<PAGE>
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Legg Mason, Inc.
_________________________________________________________________________
(Name of Registrant as Specified in its Charter)
_________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
_________________________________________________________________
2. Aggregate number of securities to which transaction applies:
_________________________________________________________________
3. Per unit price or other underlying value of transaction computed
to Exchange Act Rule 0-11: (1)
_________________________________________________________________
4. Proposed maximum aggregate value of transaction
_________________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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 of Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________
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4) Date Filed:
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<PAGE>
[LOGO]
Legg Mason Tower
111 South Calvert Street
Baltimore, Maryland 21202
June 15, 1994
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at the Stouffer Harborplace Hotel, 202 East Pratt Street,
Baltimore, Maryland at 11:00 a.m. on Thursday, July 28, 1994. On the
following pages you will find the formal Notice of Annual Meeting and Proxy
Statement.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted at the meeting. Accordingly, please
date, sign and return the enclosed proxy card promptly.
I hope that you will attend the meeting and look forward to seeing you
there.
Sincerely,
[SIG]
RAYMOND A. MASON
Chairman of the Board
and President
<PAGE>
LEGG MASON, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, July 28, 1994
To the Stockholders of
LEGG MASON, INC.:
The Annual Meeting of Stockholders of Legg Mason, Inc., a Maryland
corporation, will be held at the Stouffer Harborplace Hotel, 202 East Pratt
Street, Baltimore, Maryland, on July 28, 1994, at 11:00 a.m. to consider and
vote upon:
(1) The election of five directors for the three-year term ending in 1997.
(2) Ratification of the appointment of Coopers & Lybrand as independent
auditors of the Company for the fiscal year ending March 31, 1995.
(3) Any other matter that may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on May 19, 1994 as
the date for determining stockholders of record entitled to notice of and to
vote at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement and 1994
Annual Report to Stockholders.
By order of the Board of Directors
[SIG]
CHARLES A. BACIGALUPO
Secretary
June 15, 1994
<PAGE>
LEGG MASON, INC.
Legg Mason Tower
111 South Calvert Street
Baltimore, Maryland 21202
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Thursday, July 28, 1994
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Legg Mason,
Inc. (the "Company") and is revocable at any time prior to its exercise. The
cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by officers, directors and
regular employees of the Company personally or by telephone or telegraph, and
the Company may reimburse brokers, banks, custodians, nominees and other
fiduciaries for their reasonable out-of-pocket expenses in forwarding proxy
materials to their principals. This proxy material is being sent to
stockholders on or about June 15, 1994.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on May 19, 1994 are
entitled to notice of and to vote at the meeting. As of the close of business
on that date, there were outstanding and entitled to vote 12,145,519 shares
of Common Stock, $.10 par value ("Common Stock"), each of which is entitled
to one vote. Except as otherwise noted, all references in this Proxy
Statement to numbers of shares of Common Stock and stock options have been
adjusted to reflect a five-for-four stock split effected September 24, 1993.
See "Security Ownership of Management and Principal Stockholders" for
information regarding ownership of the Common Stock.
Directors are elected by a plurality of the votes cast by the holders of
shares of Common Stock present in person or represented by proxy at the
meeting, with a quorum present. For purposes of the election of directors,
abstentions and broker non-votes do not affect the plurality vote.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Each year
the directors in one class are elected to serve for a term of three years.
The stockholders will vote at this Annual Meeting for the election of five
directors for the three-year term expiring at the Annual Meeting of
Stockholders in 1997.
The persons named in the enclosed proxy will vote for the election of the
nominees named below unless authority to vote is withheld. In the event that
any of the nominees should be unable to serve, the persons named in the proxy
will vote for such substitute nominee or nominees as they, in their
discretion, shall determine. The Board of Directors has no reason to believe
that any nominee named herein will be unable to serve.
The following material contains information concerning the nominees for
election and those directors whose terms continue beyond the date of the
Annual Meeting.
<PAGE>
Nominees for Director for the Term Expiring in 1997
Charles A. Bacigalupo, age 60, has been a director and the Secretary of
the Company since its inception in 1981 and has served as a Senior Vice
President of the Company since May 1982. He has served as a Senior Vice
President and Secretary of Legg Mason Wood Walker, Incorporated ("LMWW"), the
Company's principal subsidiary, since 1970. He is the director of LMWW's
legal and compliance department. Mr. Bacigalupo is Chairman of the Board of
Legg Mason Capital Management, Inc.
