<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
[ ] 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 ss.240.14a-11(c) or ss.240.14a-12
Legg Mason, Inc.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $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 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:
---------------------------------------------------------------
<PAGE>
[ ] 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>
[LOGO]
Legg Mason Tower
111 South Calvert Street
Baltimore, Maryland 21202
June 15, 1995
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 10:00 a.m. on Thursday, July 27, 1995. 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,
/s/ Raymond A. Mason
RAYMOND A. MASON
Chairman of the Board
and President
<PAGE>
LEGG MASON, INC.
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, July 27, 1995
---------------
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 27, 1995, at 10:00 a.m. to consider and
vote upon:
(1) The election of six directors for the three-year term ending in 1998 and
one director for the remainder of the three-year term ending in 1997.
(2) Amendment of the Legg Mason, Inc. Employee Stock Purchase Plan.
(3) Approval of the Legg Mason, Inc. Executive Incentive Compensation Plan.
(4) Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the fiscal year ending March 31, 1996.
(5) 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 18, 1995 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 1995
Annual Report to Stockholders.
By order of the Board of Directors
/s/ Charles A. Bacigalupo
CHARLES A. BACIGALUPO
Secretary
June 15, 1995
<PAGE>
LEGG MASON, INC.
Legg Mason Tower
111 South Calvert Street
Baltimore, Maryland 21202
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF STOCKHOLDERS
Thursday, July 27, 1995
-----------------
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, 1995.
Stockholders of record at the close of business on May 18, 1995 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 12,298,865 shares of Common
Stock, $.10 par value ("Common Stock"), each of which is entitled to one vote.
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. The affirmative vote of a
majority of the issued and outstanding shares of Common Stock entitled to vote
at the meeting is required to amend the Legg Mason, Inc. Employee Stock Purchase
Plan, and the affirmative vote of a majority of the votes cast on the matter is
required for approval of the Legg Mason, Inc. Executive Incentive Compensation
Plan. Abstentions and broker non-votes will have the same effect as a negative
vote with respect to the proposed amendment of the Employee Stock Purchase Plan
and will have no effect with respect to the proposed approval of the Executive
Incentive Compensation Plan.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Each year one
class is elected to serve for a term of three years. The stockholders will vote
at this Annual Meeting for the election of six directors for the three-year term
expiring at the Annual Meeting of Stockholders in 1998 and for the election of
one director to serve for the remainder of the three-year term expiring at the
Annual Meeting of Stockholders in 1997. All nominees except William Wirth and
Margaret DeB. Tutwiler presently serve as directors.
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 any
nominee is unable to serve, the persons named in the proxy will vote for such
substitute nominee 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.
1
<PAGE>
Nominees for Director for the Term Expiring in 1998
Edmund J. Cashman, Jr., age 58, 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 Legg
Mason Wood Walker, Incorporated ("LMWW"), the Company's principal subsidiary,
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.; Vice Chairman of the Board
of Legg Mason Income Trust, Inc.; President and a 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 55, 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 64, 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.
William Wirth, age 64, was employed by Credit Suisse from 1961 until his
retirement in March 1994. From 1977 to 1994, Dr. Wirth served as a member of the
Credit Suisse Executive Board with responsibility for various areas of asset
management, institutional investment counseling, mutual funds, economic research
and financial analysis. He continues to occupy positions in several entities
within the CS Holding Group, an international financial organization, including
Chairman of the Board of Bank Hofmann AG, Zurich, Vice Chairman of the Board of
Soci|fet|fe Internationale de Placements, Zurich, and Vice Chairman of the Board
of Transplan AG, Zurich. He is also a Vice Chairman of Deutsche Bank
(Switzerland) AG, Zurich.
Harold L. Adams, age 56, has been a director of the Company since January
1988. He has been the Chairman of RTKL Associates, Inc., an international
architecture, engineering and planning firm, since 1987 and the President of the
firm since 1969.
W. Curtis Livingston, age 51, 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.
Nominee for Director for the Term Expiring in 1997
Margaret DeB. Tutwiler, age 44, has, since May 1993, been engaged in the
public relations and strategic communications business through firms of which
she has been the sole or a principal owner. Prior to May 1993, she held various
positions in government service, including from August 1992 to January 1993
Assistant to the President for Communications, The White House; from March 1989
to August 1992 Assistant Secretary of State for Public Affairs and Department
Spokesman, U.S. Department of State; from January 1989 to March 1989 Consultant,
U.S. Department of State; from November 1988 to January 1989 Senior Advisor,
Transition Team, U.S. Department of State; from February 1985 to August 1988
Assistant Secretary for Public Affairs and Public Liaison, U.S. Department of
the Treasury; from July 1984 to February 1985 Deputy Assistant to the President
for Political Affairs, The White House; and from January 1981 to July 1984
Special Assistant to the President and Executive Assistant to the Chief of
Staff, The White House.
2
<PAGE>
Directors Continuing in Office
Directors whose terms will expire in 1996
Raymond A. Mason, age 58, 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 58, 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 56, 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 53, 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 58, has been a director of the Company since January
1991. He has been Chairman of the Board and Chief Executive Officer of Sunbeam
Corporation, 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. 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
Corporation.
Edward I. O'Brien, age 66, 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., Focus Fund, Inc., Genesis Fund,
Inc. and Socially Responsive Fund, Inc.
Directors whose terms will expire in 1997
Charles A. Bacigalupo, age 61, 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 LMWW 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 62, 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. Mr. Ford's principal
occupation is as an investment executive with LMWW.
