<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
A.G. EDWARDS, INC.
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Douglas L. Kelly, Secretary of A.G. Edwards, Inc.
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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* Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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Notes:
<PAGE> 2
A.G. Edwards, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 1994
The Annual Meeting of the Stockholders of A.G. Edwards, Inc. (the
"Company") will be held at the home office of the Company, One North
Jefferson Avenue, St. Louis, Missouri, on Thursday, June 23, 1994 at
10:00 a.m., local time, for the following purposes:
1. To elect 3 directors;
2. To consider and act on a proposal to approve performance goals for
the A.G. Edwards, Inc. Performance Plan for Executives;
3. To ratify the appointment of Deloitte & Touche as independent
auditors of the Company for the fiscal year ending February 28,
1995; and
4. To transact such other business as may properly come before the
annual meeting and any adjournments thereof.
Only stockholders of the Company of record as of the close of
business on May 2, 1994 will be entitled to notice of, and to vote at,
the annual meeting and any adjournments thereof.
If you do not expect to attend the meeting in person, please sign,
date and return the accompanying proxy in the enclosed business reply
envelope. If you later find that you can be present or for any other
reason desire to revoke your proxy, you may do so at any time before
the voting.
DOUGLAS L. KELLY
Secretary
May 16, 1994
<PAGE> 3
A.G. Edwards, Inc.
PROXY STATEMENT
GENERAL INFORMATION
The enclosed form of proxy is solicited by and on behalf of the Board
of Directors of A.G. Edwards, Inc. (the "Company") for use at the
Annual Meeting of Stockholders to be held on June 23, 1994 (the "1994
Annual Meeting") and at any adjournments thereof. The solicitation of
proxies is being made primarily by the use of the mails. The cost of
preparing and mailing this Proxy Statement and accompanying materials,
and the cost of any supplementary solicitations, which may be made by
mail, telephone, telegraph or personally by officers and employees of
the Company and its subsidiaries, will be borne by the Company. The
stockholder giving the proxy has the power to revoke it any time before
it is exercised by notice in writing to the Secretary of the Company at
the Company's principal executive offices at One North Jefferson
Avenue, St. Louis, Missouri 63103, by properly submitting to the
Company a duly executed proxy bearing a later date, or by attending the
meeting and voting in person. The proxy will be voted as specified by
the stockholder in the spaces provided therefor or, if no specification
is made, it will be voted for Proposals 1, 2 and 3. This Proxy
Statement and form of proxy are first being mailed to the stockholders
of the Company on or about May 16, 1994.
Only stockholders of record at the close of business on May 2, 1994
are entitled to notice of, and to vote at, the 1994 Annual Meeting and
any adjournments thereof. On May 2, 1994 the Company had outstanding
60,380,045 shares of Common Stock. Each outstanding share is entitled
to one vote on each director position, and each other matter, to be
voted on at the 1994 Annual Meeting. Because the Common Stock is
entitled to vote on all matters at the 1994 Annual Meeting, a majority
of the outstanding shares of Common Stock present in person or by proxy
will constitute a quorum for the transaction of business at the 1994
Annual Meeting. Votes cast by proxy or in person at the 1994 Annual
Meeting will be tabulated by the inspectors of election appointed by
the Board for the meeting.
Shares which are entitled to vote but which are not voted at the
direction of the beneficial owner ("abstentions"), shares represented
by proxies or ballots which are marked "withhold authority" with
respect to the election of any one or more nominees for election as
directors, and votes withheld by brokers in the absence of instructions
from street-name holders ("broker non-votes") will be counted for the
purpose of determining whether there is a quorum for the transaction of
business at the 1994 Annual Meeting.
Abstentions may be specified on Proposal 2 to approve the performance
goals for the Performance Plan for Executives and on Proposal 3 to
ratify the appointment of independent auditors, but not the election of
directors; however, failure to mark the proxy or a ballot to either
vote for, or to withhold votes for one or more nominees for election as
directors, has the practical effect of an abstention.
2
<PAGE> 4
The affirmative vote of a plurality of the shares represented at the
meeting is required to elect directors. "Plurality" means that the
nominees who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be elected at the
1994 Annual Meeting. Consequently, any shares represented at the 1994
Annual Meeting, but not voted for any reason, have no impact on the
election of directors.
The affirmative vote of a majority of the shares represented at the
meeting is required to approve the performance goals for the
Performance Plan for Executives and to ratify the appointment of the
independent auditors. Broker non-votes will not be counted with respect
to, and will have no effect on, whether the stockholders approve those
proposals. Abstentions, however, are counted in determining whether the
stockholders have approved those proposals and, thus, have the effect
of a vote against the proposals.
PROPOSAL 1: ELECTION OF DIRECTORS
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company is under the general management of the
Board of Directors as provided by the laws of Delaware, the state of
incorporation. The Board of Directors generally meets at least
quarterly and held five meetings during the 1994 fiscal year. Between
Board meetings, Board responsibilities are delegated to the Executive
Committee, comprised of five Board members. The Executive Committee
held seven meetings during the 1994 fiscal year.
The entire Board of Directors serves in the capacity of a Nominating
Committee. The Board of Directors will accept recommendations for
nominations as directors from stockholders. Stockholders wishing to
propose nominees for consideration at the 1995 Annual Meeting must
comply with a Bylaw provision dealing with nominations. For a
discussion of the nominating procedures, see "Stockholder Proposals."
The Company has a Compensation Committee established in November 1993
and comprised of four outside directors. The Compensation Committee
held two meetings during the 1994 fiscal year. The Compensation
Committee was responsible for establishing the compensation of Benjamin
F. Edwards III and the amount of the shares awarded to certain
executives under the Performance Plan for Executives for the 1995
fiscal year, and for establishing the amount of discretionary bonus for
Benjamin F. Edwards III for the 1994 fiscal year. The Compensation
Committee of A.G. Edwards & Sons, Inc., a wholly-owned subsidiary of
the Company (the "Brokerage Company"), determined the compensation for
all employees for the 1994 fiscal year, including officers of the
Company, with the exception of Benjamin F. Edwards III, whose
discretionary bonus was determined by the Compensation Committee of the
Company and whose other compensation was determined by the Board of
Directors of the Company. (See "Joint Report of the Compensation
Committees of the Brokerage Company and the Company and the Board of
Directors.")
The Audit Committee of the Board of Directors held three meetings
during the 1994 fiscal year. The Audit Committee performed the
following principal functions: (i) reviewed quarterly and
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<PAGE> 5
year-end financial statements with the outside auditors, internal
auditors and management; (ii) reviewed the scope of the external and
internal audits and reports with the outside and internal auditors and
management; (iii) reviewed the outside auditors' management letter and
management's response thereto; (iv) recommended the selection of
outside auditors; (v) reviewed the quality and depth of the Company's
internal audit, accounting and financial staffs; and (vi) reviewed and
approved the rendering of audit and nonaudit services by the outside
auditors.
During the 1994 fiscal year, all incumbent directors attended 90
percent or more of the aggregate meetings of the Board of Directors and
the committees of the Board on which each served. There are presently
no mandatory retirement ages stipulated either for officers or members
of the Board of Directors.
