<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / 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)
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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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: (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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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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<PAGE> 2
A. G. EDWARDS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 1995
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 22, 1995, 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 amendments to the
Company's 1988 Incentive Stock Plan to increase the number of
shares of Common Stock available under the Plan from 17,328,125 to
26,328,125, and to extend the term of the Plan indefinitely;
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending February 29,
1996; 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 1, 1995 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 15, 1995
<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 22, 1995 (the "1995
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 15, 1995.
Only stockholders of record at the close of business on May 1, 1995
are entitled to notice of, and to vote at, the 1995 Annual Meeting and
any adjournments thereof. On May 1, 1995 the Company had outstanding
62,360,281 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 1995 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 1995 Annual Meeting.
Votes cast by proxy or in person at the 1995 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") and 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 will be counted for the purpose of determining whether
there is a quorum for the transaction of business at the 1995 Annual
Meeting.
Abstentions may be specified on Proposal 2 to approve the amendments
to the Company's 1988 Incentive Stock Plan and on Proposal 3 to ratify
the appointment of independent auditors, but not the election of
directors.
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
1995 Annual
2
<PAGE> 4
Meeting. Consequently, any shares represented at the 1995 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 amendments to the Company's 1988
Incentive Stock Plan and to ratify the appointment of the independent
auditors. Votes withheld by brokers in the absence of instructions
("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 four meetings during the 1995 fiscal year. Between
Board meetings, Board responsibilities are delegated to the Executive
Committee, comprised of five Board members. The Executive Committee
held four meetings during the 1995 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 1996 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 comprised of four outside
directors. The Compensation Committee held two meetings during the 1995
fiscal year. The Compensation Committee was responsible for
establishing the compensation of Benjamin F. Edwards III and the amount
of awards to certain executives under the Performance Plan for
Executives for the 1995 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 1995 fiscal year, including officers of the Company, with the
exception of Benjamin F. Edwards III. (See "Joint Report of the
Compensation Committees of the Brokerage Company and the Company.")
The Audit Committee of the Board of Directors held three meetings
during the 1995 fiscal year. The Audit Committee performed the
following principal functions: (i) reviewed quarterly and 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.
3
<PAGE> 5
During the 1995 fiscal year, all incumbent directors attended 88% or
more of the aggregate meetings of the Board of Directors and the
committees of the Board on which each served except Donna C. E.
Williamson who attended 67% of such meetings. 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 1995 Annual Meeting, each to serve for a term of three
years. All of the nominees except Robert L. Bagby 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 1998 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
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 1995
FOR TERMS EXPIRING IN 1998
<C> <S> <C>
Robert G. Avis, 63<F1> Vice Chairman of the Board of the Company and Vice 1984
Chairman of the Board, Executive Vice President, Director Member of the
of the Investment Banking Division and Director of the Executive Committee
Sales and Marketing Division of the Brokerage Company
since March 1989. Employee of the Brokerage Company for
29 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, 53 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
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
------------ ---------------------------------- --------------------
<C> <S> <C>
Robert L. Bagby, 51 Corporate Vice President of the Brokerage Company;
Director of the Branch Division of the Brokerage Company
since March 1995. Assistant Director of the Branch
Division of the Brokerage Company from 1980 to 1995.
Employee of the Brokerage Company for 20 years. Director
of the Brokerage Company since 1979.
DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AND
WHOSE TERMS CONTINUE BEYOND 1995
DIRECTORS WITH TERMS EXPIRING 1996
Benjamin F. Edwards III, Chairman of the Board, President and Chief Executive 1983
63<F1> 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 38 years. Director
of the Brokerage Company since 1967. Director of Heilig-
Meyers Company and National Life Insurance Company of
Vermont.
Robert C. Dissett, 57 Corporate Vice President of the Brokerage Company since 1990
June 1977; Director of the Operations Division of the Member of the
Brokerage Company. Employee of the Brokerage Company for Executive Committee
33 years. Director of the Brokerage Company since 1973.
Samuel C. Hutchinson, Jr., President, Interface Construction Corp. since 1978. 1993
52 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
------------ ---------------------------------- --------------------
DIRECTORS WITH TERMS EXPIRING 1997
<C> <S> <C>
Dr. Louis Fernandez, 71 Chairman of the Board of Boehringer Ingelheim 1989
Corporation; Director of Alteon Corporation and Petrolite Member of the
Corporation. Chairman of the Board, Celgene Corporation Audit Committee and
from June 1990 to May 1992. President, Chief Executive Compensation Committee
Officer and Director, Celgene Corporation from August
1986 to June 1990. Chairman of the Board of Monsanto
Company until March 1986.
David W. Mesker, 63 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 33 years. Director of the
Brokerage Company since 1967.
Donna C. E. Williamson, Senior Vice President, Caremark International, Inc. since 1988
42 July 1993. Corporate Vice President, Health Cost Member of the
Management Group, Caremark International, Inc. from Audit Committee and
December 1992 to July 1993; Corporate Vice President Compensation Committee
Baxter International, Inc. until November 1992. Director
of Haemonetics Corporation.
<FN>
- -----
<F1> 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 1, 1995 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 279,114<F1><F2><F3> (4)
Robert L. Bagby 55,623<F1><F5> (4)
Dr. E. Eugene Carter 259,704 (4)
Robert C. Dissett 53,707<F1><F2><F6> (4)
Benjamin F. Edwards III 792,256<F1><F2><F7> 1.27%
Dr. Louis Fernandez 1,288<F8> (4)
Samuel C. Hutchinson, Jr. 1,381 (4)
David W. Mesker 612,653<F2> (4)
David M. Sisler 94,002<F1> (4)
Donna C. E. Williamson 687 (4)
All Directors and Executive Officers as a Group (14 persons) 2,347,524<F1> 3.76%
<FN>
- -----
<F1> 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, 3,364 shares; Mr. Bagby, 10,371 shares; Mr. Dissett,
10,371 shares; Mr. Edwards, 3,364 shares; Mr. Sisler, 3,364 shares;
other Executive Officers, 22,746.
<F2> 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; Mr. Edwards 4,418 shares; Mr. Mesker 8,837 shares.
<F3> Mr. Avis has shared voting and investment power over 44,994 shares
held by him as a co-trustee of a trust.
<F4> Percentages of less than 1% have been omitted.
<F5> Mr. Bagby has shared voting and investment power over 34,351
shares, including 116 shares owned by his wife and 34,235 shares
held jointly with his wife.
<F6> Mr. Dissett has shared voting and investment power over 38,982
shares held by him as a co-trustee of a trust.
<F7> Mr. Edwards has shared voting and investment power over 430,875
shares, including 391,029 shares held by him as co-trustee of two
trusts and 39,846 shares held by his wife.
<F8> 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>
FMR Corp. 3,670,481<F1> 6.08%<F1>
82 Devonshire Street
Boston, Massachusetts 02109
<FN>
- -----
<F1> Sole voting power over 781 shares; shared voting power over 0
shares; sole investment power over 3,670,481 shares; shared
investment power over 0 shares. Information, as of December 31,
1994, obtained from a stockholder filing made with the Securities
and Exchange Commission dated February 13, 1995.
</TABLE>
EXECUTIVE COMPENSATION
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.