3
<PAGE>
James E. Ukrop, age 57, has been a director of the Company since January
1985. Since 1975, he has been the principal executive officer of Ukrop Super
Markets, 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 52, 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 56, has been a director of the Company since April
1992. He has been Of Counsel to the law firm of O'Malley, Miles, Nylen & Gilmore
and its predecessor, O'Malley & Miles, since 1989. Prior to that time he was
Managing Partner of O'Malley & Miles. Mr. O'Malley is a director of Potomac
Electric Power Company and Giant Food Inc.
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), O'Brien
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),
Koerner 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, 1995, the Board of Directors met five
times, the Audit Committee four times, and the Compensation Committee six times.
Each director except Mr. Ukrop attended 75% or more of the aggregate number of
meetings of the Board and all committees of the Board on which the director
served.
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 are 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, 1995, 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.
4
<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 18, 1995 by each director and nominee for
director, each executive officer named in the Summary Compensation Table, all
executive officers, directors and nominees 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>
PERCENT OF
COMMON STOCK OUTSTANDING
BENEFICIALLY COMMON STOCK
NAME OF OWNER (1) OWNED (2) (3) (3)
- -------------------------------------------- -------------- ---------------
<S> <C> <C>
Raymond A. Mason............................ 490,090 (4) 3.96
Kenneth S. Battye........................... 315,178 (5) 2.56
James W. Brinkley........................... 285,651 2.31
Edmund J. Cashman, Jr. ..................... 193,650 1.57
John F. Curley, Jr. ........................ 154,765 1.26
Charles A. Bacigalupo....................... 129,733 1.05
Richard J. Himelfarb........................ 122,981 1.00
John B. Levert, Jr.......................... 103,873 *
Harry M. Ford, Jr........................... 71,354 *
James E. Ukrop ............................. 35,600 *
W. Curtis Livingston........................ 25,950 (6) *
Nicholas J. St. George...................... 17,000 *
John E. Koerner, III........................ 15,525 (7) *
Harold L. Adams............................. 14,500 *
Roger W. Schipke............................ 10,750 *
Peter F. O'Malley........................... 10,750 *
Edward I. O'Brien........................... 7,500 *
Edward A. Taber III......................... 6,000 *
Margaret DeB. Tutwiler...................... 0
William Wirth............................... 0
All executive officers, directors and
nominees
as a group (25 persons) ....................2,041,640 16.09
<FN>
* Less than 1%.
(1) The table does not include 2,189,869 shares (including 257,202 shares that
are deemed to be beneficially owned by virtue of ownership of the Company's
7% Convertible Subordinated Debentures) of which 1,364,869 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 825,000 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 (17.8% of the shares
outstanding) are held with sole dispositive power and 2,095,987 shares are
held with sole voting power. In addition, the table does not include
1,220,849 shares (9.9% 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, 1994.
(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) Includes the following number of shares subject to options exercisable
within 60 days from May 18, 1995: Mr. Mason -- 70,710; Mr. Battye -- 14,865;
Mr. Brinkley -- 47,062; Mr. Cashman -- 29,462; Mr. Curley -- 16,050; Mr.
Bacigalupo -- 14,274; Mr. Himelfarb -- 40,999; Mr. Levert -- 2,500; Mr. Ford
-- 23,394; Mr. Ukrop -- 17,000; Mr. Livingston -- 25,625; Mr. St. George --
17,000; Mr. Koerner -- 9,500; Mr. Adams -- 13,250; Mr. Schipke -- 4,500; Mr.
O'Malley -- 8,250; Mr. O'Brien -- 7,000; Mr. Taber -- 5,375; and all
executive officers and directors as a group -- 391,867. For purposes of
determining the percent of outstanding stock, such stock options are assumed
to have been exercised. Does not include shares represented by vested
beneficial interests in the Legg Mason Profit Sharing Plan and Trust.
(4) Does not include 5,000 shares owned by Mr. Mason's wife, as to which Mr.
Mason disclaims beneficial ownership.
<PAGE>
(5) Does not include 1,000 shares owned by the Legg & Co. Foundation, Inc. as to
which Mr. Battye has dispositive power.
(6) Includes 200 shares held by Mr. Livingston as a trustee of trusts for the
benefit of his children.
(7) Includes 900 shares owned by Mr. Koerner's children.
5
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain information concerning compensation
of the Company's Chief Executive Officer and each of the five 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(#)(4) Compensation(5)
--------------------------- ---- ------ ---------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason................ 1995 $212,000 $ 608,000 $ 1,564 10,000 $ 39,826
Chairman of the Board, 1994 212,000 1,684,000 1,378 7,000 39,689
President and Chief 1993 211,000 1,421,000 1,392 10,000 29,801
Executive Officer
James W. Brinkley............... 1995 184,000 260,000 879 5,000 22,106
Senior Executive 1994 173,340 770,000 1,463 5,000 29,593
Vice President 1993 164,167 675,000 1,413 5,000 16,572
Edmund J. Cashman, Jr........... 1995 167,500 260,000 -- 4,000 17,564
Senior Executive 1994 158,340 553,000 -- 2,000 17,156
Vice President 1993 149,167 580,500 -- 2,500 12,714
John F. Curley, Jr.............. 1995 178,995 260,000 177 4,000 11,062
Vice Chairman of the Board 1994 168,000 695,000 393 4,000 12,916
and Chief Administrative 1993 157,333 620,000 329 5,000 10,344
Officer
Richard J. Himelfarb............ 1995 181,245 260,000 679 4,000 7,354
Executive Vice President 1994 168,336 765,000 1,427 5,000 10,385
1993 159,167 645,000 137,985(3) 5,000 7,102
Edward A. Taber III(2).......... 1995 200,000 245,000 -- 24,000 3,700
Executive Vice President 1994 175,000 665,000 -- 5,000 5,850
1993 -- -- -- -- --
<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. See "Approval of
Executive Incentive Compensation Plan."
