<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST OF MICHIGAN CAPITAL CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST OF MICHIGAN
Capital Corporation
100 RENAISSANCE CENTER
26TH FLOOR
DETROIT, MICHIGAN 48243
January 27, 1997
Dear Stockholder:
We are pleased to enclose our Notice of Annual Meeting to be held on
February 27, 1997, Proxy Statement, Annual Report to Stockholders, and form of
proxy.
You are cordially invited to attend the Annual Meeting, but whether or not
you expect to attend, your vote is highly important regardless of the number of
shares you own. We strongly urge to you to sign and return your proxy to us
promptly.
If you have any questions about the Company, please do not hesitate to
direct them to us or to other officers of the Company at the Annual Meeting or
at any other time.
Edward Soule Conrad W. Koski
Chairman of the Board President and Chief Executive Officer
<PAGE> 3
FIRST OF MICHIGAN
Capital Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 27, 1997
The Annual Meeting of Stockholders of First of Michigan Capital
Corporation (the "Company") will be held at the Riverfront Ballroom of the
Westin Hotel, Renaissance Center, Detroit, Michigan, on Thursday, the 27th day
of February, 1997, at 9:00 a.m., E.S.T., for the following purposes:
1. To elect two directors for terms expiring in 1999 and two
directors for terms expiring in 2000.
2. To consider and act upon a proposal to ratify the appointment
of Ernst & Young LLP by the Board of Directors to act as independent
public accountants of the Company for the fiscal year ending
September 26, 1997.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
December 31, 1996, as the record date for the determination of stockholders
entitled to notice of and to vote at the annual meeting. Accordingly, only
stockholders of record on that date will be entitled to vote at the meeting. A
complete list of the stockholders of record entitled to vote at the annual
meeting will be open and available for examination by any stockholder, for any
purpose germane to the meeting, from 9:00 a.m. to 5:00 p.m. at the Company's
executive offices for ten days before the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE
THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENCLOSED STAMPED,
SELF-ADDRESSED ENVELOPE PROMPTLY IN ORDER THAT YOU MAY BE REPRESENTED AT THE
MEETING.
By the Order of the Board of Directors
Lenore P. Denys
Senior Vice President and Secretary
January 27, 1997
<PAGE> 4
FIRST OF MICHIGAN
Capital Corporation
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of First of Michigan Capital Corporation (the "Company")
of proxies to be voted at the Annual Meeting of stockholders of the Company to
be held at the Riverfront Ballroom of the Westin Hotel, Renaissance Center,
Detroit, Michigan, on Thursday, the 27th day of February, 1997, at 9:00 a.m.,
E.S.T., and any adjournment or adjournments thereof (the "Meeting"). The
mailing address of the principal executive office of the Company is 100
Renaissance Center, 26th Floor, Detroit, Michigan 48243.
A Notice of Annual Meeting, form of proxy, and the Company's Annual Report
to Stockholders for the fiscal year ended September 27, 1996 accompany this
Proxy Statement, which is first being sent or given to stockholders on January
31, 1997.
VOTING SHARES REPRESENTED BY PROXIES
The Board of Directors knows of no business which will be presented to the
Meeting other than the election of Directors and the ratification proposal
identified as proposal 2 in the accompanying Notice of Annual Meeting.
However, if any other matters are properly presented to the Meeting, it is
intended that the persons named in the enclosed proxy form will vote upon the
same and act in accordance with their judgment. Shares represented at the
Meeting by properly executed proxies in the form enclosed will be voted at the
Meeting in the manner specified therein. If no instructions are specified in
the proxy, the shares represented thereby will be voted FOR proposal 2 and FOR
the election as directors of the nominees identified below. Any proxy may be
revoked by the person giving it any time prior to being voted by giving a later
dated proxy or by attending the Meeting, revoking the proxy, and voting in
person.
STOCKHOLDERS ENTITLED TO VOTE AND PRINCIPAL STOCKHOLDERS
Only stockholders of record at the close of business on December 31, 1996
(the "record date"), are entitled to vote at the Meeting. At the close of
business on the record date, there were 2,599,925 shares of Common Stock, 10
cents par value ("Common Stock"), entitled to vote. Each share of Common Stock
is entitled to one vote on each matter to be presented at the Meeting.
So far as is known to the management, no person or group of persons owned
beneficially as of the record date more than 5% of the outstanding Common
Stock, the only outstanding voting security of the Company, other than the
persons shown in the following table.
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ---------------- ---------- --------
<S> <C> <C>
DST Systems, Inc.(1)
1055 Broadway
Kansas City, Missouri 64105.................... 675,422(1) 26.0%
1888 Limited Partnership(2)
c/o Day, Berry & Howard
One Canterbury Green
Stamford, Connecticut 06091.................... 747,929(2) 28.8
Hal H. Smith III(3)
One Griswold Street
Detroit, Michigan 48226........................ 173,356(3) 6.7
</TABLE>
(1) Based upon disclosures contained in a Schedule 13D dated April 23, 1982,
as amended, filed with the Securities and Exchange Commission (the
"Commission") by DST Systems, Inc. ("DST"). Such amended filing indicates
that DST has sole voting and dispositive power over all of the reported
shares.
(2) Based upon disclosures contained in a Schedule 13D dated October 6, 1995,
as amended, filed with the Commission by 1888 Limited Partnership (the
"Partnership") and in Schedule 13D amendments filed October 10, 1995 by
Louis C. Baker, who is the father of Directors Craig P. and Geoffrey B.
