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 Sect. 240.14a-11(c) or Sect.
240.14a-12
FRANKLIN RESOURCES, 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] 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:
.................................................
FRANKLIN RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON JANUARY 20, 1998
To the Stockholders of Franklin Resources, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of FRANKLIN
RESOURCES, INC. (the "Company") will be held at 9:30 A.M., Pacific Standard
Time, on January 20, 1998 at the offices of the Company, 777 Mariners Island
Boulevard, San Mateo, California 94404 U.S.A. At this meeting, the stockholders
of the Company will consider and vote on:
1. The election of nine (9) directors to hold office until the next Annual
Meeting of Stockholders or until their successors are elected and shall qualify.
2. The ratification of the appointment by the Board of Directors of
Coopers & Lybrand L.L.P. as the Company's independent accountants for
the current fiscal year ending September 30, 1998.
3. The adoption of an Employee Stock Investment Plan for the
purchase of Common Stock of the Company by employees of the Company.
4. The transaction of such other business as properly may come
before the Meeting or any adjournments or postponements thereof.
Stockholders of record at the close of business on December 11, 1997 are
entitled to notice of, and to vote on, all matters presented at the meeting and
at any adjournments or postponements thereof. Each holder of shares of the
Company's Common Stock is entitled to one (1) vote for each share of Common
Stock held on the record date.
By Order of the Board of Directors
Harmon E. Burns
Secretary
December 19, 1997
San Mateo, California, U.S.A.
IF YOU DO NOT EXPECT TO BE PRESENT PERSONALLY AT THE MEETING, PLEASE
EXECUTE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE>
PROXY STATEMENT
FRANKLIN RESOURCES, INC.
777 Mariners Island Boulevard
San Mateo, California 94404, U.S.A.
This Proxy Statement and the accompanying Notice of Annual Meeting are
furnished in connection with the solicitation by the Board of Directors of
Franklin Resources, Inc., a Delaware corporation (the "Company"), of the
accompanying proxy, to be voted at the Annual Meeting of Stockholders to be held
at the offices of the Company, 777 Mariners Island Boulevard, San Mateo,
California U.S.A., on January 20, 1998, at 9:30 A.M. Pacific Standard Time and
at any and all adjournments or postponements thereof. A proxy may be revoked by
a stockholder prior to its exercise in any of three ways: by written notice to
the Secretary of the Company; by submission of another proxy bearing a later
date; or by voting in person at the Annual Meeting. Revocation by notice to the
Secretary of the Company or by submission of a later proxy will not affect a
vote on any matter which is taken prior to the receipt of the notice or later
proxy by the Company. The mere presence at the Annual Meeting of the stockholder
appointing the proxy will not revoke the appointment. If not revoked, the proxy
will be voted at the Annual Meeting in accordance with the instructions
indicated on the proxy by the stockholder or, if no instructions are indicated,
will be voted FOR the slate of directors described herein, FOR ratification of
the appointment of Coopers & Lybrand L.L.P. as the Company's independent
accountants and FOR the adoption of the Employee Stock Investment Plan. These
proxy materials are being mailed on or about December 19, 1997 to stockholders
of record of the Company's $0.10 par value Common Stock on December 11, 1997
(the "Record Date").
This solicitation is being made by the Company. All expenses of the Company
in connection with this solicitation will be borne by the Company. In addition
to solicitation by mail, proxies may also be solicited personally by officers,
directors and other employees of the Company by telephone, electronic mail or
fax without additional compensation. The Company will also use a service agent
to request brokerage houses, custodians, nominees and fiduciaries to forward
proxy material to the beneficial owners of the shares held of record by such
persons and will reimburse such persons, the Company's transfer agent, and the
service agent for their reasonable out-of-pocket expenses in forwarding such
materials. The Company's transfer agent and the service agent are paid for their
services pursuant to a standard fee schedule.
The Company's Annual Report for its fiscal year ended September 30, 1997,
including financial statements, has been sent or is being sent together with
this Proxy Statement to all stockholders as of the Record Date for the Annual
Meeting. Such financial statements and the Annual Report do not form any part of
this proxy soliciting material.
VOTING SECURITIES
Stockholders of record at the close of business on the Record Date are
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. Each holder of shares of the Company's
$0.10 par value Common Stock (the "Common Stock") is entitled to one (1) vote
for each share of Common Stock held on the Record Date.
On December 1, 1997, 126,026,610 shares of Common Stock were outstanding. The
presence in person or by proxy at the Annual Meeting of the holders of a
majority of such shares will constitute a quorum. All share information
described herein reflects a three-for-two stock split of the Common Stock that
was paid on January 15, 1997.
Assuming the presence of a quorum at the Annual Meeting, the affirmative vote
of a plurality of the votes cast by holders of shares of Common Stock is
required for the election of directors. The affirmative vote of a majority of
shares of Common Stock represented at the Annual Meeting and entitled to vote on
each matter is required for the ratification of the appointment of Coopers &
Lybrand L.L.P. An abstention with respect to the ratification of the appointment
of Coopers & Lybrand L.L.P. will be counted as present for purposes of
determining the existence of a quorum and will have the practical effect of a
negative vote as to that proposal. The affirmative vote of a majority of the
shares of Common Stock represented at the Annual Meeting and entitled to vote on
each matter is required for the approval of the Employee Stock Investment Plan.
The New York Stock Exchange determines whether brokers that do not receive
instructions from beneficial owners will be entitled to vote on the proposals
contained in this Proxy Statement. In the event of a broker non-vote with
respect to any issue coming before the Annual Meeting, such shares will be
counted as present for the purpose of determining the existence of a quorum, but
will not be deemed as present and entitled to vote as to that issue for the
purpose of determining the total number of shares of which a majority is
required for adoption.
The following persons are known by the Company as of December 1, 1997 to be
beneficial owners of more than five percent (5%) of its total outstanding Common
Stock:
Name and Address of Amount and Nature of Percent of
Beneficial Owner(a) Beneficial Ownership Voting Securities(e)
Charles B. Johnson 24,005,311(b) 19.1%
Rupert H. Johnson, Jr. 19,136,575(c) 15.2%
R. Martin Wiskemann 11,763,166(d) 9.3%
(a) The addresses of Messrs. C. B. Johnson, R. H. Johnson, Jr. and
R. M. Wiskemann is: c/o Franklin Resources, Inc., 777 Mariners Island
Boulevard, San Mateo, CA 94404 U.S.A.
(b) Includes 21,502,615 shares held directly and 2,106,837 shares
held in an IRA account for which Mr. C. B. Johnson holds sole voting
and investment power. Also includes 3,726 shares which represent a
pro-rata number of shares equivalent to Mr. Johnson's percentage of
ownership of the holdings of the Franklin Resources, Inc. Profit
Sharing Plan (the "Profit Sharing Plan") as of September 30, 1997. Mr.
Johnson disclaims any beneficial ownership of such shares. Also
includes 392,133 shares of which Mr. C. B. Johnson disclaims beneficial
ownership, held by a private foundation of which Mr. C. B. Johnson is a
trustee. Does not include 1,590 not yet issued restricted shares
granted under the Company's Universal Stock Plan (the "Stock Plan") as
of October 1, 1997 and pursuant to the Company's Annual Incentive
Compensation Plan (the "Incentive Plan") as described in the Summary
Compensation Table below. Upon issuance, Mr. C. B. Johnson is entitled
to receive dividends and vote such 1,590 restricted shares; however,
such shares are still subject to vesting requirements.
(c) Includes 17,867,203 shares held directly and 1,102,622 shares
held in an IRA account for which Mr. R. H. Johnson, Jr. holds sole
voting and investment power. Also includes a total of 12,034 shares of
unvested restricted stock granted in 1995 and 1996 under the Stock
Plan and pursuant to the Incentive Plan which may be voted by Mr.
Johnson. Also includes 3,113 shares which represent a pro-rata number
of shares equivalent to Mr. Johnson's percentage of ownership of the
holdings of the Profit Sharing Plan as of September 30, 1997. Mr.
Johnson disclaims any beneficial ownership of such shares. Also
includes 149,917 shares of which Mr. R. H. Johnson, Jr. disclaims
beneficial ownership, held by a private foundation of which Mr. R. H.
Johnson, Jr. is a trustee. Also includes 1,686 shares held by a member
of Mr. R. H. Johnson, Jr.'s immediate family, of which Mr. R. H.
Johnson, Jr. disclaims beneficial ownership. Does not include 8,905 not
yet issued restricted shares, granted under the Stock Plan as of
October 1, 1997 and pursuant to the Incentive Plan as described in the
Summary Compensation Table below. Upon issuance, Mr. R. H. Johnson,
Jr. is entitled to receive dividends and vote such 8,905 restricted
shares; however, such shares are still subject to vesting requirements.
(d) Includes 11,176,838 shares held directly and 552,840 shares held in an
IRA account for which Mr. Wiskemann holds sole voting and investment power. Also
includes 33,448 shares of which Mr. Wiskemann disclaims beneficial ownership,
held by a private foundation of which Mr. Wiskemann is a trustee.
(e) Percentages are calculated based upon 126,026,610 shares issued and
outstanding on December 1, 1997 and do not include any restricted shares not yet
issued as of December 1, 1997 under incentive compensation arrangements
described above and in the Summary Compensation Table below.