(2) Mr. Taber was not an executive officer of the Company prior to fiscal 1994.
(3) Of this amount, $136,577 represents a tax reimbursement payment pursuant to
the terms of a stock option granted in 1983.
(4) Adjusted to reflect five-for-four stock split effected September 1993.
(5) Includes for fiscal 1995 for each individual $3,700 contributed by the
Company under the Company's Profit Sharing Plan; and for Mr. Curley, $93
contributed under the Company's Employee Stock Purchase Plan. In addition,
includes for fiscal 1995 for Messrs. Mason, Brinkley, Cashman, Curley and
Himelfarb, respectively, $36,126, $18,406, $13,864, $7,269, and $3,654 of
commissions earned from securities brokerage activities.
</TABLE>
6
<PAGE>
Stock Options
The following table summarizes option grants made during the fiscal year
ended March 31, 1995 to the executive officers named in the Summary
Compensation Table.
Option Grants in Fiscal 1995
<TABLE>
<CAPTION>
Individual Grants (1)
------------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration Grant Date
Name Granted Year ($/Share) Date Present Value (2)
---- ---------- ---------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Raymond A. Mason...... 10,000 2.46 $ 19.62 7/27/04 $ 82,006
James W. Brinkley ... 5,000 1.23 19.62 7/27/04 41,003
Edmund J. Cashman,
Jr.................. 4,000 0.98 19.62 7/27/04 32,803
John F. Curley, Jr. . 4,000 0.98 19.62 7/27/04 32,803
Richard J. Himelfarb . 4,000 0.98 19.62 7/27/04 32,803
Edward A. Taber III .. 4,000 0.98 19.62 7/27/04 32,803
20,000 4.91 22.06 1/18/05 187,335
<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. The vesting schedule of the
$22.06 options granted to Mr. Taber is as follows: 727 shares at 1/19/96 and
1/19/97; 2,699 shares at 1/19/98; 3,821 shares at 1/19/99; 4,533 shares at
1/19/00 and 1/19/01; and 2,960 shares at 1/19/02. Option holders may use
previously owned shares to pay all or part of the exercise price.
(2) The stock options were valued using the Modified American Black-Scholes
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; a
dividend yield of 1.8%; stock price volatility of .3074 and .3040 for the
$19.62 and the $22.06 options, respectively, based upon the monthly common
stock closing prices for the eight years prior to the grant date; and a
risk-free interest rate of 7.39% and 7.79% for the $19.62 and the $22.06
options, respectively. 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>
<PAGE>
The following table summarizes option exercises during the fiscal year
ended March 31, 1995 by the executive officers named in the Summary
Compensation Table and the value of their unexercised options at March 31,
1995.
Aggregate Option Exercises During Fiscal 1995
and Value of Options Held at March 31, 1995
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money
Shares Options at March 31, 1995 Options at March 31, 1995(1)
Acquired on Value --------------------------- ---------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason...... 5,000 $ 67,338 71,613 48,167 $ 775,359 $ 345,938
James W. Brinkley ... 12,031 159,973 59,093 15,750 684,097 74,309
Edmund J. Cashman,
Jr.................. 7,186 100,576 33,462 8,100 375,038 34,976
John F. Curley, Jr. . 7,100 57,793 26,335 13,200 300,371 63,145
Richard J. Himelfarb . 8,592 99,731 40,999 14,250 431,172 65,885
Edward A. Taber III .. -- -- 5,375 35,500 26,960 92,038
<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, 1995, respectively.
</TABLE>
7
<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 1995, 74% 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 1995 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 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 7% to 10% of annual pre-tax income. A total of 11
executives were included in this group for fiscal 1995. The specific bonus an
executive receives
8
<PAGE>
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 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 judgment and management skills.
Total bonuses to this group with respect to fiscal 1995 aggregated
approximately 7% of pre-tax income (before deduction of the cash bonuses). The
portion of the bonus pool awarded to Raymond A. Mason, the Company's CEO, for
fiscal 1995 reflects his significant personal contributions to the business and
his leadership in building the Company's revenues, earnings and capital
position. The award was based on the Compensation Committee's general evaluation
of Mr. Mason's overall contribution as CEO to the Company's performance levels,
rather than on quantitative measures or formulas. The Compensation Committee
believes that Mr. Mason's cash compensation (salary and cash bonus) 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.
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits
deductions for certain annual compensation in excess of $1,000,000 paid to
individuals required to be named in the summary compensation table in proxy
statements of public companies. This limitation did not result in the loss of
any tax deduction to the Company for its fiscal year ended March 31, 1995.
Beginning in fiscal 1996, it is intended that cash incentives bonuses will be
paid pursuant to the Legg Mason, Inc. Executive Incentive Compensation Plan,
which is described in detail below and recommended for stockholder approval at
the Annual Meeting. Amounts paid pursuant to the Executive Incentive
Compensation Plan are intended to qualify as performance-based compensation
within the meaning of Section 162(m), resulting in exclusion from the $1,000,000
limitation on deductibility. See "Approval of Executive Incentive Compensation
Plan."
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 1995. 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. Generally, 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 1995, the annual option award to
Mr. Mason increased from the preceding year, but represented a reduced
percentage of the total options granted to all employees.
