<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
DAIN RAUSCHER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DAIN RAUSCHER CORPORATION
1999 proxy statement
March 26, 1999
To Our Stockholders,
You are cordially invited to attend the Annual Meeting of stockholders of
Dain Rauscher Corporation. The meeting will be held in the Scandinavian Ballroom
of the Radisson Plaza Hotel, 35 South Seventh Street, Minneapolis, Minnesota, on
Tuesday, April 27, 1999, at 3:30 p.m. At the meeting, you will hear a report on
our operations and have a chance to meet your directors and executives.
This booklet includes the formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also briefly describes how the Board of Directors operates
and gives background information about our director candidates.
Irrespective of the number of shares you own, we hope your shares will be
represented at the meeting. I urge you to participate by reading the proxy
statement and promptly completing, signing, dating and returning your proxy card
in the enclosed envelope.
Sincerely,
Irving Weiser
Chairman, President and
Chief Executive Officer
Notice of 1999 Annual Meeting of Stockholders
Time: 3:30 p.m.
Date: Tuesday, April 27, 1999
Place: The Scandinavian Ballroom
Radisson Plaza Hotel
35 South Seventh Street, Minneapolis, Minnesota
Purposes:
-- To elect ten directors to hold office for one year
-- To ratify the selection of KPMG Peat Marwick LLP as Dain Rauscher's
independent auditors for the fiscal year ending December 31, 1999
-- To transact other business if properly raised
Only stockholders of record on March 3, 1999, may vote at the meeting. A
list of stockholders will be available at Dain Rauscher's Minneapolis
headquarters
<PAGE>
beginning April 16, 1999, for examination by any stockholder for
any purpose relevant to the meeting.
Your vote is important. Please complete, sign, date and return your proxy
card promptly in the enclosed envelope.
By Order of the Board of Directors
Carla J. Smith
Secretary
Minneapolis, Minnesota
March 26, 1999
Proxy Statement
ANNUAL MEETING OF STOCKHOLDERS, Tuesday, April 27, 1999
The Board of Directors of Dain Rauscher Corporation is soliciting proxies
to be voted at the Annual Meeting of Stockholders. The following provides
general information relating to the voting of your shares. This proxy statement
was first mailed to stockholders on or about March 26, 1999.
Who can vote:
Record holders of Dain Rauscher common stock as of March 3, 1999, may vote
at the Annual Meeting.
How proxies work, and how to vote:
Dain Rauscher's Board of Directors is asking for your proxy. Giving us your
proxy means that you authorize us to vote your shares at the meeting in the
manner you direct. You may vote your shares in person at the meeting, but we
recommend that you vote by proxy even if you plan to attend the meeting. You can
always change your vote by voting in person at the meeting.
If you return your signed proxy card before the Annual Meeting, we will
vote your shares as you direct. You have three choices on each matter to be
voted upon. For Proposal 1, the election of directors, you may vote for (a) all
of the nominees, (b) none of the nominees, or (c) all of the nominees except
those whom you specifically designate. For Proposal 2, the ratification of the
selection of Dain Rauscher's independent auditors, you may vote "FOR,"
"AGAINST," or "ABSTAIN" from voting.
If you sign and return the enclosed proxy card but do not specify how to
vote, we will vote your shares "FOR" the election of all nominees for director;
"FOR" ratification of the independent auditors; and as otherwise recommended by
the individuals named as proxies on the proxy card on any other matter properly
raised at the meeting. Your proxy may not be voted for more than ten directors.
If you sign and return the enclosed proxy card and withhold authority to
vote for certain specified director nominees or abstain from voting on Proposal
2, your shares will be considered present for purposes of determining a quorum
and for purposes of calculating the vote total with respect to such director
nominees or proposal, but will not be counted as a vote for that director or
proposal.
<PAGE>
If your shares are held in the name of your broker, a bank, or other
nominee ("street name" shares), and you do not tell the nominee how to vote your
shares ("broker nonvotes"), the nominee can vote them as it sees fit only on
matters that the New York Stock Exchange determines to be routine. Broker
nonvotes will be counted as present to determine if a quorum exists but will not
be counted as having been voted on any non-routine proposal.
How to revoke or change your vote:
You may revoke your proxy before it is voted by (a) submitting a new proxy
with a later date, (b) voting in person at the meeting, or (c) notifying Dain
Rauscher's Secretary in writing at the company's Minneapolis headquarters. (The
address is listed on page 17.)
Quorum:
In order to carry on the business of the meeting, we must have a quorum.
This means that at least a majority of the outstanding shares eligible to vote
must be represented at the meeting, either by proxy or in person.
Votes needed:
Each share of Dain Rauscher common stock is entitled to one vote. The
affirmative vote of a majority of the shares of stock represented at the meeting
and entitled to vote is required for the election of each director. Cumulative
voting is not permitted. The affirmative vote of a majority of the outstanding
shares of stock present and entitled to vote is required to approve Proposal 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of Dain Rauscher's common stock by directors, executive officers named
in the Summary Compensation Table and all directors and executive officers as a
group (17 persons). We are not aware that any person or group owned beneficially
5 percent or more of our outstanding common stock as of March 3, 1999. Unless we
have indicated otherwise, the information below is current as of March 3, 1999,
and each named beneficial owner possesses sole voting and investment power with
respect to all shares. On March 3, 1999, Dain Rauscher had 12,508,575 shares of
common stock outstanding.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial Owner Title of Class of Beneficial Ownership Percent of Class
- ------------------------ -------------- ----------------------- ----------------
<S> <C> <C> <C>
John C. Appel................................ Common 200,211 (1) (2) (3) 1.6%
J. Evans Attwell............................. Common 11,748 (1) (4) *
Susan S. Boren............................... Common 16,532 (1) (4) *
Nelson D. Civello............................ Common 95,689 (1) (2) (3) *
F. Gregory Fitz-Gerald....................... Common 21,000 (1) *
Walter F. Mondale............................ Common 4,300 (1) *
C.A. Rundell Jr.............................. Common 13,500 (1) *
Robert L. Ryan............................... Common 15,000 (1) *
Arthur R. Schulze Jr......................... Common 27,713 (1) (4) *
Ronald A. Tschetter.......................... Common 147,735 (1) (2) (3) 1.2%
Irving Weiser................................ Common 363,784 (1) (2) (3) (5) 2.9%
<PAGE>
<S> <C> <C> <C>
Kenneth J. Wessels........................... Common 19,953 (3) *
All directors and executive
officers as a group (17 persons)........... Common 986,164 (1) (2) (3) (4)
(5) (6) (7) 7.8%
</TABLE>
- -------------
* Less than 1%
(1) This number includes the following number of shares which could be issued
upon exercise of currently exercisable options: Mr. Appel, 97,070; Mr.