SECURITY OWNERSHIP OF MANAGEMENT
The following information with respect to the outstanding shares of Common
Stock beneficially owned by each director, each executive officer named in the
Summary Compensation Table, each nominee for director and all directors,
nominees and executive officers as a group, is furnished as of December 1, 1997:
Amount and
Nature of
Beneficial Ownership(a) Percent of Class(a)
Name
Harmon E. Burns 1,572,626(b) 1.3%
Martin L. Flanagan 293,767(c) - %(i)
F. Warren Hellman 82,459(d) - %(i)
Charles B. Johnson 24,005,311(e) 19.1%
Charles E. Johnson 375,389(f) - %(i)
Rupert H. Johnson, Jr. 19,136,575(g) 15.2%
Harry O. Kline 0 - %(i)
James A. McCarthy 1,500 - %(i)
Peter M. Sacerdote 7,500 - %(i)
Louis E. Woodworth 1,057,464(h) - %(i)
Directors and Executive
Officers as a Group
(consisting of 19 persons) 47,249,571 37.49%(a)
(a) Does not include an aggregate of 66,999 not yet issued restricted shares,
granted as of October 1, 1997 to the executive officers of the Company under the
Stock Plan and pursuant to the Incentive Plan. Upon issuance, all restricted
stockholders have the right to vote and receive dividends on all restricted
shares. Does not include beneficial ownership of 11,763,166 shares by R. Martin
Wiskemann, a principal stockholder of the Company (but not an executive officer)
and a director and officer of certain subsidiaries of the Company.
(b) Includes 1,133,856 shares held directly and 375,000 shares held in an IRA
account for which Mr. Burns holds sole voting and investment power. Also
includes a total of 12,024 shares of unvested restricted stock granted in 1995
and 1996 under the Stock Plan. Also includes 48,999 shares of which Mr. Burns
disclaims beneficial ownership, held by a private foundation of which Mr. Burns
is a trustee. Also includes 2,747 shares which represent a pro-rata number of
shares equivalent to Mr. Burns' percentage of ownership of the holdings of the
Profit Sharing Plan, as of September 30, 1997. Mr. Burns disclaims any
beneficial ownership of such shares. Does not include 8,905 not yet issued
restricted shares granted under the Stock Plan as of October 1, 1997 and
pursuant to the Incentive Plan as described in the Summary Compensation Table
below.
(c) Includes 277,785 shares held directly for which Mr. Flanagan holds sole
voting and investment power. Also includes a total of 16,151 shares of
restricted stock granted in 1995 and 1996 under the Stock Plan. Also includes
231 shares which represent a pro-rata number of shares equivalent to Mr.
Flanagan's percentage of ownership of the holdings of the Profit Sharing Plan,
as of September 30, 1997. Mr. Flanagan disclaims any beneficial ownership of
such shares. Does not include 10,103 not yet issued restricted shares granted
under the Stock Plan as of October 1, 1997 and pursuant to the Incentive Plan as
described in the Summary Compensation Table below.
(d) Includes 76,545 shares held by a limited partnership, of which Mr.
Hellman disclaims beneficial ownership, and 5,914 shares held in a revocable
trust.
(e) See footnote (b) under "Voting Securities".
(f) Includes 358,815 shares not subject to vesting limitations for
which Mr. C. E. Johnson holds sole voting and investment power. Also
includes a total of 16,151 shares of restricted stock granted in 1995
and 1996 under the Stock Plan. Also includes 423 shares held by a
member of Mr. C. E. Johnson's immediate family, of which Mr. C. E.
Johnson disclaims beneficial ownership. Does not include 10,103 not
yet issued restricted shares granted under the Stock Plan as of October
1, 1997 and pursuant to the Incentive Plan as described in the Summary
Compensation Table below.
(g) See footnote (c) under "Voting Securities".
(h) Includes 553,420 shares held directly and 391,544 shares held in an IRA
account for which Mr. Woodworth holds sole voting and investment power. Also
includes 112,500 shares held by a member of Mr. Woodworth's immediate family, of
which he disclaims beneficial ownership.
(i) Represents less than 1% of class.
PROPOSAL 1: ELECTION OF DIRECTORS
The following nine (9) persons have been nominated for election as directors
of the Company to serve until the next Annual Meeting of Stockholders or until
their successors are elected and shall qualify. Unless authority to do so is
withheld, the persons named as proxies intend to vote in favor of the election
of said nominees. The voting requirements for approval of this proposal are more
particularly described under "Voting Securities" elsewhere herein. The
information below is given as of December 1, 1997.
Director
Principal Occupation During Since
Name Age Last Five Years
Charles B. Johnson 64 President, Chief Executive Officer 1969
and Director of the Company;
Chairman and Director, Franklin
Advisers, Inc. and
Franklin/Templeton Distributors,
Inc.; Director, Templeton
Worldwide, Inc., Franklin Bank,
Franklin/Templeton Investor
Services, Inc., Franklin Mutual
Advisers, Inc. and General Host
Corporation; officer and/or
director, as the case may be, of
most other principal domestic
subsidiaries of the Company;
officer and/or director or trustee,
as the case may be, of 54 of the
investment companies in the
Franklin Templeton Group of Funds.
Rupert H. Johnson, Jr. 57 Executive Vice President and 1969
Director of the Company; Director
and President, Franklin Advisers,
Inc.; Director and Executive Vice
President, Franklin/Templeton
Distributors, Inc.; Director,
Franklin/Templeton Investor
Services, Inc., Templeton
Worldwide, Inc., Franklin Bank and
Franklin Mutual Advisers, Inc.;
officer and/or director or trustee,
as the case may be, of most other
principal domestic subsidiaries of
the Company; and of 58 of the
investment companies in the
Franklin Templeton Group of Funds.
Louis E. Woodworth 64 Private investor. President, Alpine 1981
Corp. (private investments).
Harry O. Kline 70 Vice President and Registration 1990
Sales Manager of Franklin/Templeton
Distributors, Inc. from 1980 until
becoming Director in 1990. Over 45
years experience in the mutual fund
industry.
Harmon E. Burns 52 Executive Vice President, Director 1991
and Secretary of the Company;
Executive Vice President and
Director of Franklin/Templeton
Distributors, Inc., and Franklin
Templeton Services, Inc.; Executive
Vice President of Franklin
Advisers, Inc.; Director, Templeton
Worldwide, Inc., Franklin/Templeton
Investor Services, Inc., and
Franklin Mutual Advisers, Inc.;
officer and/or director, as the
case may be, of most other
principal domestic subsidiaries of
the Company; officer and/or
director or trustee, as the case
may be, of 58 of the investment
companies in the Franklin Templeton
Group of Funds.
F. Warren Hellman 63 Partner, Hellman & Friedman 1992
(private equity investments);
Director and General Partner,
Matrix Partners; Director, APL,
Ltd., Levi Strauss & Co., Il
Fornaio (America) Corporation and
MobileMedia Corp.
Peter M. Sacerdote 60 Limited Partner and Chairman of the 1993
Investment Committee of the Goldman
Sachs Group, L.P. (investment
banking) and G.S. Capital Partner,
L.P. (merchant banking fund).
Director, Qualcomm, Inc. and AMF
Bowling, Inc. Formerly, General
Partner of Goldman Sachs Group,
L.P.
Charles E. Johnson 41 Senior Vice President and Director 1993
of the Company; President and
Director, Templeton Worldwide, Inc.
and Franklin Mutual Advisers, Inc.;
President, CEO and Director,
Franklin Institutional Services
Corporation; Senior Vice President,
Franklin/Templeton Distributors
Inc.; Chairman, Director, Franklin
Agency, Inc.; Vice President,
Franklin Advisers, Inc.; Chairman
and Director, Templeton Investment
Counsel, Inc.; officer and/or
director, as the case may be, of
other domestic and international
subsidiaries of the Company;
officer and/or director or trustee,
as the case may be, of 36 of the
investment companies in the
Franklin Templeton Group of Funds.
James A. McCarthy 62 Private investor. From 1993-95, 1997
Chairman of Merrill Lynch & Co.
("Merrill") Investor Client
Coverage Groups; formerly, Senior
Vice President of Merrill and
Director, Global Institutional
Sales. Total of 33 years experience
with Merrill.
Franklin Advisers, Inc., Franklin/Templeton Distributors, Inc.,
Franklin Bank, Franklin Agency, Inc., Franklin Institutional Services
Corporation, Franklin/Templeton Investor Services, Inc., Franklin
Mutual Advisers, Inc. and Templeton Worldwide, Inc. are all
wholly-owned subsidiaries of the Company.
Mr. Hellman is a principal in Hellman & Friedman ("H & F"). In connection
with the Company's 1992 acquisition (the "Templeton Acquisition") of the assets
of Templeton, Galbraith & Hansberger, Ltd. ("Templeton"), Hellman & Friedman
Capital Partners II, L.P., an affiliate of H & F, received the right to nominate
Mr. Hellman for election as a member of the Board of Directors. The Company has
agreed, to the extent permitted by law, to use its best efforts to cause Mr.
Hellman to become nominated and to vote all shares for which the Company's
management holds proxies or is otherwise entitled to vote in favor of the
election of Mr. Hellman. This obligation remains in effect for so long as the
entities affiliated with H & F own Common Stock with a value of $50,000,000,
which they presently do.
Charles B. Johnson and Rupert H. Johnson, Jr. are brothers. Peter M.
Sacerdote is a brother-in-law of Charles B. Johnson and Rupert H.
Johnson, Jr. Charles E. Johnson is the son of Charles B. Johnson and the
nephew of Rupert H. Johnson, Jr. and Peter M. Sacerdote.
During the fiscal year ended September 30, 1997, directors who are not
officers of the Company received a standard fee of $7,500 per quarter, plus
$3,000 per meeting attended. An additional fee of $1,500 per Committee meeting
attended is paid to directors who serve on committees of the Board. Directors
and Directors Emeritus (as hereinafter defined) of the Company who are retired
from other employment and not otherwise eligible for group health coverage under
the group health plan of the Company or any other corporation by whom they are
or were employed, are entitled to receive reimbursement by the Company of the
cost of health insurance coverage comparable to that provided to employees of
the Company. During the fiscal year ended September 30, 1997, Judson R.
Grosvenor, then a director, and Louis E. Woodworth, a director, were reimbursed
$1,132 and $2,594 respectively, for such expenses.