COMPENSATION COMMITTEE
Harold L. Adams, Chairman
John E. Koerner, III
James E. Ukrop
9
<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, 1990, and the reinvestment
of all dividends). The Lipper Regional is comprised of 15 publicly held regional
securities firms.
#############################################################################
IMAGE OF GRAPH OMITTED
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Legg Mason $100 $131 $175 $201 $186 $219
S&P 500 Stock Index $100 $114 $127 $146 $148 $171
Lipper Regional $100 $123 $230 $256 $280 $306
#############################################################################
CERTAIN TRANSACTIONS
Pursuant to an arrangement between LMWW and Aberdeen Creek Corporation
("Aberdeen"), a corporation owned by Peter F. O'Malley, a director of the
Company, LMWW and Aberdeen may in certain instances provide investment banking
services under a joint working relationship. The portion of the total fees to be
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. During fiscal 1995, there were no investment banking engagements that
resulted in any fees pursuant to the arrangement.
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.
Compensation Committee Interlocks
During the period April 1, 1994 through May 30, 1995, the Company paid
$70,479 to RTKL Associates, Inc. for architecture and planning services relating
to various Company locations. Harold L. Adams, a director of the Company and a
member of the Compensation Committee of the Board, is the Chairman of RTKL
Associates, Inc.
10
<PAGE>
APPROVAL OF AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
On December 1, 1987, the Board of Directors adopted the Legg Mason, Inc.
Employee Stock Purchase Plan (the "Plan"). The Plan was approved by the
stockholders in 1988. The purpose of the Plan is to provide employees of the
Company and its subsidiaries with the opportunity to purchase shares of the
Company's Common Stock in the market through voluntary payroll deductions. The
Plan, as originally adopted, covered a total of 625,000 shares (as adjusted for
a subsequent five-for-four stock split). The Board of Directors believes that
the Plan continues to be desirable for purposes of encouraging employee
ownership of the Company's Common Stock, and in April 1995 adopted an amendment
to the Plan increasing the number of shares covered by the Plan by 1,000,000.
The provisions of the Plan require that any amendment increasing the number of
shares is required to be approved by the stockholders, and such amendment is
being presented for approval at the Annual Meeting.
Any regular employee of the Company or one of its subsidiaries (the Company
and its subsidiaries being sometimes hereinafter referred to as the "Employer")
is eligible to participate in the Plan. As of March 31, 1995, approximately
2,900 employees were eligible to participate in the Plan and 545 employees were
participating. Each eligible employee who elects to participate may authorize
payroll deductions of not less than 1% and not more than 10% of the employee's
compensation (as defined). The participant may increase or decrease the amount
of deductions at any time, but not more than once during any calendar year. In
addition, a participant may terminate payroll deductions under the Plan at any
time, but is not allowed to resume payroll deductions until six months after the
date when the deductions terminated. Payroll deductions under the Plan cease
immediately upon the employee's retirement, resignation, death or other
termination of employment.
The Employer contributes an amount equal to 5% of each participant's monthly
payroll deduction. The Company's Board of Directors may at any time increase or
decrease the amount of the Employer contribution. Payroll deductions are
accumulated and forwarded to a bank or other firm selected by the Company (the
"Agent"), together with the Employer contributions. As promptly as practicable
after the end of each month, the Agent causes to be purchased on the open market
as many shares of the Company's Common Stock as such funds will permit. The
number of shares purchased depends upon the market price of the Common Stock at
the time of each purchase. Shares purchased in each month are allocated on the
basis of the average cost thereof among participants in proportion to the
respective amount of funds available in the account of each participant.
Allocations are made in whole shares and fractional shares.
The Company has designated First Union National Bank of North Carolina, as
Agent, to maintain accounts in the names of the participants and to effect
purchases and sales of the Company's Common Stock through broker-dealers. The
Company pays brokerage commissions and other charges with respect to purchases
made under the Plan and reinvestment of dividends under the Plan. The
participant may at any time instruct the Agent to sell all of the shares held in
the participant's account, and may also, but not more than once during any
calendar year, instruct the Agent to sell less than all of the shares held in
the account. Brokerage commissions and other charges in connection with sales
are payable by the participant.
The Company's Board of Directors may amend the Plan in any respect except
that certain amendments require the approval of the holders of a majority of the
shares of the Company's Common Stock then issued, outstanding and entitled to
vote. Without such approval, no amendment may be made (a) increasing or
decreasing the total number of shares covered by the Plan (except pursuant to
the anti-dilution provisions of the Plan), or (b) materially modifying the
eligibility requirements for participation in the Plan.
The table below shows the dollar value that would be received by the person
or group indicated during the fiscal year ended March 31, 1996 pursuant to the
Plan as a result of the Company's 5% matching contribution assuming the
continuation of the current participants in the Plan at the payroll deduction
levels that existed in fiscal 1995.
11
<PAGE>
<PAGE>
New Plan Benefits
Legg Mason, Inc. Employee Stock Purchase Plan
Dollar Value of
Company Contribution
--------------------
John F. Curley, Jr., Vice Chairman of the
Board ................................... $ 93
Executive officers as a group ........... 870
All employees as a group ................ 91,420
APPROVAL OF EXECUTIVE INCENTIVE COMPENSATION PLAN
In May 1995, the Compensation Committee of the Board of Directors (the
"Compensation Committee") approved the Legg Mason, Inc. Executive Incentive
Compensation Plan (the "Plan") for submission to a vote of the stockholders at
the 1995 Annual Meeting. The text of the Plan is set forth in Appendix A to this
proxy statement and the following description of the Plan is qualified in its
entirety by reference to the Plan.