NOMINEES FOR DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide for a
classified Board of Directors, with the Board divided into three
classes whose terms expire at different times. The Company presently
has nine directors. Three members are to be elected to the Board of
Directors at the 1994 Annual Meeting, each to serve for a term of three
years. All of the nominees are now directors of the Company. The
persons named in the enclosed form of proxy intend to vote the proxies
in favor of the election of the nominees listed below to serve as
directors of the Company for terms expiring in 1997 or until the
election and qualification of their successors, unless the stockholder
indicates on the form of proxy that the vote should be withheld or
contrary directions are indicated. If one or more nominees shall become
unavailable for any reason, the Board of Directors, in its discretion,
may, unless the Board of Directors provides by resolution for a lesser
number of directors, designate one or more substitute nominees, in
which case such proxies will be voted for such substituted nominees.
The Board of Directors has no reason to doubt the availability of any
of the nominees, and each has indicated his or her willingness to serve
if elected.
<TABLE>
<CAPTION>
YEAR FIRST ELECTED
DIRECTOR OF THE
PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP
------------ ---------------------------------- --------------------
NOMINEES FOR DIRECTORS TO BE ELECTED IN 1994
FOR TERMS EXPIRING IN 1997
<C> <S> <C>
Dr. Louis Fernandez, 70 Chairman of the Board of Boehringer Ingelheim 1989
Corporation, Director of Alteon Corporation, Mallinckrodt Member of the
Group, Inc. and Petrolite Corporation. Chairman of the Audit Committee and
Board, Celgene Corporation from June 1990 to May 1992. Compensation Committee
President, Chief Executive Officer and Director, Celgene
Corporation from August 1986 to June 1990. Chairman of
the Board of Monsanto Company until March 1986.
4
<PAGE> 6
<CAPTION>
YEAR FIRST ELECTED
DIRECTOR OF THE
PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP
------------ ---------------------------------- --------------------
David W. Mesker, 62 Treasurer of the Company and of the Brokerage Company 1983
since March 1989; Senior Vice President and Director of Member of the
the Staff Division of the Brokerage Company. Employee of Executive Committee
the Brokerage Company for 32 years. Director of the
Brokerage Company since 1967.
Donna C. E. Williamson, Senior Vice President, Caremark International, Inc. since 1988
41 December 1992. Corporate Vice President, Health Cost Member of the
Management Group, Baxter International, Inc. until Audit Committee and
December 1992. Director of Haemonetics Corporation. Compensation Committee
<CAPTION>
DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AND
WHOSE TERMS CONTINUE BEYOND 1994
DIRECTORS WITH TERMS EXPIRING 1995
Robert G. Avis, 62(1) Vice Chairman of the Board of the Company and Vice 1984
Chairman of the Board and Director of the Investment Member of the
Banking Division of the Brokerage Company since March Executive Committee
1989; Executive Vice President and Director of the Sales
and Marketing Division of the Brokerage Company. Employee
of the Brokerage Company for 28 years. Director of the
Brokerage Company since 1970. Director of American Stock
Exchange, Inc. and Director or Trustee of fifteen funds
of the Oppenheimer Funds Group and eight funds of the
Centennial Funds Group.
Dr. E. Eugene Carter, 52 Research Fellow, Lincoln Institute of Land Policy. 1983
Director of the Brokerage Company from 1976 to 1983. Member of the
Audit Committee and
Compensation Committee
5
<PAGE> 7
<CAPTION>
YEAR FIRST ELECTED
DIRECTOR OF THE
PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP
------------ ---------------------------------- --------------------
David M. Sisler, 62 Vice Chairman of the Board of the Company and of the 1983
Brokerage Company since March 1989; Executive Vice Member of the
President and Director of the Branch Division of the Executive Committee
Brokerage Company. Employee of the Brokerage Company for
31 years. Director of the Brokerage Company since 1970.
<CAPTION>
DIRECTORS WITH TERMS EXPIRING 1996
Benjamin F. Edwards III, Chairman of the Board, President and Chief Executive 1983
62(1) Officer of the Company; Chairman of the Board, President Member of the
and Chief Executive Officer of the Brokerage Company. Executive Committee
Employee of the Brokerage Company for 37 years. Director
of the Brokerage Company since 1967. Director of Heilig-
Meyers, Co. and National Life of Vermont.
Robert C. Dissett, 56 Corporate Vice President of the Brokerage Company since 1990
June 1977; Director of the Operations Division of the Member of the
Brokerage Company since February 1988. Employee of the Executive Committee
Brokerage Company for 32 years. Director of the Brokerage
Company since 1973.
Samuel C. Hutchinson, Jr., President, Interface Construction Corp. since 1978. 1993
51 Member of the
Audit Committee and
Compensation Committee
<FN>
- - -----
(1) Mr. Edwards and Mr. Avis are stepbrothers.
</TABLE>
DIRECTOR COMPENSATION
Directors, except those who are officers or employees of the Company
or its subsidiaries, receive an annual fee of $7,200, a fee of $800 for
each directors' meeting attended and a fee of $600 for each committee
meeting attended. Non-employee directors do not participate in any of
the Company's employee benefit plans.
6
<PAGE> 8
OWNERSHIP OF THE COMPANY'S COMMON STOCK
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
The following table sets forth the beneficial ownership of the
Company's Common Stock as of May 2, 1994 by (i) each director, (ii)
each executive officer named in the Summary Compensation Table, and
(iii) all directors and executive officers as a group:
<CAPTION>
NUMBER PERCENTAGE
NAME OF SHARES OF CLASS
---- --------- ----------
<S> <C> <C>
Robert G. Avis 280,871(1)(2)(3) (4)
Robert L. Bagby 51,627(1)(5) (4)
Dr. E. Eugene Carter 276,774 (4)
Robert C. Dissett 50,479(1)(2)(6) (4)
Benjamin F. Edwards III 794,791(1)(7) 1.32%
Dr. Louis Fernandez 1,288(8) (4)
Samuel C. Hutchinson, Jr. 629 (4)
David W. Mesker 622,576 1.03%
David M. Sisler 93,801(1) (4)
Donna C. E. Williamson 345 (4)
All Directors and Executive Officers as a Group (14 persons) 2,359,780(1) 3.91%
<FN>
- - -----
(1) Includes restricted stock issued pursuant to the Company's 1988
Incentive Stock Plan (the "1988 Plan") as to which each recipient
has sole voting power and no current investment power, as follows:
Mr. Avis, 3,682 shares; Mr. Bagby, 10,688 shares; Mr. Dissett,
10,688 shares; Mr. Edwards, 1,841 shares; Mr. Sisler, 3,682 shares;
other Executive Officers, 25,058.
(2) Includes shares subject to exercisable stock options under the 1988
Plan and the Company's 1982 Restricted Stock and Stock Option Plan
(the "1982 Plan") as follows: Mr. Avis, 8,352 shares; Mr. Dissett,
4,257 shares.
(3) Mr. Avis has shared voting and investment power over 43,876 shares
held by him as a co-trustee of a trust.
(4) Percentages of less than 1% have been omitted.
(5) Mr. Bagby has shared voting and investment power over 30,357
shares, including 116 shares owned by his wife and 30,241 shares
held jointly with his wife.
(6) Mr. Dissett has shared voting and investment power over 35,437
shares held by him as a co-trustee of a trust.
(7) Mr. Edwards has shared voting and investment power over 430,475
shares, including 391,029 shares held by him as co-trustee of two
trusts and 39,446 shares held by his wife.