The Company has established a policy permitting the deferral of payment of
directors' fees and treatment of such deferral amounts as hypothetical
investments in the Common Stock of the Company on the dates such fees would
otherwise be payable to a director. Such deferral may be terminated by either
the Company or a director upon ninety (90) days notice. Upon termination of such
deferral, the Company is obligated to pay a director an amount equal to such
hypothetical investment in the Company's Common Stock, including reinvestment of
dividends, based upon the closing price of such stock on the New York Stock
Exchange Composite Tape (the "NYSE") on the date of such termination. During the
1997 fiscal year, Louis E. Woodworth elected to defer directors' fees. As of
September 30, 1997, the amount accrued for Mr. Woodworth's benefit pursuant to
such deferral policy based upon the 1997 Price (as hereinafter defined) of the
Company's Common Stock was $385,521.53.
The Board of Directors has also adopted a policy whereby, upon reaching the
age of 75, directors who are not also officers or employees of the Company will
retire and not stand for re-election and will become eligible to serve as a
Director Emeritus, without voting authority. Each Director Emeritus presently
will receive such compensation and benefits from the Company as is established
by the Board of Directors and will be available to provide such services to the
Board of Directors as may be mutually determined. Each Director Emeritus
receives compensation equal to the compensation paid to a director who attends
each meeting of the Board. Pursuant to this policy, Judson R. Grosvenor retired
as a director on January 23, 1997. Since that time Mr. Grosvenor has served as a
Director Emeritus and has received such compensation and benefits, in addition
to the reimbursement received during his term as a director disclosed above.
Section 16(a) Beneficial Ownership Reporting Compliance
During the fiscal year ended September 30, 1997, the following persons
inadvertently failed to file transaction reports in a timely manner in
accordance with Section 16 of the Securities Exchange Act of 1934 with respect
to the following transactions: Jennifer J. Bolt, a Vice President, a Form 5
reporting the sale of 546 shares by a family member during June 1995, for which
Ms. Bolt disclaims beneficial ownership, the acquisition by gift of 2,790 shares
(558 of which were gifted to Ms. Bolt and 2,232 of which were gifted to family
members and for which Ms. Bolt disclaims beneficial ownership), during July
1996, a Form 4 reporting the sale of 1,509 shares in October 1996, and a Form 4
reporting a sale of 225 shares in August 1996 by a family member for which Ms.
Bolt disclaims beneficial ownership; Charles E. Johnson, a director and Senior
Vice President, a Form 5 reporting the acquisition of 558 shares by gift in July
1996 and the sale of 2,802 shares in October 1996; Gregory E. Johnson, a Vice
President, a Form 5 reporting the acquisition by gift of 2,232 shares (558 of
which were gifted to Mr. Johnson and 1,674 of which were gifted to family
members and for which Mr. Johnson disclaims beneficial ownership), in July 1996,
a Form 4 reporting the sale of 1,603 shares in October 1996, and a Form 4
reporting the sale of 265 shares in October 1996 by a family member for which
Mr. Johnson disclaims beneficial ownership; and Kenneth A. Lewis, a Vice
President, a Form 4 reporting the sale of 531 shares in October 1996.
Board and Committee Meetings
The Board of Directors held five (5) meetings (exclusive of committee
meetings) during the fiscal year ended September 30, 1997. With the exception of
F. Warren Hellman, each director attended at least seventy-five percent (75%) of
the aggregate of the total number of Board meetings and the total number for
committee meetings of committees of which such director is a member held during
such period. The Board of Directors has established an Audit Committee and a
Compensation Committee. The Board does not have a nominating committee.
The Audit Committee of the Board of Directors consisted of Mr. Woodworth
(Chairman) and Messrs. Grosvenor (until January 23, 1997) and Kline. Upon Mr.
Grosvenor's retirement from the Board, Mr. James McCarthy was elected as a
director and subsequently as a member of the Audit Committee. Each of Messrs.
Woodworth, Grosvenor, Kline and McCarthy is a director or Director Emeritus who
is not employed by the Company. The Audit Committee reviews the Company's
internal accounting controls and helps to ensure the integrity of the Company's
financial statements. The Committee meets with the Company's independent
accountants and reviews the scope of their audit, report and recommendations.
The Audit Committee also recommends to the Board of Directors the selection of
the Company's independent accountants. The Committee met two (2) times during
the fiscal year.
The Compensation Committee of the Board of Directors consists of Mr. Hellman
(Chairman) and Messrs. Sacerdote and Woodworth. The Compensation Committee was
established to review and set the compensation of the Chief Executive Officer,
to determine the general policies and guidelines pursuant to which the
compensation of the other executive officers is made and to perform other duties
as assigned from time to time by the Board. The Compensation Committee also
administers the Incentive Plan and the Stock Plan. The Compensation Committee
met four (4) times during the fiscal year.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Company's compensation program for executive officers (including the
Chief Executive Officer) consists primarily of salary and annual incentive
bonuses based upon individual and Company performance. A portion of the bonuses
may be paid in the form of shares of restricted stock which are vested over a
several year period. For fiscal 1997, such shares were granted with vesting in
equal installments over a three (3) year period.
Executive officers also participate in a combined profit sharing and 401(k)
plan (the "Profit Sharing Plan") and are entitled to receive medical, life and
disability insurance coverage and other corporate benefits generally available
to most employees of the Company. Contributions to the Company's Profit Sharing
Plan are determined by the Board, which takes into consideration the
profitability of the Company.
In January 1997, the salary of the Chief Executive Officer, Mr.
Charles B. Johnson, was increased by five percent (5%). The Committee
has determined that Mr. C. B. Johnson will continue to participate in
the Incentive Plan. Bonuses paid to Mr. C. B. Johnson under this plan
depend upon both Company performance and Mr. C. B. Johnson's
performance as determined annually by the Compensation Committee. The
Compensation Committee has also taken into account Mr. Johnson's
position as a principal stockholder of the Company in determining his
compensation and in the award of a bonus to him primarily in cash.
The salaries of the two executive vice presidents, Rupert H. Johnson, Jr.,
and Harmon E. Burns were determined by the Chief Executive Officer in
consultation with such individuals. Such salaries were increased five percent
(5%) effective January 1, 1997. The salary of Martin L. Flanagan, the Chief
Financial Officer, was determined by the Chief Executive Officer and was
increased five percent (5%) in January 1997. Effective January 1, 1997, the
salary of Charles E. Johnson was increased by five percent (5%) and was
determined by the Chief Executive Officer in consultation with the Committee.
Bonus payments to executive officers, including the Chief Executive Officer,
are determined by the Compensation Committee under the Incentive Plan. As a
general matter, the size of the pool available for such bonus payments is a
percentage of pre-tax operating income of the Company, which consists of net
operating income, exclusive of passive income and calculated before interest,
taxes, and extraordinary items and after accrual of awards under the Incentive
Plan. In determining the percentage, the Compensation Committee considers a
variety of factors including the performance of the Company's stock as compared
to the indices set forth in the performance graph included in this Proxy
Statement; the increase in book value of the Company's Common Stock; the more
than 342% increase of the Company's net income from the fiscal year ended
September 30, 1991 to the fiscal year ended September 30, 1997; the approximate
731% increase in the market capitalization of the Company from fiscal 1991 to
fiscal 1997; and the general stability of the Company's profit margin since the
Templeton Acquisition and acquisition of the assets of Heine Securities
Corporation in November 1996 (the "Mutual Series Acquisition"). The Committee
considered a number of factors, but no specific weighting was given to any
particular factor in determining the percentage for the pool. The Compensation
Committee also considered the continuing changes in the Company's financial and
business structure as a result of the Templeton and Mutual Series Acquisitions
and the successful management of such changes.
In its review of compensation, and, in particular, in determining the amount
and form of actual awards under the Incentive Plan for the Chief Executive
Officer and the other executive officers, the Compensation Committee considered
amounts paid to executive officers in prior years as salary, bonus and other
compensation, the Company's overall performance during the prior five (5) year
period, and its future objectives and challenges. Although the Committee
considered a number of different individual and Company performance factors, no
specific weighting was given to any such factor.
The Compensation Committee believes that the opportunity to earn awards under
the Incentive Plan motivates executive officers to achieve results. Moreover,
the payment of incentive compensation in the form of stock of the Company aligns
the interests of the management of the Company with those of its stockholders
and further encourages them to focus on the long range growth and development of
the Company.
Section 162(m) of the Internal Revenue Code, which limits the deductibility
by the Company of certain executive compensation for federal income tax
purposes, applied for the first time to the Company in the fiscal year ended
September 30, 1995. The Committee recognized the potential effects of Section
162(m) on the Company in determining incentive compensation awards for the year
ended September 30, 1997, but believed that the compensation awards granted for
such fiscal year were commensurate with the performance of the covered employees
and were necessary and appropriate to meet competitive requirements even if such
compensation exceeded the deductibility limits of Section 162(m).
Respectfully Submitted:
Compensation Committee
F. Warren Hellman, Chairman
Peter M. Sacerdote
Louis E. Woodworth
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended September 30, 1997, Goldman Sachs & Co., the
parent company of which Mr. Sacerdote is a limited partner ("Goldman"), served
as an agent for the sale of notes under the Company's medium-term note and
commercial paper programs and received payments in connection with the sale of
such commercial paper. From time to time, Goldman has also performed other
services for the Company. Fees paid to such investment banking firm did not
exceed five percent (5%) of such firm's consolidated gross revenues for such
firm's last full completed fiscal year.
As set forth in more detail under "Certain Relationships and Related
Transactions", the Company entered into a transaction on December 13,
1996 with entities affiliated with Mr. F. Warren Hellman.
Employment Contracts
Mr. Charles B. Johnson has an employment contract with the Company pursuant
to which the Company is obligated, in the event of Mr. Johnson's death or
permanent disability, to pay one year's salary. Under the contract, Mr. Johnson
is employed as the President and Chief Executive Officer at a salary determined
from time to time by the Board of Directors, which has assigned the review of
Mr. Johnson's compensation arrangements to the Compensation Committee.