Attwell, 6,000; Ms. Boren, 12,000; Mr. Civello, 41,660; Mr. Fitz-Gerald,
12,000; Mr. Mondale, 4,000; Mr. Rundell, 12,000; Mr. Ryan, 12,000; Mr.
Schulze, 12,000; Mr. Tschetter, 54,010; Mr. Weiser, 226,300; and all
directors and executive officers as a group, 507,160.
(2) This number includes the following number of shares allocated to accounts
under Dain Rauscher's Retirement Plan as of March 3, 1999: Mr. Appel,
15,024; Mr. Civello, 5,121; Mr. Tschetter, 27,048; Mr. Weiser, 18,484; and
all directors and executive officers as a group, 72,171. As of March 3,
1999, a total of 3,440,307 shares of Dain Rauscher common stock, or 28
percent of the outstanding, were held in the Retirement Plan. Voting of
shares held in the Retirement Plan is passed through to the participating
employees. An overview of the Retirement Plan is provided on page 14.
(3) This number includes the following number of deemed shares credited to
accounts under the Management Deferred Stock Plan (formerly called the
Executive Deferred Compensation Plan): Mr. Appel, 53,113; Mr. Civello,
32,408; Mr. Tschetter, 52,975; Mr. Weiser, 70,714; Mr. Wessels, 9,953; and
all directors and executive officers as a group, 232,959. As of March 3,
1998, 298,681 deemed shares of Dain Rauscher common stock were credited to
the accounts of participants in the Management Deferred Stock Plan and
307,032 shares, or 2.5 percent of the outstanding, were held in the related
trust. The trustee will vote all shares held in the trust in its sole
discretion. An overview of the Management Deferred Stock Plan is provided
on page 14. This number also includes the following number of deemed shares
credited to accounts under the Wealth Accumulation Plan as of December 31,
1998: all directors and executive officers as a group, 34. As of December
31, 1998, 430,981 deemed shares of Dain Rauscher common stock were credited
to the accounts of participants under the Wealth Accumulation Plan. Because
these are deemed shares and there is no related trust, no voting rights are
associated with these shares. The Wealth Accumulation Plan is a deferred
compensation plan in which certain executive officers, other than those
named in this proxy statement, may participate. Named executive officers
are ineligible to participate in the Wealth Accumulation Plan.
(4) This number includes the following number of unvested restricted shares
received in lieu of cash compensation: Mr. Attwell, 280; Ms. Boren, 525;
Mr. Schulze, 1,049; and all directors and executive officers as a group,
1,854. Participating directors may vote and receive distributions on
restricted shares, but may not dispose of or pledge them until the shares
are fully vested. Unvested shares are subject to forfeiture in certain
circumstances. Of the 1,854 unvested shares, 1,132 vest in May 1999; and
722 vest in May 2000. An overview of the directors' compensation programs
is provided on page 8.
<PAGE>
(5) This number includes 3,445 shares held in trust accounts for the benefit of
Mr. Weiser's children for which Mr. Weiser has sole voting and dispositive
power, and 4,000 shares held in the estate of Mr. Weiser's deceased father
for which Mr. Weiser, as co-executor and co-trustee, has shared voting and
dispositive power. This number excludes 420 shares beneficially owned by
Mr. Weiser's spouse and disclaimed by Mr. Weiser.
(6) This number includes 3,800 shares of unvested restricted stock granted to
certain unnamed executive officers under the 1996 Stock Incentive Plan.
These restricted shares become fully vested on or before May 6, 2002.
Holders of restricted shares may vote and receive distributions on these
shares, but may not dispose of or pledge them. Restricted shares are also
subject to forfeiture under certain circumstances until they are fully
vested.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires that Dain
Rauscher's directors and executive officers file reports of their ownership, and
any changes in their ownership, of Dain Rauscher common stock. Dain Rauscher is
also required by this rule to identify any late reporting of this information by
Dain Rauscher directors and executive officers. Dain Rauscher believes that
during 1998 all directors and executive officers complied with their Section
16(a) filing requirements.
Proposal 1 -- Election of Directors
NOMINEES
The Board of Directors has nominated the ten director candidates named
below to hold office until the next annual meeting of stockholders, or until
their successors are elected (except where a director has died, resigned or been
removed). In the event that any nominee becomes unable or unwilling to serve as
a director for any reason, your proxy will be voted by the named persons in
their best judgment.
Three of the nominees for election, Mr. Weiser, Mr. Appel and Mr. Wessels,
are officers of Dain Rauscher and its wholly owned subsidiary, Dain Rauscher
Incorporated ("DRI"). Additionally, Mr. Weiser and Mr. Appel held executive
officer positions at DRI's two predecessor firms, Dain Bosworth Incorporated
("DBI") and Rauscher Pierce Refsnes, Inc. ("RPR"), which were merged in January
1998 to form DRI.
Each director nominee has furnished the following information regarding his
or her principal occupations or employment during the last five years, and his
or her directorships of other reporting companies.
JOHN C. APPEL
Vice Chairman and
Chief Financial Officer
Dain Rauscher Corporation
Dain Rauscher Incorporated
50
Director since 1995
Mr. Appel was named Vice Chairman and Chief Financial Officer of Dain Rauscher
in October 1997 and of DRI in January 1998. He was Chief Executive Officer of
DBI from February 1997 through December 1997, President and Chief Operating
Officer of DBI
<PAGE>
from 1994 through December 1997, and an Executive Vice President of Dain
Rauscher from 1990 until October 1997. Mr. Appel served as Chief Financial
Officer of Dain Rauscher from 1986 to 1994 and as Chief Financial Officer of
DBI from 1990 to 1994. Mr. Appel also serves as a director of Smith Breeden
Associates, a registered investment adviser.
J. EVANS ATTWELL
Of Counsel
Vinson & Elkins LLP
68
Director since 1996
Mr. Attwell is Of Counsel to the Houston-based law firm of
Vinson & Elkins LLP. He was a partner in the firm from 1965 through 1995 and
served as its Managing Partner from 1981 through 1991. Mr. Attwell also serves
as a director of American General Corporation and Seagull Energy Corporation.
SUSAN S. BOREN
Director
Spencer Stuart
52
Director since 1993
Ms. Boren has been a Director of Spencer Stuart, a senior executive search
consulting firm, since May 1998. Previously, Ms. Boren was President of Trillium
Advisors, Inc., a governance consulting firm. From 1981 through 1995, Ms. Boren
was an executive with Dayton Hudson Corporation in financial, human resources
and operating roles. Ms. Boren also serves as a director of Valspar Corporation.