Baker, and by Mr. Louis Baker's brother, Paxton Mendelssohn II. Such
filings report that Messrs. Craig and Louis Baker and Mr. Mendelssohn
constitute the sole general partners of the Partnership, each having a
one-third general partnership interest as well as limited partnership
interests, and that action by the Partnership requires the approval of the
general partners holding at least two-thirds in interest of the general
partners. In light of that approval requirement, each general partner has
disclaimed beneficial ownership of any shares of Common Stock held by the
Partnership, and the Partnership has reported having sole voting and
dispositive power over such shares. The shares reported for the
Partnership do not include 100 shares held by Mr. Craig Baker
individually, 21,780 shares held by a trust of which Messrs. Craig and
Louis Baker and one other person are co-trustees, 21,780 shares held by a
trust of which Messrs. Geoffrey and Louis Baker and another person are
co-trustees, and 21,780 shares held by a trust of which Mr. Mendelssohn
and two other persons are co-trustees.
(3) Based upon disclosures contained in a Form 5 dated November 14, 1994
filed with the Commission by Mr. Smith.
-2-
<PAGE> 6
ELECTION OF DIRECTORS
Pursuant to the provisions of the Company's Certificate of Incorporation,
the total number of Directors of the Company may range from five to twenty,
with the precise number within that range at any given time to be as determined
by the Board of Directors. Currently, the total number of Directors is fixed
at six. The total Board is divided into three classes, with the membership in
each class required to be as nearly equal as possible to those of the others,
and the terms of office of the Directors are staggered by class over a cycle of
three successive annual meetings of stockholders, such that normally an
election of Directors to only one class is held each year. This year, however,
because an annual meeting was not held in the last fiscal year, two Directors
are to be elected to the class of Directors with terms scheduled to expire in
1999 (the "1999 class") and two Directors are to be elected to the class of
Directors with terms scheduled to expire in 2000 (the "2000 class").
Assuming the presence of a quorum, Directors will be elected at the
Meeting for each of the 1999 class and the 2000 class, from among those persons
duly nominated for that class, by a plurality of the votes for nominees for the
class that are cast by holders of Common Stock present in person or by proxy
and entitled to vote at the Meeting. Thus, those nominees for the 1999 class
and those nominees for the 2000 class who receive the highest and
second-highest numbers of votes for their election as Directors of the
pertinent class will be elected, regardless of the number of votes which for
any reason, including abstention, broker non-vote, or withholding of authority
to vote, are not cast for the election of such nominees.
It is intended that votes for election as Directors will be cast pursuant
to the proxies hereby solicited (except to the extent authority is withheld)
for the nominees named in this Proxy Statement. If any nominee shall be unable
to serve, such proxies will be voted for such other person as may be nominated
by the management.
-3-
<PAGE> 7
The following table sets forth information concerning the age, business
background, positions with the Company, and record date ownership of Common
Stock of each nominee and each Director whose term continues beyond 1996,
based in each case on data furnished by him. It also sets forth the ownership
of Common Stock as of the record date of each current and/or fiscal 1996
Executive Officer who is named in the Summary Compensation Table below and who
is not also a Director, and of all Directors and current Executive Officers as
a group, based on information so furnished. Except as indicated by footnote,
each person exercises sole voting and investment power with respect to shares
shown.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
NAME AND PRINCIPAL OCCUPATION OR SERVED AS A DIRECTOR BENEFICIALLY AT
EMPLOYMENT AT PRESENT AND FOR OF THE DECEMBER 31, PERCENT
PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE REGISTRANT SINCE 1996(1) OF CLASS(1)
- -------------------------------------------- --- -------------------- ----------------- -----------
NOMINEES FOR TERMS EXPIRING IN 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Conrad W. Koski, President and Chief 51 November 18, 1996 66,361 2.6%
Executive Officer of the Company and of
its principal subsidiary, First of Michigan
Corporation ("FoM"), since November 18,
1996. Prior thereto, Executive Vice
President and Treasurer of the Company and
FoM.
- ------------------------------------------------------------------------------------------------------------------------
Gerard M. Lavin, President, Chief Executive 54 March 16, 1995 25,000 1.0%
Officer, and a director, Berger
Associates, Inc., a mutual fund management
company. Also Chairman of the Board of
Managers, BBOI Worldwide LLC (an investment
management company), since November
1996; President and a trustee, Berger/BIAM
Worldwide Portfolios Trust and Berger/BIAM
Worldwide Funds, each since May 1996;
President and a trustee, Berger
Institutional Products Trust, since October
1995; and Vice President, DST Systems, Inc.
(information processing and computer
software services and products), since July
1995. Formerly President and Chief
Executive Officer, Investors Fiduciary
Trust Company (February 1992 to March 1995)
and Chief Operating Officer, SUNAMERICA
Asset Management Co. (January 1990 to
February 1992).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 8
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NOMINEES FOR TERMS EXPIRING IN 2000
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Geoffrey B. Baker, Investor. (2) 46 April 25, 1985 77,432(2) 3.0%
===================================================================================================================
William H. Cuddy, Partner in the law firm of 61 March 12, 1994 1,000 *
Day, Berry & Howard. Formerly Chairman of
the Board of Directors of the Company
(April 25, 1995 to January 24, 1997).
===================================================================================================================
DIRECTORS WHOSE TERMS EXPIRE IN 1998
- -------------------------------------------------------------------------------------------------------------------
Craig P. Baker, Investor. (2) 44 January 27, 1994 769,809(2)(3) 29.6%
- -------------------------------------------------------------------------------------------------------------------
Edward Soule, Adjunct Professor of Business 44 January 24, 1997 0 *
Ethics, University of Missouri in St.