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLES AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Restricted
Name and Principal Stock All Other
Position Year Salary Bonus Awards(f) Compensation
<S> <C> <C> <C> <C> <C>
Charles B. Johnson, 1997 $571,922 $ 460,000 $ 149,977(c) $ 75,943(a)
President, Chief 1996 $544,688 $ 400,000 $ 21,059(b)
Executive Officer 1995 $518,750 $ 260,000 $ 19,714(b)
Rupert H. Johnson, Jr., 1997 $514,730 $ 460,000 $ 839,964(c) $ 20,292(b)
Executive Vice 1996 $490,219 $ 400,000 $ 599,997(d) $ 21,059(b)
President 1995 $466,875 $ 226,000 $ 338,997(e) $ 19,714(b)
Harmon E. Burns, 1997 $514,730 $ 460,000 $ 839,964(c) $ 21,292(b)
Executive Vice 1996 $490,219 $ 400,000 $ 599,997(d) $ 22,059(b)
President 1995 $466,875 $ 225,200 $ 337,811(e) $ 19,714(b)
Martin L. Flanagan, 1997 $743,499 $ 552,000 $ 952,965(c) $ 20,292(b)
Senior Vice President, 1996 $716,625 $1,480,000 $ 719,983(d) $ 21,059(b)
Chief Financial Officer 1995 $682,500 $ 400,000 $ 599,989(e) $ 19,714(b)
Charles E. Johnson, 1997 $743,499 $ 552,000 $ 952,965(c) $ 21,292(b)
Senior Vice President 1996 $686,094 $ 480,000 $ 719,983(d) $ 21,547(b)
1995 $549,375 $ 400,000 $2,499,989(e) $ 22,500(b)
</TABLE>
<PAGE>
(a) Includes $20,292 of Company contributions to the Profit Sharing Plan
for Mr. C. B. Johnson for the fiscal year ended September 30, 1997. Also
includes $48,159 representing personal use of Company aircraft by Mr. C. B.
Johnson valued using the Standard Industry Fare formula provided for by Internal
Revenue Code regulations.
(b) Represents Company contributions to the Profit Sharing Plan for Mr. C.
B. Johnson for 1995 and 1996, and for Mr. R. H. Johnson, Jr., Mr. H. E. Burns
and Mr. M. L. Flanagan for 1995, 1996 and 1997. For Mr. C. E. Johnson,
represents Company contributions to the Company's Profit Sharing Plan for 1997,
a combination of contributions to a profit sharing plan of a subsidiary (the
"Subsidiary Plan") and the Profit Sharing Plan for 1996, and for 1995 represents
contributions to the Subsidiary Plan.
(c) Represents the value of shares of to-be-issued restricted stock of the
Company granted as of October 1, 1997 by the Compensation Committee for the
fiscal year ended September 30, 1997 in the following amounts: Mr. R. H.
Johnson, Jr., 8,905; Mr. H. E. Burns, 8,905; Mr. M. L. Flanagan, 10,103; and Mr.
C. E. Johnson, 10,103. Such shares vest in approximately equal one-third (1/3)
increments on September 30, 1998, September 30, 1999 and September 29, 2000.
Such shares were granted at a grant price of $94.3250, representing the average
of the closing price of the Company's Common Stock on the NYSE on September 30,
1997 and the five (5) trading days before and after such date.
(d) Represents the value of shares of restricted stock vested or vesting in
approximately equal installments on each of September 30, 1997, September 30,
1998, and September 30, 1999, granted by the Compensation Committee as of
October 1, 1996 in the following amounts: Mr. R. H. Johnson, Jr., 13,547; Mr. H.
E. Burns, 13,547; Mr. M. L. Flanagan, 16,256; and Mr. C. E. Johnson, 16,256.
Such shares vest in approximately equal one-third (1/3) increments on September
30, 1997, September 30, 1998 and September 30, 1999. Such shares were granted at
a grant price of $44.2917 representing the average of the closing price of the
Company's Common Stock on the NYSE on September 30, 1996 and the five (5)
trading days before and after such date.
(e) Represents the value of shares of restricted stock vested or vesting in
approximately equal installments on each of September 30, 1996, September 30,
1997, and September 30, 1998, granted by the Compensation Committee as of
October 1, 1995 in the following amounts: Mr. R. H. Johnson, Jr., 9,009; Mr. H.
E. Burns, 8,978; Mr. M. L. Flanagan, 15,945; and Mr. C. E. Johnson, 15,945. Such
shares were granted at a grant price of $37.6287, representing the average of
the closing price on the NYSE on September 29, 1995 and the five (5) trading
days before and after such date. For Mr. C. E. Johnson, also represents the
value of a grant of 75,000 shares of Company stock on March 22, 1995 at $25.3334
per share, representing the average of the closing price of the Company's Common
Stock on the NYSE on September 30, 1995 and the five (5) trading days before and
after such date.
(f) Upon issuance, restricted shares have the same rights as other shares
of the Company's Common Stock. Based upon the closing price on the NYSE on
September 30, 1997 of $93.125 (the "1997 Price"), the value of the issued and
to-be-issued unvested restricted stock holdings of the persons listed in the
Summary Compensation Table were as follows: Mr. C. B. Johnson, $148,068.75; Mr.
R. H. Johnson, Jr., $1,949,944.38; Mr. H. E. Burns, $1,949,013.13; Mr. M. L.
Flanagan, $2,444,903.75; and Mr. C. E. Johnson, $2,444,903.75.
PERFORMANCE GRAPH
The following performance graph compares the performance of an investment
in the Company's Common Stock for the last five (5) fiscal years to that of the
Standard & Poor's 500 Composite Stock Price Index ("R") and to the Standard &
Poor's MidCap 400 Index ("R"). The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 on September
30, 1992 and that all dividends were reinvested. Many companies with principal
lines of business that might be deemed to be in competition with the Company are
not publicly-traded. Although there are some publicly traded companies that have
lines of business comparable to the Company, such lines of business are not
generally the principal line of business for such companies and, therefore, a
comparison of stock performance or a construction of a peer group index is not
appropriate. Therefore, the Company has chosen the Standard & Poor's MidCap 400,
an index of which it is part, as an index of issuers with similar market
capitalization for comparative purposes.
<PAGE>
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Return
Franklin Resources, Inc., S&P 500 and S&P Midcap
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FY92
Franklin
Resources: $100 $112 $130 $121 $136 $128 $133 $120 $132 $136 $149 $158
S&P 500: $100 $100 $104 $105 $106 $107 $110 $107 $110 $110 $110 $114
S&P MidCap: $100 $102 $108 $112 $113 $112 $115 $112 $118 $118 $118 $123
FY93
Franklin
Resources: $171 $166 $154 $160 $173 $154 $142 $132 $129 $130 $129 $138
S&P 500: $113 $115 $114 $116 $119 $116 $111 $113 $114 $112 $115 $120
S&P MidCap: $124 $124 $122 $127 $130 $128 $123 $123 $122 $118 $122 $128
FY94
Franklin
Resources: $131 $143 $133 $125 $119 $136 $137 $142 $154 $157 $176 $194
S&P 500: $117 $120 $115 $117 $120 $125 $129 $132 $137 $141 $145 $146
S&P MidCap: $126 $127 $122 $123 $124 $131 $133 $136 $139 $144 $152 $155
FY95
Franklin
Resources: $204 $179 $187 $178 $190 $204 $202 $203 $210 $217 $199 $211
S&P 500: $152 $151 $158 $161 $167 $168 $170 $172 $177 $177 $170 $173
S&P MidCap: $159 $154 $161 $161 $163 $169 $171 $176 $178 $176 $164 $173
FY96
Franklin
Resources: $236 $251 $255 $244 $291 $313 $273 $317 $347 $389 $455 $415
S&P 500: $183 $188 $202 $198 $211 $212 $203 $216 $229 $239 $258 $243
S&P MidCap: $181 $181 $191 $192 $199 $197 $189 $194 $211 $217 $238 $238
FY97
Franklin
Resources: $500
S&P 500: $257
S&P MidCap: $251
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Templeton Acquisition, Templeton loaned Mr. Flanagan monies
secured by a mortgage on Mr. Flanagan's then residence in Nassau, Bahamas. Such
loan is still outstanding to a subsidiary of the Company and bears interest at
the rate of 5.98%. The largest aggregate amount outstanding during the fiscal
year was $483,283. As of December 1, 1997, $462,032 was outstanding under the
loan.
In June 1995, prior to the time that Mr. Kenneth A. Lewis became an
executive officer of the Company, in connection with his relocation from Florida
to California, the Company made two loans to Mr. Lewis, one of which is secured
by a mortgage on his residence (the "Mortgage Loan"). The largest amount
outstanding on the Mortgage Loan during the 1997 fiscal year, which loan bears
interest at the rate of 5%, was $510,357. The largest amount outstanding on the
second loan during the 1997 fiscal year, which loan is non-interest bearing, was
$50,000. As of December 1, 1997, $500,825 was outstanding under the Mortgage
Loan and $25,000 was outstanding under the second loan. The second loan was
forgiven and is forgivable by the Company in equal installments over a three (3)
year period on the first three anniversary dates of Mr. Lewis' transfer to
California.
In October 1997, prior to the time that Mr. Charles R. Sims became an
executive officer of the Company, in connection with his relocation from Canada
to California, the Company made two loans to Mr. Sims, one of which is secured
by a mortgage on his residence and bears interest at the rate of 5% (the "Sims
Mortgage"). Both loans were made after the end of the 1997 fiscal year of the
Company. The original amount outstanding on the Sims Mortgage was $650,000 and
the original amount outstanding on the second loan was $85,000. As of December
1, 1997, $649,610 was outstanding on the Sims Mortgage and $85,000 was
outstanding on the second loan, which is non-interest bearing. The second loan
is forgivable by the Company in equal installments over a three (3) year period
on the first three anniversary dates of Mr. Sims' transfer to California.
During the fiscal year, loans were also outstanding to certain executive
officers of the Company from Franklin Bank, a subsidiary of the Company. Such
loans were made 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 and did not involve more than the normal risk of
collectibility or present other unfavorable features. In addition, certain
executive officers were holders of credit cards issued by Franklin Bank upon
substantially the same terms as those prevailing at the time for comparable
cards issued to other Franklin Bank customers.