The Plan is an annual bonus plan designed to provide certain senior officers
of the Company, including those who are required to be named in the Summary
Compensation Table, with incentive compensation based upon achievement of
pre-established performance goals. The Plan is designed to comply with Section
162(m) of the Internal Revenue Code of 1986, as amended, which denies a tax
deduction to a public company for compensation in excess of $1,000,000 paid in
any tax year to the chief executive officer and each of the four other most
highly compensated executive officers, subject to an exception for
"performance-based compensation" paid pursuant to performance goals determined
by the company's compensation committee and approved by its shareholders.
The Plan will be administered by the Compensation Committee. The Compensation
Committee will select Plan participants from among the Company's senior
management and key employees who will be eligible to receive cash awards under
the Plan (collectively, "Awards").
The Plan provides for a total pool (the "Award Pool") to be based upon a
designated percentage of the Company's consolidated pre-tax income for each
fiscal year, before reduction by the amount of the Award Pool ("Annual
Profits"). The Award Pool for each fiscal year will be determined by the
Compensation Committee, but may not exceed 10% of Annual Profits. The
Compensation Committee will designate the persons who will participate in the
Plan for each fiscal year and will determine the maximum percentage of the Award
Pool, if any, to be paid to each participant for the particular fiscal year. In
no event may more than 40% of the Award Pool for a fiscal year be awarded to any
single participant in the Plan. No payments will be made under the Plan unless
Annual Profits exceed $3,000,000.
The Compensation Committee is authorized at any time during or after a fiscal
year, in its sole and absolute discretion, to reduce or eliminate the Award Pool
or the portion of the Award Pool allocated to any participant, for any reason.
The Compensation Committee may, at any time, terminate or, from time to time,
amend, modify or suspend the Plan or any Award which has not yet been paid. Any
such amendment may be made without stockholder approval. No Award may be granted
during any suspension of the Plan or after its termination.
The Plan is effective for the fiscal year which began April 1, 1995, subject
to approval of the stockholders at the Annual Meeting. Because amounts payable
under the Plan will be based on fiscal 1996 performance and will be contingent
upon the right of the Compensation Committee to exercise discretion to reduce
the amount of the final payments, such amounts are not determinable at the
present time. The Committee anticipates that if Annual Profits for fiscal 1996
were the same as earned in fiscal 1995 the aggregate Awards that would be paid
under the Plan to the executives named in the Summary Compensation Table would
not be materially different than the aggregate incentive bonuses paid for fiscal
1995.
12
<PAGE>
The Company believes that, upon approval of the Plan by the stockholders and
certification by the Compensation Committee that performance goals and any other
material terms have been satisfied, compensation paid pursuant to the Plan will
be tax deductible. The approval of the Plan by the stockholders and
certification by the Compensation Committee will be conditions to the receipt by
participants of any payments under the Plan. Failure of the stockholders to
approve the Plan will not prohibit the Company from paying bonus compensation to
senior management who would have been covered by the Plan, including in
situations where such compensation may be subject to the deductibility
limitation under Section 162(m).
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. to be the
independent auditors of the Company for the fiscal year ending March 31, 1996.
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 1996 ANNUAL MEETING
Any stockholder proposal intended for inclusion in the proxy material for the
1996 Annual Meeting must be received in writing by the Company on or before
February 16, 1996. The inclusion of any proposal will be subject to applicable
rules of the Securities and Exchange Commission.
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, 1995 its executive officers and directors complied with the Section
16(a) requirements except that reports covering a purchase of 900 shares for the
children of John E. Koerner, III and the exercise of stock options by W. Curtis
Livingston and Richard J. Himelfarb 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
/s/ Charles A. Bacigalupo
Secretary
13
<PAGE>
APPENDIX A
LEGG MASON, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the Legg Mason, Inc. Executive Incentive
Compensation Plan (the "Plan") is to provide incentives to executive officers
and other key employees of Legg Mason, Inc. (Legg Mason, Inc. and all direct and
indirect subsidiaries being referred to herein as the "Company") to incent such
employees and to encourage them to remain in the employ of the Company. Amounts
paid pursuant to the Plan are intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended.
2. Definitions. The terms defined in this section are used (and capitalized)
elsewhere in the Plan.
a. "Annual Profits" means the consolidated income before income taxes of the
Company for the Performance Period, before the provision for incentive
compensation earned pursuant to this Plan, and subject to accounting adjustments
and adjustment for extraordinary items.
b. "Award" means a portion of the Award Pool payable to a Participant as
determined pursuant to Section 4 hereof.
c. "Award Pool" means a pool specified by the Committee, in accordance with
Section 4 hereof, out of which Awards may be made to Participants.
d. "Committee" means the Compensation Committee of the Board of Directors of
Legg Mason, Inc., or such other Board committee as may be designated by the
Board of Directors to administer the Plan.
e. "Participant" means an employee designated by the Committee to participate
in the Plan for a designated Performance Period.
f. "Performance Period" means the Company's fiscal year.
3. Administration.
3.1 The Committee shall administer the Plan. The Committee's interpretation
of the Plan and of any Awards made under the Plan shall be final and binding on
all persons with an interest therein. The Committee shall have the power to
establish regulations to administer the Plan and to change such regulations.
3.2 Exculpation and Indemnification. To the full extent permitted by law, (i)
no member of the Committee shall be liable for any action or determination taken
or made in good faith with respect to the Plan or any Award made under the Plan,
and (ii) the members of the Committee shall be entitled to indemnification by
the Company with regard to such actions.