8
<PAGE> 10
<TABLE>
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 <F1><F2><F3><F4> OPTIONS<F2> TION<F5>
--------------------------- ------ ------ ----- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Benjamin F. Edwards III, 1995 $372,840 $702,682 $70,796 0 $70,000
Chairman of the Board, President 1994 351,840 898,127 87,732 0 70,000
and Chief Executive Officer of the 1993 331,840 730,550 64,842 0 70,000
Company; Chairman of the Board,
President and Chief Executive Officer
of the Brokerage Company
Robert G. Avis, 1995 $248,840 $539,618 $70,796 0 $70,000
Vice Chairman of the Board of the 1994 234,840 693,607 87,732 0 70,000
Company; Vice Chairman of the 1993 221,840 563,880 64,842 0 70,000
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, 1995 $241,770 $531,824 $70,796 0 $70,000
Until retirement on March 1, 1995, 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 Board,
Executive Vice President and Director
of the Branch Division of the
Brokerage Company
Robert L. Bagby, 1995 $191,840 $426,153 $70,796 0 $70,000
Corporate Vice President and 1994 181,840 562,286 87,732 0 70,000
since March 1, 1995 Director of the 1993 171,840 449,484 64,842 0 68,689
Branch Division of the Brokerage
Company
Robert C. Dissett, 1995 $171,840 $403,884 $70,796 0 $70,000
Corporate Vice President and 1994 164,840 536,202 87,732 0 70,000
Director of the Operations Division 1993 156,840 430,165 64,842 0 65,292
of the Brokerage Company
<FN>
- -----
<F1> 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"), with each Phantom Stock Credit
representing 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. Restricted
Shares awarded as of any Deferred Award Date are subject to all of
the terms and
9
<PAGE> 11
restrictions applicable to other Restricted Shares, except the
restrictions last for only nine months.
<F2> 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.
<F3> The aggregate number and value of Restricted Shares and Phantom
Stock Credits held by the persons named in the table as of February
28, 1995, are as follows: Mr. Edwards, 3,364 shares and 7,278
credits-$239,445; Mr. Avis, 3,364 shares and 7,278 credits-
$239,445; Mr. Sisler, 3,364 shares and 7,278 credits-$239,445; Mr.
Bagby, 10,371 shares and 0 credits-$233,348; and Mr. Dissett,
10,371 shares and 0 credits-$233,348.
<F4> 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.
<F5> Amounts shown consist of the following: (i) amounts set aside under
the Company's Retirement and Profit Sharing Plan for the 1993, 1994
and 1995 fiscal years, respectively-Mr. Edwards, $21,272, $21,006
and $15,273; Mr. Avis, $21,272, $21,006 and $15,273; Mr. Sisler,
$21,272, $21,006 and $15,273; Mr. Bagby, $21,272, $21,006 and
$15,273; and Mr. Dissett, $21,272, $21,006 and $15,273; and (ii)
amounts credited to accounts under the Company's Excess Profit
Sharing Deferred Compensation Plan for the 1993, 1994 and 1995
fiscal years, respectively-Mr. Edwards, $48,728, $48,994 and
$54,727; Mr. Avis, $48,728, $48,994 and $54,727; Mr. Sisler,
$48,728, $48,994 and $54,727; Mr. Bagby, $47,417, $48,994 and
$54,727; and Mr. Dissett, $44,020, $48,994 and $54,727.
</TABLE>
<TABLE>
The following table sets forth certain information regarding the
exercise of options to purchase Company Common Stock during the
Company's 1995 fiscal year by the Named Executive Officers and the
unexercised options to purchase Company Common Stock held by such
persons on February 28, 1995:
<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<F1>
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 - $ 11,929 $0
Robert G. Avis - 0 8,352 - 125,615 0
David M. Sisler - 0 - - 0 0
Robert L. Bagby - 0 - - 0 0
Robert C. Dissett - 0 4,257 - 62,024 0
<FN>
- -----
<F1> 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, except Mr. Sisler who was an officer until his retirement
at the end of the 1995 fiscal year.
JOINT REPORT OF THE COMPENSATION COMMITTEES
OF THE BROKERAGE COMPANY AND THE COMPANY
The Compensation Committee of the Brokerage Company (the "Brokerage
Committee") determined the compensation for the fiscal year ended
February 28, 1995 (the "1995 fiscal year") of all officers of the
Company with the exception of Benjamin F. Edwards III and with the
exception of certain performance-based compensation of certain other
executives. The Compensation Committee of the Company (the "Company
Committee") determined the compensation of Mr. Edwards and certain
performance-based compensation of certain other executives.
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 1995 fiscal year, the annual compensation of the Named
Executive Officers had seven components. 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
meeting the requirements of Section 162(m) of the Internal Revenue Code
for deductibility of compensation in excess of a certain amount.
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 1995
fiscal year by the Brokerage Committee for each Named Executive Officer
other than Mr. Edwards and by the Company Committee 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 1995 fiscal year was established
consistent with the guidelines used for increases for other officers of
the Brokerage Company and after consideration by the Company Committee
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
11
<PAGE> 13
the 1995 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 1995 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 1995 fiscal year by the Brokerage Committee. The Company
Committee assigned 100 shares to Mr. Edwards for the 1995 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 1995 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 assigned to
any individual under the plan each year. At the beginning of the 1995
fiscal year, a total of 10,838 shares were assigned to 343 eligible
officers.
Under the Executive Bonus Plan, after the end of the fiscal year, the
accrued bonus pool 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.
The Executive Bonus Plan limits 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 may not be paid under the Executive Bonus Plan to individual
participants because of the tax limitation, the amounts may be paid
under the Performance Plan for Executives (the "Performance Plan") if
the conditions of the Performance Plan are met.
Performance Plan for Executives. 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 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 operated prior to the enactment of
Section 162(m), subject only to certain new limitations on payments.
12
<PAGE> 14
The participants in the Performance Plan 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
Company Committee, and (iii) participants under the Executive Bonus
Plan. The Company 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.
The performance goals for the Performance Plan were approved by the
stockholders in 1994 and are the same as for the Executive Bonus 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 was $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 Company Committee must certify in writing that the performance
goals and the material terms of the Performance Plan were satisfied.
The Company Committee certified that the performance goals and material
terms were satisfied for the 1995 fiscal year and the amount paid to
Mr. Edwards is included in the Summary Compensation Table.
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 1995 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 results for the 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 1995 fiscal year. The three discretionary bonuses were
the only discretionary bonuses awarded for the 1995 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
13
<PAGE> 15
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 and Performance
Plan Bonus (as described above); provided, in no event can the award
amount for any participant exceed an amount set by the 1988 Plan,
$70,000 in the 1995 fiscal year. Accordingly, the awards of Options and
Restricted Shares are related to the profitability of the Company in
substantially the same manner as the awards under the Executive Bonus
Plan and the Performance 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 and part-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 25, 1994, the Board of Directors of the Company approved an
accrual formula for the discretionary contribution to the Profit
Sharing Plan for the 1995 fiscal year in an amount not less than 8% and
not more than 10% of the 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
14
<PAGE> 16
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 by the employer 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 1995 fiscal year, the
Company Committee considered the compensation of Mr. Edwards. The
Company Committee reviewed the seven 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 Company Committee determined the increase in Mr.
Edwards' base salary should be 6.1% and that the other components of
his compensation should not be changed from the prior year.
At the end of the 1995 fiscal year, the Company Committee reviewed
the components of the compensation of Mr. Edwards, the performance of
the Company for the 1995 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 1995 fiscal year in the amount of $75,000.