Harry M. Ford, Jr., age 61, has been a director of the Company since its
inception in 1981 and has served as a Senior Vice President of the Company
since May 1982. He has been a Vice President of LMWW since 1976 and a Senior
Vice President since 1978. He joined Legg & Co. in 1964.
James E. Ukrop, age 56, has been a director of the Company since January
1985. Since 1975, he has been the President of Ukrop Supermarkets, Inc., a
corporation which operates a chain of supermarkets in Virginia. Mr. Ukrop is
a director of Owens & Minor, Inc. and Richfood Holdings, Inc.
John E. Koerner, III, age 51, has been a director of the Company since
October 1990. He has been President of Barq's, Inc., a soft drink producer
and distributor, since 1976.
Peter F. O'Malley, age 55, has been a director of the Company since April
1992. He has been Of Counsel to O'Malley & Miles, a law firm in Upper
Marlboro, Maryland, since 1989. Prior to that time he was Managing Partner of
the firm. Mr. O'Malley is a director of Potomac Electric Power Company.
Directors Continuing in Office
Directors whose terms will expire in 1995
Edmund J. Cashman, Jr., age 57, has been a director of the Company since
its inception in 1981 and has served as a Senior Executive Vice President of
the Company since December 1983. He has been an Executive Vice President of
LMWW since 1977. He is responsible for supervising LMWW's syndicate,
fixed-income securities and institutional sales activities. Mr. Cashman is
also President and a director of the Legg Mason Tax-Exempt Trust, Inc. and
the Legg Mason Income Trust, Inc.; President and trustee of the Legg Mason
Tax-Free Income Fund, and a director of the Worldwide Value Fund, Inc. and EA
Engineering, Science, and Technology, Inc.
John F. Curley, Jr., age 54, has served as Vice Chairman of the Company
and of LMWW since February 1982. He is the chief administrative officer of
the Company. Mr. Curley is President and a director of the Legg Mason Value
Trust, Inc., the Legg Mason Total Return Trust, Inc. and the Legg Mason
Special Investment Trust, Inc., and is Chairman of the Board of the Legg
Mason Tax-Exempt Trust, Inc., the Legg Mason Income Trust, Inc., the Legg
Mason Cash Reserve Trust, the Legg Mason Tax-Free Income Fund, the Legg Mason
Global Trust, Inc., and the Legg Mason Investors Trust, Inc.
John B. Levert, Jr., age 63, has been a director of the Company since
February 1987. He is Chairman of the Board and President of Howard Weil
Financial Corporation, a financial services holding company acquired by the
Company in February 1987, and since January 1985 has been Chairman of the
Board of Howard, Weil, Labouisse, Friedrichs Incorporated ("HWLF"), the
principal subsidiary of Howard Weil Financial Corporation. From March 1975
until January 1985, Mr. Levert was President of HWLF.
Kenneth S. Battye, age 80, has been a director of the Company since its
inception in 1981. He has been employed by LMWW since 1970. Prior to that
time he was a partner in Legg & Co., which he joined in 1947.
Harold L. Adams, age 55, has been a director of the Company since January
1988. He has been the Chairman of RTKL Associates, Inc., an architectural
design and planning firm, since 1987 and the President of the firm since
1969.
W. Curtis Livingston, age 50, has been a director of the Company since
1989 and has served as the President and Chief Executive Officer of Western
Asset Management Company since August 1984, having served as Senior Vice
President of that firm since 1980. Western Asset Management Company is an
investment advisory firm acquired by the Company in December 1986. Mr.
Livingston is a director of Western Asset Trust, Inc.
<PAGE>
Directors whose terms will expire in 1996
Raymond A. Mason, age 57, has served as Chairman of the Board and
President of the Company since its inception in 1981. He has served as
Chairman and Chief Executive Officer of LMWW since 1975, and was its
President from 1970 to November 1985. Prior to 1970, he was President of
Mason & Company, Inc., which he founded in 1962. Mr. Mason is Chairman of the
Board of the Legg Mason Value Trust, Inc., the Legg Mason Total Return Trust,
Inc. and the Legg Mason Special Investment Trust, Inc. He is a director of
Environmental Elements Corporation.
James W. Brinkley, age 57, has been a director of the Company since its
inception in 1981 and has served as a Senior Executive Vice President of the
Company since December 1983. In November 1985, he became President of LMWW,
having served as an Executive Vice President of LMWW since 1970. Mr. Brinkley
has primary responsibility for LMWW's retail sales and marketing activities.