4. Awards.
4.1 Creation of Award Pools. Not later than 90 days following the
commencement of each Performance Period, the Committee shall establish an Award
Pool from which Awards may be paid in accordance with the Plan. The amount
included in the Award Pool for a particular Performance Period shall be equal to
a percentage of the Annual Profits for the Performance Period to be determined
by the Committee, not to exceed 10% of the Annual Profits.
4.2 Allocation of Award Pools. Not later than 90 days following the
commencement of each Performance Period, the Committee shall select the persons
who shall be Participants for such Performance Period and allocate, with respect
to each Participant, a maximum percentage of the Award Pool, if any, to be paid
for such Performance Period; provided that in no event shall the percentage of
the Award Pool allocated to any Participant exceed 40% of the Award Pool.
A-1
<PAGE>
4.3 Adjustments. The Committee is authorized at any time during or after a
Performance Period, in its sole and absolute discretion, to reduce or eliminate
the Award Pool or the Award allocated to any Participant for any reason.
4.4 Payment of Awards. Following the completion of each Performance Period,
the Committee shall certify in writing the amount of the Award Pool and the
Awards payable to Participants. Partial payments may be made to Participants
during the course of a Performance Period in the sole discretion of the
Committee; provided that the aggregate of such partial payments may not exceed
the amount of the Award that a Participant would otherwise be entitled to under
this Section 4. No Award shall be paid under the Plan unless the Annual Profits
for the Performance Period exceed $3,000,000.
5. Effective Date of the Plan. The Plan shall be effective as of April 1,
1995, provided that the Plan is approved by the stockholders of the Company at a
meeting held no later than September 1, 1995. The Plan shall remain in effect
until it has been terminated pursuant to Section 8.
6. Right to Terminate Employment. Nothing in the Plan or designation as a
Participant shall confer upon any Participant the right to continue in the
employment of the Company or any subsidiary or affect any right which the
Company or any subsidiary may have to terminate the employment of a Participant
with or without cause.
7. Tax Withholding. The Company shall withhold from cash payments made
pursuant to the Plan an amount sufficient to cover any required withholding
taxes.
8. Amendment, Modification and Termination of the Plan. The Committee may at
any time terminate, suspend or modify the Plan or any Award which has not been
paid. No Award may be granted during any suspension of the Plan or after its
termination.
9. Unfunded Plan. The Plan shall be unfunded and the Company shall not be
required to segregate any assets that may be represented by the Award Pool.
10. Other Benefit and Compensation Programs. Neither the adoption of the Plan
by the Committee nor its submission to the stockholders of the Company shall be
construed as creating any limitation on the power of the Committee or the Board
of Directors to adopt such other incentive or other compensation arrangements as
it may deem necessary. Payments received by a Participant pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay law of any state or
country and shall not be included in, nor have any effect on, the determination
of benefits under any other employee benefit plan, contract or similar
arrangement provided by the Company or any subsidiary unless expressly so
provided by such other plan, contract or arrangement, or unless the Committee
expressly determines that an Award or portion of an Award should be included to
accurately reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of competitive cash compensation.
11. Governing Law. To the extent that federal laws do not otherwise control,
the Plan and all determinations made and actions taken pursuant thereto shall be
governed by the laws of Maryland.
A-2
<PAGE>
APPENDIX B
FILED PURSUANT TO INSTRUC-
TION 3 OF ITEM 10 OF
SCHEDULE 14A
(NOT BEING DISTRIBUTED AS
PART OF PROXY STATEMENT)
LEGG MASON, INC.
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
(As Amended 1995)
1. PURPOSE OF PLAN
The purpose of the Legg Mason, Inc. Employee Stock
Purchase Plan (the "Plan") is to provide an opportunity for eligible employees
of Legg Mason, Inc. (the "Company") and its subsidiaries (the Company and each
of its subsidiaries being sometimes hereinafter referred to as the "Employer")
to purchase shares of the Company's Common Stock through regular payroll
deductions.
2. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 16,
the number of shares of Common Stock which may be purchased by participants
under the Plan commencing with purchases made from and after completion of the
purchase of the 625,000 shares (as adjusted pursuant to Section 16) authorized
by the Plan as adopted in December 1987 shall be 1,000,000 shares.
3. ADMINISTRATION
3.1 The Plan will be administered by a committee
(the "Committee") consisting of at least three members of the Board of Directors
of the Company, none of whom shall be eligible to participate in the Plan.
Members of the Committee shall be appointed, and may be removed, by the
affirmative vote of a majority of the entire Board of Directors. No member of
the
<PAGE>
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan.
3.2 Subject to the provisions of the Plan, the Committee shall
have authority to interpret the Plan, to prescribe, amend and rescind rules
relating to it and to make all other determinations necessary or advisable in
administering the Plan, all of which determinations shall be final and binding
upon all persons.
4. ELIGIBLE EMPLOYEES
Any regular employee of the Company or any of its
subsidiaries who has reached the age of majority in the state in which he
resides will be eligible to participate in the Plan. A "regular employee" is any
employee who is regularly scheduled to work twenty-five or more hours per week,
and who fills an authorized, non-temporary position. No member of the Board of
Directors who is not an employee of the Company or a subsidiary or who is a
member of the Committee will be eligible to participate.
5. PARTICIPATION
An eligible employee may enroll as a participant
in the Plan by completing and signing a payroll deduction authorization form and
forwarding the completed form to his Employer. Enrollment will become effective
as soon as practicable following receipt of the form by the Employer. The form
will state the whole percentage of salary or wages to be deducted regularly from
the employee's pay and will authorize the
2
<PAGE>
purchase of stock for him in each Payment Period (as defined in Section 6
hereof) in accordance with the terms of the Plan.