<TABLE>
<CAPTION>
MEMBERS OF THE COMPENSATION
MEMBERS OF THE COMPENSATION COMMITTEE COMMITTEE OF THE BROKERAGE
OF THE COMPANY ("COMPANY COMMITTEE") COMPANY ("BROKERAGE COMMITTEE")
------------------------------------- -------------------------------
<S> <C>
Dr. E. Eugene Carter Robert G. Avis
Dr. Louis Fernandez, Chairman Robert C. Dissett
Samuel C. Hutchinson, Jr. Benjamin F. Edwards III, Chairman
Donna C. E. Williamson Douglas L. Kelly
David W. Mesker
Robert L. Proost
David M. Sisler
</TABLE>
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, 1990 to February 28, 1995) 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 Paine Webber
Group Inc.). The graph assumes that the value of the investment in
Common Stock and each index was $100 at February 28, 1990, and that all
dividends were reinvested.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG A.G. EDWARDS, INC., S&P BROKERAGE INDEX AND S&P 500 INDEX
<CAPTION>
Measurement Period A.G. Edwards, Inc. S&P Brokerage Index S&P 500
(Fiscal Year Covered) Index
<S> <C> <C> <C>
Measurement Pt-2/28/90 $100 $100 $100
FYE 2/28/91 $139 $120 $115
FYE 2/28/92 $248 $210 $133
FYE 2/28/93 $240 $235 $147
FYE 2/28/94 $270 $286 $159
FYE 2/28/95 $282 $286 $171
</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: AMENDMENTS TO THE COMPANY'S
1988 INCENTIVE STOCK PLAN
On February 24, 1995, the Board of Directors of the Company adopted
amendments to the 1988 Plan and directed that the amendments be
submitted to the stockholders for their approval. The amendments
provide for an increase in the number of shares of the Company's Common
Stock available under the 1988 Plan by 9,000,000 shares and extend the
term of the 1988 Plan indefinitely. The amendments will become
effective upon approval by the holders of at least a majority of the
shares of the Common Stock present in person or by proxy at the 1995
Annual Meeting.
GENERAL
The purpose of the 1988 Plan is to motivate employees of the Company
and its subsidiaries through incentives inherent in stock ownership by
providing the opportunity to obtain or increase a proprietary interest
in the Company on a favorable basis. The purpose of the proposed
amendments to the 1988 Plan is to increase the number of available
shares so as to enable the Company to continue the 1988 Plan in future
years and to provide that the 1988 Plan will continue indefinitely
instead of terminating April 21, 1998 as currently provided in the 1988
Plan. The 1988 Plan became effective in April 1988. The 1988 Plan was
amended in June 1990 to provide for the award or purchase of a maximum
of 4,060,000 shares of Common Stock and in June 1992 to provide for the
award or purchase of a maximum of 13,862,500 shares of Common Stock
(subject to adjustment for stock splits, stock dividends and changes in
the capitalization of the Company). After adjustment for a subsequent
stock dividend, the maximum number is now 17,328,125 shares of Common
Stock of which all except 1,981,112 shares have been issued or reserved
for issuance. In the event there is a lapse, expiration, termination,
or cancellation of any benefit awarded under the 1988 Plan and the
shares represented by such benefit either are not issued or are
subsequently reacquired by the Company, such shares may be again
available to be used in connection with the 1988 Plan without being
charged against the limitation of the number of authorized shares under
the 1988 Plan. The shares currently authorized have been and, if
Proposal 2 is approved, the additional shares will be registered under
the Securities Act of 1933, as amended. The closing price of the
Company's Common Stock on May 1, 1995 on the New York Stock Exchange
was $22.50 per share.
An Administrator of the 1988 Plan (the "Administrator") appointed by
the Board of Directors of the Company has the exclusive authority to
interpret and administer the 1988 Plan, establish
17
<PAGE> 19
appropriate rules relating to the 1988 Plan, delegate its authority and
duties under the 1988 Plan and make all determinations in connection
with the 1988 Plan and the benefits as it may deem necessary or
appropriate. The Administrator, however, may not change the amount,
price or timing of any benefits under the 1988 Plan, and only a
disinterested Administrator (within the meaning of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
thereunder) may make determinations relating to forfeitures of benefits
by participants who are reporting persons within the meanings of the
Exchange Act ("Reporting Persons"). The Brokerage Committee presently
is serving as Administrator for all aspects of the 1988 Plan, except
that the Executive Committee of the Board of Directors of the Brokerage
Company presently is serving as Administrator of the 1988 Plan to make
determinations relating to forfeitures of benefits by participants who
are not Reporting Persons.
The 1988 Plan establishes formulae for the award of stock options
("Options") and restricted shares ("Restricted Shares") for Reporting
Persons, as well as for the grant of options ("Section 423 Options")
under the "Employee Stock Purchase Plan" portion of the 1988 Plan for
all participants. The Administrator may establish the eligibility
requirements for the award of Options and Restricted Shares for
employees who are not Reporting Persons. In addition, a disinterested
Administrator may award other benefits ("Other Benefits") in the form
of Common Stock or the right to acquire Common Stock on such terms and
conditions as the disinterested Administrator shall determine in its
sole discretion, including the award of Options and Restricted Shares
in addition to those awarded pursuant to the formulae in the 1988 Plan
and the award of incentive stock options and stock appreciation rights.
The Administrator may make any type of awards of Other Benefits that
can be made by a disinterested Administrator, provided, unless the 1988
Plan is amended as described below, such awards are made only to
employees who are not Reporting Persons. The Board of Directors may
amend the 1988 Plan, from time to time as provided or limited by the
1988 Plan, (i) to change any terms, conditions or formulae pursuant to
which an award of Options, Restricted Shares or Section 423 Options may
be awarded (either increasing or decreasing the amount of such awards);
provided, such changes comply with Rule 16b-3 under the Exchange Act
("Rule 16b-3"), and (ii) to provide terms, conditions and a formula
(complying with Rule 16b-3) pursuant to which any right to acquire
Common Stock (including, without limitation, incentive stock options
and stock appreciation rights) may be awarded, in addition to Options,
Restricted Shares or Section 423 Options. If any such amendments are
made, the awards of benefits authorized by the amendments may be
administered by the Administrator.
Other Benefits which grant the right to purchase Common Stock, unless
they are subject to a substantial risk of forfeiture for purposes of
the Internal Revenue Code of 1986, as amended (the "Code"), require
that the purchase price of such share be at least 85% of the fair
market value of the shares at the time such Other Benefits are awarded.
OPTIONS AND RESTRICTED SHARES
Awards of Options or Restricted Shares (as elected by a participant)
are made to employees of the Company and its subsidiaries who are: (1)
Reporting Persons and who are participants in
18
<PAGE> 20
the Company's "Corporate Executive Bonus Plan" as of October 1, and as
of the last day, of the fiscal year of the Company for which the
benefits are awarded and (2) not Reporting Persons, as determined by
the Administrator. Awards of Options and Restricted Shares are made for
each fiscal year of the Company during the term of the 1988 Plan as of
the last day of each such fiscal year (an "Award Date"). The amount of
the Awards on a specific Award Date is determined as soon as
administratively practical after the end of each such fiscal year (a
"Determination Date").
The total amount of an award (an "Award Amount") for both Options and
Restricted Shares to which an eligible participant is entitled for any
specific fiscal year of the Company is equal to: (i) 25% of the
eligible participant's Corporate Executive Bonus and Performance Plan
Bonus, if applicable, for the fiscal year if the participant is a
Reporting Person, or (ii) such amount as may be determined by the
Administrator if the participant is not a Reporting Person. In no event
can the Award Amount for any eligible participant in any fiscal year of
the Company exceed $100,000 beginning with the 1996 fiscal year. An
eligible participant may elect to receive his or her Award Amount in
any fiscal year of the Company as (i) 100% Restricted Shares; (ii) 50%
Restricted Shares and 50% Options, or (iii) 100% Options. If no
election is made, the Award Amount is automatically divided 50%
Restricted Shares and 50% Options.
Stock Options. Options are granted in the form of "Nonqualified Stock
Options." The number of shares of Common Stock subject to Options
awarded to a participant for a specific fiscal year of the Company is
determined by dividing the portion of the participant's Award Amount
elected, or deemed elected, to be taken as Options for that fiscal year
by the greater of (a) the market value of a share of Common Stock on
the applicable Determination Date, or (b) $16 (subject to adjustment),
and multiplying such number by 2.5.
Options entitle a participant to purchase shares of Common Stock at a
price per share equal to the market value of the Common Stock on the
applicable Determination Date. Options become exercisable three (3)
years after the applicable Award Date (a "Vesting Period"), and must be
exercised no later than eight (8) years after the applicable Award
Date.
