<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 \s240.14a-11(c) or \s240.14a-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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
- ------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[logo]
Legg Mason Tower
111 South Calvert Street
Baltimore, Maryland 21202
June 13, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at the Renaissance Harborplace Hotel, 202 East Pratt Street,
Baltimore, Maryland at 10:00 a.m. on Thursday, July 24, 1997. 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 24, 1997
----------------
To the Stockholders of
LEGG MASON, INC.:
The Annual Meeting of Stockholders of Legg Mason, Inc., a Maryland
corporation, will be held at the Renaissance Harborplace Hotel, 202 East Pratt
Street, Baltimore, Maryland, on Thursday, July 24, 1997, at 10:00 a.m. to
consider and vote upon:
(1) The election of six directors for the three-year term ending in 2000.
(2) Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the fiscal year ending March 31,
1998.
(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 16, 1997 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 1997
Annual Report to Stockholders.
By order of the Board of Directors
/s/ Charles A. Bacigalupo
CHARLES A. BACIGALUPO
Secretary
June 13, 1997
<PAGE>
LEGG MASON, INC.
LEGG MASON TOWER
111 SOUTH CALVERT STREET
BALTIMORE, MARYLAND 21202
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JULY 24, 1997
----------------
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 any other means
of communication, 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 13, 1997.
Stockholders of record at the close of business on May 16, 1997 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 18,303,307 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.
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 2000. All nominees
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.
NOMINEES FOR DIRECTOR FOR THE TERM EXPIRING IN 2000
CHARLES A. BACIGALUPO, age 63, 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.
1
<PAGE>
HARRY M. FORD, JR., age 64, 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 a Financial Advisor with LMWW.
MARGARET DEB. TUTWILER, age 46, has been a director of the Company since
July 1995. Since May 1997, she has served as Senior Vice President for
Communications and Public Affairs for the Cellular Telecommunications Industry
Association. From May 1993 until May 1997, she was 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.
JAMES E. UKROP, age 59, has been a director of the Company since January
1985. Since 1975, he has been the principal executive officer of Ukrop Super
Markets, Inc., which operates a chain of supermarkets in Virginia. Mr. Ukrop is
a director of Owens & Minor, Inc. and Vice Chairman of Richfood Holdings, Inc.
JOHN E. KOERNER, III, age 54, has been a director of the Company since
October 1990. He has been the President of Koerner Capital Corporation, a
private investment corporation, since August 1995. From 1976 until August 1995
he was President of Barq's, Inc., a soft drink producer and distributor.
PETER F. O'MALLEY, age 58, 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, P.A. and its predecessor, O'Malley & Miles, since 1989. Prior to that
time he was Managing Partner of O'Malley & Miles. Mr. O'Malley currently serves
as the President of Aberdeen Creek Corp., a privately-held company engaged in
investment, business consulting and development activities, and is a director of
Potomac Electric Power Company, Giant Food Inc. and Forensic Technologies
International Corp.
DIRECTORS CONTINUING IN OFFICE
Directors whose terms will expire in 1998
EDMUND J. CASHMAN, JR., age 60, 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, taxable
fixed-income securities, private client services, public finance and equity
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; a trustee of Legg Mason Cash Reserve Trust, and a director of Worldwide
Value Fund, Inc. and EA Engineering, Science, and Technology, Inc.
JOHN F. CURLEY, JR., age 57, 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 66, 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
2
<PAGE>
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 66, has been a director of the Company since July 1995.
He 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. He is also a Vice Chairman of Deutsche Bank
(Switzerland) AG, Geneva.
HAROLD L. ADAMS, age 58, 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 53, 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 and as Chairman since October 1995, 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.
Directors whose terms will expire in 1999
RAYMOND A. MASON, age 60, 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 Giant Food Inc.
JAMES W. BRINKLEY, age 60, 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 58, 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, American Bankers Insurance Group, Inc. and Carey International,
Inc.
RICHARD J. HIMELFARB, age 55, has served as a director of the Company and
as an Executive Vice President of the Company and LMWW since November 1983. He
has been a Senior Executive Vice President of the Company and LMWW since July
1995. He is responsible for supervising corporate and real estate finance
activities of LMWW and other subsidiaries of the Company. From 1967 until
joining the Company in 1983, Mr. Himelfarb was engaged in the private practice
of law.
ROGER W. SCHIPKE, age 60, has been a director of the Company since January
1991. He is engaged in private investment activities. From August 1993 through
May 1996, he was Chairman of the Board and Chief Executive Officer of Sunbeam
Corporation, a manufacturer of consumer products. 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, Oakwood Homes Corporation and the Rouse Company.