Louis, since January 1, 1997. Chairman of
the Board of Directors of the Company since
January 24, 1997. Formerly Chief Financial
Officer, Transworld Airlines (September
1996 to December 1996), consultant to
Edward Jones (securities brokerage) (June
1995 to September 1996), and Partner and
Chief Financial Officer, Edward Jones (May
1986 to June 1995).
===================================================================================================================
NON-DIRECTOR NAMED EXECUTIVES AND GROUP
- -------------------------------------------------------------------------------------------------------------------
Charles R. Roberts 0 *
===================================================================================================================
Kenneth C. Eich(4) 0 *
===================================================================================================================
Steve Gasper, Jr.(4) 2 *
===================================================================================================================
Urban A. MacDonald(4) 100(5) *
===================================================================================================================
All Directors and current Executive Officers as a group
(9 persons)(1)(2)(3)(5) 943,287 36.3%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 0.1%
(1) Where applicable, shares reported as owned include shares subject to
options that are or will become exercisable within 60 days of the date of
this Proxy Statement. For purposes of reporting the percentage owned as a
group, all such optioned shares are treated as outstanding, but for
purposes of reporting the percentage owned by an individual only such of
those optioned shares as are held by the individual are treated as
outstanding.
(2) Messrs. Geoffrey and Craig Baker are brothers. Shares reported for each
include 21,780 shares as to which voting and investment power is shared as
a co-trustee. See note (2) to table on page 2.
(3) Includes 747,929 shares owned by 1888 Limited Partnership of which Mr.
Craig Baker is a general and limited partner. See note (2) to table on
page 2. Mr. Baker disclaims beneficial ownership of these shares.
(4) A former Executive Officer no longer with the Company.
(5) Includes 50 shares held by Mr. MacDonald's wife, as to which he disclaims
beneficial ownership.
-5-
<PAGE> 9
CERTAIN INFORMATION AS TO COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, which has full
authority to act in lieu of the Board during the intervals between Board
meetings, except with respect to such matters as are reserved to the entire
Board by applicable law, held nine meetings during fiscal 1996. The current
members of this committee are Craig P. Baker, Geoffrey B. Baker, William H.
Cuddy, and Gerard M. Lavin.
The Audit Committee of the Board of Directors, which currently consists of
Craig P. Baker, Geoffrey B. Baker, William H. Cuddy, and Gerard M. Lavin, makes
recommendations to the Board of Directors with respect to the selection of
auditors and reviews with the auditors their report on the Company's financial
statements. This committee met three times during fiscal 1996.
The Compensation/Stock Option Committee, the current members of which are
Geoffrey B. Baker, William H. Cuddy, and Gerard M. Lavin, met once during the
last fiscal year. The Compensation/Stock Option Committee administers the
Company's option plans as to officers of the Company and, as requested by the
Board, considers and makes recommendations to the Board respecting
discretionary cash compensation for Executive Officers and certain other
employees of the Company and FoM.
The Nominating Committee, of which Craig P. Baker currently is the sole
member, makes recommendations to the Board concerning prospective
Director-nominees and, on occasion, also may make recommendations to the Board
concerning adjustments to the total number of Board seats. In the course of
its deliberations, the Nominating Committee expects from time to time to
consider such potential Director-candidates as may have been recommended by
stockholders for its consideration. A stockholder desiring to recommend a
candidate should submit the recommendation in writing to the Secretary of the
Company at the Company's principal executive offices. The recommendation
should explain the proposing stockholder's reasons for recommending the
candidate and be accompanied by the candidate's current resume and a statement,
signed by the candidate and recently dated, affirming his or her interest in
being considered as a prospective Director-nominee and willingness to provide
additional information if requested by the Nominating Committee or the Board.
The Nominating Committee did not meet during fiscal 1996.
The Board has no other standing committees.
The Board of Directors held five meetings in fiscal 1996. During that
year, each incumbent Director attended more than 75% of the total of (a) the
number of Board meetings held while he served as a Director and (b) the number
of meetings of Board committees on which such Director served that were held
during his period of service.
-6-
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The table which follows sets forth summary information for the Company's
1996 fiscal year and, as applicable, the preceding two fiscal years with
respect to the compensation of Kenneth C. Eich and of Steve Gasper, Jr., each
of whom served as the Company's Chief Executive Officer during a portion of
fiscal 1996, and of each other current or former Executive Officer of the
Company (including the Company's current CEO, Conrad W. Koski) who served as an
Executive Officer during fiscal 1996 and whose total salary and bonus
compensation for such fiscal year exceeded $100,000 ("named executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
-------------------------------- ------------
Awards
------------
Other
Annual Securities
Compen- Underlying All Other
Salary Bonus sation Options/SARs Compensation
Name and Principal Position Year ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conrad W. Koski 1996 $ 87,496 $ 25,000 -0- -0- $ 4,500
President and Chief Executive 1995 88,731 20,000 -0- -0- 1,364
Officer since November 1994 88,703 98,980 -0- -0- 2,989
18, 1996; during fiscal years
reported, Executive Vice-President
and Treasurer
- -------------------------------------------------------------------------------------------------------------------
Kenneth C. Eich 1996 $ 56,090 $ -0- -0- -0- $ -0-
Former President and Chief 1995 N/A N/A N/A N/A N/A
Executive Officer (March 19, 1994 N/A N/A N/A N/A N/A
1996 through November 15,
1996)
- -------------------------------------------------------------------------------------------------------------------
Steve Gasper, Jr. 1996 $100,000 $500,000 -0- -0- $ 4,500
Former President and Chief 1995 100,000 500,000 -0- -0- 735
Executive Officer (April 4, 1994 1994 50,000 236,667 $178,818 120,000 -0-
through March 18, 1996)
- -------------------------------------------------------------------------------------------------------------------
Charles R. Roberts 1996 $ 95,000 $ 50,000 -0- -0- $ 4,500
Senior Vice-President 1995 95,000 180,000 -0- 8,000 811
(since July 26, 1994)(6) 1994 N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Urban A. MacDonald 1996 $105,462 $143,951 -0- -0- $ -0-
Former Senior Vice-President 1995 120,000 180,930 -0- 8,000 -0-
(October 17, 1994 through August 1994 N/A N/A N/A N/A N/A
16, 1996)(6)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This compensation was received primarily in their capacities with FoM.