A participant will forfeit his or her unvested Options if his or her
employment with the Company is terminated for any reason other than
death or disability on or before the end of any applicable Vesting
Period. If a participant's employment is terminated before the end of
any applicable Vesting Period because of death or disability, his or
her unvested Options may be exercised by the participant (or the
participant's beneficiary, personal representative or distributee, as
applicable) during a five-year exercise period beginning as of the date
of such termination, but in no event later than the expiration of the
applicable original exercise period. A portion of the shares subject to
an unvested Option held by a senior participant (age 57 or older) are
not forfeited merely because the senior participant's employment with
the Company is terminated (other than for aggravated cause). A senior
participant will forfeit his or her unvested Options if the senior
participant engages in competition with the Company.
Options are exercisable in any order and in whole or in part from
time to time during the term of the Option after the exercise date is
achieved. The Option price is payable in full upon exercise of an
Option and may be paid in cash or, if permitted by the Administrator,
by tendering shares of Common Stock of the Company already owned by the
participant. Options granted under the Plan
19
<PAGE> 21
are nontransferable and nonassignable by a participant other than by
will or by the laws of descent and distribution, and are exercisable
during the participant's lifetime only by the participant.
Restricted Shares. The portion of an Award Amount that is available
for Restricted Shares is equal to the balance of the Award Amount after
deducting any portion elected, or deemed elected, to be taken as
Options. The number of Restricted Shares awarded to a participant for
any fiscal year of the Company is determined by dividing the portion of
the participant's Award Amount elected, or deemed elected, to be taken
as Restricted Shares for that fiscal year by the greater of (a) the
market value of the Common Stock on the applicable Determination Date
and (b) $16 (subject to adjustment).
Restricted Shares are subject to certain restrictions for three years
from their applicable Award Date (a "Restricted Period"). During a
Restricted Period, a participant has voting and dividend rights with
respect to the Restricted Shares, but cannot sell, transfer (other than
by will or by the laws of descent and distribution) or otherwise
dispose of or encumber the shares during the period the shares are
restricted.
A participant will forfeit any Restricted Shares if the participant's
employment with the Company is terminated for any reason other than
death or disability within any Restricted Period. A portion of any
Restricted Shares held by a senior participant are not forfeited merely
because the senior participant's employment with the Company is
terminated (other than for aggravated cause). A senior participant will
forfeit any Restricted Shares if senior participant engages in
competition with the Company.
A participant who is 60 years of age or older (an "Over 60
Participant") on any Award Date, and who elects to receive Restricted
Shares as all or part of the participant's award, is not awarded
Restricted Shares on that date. Instead, the Over 60 Participant is
awarded "Phantom Stock Credits" which serve as the basis for an award
of Restricted Shares two years after the Award Date (a "Deferred Award
Date"), with each Phantom Stock Credit representing 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. If an Over 60 Participant's employment is terminated
for aggravated cause or if he or she competes with the Company before a
Deferred Award Date or the end of a Restricted Period, the Over 60
Participant forfeits the right to an award of Restricted Shares based
on Phantom Stock Credits and forfeits all Restricted Shares still
subject to a Restricted Period at time of the termination for
aggravated cause or at the time competition with the Company commences,
as applicable. 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 (as adjusted) for the applicable award
year. Restricted Shares awarded as of any Deferred Award Date are
subject to all of the previously described terms and restrictions
applicable to Restricted Shares for nine months.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan portion of the Plan authorizes the
award of Section 423 Options to certain employees of the Company and
its subsidiaries. Offerings are made for each fiscal year of the
Company during the term of the Plan as of the first business day of
October of
20
<PAGE> 22
each fiscal year. The total number of shares offered ("Offered Shares")
to all eligible participants in any specific Offering is determined by
the Administrator. Section 423 Options are granted to each individual
who is eligible on the Date of Grant of an Offering, subject to an
election to participate in offering. "Date of Grant" has the same
meaning as set forth in Treasury Regulation 1.421-7(c).
Section 423 Options are granted only to employees of the Company and
its subsidiaries who: (i) are full-time employees or part-time salaried
employees on October 1 and on the Date of Grant for an Offering and
(ii) have one year of employment with the Company or a subsidiary or
one year of experience in the securities industry during the 10 years
preceding the Date of Grant for the Offering. However, no Section 423
Option may be granted to an employee who owns stock possessing 5% or
more of the total combined voting power or value of all classes of
stock of the Company or any subsidiary, or to an employee if the
Section 423 Option permits the employee's rights to purchase stock
under all employee stock purchase plans of the Company or any
subsidiary to accrue at a rate that exceeds $25,000 of fair market
value of such stock determined as of the grant date for each calendar
year in which such Section 423 Option is outstanding.
Section 423 Options entitle a participant to purchase a proportionate
share of the Offered Shares for any Offering, based on the percentage
that the participant's respective individual contributions represent of
the total contributions of all participants with respect to that
Offering; provided, however, a participant may not purchase more than
$25,000 of fair market value of such stock determined as of the grant
date in any specific Offering.
The price per share at which participants can purchase Common Stock
pursuant to their Section 423 Options is the lesser of the following
two amounts: (1) the greater of (a) 85% of the market value of the
Common Stock on the applicable Date of Grant, or (b) 85% of the average
of the market values of the Common Stock on the first business day of
each month for thirteen consecutive months from and including the month
of the applicable Date of Grant; and (2) 85% of the market value on the
first business day in October of the next year after the applicable
Date of Grant.
To participate in any specific Offering, an eligible employee must
elect to contribute between 1% and 10% of the employee's total cash
compensation (based on salary, commission, bonus and overtime) paid
during the period from the applicable Date of Grant until the first
business day in October of the next year after such date (an "Offering
Period"). Common Stock is purchased automatically for participants
using their accumulated contributions to the maximum possible extent at
the end of an Offering Period. Participants must be employees at the
end of an Offering Period to purchase Common Stock in that Offering.
Certain special restrictions apply to participants who are Reporting
Persons.
CHANGE OF CONTROL
The awards of Options, Restricted Shares and Phantom Stock Credits
contain provisions for the accelerated exercisability of Options and
the lapsing of the Restricted Period for Restricted Shares (including
those issued based on Phantom Stock Credits) 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 company.
21
<PAGE> 23
AMENDMENT; TERMINATION
The Board of Directors may amend the 1988 Plan at any time, except
that the Board may not, without the approval of the stockholders,
increase the maximum number of shares of Common Stock in the aggregate
which may be issued under the 1988 Plan, except as provided by the 1988
Plan, or adopt any other amendment for which shareholder approval is
required by federal income tax or securities laws. If required to
qualify the 1988 Plan under Rule 16b-3 of the Exchange Act, no
amendment to the 1988 Plan shall be made more than once every six
months that would change the amount, price or timing of any benefits,
other than to comport with changes in the Code, the Employment
Retirement Income Security Act of 1974 (as amended), or the rules
thereunder.
The Board of Directors may terminate or suspend the 1988 Plan at any
time. The 1988 Plan currently will terminate automatically on April 21,
1998. If the amendments are approved by the stockholders, the 1988 Plan
will be amended to eliminate the termination date and to provide that
the 1988 Plan will continue until terminated by the Board of Directors.
No benefits may be awarded under the 1988 Plan after its termination.
FEDERAL TAX CONSEQUENCES
Nonqualified Stock Option. A participant will not realize any income
at the time a Nonqualified Stock Option is granted, nor will the
Company be entitled to a deduction at that time. Upon exercise of a
Nonqualified Stock Option, the participant will recognize ordinary
income (whether the Nonqualified Stock Option price is paid in cash or
by the surrender of previously owned common stock) in an amount equal
to the difference between the option price and the fair market value of
the shares to which the Nonqualified Stock Option pertains. The Company
will be entitled to a tax deduction in an amount equal to the amount of
ordinary income realized by the participant, subject to the limitation
on deductions discussed below.