3
<PAGE>
EDWARD I. O'BRIEN, age 68, 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 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 a number of mutual funds in the Neuberger & Berman mutual fund
complex.
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. Koerner (Chairman)
and Ukrop and Ms. Tutwiler, 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, 1997, the Board of Directors met
five times, the Audit Committee five times, and the Compensation Committee five
times. Each director attended 75% or more of the aggregate number of meetings of
the Board and all committees of the Board on which the director served, except
for Mr. St. George, who attended 60% of the aggregate number of meetings of the
Board of Directors and the Audit Committee, and Mr. Ukrop, who attended 70% of
the aggregate number of meetings of the Board of Directors and the Compensation
Committee.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer
of $15,000, 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 or she is first elected as
a director, an option to purchase 2,000 shares of Common Stock, and, on the date
of each subsequent 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, 1997, each of Messrs. Adams,
Koerner, O'Brien, O'Malley, Schipke, St. George, Ukrop and Wirth and Ms.
Tutwiler 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 16, 1997 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>
COMMON
STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OF OWNER(1) OWNED(1)(2)(3) COMMON STOCK(1)(3)
- ------------------------------------------------------- ---------------- -------------------
<S> <C> <C>
Raymond A. Mason.................................. 517,800(4) 2.82
James W. Brinkley................................. 295,108 1.61
Edmund J. Cashman, Jr. ........................... 193,093 1.05
John F. Curley, Jr. .............................. 141,430 *
Charles A. Bacigalupo............................. 132,518 *
Richard J. Himelfarb.............................. 126,226 *
John B. Levert, Jr. .............................. 101,161 *
Harry M. Ford, Jr. .............................. 71,269 *
W. Curtis Livingston.............................. 41,277(5) *
James E. Ukrop.................................... 39,600 *
Edward A. Taber III............................... 21,054 *
Nicholas J. St. George............................ 21,000 *
John E. Koerner, III.............................. 19,525(6) *
Harold L. Adams................................... 18,500 *
Peter F. O'Malley................................. 17,250 *
Roger W. Schipke.................................. 14,750 *
Edward I. O'Brien................................. 11,500 *
Margaret DeB. Tutwiler............................ 4,000 *
William Wirth..................................... 4,000 *
All executive officers, directors and nominees as
a group (24 persons)............................. 1,836,080 9.81
</TABLE>
- ----------
* Less than 1%.
(1) The table does not include 2,416,651 shares, of which 1,481,651 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 935,000 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
(13.2% of the shares outstanding) are held with sole dispositive power and
2,217,201 shares are held with sole voting power. In addition, the table
does not include 1,545,323 shares (8.4% of the shares outstanding) held by
investment advisory clients of Wellington Management Company, LLP ("WMC"),
75 State Street, Boston, Massachusetts 02109, as to all of which shares
WMC has shared dispositive power and as to 976,344 of which shares WMC has
shared voting power, and 1,471,087 shares (8.0% 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 number of shares in the
preceding information is based upon Schedule 13G reports filed by The
Equitable Companies Incorporated, WMC and GeoCapital Corporation,
respectively, reporting ownership as of December 31, 1996. The percentages
are based on the Company's outstanding shares as of May 16, 1997.
(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 16, 1997: Mr. Mason - 65,710; Mr. Brinkley -
40,332; Mr. Cashman - 22,737; Mr. Curley - 8,150; Mr. Bacigalupo - 15,150;
Mr. Himelfarb - 35,825; Mr. Levert - 2,500; Mr. Ford - 18,595; Mr.
Livingston - 40,500; Mr. Ukrop - 21,000; Mr. Taber - 20,429; Mr. St.
George - 21,000; Mr. Koerner - 13,500; Mr. Adams - 17,250; Mr. O'Malley -
12,250; Mr. Schipke - 6,500; Mr. O'Brien - 11,000; Ms. Tutwiler - 4,000;
Mr. Wirth - 4,000; and all executive officers, directors and nominees as a
group - 414,596. 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 4,900 shares owned by Mr. Mason's wife, as to which Mr.
Mason disclaims beneficial ownership.
(5) Includes 777 shares held by Mr. Livingston as a trustee of trusts for the
benefit of his children.
(6) Includes 900 shares owned by Mr. Koerner's children.