F. GREGORY FITZ-GERALD
President
The ANSR Company, LLC
57
Director since 1987
Mr. Fitz-Gerald is President of The ANSR Company, LLC, a private company engaged
in investment research using genetic algorithms and evolutionary computation.
From 1991 to 1995, Mr. Fitz-Gerald was a private investor and financial
consultant. Previously, he held senior executive positions with Commercial
Credit Company and Primerica Corporation, American Express Company, American
Express Credit Corporation, and Merrill Lynch & Co., Inc.
WALTER F. MONDALE
Partner
Dorsey & Whitney, LLP
71
Director since 1997
Mr. Mondale is a partner with the Minneapolis-based law firm of Dorsey &
Whitney, LLP. From 1993 through 1996, Mr. Mondale was the U.S. Ambassador to
Japan. Prior to that he was the Democratic Party's nominee for President, Vice
President of the United States, a U.S. Senator, and Attorney General for the
State of Minnesota. Mr. Mondale also serves as a director of several Black Rock
mutual funds managed by Black Rock Financial Management, Inc., Northwest
Airlines
<PAGE>
Corporation, the Mayo Foundation, CNA Financial Corp., and United HealthCare
Corporation.
C. A. RUNDELL JR.
Former President and
Chief Executive Officer
Tyler Corporation
67
Director since 1994
Mr. Rundell has been a private investor and financial consultant, doing business
as Rundell Enterprises, since he retired as Chairman of the Board, President and
Chief Executive Officer of Cronus Industries, Inc. in 1988. From October 1997 to
December 1998, he also served as President and Chief Executive Officer of Tyler
Corporation. Mr. Rundell remains a director and member of the Executive
Committee of Tyler Corporation and a director of Tandy Brands Accessories, Inc.
He also serves as chairman of NCI Building Systems, Inc.
ROBERT L. RYAN
Senior Vice President
Chief Financial Officer
Medtronic, Inc.
55
Director since 1994
Mr. Ryan has been Senior Vice President and Chief Financial Officer of
Medtronic, Inc. since 1993. Prior to joining Medtronic, he had been Vice
President, Finance, and Chief Financial Officer of Union Texas Petroleum Corp.
since 1984. Mr. Ryan also is a director of United HealthCare Corporation and
Brunswick Corporation.
ARTHUR R. SCHULZE JR.
Former Vice Chairman of the Board
General Mills, Inc.
68
Director since 1987
Mr. Schulze retired from his position as Vice Chairman of the Board of General
Mills, Inc. in 1993, a position he had held since 1989. He previously served as
Executive Vice President of General Mills, Inc. and President of its Grocery
Products Food Group.
IRVING WEISER
Chairman, President and
Chief Executive Officer
Dain Rauscher Corporation
Dain Rauscher Incorporated
51
Director since 1985
Mr. Weiser has been Dain Rauscher's Chairman since 1995, its Chief Executive
Officer since 1990, and its President since 1985. Mr. Weiser has been President
and Chief Executive Officer of DRI since January 1998, and Chairman of DRI and
DBI since 1990. Mr. Weiser was also Chairman of RPR from 1995 until it merged
into
<PAGE>
DRI in January 1998. From 1990 to February 1997, Mr. Weiser held various
other executive positions with each of DBI and RPR, including serving as DBI's
Chief Executive Officer and Acting Chief Executive Officer of RPR. Mr. Weiser
recently completed a one-year term as Chairman of the Securities Industry
Association.
KENNETH J. WESSELS
Senior Executive Vice President
Dain Rauscher Corporation
President - Dain Rauscher Wessels Division
Dain Rauscher Incorporated
56
Director since 1998
Mr. Wessels is Senior Executive Vice President of Dain Rauscher and President -
Dain Rauscher Wessels, the equity capital markets division of DRI. From 1986
until their acquisition by Dain Rauscher in March 1998, Mr. Wessels was the
Chief Executive Officer and a Managing Director of each of Wessels, Arnold &
Henderson, LLC, an institutional equity sales, trading and investment banking
firm based in Minneapolis, and Wessels, Arnold & Henderson Group LLC. Mr.
Wessels is currently serving on the Board of Governors of the National
Association of Security Dealers, Inc. (NASD). He served as Chairman of its Board
of Governors in 1990 and has also served on various NASD committees and task
forces.
Information Regarding Dain Rauscher's Board of Directors
BOARD COMMITTEES
The Board of Directors appoints committees to help carry out its duties. In
particular, Board committees work on key issues in greater detail than would be
possible at full Board meetings. Each of the Committees reviews the results of
its meetings with the full Board. Dain Rauscher has the following Board
Committees:
Audit Committee
Members: Messrs. Fitz-Gerald (chairperson), Rundell and Attwell
Number of Meetings in 1998: 6
Functions:
- -- Reviews and monitors Dain Rauscher's accounting policies and control
procedures;
- -- Recommends the engagement of the independent auditors;
- -- Reviews the scope of the audit;
- -- Assists the Board in fulfilling its fiduciary responsibilities relating to
accounting, financial and reporting policies and practices; and
- -- Reviews the responsibilities, plans and material recommendations of Dain
Rauscher's internal Audit Department.
Compensation and Organization Committee
Members: Ms. Boren (chairperson), and Messrs. Mondale, Ryan and Schulze
Number of meetings in 1998: 8
Functions:
<PAGE>
- -- Approves the compensation philosophy and structure for Dain Rauscher's
senior management;
- -- Determines the amount of compensation for Dain Rauscher's Chief Executive
Officer and approves the amounts for the members of the company's Executive
Committee;
- -- Reviews and evaluates the performance of Dain Rauscher's Chief Executive
Officer and Board of Directors;
- -- Consults with Dain Rauscher's Chief Executive Officer and Board of Directors
concerning organizational matters;
- -- Administers Dain Rauscher's stock-based benefit and deferred compensation
plans; and
- -- Acts as the Board's nominating committee by reviewing new Board
candidates and recommending annually the slate of directors for approval by the
Board of Directors and stockholders.
The Compensation and Organization Committee will consider your suggestions for
possible director candidates if you submit in writing the name, biographical
information and a summary of the person's qualifications to the Secretary at the
address listed on page 17. You must submit this information to the Secretary at
least 120 days prior to the date of the stockholder meeting at which your
candidate would be considered.
MEETINGS OF THE BOARD AND BOARD COMMITTEES
The Board of Directors met seven times in 1998. During 1998, no director
attended fewer than 75% of the meetings of the Board and Committees upon which
such director served.