Restricted Shares. A participant generally will recognize no income
for federal income tax purposes at the time Restricted Shares are
granted to the participant. An amount equal to the fair market value of
the Restricted Shares at the time the restrictions lapse generally is
includable in gross income of the participant for the year in which the
restrictions lapse. Gain or loss realized upon disposition of
Restricted Shares after the restrictions lapse will be taxed as long-
term or short-term capital gain or loss depending on the participant's
holding period, which begins at the time just after the restrictions
lapse, or just after the stock is transferred to the participant,
whichever event results in inclusion of income. The basis to the
participant generally is equal to the fair market value of the stock at
the time the restrictions lapse.
In two special circumstances an award of Restricted Shares may result
in taxable income to a participant for a year ending before the
restrictions lapse. First, a participant may elect within 30 days of an
award of Restricted Shares to include in gross income the fair market
value of the Restricted Shares on the date of the award. If such an
election is made and the participant subsequently forfeits the
Restricted Shares, no loss will be recognized on account of the
forfeiture of the Restricted Shares. Second, the value of Restricted
Shares that are subject to restrictions which may result in forfeiture
by a senior participant, such as if the senior participant engages in
22
<PAGE> 24
competition with the Company, may be includable in gross income before
the end of the Restricted Period of such shares if, based on the
particular facts and circumstances of each case, such conditions do not
constitute a substantial risk of forfeiture. The fair market value of
such Restricted Shares at the time such conditions no longer constitute
a substantial risk of forfeiture is includable in gross income of the
participant for the year in which the event occurs.
The Company is entitled to a deduction at the time and in the amount
income is included in the gross income of the participant subject to
the limitation on deductions discussed below. Dividends received by the
participant on stock prior to the lapse of the restrictions are taxed
to the participant as compensation and are deductible by the Company.
However, if the value of the Restricted Shares is includable in the
gross income of the participant before the end of the Restricted
Period, dividends on such shares after the taxable event will not be
deductible by the Company. If a participant forfeits previously taxed
Restricted Shares, the Company is required to include in income any
deductions that it claimed with respect to such Restricted Shares.
Section 423 Options. If the participant acquires shares under the
Employee Stock Purchase Plan and retains the shares until the later of
two years after the grant of the purchase right or one year after the
transfer of these shares to the participant, the participant will
recognize no income on exercise of the right. If the Section 423 Option
price of a share acquired by a principal was less than 100% of the fair
market value of the share at the time the Section 423 Option was
granted, upon subsequent disposition of the shares, which meets the
holding requirements, or in the event of the participant's death, the
lesser of (i) 15% of the fair market value of the shares on the date
the right was granted, and (ii) the excess of the fair market value of
the shares at the disposition or death over the purchase price will be
recognized as ordinary income to the participant. The cost basis of the
shares to the participant will be the purchase price plus any
recognized ordinary income. If the participant does not comply with the
foregoing holding requirements, in the year in which the participant
disposes of the shares, the participant will recognize ordinary income
equal to the fair market value of the shares on the date the right was
exercised less the purchase price. The basis of the shares for
computing long-term or short-term gain or loss on the disposition will
be fair market value of the shares at the date the right was exercised.
If the participant complies with the holding requirements, the Company
receives no income tax deductions. If the participant does not so
comply, the Company will receive in its taxable year in which the
disposition occurs a deduction equal to the ordinary income recognized
by the participant.
Other Benefits. In general, with respect to other benefits that may
be awarded under the 1988 Plan, a participant will not be taxed on any
property transferred to the participant if there is a substantial risk
of forfeiture. The Company generally will be entitled to a deduction if
the value of the property transferred to a participant becomes
includable in the income of such participant.
Limitation on Deductions. Section 162(m) of the Internal Revenue Code
of 1993 limits to $1 million per year the federal income tax deduction
available to a public company for compensation paid to its chief
executive officer or any of its other four highest paid officers unless
certain requirements are met. The 1988 Plan does not meet the
requirements of Section 162(m) and it is possible that certain
compensation paid under the 1988 Plan would not be deductible in the
future. However, the Company currently believes that all amounts under
the Plan will be deductible
23
<PAGE> 25
because the compensation of the officers will either not exceed the
limit under Section 162(m) or part of the compensation will be paid
under the Performance Plan for Executives which does meet the
requirements of Section 162(m). (See "Joint Report of the Compensation
Committees of the Brokerage Company and the Company").
ACCOUNTING TREATMENT
The impact of the 1988 Plan on the Company's reported results of
operations under present generally accepted accounting principles will
be as follows: awards of Restricted Shares will generally be recognized
as compensation expense as the services giving rise to the awards are
rendered to the Company; and stock options, unless issued in tandem
with stock appreciation rights, will have no impact on the reported
results of the Company.
The Board of Directors recommends a vote "FOR" the approval of the
amendments to the A.G. Edwards, Inc. 1988 Incentive Stock Plan.
PROPOSAL 3: APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP, Certified Public Accountants, as
independent auditors of the Company for the fiscal year ending February
29, 1996.
Deloitte & Touche LLP 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 LLP will be present at the
annual meeting, will have the opportunity to make a statement if he or
she 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 LLP as independent auditors of the Company for the fiscal year
ending February 29, 1996. 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 LLP as independent auditors.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be presented at the 1996 annual meeting
of stockholders must be received by the Company no later than January
16, 1996 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
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<PAGE> 26
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 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 15, 1995
25
<PAGE> 27
----------------------------
Proxy Statement
and
Notice of the
Annual Meeting
of Stockholders
to be held
June 22, 1995
A. G. EDWARDS, INC.
One North Jefferson Avenue
St. Louis, Missouri 63103
----------------------------
<PAGE> 28
A. G. EDWARDS, INC.
May 15, 1995
Dear Stockholder:
The 1995 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 22, 1995 at 10:00 a.m. local
time. At the meeting, stockholders will elect three directors, act on a
proposal to approve amendments to the A.G. Edwards, Inc. 1988 Incentive
Stock Plan, act on a proposal to ratify the appointment of the
independent auditors of the Company for the fiscal year ending
February 29, 1996, and transact such other business as may properly
come before the meeting.
It is important that your shares be 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 22, 1995, at
10:00 a.m., local time, at the home office of the Company, One North
Jefferson Avenue, St. Louis, Missouri, and at any adjournments thereof,
hereby revoking any proxy heretofore given:
1. ELECTION OF DIRECTORS FOR / / all nominees WITHHOLD AUTHORITY / / to
listed below (except vote for all nominees
as marked to the listed below
contrary below)
Robert G. Avis, Dr. E. Eugene Carter and Robert L. Bagby
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
- ------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AMENDMENTS TO THE A.G. EDWARDS, INC. 1988
INCENTIVE STOCK PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP 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> 29
(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: ................, 1995
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> 30
APPENDIX
(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.
1988 INCENTIVE STOCK PLAN
1995 RESTATEMENT
RECITALS
This Plan originally became effective in April 1988. It was
amended in (1) June 1990 by the stockholders of the Company to
increase the number of shares of Common Stock available under the
Plan to 4,060,000 shares (which number has since been adjusted to
7,612,500 shares to reflect a 50% and a 25% stock dividend, treated
as a stock split), (2) April 1992 by the Board of Directors to
comply with changes under Section 16(b) of the Exchange Act and
(3) June 1992 by the stockholders of the Company to increase the
number of shares of Common Stock available under the Plan to
13,862,500 shares (which number has since been adjusted to
17,328,125 to reflect a 25% stock dividend, treated as a stock
split).
The Company now wishes to amend the Plan to increase the
number of shares available under the Plan to 26,328,125, subject to
approval of the stockholders of the Company, and to make certain
other changes.
NOW, THEREFORE, effective June 22, 1995, the Plan is hereby
amended and restated in its entirety as follows:
1. PURPOSE.
The purpose of the A.G. Edwards, Inc. 1988 Incentive Stock
Plan (the "Plan") is to motivate employees of A.G. Edwards, Inc.