(8) Mr. Fernandez has shared voting and investment power over 1,288
shares held by him as a co-trustee of a trust.
</TABLE>
7
<PAGE> 9
OWNERSHIP BY CERTAIN OTHER PERSONS
<TABLE>
The following table sets forth information regarding all persons
known to the Company to be the beneficial owner of more than five
percent of the Common Stock of the Company:
<CAPTION>
NUMBER PERCENTAGE
NAME AND ADDRESS OF SHARES OF CLASS
---------------- --------- ----------
<S> <C> <C>
Firstar Corporation 3,624,337(1) 6.2%(1)
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
<FN>
- - -----
(1) Sole voting power over 2,873,562 shares; shared voting power over
591,025 shares; sole investment power over 3,029,211 shares; shared
investment power over 591,025 shares. Information, as of December
31, 1993, obtained from a stockholder filing made with the
Securities and Exchange Commission dated February 11, 1994 (all
share information has been adjusted to reflect the 5-for-4 stock
split, payable in the form of a stock dividend, paid on January 3,
1994).
</TABLE>
EXECUTIVE COMPENSATION
<TABLE>
The table on the next page sets forth the compensation of the
Company's Chief Executive Officer and its other four most highly
compensated executive officers (the "Named Executive Officers"), for
each of the Company's last three fiscal years:
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<PAGE> 10
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS
--------------------- --------------------------
NUMBER OF
RESTRICTED SECURITIES ALL OTHER
FISCAL STOCK AWARDS UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1)(2)(3)(4) OPTIONS(2) TION(5)
--------------------------- ------ ------ ----- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Benjamin F. Edwards III, 1994 $351,840 $898,127 $87,732 0 $70,000
Chairman of the Board, President 1993 331,840 730,550 64,842 0 70,000
and Chief Executive Officer of the 1992 309,840 641,085 37,754 4,418 70,000
Company; Chairman of the Board,
President, and Chief Executive
Officer of the Brokerage Company
Robert G. Avis, 1994 $234,840 $693,607 $87,732 0 $70,000
Vice Chairman of the Board of the 1993 221,840 563,880 64,842 0 70,000
Company; Vice Chairman of the 1992 206,840 494,311 75,508 0 57,208
Board, Executive Vice President,
Director of the Investment Banking
Division, and Director of the Sales
and Marketing Division of the
Brokerage Company
David M. Sisler, 1994 $228,840 $684,401 $87,732 0 $70,000
Vice Chairman of the Board of the 1993 215,840 556,152 64,842 0 70,000
Company; Vice Chairman of the 1992 201,840 488,399 75,508 0 56,075
Board, Executive Vice President, and
Director of the Branch Division of
the Brokerage Company
Robert L. Bagby, 1994 $181,840 $562,286 $87,732 0 $70,000
Corporate Vice President, Assistant 1993 171,840 449,484 64,842 0 68,689
Director of the Branch Division, and 1992 158,340 386,970 75,508 0 42,607
Central and Pacific Coast Regional
Officer of the Brokerage Company
Robert C. Dissett, 1994 $164,840 $536,202 $87,732 0 $70,000
Corporate Vice President, and 1993 156,840 430,165 64,842 0 65,292
Director of the Operations Division 1992 148,240 375,029 75,508 0 43,996
of the Brokerage Company
<FN>
- - -----
(1) Amounts shown include both Restricted Share and "Phantom Stock
Credit" awards, which are valued based on the closing prices of
Common Stock on the Consolidated Transaction Reporting System on
the dates of grant of such awards. The awards are made as of the
end of the fiscal year for which they are awarded for service
during that fiscal year. Restricted Shares can be awarded to
participants in the 1988 Plan who are under age 60. The
restrictions on Restricted Shares lapse three years after their
award date. Participants who are 60 years of age or older ("Over 60
Participants") do not receive Restricted Shares. Instead, they are
awarded "Phantom Stock Credits" which serve as the basis for an
award of Restricted Shares two years after their award date
("Deferred Award Date"), where each Phantom Stock Credit represents
the right to receive one Restricted Share. The number of Phantom
Stock Credits awarded to an Over 60 Participant is adjusted to
reflect dividends on the Common Stock. On a Deferred Award Date, an
Over 60 Participant is awarded that number of shares of Restricted
Shares equal to the number of Phantom Stock Credits awarded to him
(as adjusted) for the
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<PAGE> 11
applicable award year. Restricted Shares awarded as of any Deferred
Award Date are subject to all of the terms and restrictions
applicable to other Restricted Shares, except the restrictions last
for only nine months.
(2) The awards of Restricted Shares, Phantom Stock Credits and Options
contain provisions for the accelerated lapsing of the restrictions
for Restricted Shares (including those issued based on Phantom
Stock Credits) and the accelerated exercisability of Options in the
event of a merger, consolidation, acquisition, sale or transfer of
assets, tender, or exchange offer or other reorganization in which
the Company does not survive as an independent, publicly-owned
company.
(3) The aggregate number and value of Restricted Shares and Phantom
Stock Credits held by the persons named in the table as of February
28, 1994, are as follows: Mr. Edwards, 1,841 shares and 7,232
credits-$201,874; Mr. Avis, 3,682 shares and 7,232 credits-
$242,836; Mr. Sisler, 3,682 shares and 7,232 credits-$242,836; Mr.
Bagby, 10,688 shares and 0 credits-$237,808; and Mr. Dissett,
10,688 shares and 0 credits-$237,808.
(4) Dividends are paid on unvested Restricted Shares and adjustments
are made to Phantom Stock Credits for dividends as discussed in
Note 1 to this table above; such dividends and adjustments are
equal in amount to the dividends paid on shares of Common Stock.
(5) Amounts shown consist of the following: (i) amounts set aside under
the Company's Retirement and Profit Sharing Plan for the 1992, 1993
and 1994 fiscal years, respectively-Mr. Edwards, $21,525, $21,272,
and $21,006; Mr. Avis, $21,525, $21,272, and $21,006; Mr. Sisler,
$21,525, $21,272, and $21,006; Mr. Bagby, $21,575, $21,272, and
$21,006; and Mr. Dissett, $21,525, $21,272, and $21,006; and (ii)
amounts credited to accounts under the Company's Excess Profit
Sharing Deferred Compensation Plan for the 1992, 1993 and 1994
fiscal years, respectively-Mr. Edwards, $48,475, $48,728, and
$48,994; Mr. Avis, $35,683, $48,728, and $48,994; Mr. Sisler,
$34,550, $48,728, and $48,994; Mr. Bagby, $21,082, $47,417, and
$48,994; and Mr. Dissett, $22,471, $44,020, and $48,994.
</TABLE>
<TABLE>
The following table sets forth certain information regarding the
exercise of options to purchase Company Common Stock during the
Company's 1994 fiscal year by the Named Executive Officers and the
unexercised options to purchase Company Common Stock held by such
persons on February 28, 1994:
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
NUMBER OF OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ---------------------------------------------------------------
ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE
NAME EXERCISE REALIZED (SHARES) (SHARES) EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Benjamin F. Edwards III - $ 0 - 4,418 $ 0 $10,824
Robert G. Avis - 0 8,352 - 123,527 0
David M. Sisler 8,352 91,812 - - 0 0
Robert L. Bagby - 0 - - 0 0
Robert C. Dissett - 0 4,257 - 60,960 0
<FN>
- - -----
(1) Options become exercisable three years after they are awarded, and
must be exercised no later than eight years after they are awarded.