5
<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(#) COMPENSATION(2)
- ------------------------------- ---------- --------- ----------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason................. 1997 $240,000 $2,680,000 $1,700 20,000 $43,740
Chairman of the Board, President 1996 222,000 1,835,000 1,638 20,000 41,007
and Chief Executive Officer 1995 212,000 608,000 1,564 10,000 39,826
James W. Brinkley................ 1997 $210,000 $1,100,000 $1,716 7,000 $38,868
Senior Executive Vice President 1996 196,170 800,000 1,007 6,000 26,462
1995 184,000 260,000 879 5,000 22,106
Edmund J. Cashman, Jr. .......... 1997 $200,000 $1,000,000 - 2,000 $27,802
Senior Executive Vice President 1996 181,665 700,000 - 4,000 19,501
1995 167,500 260,000 - 4,000 17,564
John F. Curley, Jr. ............. 1997 $210,000 $1,000,000 $ 214 3,000 $18,760
Vice Chairman of the Board and 1996 193,330 725,000 334 6,000 13,675
Chief Administrative Officer 1995 178,995 260,000 177 4,000 11,062
Richard J. Himelfarb............. 1997 $210,000 $1,100,000 $1,733 6,000 $11,413
Senior Executive Vice President 1996 195,830 750,000 1,646 6,000 9,006
1995 181,245 260,000 679 4,000 7,354
Edward A. Taber III.............. 1997 $210,000 $1,000,000 - 3,000 $ 6,750
Senior Executive Vice President 1996 201,660 750,000 - 20,000 4,500
1995 200,000 245,000 - 24,000 3,700
</TABLE>
- ----------
(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 sets 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 identified in this table, is determined by the
Compensation Committee as described in the Compensation Committee Report
on Executive Compensation.
(2) Includes for fiscal 1997 for each individual $6,750 contributed by the
Company under the Company's Profit Sharing Plan; and for Mr. Curley, $111
contributed under the Company's Employee Stock Purchase Plan. In addition,
includes for fiscal 1997 for Messrs. Mason, Brinkley, Cashman, Curley and
Himelfarb, respectively, $36,990, $32,118, $21,052, $11,899, and $4,663 of
commissions earned from securities brokerage activities.
6
<PAGE>
STOCK OPTIONS
The following table summarizes option grants made during the fiscal year
ended March 31, 1997 to the executive officers named in the Summary Compensation
Table.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION GRANT DATE
NAME GRANTED YEAR ($/SHARE) DATE PRESENT VALUE(2)
---- ------------ ----------- ----------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Raymond A. Mason ............ 20,000 4.89% $28.94 7/23/01 $159,550
James W. Brinkley ............ 7,000 1.71 28.94 7/23/01 55,843
Edmund J. Cashman, Jr. ...... 2,000 0.49 28.94 7/23/01 15,955
John F. Curley, Jr. ......... 3,000 0.73 28.94 7/23/01 23,933
Richard J. Himelfarb ......... 6,000 1.47 28.94 7/23/01 47,865
Edward A. Taber III ......... 3,000 0.73 28.94 7/23/01 23,933
</TABLE>
- ----------
(1) Option grants made pursuant to the Legg Mason, Inc. 1996 Equity Incentive
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 25% on
each anniversary of the date of grant, such that the options are fully
exercisable on and after 4 years from the date of grant until the fifth
year following that date, subject in all cases to accelerated vesting if
there is an unapproved change of control. The vesting schedules for
certain of the executive officers are as follows: Mr. Brinkley 853 shares
at 7/24/99; 3,455 shares at 7/24/00; and 2,692 shares at 1/24/01; Mr.
Curley 586 shares at 7/24/98; 1,448 shares at 7/24/99 and 966 shares at
7/24/00; Mr. Himelfarb 73 shares at 7/24/98; 1,448 shares at 7/24/99;
2,979 shares at 7/24/00 and 1,500 shares at 1/24/01. Option holders may
use previously owned shares to pay all or part of the exercise price.
(2) The stock options were valued using 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 4.5 years to exercise; a
dividend yield of 1.9%; a stock price volatility of .2480 based upon the
daily common stock closing prices for the 4.5 years prior to the grant
date; and a risk-free interest rate of 6.65%. 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.
The following table summarizes option exercises during the fiscal year
ended March 31, 1997 by the executive officers named in the Summary Compensation
Table and the value of their unexercised options at March 31, 1997.
AGGREGATE OPTION EXERCISES DURING FISCAL 1997
AND VALUE OF OPTIONS HELD AT MARCH 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT MARCH 31, 1997 OPTIONS AT MARCH 31, 1997(1)
SHARES ----------------------------- ----------------------------
ACQUIRED ON VALUE
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------------- ------------ ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Mason.......... 25,000 $748,125 65,710 58,789 $1,880,717 $1,066,319
James W. Brinkley......... 13,281 350,500 40,332 18,293 1,160,463 301,871
Edmund J. Cashman, Jr. ... 9,000 214,200 22,737 8,700 652,767 152,619
John F. Curley, Jr. ...... 3,000 97,200 11,150 12,850 253,189 219,810
Richard J. Himelfarb...... 11,093 266,786 35,825 16,425 1,019,379 270,531
Edward A. Taber III....... - - 20,429 43,446 428,693 792,102
</TABLE>
- ----------
(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, 1997, respectively.