In a series of three transactions between the dates of February 10, 1997
and September 8, 1997 the Company purchased a total of 70,000 shares of the
Company's Common Stock from the IRA account of Mr. Charles B. Johnson, an
officer, director and principal stockholder of the Company, at an average
weighted price of $70.3393, representing the closing prices of such Common Stock
on the NYSE on the dates of such purchases. Such transactions were made in
connection with the Company's previously announced stock repurchase program as
approved by the Company's Board of Directors. The purchases from Mr. Johnson
were ratified or approved in advance by the Company's Board of Directors with
Mr. Johnson abstaining from voting on such ratification or approval.
On October 1, 1997, the Company purchased 5,960 shares of the Company's
Common Stock from Mr. Charles E. Johnson, an officer and director of the
Company, at a price of $93.7365 per share, representing the closing price of
such Common Stock on the NYSE on that date. On October 1, 1997, the Company
purchased shares of the Company's Common Stock from the following officers of
the Company, in the following amounts: Mr. Gregory E. Johnson, 3,508; Ms.
Jennifer J. Bolt, 2,258; Mr. Leslie M. Kratter, 1,956; Ms. Deborah R. Gatzek,
2,946 and Ms. Donna S. Ikeda, 670, at a price of $93.7365 per share,
representing the closing price of such Common Stock on the NYSE on that date.
The purchases from all of the above-mentioned officers and directors were
ratified by the Company's Board of Directors. Mr. Charles E. Johnson abstained
from voting on the ratification of his sale to the Company.
Mr. F. Warren Hellman, a director, is a principal in Hellman & Friedman and
is affiliated with a group that purchased from the Company, in connection with
the Templeton Acquisition, $150 million of certain debentures of a wholly-owned
subsidiary of the Company with attached option rights to acquire Common Stock of
the Company. On December 13, 1996, the Company repurchased approximately $75
million of such debentures and associated option rights for approximately $165.8
million. The holders of the remaining $75 million of debentures exercised their
associated option rights to obtain shares of the Company's Common Stock, some of
which are controlled by Hellman & Friedman Investors, Inc. ("HFII"). Mr. F. W.
Hellman is a director and officer of HFII. The related obligation of the Company
to vote in favor of Mr. F. W. Hellman as a director remains in effect as
described above.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Coopers & Lybrand
L.L.P. ("C&L") as independent accountants to audit the books and accounts of the
Company for its current fiscal year ending September 30, 1998. C&L has no direct
or indirect financial interest in the Company. During the fiscal year ended
September 30, 1997, the audit services provided by C&L consisted of the
rendering of opinions on the financial statements of the Company and its
subsidiaries. C&L also rendered opinions on the financial statements of open and
closed-end investment companies managed and advised by subsidiaries of the
Company. In addition, C&L provides tax consulting services for the Company and
its management consulting group has provided advice and assistance on several
information systems initiatives. The Board of Directors recommends ratification
of their appointment. It is the intention of the persons named as proxy holders
to vote for such ratification. The voting requirements for approval of this
proposal are more particularly described under "Voting Securities" elsewhere
herein. It is not expected that a representative of the accountants will be
present at the Annual Meeting.
PROPOSAL 3: ADOPTION OF EMPLOYEE STOCK INVESTMENT PLAN
On December 12, 1997, the Board of Directors of the Company adopted the
1998 Employee Stock Investment Plan (the "ESIP") in the form attached as
Appendix A and approved the issuance from time-to-time of up to 2,000,000 shares
of the Company's Common Stock for purchases pursuant to the ESIP. The Board of
Directors recommends that the stockholders approve the adoption of the ESIP. The
proposed Employee Stock Investment Plan will give participating employees a
direct investment in the future success of the Company, align the interests of
those employees with those of the stockholders, and will allow such employees to
acquire an interest in the Company at a price lower than they would otherwise be
able to obtain in the open market. The ability of the Company to make matching
grants to participants in the plan allows the Company to award employees who
exhibit the motivation and commitment to make a long-term investment in the
Company.
The description set forth below is a summary only and is qualified in its
entirety by the terms of the attached ESIP which is incorporated herein by this
reference. The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is required to authorize
the ESIP. It is the intention of the persons named as proxy holders to vote for
the adoption of the ESIP.
The voting requirements for approval of this proposal are more particularly
described in the section of this Proxy Statement entitled "Voting Securities".
Capitalized terms not otherwise defined herein are used as set forth in the
ESIP. In the event that stockholder approval is not received, the ESIP will be
terminated.
Purpose. The ESIP is intended to provide a method for eligible employees of
the Company and Designated Parents or Subsidiaries ("Participants") to acquire a
proprietary interest in the Company through the purchase of shares of its Common
Stock by payroll deductions.
Shares Authorized. The ESIP authorizes the issuance in each of the two (2)
annual Accrual Periods (described below) of up to two thousand (2,000) shares of
Common Stock per Participant (subject to adjustment for capital changes)
pursuant to the exercise of non-transferable options granted to Participants.
Participation. Participants in the ESIP will, by a subscription agreement,
authorize a whole percentage payroll deduction between one percent (1%) and ten
percent (10%) of Compensation during consecutive twenty-four (24) month Purchase
Periods. Purchases will be made at the end of six (6) month Accrual Periods,
beginning on the later of February 1, 1998 or the Effective Date of the ESIP as
designated by the Plan Administrator. The initial Purchase Period will commence
on the Effective Date and end on July 31, 2000. The Plan Administrator has the
authority to change the length of any Purchase Period and the length of Accrual
Periods within any such Purchase Period subsequent to the initial Purchase
Period.
Purchase Discount. Participants will be granted a separate option for each
Purchase Period on an Enrollment Date, which option will be automatically
exercised in successive installments on the Exercise Dates ending within such
Purchase Period. In no event, however, may the Participant purchase Common Stock
in any one (1) calendar year having a Fair Market Value in excess of $25,000.
If, on the first day of any Accrual Period in a Purchase Period, the Fair Market
Value of the Common Stock is less than the Fair Market Value of the Common Stock
on the Enrollment Date of the Purchase Period, the Purchase Period will be
terminated automatically and the Participant will be enrolled automatically in a
new Purchase Period which has its first Accrual Period commencing on that date.
The Purchase Price under the ESIP will be equal to ninety percent (90%) of the
Fair Market Value of the Common Stock on the Enrollment Date or the Exercise
Date, whichever is lower. No interest will be paid on amounts deducted from an
employee's pay and used to purchase Common Stock under the ESIP.
Eligibility. Employees of the Company whose customary employment is at
least twenty (20) hours per week with the Company or a Designated Parent or
Subsidiary are eligible to participate in the ESIP. An employee may not be
granted an option under the ESIP if (1) after the granting of the option, such
employee would be deemed to own five percent (5%) or more of the combined voting
power or value of all classes of stock of the Company or (2) such employee is
subject to rules or laws of a foreign jurisdiction that prohibit or make
impractical the employee's participation in the ESIP. An Employee's rights under
the ESIP may not be assigned, transferred, pledged or otherwise disposed of,
except by will or the laws of descent and distribution. As of December 1, 1997,
approximately 6,000 employees would have been eligible to participate in the
ESIP.
Withdrawal. Participants may withdraw from the ESIP, in whole but not in
part, at any time by giving written notice fifteen (15) days prior to the
Exercise Date, in which event the Company will refund the entire balance of the
Participant's deductions during the Accrual Period. Withdrawal during an Accrual
Period will not prevent the Participant from participating in a later Purchase
Period.
Amendment and Termination. The Board of Directors of the Company may at any
time terminate or amend the Employee Stock Investment Plan. No such termination
may affect options previously granted, nor may an amendment make any change in
any option previously granted which adversely affects the rights of any
Participant. In addition, to the extent necessary to comply with securities and
tax laws, the Company will obtain stockholder approval of such termination or
such amendments. A participant's rights under the ESIP terminate upon
termination of such Participant's employment. Upon such termination, the Company
will return all monies in such Participant's account which have not yet been
used to purchase shares under the ESIP.
Matching Grants. The Company has the right, in its sole discretion to
provide matching grants to Participants of whole or partial shares in a uniform
and non-discriminatory manner upon such terms and conditions as are determined
from time to time by the Plan Administrator. While reserving its right to change
such determination at any time prior to or after the Effective Date of the ESIP,
the Plan Administrator has initially determined to provide a matching grant of
one-half (1/2) share for each share held for a Participant who holds shares
purchased under the ESIP for more than the Minimum Holding Period, (as described
in Federal Income Tax Consequences below).
Miscellaneous. The proceeds received by the Company from the sale of Common
Stock pursuant to the ESIP will be used for general corporate purposes.
Federal Income Tax Consequences. The following discussion summarizes
certain tax considerations for Participants and certain tax effects to the
Company, based upon the tax laws in effect as of December 1, 1997:
1. Amounts deducted from a Participant's pay under the ESIP are part of the
employee's regular compensation and remain subject to federal, state and
local income and social security withholding taxes. A Participant will not
recognize any additional income at the time such Participant elects to
participate in the ESIP, or purchases Common Stock under the ESIP.
2. If a Participant disposes of Common Stock purchased pursuant to the ESIP
within two (2) years after an Enrollment Date or within one (1) year of the
Exercise Date for such Common Stock (the "Minimum Holding Period"), the
Participant will recognize, for federal tax purposes, ordinary compensation
income at the time of disposition of the Common Stock in an amount equal to
the excess (if any) of the Fair Market Value of the Common Stock on the day
the Common Stock was purchased over the purchase price such Participant
paid for such Common Stock. This amount may be subject to withholding
taxes, including social security taxes. In addition, a Participant
generally will recognize a capital gain or loss in an amount equal to the
difference between the amount realized upon the sale of the stock and such
Participant's basis in the Common Stock (that is, the purchase price plus
the amount taxed as compensation income).