DIRECTOR COMPENSATION
Retainers and Fees. Dain Rauscher employees receive no extra pay for serving as
directors. In February 1999, the Board of Directors approved certain changes to
the Board compensation program to make the compensation paid to non-employee
directors more competitive and to better align the interests of such directors
with the interests of Dain Rauscher's stockholders. The amount of the annual
retainer was increased from $15,000 to $18,000 and will be paid at the start of
each board year in Dain Rauscher common stock rather than in cash. The number of
shares to be issued will be determined based on the average price of Dain
Rauscher common stock on the New York Stock Exchange over the five trading days
preceding the date of the annual meeting. Directors also may elect to receive
their annual retainer in five-year options rather than in stock. The number of
options granted will be four times the number of shares of common stock the
director would otherwise receive, and the exercise price will be equal to the
closing price per share of Dain Rauscher common stock as reported on the New
York Stock Exchange on the day prior to the date of grant. The amount of the
special retainer for the chairpersons of the Audit Committee and Compensation
and Organization Committees was increased from $1,800 to $5,000 annually in
recognition of the increased amount of responsibility and time commitment being
required of the chairpersons. This special retainer will be paid quarterly in
cash. The meeting fees of $1,000 per Board or committee meeting attended and per
diem compensation rates of $1,000 per whole day and $500 per half day for
substantial additional time spent on company matters remain the same. These fees
are also paid quarterly in cash.
<PAGE>
Directors Deferred Compensation Plan. Also effective April 27, 1999, Dain
Rauscher will put into place a new Directors Deferred Compensation Plan. Under
this plan, each director may defer up to 100% of his or her annual retainer
stock payment, and up to 100% of his or her quarterly cash payments for any
special retainer and meeting and other fees, in Dain Rauscher common stock. The
value of the annual retainer deferral is based on the average prices of Dain
Rauscher common stock on the New York Stock Exchange over the five trading days
preceding the date of the annual meeting, and the value of the quarterly special
retainer and fees deferral is based on the average of the closing prices of Dain
Rauscher common stock on the New York Stock Exchange over the last five trading
days of the quarter in which the retainer and fees were earned. All payments
deferred by a director under this plan, except the deferred stock award for his
or her current accrued benefit under the retirement agreement program described
below, will be payable, at the election of the director, in a lump sum payout or
in annual installments over a period of up to three years after termination of
his or her Board service.
Termination of Retirement Agreement Program. Dain Rauscher has decided to
terminate its directors' retirement agreement program, effective on April 27,
1999. Under this program, Dain Rauscher had entered into a retirement agreement
with each non-employee director so that, upon retirement from the Board after at
least five years of service as a director, he or she would receive an annual
retainer fee for the number of years served (up to a maximum of ten years). As a
result of the termination of this program, no additional benefits will be earned
and each director will receive a deferred stock award for his or her current
accrued benefit under the plan. For each director, the deferred stock award is
equivalent to the present value of his or her accrued benefit for service
through April 1999. These deferred shares will be credited to each director's
account under the new Directors' Deferred Compensation Plan described above, and
will be paid out after termination of his or her Board service in accordance
with the terms of the new plan.
Options to Purchase Dain Rauscher Common Stock. Finally, under Dain Rauscher's
1996 Stock Incentive Plan, each non-employee director is automatically granted,
upon each election or reelection to the Board, a five-year, non-qualified option
to purchase 2,000 shares of Dain Rauscher's common stock. This option vests in
full six months after the date of grant, and its exercise price is equal to the
closing price per share of Dain Rauscher common stock as reported on the New
York Stock Exchange on the date of grant.
COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
This report was prepared at the direction of the Compensation and
Organization Committee of the Board of Directors (the "Committee"), which is
composed entirely of non-employee directors. The Committee establishes the
compensation philosophy and program of Dain Rauscher on behalf of the Board of
Directors, determines the compensation of Dain Rauscher's Chief Executive
Officer, and approves the compensation of the company's executive committee
members. These officers are collectively referred to in this section as the
"Executive Officers."
Compensation Philosophy
<PAGE>
Dain Rauscher's compensation philosophy and program supports and reinforces
growth in shareholder value. Dain Rauscher's Executive Officer compensation
program is designed to reward for a combination of company, business unit, and
individual results. Specifically, the Committee seeks to achieve the following
objectives:
- -- To attract, motivate and retain highly qualified Executive Officers through a
competitive total compensation program.
- -- To encourage Executive Officers to purchase and hold significant amounts of
Dain Rauscher stock.
- -- To require that a substantial portion of Executive Officer compensation be
tied to the achievement of financial and strategic objectives for Dain Rauscher
and individual business units.
COMPONENTS OF THE EXECUTIVE OFFICER COMPENSATION PROGRAM
The three main components of Dain Rauscher's Executive Officer compensation
program are salaries, bonuses, and long-term incentive compensation.
Salaries
The first component of Dain Rauscher's Executive Officer compensation
program is cash compensation in the form of base salaries. Base salaries
generally represent a small portion of the Executive Officers' cash compensation
and are set close to the median relative to comparable firms in the securities
industry.
Bonuses
The second component of Dain Rauscher's Executive Officer compensation
program consists of annual performance-based bonuses. Annual bonuses make up a
significant portion of the Executive Officers' cash compensation, and are
determined on the basis of several factors, including Dain Rauscher's
performance, the performance of the individual executive, and the performance of
his or her operating unit during the year. Bonuses are awarded early in the
following year. In evaluating performance, achievement of both financial and
strategic objectives are considered. The Committee believes that basing a
substantial portion of an Executive Officer's compensation on performance
motivates the executive to perform at the highest possible level.
An integral part of Dain Rauscher's annual bonus program is the Executive
Deferred Compensation Plan, which was amended and restated in February 1999 to
create the Dain Rauscher Management Deferred Stock Plan. This newly amended
plan, which is described in more detail on page 14, was created in order to
increase stock ownership among Executive Officers and senior management of the
company. Under the new terms, the plan requires that a certain portion of each
bonus must be deferred and invested in Dain Rauscher stock. The plan also
permits an additional portion of each bonus to be deferred and invested in Dain
Rauscher common stock. The Committee believes that programs such as the
Management Deferred Stock Plan will further align the Executive Officers'
long-term financial and strategic interests with those of Dain Rauscher's
stockholders.
Long-Term Incentive Compensation
<PAGE>
The third component of Dain Rauscher's Executive Officer compensation
program is the annual grant by the Committee, on a targeted long-term value
basis, of options to acquire shares of Dain Rauscher's common stock. These
options have a ten-year term and have an exercise price equal to the fair market
value per share of Dain Rauscher's common stock on the date of the grant.
Beginning with the February 1999 grants, these options will vest ratably over
three years. Prior to 1999, the size of option grants to the Executive Officers
was based, in large part, on a formula tied to each Executive Officer's total
cash compensation for the preceding year. Beginning in February 1999, the
company shifted to a targeted value approach for its option grant guidelines
which allows other factors in addition to individual performance to be
considered. The Committee believes that stock options provide an incentive to
achieve Dain Rauscher's longer-term strategic goals by aligning the financial
interests of the Executive Officers with those of Dain Rauscher's stockholders.