Nicholas J. St. George, age 55, has been a director of the Company since
July 1983. Since February 1979, he has been the President and Chief Executive
Officer of Oakwood Homes Corporation, a manufacturer and retailer of
manufactured homes. Mr. St. George was the Director of Corporate Development
for Ferguson Enterprises, Inc., a wholesale plumbing supplier, from 1976 to
1979 and was Group Vice President of LMWW, where he was engaged in investment
banking activities, from 1973 to 1976. Mr. St. George is a director of
Oakwood Homes Corporation and American Bankers Insurance Group, Inc.
Richard J. Himelfarb, age 52, has served as a director of the Company and
as an Executive Vice President of the Company and LMWW since November 1983.
He is responsible for supervising LMWW's corporate, real estate and
partnership finance activities. From 1967 until joining the Company in 1983,
Mr. Himelfarb was engaged in the private practice of law.
Roger W. Schipke, age 57, has been a director of the Company since January
1991. He has been Chairman of the Board and Chief Executive Officer of
Sunbeam-Oster Company, Inc., a manufacturer of consumer products, since
August 1993. From May 1990 to July 1993, he was Chairman of the Board,
President and Chief Executive Officer of The Ryland Group, Inc., a company
engaged in home building and mortgage banking. Prior to May 1990, Mr. Schipke
served 29 years in various executive capacities with the General Electric
Company, most recently as Senior Vice President of the Appliance Group. Mr.
Schipke is a director of Brunswick Corporation, Mohawk Industries, Inc., the
Rouse Company and Sunbeam-Oster Company, Inc.
Edward I. O'Brien, age 65, has been a director of the Company since
February 1993. He serves in an advisory capacity to certain entities in the
securities business, having served as a consultant to the Securities Industry
Association (the "SIA") from December 1992 to November 1993, and as its
President from 1974 to December 1992. From 1955 to 1974, Mr. O'Brien served
in various capacities with Bache & Co. (now Prudential Securities
Incorporated), including as a general partner, Chairman of the Executive
Committee and Director. Mr. O'Brien is a director of the following Neuberger
& Berman mutual funds: Partners Fund, Inc., Manhattan Fund, Inc., Guardian
Fund, Inc., Selected Sectors Fund, Inc. and Genesis Fund, Inc.
Certain of the Company's directors and executive officers serve as
officers and directors of other subsidiaries of the Company not specified in
the preceding discussion. The principal occupation of Messrs. Battye and Ford
is as an investment executive with LMWW.
Committees of the Board -- Board Meetings
The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a nominating committee.
The Audit Committee, which consists of Messrs. St. George (Chairman),
Koerner and Schipke, is primarily concerned with the effectiveness of the
audits of the Company by the Company's independent auditors. Its duties
include: recommending the selection of independent auditors; reviewing the
scope of the audits conducted by them, as well as the results of their
audits; meeting with the Company's internal auditors; and reviewing the
organization and scope of the Company's internal system of accounting and
financial controls.
The Compensation Committee, which consists of Messrs. Adams (Chairman),
O'Brien and Ukrop, is responsible for recommending and approving the
compensation of the senior executive officers of the Company. The
Compensation Committee also serves as the administrative committee of certain
of the Company's employee benefit plans.
During the fiscal year ended March 31, 1994, the Board of Directors met
five times, and the Audit and Compensation Committees met three times.
<PAGE>
Compensation of Directors
Directors who are not employees of the Company receive an annual retainer
of $10,000, a fee of $2,000 for each Board meeting attended, and
reimbursement of expenses for attendance at meetings. Committee members also
receive an annual retainer of $1,000 ($2,000 for the committee chair) for
service in that capacity.
Under the terms of the Legg Mason, Inc. 1988 Non-Employee Director Stock
Option Plan, which covers an aggregate of up to 175,000 shares of Common
Stock, each non-employee director is granted, on the date he is first elected
as a director, an option to purchase 2,000 shares of Common Stock, and, on
the date of each Annual Meeting of Stockholders, an option to purchase an
additional 2,000 shares. All options have an exercise price equal to the fair
market value of the Common Stock on the date of grant. The options become
exercisable immediately upon the date of grant and have a ten-year term,
subject to earlier termination in the event the optionee ceases to be a
director of the Company. During the fiscal year ended March 31, 1994, each of
Messrs. Adams, Koerner, O'Brien, O'Malley, Schipke, St. George and Ukrop
received an option to purchase 2,000 shares of Common Stock (2,500 shares
after giving effect to a five-for-four stock split effected in September
1993).