In addition to salary paid in respect of services performed during the
pertinent fiscal year, amounts reported in this column include, where
applicable, salary payable for such year but deferred under the Company's
former Deferred Compensation Plan (which was discontinued on February 29,
1996) and salary so payable but contributed on behalf of the named
executive to the Company's Capital Accumulation Plan, a so-called "401(k)
plan." For Mr. Koski, the amounts reported also include for each fiscal
year an amount equal to the interest paid by him for such year on a
then-outstanding loan to purchase Common Stock, pursuant to the terms of
the Company's former Loan Guaranty Plan.
-7-
<PAGE> 11
(2) This compensation was received primarily in their capacities with FoM.
In addition to bonuses paid in respect of the pertinent fiscal year, the
amounts reported in this column include, where applicable, bonuses payable
for such year but deferred under the Deferred Compensation Plan or
contributed to the Capital Accumulation Plan. For Mr. MacDonald, the
amounts reported consist of a share of the net profits of FoM's Corporate
Finance Department that were payable to him as head of that department and
investment executive commissions.
(3) The fiscal 1994 amount reported in this column for Mr. Gasper includes
relocation expense reimbursements and an adjustment for the tax effect of
such reimbursements aggregating to $154,026. In accordance with
Commission rules, the other amounts shown in this column do not include
any perquisites or other personal benefits provided to named executives,
which in each case and for each fiscal year did not exceed the lesser of
(a) $50,000 and (b) 10% of the aggregate salary and bonus reported for the
named executive.
(4) All shares reported in this column relate to option grants. The Company
has never maintained any plans for the grant of so-called "freestanding"
stock appreciation rights ("SARs").
(5) Fiscal 1996 amounts reported in this column consist entirely of Company
"matching" contributions allocated for the pertinent year to the accounts
of then-eligible named executives under the Capital Accumulation Plan.
Fiscal 1994 and 1995 amounts also include contributions allocated to the
accounts of then-eligible named executives under the Company's former
Profit Sharing Retirement Plan, and fiscal 1994 amounts also include
contributions allocated to the accounts of then-eligible named executives
under the Company's former Employee Stock Ownership Plan, both so-called
"defined contribution" plans that have been discontinued.
(6) Beginning date shown is date of engagement as an officer of FoM. Messrs.
MacDonald and Roberts were first appointed Executive Officers in December
1994. As permitted by rules of the Commission, fiscal 1994 compensation
information is not presented for Mr. Roberts since he did not serve as an
Executive Officer during that year.
-8-
<PAGE> 12
STOCK OPTIONS
During fiscal 1996, no options were granted to any of the named executives
and no previously granted options were exercised by any of them. The following
table provides information concerning unexercised options held by the named
executives at fiscal year-end.
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised In-the-Money
Unexercised Options/SARs Options/
at Fiscal SARs at Fiscal
Year-End (#) Year-End ($)(1)
------------------------------------------------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- -----------------------------------------------------------------------------
<S> <C> <C>
Conrad W. Koski 10,725/0 $5,315/$0
- -----------------------------------------------------------------------------
Kenneth C. Eich 0/0 $0/$0
- -----------------------------------------------------------------------------
Steve Gasper, Jr. 0/0 $0/$0
- -----------------------------------------------------------------------------
Charles R. Roberts 8,000/0 $0/$0
- -----------------------------------------------------------------------------
Urban A. MacDonald 0/0 $0/$0
=============================================================================
</TABLE>
(1) For purposes of this column, "value" is determined by subtracting the
aggregate exercise price for the optioned shares from the product of that
number of shares and the closing price for the Common Stock on the Chicago
Stock Exchange as of fiscal year-end.
CERTAIN CONTRACTS
Koski Employment Contract. In connection with his promotion to CEO of the
Company and FoM, Conrad W. Koski has entered into a new employment agreement
with the Company. The agreement provides for payment to Mr. Koski of salary at
the annual rate of $96,919 and of a cash bonus equal to 10% of the Company's
consolidated net income (as determined according to generally accepted
accounting principles) for the period of the agreement or, if greater,
$200,000. The bonus is payable quarterly within 30 days after release of the
Company's quarterly earnings report for a pertinent quarter and is to be
prorated for the first quarter of fiscal years 1997 and 1998 to take into
account the portions of those quarters not within the agreement period. The
agreement also entitles Mr. Koski to certain perquisites and to participate in
Company employee benefit plans while he continues as an employee, and it
imposes certain non-compete obligations upon him for a period of one year after
termination of his employment.