The criteria for targeted long-term value are based on competitive
guidelines established with the assistance of an independent third party. The
size of individual grant to each Executive Officer may vary from the guidelines,
however, to take into consideration the performance of the individual and his
operating unit and other factors. The grant guidelines are reviewed periodically
by the Chief Executive Officer and the Committee for appropriateness and
competitiveness.
Determination of 1998 Senior Executive Compensation
The Committee met four times in late 1998 and early 1999 to review and
approve revisions to Dain Rauscher's compensation philosophy and programs, and
to approve annual bonuses and long-term incentive compensation for the Executive
Officers. In preparation for these meetings, the Committee reviewed the overall
profitability, growth and financial performance of Dain Rauscher and its various
business lines. The Committee also reviewed similar information for other
comparable brokerage firms and reviewed historical compensation information
prepared by a third party for background on competitive salary and total
compensation levels within the industry.
Chief Executive Officer Compensation
In determining Mr. Weiser's bonus and stock option award for 1998, the
Committee considered a number of factors. The Committee determined that Mr.
Weiser's bonus for 1998 should reflect the decline in Dain Rauscher's net
earnings per share and return on average equity, among other financial
measurements, as a result of the costs associated with the consolidation of Dain
Rauscher's broker-dealer subsidiaries, the acquisition of Wessels, Arnold &
Henderson, LLC, and the resolution of several major litigation matters that had
been facing the company. While the Committee and the Board of Directors
unanimously agreed with Mr. Weiser's recommendations regarding these events, Mr.
Weiser and the Committee determined that Mr. Weiser's compensation should
continue to reflect the net earnings of Dain Rauscher, including any
nonrecurring charges or gains. In its deliberations, the Committee consulted
with an independent executive compensation consulting firm and looked at various
competitive benchmarks including the relationship between compensation and
performance at competitive firms. The Committee concluded that a 1998 bonus of
$175,000, which results in a 70 percent decrease in Mr. Weiser's total cash
compensation when compared to 1997, positioned Mr. Weiser's compensation both
fairly and competitively relative to Dain Rauscher's financial performance. The
Committee also determined to grant Mr. Weiser options to purchase 35,000 shares
of Dain Rauscher common stock in recognition of the Committee's confidence in
his
<PAGE>
leadership and the company's strategic direction. In addition, the Committee
determined to increase Mr. Weiser's base salary for 1999 from $250,000 to
$300,000, his first base salary increase since becoming Chief Executive Officer
of Dain Rauscher in 1990.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits Dain
Rauscher's ability to deduct, for corporate income tax purposes, certain
compensation in excess of $1 million per year paid to persons named in the
Summary Compensation Table. Through the Dain Rauscher Annual Cash Bonus Plan for
Designated Corporate Officers, which was approved by stockholders in 1998, the
Committee may ensure that bonuses paid under that plan to the Executive Officers
named in the Summary Compensation Table will continue to meet the deductibility
requirements of Section 162(m). Dain Rauscher reserves the flexibility to design
effective compensation plans that meet the executive compensation objectives
described above, which may result in Dain Rauscher's inability to deduct
compensation under Section 162(m).
Summary
The Committee believes that the compensation plans for Dain Rauscher's
Executive Officers have been designed so as to focus their efforts on the
achievement of Dain Rauscher's business strategy and corporate objectives, and
to align the Executive Officers' interests with those of Dain Rauscher's
stockholders. The Committee will continue to evaluate these programs to ensure
that they to do so.
Susan S. Boren, Chairperson
Robert L. Ryan
Walter F. Mondale
Arthur R. Schulze Jr.
Members of the Compensation and Organization Committee
SUMMARY COMPENSATION TABLE
The following table summarizes, for each of the last three fiscal years,
the compensation of the Chief Executive Officer and each of the four other most
highly compensated Executive Officers of Dain Rauscher. The principal position
indicated for each named Executive Officer represents the position held on
December 31, 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Restricted Securities Underlying All Other
------------------------ ----------------------------------------------
Name & Principal Positions Year Salary Bonus (1) Stock Options / SARs (2) Compensation (3)
- -------------------------- ---- -------- --------- ----- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Irving Weiser, 1998 $250,000 $175,000 -- 35,000 $ 34,050
Chairman, President & CEO 1997 $250,000 $1,200,000 -- 50,000 $194,165
1996 $250,000 $1,500,000 -- 23,000 $248,882
John C. Appel, 1998 $200,000 $300,000 -- 12,000 $ 52,800
Vice Chairman & CFO 1997 $200,000 $675,000 -- 24,000 $115,415
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
1996 $175,000 $950,000 -- 11,100 $167,806
Nelson D. Civello, 1998 $175,000 $575,000 -- 10,000 $ 94,050
Sr. Exec. Vice President 1997 $150,000 $600,000 -- 24,000 $104,165
1996 $150,000 $500,000 -- 4,300 $ 65,806
Ronald A. Tschetter, 1998 $175,000 $625,000 -- 12,000 $101,550
Sr. Exec. Vice President 1997 $150,000 $900,000 -- 24,000 $149,165
1996 $150,000 $800,000 -- 6,300 $135,806
Kenneth J. Wessels, (4) 1998 $225,000 $650,000 -- 108,669 $102,300
Sr. Exec. Vice President
</TABLE>
(1) For 1998, 1997 and 1996, respectively, this number includes the following
amounts voluntarily deferred under the Management Deferred Stock Plan (formerly
the Executive Deferred Compensation Plan): Mr. Weiser, $52,500, $360,000 and
$450,000; Mr. Appel, $90,000, $202,500 and $285,000; Mr. Civello, $172,500,
$180,000 and $100,000; Mr. Tschetter, $170,000, $270,000 and $240,000; and Mr.
Wessels, $195,000 (1998 only). A summary of the terms of the Management Deferred
Compensation Plan is provided on page 14.
(2) Includes options awarded to Executive Officers with respect to such
year in January or February of the following year. All options are
10-year options having an exercise price equal to the fair market value
per share of Dain Rauscher's common stock on the date of grant. Options
granted in 1998 and prior years vest over four years. Options granted in
1999 vest over three years.
(3) This number includes for each of 1998, 1997 and 1996, respectively:
(a) Dain Rauscher's contributions under the Dain Rauscher Retirement Plan
in the following amounts: Mr. Weiser, $7,800, $14,165 and $14,382; Mr.