</TABLE>
10
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Compensation Committee of the Brokerage
Company (as named on page 15) are officers of the Company or one of its
subsidiaries. Messrs. Avis, Dissett, Edwards, Mesker and Sisler are all
directors of the Company and are officers of the Company or one of its
subsidiaries.
JOINT REPORT OF THE COMPENSATION COMMITTEES
OF THE BROKERAGE COMPANY AND THE COMPANY
AND THE BOARD OF DIRECTORS
The Compensation Committee of the Brokerage Company (the "Brokerage
Committee") for the fiscal year ended February 28, 1994 (the "1994
Fiscal Year") determined the compensation of all officers of the
Company with the exception of Benjamin F. Edwards III. The compensation
of Mr. Edwards was determined by the Board of Directors except for the
discretionary bonus paid to Mr. Edwards which was determined by the
Compensation Committee of the Company (the "Company Committee"). The
Company Committee was created in November 1993 primarily to establish
compensation for Mr. Edwards and certain performance-based compensation
of other executives for the fiscal year ending February 28, 1995 (the
"1995 Fiscal Year") and thereafter.
It is the policy of the Company to have a substantial portion of each
officer's annual compensation directly related to the performance of
the Company. The policy is applied consistently to all the Named
Executive Officers, including Mr. Edwards.
For the 1994 Fiscal Year, the annual compensation of the Named
Executive Officers had six components. For the 1995 Fiscal Year, a
seventh component has been added in the form of the Performance Plan
for Executives as described under "Proposal 2: Approval of Performance
Goals for the Performance Plan for Executives" in this Proxy. The
Performance Plan for Executives is consistent with the Company's policy
concerning Section 162(m) of the Internal Revenue Code. Specifically,
the Company seeks to structure compensation for its executive officers
so that all of the compensation is deductible by the Company for
federal income tax purposes including under the limitations of Section
162(m) of the Internal Revenue Code. However, if the Company is not
able to structure compensation for its executive officers so that all
such compensation is deductible, the Board of Directors of the Company,
the Company Committee or the Brokerage Committee, as appropriate, will
make a determination in its business judgment as to the appropriate
compensation for such executives considering the benefits and the costs
to the Company including in its considerations the additional costs
arising from the inability to deduct part or all of the compensation.
Base Salary. A base salary was set prior to the beginning of the 1994
Fiscal Year by the Brokerage Committee for each Named Executive Officer
other than Mr. Edwards and by the Board of Directors for Mr. Edwards.
Base salaries are intended to be relatively moderate, but competitive,
for the Company's industry (including those companies in the Standard's
& Poor's Brokerage Index listed on page 16). The increase in the Base
Salary for Mr. Edwards of 6.1% for the 1994 Fiscal Year was established
consistent with the guidelines used for increases for other
11
<PAGE> 13
officers of the Brokerage Company and after consideration by the Board
of Directors of a recommendation by the Brokerage Committee (determined
without Mr. Edwards).
Executive Bonus Plan. The Executive Bonus Plan is designed to provide
certain officers and key employees of the Company and its subsidiaries
with direct participation in the profitability of the Company. Unless
the Company has a specified minimum of pre-tax earnings ($2,500,000 in
the 1994 Fiscal Year), no payment is made under the Plan. Awards under
the Plan are based on prescribed formulae that take into account the
employee's position with the Company, individual performance, and the
Company's earnings. The formula for bonus accrual (the "bonus pool") is
determined prior to the beginning of each fiscal year by the Board of
Directors based on (i) the Company's consolidated earnings before
provision for income taxes, certain employee bonuses, and discretionary
Profit Sharing Plan contributions, (ii) certain branch office profits,
and (iii) the net revenues of certain departments. The formula for
accrual for the 1994 Fiscal Year was the same as for the prior fiscal
year.
Eligible officers are assigned "shares" in the bonus pool prior to
the beginning of the fiscal year. Such shares are assigned based on the
officer's position and responsibility with the Company and individual
performance. Eligible officers, other than Mr. Edwards, were assigned
shares for the 1994 Fiscal Year by the Brokerage Committee. The Board
of Directors assigned 100 shares to Mr. Edwards for the 1994 Fiscal
Year, the same number of shares he had for the prior fiscal year. No
officer has ever received more than 100 shares. During the 1994 Fiscal
Year, 15 officers, including all of the Named Executive Officers and
Mr. Edwards, had 100 shares. Since the Executive Bonus Plan was adopted
in 1979, Mr. Edwards has received the maximum number of shares
available under the plan each year. At the beginning of the 1994 Fiscal
Year, a total of 10,439 shares were assigned to 306 eligible officers.
Under the Executive Bonus Plan, after the end of the fiscal year, the
accrued bonus plan is mathematically divided into two separate
portions, consisting of two-thirds and one-third, respectively. The
two-thirds portion is distributed in accordance with the number of
shares previously assigned to each participant. The one-third portion
is distributed based on a formula which weights each participant's
shares by the participant's base salary. The sum of the two portions is
each participant's total Executive Bonus for the fiscal year, and is
paid after the end of the fiscal year.
Discretionary Bonus. Mr. Edwards may award a discretionary bonus to
any officer other than himself and the Company Committee may award a
discretionary bonus to Mr. Edwards. The discretionary bonus is intended
to award efforts or results by an individual which are not recognized
or compensated by other compensation. No objective standards, criteria
or established targets are used to determine the amount of the
discretionary bonuses. For the 1994 Fiscal Year, the Company Committee
determined at the end of the year to make an award of $75,000 to Mr.
Edwards in recognition of the excellent year by the Company under his
leadership, in recognition of the extra efforts made by him in the
Company and in the community which benefit the Company, and in
recognition that his compensation is moderate for the industry. Two
other Named Executive Officers each received a discretionary bonus of
$50,000 for the 1994 Fiscal Year. The three discretionary bonuses were
the only discretionary bonuses awarded for the 1994
12
<PAGE> 14
Fiscal Year and each was for the same amount as the recipient received
as a discretionary bonus during the prior fiscal year.
1988 Incentive Stock Plan. The 1988 Plan is designed to motivate
employees of the Company and its subsidiaries through the incentives
inherent in stock ownership by providing the opportunity to obtain or
increase a proprietary interest in the Company on a favorable basis.
The 1988 Plan provides for the granting of Options or Restricted
Shares, or both. If Options are granted, the participant receives an
option to purchase 2.5 times the number of shares that would have been
granted as Restricted Shares. The Named Executive Officers, including
Mr. Edwards, are awarded an amount equal to 25% of each such officer's
Executive Bonus (as described above); provided, in no event can the
award amount for any participant exceed an amount set by the Brokerage
Committee, $70,000 in the 1994 Fiscal Year. Accordingly, the awards of
Options and Restricted Shares are tied to the profitability of the
Company in substantially the same manner as the awards under the
Executive Bonus Plan.
The Options provide for the purchase of shares of Common Stock at
market value on the determination date and do not become exercisable
until three years after the date of award. Because the value of the
Options is dependent on the increase of the market value of the Common
Stock over at least a three year period, the Options provide a long-
term incentive for the executives to stay with the Company and to
increase the market value of the Common Stock.