6. PAYMENT PERIODS AND EMPLOYEE CONTRIBUTIONS
6.1 Each calendar month shall be a Payment Period
during which payroll deductions will be accumulated under the Plan. Each Payment
Period includes only regular paydays falling within it. The Committee, in its
discretion, may establish other Payment Periods for designated classes of
participating employees.
6.2 A participant may authorize payroll deductions in
a whole percentage amount of not less than 1% and not more than 10% of
compensation received during a Payment Period. For purposes of the Plan,
compensation shall be deemed to include wages, salary, commissions, bonuses and
overtime pay. A participant may not contribute amounts to purchase stock under
the Plan in any manner other than by payroll deductions.
6.3 The total amount of payroll deductions for a
participant during any calendar year may not exceed $25,000.
6.4 A participant may at any time (but in no event
more than once during any calendar year) increase or decrease his payroll
deduction by completing and forwarding a new payroll deduction authorization
form to the Employer in accordance with Section 5. The change may not become
effective sooner than the next Payment Period.
3
<PAGE>
7. EMPLOYER CONTRIBUTIONS
Each Employer will contribute an amount equal to 5%
of the amount of each of its participating employee's monthly payroll
deductions. The Board of Directors of the Company may at any time increase or
decrease the amount of the Employer contribution. Neither the Employer's
contribution nor any payment of costs by the Employer under this Plan shall
constitute a part of base earnings, compensation or salary of an employee for
purposes of determining wage scales, insurance, pension benefits or other
employee benefits.
8. METHOD OF OPERATION
8.1 The Committee will designate a bank, broker-
dealer or other firm as Agent to maintain accounts in the names of the
participants and to effect purchases and sales of shares of the Company's Common
Stock through registered broker-dealers. The Agent shall be subject to removal
by action of the Committee at any time.
8.2 The Employer will pay brokerage commissions, if
any, and other charges with respect to purchases made under the Plan and
reinvestment of dividends under the Plan. Brokerage commissions, if any, and
other charges in connection with sales will be payable by the participant.
Commissions under the Plan will be determined by negotiation between the Agent
and the brokers through which the Agent effects purchases and sales of the
Company's Common Stock.
8.3 The Employer will deduct funds from each
participant's salary as authorized and, as promptly as practicable after the end
of each Payment Period, forward the
4
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total of the amounts deducted for all participants, together with the Employer's
contribution, to the Agent at such address as is designated in writing by the
Agent, together with a list of participants and the amounts applicable to the
account of each participant.
8.4 The Company, and any of its subsidiaries with the
consent of the Company, may advance payroll deductions or Employer
contributions, or both, on behalf of any other subsidiary.
8.5 Upon receipt of funds from the Employer, the
Agent will, as promptly as practicable, cause to be purchased for the
participants as many whole and fractional shares of Common Stock of the Company
as such funds will permit. The amount of stock purchased will depend upon the
market price of the Company's Common Stock at the time such purchases are made.
Such purchases shall be allocated by the Agent, at the average cost thereof, to
the participants' accounts in proportion to the respective amount received for
each participant. Allocations will be made in full shares and in fractional
shares to the thousandth of a share.
9. PARTICIPANT'S ACCOUNT WITH THE AGENT
9.1 Shares purchased pursuant to the Plan will be
held in the custody of the Agent. The Agent may hold in nominee or street name
certificates for shares purchased pursuant to the Plan, and may commingle shares
in its custody pursuant to the Plan in a single account without identification
as to individual participants.
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9.2 The participant may at any time, by prior written
notice, instruct the Agent to effect the sale of all of the whole shares held in
his account. The participant may also, by prior written notice, instruct the
Agent to sell less than all of the whole shares in his account, but such partial
sales will be permitted not more than once during any calendar year. All sales
shall be made through such brokerage firm or firms as may be selected by the
Agent. Upon receipt of the proceeds of the sale from one or more broker-dealers,
the Agent will mail the participant a check for such proceeds, less the
brokerage commission, if any, and any transfer taxes, registration fee or other
charges incurred in connection with the sale.
9.3 Each participant's account will be credited,
without charge to the participant, with all dividends in respect of the whole
shares and fractional shares held in the account. Cash dividends will
automatically be reinvested in shares of the Company's Common Stock as promptly
as practicable following the Agent's receipt of such dividends.
9.4 The Agent will deliver to each participant a
quarterly statement reflecting the amount of payroll deductions and Employer
contributions for the prior calendar quarter, the number of whole and fractional
shares purchased for the participant's account during such quarter, the average
price per share of all stock purchased for the participant's account during such
quarter, and the number of whole and fractional shares held in the account at
the end of such quarter.
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10. TERMINATION OF PAYROLL DEDUCTIONS
10.1 A participant may voluntarily terminate payroll
deductions under the Plan at any time by delivering written notice to his
Employer. As soon as practicable following receipt of such notice, the Employer
will instruct the Agent to deliver to the participant a stock certificate
representing the number of whole shares credited to his account, together with a
check representing the net proceeds from the sale of any fractional interest in
shares.
10.2 A participant who terminates deductions under
the Plan shall be deemed to have withdrawn from the Plan and may thereafter
re-enter the Plan by following the procedure set forth in Section 5 hereof,
provided that no employee may withdraw from and re-enter the Plan more than once
during any six-month period.
11. STOCK CERTIFICATES; FRACTIONAL SHARES
Stock certificates representing shares purchased
under the Plan will be issued to participants only upon their written request
(which may be made not more than once during any six-month period) or at the
time of termination of the Plan or upon a participant's termination of payroll
deductions under the Plan. Certificates will be issued only for whole numbers of
shares.