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the ownership of
Common Stock of the Company as of May 19, 1994 by each director and nominee
for director, each executive officer named in the Summary Compensation Table,
all executive officers and directors as a group, and each person who, to the
best of the Company's knowledge, beneficially owned more than five percent of
the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OF OWNER (1) OWNED (2)(3) COMMON STOCK (3)
_____________________________________ ______________ _______________
<S> <C> <C>
Raymond A. Mason..................... 487,593(4) 3.99
Kenneth S. Battye.................... 370,886(5) 3.05
James W. Brinkley.................... 281,851 2.31
Edmund J. Cashman, Jr. .............. 196,700 1.61
John F. Curley, Jr. ................. 162,086 1.33
Charles A. Bacigalupo................ 128,333 1.06
Richard J. Himelfarb................. 114,091 *
John B. Levert, Jr................... 103,873 *
Harry M. Ford, Jr.................... 72,733 *
Joseph W. Sener, Jr. ................ 60,025(6) *
James E. Ukrop ...................... 45,800 *
W. Curtis Livingston................. 22,875 *
Nicholas J. St. George............... 15,000 *
John E. Koerner, III................. 12,625 *
Harold L. Adams...................... 12,500 *
Roger W. Schipke..................... 8,750 *
Peter F. O'Malley.................... 8,750(7) *
Edward I. O'Brien.................... 5,500 *
Edward A. Taber III.................. 2,500 *
All executive officers and directors
as a group (24 persons) ............. 2,136,996 17.03
___________________
<FN>
* Less than 1%.
(1) The table does not include 2,229,802 shares (including 334,898 shares
that are deemed to be beneficially owned by virtue of ownership of the
Company's 7% Convertible Subordinated Debentures) of which 1,952,802 shares
are held for investment purposes on behalf of advisory clients of Alliance
Capital Management, L.P., an investment advisory subsidiary of The Equitable
Companies, Incorporated, and 277,000 shares are held for investment purposes
by the Equitable Life Assurance Society of the United States, 787 Seventh
Avenue, New York, New York 10019. All of the shares (18.4% of the shares
outstanding)are held with sole dispositive power and 2,027,446 shares are
held with sole voting power. In addition, the table does not include 830,424
shares (6.8% of the shares outstanding) held by investment advisory clients
of GeoCapital Corporation, 767 Fifth Avenue, New York, New York 10153, as
to which shares GeoCapital Corporation has sole dispositive power. The
preceding information is based upon Schedule 13G reports filed by The
Equitable Companies and GeoCapital, respectively, reporting ownership as
of December 31, 1993.
(2) Except as otherwise indicated and except for shares held by members of
an individual's family or in trust, all shares are held with sole dispositive
and voting power.
(3) Does not include shares represented by vested beneficial interests in
the Legg Mason Profit Sharing Plan and Trust. Includes the following number
of shares subject to options exercisable within 60 days from May 19, 1994:
Mr. Mason -- 73,213; Mr. Battye -- 13,120; Mr. Brinkley -- 66,624; Mr.
Cashman -- 38,998; Mr. Curley -- 29,635; Mr. Bacigalupo -- 12,874; Mr.
Himelfarb -- 40,701; Mr. Levert -- 2,500; Mr. Ford -- 21,484; Mr.
Ukrop -- 15,000; Mr. Livingston -- 22,750; Mr. St. George -- 15,000; Mr.
Koerner -- 7,500; Mr. Adams -- 11,250; Mr. Schipke -- 2,500; Mr.
O'Malley -- 6,250; Mr. O'Brien -- 5,000; Mr. Taber -- 1,875; and all
executive officers and directors as a group -- 405,892. For purposes of
determining the percent of outstanding stock, such stock options are assumed
to have been exercised.
(4) Does not include 5,000 shares owned by Mr. Mason's wife, as to which
Mr. Mason disclaims beneficial ownership.
(5) Does not include 1,957 shares owned by the Legg & Co. Foundation, Inc.
as to which Mr. Battye has dispositive power.
(6) Does not include 120,000 shares held by the Trust under the Will of
Joseph W. Sener. Joseph W. Sener, Jr. is co-trustee and a beneficiary of the
trust.
(7) Includes 1,250 shares of an employee benefit plan trust of which Mr.
O'Malley and his wife are the sole beneficiaries.