The agreement has a one-year term, commencing as of November 18, 1996, but
would automatically terminate earlier if Mr. Koski should die or become
"disabled" (as that term is used in the agreement) and may be terminated
earlier under certain other circumstances. If Mr. Koski's employment is
terminated by the Company "for cause" (as defined in the agreement) during its
one-year term, he would be entitled only to payment of any unpaid amounts of
salary then accrued for his services prior to termination, but if termination
during that period is due to his death or disability, by Mr. Koski for "good
reason" (as therein defined), or by the Company other than for cause, he (or
his estate) would be entitled to receive the remainder of the salary and the
$200,000 guaranteed portion of the bonus that would have been payable under the
agreement had he remained employed through
-9-
<PAGE> 13
the end of its term. The agreement also provides that if Mr. Koski's employment
is terminated by the Company other than for cause before the end of the
agreement's term, he will be entitled during the 30-day period following his
termination to require the Company to purchase all shares of Common Stock then
owned by him, at a price equal to the closing bid price for such shares on the
public market as of his termination date.
Koski Retirement Agreement, Former Guaranteed Loan. The Company also has
a supplemental retirement benefit agreement with Mr. Koski, which was entered
into several years ago and continues to be in effect. Under this agreement,
following his retirement from the Company's employ or termination of his
employment under certain circumstances in the event of a change in control of
the Company, but in any event not before age 65, cash payments equal to 25% of
his average compensation in the fiscal years 1987 through 1991 are payable to
Mr. Koski for each year until age 75 and to designated beneficiaries in the
event of his death before age 75. Should he die before retirement, an amount
equal to such annual benefit is payable to his designated beneficiaries in the
year following death and 50% of such amount is payable in each year thereafter
until Mr. Koski would have reached age 65 or for nine years, whichever is
later.
For a portion of fiscal 1996, there also was outstanding a Company
guaranty of a third-party loan that was made to Mr. Koski in fiscal 1987 for
the purpose of purchasing Common Stock. This guaranty was extended pursuant to
the provisions of a former Company plan designated as the Key Employee Stock
Purchase Loan Guaranty Plan (the "Loan Guaranty Plan"), which was approved by
the Company's stockholders at its 1986 annual meeting. By the beginning of
fiscal 1996, the aggregate principal amount of the guaranteed loan had
decreased to $60,000; it was repaid in full early that year. Under the terms
of the Loan Guaranty Plan, while the loan was outstanding the Company was
obligated to pay Mr. Koski additional compensation equal to the amount of
interest on the loan paid by him. The additional compensation so paid for the
fiscal years covered by the Summary Compensation Table above is included there
under "Salary."
Roberts Employment Agreement. In connection with his engagement by FoM in
July of 1994, Charles R. Roberts entered into an employment agreement providing
for salary at the annual rate of $95,000, a minimum cash bonus at the annual
rate of $180,000 through the end of fiscal 1995, and a potential future grant
of options to purchase 8,000 shares of Common Stock, which occurred during
fiscal 1995. Currently, only the salary payment continues to be covered by the
agreement. Under the agreement, Mr. Roberts may be terminated by FoM at will,
but if he is terminated other than for "cause" (as therein defined) prior to
the end of fiscal 1997 he will be entitled to receive his salary through the
end of that period. The agreement also entitles Mr. Roberts to receive certain
fringe benefits and to participate in employee benefit plans and in any bonus
pool for executives at his level, and it imposes certain indemnification
obligations upon him.
In connection with Mr. Robert's employment, FoM also made him a $25,000
cash advance, $5,000 of which was forgiven on each of the first and second
anniversaries of his employment by FoM and the remainder of which is to be
forgiven in $5,000 increments on the third through fifth anniversaries of his
employment provided he is then still employed by FoM.
Eich Severance Arrangements. In connection with his resignation from his
former positions with the Company and FoM, Kenneth C. Eich entered into a
severance agreement with the Company. Under this agreement, in lieu of all
other compensation and benefits otherwise payable or required to be provided to
him, Mr. Eich received a $100,000 cash payment in November 1996 and is entitled
through March 1997 to continue participation in the Company's medical and
health insurance plan on the same basis as immediately prior to his
resignation.
Gasper Severance Arrangements. In connection with his former engagement
as President and CEO in March of 1994, Steve Gasper, Jr. entered into an
employment agreement with the Company and FoM. In connection with his March
1996 resignation from his positions with the Company and FoM, that employment
agreement was modified into a severance agreement. As so modified, the
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<PAGE> 14
agreement provides that through March 17, 1997, he will continue to be paid
cash compensation at the annual salary and quarterly bonus rates that applied
to him in fiscal 1995 and to continuation of some of the fringe benefits
provided to him while he was CEO. Until March 18, 1998, Mr. Gasper is
prohibited under this agreement from making any attempt to induce or encourage
any employee of the Company or any affiliate to leave for employment with a
competitor. The agreement also imposes confidentiality obligations upon Mr.
Gasper, which continue indefinitely.
PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Common Stock
for the last five fiscal years with the cumulative total return on the Standard
& Poor's 500 Composite Stock Index (the "S & P 500 Index") and on the Lipper
Analytical Brokerage Firm Composite Stock Price Index (the "Lipper Composite
Index") over the same period (assuming an investment of $100 in each on
September 30, 1991 and reinvestment of all dividends). The Lipper Composite
Index is comprised of 30 publicly held regional and national securities
firms, not including the Company.