Restricted Shares are also awarded based on the market value of the
Common Stock on the determination date (participants 60 years of age
and over on the date Restricted Shares are awarded receive Phantom
Stock Credits, in lieu of Restricted Shares, which serve as the basis
for an award of Restricted Shares two years after the award date). The
Restricted Shares are subject to restrictions for three years after
their award. Again, by an award of Restricted Shares, the executives
are encouraged to remain with the Company and to increase the market
value of the Common Stock.
The 1988 Plan also has an Employee Stock Purchase Plan portion to
authorize the award of options qualified under Section 423 of the
Internal Revenue Code to qualified employees. The qualified employees
include most of the full-time employees of the Company and its
subsidiaries. Participation in the Employee Stock Purchase Plan is not
based upon the performance of the Company; employees elect to use a
portion of their compensation to buy Common Stock under the plan. The
Employee Stock Purchase Plan is intended to encourage the employees of
the Company to obtain or increase a proprietary interest in the Company
on a favorable basis by offering Common Stock at below market value.
Shares under the Employee Stock Purchase Plan are issued at a price
based upon a formula which is at least 15% below market at the sale
date.
Retirement and Profit Sharing Plan. The Company maintains a
Retirement and Profit Sharing Plan (the "Profit Sharing Plan"), which
is qualified under Section 401 of the Internal Revenue Code of 1986
(the "Code"). In addition to certain required matching and non-matching
contributions, the Company may make a discretionary contribution as
determined each year by the Board of Directors of the Company. On
February 19, 1993, the Board of Directors of the Company approved an
accrual formula for the discretionary contribution to the Profit
Sharing Plan for the fiscal year ended February 28, 1994 in an amount
not less than 8% and not more than 10% of the
13
<PAGE> 15
Company's earnings on a consolidated basis and before certain bonuses,
Company discretionary Profit Sharing Plan contributions and taxes on
income. The maximum total Company and employee contribution allowable
with respect to any employee under the Profit Sharing Plan in the last
fiscal year was $30,000; however, because of the contribution rate and
other limitations on recognized compensation in the Profit Sharing
Plan, the actual maximum Company contribution with respect to any
employee was less than that amount.
Excess Profit Sharing Deferred Compensation Plan. The Company has
established the Excess Profit Sharing Deferred Compensation Plan (the
"Excess Benefit Plan") to provide deferred compensation to certain
participants in the Profit Sharing Plan whose benefit in the Profit
Sharing Plan is subject to limitations imposed by the Code.
Contributions to the Excess Benefit Plan are based on the same basic
formula as the Profit Sharing Plan, but without regard to certain
limitations imposed by the Code on the benefits of highly compensated
employees. The maximum aggregate contribution under both the Profit
Sharing Plan and the Excess Benefit Plan in the last fiscal year was
$70,000; accordingly, the maximum benefit with respect to any employee
under the Excess Benefit Plan was the difference between $70,000 and
the Profit Sharing Plan Company contribution with respect to such
employee.
Procedures. Prior to the beginning of the 1994 Fiscal Year, the Board
of Directors considered the compensation of Mr. Edwards. The Board of
Directors reviewed the six components of the compensation structure of
the Company, the historical performance of the structure, the
consistency of the compensation components for Mr. Edwards with the
components for other officers, the guidelines used for determining the
base salaries of other officers, the recommendation of the Brokerage
Committee (determined without Mr. Edwards) that Mr. Edwards' increase
should be consistent with the guidelines for other officers and the
compensation of officers in other companies in the industry. Based on
the review, the Board of Directors determined the increase in Mr.
Edwards' base salary and that the other components of his compensation
should not be changed from the prior year.
In November 1993, the Company Committee was established. The Company
Committee met twice prior to the end of the 1994 Fiscal Year. The
Committee reviewed the components of the compensation of Mr. Edwards,
the performance of the Company for the 1994 Fiscal Year and information
concerning compensation at other companies in the industry. Based on
the review discussed above under "Discretionary Bonus," the Company
Committee determined that a discretionary bonus should be paid to Mr.
Edwards for the 1994 Fiscal Year in the amount of $75,000.
14
<PAGE> 16
MEMBERS OF THE BOARD OF DIRECTORS
OF THE COMPANY ("BOARD OF DIRECTORS")
- - -------------------------------------
Robert G. Avis
Dr. E. Eugene Carter
Robert C. Dissett
Benjamin F. Edwards III, Chairman
Dr. Louis Fernandez
Samuel C. Hutchinson, Jr.*
David W. Mesker
David M. Sisler
Donna C. E. Williamson
MEMBERS OF THE COMPENSATION
COMMITTEE OF THE BROKERAGE
COMPANY ("BROKERAGE COMMITTEE")
- - -------------------------------
Robert G. Avis
Robert C. Dissett
Benjamin F. Edwards III, Chairman
Douglas L. Kelly**
David W. Mesker
Robert L. Proost
David M. Sisler
MEMBERS OF THE COMPENSATION COMMITTEE
OF THE COMPANY ("COMPANY COMMITTEE")
- - -------------------------------------
Dr. E. Eugene Carter
Dr. Louis Fernandez
Samuel C. Hutchinson, Jr.*
Donna C. E. Williamson
[FN]
- - -----
* Mr. Hutchinson was elected to the Board of Directors and the Company
Committee on June 24, 1993 and joins in the report only for actions
after that date.
** Mr. Kelly was elected to the Brokerage Committee effective January
1, 1994 and joins in the report only for actions after that date.
15
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total
stockholder return on its Common Stock for a five year period (February
28, 1989 to February 28, 1994) with the cumulative total return of the
Standard & Poor's 500 Stock Index and the Standard & Poor's Brokerage
Index (which includes the Company, The Bear Stearns Companies Inc.,
Merrill Lynch & Co., Inc., Morgan Stanley Group Inc. and PaineWebber
Group Inc.). The graph assumes that the value of the investment in
Common Stock and each index was $100 at February 28, 1989, and that all
dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
<TABLE>
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
1989 1990 1991 1992 1993 1994
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A.G. Edwards, Inc. 100 113 156 279 270 305
S&P Brokerage Index 100 94 118 212 236 288
S&P 500 Index 100 119 136 158 175 189
- - -------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 18
CERTAIN TRANSACTIONS
Directors and executive officers of the Company have been customers
of and have had brokerage transactions with the Company in the ordinary
course of business. Included in such transactions are the maintenance
of margin accounts and the extension of credit under Federal Reserve
Regulation T. Such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other people and did not and
do not involve more than normal risk of collectibility or present other
unfavorable features.
PROPOSAL 2: APPROVAL OF PERFORMANCE GOALS
FOR THE PERFORMANCE PLAN FOR EXECUTIVES
The Compensation Committee of the Company has established performance
goals and a formula for the payment of bonuses to certain executive
officers of the Company under the A.G. Edwards, Inc. Performance Plan
for Executives ("Performance Plan"). Although the Performance Plan is a
new formal plan being presented to the stockholders for approval for
the first time this year, it will not change the formula used in prior
years for determining the amount of bonus compensation paid by the
Company to executive officers. The Performance Plan was adopted solely
in response to the enactment of the Section 162(m) of the Internal
Revenue Code in 1993. Section 162(m) requires conditions to be met for
certain compensation of specified executive officers to be deductible.