/TABLE
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain information concerning compensation
of the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers for the past three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
_____________________________________________ _____________
Other Annual Options All Other
Name and Principal Position Year Salary Bonus (1) Compensation Granted (#) Compensation(3)
_______________________________ ________ _________ __________ _____________ ___________ _______________
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason................ 1994 $212,000 $1,684,000 $ 1,378 7,000 $ 39,689
Chairman of the Board, President 1993 211,000 1,421,000 1,392 10,000 29,801
and Chief Executive Officer 1992 199,167 1,178,000 690 12,500 25,796
James W. Brinkley .............. 1994 173,340 770,000 1,463 5,000 29,593
Senior Executive Vice President 1993 164,167 675,000 1,413 5,000 16,572
1992 153,170 555,000 838 6,250 16,001
John F. Curley, Jr.............. 1994 168,000 695,000 393 4,000 12,916
Vice Chairman of the Board and 1993 157,333 620,000 329 5,000 10,344
Chief Administrative Officer 1992 148,167 500,000 148 5,000 9,483
Richard J. Himelfarb............ 1994 168,336 765,000 1,427 5,000 10,385
Executive Vice President 1993 159,167 645,000 137,985(2) 5,000 7,102
1992 147,834 535,000 845 5,000 6,390
Edward A. Taber III(4).......... 1994 175,000 665,000 -- 5,000 5,850
Executive Vice President 1993 -- -- -- -- --
1992 -- -- -- -- --
__________________
<FN>
(1) The Company pays discretionary incentive cash bonuses to certain
executive officers whose duties are administrative and managerial or whose
compensation is not solely based on commissions. The Company's present policy
is to set aside in each fiscal year an executive bonus pool in an amount up
to 10% of the Company's pre-tax income for the fiscal year (before deducting
such bonuses). The selection of the participants in the pool, the total
amount reserved for bonuses, and the allocation of incentive bonuses among
the executive officers, including each of the officers identified in this
table, is determined by the Compensation Committee as described in the
Compensation Committee Report on Executive Compensation.
(2) Of this amount, $136,577 represents a tax reimbursement payment
pursuant to the terms of a stock option granted in 1983.
(3) Includes for fiscal 1994 for each individual $5,850 contributed by the
Company under the Company's Profit Sharing Plan; and for Messrs. Brinkley and
Curley, $185 and $86, respectively, contributed under the Company's Employee
Stock Purchase Plan. In addition, includes for fiscal 1994 for Messrs. Mason,
Brinkley, Curley and Himelfarb, respectively, $33,839, $23,558, $6,980, and
$4,535 of commissions earned from securities brokerage activities.
(4) Mr. Taber was not an executive officer of the Company prior to fiscal
1994.
</TABLE>
<PAGE>
STOCK OPTIONS
The following table summarizes option grants made during the fiscal year
ended March 31, 1994 to the executive officers named in the Summary
Compensation Table.
OPTION GRANTS IN FISCAL 1994
<TABLE>
<CAPTION>
Individual Grants (1)
____________________________________________________
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration Grant Date
Name Granted(#) Year ($/Share) Date Present Value(2)
__________ ____________ ______ _________ ____________ ________________
<S> <C> <C> <C> <C> <C>
Raymond A. Mason ...... 7,000 3.27% $24.75 October 2003 $ 60,550
James W. Brinkley ..... 5,000 2.34 24.75 October 2003 43,250
John F. Curley, Jr..... 4,000 1.87 24.75 October 2003 34,600
Richard J. Himelfarb... 5,000 2.34 24.75 October 2003 43,250
Edward A. Taber III.... 5,000 2.34 24.75 October 2003 43,250
________________
<FN>
(1) Option grants made pursuant to the Legg Mason, Inc. 1991 Omnibus
Long-Term Compensation Plan. The exercise price of each option granted under
the Plan is not less than the fair market value of the Common Stock on the
grant date. Options generally are not exercisable during the first year after
the date of grant, and thereafter generally vest in cumulative installments
of 20% on each anniversary of the date of grant, such that the options are
fully exercisable on and after 5 years from the date of grant until the tenth
year following that date, subject in all cases to accelerated vesting if
there is an unapproved change of control. Participants may use previously
owned shares to pay all or part of the exercise price.
(2) The stock options were valued using the Cox-Ross-Rubinstein Binomial
Model which is a variation of the Black-Scholes option pricing model. The
following assumptions were made for purposes of calculating the Grant Date
Present Value: an expected option term of eight years to exercise; stock
price volatility of .2949 based upon the monthly closing prices of the Common
Stock for the five years prior to the grant date; dividend yield of 2.0% and
a risk-free interest rate of 5.21%. The actual value realized, if any, on
stock option exercises will be dependent on overall market conditions and the
future performance of the Company and its Common Stock. There is no assurance
the actual value realized will approximate the amount calculated under the
valuation model.