12. NO TRANSFER OR ASSIGNMENT OF PARTICIPANT'S RIGHTS
No right or interest of any participant in any
payroll deductions, Employer contributions, Employer payment of commissions or
fees nor any other interest of participants or obligations of any Employer under
this Plan may be assigned or transferred by participants in whole or in part,
whether directly or by operation of law or otherwise.
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13. WITHHOLDING TAXES
All withholding taxes payable with respect to
contributions by any Employer under this Plan will be deducted from the balance
of the participant's compensation and will not reduce the remittance to the
Agent on his behalf.
14. TERMINATION OF PARTICIPANT'S RIGHTS
A participant's rights under the Plan will terminate
immediately upon his retirement, resignation, discharge, death or other
termination of employment, or upon the participant ceasing to be a "regular
employee" as defined in Section 4 hereof. An authorization of termination of
rights under the Plan will be considered as having been received from the
employee on the date his employment ceases or he ceases to be a regular
employee. As soon as practicable following such date, the Agent will deliver to
the participant a stock certificate representing the number of whole shares held
in the participant's account, together with a check representing the net
proceeds from the sale of any fractional shares.
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15. RIGHTS AS A STOCKHOLDER
15.1 None of the rights or privileges of a
stockholder of the Company shall exist with respect to shares purchased under
this Plan unless and until a stock certificate representing such shares shall
have been issued to the nominee for each participant or directly to the
participant. In the case of shares held in the name of the nominee holder, such
rights and privileges shall only inhere indirectly to the participant as a
beneficial owner, and the Company shall be entitled to treat the nominee as the
record owner of such shares.
15.2 The Agent will deliver to each participant as
promptly as practicable by mail or otherwise, all notices of meetings, proxy
statements, proxies or other material distributed by the Company to its
stockholders. The whole shares in each participant's account will be voted by
the Agent in accordance with the participant's signed proxy instructions duly
delivered to the Agent. There will be no charge to the participants in
connection with such notices, proxies or other material.
16. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON
STOCK
If the outstanding shares of Common Stock of the
Company shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation or other corporate reorganization in which the Company is the
surviving corporation, the Committee shall make an appropriate adjustment in the
number and kind of shares subject to this Plan. The determination of the
Committee as to the terms of any such adjustment shall be conclusive.
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17. AMENDMENT OF THE PLAN
The Board of Directors may at any time, or from time
to time, amend this Plan in any respect; provided, however, that without the
prior approval of the holders of a majority of the shares of Common Stock of the
Company then issued and outstanding and entitled to vote, no amendment shall be
made (i) increasing or decreasing the number of shares covered by the Plan
(other than as provided in Section 16) or (ii) materially modifying the
eligibility requirements for participation in the Plan.
18. TERMINATION OF THE PLAN
18.1 The Board of Directors may terminate the Plan at
any time, provided that such termination shall not impair the rights of
participants outstanding at the time of termination. The Plan will in any event
terminate at such time as the accumulated payroll deductions of participants are
sufficient to purchase a number of shares equal to or greater than the number of
shares remaining available for purchase under the Plan.
18.2 If at any time shares remain available for
purchase within the number of shares authorized under the Plan, but not in
sufficient number to satisfy all then unfilled purchase requirements, the
available shares shall be allocated by the Committee. Upon termination of this
Plan all funds in the accounts of participating employees not applied to the
purchase of shares hereunder shall be promptly refunded.
19. PAYMENT OF EXPENSES RELATED TO THE PLAN
The Company will bear all costs of administering and
carrying out the Plan. Neither the Company nor any other
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Employer will pay any expenses, commissions or taxes in connection with sales of
shares by the Agent at the request of the participant. Expenses payable by the
participant in connection with any such sale shall be deducted from the proceeds
of sale prior to remittance to the participant.
20. NO RIGHT TO CONTINUED EMPLOYMENT
The Plan and any right to purchase shares under the
Plan shall not confer upon any employee any right to continuance of employment
by the Company or any subsidiary, nor shall they restrict or interfere in any
way with the right of the Company or any subsidiary to terminate an employee's
employment at any time.
21. EFFECTIVE DATE
The operation of this Plan shall commence as of such
date as the Plan receives all necessary governmental approvals, including
registration under the Securities Act of 1933 of the shares of Common Stock
subject to the Plan.
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APPENDIX C
LEGG MASON, INC.
Proxy for Annual Meeting of Stockholders, July 27, 1995
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 27, 1995, at
10:00 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 1998 annual meeting
Edmund J. Cashman, Jr. John F. Curley, Jr. John B. Levert, Jr.
William Wirth Harold L. Adams W. Curtis Livingston
Nominee for the term expiring at the 1997 annual meeting
Margaret DeB. Tutwiler
(to withhold authority to vote for any individual nominee strike a line
through the nominee's name)
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] Amendment of Legg Mason, Inc. Employee
Stock Purchase Plan.
3. FOR [ ] AGAINST [ ] ABSTAIN [ ] Approval of Legg Mason, Inc. Executive
Incentive Compensation Plan.
4. FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of Coopers & Lybrand
L.L.P. as independent auditors of the
Company for the fiscal year ending
March 31, 1996.
5. 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 proposals.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
IT MAY BE REVOKED PRIOR TO ITS EXERCISE.
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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:.................... 1995 ................................
(SEAL)
................................
(SEAL)
Please date and then sign exactly
as name appears to the left. If
signing for trust, estate,
corporation or other legal
entity, 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
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