In order to meet the conditions of Section 162(m) with no significant
change in the compensation structure of the Company, the Executive
Bonus Plan was amended to limit compensation which would otherwise be
payable under the Executive Bonus Plan and the Performance Plan for
Executives was adopted in order to pay the compensation which, but for
the new limitation, would have been payable under the Executive Bonus
Plan. The Company's intent and the provisions of the Plans are drafted
to provide that the combined plans will operate in the same manner as
the Executive Bonus Plan has operated in prior years subject only to
certain new limitations on payments. (See the Joint Report of the
Compensation Committees of the Brokerage Company and the Company and of
the Board of Directors for a description of the Executive Bonus Plan).
The eligible participants for the Executive Bonus are all officers of
the Company who are not otherwise eligible for variable compensation or
bonus (such as commission, sales bonuses or a branch manager's share of
branch office profits). The participants in the Performance Plan,
however, are those employees of the Company who are: (i) "covered
employees" under Section 162(m) of the Internal Revenue Code, (ii)
designated individually or by class description to be "Covered
Employees" under the Performance Plan by the Compensation Committee,
and (iii) participants under the Executive Bonus Plan. The Compensation
Committee has designated all executive officers of the Company to be
Covered Employees, and all of the executive officers of the Company are
participants in the Executive Bonus Plan. Section 162(m), however,
limits "covered employees" to only the Chief Executive Officer of the
Company and the four highest compensated officers of the Company (other
than the Chief Executive Officer), so, in any fiscal year, there can be
no more than five participants.
17
<PAGE> 19
The performance goals for the Performance Plan are the same as for
the Executive Bonus Plan. They include (i) the Company's consolidated
earnings before provision for income taxes, certain employee bonuses
and discretionary profit sharing plan contributions, (ii) certain
branch office profits and (iii) the net revenues of certain
departments, a percentage of each of which is paid into the Executive
Bonus Pool. As described in the Joint Report of the Compensation
Committees of the Brokerage Company and the Company and of the Board of
Directors, amounts are paid under the Executive Bonus Plan based on the
participants' relative shares in the plan and salary. The Executive
Bonus Plan limits, however, the amount that can be paid to individual
participants, so that all compensation paid under the Executive Bonus
Plan is tax deductible by the Company. To the extent amounts cannot be
paid under the Executive Bonus Pool to individual participants because
of the tax limitation, they may be paid under the Performance Plan.
The actual amount payable to a Covered Employee in a fiscal year
under the Performance Plan is the lesser of: (i) the amount of
reduction in payments to the Covered Employee as a participant under
the Executive Bonus Plan for that fiscal year as a result of Section
162(m), (ii) the Covered Employee's Initial Bonus Amount for that
fiscal year, and (iii) the Maximum Bonus Amount for that fiscal year. A
Covered Employee's Initial Bonus Amount each fiscal year is equal to
the amount that the Covered Employee would be prohibited from receiving
under the Executive Bonus Plan as a result of Section 162(m) as
determined solely from fixed assumptions contained in the Performance
Plan and information known as of the beginning of the fiscal year. The
Maximum Bonus Amount for each Covered Employee is $2,000,000 for fiscal
year 1995. The Maximum Bonus Amount increases each fiscal year by 10%
over the prior fiscal year. Before any amount can be paid under the
Performance Plan, the Compensation Committee must certify in writing
that the performance goals and the material terms of the Performance
Plan were in fact satisfied.
The Compensation Committee has the authority to interpret and
administer the Performance Plan consistent with Section 162(m). The
Performance Plan may be terminated or amended by the Board of Directors
of the Company or its Compensation Committee at any time; however, no
amount can be paid under the Performance Plan unless the stockholders
have approved the Performance Plan (or its material terms) at such time
and in such manner as required by Section 162(m) (which approval may
apply to more than one fiscal year) so that amounts paid under the
Performance Plan will be "qualified performance based compensation."
If the stockholders do not approve the performance goals for the
Performance Plan, no amount will be paid under the Performance Plan and
the Board of Directors, the Company Committee or the Brokerage
Committee, as appropriate, will make a determination in its business
judgment as to the compensation for the executives who would have
received payments under the Performance Plan considering the benefits
and costs to the Company including the additional costs arising from
the inability to deduct part or all of the compensation.
The Board of Directors recommends that the stockholders vote "FOR"
the approval of this proposal.
18
<PAGE> 20
PROPOSAL 3: APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on recommendation of the Audit Committee, has
appointed Deloitte & Touche, Certified Public Accountants, as
independent auditors of the Company for the fiscal year ending February
28, 1995.
Deloitte & Touche or its predecessor, Touche Ross & Co., has served
as the independent auditors of the Company since its incorporation in
1983 and of the Brokerage Company since the early 1940s. A
representative of Deloitte & Touche will be present at the annual
meeting, will have the opportunity to make a statement if he desires,
and will be available to respond to appropriate questions.
Although this appointment is not required to be submitted to a vote
of stockholders, the Board of Directors believes it is appropriate to
request that the stockholders ratify the appointment of Deloitte &
Touche as independent auditors of the Company for the fiscal year
ending February 28, 1995. If the stockholders do not ratify, the Audit
Committee will investigate the reasons for stockholder rejection and
the Board of Directors will reconsider the appointment.
The Board of Directors recommends a vote "FOR" the ratification of
the appointment of Deloitte & Touche as independent auditors.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be presented at the 1995 annual meeting
of stockholders must be received by the Company no later than January
16, 1995 at its principal executive office at One North Jefferson
Avenue, St. Louis, Missouri 63103 in order to be considered for
inclusion in the Company's proxy statement and proxy relating to that
meeting.
Stockholders wishing to nominate one or more candidates for election
to the Board of Directors, or propose any other business to be
considered at any stockholder meeting, must comply with a Bylaw
provision dealing with such matters. Pursuant to the Company's Bylaw
provision, any stockholder of the Company eligible to vote in an
election of directors may nominate one or more candidates for election
to the Board of Directors, or propose business to be brought before a
stockholder meeting, by giving written notice to the Company not less
than 60 nor more than 90 days prior to the date of the meeting (if the
Company gives less than 70 days notice or prior public disclosure of
the date of the meeting, then the notice by the stockholder must be
received by the Company not later than the close of business on the
tenth day following the date on which the Company mailed the notice of
the meeting or the date on which public disclosure was made). The
notice by the stockholder should be sent to the Secretary of the
Company at the address stated in the preceding paragraph.
The notice by the stockholder to the Company must contain: (1) the
name and address of the stockholder who intends to make the
nomination(s) or propose the business, (2) the name and address of the
candidate(s) to be nominated (if applicable), (3) a written statement
from any proposed nominee that the nominee consents to be named as a
nominee and to serve as a director of the Company if elected (if
applicable), (4) a representation that the stockholder is a
19
<PAGE> 21
holder of record of Company stock entitled to vote at the meeting and
whether the stockholder intends to appear in person or by proxy at the
meeting, (5) a description of all arrangements or understandings, if
any, between the stockholder and each nominee and any other person(s)
pursuant to which any nomination(s) are to be made by the stockholder
(if applicable), and (6) such other information regarding each nominee
or each matter of business to be proposed as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or
the matter been proposed, by the Board of Directors.
At any stockholder meeting, the Chairman of the meeting may refuse to
acknowledge the nomination of any person, or the proposal of any
business, not made in compliance with the Bylaws. The foregoing
requirements are separate from and in addition to the requirements a
stockholder must meet to have a proposal included in the Company's
proxy statement for any meeting. Any stockholder desiring a copy of the
Company's Bylaws will be furnished one without charge upon written
request sent to the Secretary of the Company at the address stated
above.