Comparison of Five Year Cumulative Total Return Among
First of Michigan, S&P 500 Index and Lipper Composite Index
[LINE GRAPH]
FISCAL YEAR ENDING SEPTEMBER
1991 1992 1993 1994 1995 1996
First of Michigan 100.00 131.49 126.46 176.04 119.61 104.49
S&P 500 Index 100.00 111.04 125.44 130.06 168.70 202.98
Lipper Composite Index 100.00 113.66 199.70 152.91 239.41 255.24
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<PAGE> 15
REPORTS ON EXECUTIVE COMPENSATION
Board of Directors Report
General Executive Compensation Policy. For many years, the Company's
policy concerning the compensation of Executive Officers has been to structure
the compensation components for such executives (principally, salary, bonuses,
and stock-based awards) such that a substantial portion of an executive's total
potential compensation, annually and over the longer term, is dependent upon
Company profits and/or appreciation in the market value of the Common Stock.
Allowing for variations made necessary or advisable by arrangements
individually negotiated with recently hired executives as they joined the
Company or by the unusual turnover of Executive Officers during the course of
the year, this same general policy was followed with respect to compensating
fiscal 1996 Executive Officers for the year. More particularized information
concerning the fiscal 1996 compensation of these executives is provided in the
remainder of this report and the committee reports which follow.
1996 Executives No Longer with the Company. During the course of fiscal
1996 the Company had two Chief Executive Officers: Steve Gasper, Jr., who
served as CEO until his resignation in March of 1996, and Kenneth C. Eich, who
succeeded Mr. Gasper and served until his resignation after the end of the
fiscal year. Former Executive Officer Urban A. MacDonald, who served as head
of FoM's Corporate Finance Department for most of the fiscal year, and another
individual who served as an Executive Officer for a portion of the year, also
resigned their positions with the Company and FoM during the course of the
year.
As reported earlier in this Proxy Statement, the terms of Mr. Gasper's
compensation for his fiscal 1996 period of service as CEO were specified in the
employment agreement negotiated with him when he first joined the Company. His
severance payments for the year also were the result of arms' length
negotiation with him, conducted on behalf of the Company by the Chairman of the
Board (then, Mr. Cuddy) and approved by the full Board.
Mr. Eich did not enter into a written employment agreement with the
Company when he became CEO and, although it initially was contemplated that
such an agreement might be negotiated after his engagement, no such agreement
had been finalized by the time of his resignation. For his period of CEO
service during fiscal 1996, he therefore continued to be paid salary and
provided employee benefits on the terms the Board had approved when he first
joined the Company. Those terms also were the result of arms' length
negotiation conducted for the Company as described above, as were the terms of
the severance arrangements made with him after year end.
Mr. MacDonald also did not have a written employment agreement with the
Company. For fiscal 1996, his compensation package (which also included
commissions earned as a FOM investment executive, a potential cash bonus based
on net profits of the Corporate Finance Department, and certain employee
benefits) was continued by the Board on the terms initially negotiated with
him by the CEO (then, Mr. Gasper) when Mr. MacDonald first joined the Company
in the prior fiscal year.
The other former Executive Officer who resigned during the fiscal year was
entitled to salary at a specified annual rate through February 1, 1996, under
the contract that had been negotiated with him by Mr. Gasper when the executive
first joined the Company. His fiscal 1996 compensation consisted entirely of
salary at that rate through the date of his resignation in March 1996, together
with certain employee benefits consistent with his position.
Salaries of Other 1996 Executives. Barring special circumstances, such as
when the Board or the CEO (acting within Board-approved parameters) has
determined that a salary increase is in order in light of expansion of an
executive's duties or for competitive reasons (none of which determinations were
made for fiscal 1996), the Company's long-standing practice has been to continue
the salaries
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<PAGE> 16
of Executive Officers without change from year to year, except for occasional
cost-of-living adjustments.
For fiscal 1996, a 4% cost-of-living adjustment was made in the salaries
of all Executive Officers whose employment with the Company preceded that year,
other than those whose salary arrangements were governed by contract. The
fiscal 1996 "salary" total shown in the Summary Compensation Table for Mr.
Koski is less than in prior years because of the end of interest reimbursements
to him under the Loan Guaranty Plan, which also are included as "salary" in
that table.
Bonuses of Other 1996 Executives. Early in fiscal 1996, the Board
determined that 12.75% of Company pre-tax profits for the year (determined on a
consolidated basis, before bonuses) would be used as a cash incentive bonus
pool. Messrs. Gasper and MacDonald were not eligible to participate in this
pool in light of their separate bonus arrangements described above, nor was Mr.
Eich. All other fiscal 1996 Executive Officers were eligible, as were other,
less senior, management-level employees.
After fiscal year end, the Executive Committee of the Board was charged
with allocating bonuses from the pool among the eligible employees.
The basis for that Committee's decisions is discussed in the report of that
Committee below.
Stock Options. The stock-based component of the Company's compensation
structure for Executive Officers traditionally has been implemented through the
grant of options to purchase Common Stock under the Company's employee stock
option plans. Consistent with the practice in prior years, decisions
concerning the grant of options to Executive Officers for fiscal 1996 were made
by the Compensation/Stock Option Committee of the Board. The basis for that
committee's decisions is discussed in the report of that Committee below.
First of Michigan Capital Corporation
Board of Directors
Craig P. Baker
Geoffrey B. Baker
William H. Cuddy
Conrad W. Koski*
Gerard M. Lavin
Edward Soule*
* Messrs. Koski and Soule did not become Directors until after the close
of fiscal 1996 and accordingly did not take part in any of the compensation
decisions covered by the above report.