Appel, $7,800, $14,165 and $15,806; Mr. Civello, $7,800, $14,165 and
$15,806; Mr. Tschetter, $7,800, $14,165 and $15,806; and Mr. Wessels,
$4,800 (1998 only); and (b) Dain Rauscher's matching contributions in the
following amounts under the Management Deferred Stock Plan on bonus
amounts earned by Executive Officers, but voluntarily deferred: Mr.
Weiser, $26,250, $180,000 and $225,000; Mr. Appel, $45,000, $101,250 and
$142,500; Mr. Civello, $86,250, $90,000 and $50,000; Mr. Tschetter,
$85,000, $135,000 and $120 ,000; and Mr. Wessels, $97,500 (1998 only). A
summary of the terms of the Retirement Plan is provided on page 14.
(4) Mr. Wessels joined Dain Rauscher on its acquisition, in March 1998, of
Wessels, Arnold & Henderson, LLC (WAH). Mr. Wessels' annualized salary of
$300,000 was pro-rated to cover April through December 1998. Mr. Wessels'
bonus reflects the recent amendment to Mr. Wessels' employment agreement with
Dain Rauscher under which Mr. Wessels agreed to a reduced guaranteed minimum
total cash
<PAGE>
compensation for 1998. Mr. Wessels' option total includes a grant in February
1999 of options to purchase 10,000 shares of common stock, based in part on
Mr. Wessels' 1998 performance; a special one-time grant of options to
purchase 25,000 shares of common stock made in February 1999; a grant in
March 1998 of options to purchase 24,000 shares of common stock pursuant to
Mr. Wessels' employment agreement; and a grant in March 1998 of options to
purchase 49,669 shares of common stock made in connection with the
acquisition of Mr. Wessels' ownership interest in WAH. A summary of the terms
of Mr. Wessels' employment agreement is provided on page 15.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants made to the Executive Officers
named in the Summary Compensation Table with respect to the year ended December
31, 1998; option exercises, if any, made by those persons in that year; and the
potential realizable value of the options owned by these officers as of December
31, 1998. No stock appreciation rights ("SARs") have been granted to any of the
named Executive Officers.
Option/SAR Grants With Respect to Year Ended December 31, 1998
<TABLE>
<CAPTION>
% of Total Potential Realizable Value At Assumed
Number of Options / SARs Exercise Annual Rates of Stock Price
Securities Underlying Granted to Employees or Base Price Expiration Appreciation for Option Term (2)
Name Options / SARs Granted (1) with Respect to 1998 (per share)(1) Date 5% ($47.95)(3) 10% ($76.36)(3)
- ---- -------------------------- -------------------- -------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Irving Weiser 35,000 4.1% $29.44 2/3/2009 $648,013 $1,642,192
John C. Appel 12,000 1.4% $29.44 2/3/2009 $222,176 $ 563,037
Nelson D. Civello 10,000 1.2% $29.44 2/3/2009 $185,147 $ 469,198
Ronald A. Tschetter 12,000 1.4% $29.44 2/3/2009 $222,176 $ 563,037
Kenneth J. Wessels 10,000 1.2% $29.44 2/3/2009 $185,147 $ 469,198
25,000 2.9% $29.44 2/3/2009 $462,866 $1,172,994
49,669 5.8% $58.88 3/31/2003 $807,920 $1,785,291
24,000 2.8% $58.88 3/31/2008 $888,628 $2,251,958
</TABLE>
(1) With the exception of the 24,000 options granted to Mr. Wessels on March
31, 1998, pursuant to the terms of his employment agreement, and the 49,669
options granted to Mr. Wessels on March 31, 1998 in connection with the
acquisition of his ownership interest in Wessels, Arnold & Henderson, LLC, this
figure represents options granted with respect to 1998 in February 1999. All
such options become exercisable as follows: 331/3 percent on February 3, 2000;
an additional 331/3 percent on February 3, 2001; and the remaining 331/3 percent
on February 3, 2002. Mr. Wessels' options to purchase 24,000 shares vest 20
percent on March 31, 2000, an additional 30 percent on March 31, 2001, and the
remaining 50 percent on March 31, 2002. Mr. Wessels' options to purchase 49,669
shares vest 20 percent on March 31, 1999, an additional 30 percent on March 31,
2000, and the remaining 50 percent on March 31, 2001. In all cases, the exercise
price is equal to the closing price per share of Dain Rauscher's common stock as
reported on the New York Stock Exchange on the day prior to the date of grant.
<PAGE>
(2) This number represents the potential gains based on annual compound stock
price appreciation of 5 percent and 10 percent from the date of grant until the
expiration date. The amount in parentheses indicates what the price would be for
one share of Dain Rauscher common stock on the expiration date at those rates of
appreciation. The amounts given represent assumed rates of appreciation only.
The actual gains, if any, on option exercises will depend on the future
performance of Dain Rauscher's common stock.
(3) The stock price appreciation for Mr. Wessels's March 1998 grants of
24,000 and 49,669 options is $75.14 and $94.82, respectively, assuming a
5-percent and 10-percent annual rate of appreciation.
Aggregate Option/SAR Exercises During Year Ended December 31, 1998, and Value of
Options/SARs Held at December 31, 1998
<TABLE>
<CAPTION>
Number of Unexercised
Securities Underlying Value of Unexercised
Options / SARs Held at In-the-Money Options /
----------------------------------------------------------------------
Shares December 31, 1998 SARs at December 31,
Acquired Value (Exercisable/ 1998 (Exercisable/
Name on Exercise Realized (1) Unexercisable) Unexercisable)(1)(2)
- ---- ----------- ------------ ----------------- --------------------
<S> <C> <C> <C> <C>
Irving Weiser 5,700 $213,451 189,660/ 117,190 $2,665,231/ $476,768
John C. Appel 2,750 $129,594 74,180/ 62,720 $ 903,723 / $304,736
Nelson D. Civello -- -- 36,270/ 35,380 $ 482,835 / $ 70,071
Ronald A. Tschetter 3,400 $ 91,528 45,215/ 42,285 $ 619,526 / $118,267
Kenneth J. Wessels -- -- --/ 73,669 -- / --
</TABLE>
(1) "Value" is the difference between the per-share option exercise price and
the closing price of Dain Rauscher common stock on the New York Stock
Exchange on the date of exercise or December 31, 1998.
(2) "In-the-money" means the market price of the common stock is greater than
the exercise price of the option on the date specified.
DESCRIPTION OF EXECUTIVE OFFICER COMPENSATION PLANS
Dain Rauscher has two compensation plans in which its Executive Officers
participate: the Executive Deferred Compensation Plan, which was amended in
February 1999 to create the Dain Rauscher Management Deferred Stock Plan, and
the Dain Rauscher Retirement Plan.