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 1997, approximately 90% 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 1997 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 Executive Incentive Compensation Plan 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
and other key executive officers selected by the Committee. For fiscal
8
<PAGE>
1997, the Committee selected the CEO and four of the five other executives named
in the Summary Compensation Table to be eligible for bonus awards pursuant to
the Plan, and during the first quarter of the fiscal year established maximum
percentage allocations of the pool for each of these individuals. Mr. Mason's
maximum percentage allocation was established at 39%. The pre-established
maximum percentage allocation and the specific bonus the CEO and each of the
other selected executives receives within the amount determined pursuant to the
pre-established percentage allocation is dependent on the executive's level of
responsibility and individual performance. Levels of responsibility are
evaluated annually by the Compensation Committee without regard to any specific
formula. Assessments of individual performance are made annually by the
Compensation Committee after receiving the evaluations and 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 the CEO and the five named executive officers with respect
to fiscal 1997 aggregated approximately 8% of pre-tax income (before deduction
of the cash bonuses), with 34% of such total bonuses being awarded to Mr. Mason.
The portion of the total bonus pool awarded to Mr. Mason for fiscal 1997
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. 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, 1997.
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards, made during fiscal 1997 pursuant to the
shareholder-approved Legg Mason, Inc. 1991 Omnibus Long-Term Compensation Plan
and the Legg Mason, Inc. 1996 Equity Incentive 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 1997. 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 plans, options have
a term of up to 10 years and are granted at the fair market value of Legg Mason
Common Stock on the date of grant. Generally, an initial portion of the options
becomes exercisable one year from date of grant, with the balance becoming
exercisable in 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.
COMPENSATION COMMITTEE
John E. Koerner, III, Chairman
Margaret DeB. Tutwiler
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 Financial
Service Analytics Brokerage Stock Price Index ("FSA Regional") over the same
period (assuming the investment of $100 in each on March 31, 1992, and the
reinvestment of all dividends). The FSA Regional is comprised of 16 publicly
held regional securities firms.
[GRAPHIC OMITTED]
Fiscal Year Ended March 31,
<TABLE>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Legg Mason $100 $114 $106 $125 $157 $231
S&P 500 Stock Index $100 $115 $117 $135 $178 $214
FSA Regional $100 $111 $121 $134 $179 $251
</TABLE>
CERTAIN TRANSACTIONS
During fiscal 1997, the Company paid approximately $175,000 to the law firm
of Ballard Spahr Andrews & Ingersoll for legal services and related expenses.
The daughter of Charles A. Bacigalupo, a Senior Vice President, the Secretary
and a director of the Company, is a partner of that law firm.
During fiscal 1997, the Company engaged RTKL Associates, Inc. ("RTKL") to
perform architectural and engineering services in the building to which the
Company's headquarters is being relocated. The estimated total cost of RTKL's
services for the entire project is approximately $950,000, of which
approximately $370,000 has been paid by the Company through March 31, 1997.
Harold L. Adams, a director of the Company, is the President and Chairman of
RTKL.
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.
10
<PAGE>
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, 1998.
This selection will be submitted for ratification at the Annual Meeting.
Representatives of Coopers & Lybrand L.L.P. 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 1998 ANNUAL MEETING
Any stockholder proposal intended for inclusion in the proxy material for
the 1998 Annual Meeting must be received in writing by the Company on or before
February 14, 1998. 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, 1997 its executive officers and directors complied with the Section
16(a) requirements except that reports covering the acquisition of an aggregate
of 452 shares by two family trusts of which W. Curtis Livingston is trustee, two
gifts of an aggregate of 400 shares by John B. Levert, Jr. and a gift of 100
shares by the wife of Raymond A. Mason 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
CHARLES A. BACIGALUPO
Secretary
11
<PAGE>
LEGG MASON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JULY 24, 1997
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 24, 1997, 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 2000 annual meeting
Charles A. Bacigalupo Harry M. Ford, Jr. Margaret DeB. Tutwiler
James E. Ukrop John E. Koerner, III Peter F. O'Malley
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE THROUGH
THE NOMINEE'S NAME)
2. FOR [ ] AGAINST [ ] ABSTAIN [ ] Ratification of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the
fiscal year ending March 31, 1998.
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:.......................1997 ..........................................
(SEAL)
..........................................
(SEAL)
PLEASE DATE AND THEN SIGN EXACTLY AS NAME
APPEARS TO THE LEFT. IF SIGNING FOR A
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