(the "Company") and its subsidiaries through added incentives to
make a maximum contribution to Company objectives.
2. DEFINITIONS.
As used in the Plan, the following words shall have the
following meanings:
"Administrator" has the meaning ascribed to it in Section 3(a)
of the Plan.
"Award Amount" has the meaning ascribed to it in Section 5(b)
of the Plan.
"Benefits" means the benefits awarded to Participants as
described in Sections 5 through 9 of the Plan. Benefits may be
awarded separately or in any combination.
"Board of Directors" means the Board of Directors of the
Company.
<PAGE> 31
"Business Day" means any day on which the New York Stock
Exchange is open for business.
"Change in Control" means the occurrence of any of the
following events without the prior approval of the Board of
Directors: (a) a merger, consolidation or reorganization of the
Company in which the Company does not survive as an independent
entity; (b) a sale of all or substantially all of the assets of the
Company; (c) the first purchase of shares of Common Stock of the
Company pursuant to a tender or exchange offer for more than 20% of
the Company's outstanding shares of Common Stock; or (d) any change
in control of a nature that, in the opinion of the Board of
Directors, would be required to be reported under the federal
securities laws; provided that such a change in control shall be
deemed to have occurred if (i) any person is or becomes the
beneficial owner, directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of
the Company's then outstanding securities; or (ii) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company
cease for any reason to constitute a majority thereof unless the
election of any director, who was not a director at the beginning
of the period, was approved by a vote of at least 70% of the
directors then still in office who were directors at the beginning
of the period.
"Code" means the Internal Revenue Code of 1986, as amended.
Reference to a section of the Code shall include: (i) that section
and any comparable section or sections of any future legislation
that amends, supplements or supersedes that section, and (ii) any
rules or regulations promulgated under such section.
"Common Stock" means the $1.00 par value common stock of the
Company, together with the Common Stock Purchase Rights (as
described in the Rights Agreement dated December 30, 1988 by and
between the Company and Boatmen's Trust Company, as Rights Agent)
associated with such common stock.
"Company" has the meaning ascribed to it in Section 1 of the
Plan.
"Competition with the Company" means, with respect to any
individual, owning, managing, controlling, participating in or
becoming connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any business, individual,
partnership or corporation that is engaged significantly, or is
planning to become engaged significantly, in a business which,
directly or indirectly, competes with a business of the Company or
a Subsidiary; provided, merely acquiring or holding shares of any
business entity that has its securities listed on a national
securities exchange or quoted in the daily listing of over-the-
counter market securities shall not constitute such competition so
long as such individual and members of such individual's family do
not own more than 1% of the voting securities of such an entity.
"Corporate Executive Bonus" has the meaning ascribed to it in
Section 4 of the Plan.
"Corporate Executive Bonus Plan" has the meaning ascribed to
it in Section 4 of the Plan.
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<PAGE> 32
"Date of Grant" has the meaning ascribed to it in Section 7(b)
of the Plan.
"Deferred Award Date" has the meaning ascribed to it in
Section 6(e) of the Plan.
"Disability" means a total and permanent disability that
renders a Participant unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has
lasted or can be expected to last for a continuous period of not
less than three years.
"Disinterested Administrator" means an Administrator composed
of the Board of Directors, if each member is a disinterested
person, or a committee of two or more directors of the Company,
each of whom is a disinterested person.
"Disinterested Person" shall have the meaning set forth in
Rule 16b-3(c)(2)(i) promulgated under Section 16 of the Exchange
Act, or any successor rule thereto.
"Eligible Employee" has the meaning ascribed to it in Section
4 of the Plan.
"Employee" means any individual who is employed by the Company
or a Subsidiary.
"Employee Stock Purchase Plan" has the meaning ascribed to it
in Section 7 of the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended. Reference to a section of the Exchange Act shall include:
(i) that section and any comparable section or sections of any
future legislation that amends, supplements or supercedes that
section, and (ii) any rules or regulations promulgated under such
section.
"Exercise Price" has the meaning ascribed to it in Section
5(d) of the Plan.
"Incentive Stock Options" has the meaning ascribed to it in
Section 8 of the Plan.
"Market Value" means, with respect to a share of Common Stock
on a particular date, the average of the highest and lowest quoted
selling prices on the particular date. If there are no sales on
that date, the Market Value shall be the weighted average of the
mean between the highest and lowest quoted selling prices on the
nearest date before and the nearest date after that date. Such
average shall be weighted inversely by the respective number of
trading days between the selling dates and the valuation date.
"Offered Shares" has the meaning ascribed to it in
Section 7(b) of the Plan.
"Offering" has the meaning ascribed to it in Section 7 of the
Plan.
"Offering Period" has the meaning ascribed to it in Section
7(e) of the Plan.
"Option Award Date" has the meaning ascribed to it in
Section 5(a) of the Plan.
3
<PAGE> 33
"Option Award Amount" has the meaning ascribed to it in
Section 5(c) of the Plan.
"Option Awards" has the meaning ascribed to it in Section 5(a)
of the Plan.
"Option Determination Date" has the meaning ascribed to it in
Section 5(a) of the Plan.
"Options" has the meaning ascribed to it in Section 5(a) of
the Plan.
"Over 60 Participant" has the meaning ascribed to it in
Section 6(e) of the Plan.
"Participant" means each eligible Employee who receives a
Benefit or an award of Benefits under the Plan.
"Phantom Stock Credits" has the meaning ascribed to it in
Section 6(e) of the Plan.
"Plan" has the meaning ascribed to it in Section 1 of the
Plan.
"Purchase Price" has the meaning ascribed to it in Section
7(d) of the Plan.
"Reporting Person" means any person who is an officer or
director, within the meaning of the Exchange Act, and the rules and
regulations promulgated thereunder, of the Company.
"Restricted Period" has the meaning ascribed to it in
Section 6(c)(1) of the Plan.
"Restricted Share Award Amount" has the meaning ascribed to it
in Section 6(b) of the Plan.
"Restricted Share Award Date" has the meaning ascribed to it
in Section 6(a) of the Plan.
"Restricted Share Awards" has the meaning ascribed to it in
Section 6(a) of the Plan.
"Restricted Share Determination Date" has the meaning ascribed
to it in Section 6(a) of the Plan.
"Restricted Shares" has the meaning ascribed to it in Section
6(a) of the Plan.
"Rule 16b-3" means Rule 16b-3 promulgated under Section 16 of
the Exchange Act, or any successor rule thereto.
"Section 423 Options" has the meaning ascribed to it in
Section 7(a) of the Plan.
"Senior Participant" has the meaning ascribed to it in Section
5(f) of the Plan.
"Stock Purchase Plan Eligible Employee" has the meaning
ascribed to it in Section 7(a) of the Plan.
4
<PAGE> 34
"Subsidiary" means any corporation, partnership, joint venture
or business trust, control of which is owned, directly or
indirectly, by the Company; provided, for the purpose of any
Incentive Stock Options and options granted pursuant to the
Employee Stock Purchase Plan, "Subsidiary" shall have the same
meaning as the term "subsidiary corporation" as defined in Section
424 of the Code.
"Termination of Employment," whether or not capitalized when
used herein, or any other similar phrase used herein to refer to
the employment of an Employee with the Company being terminated
means the Employee ceases to be employed by the Company whether the
cessation of employment is voluntary or involuntary and regardless
of whether the employment of the Employee with the Company ceases
because the Employee quits, is discharged, retires, is disabled or
dies.
"Termination for Aggravated Cause" means a Termination of
Employment (whether voluntary or involuntary) because any of the
following acts or events have occurred: any action or failure to
act by a Participant that results in or is likely to result in
detriment to the Company or any of its Subsidiaries, employees or
customers; violation of any securities law; dishonesty whether or
not resulting in a direct or indirect monetary loss;
insubordination; drunkenness; use of harmful drugs; willful
destruction of property; provocation or continuous agitation of the
Company's or any Subsidiary's customers or employees; or conviction
of a felony or a misdemeanor.