Deferred Compensation Plan
The Executive Deferred Compensation Plan was a voluntary, non-tax qualified
deferred compensation plan under which each participating Executive Officer was
able to elect, prior to the beginning of a fiscal year, to defer up to 30
percent of his discretionary bonus for that year. The deferred amounts could be
invested either in shares of Dain Rauscher common stock or in an alternate fixed
income investment, but the participating Executive Officer received a matching
contribution from Dain Rauscher only on amounts invested in shares of Dain
Rauscher common stock. Executive Officers vest in employer-matching
contributions under the Executive Deferred Compensation Plan after four years
(subject to acceleration
<PAGE>
under certain circumstances), and their deferred bonus amounts are
immediately vested.
In February 1999, the Executive Deferred Compensation Plan was amended to
create the new Dain Rauscher Management Deferred Stock Plan (the "New Deferred
Plan"). The New Deferred Plan, in which the Executive Officers and the next
level of the company's senior management participates, contains a number of
basic changes in plan design from the former plan. First, the New Deferred Plan
requires each Executive Officer (or other participating officer) to invest a
portion of his or her bonus in Dain Rauscher's common stock. The mandatory
deferral varies from 10 percent to 20 percent of bonus compensation earned for
the year, depending upon the level of bonus compensation earned. Each officer
may then voluntarily defer up to a further 10 percent of his or her total bonus
compensation earned for the same period. All deferred amounts, both mandatory
and voluntary, will be credited to accounts which are deemed to have been
invested in shares of Dain Rauscher's common stock. As with the Executive
Deferred Compensation Plan, shares of common stock are credited each year to the
accounts of the participating officers following payment of bonuses for the
preceding year, and each participating officer receives a matching contribution
from Dain Rauscher, based on the company's return on average equity. The match
varies with return on average equity from a minimum of 15 percent to a maximum
of 50 percent. Subject to acceleration in certain circumstances, participating
officers do not become immediately vested in the mandatory deferred amounts;
instead, 331/3 percent becomes vested upon crediting of the mandatory deferral
to the officer's account; a further 331/3 percent becomes vested on the January
1st immediately following the crediting of that deferral; and the final 33 1/3
percent becomes vested on the second January 1st following the crediting of the
deferral. Participating officers are always 100 percent vested in the voluntary
deferrals they make. Each participating officer becomes vested in the matching
contributions made by Dain Rauscher on the fourth January 1st following the date
that the match was credited to the officer's account. Distributions of account
balances credited to participants under the New Deferred Plan are paid over two
years in shares of Dain Rauscher common stock after the participant retires.
Retirement Plan
All Dain Rauscher employees may participate in the Retirement Plan after
satisfaction of certain basic eligibility criteria. Under this plan, Dain
Rauscher annually contributes a percentage of all participants' eligible
compensation. The Board of Directors determines the level of contribution to the
Retirement Plan, subject to a 3-percent minimum contribution. In addition,
participating employees receive a company-matching contribution at a rate of 40
percent on voluntary, before-tax contributions of up to 5 percent of their
eligible compensation (subject to federal tax law limitations) made by the
employees to their accounts under the Plan up to $3,000 annually. Participants
generally vest in company contributions after five years of continuous
employment with Dain Rauscher. Vested shares held in the Retirement Plan for
participating employees may be distributed subject to in-service loan and
distribution rules or after certain events of maturity (such as separation from
service, or the employee's death or disability). For 1998, Dain Rauscher did not
make any additional contribution above the 3-percent minimum.
COMPENSATION ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
<PAGE>
Mr. Kenneth J. Wessels. Dain Rauscher entered into a written employment
agreement with Kenneth J. Wessels upon the acquisition of Wessels Arnold &
Henderson, LLC (WAH) in March 1998. The initial term of Mr. Wessels' employment
agreement runs until December 31, 1999, but will be extended automatically until
December 31, 2000 unless either the company or Mr. Wessels notifies the other by
October 31, 1999. Mr. Wessels' employment agreement, a copy of which is on file
with the Securities and Exchange Commission, has the following basic provisions.
Cash Compensation. Mr. Wessels' employment agreement provided that he would
receive an annual base salary of $300,000, annualized guaranteed total cash
compensation (including base salary) of $1.5 million and an additional bonus
based on a formula tied to the performance of the Equity Capital Markets
division which Mr. Wessels heads. In February 1999, Mr. Wessels agreed to an
amendment of these terms which reduced his guaranteed total cash compensation
for 1998 to $875,000. This amendment does not affect any future year's
compensation. The performance bonus formula states that so long as the fully
allocated profit margin (the "Margin") of the Equity Capital Markets division
equals or exceeds 12 percent, and the compound annual growth rate ("CAGR") of
the division and the Margin added together exceed 36 percent, Mr. Wessels'
additional performance bonus will be equal to (i) ten times the number of
percentage points by which the sum of the CAGR and the Margin exceeds 36
percent, multiplied by (ii) $1.125 million for 1998 or $1.5 million for each of
1999 and 2000. This amount may be increased or decreased by up to 20 percent
based upon objectives to be agreed to in advance of each of these years. If the
Margin is less than 12 percent, any additional performance bonus paid to Mr.
Wessels will be determined in the discretion of Dain Rauscher's Board of
Directors.
Options to Purchase Dain Rauscher Common Stock. Under the terms of his
employment agreement, Dain Rauscher granted Mr. Wessels ten-year non-qualified
stock options to purchase 24,000 shares of Dain Rauscher common stock at a price
equal to $58.875 per share. These options vest 20 percent on March 31,2000, 30
percent on March 31, 2001, and the final 50 percent on March 31, 2002. Dain
Rauscher also granted Mr. Wessels five-year non-qualified stock options to
purchase 49,669 shares of common stock at a price of $58.875 per share in
connection with the acquisition of Mr. Wessels' ownership interest in WAH. These
options vest 20 percent on March 31, 1999, the next 30 percent on March 31,
2000, and the remaining 50 percent on March 31, 2001. For both grants, the
vesting of the options is subject to acceleration upon any "change in control"
of Dain Rauscher (as defined in the agreement), if Dain Rauscher terminates Mr.
Wessels' employment without cause (as defined in the agreement), or if Mr.
Wessels voluntarily terminates his employment for good reason (as defined in the
agreement).
Death, Disability, Termination or Resignation. If Mr. Wessels dies or becomes
permanently disabled during the term of the agreement, he (or his estate) will
receive his accrued but unpaid base salary together with a pro rata share of his
guaranteed minimum total cash compensation for the year and any vested benefits
under Dain Rauscher's benefit plans. If Mr. Wessels' employment is terminated
for cause (as defined in the agreement) during the term of the agreement, or he
voluntarily terminates his employment without good reason (as defined in the
agreement), he will be paid only his accrued but unpaid base salary and any
vested benefits. Alternatively, if Dain Rauscher terminates Mr. Wessels without
cause (as defined in the agreement), or Mr. Wessels voluntarily terminates his
employment for
<PAGE>
good reason (as defined in the agreement), Dain Rauscher will pay him his
guaranteed minimum total cash compensation for each year through December 31,
2000.