Executive Committe Report
As indicated in the preceding Board report, the decisions of the
Executive Committee relating to fiscal 1996 compensation of Executive Officers
concerned allocating the bonus pool for that year among the employees eligible
to participate, who included some of the 1996 Executive Officers as well as
other employees. With respect to these allocations, the Executive Committee
determined to defer to the judgment of Mr. Eich, who then was the Company's
CEO. Mr. Eich's allocation recommendations were based in part on the varying
levels of responsibility of the eligible employees and in part on his
subjective assessment of the quality of performance and value to the Company of
each employee, relative to that of the other eligible employees, during the
portion of the year in which he had served as CEO.
Executive Committee
Craig P. Baker
Geoffrey B. Baker
William H. Cuddy
Gerard M. Lavin
Compensation/Stock Option Committee Report
The decisions of the Compensation/Stock Option Committee relating to
compensation of Executive Officers were made in its capacity as administrator
of the Company's option plan for employees. Although not required to do so
under the terms of this plan, which authorizes grants as and when determined to
be appropriate by the Committee, in its sole discretion, the Committee normally
considers the grant of options to Executive Officers after the close of a fiscal
year in light of Company financial performance for the year, and this was the
procedure followed for fiscal 1996. In the judgment of the members of the
Committee, the Company's performance for the year did not
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<PAGE> 17
justify any option grants to Executive Officers. Accordingly, no grants were
made to any of them for fiscal 1996.
Compensation/Stock Option Committee
Geoffrey B. Baker
William H. Cuddy
Gerard M. Lavin
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<PAGE> 18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated in the preceding section of this Proxy Statement, certain
decisions concerning the fiscal 1996 compensation of Executive Officers were
made by the Compensation/Stock Option Committee of the Board of Directors;
others were made by the Executive Committee of the Board or by the full
Board. Messrs. Geoffrey Baker, Cuddy, and Lavin served on the
Compensation/Stock Option Committee throughout the last fiscal year. They also
served on the Executive Committee during the year, as did Mr. Craig Baker. The
only other persons who served on either committee at any time during fiscal
1996 are former Director Joseph M. Mendgen, who served on the
Compensation/Stock Option Committee until his resignation from the Board in
June 1996 and on the Executive Committee until May 1996, and former Director
Thomas A. McDonnell, who also served on the Executive Committee for the same
period.
The only persons other than Messrs. Mengden and McDonnell who served on
the Board of Directors at any time during the last fiscal year are the
incumbent Directors (other than Messrs. Koski and Soule, who first became
Directors during the current fiscal year), Steve Gasper, Jr., who resigned from
the Board in March 1996 in connection with his resignation as the Company's
CEO, and Kenneth C. Eich, who replaced Mr. Gasper on the Board in April 1996
and resigned that position in November 1996 in connection with his resignation
as CEO. Messrs. Gasper, Eich, and Mengden are the only current or former
Directors who took part in any decisions concerning the fiscal 1996
compensation of any Executive Officer and who also have ever been employed by
or an officer of the Company or any of its subsidiaries.
The Company's post-employment compensation arrangements with Mr. Gasper
and Mr. Eich are described above under "Executive Compensation -- Certain
Contracts." Mr. Mengden has an agreement with the Company for the provision of
supplemental retirement benefits similar to the agreement with Mr. Koski
described in the same section, which was entered into several years ago while
Mr. Mengden was still an employee of the Company. Benefits became payable to
Mr. Mengden under his agreement in April 1992, at the rate of $49,500 per year
for 10 years.
DIRECTORS' COMPENSATION
Retainer, Fees, and Other Benefits. Directors who are not also employees
of the Company or an affiliate receive an annual retainer of $8,000, fees of
$1,500 for each Board meeting attended in person, $500 for each such meeting
attended by phone, and $750 for each Board committee meeting attended, and are
reimbursed reasonable traveling expenses. In addition, the Chairman of the
Board (currently Mr. Soule) and the chairman of the Board's Audit Committee
(currently Mr. Cuddy) receive additional annual retainers of $65,000 and
$6,000, respectively. The Company also permits Directors who are not employees
to elect to participate in its health insurance plans on the same terms as are
available to its employees generally. The only Director currently
participating in such plans is Geoffrey B. Baker.
Stock Options. At their meeting in 1989, the stockholders approved the
Company's Directors Stock Option Plan of 1989 (the "Directors Plan"), which is
intended to extend the policy of providing management with an equity interest
in the Company to Directors who are not employees and therefore not eligible
for stock options under any of the Company's other stock option plans, and to
provide an incentive to qualified individuals to serve or continue to serve as
Directors. The only Directors eligible to participate in this plan are those
who are not and have never been employees of the Company or any of its
subsidiaries. Currently, the eligible Directors are Craig P. Baker, Geoffrey
B. Baker, William H. Cuddy, Gerard M. Lavin, and Edward Soule.
Under the terms of the Directors Plan, for any year in which the Company
meets the performance goals stated in either Column A or Column B below, each
eligible Director receives an
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<PAGE> 19
option to purchase the quotient of the number of shares listed in Column C
divided by the number of eligible Directors:
<TABLE>
<CAPTION>
A. B. C.
-- -- --
INCREASE IN PROFITS
PRE-TAX PROFIT PERCENTAGE OVER PREVIOUS
OVER REGIONAL AVERAGE THREE-YEAR AVERAGE NUMBER OF SHARES
- ------------------------- ------------------ ----------------
<C> <C> <C>
.25 5% 1,000
.50 10% 1,000
.75 15% 2,000
1.00 20% 2,000
1.25 25% 3,000
1.50 30% 3,000
1.75 35% 4,000
2.00 40% 4,000
2.25 45% 5,000
2.50 or more 50% or more 5,000
</TABLE>
For fiscal 1996, no options were granted under this plan.