</TABLE>
The following table summarizes option exercises during the fiscal year
ended March 31, 1994 by the executive officers named in the Summary
Compensation Table and the value of their unexercised options at March 31,
1994.
AGGREGATE OPTION EXERCISES DURING FISCAL 1994
AND VALUE OF OPTIONS HELD AT MARCH 31, 1994
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Securities Underlying
Options at March 31, 1994(#) Options at March 31, 1994(1)
Shares _____________________________ _____________________________
Acquired on Value
Name Exercise (#) Realized(1) Exercisable Unexercisable Exercisable Unexercisable
________ ____________ ___________ ____________ _____________ ____________ ______________
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason ...... 12,215 $ 194,530 63,687 51,093 $ 520,270 $ 308,236
James W. Brinkley...... -- -- 64,874 17,000 617,761 71,775
John F. Curley, Jr..... 15,896 192,285 28,385 14,250 237,500 58,400
Richard J. Himelfarb... 8,594 136,856 44,091 15,750 382,808 62,350
Edward A. Taber III.... 625 3,094 1,875 15,000 5,812 31,000
_________________
<FN>
(1) Value realized and value of unexercised options are calculated by
determining the difference between the fair market value of the shares
underlying the options and the exercise price of the options at exercise or
March 31, 1994, respectively.
</TABLE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Legg Mason's executive compensation program is designed to attract,
motivate and retain the management talent needed to strengthen the Company's
position in the financial services industry and to achieve its business
objectives.
Salaries of executive officers are set at levels which the Compensation
Committee of the Board of Directors (which committee consists entirely of
non-employee directors) believes are competitive with salaries of executives
in similar positions at comparable financial services companies. In addition,
substantial emphasis is placed on incentive compensation directly related to
short- and long-term corporate performance through annual cash bonuses and
stock option grants.
As is common in the financial services industry, a significant portion of
total compensation of the Company's executive officers is paid in the form of
annual bonuses. For example, in fiscal 1994, 89% of the annual cash
compensation of Raymond A. Mason, the Company's Chief Executive Officer
("CEO"), was paid as an annual bonus. This is intended to maximize the
portion of an individual's compensation that is subject to fluctuation each
year based upon corporate and individual performance, as discussed below.
The compensation program is structured to recognize each executive's level
of responsibility and to reward exceptional individual and corporate
performance. The program takes into account both annual operating results and
the desirability of providing incentives for future improvement. This
includes the ability to implement the Company's business plans as well as to
react to unanticipated external factors which can have a significant impact
on corporate performance. Compensation decisions for all executives,
including the CEO, are based on the same criteria.
In carrying out its responsibilities, the Compensation Committee has from
time to time availed itself of independent consulting advice in connection
with its consideration of executive compensation plans, such as the Company's
1991 Omnibus Long-Term Compensation Plan. The Committee also has available to
it surveys of financial services industry compensation, which include the
companies comprising the peer group referenced in the Stock Performance Graph
following this report.
There are three major components of the Company's executive compensation
program: base salary, short-term awards, and long-term incentive awards.
Base Salary
A competitive base salary is important in fostering a career orientation
among executives, consistent with the long-term nature of the Company's
business objectives. The Compensation Committee determines the salary of the
CEO and the Company's other executive officers based on its consideration of
the CEO's recommendations.
Salaries and salary adjustments are based on the responsibilities,
performance and experience of each executive, regular reviews of competitive
positioning (comparing the Company's salary structure with that of similar
companies) and business performance. While there is no specific weighting of
these factors, the responsibilities, performance and experience of each
executive and reviews of competitive positioning are the most important
considerations.
Raymond A. Mason, the Company's CEO, has more than 30 years of service
with the Company. The Compensation Committee established his fiscal 1994
salary based upon competitive positioning and the Company's overall
compensation approach, as noted above, of limiting base salary levels and
emphasizing incentive compensation.
Short-Term Awards
Short-term cash awards to executives are directly based on the Company's
fiscal year operating results and recognize contributions to the business
during the fiscal year.
The Company's incentive bonus program provides for an executive bonus pool
to be reserved in an amount up to 10% of the Company's pre-tax income
(calculated before deduction of the bonuses) for annual cash awards to the
CEO, the Company's other executive officers, and certain other executives
with key management responsibilities. The bonus pool has ranged from 8% to
10% of annual pre-tax income. A total of 14 executives were included in this
group for fiscal 1994. The specific bonus an executive receives is dependent
on his or her level of responsibility and individual performance. Levels of
responsibility are evaluated annually by the Compensation Committee without
regard to any specific formula for allocation of the bonus pool. Assessments
of individual performance are also made annually by the Compensation
Committee after receiving the recommendations of the CEO. Such assessments
are based on a number of factors, including individual and corporate
performance, initiative, business judgement and management skills.