Non-Competition and Non-Solicitation. Finally, Mr. Wessels has agreed, in
general, to refrain from competing with Dain Rauscher in the equity capital
markets business, and to refrain from soliciting any Dain Rauscher employee, or
any customer of the Equity Capital Markets division of Dain Rauscher, for a
period of two years from the date the agreement is terminated.
CERTAIN TRANSACTIONS
As a broker-dealer, DRI occasionally extends credit under Federal Reserve
Regulation T to Dain Rauscher's directors, Executive Officers, and members of
their immediate families. These loans are made in the ordinary course of
business and on substantially the same terms, including interest rates and
collateral, as those governing the extension of credit to other persons, and do
not involve more than normal risk of collectability, or have other unfavorable
features.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return on Dain Rauscher's
common stock for the last five fiscal years with the cumulative total return on
the S&P 500 Stock Index and the Mid-Cap Sub-Index of the Financial Service
Analytics Stock Price Index (the "FSA Index") over the same period (assuming the
investment of $100 in each on December 31, 1993, and the reinvestment of all
dividends).
[GRAPHIC OMITTED][GRAPHIC OMITTED]
<TABLE>
<CAPTION>
S&P 500 146 FSA Mid-Cap Sub Index 560 Dain Rauscher
<S> <C> <C> <C>
"93" 100 100 100
"94" 101.31 88.86 82.66
"95" 139.31 125.25 142.11
"96" 171.3 183.05 202.36
"97" 228.44 339.01 402.31
"98" 293.65 380.61 175.59
</TABLE>
(1) The total return calculations on the FSA Index were performed by
Financial Service Analytics, Inc. The FSA Index is composed of nine publicly
held mid-cap securities firms, including Dain Rauscher, and has been weighted
based upon their market capitalizations.
(2) The total return calculations on the S&P 500 Index were performed by
Standard & Poor's Compustat Services, Inc.
Proposal 2 -- Ratification of Appointment of Auditors
The Board of Directors, based upon the recommendation of its Audit
Committee, has appointed KPMG Peat Marwick LLP as independent auditors to audit
the consolidated financial statements of Dain Rauscher and its subsidiaries for
the current fiscal year ending December 31, 1999, and to perform other
appropriate
<PAGE>
accounting services, and recommends that the stockholders of Dain Rauscher
ratify that appointment. KPMG Peat Marwick LLP has audited Dain Rauscher's
financial statements since 1989. A representative of KPMG Peat Marwick LLP
will be present at the 1999 Annual Meeting, will have an opportunity to make
a statement if he or she desires to do so, and will be available to respond
to appropriate questions from stockholders.
General
OTHER BUSINESS
The Board of Directors does not know of any other business to come before
the 1999 Annual Meeting of Stockholders. If any other matters are properly
brought before the meeting, however, the persons named in the accompanying form
of proxy will vote in accordance with their best judgment.
HOW DAIN RAUSCHER SOLICITS PROXIES
In addition to soliciting proxies by mail, officers, directors and other
regular employees of Dain Rauscher or its subsidiaries may solicit proxies on
behalf of the Board of Directors in person or by telephone. Dain Rauscher will
also request that brokers or other nominees who hold shares of common stock in
their names for the benefit of other persons forward proxy materials to, and
obtain voting instructions from, the beneficial owners of such stock. The entire
cost of soliciting proxies for the 1999 Annual Meeting will be borne by Dain
Rauscher.
STOCKHOLDER PROPOSALS FOR NEXT YEAR
In order to be included in the proxy statement for presentation at the next
annual meeting of Dain Rauscher's stockholders and not be considered "untimely,"
any stockholder proposal must be received by the Secretary at Dain Rauscher's
principal executive offices, Dain Rauscher Plaza, 60 South Sixth Street, P.O.
Box 1160, Minneapolis, Minnesota 55440-1160, not later than December 30, 1999.
If no notice with respect to the proposal is received by Dain Rauscher's
Secretary by that date, the company intends to use its discretionary authority
to vote on any such matter that may come before the 2000 Annual Meeting.
QUESTIONS?
If you have questions or need more information about the annual meeting, write
to:
Carla J. Smith, Secretary
Dain Rauscher Corporation
Dain Rauscher Plaza
60 South Sixth Street
P.O. Box 1160
Minneapolis, Minnesota 55402-1160
or call Dain Rauscher at 612-371-7750.
Upon written request sent to the address above, Dain Rauscher will furnish,
without charge, to persons solicited by this proxy statement, a copy of its 1998
Annual Report on Form 10-K (excluding exhibits).
Dain Rauscher Plaza
60 South Sixth Street
P.O. Box 1160
<PAGE>
Minneapolis, Minnesota 55402-1160
612 371-7750
<PAGE>
[Dain Rauscher PROXY P.O. Box 1160, Minneapolis, MN 55440-1160
Logo]
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Irving Weiser and John C.
Appel, and each of them, with power to appoint a substitute,
to vote all shares the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Dain Rauscher Corporation to
be held on April 27, 1999, and at all adjournments thereof, as
specified below on the matters referred to and in their
discretion upon any other matters which may be brought before
the meeting.
- --------------------------------------------------------------------------------
1. Election of Directors:
[ ] For all nominees listed below [ ] Withhold authority
(except as marked to the contrary)* to vote for all nominees
listed below
01 J.C. Appel 02 J.E. Attwell
03 S.S. Boren 04 F.G. Fitz-Gerald
05 W.F. Mondale 06 C.A. Rundell Jr.
07 R.L. Ryan 08 A.R. Schulze Jr.
09 I. Weiser 10 K.J. Wessels
*(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
- -------------------------------------------------------------------------------
2. Ratification of appointment of auditors [ ] For [ ] Against [ ] Abstain
- -------------------------------------------------------------------------------
3. Discretionary authority to vote on any other business that may properly
come before the meeting
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES NAMED IN ITEM 1 AND FOR PROPOSAL 2.
Address Change? Mark Box / /
Indicate changes below:
Please sign exactly as your name appears on Proxy. When shares are held by
joint tenants, both must sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature
Signature (if held jointly)
Dated: ________________________, 1999.
Dain Rauscher Corporation
Annual Meeting of Stockholders
Tuesday, April 27, 1999
3:30 p.m.
The Scandinavian Ballroom
Radisson Plaza Hotel
35 South Seventh Street
Minneapolis, Minnesota