3. If a Participant disposes of Common Stock purchased pursuant to the ESIP at
any time after the Minimum Holding Period, the Participant will recognize,
for federal tax purposes, ordinary compensation income at the time of such
disposition in an amount equal to the lesser of (a) the excess (or zero if
there is no excess) of the Fair Market Value of the Common Stock at the
time of such disposition over the amount paid for the stock, or (b) 10% of
the Fair Market Value of the stock on the applicable Enrollment Date. In
addition, the Participant generally will recognize a capital gain or loss
in an amount equal to the difference between the amount realized upon the
disposition of the stock and such Participant's basis in the stock (that
is, the purchase price plus the amount, if any, taxed as compensation
income).
4. Although the amounts deducted from a Participant's pay under the ESIP
generally are tax-deductible business expenses of the Company, the Company
generally will not be allowed any additional deduction by reason of any
Participant's purchase of Common Stock under the ESIP. However, if a
Participant disposes of stock purchased pursuant to the ESIP within the
Minimum Holding Period, the Company should be entitled to a deduction in an
amount equal to the compensation income recognized by such Participant. If
a Participant disposes of Common Stock purchased under the ESIP after the
Minimum Holding Period, the Company will not receive any deduction for
federal income tax purposes with respect to such Common Stock. When a
Participant disposes of Common Stock after the Minimum Holding Period, the
Company still may be required to withhold taxes upon, and to pay employment
taxes with respect to compensation income recognized by the Participant in
connection with the ESIP.
5. To the extent that the Company exercises its rights under the ESIP to make
matching grants of Common Stock to Participants, the Fair Market Value of
the Common Stock on the date of such grants will be taxable to Participants
as ordinary compensation income and will be subject to withholding taxes.
The Company generally will receive a tax deduction for federal income tax
purposes in the amount of compensation income recognized by Participants
with respect to such matching grants.
SHAREHOLDER PROPOSALS
Any shareholder intending to present any proposal for consideration at the
Company's next Annual Meeting must, in addition to meeting other applicable
requirements, mail such proposal to the Company so that it is received at the
Company's executive offices no later than August 21, 1998 and in such form as is
required under the rules and regulations promulgated by the Securities and
Exchange Commission.
OTHER MATTERS
So far as the management of the Company is aware, only the aforementioned
matters will be acted upon at the Annual Meeting of Stockholders. If any other
matters properly come before the Annual Meeting, it is intended that the
accompanying proxy may be voted on such matters in accordance with the views of
management.
IF YOU CANNOT PERSONALLY ATTEND THE ANNUAL MEETING, PROMPT EXECUTION AND
RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE>
FRANKLIN RESOURCES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint Charles B. Johnson,
Harmon E. Burns, Deborah R. Gatzek and Leslie M. Kratter or any of them, the
attorneys and proxies of the undersigned with full power of substitution and
appointment, collectively and as individuals, to vote all the undersigned's
shares of Common Stock of Franklin Resources, Inc. (the "Company") at the Annual
Meeting of Stockholders of the Company, to be held at the offices of the
Company, 777 Mariners Island Boulevard, San Mateo, California, U.S.A. at 9:30
a.m., Pacific Standard Time, on January 20, 1998 and at any and all adjournments
or postponements thereof, upon the matters set forth on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES SPECIFIED IN THE PROXY STATEMENT AND FOR
ITEM 2 AND FOR ITEM 3. IF ANY OTHER MATTERS DO COME BEFORE THE MEETING, THE
PERSONS NAMED IN THIS PROXY WILL VOTE, ACT AND CONSENT WITH RESPECT THERETO IN
ACCORDANCE WITH THE VIEW OF MANAGEMENT.
Continued and to be signed and dated on the reverse side.
1. ELECTION OF DIRECTORS: FOR all nominees listed below.__ WITHHOLD AUTHORITY to
vote for all nominees listed below.__ *EXCEPTIONS___
Nominees: H.E. Burns, F.W. Hellman, C.B. Johnson, C.E. Johnson, R.H. Johnson,
Jr., H. Kline, J. McCarthy, P. Sacerdote, L. Woodworth (INSTRUCTIONS: To
withhold authority to vote for any individual nominee, mark the "Exceptions" box
and write that nominee's name in the space provided below.) *Exceptions
- -------------------------------------------------
2. Ratification of the selection of Coopers & Lybrand L.L.P. as independent
accountants for the fiscal year ending September 30, 199___. FOR__ AGAINST__
ABSTAIN__
3. Adoption of an Employee Stock Investment Plan. FOR__ AGAINST__ ABSTAIN__
4. In their discretion, the proxy holders are authorized to vote upon such other
business as properly may come before the Meeting, or any adjournments or
postponements thereof.
Change of Address and or Comments Mark Here ___
Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope. No Postage is Required.
Note: Please sign exactly as your name appears on the proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If shares
are held jointly, each holder should sign.
Dated:____________________, 199_
- -----------------
Signature
- -----------------
Signature
Votes must be indicated (X) in Black or Blue Ink. ___
<PAGE>
APPENDIX A
FRANKLIN RESOURCES, INC.
1998 EMPLOYEE STOCK INVESTMENT PLAN
The following constitute the provisions of the 1998 Employee Stock
Investment Plan of Franklin Resources, Inc.
1. Purpose.
The purpose of the Plan is to provide employees of the Company (as
hereinafter defined) and its Designated Parents or Subsidiaries with an
opportunity to purchase Common Stock of the Company through accumulated
payroll deductions. It is the intention of the Company to have the Plan
qualify as an " Employee Stock Investment Plan" under Section 423 of
the Code ( as hereinafter defined). The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation
in a manner consistent with the requirements of that section of the
Code.
2. Definitions.
As used herein, the following definitions shall apply:
(a)"Accrual Period" means a period of approximately six (6) months,
commencing on February 1 and August 1 of each year and terminating
on the next following July 31 or January 31, respectively, except
with respect to the first accrual period which may be shorter if
so determined by the Plan Administrator.
(b)"Board" means the Board of Directors of the Company.
(c)"Code" means the Internal Revenue Code of 1986, as amended.
(d)"Common Stock" means the common stock of the Company.
(e)"Company" means Franklin Resources, Inc., a Delaware corporation.
(f)"Compensation" means an Employee's base salary from the Company
including paid time off and overtime or one or more Designated
Parents or Subsidiaries, including such amounts of base salary as
are deferred by the Employee (i) under a qualified cash or
deferred arrangement described in Section 401(k) of the Code, or
(ii) to a plan qualified under Section 125 of the Code.
Compensation does not include bonuses, commissions, restricted
stock awards, other annual awards, other incentive payments,
reimbursements or other expense allowances, fringe benefits (cash
or noncash), moving expenses, deferred compensation, profit
sharing or other employer matching contributions (other than
employee deferral contributions described in the first sentence)
made on the Employee's behalf by the Company or one (1) or more
Designated Parents or Subsidiaries under any employee benefit or
welfare plan now or hereafter established, and any other payments
not specifically referenced in the first sentence.
(g) "Corporate Transaction" means any of the following
stockholder-approved transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose
of which is to change the state in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the
capital stock of the Company's subsidiary corporations) in
connection with complete liquidation or dissolution of the
Company; or
(iii) any reverse merger in which the Company is the surviving
entity, but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's
outstanding securities are transferred to a person or persons
different from those who held such securities immediately prior to
such merger.
(h) "Designated Parents or Subsidiaries" means the Parents or
Subsidiaries which have been designated by the Plan Administrator
from time to time as eligible to participate in the Plan.
(i) "Effective Date" means February 1, 1998 or such later date as is
designated by the Plan Administrator for the commencement of the
first Purchase and Accrual Period hereunder. However, should any
Designated Parent or Subsidiary become a participating company in
the Plan after such date, then such entity shall designate a
separate Effective Date with respect to its employee-participants.
(j) "Employee" means any individual, including an officer or director,
who is an employee of the Company or a Designated Parent or
Subsidiary for purposes of Section 423 of the Code. For purposes
of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on medical leave or
other leave of absence approved by the individual's employer.
Where the period of leave exceeds ninety (90) days and the
individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed
to have terminated on the ninety-first (91st) day of such leave
for purposes of determining eligibility to participate in the
Plan.
(k) "Enrollment Date" means the first day of each Purchase Period.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Exercise Date" means the last day of each Accrual Period.
(n) "Fair Market Value" means, as of any date, the closing price of
the Common Stock on the New York Stock Exchange Composite Tape on
such date. In the event such date is not a day on which the New
York Stock Exchange is open for trading or the Company's Common
Stock was not traded on such date, then such closing price for the
last market trading day immediately prior to such date shall be
used.
(o) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(p) "Participant" means an Employee of the Company or Designated
Parent or Subsidiary who is actively participating in the Plan.
(q) "Plan" means the Franklin Resources, Inc. 1998 Employee Stock
Investment Plan.
(r) "Plan Administrator" means either the Board or a Committee of the
Board that is responsible for the administration of the Plan as is
designated from time to time by resolution of the Board.
(s) "Purchase Period" means a purchase period established pursuant to
Section 4 hereof.
(t) "Purchase Price" shall mean an amount equal to Ninety Percent
(90%) of the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower.
(u) "Reserves" means the sum of the number of shares of Common Stock
covered by each option under the Plan which have not yet been
exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but not yet placed under
option.
(v) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility.
(a) Any individual who is an Employee for the ten (10) day period prior
to and including a given Enrollment Date, shall be eligible to
participate in the Plan for the Purchase Period commencing with such
Enrollment Date.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately
after the grant, such Employee (taking into account stock owned by any
other person which would be attributed to such Employee pursuant to
Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the
Company or of any Parent or Subsidiary, or (ii) which permits such
person's rights to purchase stock under all employee stock purchase
plans of the Company and its Parents or Subsidiaries to accrue at a
rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the Fair Market Value of the shares at the time
such option is granted prior to any discounts provided for in such
plan) for each calendar year in which such option is outstanding at any
time. The determination of the accrual of the right to purchase stock
shall be made in accordance with Section 423(b)(8) of the Code and the
regulations thereunder.