Total bonuses to this group with respect to fiscal 1994 aggregated
approximately 9% of pre-tax income (before deduction of the cash bonuses).
Raymond A. Mason's fiscal 1994 award reflects his significant personal
contributions to the business and his leadership in building the Company's
revenues, earnings and capital position, each of which reached record levels
in fiscal 1994. The award was based on the Compensation Committee's general
evaluation of Mr. Mason's overall contribution as CEO to the Company's record
performance levels, rather than on quantitative measures or formulas. The
Compensation Committee believes that Mr. Mason's cash compensation (salary
and cash award) was appropriate in relation to compensation of CEOs of
comparable companies, including the companies comprising the peer group
reflected in the Stock Performance Graph, taking into account the size and
business results of Legg Mason and those companies.
Long-Term Incentive Awards
Long-term incentive awards, made pursuant to the shareholder-approved Legg
Mason 1991 Omnibus Long-Term Compensation Plan, are designed to reinforce the
importance of building long-term value for the Company's stockholders.
Stock options were the only long-term incentives granted to executive
officers in fiscal 1994. The Compensation Committee believes that the regular
annual grant of stock options focuses management attention on long-term
growth in stockholder value and stock price appreciation. Under the plan,
options have a term of 10 years and are granted at the fair market value of
Legg Mason Common Stock on the date of grant. Twenty percent of the options
become exercisable one year from date of grant, with the balance becoming
exercisable in 20% increments over the ensuing four years. Recipients must
remain in the Company's employ to exercise their options.
The number of options that the Compensation Committee grants to executive
officers is based on individual performance (determined as described under
"Short-Term Awards") and level of responsibility, and is determined by the
Compensation Committee after considering the recommendations of the CEO.
Award levels must be sufficient in size so that executives develop strong
incentives to achieve long-term corporate goals. In fiscal 1994, annual
option awards to Messrs. Mason and Curley were reduced from prior year levels
and awards to certain other key officers with high potential were increased.
Recent Tax Legislation
During 1993, the Internal Revenue Code was amended to limit deductions for
certain annual compensation in excess of $1,000,000 paid to individuals
required to be named in the summary compensation table of public companies.
This limitation applies to the Company beginning with its fiscal year ending
March 31, 1995. The legislation imposing this change is unclear on a number
of issues, and the ultimate effect of the change on the Company will depend
to a significant extent on the regulations ultimately adopted by the Internal
Revenue Service. The Committee has begun to review the effect of the
legislation and proposed regulations on the Company, but has not yet reached
a determination as to whether any of the Company's compensation plans will be
revised in order to assure deductibility of all compensation.
COMPENSATION COMMITTEE
Harold L. Adams, Chairman
Edward I. O'Brien
James E. Ukrop
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on Legg
Mason's Common Stock for the last five fiscal years with the cumulative total
return of the S&P 500 Stock Index and the Regional Sub-Index of the Lipper
Analytical Brokerage Stock Price Index ("Lipper Regional") over the same
period (assuming the investment of $100 in each on March 31, 1989, and the
reinvestment of all dividends). The Lipper Regional is comprised of 15
publicly held regional securities firms.
[IMAGE OMITTED]
A line graph appears here and data is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Legg Mason $100 $113 $148 $199 $228 $212
S&P 500 Stock Index $100 $119 $136 $151 $174 $177
Lipper Regional $100 $107 $131 $245 $273 $299
</TABLE>
CERTAIN TRANSACTIONS
In October 1978, 7 East Redwood Street Limited Partnership (the
"Partnership") was formed to acquire the Company's rights under a contract to
purchase a 149,000 square foot office building in which all of the Company's
Baltimore, Maryland offices were then located. LMWW Realty, Inc., a
wholly-owned subsidiary of the Company, acquired a 31.2% interest as a
general partner in the Partnership, and in April 1984 purchased an additional
4% in outstanding limited partnership interests. In February 1988, the
Company moved its principal executive offices and a substantial portion of
its Baltimore operations to another location, and the Company's occupancy of
space leased from the Partnership decreased from approximately 78,000 square
feet (53% of the building) to approximately 49,000 square feet (33% of the
building) currently. Annual rent (including expense charges under the leases)
paid by the Company in the last fiscal year was approximately $811,000. The
following executive officers and directors of the Company hold interests as
limited partners in the Partnership with the percentage interests indicated:
Kenneth S. Battye -- 17.0%, Raymond A. Mason -- 4.5% and Joseph W. Sener,
Jr. -- 2.0%. The Company believes that the rents paid to the Partnership were
no less favorable to the Company than rents which would have been paid absent
these relationships. Beginning in 1993, the Partnership began to experience
cash flow difficulties, and in February 1994 the Company acquired the
approximately $7,400,000 principal balance non-recourse mortgage encumbering
the building from an unrelated third party lender for $5,000,000. The
Company, as mortgagee, expects to acquire the building from the Partnership
in satisfaction of the mortgage without making any further payments. It is
also anticipated the Partnership will be liquidated, without any
distributions to its partners.