The exercise price for any option granted under the Directors Plan during
a given year is the market value for the Common Stock on the Chicago Stock
Exchange as of the date of the regular December meeting of the Board of
Directors (or if there is no such meeting, December 31) of that year. Options
granted under the Directors Plan ordinarily may be exercised at any time during
the period which begins five years from the date of grant and ends seven years
after that date. However, exercisability would be accelerated in the event of
a change in control of the Company (as defined in the plan). No option may be
exercised after the holder thereof voluntarily resigns from service as a
Director, unless such resignation is due to disability or retirement from the
Board with the consent of all other Board members or after age 65. Options
granted under the Directors Plan are non-transferable, except by will or the
laws of descent and distribution in the event of death. No options may be
granted under the plan after December 31, 1999.
On January 24, 1997, in connection with his appointment as a Director and
the new Chairman of the Board, a special option grant was made to Mr. Soule by
the Board, covering 25,000 shares of Common Stock at a per share exercise price
of $8 (the closing bid price on the Chicago Stock Exchange on the day before
the grant). The option is nontransferable, normally will not become
exercisable until the third anniversary of grant (although the Board will have
discretion to accelerate exercisability upon a change in control), and will
expire on the fifth anniversary of grant if not sooner exercised. If Mr. Soule
were to voluntarily resign from service as a Director while the option remains
outstanding, other than due to disability or retirement with the consent of all
other Board members, the option no longer would be exercisable.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
appointed Ernst & Young LLP as the Company's independent public accountants for
the fiscal year ending September 26, 1997, subject to stockholder ratification.
A representative of Ernst & Young LLP, which audited the accounts of the Company
for its fiscal year ended September 27, 1996, is expected to be present at the
Meeting with the opportunity to make a statement if he desires to do so and to
be available to respond to appropriate questions.
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<PAGE> 20
Assuming the presence of a quorum, approval of the proposal to ratify the
appointment of Ernst & Young LLP will require the affirmative vote of the
majority of shares present in person or represented by proxy at the Meeting and
entitled to vote thereon. Any abstention concerning the proposal by shares so
present or represented and entitled to vote will have the same effect as a vote
against the proposal. If there is any broker non-vote with respect to the
proposal, the shares that are the subject of such non-vote will not be counted
as present and entitled to vote for purposes of the vote on the proposal and
accordingly will have no effect on the outcome of the vote.
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<PAGE> 21
MISCELLANEOUS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive Officers and Directors of the Company and beneficial owners of
more than 10% of its outstanding Common Stock are required to file initial
statements of beneficial ownership and reports of changes in ownership of
Common Stock, pursuant to Section 16(a) of the Securities Exchange Act of 1934.
The Company has reviewed such reports as it has received from persons known to
it to be (or during fiscal 1996 to have been) subject to such requirements and
written representations of certain such persons to the effect that other
reports are not required. Based solely on such review, the Company believes
that in respect of fiscal 1996 all Section 16(a) filing requirements were met.
PROPOSALS FOR 1997 ANNUAL MEETING
A stockholder desiring that a proposal, otherwise proper for presentation,
be presented at an Annual Meeting of Stockholders to be held in 1998 must send
such proposal to the Secretary of the Company for inclusion in the materials
relating to that meeting so that it is received by September 30, 1997.
COST OF SOLICITING PROXIES
The expense of soliciting proxies will be paid by the Company. In
addition to the use of the mails, proxies may also be solicited personally, or
by telephone or telegraph, by Directors and by officers and regular employees
of the Company. The Company may reimburse banks, brokers, and fiduciaries
holding stock in their names or in the names of their nominees for their
expenses in sending soliciting material to the beneficial owners of such stock
and obtaining their proxies.
By Order of the Board of Directors
Lenore P. Denys
Senior Vice President and Secretary
Dated: January 27, 1997
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<PAGE> 22
<TABLE>
<S> <C>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William H. Cuddy and
Conrad W. Koski, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to
FIRST OF MICHIGAN represent and to vote, as designated below, all the shares
Capital Corporation of common stock of First of Michigan Capital Corporation
100 Renaissance Center which the undersigned has power to vote, at the annual
26th Floor meeting of stockholders to be held on February 27, 1997 or
Detroit, Michigan 48243 any adjournment thereof.
</TABLE>
<TABLE>
<S> <C> <C>
1. Election of Directors [ ] For all nominees listed below [ ] Withhold authority
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
CONRAD W. KOSKI and GERARD M. LAVIN, for terms expiring in 1999, and GEOFFREY
B. BAKER and WILLIAM H. CUDDY, for terms expiring in 2000.
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
________________________________________________________________________________
2. Approval of Ernst & Young LLP as the independent public accountants.
[ ] For [ ] Against [ ] Abstain
3. In the discretion of the Proxies upon such other business as may properly
come before the meeting.
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ELECTION AS DIRECTORS OF THE BOARD'S NOMINEES AND FOR PROPOSAL 2.
The undersigned acknowledges receipt of the Notice and Proxy Statement
concerning the annual meeting of stockholders to be held on February 27, 1997
and revokes all proxies heretofore given to vote at said meeting and any
adjournments.
_______________________________
Signature
_______________________________
Signature if held jointly
Dated:__________________, 1997.
Please sign exactly as the
name appears. When shares are
held by joint tenants, both
should sign. When signing as
attorney, as executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