(c) Notwithstanding subsection (a), above, the following Employees
shall not be eligible to participate in the Plan for any relevant
Purchase Period: (i) Employees whose customary employment is less than
20 hours per week; and (ii) Employees who are subject to rules or laws
of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.
4. Purchase Periods.
(a) The Plan shall be implemented through overlapping or consecutive
Purchase Periods until such time as (i) the maximum number of shares of
Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated in
accordance with Section 19 hereof. The maximum duration of a Purchase
Period shall be twenty-seven (27) months. Initially, the Plan shall be
implemented through overlapping Purchase Periods of twenty-four (24)
months' duration commencing each February 1 and August 1 following the
first Effective Date designated by the Plan Administrator (except that
the initial Purchase Period shall commence on the Effective Date and
shall end on January 31, 2000). The Plan Administrator shall have the
authority to change the length of any Purchase Period and the length of
Accrual Periods within any such Purchase Period subsequent to the
initial Purchase Period by announcement at least thirty (30) days prior
to the commencement of the Purchase Period and to determine whether
subsequent Purchase Periods shall be consecutive or overlapping. (b) A
Participant will be granted a separate option for each Purchase Period
in which such individual participates. The option shall be granted on
the Enrollment Date and will be automatically exercised in successive
installments on the Exercise Dates ending within the Purchase Period.
(c) An Employee may participate in only one Purchase Period at a time.
Accordingly, except as provided in subsection 4(d) below, an Employee
who wishes to join a new Purchase Period must withdraw from the current
Purchase Period in which such Employee is participating and must also
enroll in the new Purchase Period prior to the Enrollment Date for that
Purchase Period.
(d) If on the first day of any Accrual Period in a Purchase Period in
which a Participant is participating, the Fair Market Value of the
Common Stock is less than the Fair Market Value of the Common Stock on
the Enrollment Date of the Purchase Period (after taking into account
any adjustment during the Purchase Period pursuant to Section 18(a)),
the Purchase Period shall be terminated automatically and the
Participant shall be enrolled automatically in the new Purchase Period
which has its first Accrual Period commencing on that date, provided
the Participant is eligible to participate in the Plan on that date and
has not elected to terminate participation in the Plan.
(e) Except as otherwise specifically provided herein, the acquisition
of Common Stock through participation in the Plan for any Purchase
Period shall neither limit nor require the acquisition of Common Stock
by a Participant in any subsequent Purchase Period.
5. Participation.
(a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in
the form of Exhibit "A" to this Plan and filing it with the designated
payroll office of the Company at least fifteen (15) days prior to the
Enrollment Date for the Purchase Period in which such participation
will commence, unless a later time for filing the subscription
agreement is set by the Plan Administrator for all eligible Employees
with respect to a given Purchase Period.
(b) Payroll deductions for a Participant shall commence with the first
payroll period following the Enrollment Date and shall end on the last
complete payroll period during the Purchase Period, unless sooner
terminated by the Participant as provided in Section 10.
6. Payroll Deductions.
(a) At the time a Participant files a subscription agreement, such
Participant shall elect to have payroll deductions made during the
Purchase Period in amounts between one percent (1%) and not exceeding
ten percent (10%) of the Compensation which such Participant receives
during the Purchase Period.
(b) All payroll deductions made for a Participant shall be credited to
such Participant's account under the Plan and will be withheld in whole
percentages only. A Participant may not make any additional payments
into such account.
(c) A Participant may discontinue participation in the Plan as provided
in Section 10, or may decrease the rate of payroll deductions during
the Purchase Period by completing and filing with the Company a new
subscription agreement authorizing a decrease in the payroll deduction
rate. The decrease in rate shall be effective with the first full
payroll period commencing fifteen (15) days after the Company's receipt
of the new subscription agreement unless the Company elects to process
a given change in participation more quickly. A Participant may
increase the rate of payroll deductions for a future Purchase Period by
filing with the Company a new subscription agreement authorizing an
increase in the payroll deduction rate within fifteen (15) days (unless
the Company elects to process a given change in participation more
quickly) before the commencement of the upcoming Purchase Period. A
Participant's subscription agreement shall remain in effect for
successive Purchase Periods unless terminated as provided in Section
10. The Plan Administrator shall be authorized to limit the number of
payroll deduction rate changes during any Purchase Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a
Participant's payroll deductions may be decreased to 0% at such time
during any Accrual Period which is scheduled to end during the current
calendar year (the "Current Accrual Period") that the aggregate of all
payroll deductions which were previously used to purchase stock under
the Plan in a prior Accrual Period which ended during that calendar
year plus all payroll deductions accumulated with respect to the
Current Accrual Period equal $22,500. Payroll deductions shall
recommence at the rate provided in such Participant's subscription
agreement at the beginning of the first Accrual Period which is
scheduled to end in the following calendar year, unless terminated by
the Participant as provided in Section 10.
7. Grant of Option.
(a) On the Enrollment Date, each Participant in such Purchase Period
shall be granted an option to purchase on each Exercise Date of such
Purchase Period (at the applicable Purchase Price) up to a number of
shares of the Common Stock determined by dividing such Participant's
payroll deductions accumulated prior to such Exercise Date by the
applicable Purchase Price; provided (i) that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof,
and (ii) the maximum number of shares of Common Stock a Participant
will be permitted to purchase in any Accrual Period will be two
thousand (2,000) shares, subject to adjustment as provided in Section
18 hereof. Exercise of the option shall occur as provided in Section 8,
unless the Participant has withdrawn pursuant to Section 10, and the
option, to the extent not exercised, shall expire on the last day of
the Purchase Period.
(b) The Company may, in its sole discretion, provide matching grants in
a uniform and non-discriminatory manner (in whole or partial shares) of
Common Stock to Participants who satisfy specified ongoing holding
period requirements with respect to shares purchased hereunder upon
such terms and conditions as are determined from time to time by the
Plan Administrator.
8. Exercise of Option.
Unless a Participant withdraws from the Plan as provided in
Section 10 below, such Participant's option for the purchase of shares
will be exercised automatically on each Exercise Date, and the maximum
number of shares (including fractional shares) subject to the option
shall be purchased for such Participant at the applicable Purchase
Price with the accumulated payroll deductions in such Participant's
account. The Plan Administrator shall be authorized to establish
procedures for the handling of fractional shares, including the
distribution of cash in lieu thereof. Notwithstanding the foregoing,
any amount remaining in the Participant's account following the
purchase of shares on the Exercise Date due to the application of
Section 423 (b) (8) of the Code, shall be returned to the Participant.
During a Participant's lifetime, a Participant's option to purchase
shares hereunder is exercisable only by such Participant.
9. Delivery.
Upon receipt of a request from a Participant after each Exercise
Date on which a purchase of shares occurs, the Company shall arrange
the delivery to such Participant, as promptly as practicable, of a
certificate representing the shares purchased upon exercise of such
Participant's option.
10. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all, but not less than all of the
payroll deductions credited to such Participant's account and not yet
used to exercise such Participant's option under the Plan at any time
by giving at least fifteen (15) days prior written notice to the
Company in the form of Exhibit "B" to this Plan. All of the
Participant's payroll deductions credited to such Participant's account
will be paid to such Participant as promptly as practicable after
receipt of notice of withdrawal, such Participant's option for the
Purchase Period will be automatically terminated, and no further
payroll deductions will be made during the Purchase Period. If a
Participant withdraws from a Purchase Period, payroll deductions will
not resume at the beginning of the succeeding Purchase Period unless
the Participant delivers a new subscription agreement to the Company.
(b) Upon a Participant's ceasing to be an Employee for any reason or
upon termination of a Participant's employment relationship (as
described in Section 2(j)), the payroll deductions credited to such
Participant's account during the Purchase Period, but not yet used to
purchase shares will be returned to such Participant or, in the case of
such Participant's death, to the person or persons entitled thereto
under Section 14, and such Participant's option will be automatically
terminated.
11. Interest.
No interest shall accrue on the payroll deductions credited to a
Participant's account under the Plan under any circumstances or at any
time.
12. Stock.
(a) The maximum number of shares of Common Stock which shall be made
available for sale or as a matching grant under the Plan shall be two
million (2,000,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided for in Section 18. If on a
given Exercise Date, the number of shares with respect to which options
are to be exercised exceeds the number of shares then available under
the Plan, the Plan Administrator shall make a pro rata allocation of
the shares remaining available for purchase among the Participants in
as uniform a manner as shall be practicable and as it shall determine
to be equitable.
(b) A Participant will have no interest or voting right in shares
covered by such Participant's option until such shares are actually
purchased on such Participant's behalf in accordance with the
applicable provisions of the Plan. No adjustment shall be made for
dividends, distributions or other rights for which the record date is
prior to the date of such purchase. (c) Shares to be delivered to a
Participant under the Plan will be registered in the name of the
Participant or in the name of the Participant and such Participant's
spouse.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the
Participant and such Participant's spouse.
13. Administration.
The Plan shall be administered by the Board or a committee of
members of the Board appointed by the Board. The Board or its committee
shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and
to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to
the full extent permitted by law, be final and binding upon all
persons.
14. Designation of Beneficiary.
(a) Each Participant will file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the Participant's
account under the Plan in the event of such Participant's death. If a
Participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be
effective.
(b) Such designation of beneficiary may be changed by the Participant
(and such Participant's spouse, if any) at any time by written notice.
In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time
of such Participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed
(to the knowledge of the Plan Administrator), the Plan Administrator,
in its discretion, may deliver such shares and/or cash to the spouse or
to any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Plan Administrator, then
to such other person as the Plan Administrator may designate.
15. Transferability.
Neither payroll deductions credited to a Participant's account nor
any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 14 hereof) by the
Participant, nor shall it be subject to attachment or other legal
process of whatever nature. Any such attempt at assignment, attachment,
transfer, pledge or other disposition shall be without effect, except
that the Plan Administrator may treat such act as an election to
withdraw funds from a Purchase Period in accordance with Section 10.
16. Use of Funds.
All payroll deductions received along with any other funds held by
the Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such
payroll deductions or funds.