OTHER MATTERS
The Board of Directors knows of no other business to be brought
before the meeting. If any other matters properly come before the
meeting, the proxies will be voted on such matters in accordance with
the judgment of the persons named as proxies therein, or their
substitutes, present and acting at the meeting.
May 16, 1994
20
<PAGE> 22
----------------------------
Proxy Statement
and
Notice of the
Annual Meeting
of Stockholders
to be held
June 23, 1994
A.G. Edwards, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
----------------------------
<PAGE> 23
A.G. Edwards, Inc.
May 16, 1994
Dear Stockholder:
The 1994 Annual Meeting of Stockholders of A.G. Edwards, Inc. will be
held at the home office of the Company, One North Jefferson Avenue,
St. Louis, Missouri, on Thursday, June 23, 1994 at 10:00 a.m. At the
meeting, stockholders will elect three directors, act on a proposal to
approve performance goals for the A.G. Edwards, Inc. Performance Plan
for Executives, act on a proposal to ratify the appointment of the
independent auditors of the Company for the fiscal year ending
February 28, 1995, and transact such other business as may properly
come before the meeting.
It is important that your shares are represented at the meeting.
Whether or not you plan on attending the meeting, please review the
enclosed proxy materials, complete the proxy form attached below and
promptly return the proxy form in the envelope provided.
PLEASE DETACH AND MARK THE PROXY, SIGN IT ON THE
REVERSE SIDE, AND RETURN IT BEFORE THE MEETING
(Detach Proxy Form Here)
- - ------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF A.G. EDWARDS, INC.
The undersigned stockholder of A.G. Edwards, Inc., a Delaware
corporation (the "Company"), hereby appoints Benjamin F. Edwards III
and Douglas L. Kelly, or either of them, each with full power of
substitution, proxies or proxy of the undersigned, to vote all the
shares of Common Stock of the Company that the undersigned would be
entitled to vote if personally present at the meeting of the
stockholders of the Company, to be held on Thursday, June 23, 1994, at
10:00 a.m., local time, at the home office of the Company, One North
Jefferson Avenue, St. Louis, Missouri, and at any adjournment or
adjournments thereof, hereby revoking any proxy heretofore given:
1. ELECTION OF DIRECTORS FOR / / all nominees WITHHOLD AUTHORITY / /
listed below (except to vote for all nominees
as marked to the listed below
contrary below)
Dr. Louis Fernandez, David W. Mesker, and Donna C. E. Williamson
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
- - ------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE PERFORMANCE GOALS FOR THE A.G. EDWARDS, INC.
PERFORMANCE PLAN FOR EXECUTIVES.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE AS
INDEPENDENT AUDITORS FOR THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
4. In their sole discretion on such other matters as may properly come
before such meeting and any adjournment or adjournments thereof;
<PAGE> 24
(Detach Proxy Form Here)
- - ------------------------------------------------------------------------
all as described in the Notice of Annual Meeting of Stockholders and
accompanying Proxy Statement for such meeting, the receipt of which is
hereby acknowledged.
THIS PROXY WILL BE VOTED AS SPECIFIED IN THE SPACES PROVIDED THEREFOR
OR, IF NO SUCH SPECIFICATION IS MADE, IT WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
Dated: ......................., 1994
Sign here: ......................
(Please sign exactly as name
appears hereon. Administrators,
trustees, etc., should so
indicate when signing.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PRIOR TO THE MEETING.
<PAGE> 25
APPENDIX A
(THIS PLAN IS BEING SUBMITTED PURSUANT TO INSTRUCTION 3 TO ITEM 10 OF SCHEDULE
14A. IT IS NOT PRINTED IN THE PROXY STATEMENT CIRCULATED TO INVESTORS.)
A.G. EDWARDS, INC.
PERFORMANCE PLAN FOR EXECUTIVES
ARTICLE I
PREAMBLE
Section 162(m) of the Internal Revenue Code of 1986 was
enacted by the Revenue Reconciliation Act of 1993. Section
162(m) limits to $1,000,000 the amount of an employer's deduction
for a fiscal year relating to compensation for certain executive
officers, with exceptions for specific types of compensation such
as performance-based compensation. The Holding Company has
amended its Executive Bonus Plan to limit the amount payable
under the Executive Bonus Plan as a result of the Section 162(m)
deduction limitation.
Qualified performance-based compensation is not subject to
the Section 162(m) deduction limitation. This Performance Plan
is intended to provide for the payment of qualified performance-
based compensation in the form of a bonus to each executive
officer whose bonus under the Executive Bonus Plan is actually
limited by Section 8 thereof because of the Section 162(m)
deduction limitation. The amount of any such bonus under this
Performance Plan is intended to be equal to the amount that would
have been payable to such executive officer pursuant to the
Executive Bonus Plan but for the limitation contained in Section
8 thereof, relating to the Section 162(m) deduction limitation.
This Performance Plan shall be administered in accordance with,
and to achieve, the intent stated above.
Notwithstanding anything contained herein to the contrary,
amounts accrued under this Performance Plan shall be paid only if
this Performance Plan is approved by the stockholders of the
Holding Company as provided in Article VI hereof.
ARTICLE II
DEFINITIONS
Unless defined below in this Article II or in the other
provisions of this Plan, capitalized but undefined terms used
herein shall have the meaning ascribed to them in the Executive
Bonus Plan.
"Company" means the Holding Company and its subsidiaries,
individually or collectively, as the context may require.
"Covered Employee" for a fiscal year means an individual
employed by the Company who has satisfied the requirements
of Article III for such fiscal year.
"Executive Bonus Plan" means the A.G. Edwards, Inc.
Corporate Executive Bonus Plan, as amended from time to
time.
<PAGE> 26
"Fixed Allowance" means $300,000 for the fiscal year ending
February 28, 1995; thereafter, the Fixed Allowance for each
subsequent fiscal year shall be increased by 10% over the
Fixed Allowance for the immediately preceding fiscal year.
"Holding Company" means A.G. Edwards, Inc.
"Initial Fixed Compensation" means, with respect to any
Covered Employee in any fiscal year, the aggregate amount
of: (i) such Covered Employee's Initial Salary for such
fiscal year and (ii) other components of compensation for
the Covered Employee that are "applicable employee
remuneration" under Section 162(m) for such fiscal year that
are established as of the beginning of such fiscal year.
Specifically, "Initial Fixed Compensation" shall not
include: (i) any salary increases or other amounts approved
by the Company at its discretion after the beginning of such
fiscal year, (ii) any amounts payable pursuant to this
Performance Plan or the Executive Bonus Plan for such fiscal
year, (iii) the Fixed Allowance for such fiscal year, or
(iv) any amounts payable to a Covered Employee for such
fiscal year to which, or to the extent that, Section 162(m)
does not apply to them under applicable transitional rules
(such as amounts payable under the A.G. Edwards, Inc.
Restricted Stock and Stock Option Plan and the A.G. Edwards,
Inc. Excess Profit Sharing Plan).
"Initial Salary" means, with respect to any Participant
under the Executive Bonus Plan for a fiscal year, the rate
of salary in effect for such Participant for such fiscal
year as established prior to the beginning of such fiscal
year.