During the fiscal year ended March 31, 1994, LMWW and Aberdeen Creek
Corporation ("Aberdeen"), a corporation owned by Peter F. O'Malley, a
director of the Company, entered into an arrangement under which LMWW and
Aberdeen may in certain instances provide investment banking services
under a joint working relationship. Total fees earned in connection with
such services from inception of the relationship through May 1994 were
$150,000, of which Aberdeen received $45,000 and LMWW received $105,000. The
portion of the total fees received by Aberdeen and LMWW in any investment
banking engagement subject to the arrangement is determined by negotiation
between Aberdeen and LMWW, and in each case will depend upon a number of
factors, including their respective roles in securing the engagement and the
level and nature of services performed by each.
In the ordinary course of its business, the Company has extended credit to
certain of its directors and executive officers in connection with their
purchase of securities in margin accounts. Such extension of credit has not
resulted in any losses to the Company and has been made on the same terms as
loans to unaffiliated customers.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Coopers & Lybrand to be the
independent auditors of the Company for the fiscal year ending March 31,
1995. This selection will be submitted for ratification at the Annual
Meeting. Representatives of Coopers & Lybrand will be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1994 ANNUAL MEETING
Any stockholder proposal intended for inclusion in the proxy material for
the 1995 Annual Meeting must be received in writing by the Company on or
before February 16, 1995. The inclusion of any proposal will be subject to
applicable rules of the Securities and Exchange Commission.
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
rules thereunder, the Company's executive officers and directors are required
to file with the Securities and Exchange Commission and the New York Stock
Exchange reports of their ownership of Common Stock. Based solely on a review
of copies of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that
during the fiscal year ended March 31, 1994 its executive officers and
directors complied with the Section 16(a) requirements except that reports
covering a gift by Kenneth S. Battye to a charitable foundation and a sale by
John B. Levert, Jr. were filed late.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters to
come before the meeting. If any other matters should come before the meeting,
the persons named in the enclosed proxy will act thereon according to their
best judgment.
By order of the Board of Directors
[SIG]
CHARLES A. BACIGALUPO
Secretary
<PAGE>
LEGG MASON, INC.
Proxy for Annual Meeting of Stockholders, July 28, 1994
The undersigned hereby appoints Raymond A. Mason, Charles A. Bacigalupo
and John F. Curley, Jr., and each of them, as proxy, with full power of
substitution, to vote all shares which the undersigned is entitled to vote at
the annual meeting of stockholders of Legg Mason, Inc., on July 28, 1994, at
11:00 a.m., and at any adjournment thereof.
The Board of Directors recommends a vote FOR each of the items below.
1. FOR [ ] WITHHOLD [ ] The election of all Nominees listed (except as
marked to the contrary):
Nominees for the term expiring at the 1997 annual meeting
Charles A. Bacigalupo, Harry M. Ford, Jr.James E. Ukrop
John E. Koerner, III, Peter F. O'Malley
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of Coopers & Lybrand as
independent auditors of the Company for the fiscal year ending March 31, 1995
3. To act upon any other matter which may properly come before the meeting
or any adjournment thereof.
This proxy will be voted on each of the foregoing items as specified by
the person signing it, but if no specification is made, the proxy will be
voted FOR the election of Directors and FOR the other proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
IT MAY BE REVOKED PRIOR TO ITS EXERCISE.
Receipt of notice of the meeting and proxy statement is hereby
acknowledged, and the terms of the notice and statement are hereby
incorporated by reference into this proxy. The undersigned hereby revokes all
proxies heretofore given for said meeting or any adjournment or adjournments
thereof.
Dated: 1994
(SEAL)
(SEAL)
Please date and then sign exactly as name appears to the left. If signing for
trust, estate or corporation, capacity or title should be stated. If shares
are jointly owned, both owners should sign.
PLEASE DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
<PAGE>