17. Reports.
Individual accounts will be maintained for each Participant in the
Plan. Statements of account will be given to Participants at least
annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Changes in Capitalization; Corporate Transactions.
(a) Subject to any required action by the stockholders of the Company,
the Reserves, as well as the Purchase Price, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any
other similar event resulting in an increase or decrease in the number
of issued shares of Common Stock. Such adjustment shall be made by the
Plan Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided for herein, no
issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to an option. The Plan
Administrator may, if it so determines in the exercise of its sole
discretion, make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in
the event the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of
shares of its outstanding Common Stock.
(b) In the event of a proposed Corporate Transaction, each option under
the Plan shall be assumed or an equivalent option shall be substituted
by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Plan Administrator determines, in the
exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Purchase Period then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Plan
Administrator shortens the Purchase Period then in progress in lieu of
assumption or substitution in the event of a Corporate Transaction, the
Plan Administrator shall notify each Participant in writing, at least
ten (10) days prior to the New Exercise Date, that the Exercise Date
for such Participant's option has been changed to the New Exercise Date
and that such Participant's option will be exercised automatically on
the New Exercise Date, unless prior to such date such Participant has
withdrawn from the Purchase Period as provided in Section 10. For
purposes of this Section, an option granted under the Plan shall be
deemed to be assumed if, following the Corporate Transaction, the
option confers the right to purchase, for each share of Common Stock
subject to the option immediately prior to the Corporate Transaction,
the consideration (whether stock, cash or other securities or property)
received in the Corporate Transaction by holders of Common Stock for
each share of Common Stock held on the effective date of the Corporate
Transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however,
that if such consideration received in the Corporate Transaction was
not solely common stock of the successor corporation or its Parent, the
Plan Administrator may, with the consent of the successor corporation
and the Participant, provide for the consideration to be received upon
exercise of the option to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Corporate
Transaction.
19. Amendment or Termination of the Plan
(a) The Plan Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that a
Purchase Period may be terminated by the Plan Administrator on any
Exercise Date if the Plan Administrator determines that the termination
of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 18, no amendment may make
any change in any option theretofore granted which adversely affects
the rights of any Participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall obtain
stockholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected,"
the Plan Administrator shall be entitled to change the Purchase
Periods, limit the frequency and/or number of changes in the amount
withheld during Purchase Periods, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars,
establish additional terms, conditions, rules or procedures to
accommodate the rules or laws of applicable foreign jurisdictions,
permit payroll withholding in excess of the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase
of Common Stock for each Participant properly correspond with amounts
withheld from the Participant's Compensation, and establish such other
limitations or procedures as the Plan Administrator determines in its
sole discretion advisable and which are consistent with the Plan.
20. Notices.
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Plan
Administrator at the location, or by the person, designated by the Plan
Administrator for the receipt thereof.
21. Conditions Upon Issuance of Shares.
Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act
of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon
which the shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an option, the Company
may require the Participant to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if,
in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law. In
addition, no options shall be exercised or shares issued hereunder
before the Plan shall have been approved by stockholders of the Company
as provided in Section 23.
22. Term of Plan.
The Plan shall become effective upon January 1, 1998. It shall
continue in effect for a term of ten (10) years unless sooner
terminated under Section 19. The first Effective Date under the Plan
shall be determined as set forth in Section 2(i).
23. Stockholder Approval.
Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted by the Board. If such stockholder approval
is obtained at a duly held stockholders' meeting, the Plan must be
approved by a majority of the votes cast at such stockholders' meeting
at which a quorum representing a majority of all outstanding voting
stock of the Company is, either in person or by proxy, present and
voting on the Plan. If such stockholder approval is obtained by written
consent, it must be obtained by the written consent of the holders of a
majority of all outstanding voting stock of the Company. However,
approval at a meeting or by written consent may be obtained by a lesser
degree of stockholder approval if the Plan Administrator determines, in
its discretion after consultation with the Company's legal counsel,
that such a lesser degree of stockholder approval will comply with all
applicable laws and will not adversely affect the qualification of the
Plan under Section 423 of the Code.
24. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares
under the Plan, or create in any employee or class of employees any
right with respect to continuation of employment by the Company or a
Designated Parent or Subsidiary, and it shall not be deemed to
interfere in any way with such employer's right to terminate, or
otherwise modify, an employee's employment at any time.
25. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each
Participant, including, without limitation, such Participant's estate
and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Participant.
26. Applicable Law.
The laws of the State of California (excluding that body of law
pertaining to its conflicts of law) will govern all matters relating to
this Plan except to the extent it is superseded by the laws of the
United States.
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY ON DECEMBER 12,
1997:
- ----------------
Harmon E. Burns
Secretary
<PAGE>
EXHIBIT A
FRANKLIN RESOURCES, INC.
1998 EMPLOYEE STOCK INVESTMENT PLAN
SUBSCRIPTION AGREEMENT
____ Original Application Enrollment Date: _____________
____ Change in Payroll Deduction Rate
____ Change of Beneficiary(ies)
I, _____________________________, hereby elect to participate in the Franklin
Resources, Inc. 1998 Employee Stock Investment Plan (the "Plan") for the
Purchase Period __________________, 19___ to __________________, 19___, and
hereby subscribe to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Plan. Capitalized terms not otherwise
defined herein are used as defined in the Plan. I have received a copy of the
complete Plan and understand that my participation in the Plan is in all
respects subject to the terms of the Plan.
I hereby authorize payroll deductions in the amount of ________% of my
Compensation from each paycheck during the Purchase Period. I understand that
this amount must not be less than one percent (1%) and not more than ten percent
(10%) of my Compensation during the Offering Period and that no fractional
percentages are permitted. I further understand that:
(1) all payroll deductions made by me shall be credited to my account under
the Plan;
(2) I may not make any additional payments into such account;
(3) all payments made by me shall be accumulated for the purchase of shares
of Common Stock at the applicable purchase price determined in
accordance with the Plan;
(4) except as otherwise set forth in the Plan, shares will be purchased for
me automatically on the Exercise Date of each Accrual Period unless I
otherwise withdraw from the Plan by giving written notice to the
Company for such purpose;
(5) no interest will be credited on funds held in my account at any time
for any reason including, but not limited to, before or after the
purchase of shares under the Plan or in connection with any refund
caused by my withdrawal from the Plan;
(6) I may discontinue my participation in the Plan at any time prior to an
Exercise Date as provided in Section 10 of the Plan;
(7) I can decrease the rate of my payroll deductions in whole percentage
increments to not less than one percent (1%) on one (1) occasion only
during any Accrual Period by completing and filing a new Subscription
Agreement with such decrease taking effect as of the beginning of the
payroll period following the date of filing of a new Subscription
Agreement, filed at least fifteen (15) days prior to the beginning of
such payroll period;
(8) I may not increase the rate of my payroll deductions during any
Purchase Period.
(9) I may increase or decrease the rate of deductions for future Purchase
Periods by filing a new Subscription Agreement, and that any such
change will be effective as of the beginning of the next Purchase
Period;
(10)unless I discontinue my participation in the Plan as provided in
Section 10 of the Plan, my election will continue to be effective for
each successive Purchase Period.
Until I request the delivery of certificates, shares purchased for me under
the Plan shall be owned by me beneficially and shall be held in street name of
the nominee of the third party administrator selected by the Plan Administrator
to administer the Plan records or in such other nominee name as shall be
designated from time to time by the Plan Administrator. Upon delivery, shares
should be issued in the name(s) of (name of employee or employee and spouse
only): ______________________________________________________________________ .
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan
NAME: (Please print)
__________________________________ __________________________________
(First) (Middle) (Last) (Address)
__________________________________
(Relationship)
I understand that if I dispose (an "Early Disposition") of any shares
received by me pursuant to the Plan within two (2) years after the Enrollment
Date or within one (1) year after the Exercise Date for such shares (the
"Minimum Holding Period"), I will be treated for federal income tax purposes as
having received ordinary compensation income at the time of such disposition in
an amount equal to the excess of the Fair Market Value of the shares on the
Exercise Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their Fair Market Value on the
Exercise Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss. I hereby agree to notify
the Company in writing within thirty (30) days after the date of any such Early
Disposition.
If I dispose of shares purchased under the Plan at any time after
expiration of such Minimum Holding Period, I understand that I will be treated
for federal income tax purposes as having received compensation income only to
the extent of an amount equal to the lesser of (1) the excess of the Fair Market
Value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) ten percent (10%) of the
Fair Market Value of shares on the Enrollment Date. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.
I will make adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon any disposition of the Common Stock. The
Company may, but will not be obligated to, withhold from my compensation the
amount necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or Early Disposition of Common Stock by me.
I understand that the tax information contained herein is only a summary of some
of the basic provisions of the Code and related regulations applicable to the
Plan in effect as of the date of execution of this Subscription Agreement and is
subject to change. I further understand that the Company is not giving tax
advice and that I should consult a tax advisor of my choice concerning the tax
implications of the purchase and sale of stock under the Plan.
I hereby agree to be bound by the terms of the Plan and acknowledge that the
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SPOUSE'S SIGNATURE
SIGNATURE: _______________________ (necessary if beneficiary is not spouse)
EMPLOYEE NAME: ____________________ _____________________________
(Signature)
DATE: ___________________________
____________________________
(Print name)
<PAGE>
EXHIBIT B
FRANKLIN RESOURCES, INC.
1998 EMPLOYEE STOCK INVESTMENT PLAN
NOTICE OF WITHDRAWAL
The undersigned Participant in the Purchase Period of the Franklin Resources,
Inc. 1998 Employee Stock Investment Plan which began on _________________,
19___, hereby notifies the Company that such Participant hereby withdraws from
the Purchase Period. Such Participant hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited such
Participant's account with respect to such Purchase Period. The undersigned
understands and agrees that the option for such Purchase Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Purchase Period and the undersigned shall be eligible to participate in
succeeding Purchase Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address
of Participant: ______________________________________________________________
______________________________________________________________
______________________________________________________________
Signature: ______________________________________________________________
Date: ______________________________________________________________