"Vesting Period" has the meaning ascribed to it in Section
5(d) of the Plan.
3. ADMINISTRATION.
(a) Appointment. The Plan shall be administered by the Board
of Directors of the Company or by one or more committees the
members of which need not be members of the Board of Directors
(collectively, the "Administrator") appointed by the Board of
Directors. Such a committee may be appointed by designating
another committee, such as the Compensation Committee of A.G.
Edwards & Sons, Inc., to serve as Administrator. All of the duties
of the Administrator may be assigned to one committee or, if the
Board of Directors appoints more than one committee to serve as
Administrator, the Board of Directors may allocate the specific
duties of the Administrator among such committees. A particular
committee to whom a specific duty is so allocated shall have the
sole responsibility and authority for carrying out such duty. A
committee shall continue to serve in its appointed role until its
role is terminated or changed by the Board of Directors.
(b) Duties. Subject to the provisions of the Plan, the
Administrator shall have exclusive authority to interpret and
administer the Plan (including, without limitation, developing or
approving forms to implement all or any part of the Plan), to
delegate its authority and duties under the Plan, and to take all
such steps and make all such rules or determinations in connection
with the Plan and any of the Benefits provided by the Plan as it
may deem necessary or advisable (including, without limitation,
rules relating to any tax withholding requirements, designation of
beneficiaries, ownership of shares in joint names and restoration
of awards for
5
<PAGE> 35
rehired Participants); provided, however, the Administrator shall not have
the authority to change the amount, price or timing of any Benefits
awarded by the terms of any formula contained in the Plan; provided,
further, with respect to the forfeiture of any Benefits, only a
Disinterested Administrator may make a determination that a Reporting
Person has incurred a Termination for Aggravated Cause.
4. ELIGIBILITY.
"Eligible Employee" shall include any individual who is an
Employee of the Company or a Subsidiary at the time Benefits under
the Plan are awarded and who (i) is a non-Reporting Person who
satisfies the eligibility requirements established by the
Administrator, from time to time, taking into account such factors
as the Administrator may consider relevant (which may include, but
need not include, the nature of services rendered by the Employee
or the capacity of the Employee to contribute to the success of the
Company), or (ii) is a Reporting Person who is a participant in the
"Corporate Executive Bonus Plan" as of October 1, and as of the
last day, of the fiscal year of the Company for which the Benefits
are awarded.
For the purposes of this Section 4 and Section 5:
(i) "Corporate Executive Bonus Plan" means the compensation plan by
such name together with the Performance Plan for Executives each as
adopted by the Company or a subsidiary of the Company, and shall
continue to refer to such plans even if the name or terms of such
plans are changed in the future, whereby officers of the Company
and Subsidiaries who are not otherwise eligible for or who do not
otherwise receive variable compensation or bonuses participate in
a defined bonus pool, and (ii) "Corporate Executive Bonus" means a
bonus received by an Eligible Employee from the Corporate Executive
Bonus Plan. The terms and conditions relating to the Corporate
Executive Bonus Plan with respect to Reporting Persons, including,
without limitation, the requisite qualifications for Employees who
are Reporting Persons, shall not be changed more frequently than is
permitted for a change in the amount, price or timing of any
Benefits awarded by the terms of any formula contained in the Plan,
and any such change shall be deemed to be a change and amendment to
the Plan.
5. STOCK OPTIONS.
(a) Grant and Time of Award. Subject to each Eligible
Employee's election under Section 5(c), options ("Options") shall
be granted to Eligible Employees to purchase shares of Common Stock
from the Company on the terms specified herein. Options shall be
in the form of "Nonqualified Stock Options," which are not intended
to qualify as incentive stock options within the meaning of
Section 422A of the Code. Awards of Options ("Option Awards")
shall be made for each fiscal year of the Company during the term
of the Plan as of the last day of each such fiscal year (an "Option
Award Date"). The amount of the Option Awards on a specific Option
Award Date shall be determined in accordance with Sections 5(b) and
(c) as soon as administratively practical after the end of each
such fiscal year (an "Option Determination Date").
6
<PAGE> 36
(b) Amount of Award. The total amount of the award (the
"Award Amount") for both Options and Restricted Shares (as
hereinafter defined) to which an Eligible Employee is entitled for
any specific fiscal year of the Company shall be equal to: (i) 25%
of such Eligible Employee's Corporate Executive Bonus for such
fiscal year if such Eligible Employee is a Reporting Person or (ii)
such amount as may be determined by the Administrator if such
Eligible Employee is a non-Reporting Person. In no event shall the
Award Amount for any specific Eligible Employee in any given fiscal
year of the Company beginning on or after March 1, 1995 exceed
$100,000. If an Eligible Employee (who is a Reporting Person) does
not receive a Corporate Executive Bonus for any specific fiscal
year of the Company for which awards of Benefits are to be made, he
will not be entitled to an award of Options or Restricted Shares
for that fiscal year.
(c) Election of Awards. An Eligible Employee may elect to
receive his Award Amount in any specific fiscal year of the Company
as (i) 100% Restricted Shares; (ii) 50% Restricted Shares and 50%
Options, or (iii) 100% Options. An Eligible Employee's Award
Amount in any specific fiscal year of the Company will
automatically be divided 50% Restricted Shares and 50% Options if
his election form is not received within the time period specified
by the Administrator. The portion of any Award Amount elected, or
deemed elected, by an Eligible Employee to be received as Options
is hereafter referred to as an "Option Award Amount."
The number of shares of Common Stock subject to Options
awarded to a Participant for a specific fiscal year of the Company
shall be determined by dividing such Participant's Option Award
Amount for such fiscal year by the greater of (a) the Market Value
of a share of Common Stock on the applicable Option Determination
Date, or (b) $16 (subject to adjustment as referred to in
Section 10), and multiplying such number by 2.5. All calculations
shall be rounded down to the nearest whole share.
(d) Exercise. Options shall entitle a Participant to
purchase shares of Common Stock at a price (an "Exercise Price")
per share equal to the Market Value of the Common Stock on the
applicable Option Determination Date. Options shall become
exercisable three (3) years after the applicable Option Award Date
(a "Vesting Period"), and must be exercised no later than eight (8)
years, unless extended, after the applicable Option Award Date.
Any Vesting Period shall be extended by the length of any leave of
absence, except a leave of absence for medical reasons approved in
writing by the Administrator. Options that are not exercised
within eight (8) years (unless extended) after the applicable
Option Award Date will lapse. A Participant may exercise all of
his vested Options in any order and at one time or at different
times for less than the total amount until all of his vested
Options have been exercised. A Participant may exercise his
Options only by giving the Administrator written notice of his
intent to exercise his Options. The written notice must be in a
form acceptable by the Administrator. When a Participant exercises
an Option, the applicable Exercise Price is payable to the Company
in full in cash; provided, the Administrator may permit a
Participant to pay for all or any part of the Common Stock
purchased on exercise of an Option with shares of Common Stock
(valued at their Market Value on the date of the exercise) already
owned by the Participant or acquired pursuant to the exercise of
his Options.
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<PAGE> 37
(e) Restrictions.
(1) Assignment. During a Participant's lifetime,
Options shall be exercisable only by the Participant. A
Participant cannot transfer or assign his Options awarded
under the Plan other than by will or by the laws of descent
and distribution.
(2) Forfeiture. A Participant will forfeit his unvested
Options if his employment with the Company is terminated for
any reason other than death or Disability on or before the end
of any applicable Vesting Period. A Termination of Employment
shall not be deemed to occur if a Participant merely transfers
from the Company to a Subsidiary, from one Subsidiary to
another Subsidiary or from a Subsidiary to the Company.
(3) Termination of Restrictions.