"Initial Shares" means, with respect to any Participant
under the Executive Bonus Plan for a fiscal year, the number
of Shares assigned to such Participant in the Executive
Bonus Plan for such fiscal year as established prior to the
beginning of such fiscal year.
"Maximum Bonus Amount" means $2,000,000 for the fiscal year
ending February 28, 1995; thereafter, the Maximum Bonus
Amount for each subsequent fiscal year shall be increased by
10% over the Maximum Bonus Amount for the immediately
preceding fiscal year.
"Performance Plan" means the A.G. Edwards, Inc. Performance
Plan for Executives as set forth herein, as the same may be
amended from time to time.
"Performance Plan Bonus Pool" for a fiscal year means the
amount determined pursuant to Article IV.
"Plan Administrator" means the Compensation Committee of the
Holding Company.
"Predetermined Amount" means, with respect to any fiscal
year, the amount of the Executive Bonus Pool that would have
accrued for such fiscal year based on the
-2-
<PAGE> 27
respective percentages of Pre-tax Earnings established by the Board
of Directors for such fiscal year before the beginning of such
fiscal year, and the departments and percentages of revenues
(net of direct expenses) of each department that determine
the Third Bonus Pool that were in effect at the beginning of
such fiscal year, all as determined in accordance with
Section 4 of the Executive Bonus Plan, without regard to any
discretionary increase to such percentages or addition to
such departments or any other discretionary additions to the
Executive Bonus Pool for such fiscal year made after the
beginning of the fiscal year.
"Section 162(m)" means Section 162(m) of the Internal
Revenue Code of 1986, together with any regulations
promulgated thereunder, as any or all of them may be amended
or in effect from time to time, or any section that amends
or supersedes such section.
ARTICLE III
COVERED EMPLOYEES
The participants in this Performance Plan for any fiscal
year shall be comprised of each employee of the Company who is:
(i) a "covered employee" under Section 162(m) for such fiscal
year, (ii) a "Participant" under the Executive Bonus Plan who is
entitled to a bonus thereunder as of the last day of such fiscal
year, and (iii) designated individually or by class description
to be a "Covered Employee" hereunder by the Plan Administrator.
ARTICLE IV
PERFORMANCE PLAN BONUS POOL
The performance goals for this Performance Plan shall be the
Company's Pre-tax Earnings, certain branch office profits and the
net revenues of certain departments, a percentage of each of
which is paid into the Executive Bonus Pool, as set forth in the
Executive Bonus Plan. The Performance Plan Bonus Pool for a
fiscal year is based on such performance goals and shall equal
the aggregate amount of the Executive Bonus Pool for the fiscal
year that is not paid to Participants thereunder for that fiscal
year because of the limitation of Section 8 of the Executive
Bonus Plan.
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ARTICLE V
DETERMINATION OF INITIAL BONUS AMOUNT;
DISTRIBUTION AND CERTIFICATION
1. DETERMINATION OF INITIAL BONUS AMOUNT.
After the close of a fiscal year, the Initial Bonus Amount
for each Covered Employee shall be determined for such fiscal
year. The Initial Bonus Amount for a Covered Employee for any
fiscal year shall be the amount of reduction in payments to such
Covered Employee as a Participant under Section 8 of the
Executive Bonus Plan that would have occurred assuming: (i) the
individuals eligible to receive a bonus under the Executive Bonus
Plan were only those individuals who were Participants as of the
first day of such fiscal year, (ii) the Executive Bonus Pool was
equal to the Predetermined Amount, (iii) the Year-end Shares and
the Year-end Salary of all Participants in the Executive Bonus
Plan were equal to their respective Initial Shares and Initial
Salaries, and (iv) the amount treated as compensation subject to
the Section 162(m) deduction limitation for the Covered Employee
in such fiscal year was equal to the Initial Fixed Compensation
of the Covered Employee for such fiscal year plus the Fixed
Allowance for such fiscal year.
2. DISTRIBUTION.
Subject to Article V, Section 3, after the close of a fiscal
year, an amount shall be paid to each Covered Employee from the
Performance Plan Bonus Pool for that fiscal year equal to the
lesser of: (i) the amount of the reduction in payments to such
Covered Employee as a Participant under Section 8 of the
Executive Bonus Plan for such fiscal year, (ii) such Covered
Employee's Initial Bonus Amount, or (iii) the Maximum Bonus
Amount. Any part of the amount of the reduction in payments to a
Covered Employee as a Participant under Section 8 of the
Executive Bonus Plan for such fiscal year that is not paid to
such Covered Employee because such amount exceeds such Covered
Employee's Initial Bonus Amount or Maximum Bonus Amount shall not
increase the portion of the Performance Plan Bonus Pool payable
to other Covered Employees but shall be retained by the Company,
so that such limitations on the bonus paid to a particular
Covered Employee shall not affect the bonus amount payable to any
other Covered Employee.
3. CERTIFICATION BY THE PLAN ADMINISTRATOR.
Prior to the payment of any amount under this Performance
Plan to a Covered Employee, the Plan Administrator shall certify
in writing that the performance goals and other material terms of
this Performance Plan were in fact satisfied. For this purpose,
approved minutes of a meeting of the Plan Administrator in which
the certification is made shall be treated as written
certification.
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ARTICLE VI
AMENDMENT AND
STOCKHOLDER APPROVAL REQUIREMENT
This Performance Plan may be amended by the Board of
Directors of the Holding Company and its Compensation Committee;
provided, no amount shall be paid to any Covered Employee under
this Performance Plan in any fiscal year unless the stockholders
of the Holding Company have approved this Performance Plan (or
the material terms hereof) at such time and in such manner as
required by Section 162(m) (which approval may apply to more than
one fiscal year) so that amounts paid hereunder will be
"qualified performance based compensation."
ARTICLE VII
GENERAL ADMINISTRATION;
RULES OF CONSTRUCTION AND
SPECIAL TRANSITION RULE
The Plan Administrator, subject to the limitations provided
herein, shall have the authority to interpret and administer the
Performance Plan and to take all such steps and make all such
rules or determinations in connection with the Performance Plan
as it may deem necessary or advisable, including, without
limitation, the construction of any ambiguities that may arise in
the administration of the Performance Plan. By their
participation in the Performance Plan, all Covered Employees
agree that such interpretations and determinations made by the
Plan Administrator shall be final, conclusive and binding on all
Covered Employees if there is any rational basis for such
interpretations or determinations.
The terms and provisions of this Performance Plan shall be
construed in accordance with the laws of the State of Missouri
and according to the principles, and in the priority, as follows:
first, in accordance and consistent with Section 162(m) in a
manner so that all amounts payable under this Performance Plan
will be "qualified performance-based compensation;" and second,
consistent with the meaning and application of the Executive
Bonus Plan.
The Secretary of the Company, in conjunction with the
Controller of the Company, shall develop procedures and keep
detailed records as may be required to implement and document
decisions made under the Performance Plan.
The first fiscal year for which this Performance Plan is in
effect shall be the fiscal year of the Company ending February
28, 1995, even though this formal written Performance Plan may be
adopted between March 1, 1994 and April 1, 1994.
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APPENDIX
1. The Performance Graph on page 16 of the Proxy Statement has
been described and is being transmitted in a format which can
be processed by Edgar. As instructed, a paper copy of the
Performance Graph is being submitted to the electronic filers'
Branch Chief.