(A) If a Participant's employment is terminated
before the end of any applicable Vesting Period because
of death or Disability, his unvested Options may be
exercised by him (or his beneficiary, personal
representative or distributee, as applicable) during a
five-year exercise period beginning as of the date of
such Termination of Employment, but in no event later
than the expiration of the applicable original exercise
period.
(B) Any Vesting Period shall end and all unvested
Options shall become exercisable immediately upon a
Change in Control.
(4) No Rights as a Stockholder. No person entitled to
exercise any Option granted under the Plan shall have any of
the rights or privileges of a stockholder of the Company with
respect to shares issuable upon exercise of such Option until
certificates representing such shares shall have been issued
and delivered to such person.
(f) Awards for Senior Participants. The terms of this
Section 5(f) shall apply to any unvested Options held by a
Participant age 57 or older (a "Senior Participant"). The
following percentage of shares subject to any unvested Option held
by a Senior Participant shall not be forfeited (but shall remain
subject to any applicable Vesting Period) merely because such
Senior Participant's employment with the Company is terminated
(other than a Termination for Aggravated Cause):
<TABLE>
<CAPTION>
- ------------------------------------------------------------
ATTAINED AGE AT PERCENT
TERMINATION OF EMPLOYMENT NOT FORFEITED
- ------------------------------------------------------------
<S> <C>
57 but less than 58 25%
- ------------------------------------------------------------
58 but less than 59 50%
- ------------------------------------------------------------
59 but less than 60 75%
- ------------------------------------------------------------
60 and over 100%
- ------------------------------------------------------------
</TABLE>
8
<PAGE> 38
Upon a Termination for Aggravated Cause, a Senior Participant
shall forfeit all unvested Options. A Senior Participant who
engages in Competition with the Company within any Vesting Period
shall forfeit his unvested Options at the time such Competition
with the Company commences. All of the Options of a Senior
Participant shall become fully vested immediately upon a Change in
Control. Any restrictions, terms or conditions in this Section 5
applicable to Options generally shall apply to a Senior
Participant's Options to the extent they are not inconsistent with
the provisions of this Section 5(f).
6. RESTRICTED SHARES.
(a) Time of Award. "Restricted Shares" are shares of Common
Stock that are subject to certain restrictions on their disposition
and to the rights of the Company to reacquire such shares upon the
occurrence of certain events, all on the terms specified in the
Plan. Subject to an Eligible Employee's election under
Section 5(c), Restricted Shares shall be awarded to Eligible
Employees on the terms specified herein. Awards of Restricted
Shares ("Restricted Share Awards") shall be made for each fiscal
year of the Company during the term of the Plan as of the last day
of each such fiscal year (a "Restricted Share Award Date"). The
amounts of the Restricted Share Awards shall be determined in
accordance with Section 6(b) as soon as administratively practical
after the end of each such fiscal year (a "Restricted Share
Determination Date").
(b) Amount of Award. The portion of an Award Amount in any
specific fiscal year that is available for Restricted Shares (a
"Restricted Share Award Amount") shall be equal to such Award
Amount less any Option Award Amount elected, or deemed elected,
pursuant to Section 5(c) with respect to such Award Amount. The
number of Restricted Shares awarded to a Participant for any
specific fiscal year of the Company is determined by dividing the
Participant's Restricted Share Award Amount for such fiscal year by
the greater of (a) the Market Value of the Common Stock on the
applicable Restricted Share Determination Date and (b) $16 (subject
to adjustment as referred to in Section 10). All calculations
shall be rounded down to the nearest whole share.
(c) Restrictions.
(1) Restricted Period. Restricted Shares shall be subject to
the restrictions described herein for three (3) years from their
applicable Restricted Share Award Date (a "Restricted Period"). Any
Restricted Period shall be extended by the length of any leave of
absence, except a leave of absence for medical reasons approved in
writing by the Administrator.
During any Restricted Period, a Participant will have the
entire beneficial ownership and the right to vote his
Restricted Shares and receive any dividends thereon; provided,
however, a Participant may not sell, transfer, pledge or
otherwise dispose of or encumber his Restricted Shares (other
than by will or by the laws of descent and distribution)
during any applicable Restricted Period. A Participant shall
not be entitled
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<PAGE> 39
to delivery of a certificate representing shares of Common Stock
shares of Common Stock until the expiration of the Restricted
shares as Restricted Shares.
(2) Forfeiture. A Participant will forfeit his Restricted
Shares if his employment with the Company is terminated for any
reason other than death or Disability within any Restricted Period.
A termination of employment shall not be deemed to occur if a
Participant merely transfers from the Company to a Subsidiary,
from one Subsidiary to another Subsidiary or from a Subsidiary
to the Company.
(3) Termination of Restrictions.
(A) If a Participant's employment with the Company is
terminated during any Restricted Period because of death or
Disability, the restrictions on his Restricted Shares
will end and he (or his beneficiary, personal
representative or distributee, as applicable) will be
entitled to receive and retain his Restricted Shares.
(B) A Restricted Period shall end, and Participants shall
have a nonforfeitable right to their Restricted Shares,
immediately upon a Change in Control.
(d) Awards for Senior Participants. The terms of this
Section 6(d) shall apply to any Restricted Shares held by a Senior
Participant, except as may be provided in Section 6(e). A
percentage of any Restricted Shares held by a Senior Participant
shall not be forfeited (but shall remain subject to their
restrictions during any applicable Restricted Period) merely
because such Senior Participant's employment with the Company is
terminated (other than a Termination for Aggravated Cause). Such
percentage shall be determined in the same manner as for Options
pursuant to Section 5(f). Upon a Termination for Aggravated Cause,
a Senior Participant shall forfeit all of his Restricted Shares
still subject to a Restricted Period at the time of termination.
A Senior Participant who engages in Competition with the Company
during any Restricted Period shall forfeit all of his Restricted
Shares subject to a Restricted Period at the time such Competition
with the Company commences. A Restricted Period applicable to a
Senior Participant's Restricted Shares shall end upon a Change in
Control. Any restrictions, terms or conditions in this Section 6
applicable to Restricted Shares generally shall apply to a Senior
Participant's Restricted Shares to the extent they are not
inconsistent with the provisions of this Section 6(d).
(e) Phantom Stock Credits. An Eligible Employee who is 60
years of age or older (an "Over 60 Participant") on any Restricted
Share Award Date, and who elects to receive Restricted Shares as
all or part of his award, shall not be awarded Restricted Shares on
that date. Instead, such an Over 60 Participant shall be awarded
"Phantom Stock Credits" which will serve as the basis for an award
of Restricted Shares two years after such a Restricted Share Award
Date (a "Deferred Award Date"), with each Phantom Stock Credit
representing the right to receive one share of Restricted Stock.
An account shall be established for each Over 60 Participant to
show the number of Phantom Stock Credits allocated to him. The
award of
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<PAGE> 40
Phantom Stock Credits allocated to such an account for any specific fiscal
year of the Company shall be in an amount that will entitle such Over 60
Participant to the number of Restricted Shares to which such Over 60
Participant would have been entitled to receive under the applicable award
formula if such Over 60 Participant had been younger than 60 years of age
on the applicable Restricted Share Award Date.
The number of Phantom Stock Credits in an Over 60
Participant's account shall be adjusted to reflect dividends on the
Common Stock on each dividend record date after the applicable
Restricted Share Determination Date. The number of additional
Phantom Stock Credits allocated to an Over 60 Participant's account
for a cash dividend shall equal the total amount of each such
dividend imputed to such Over 60 Participant (the per share
dividend multiplied by the number of Phantom Stock Credits in such
Over 60 Participant's account before such increase) divided by the
Market Value of the Common Stock on the record date of the
dividend. The number of additional Phantom Stock Credits allocated
to an Over 60 Participant's account for a stock dividend shall
equal the number of additional shares of Common Stock to which such
Over 60 Participant would have been entitled if he had been the
holder of a number of shares of Common Stock equal in number to the
number of Phantom Stock Credits allocated to his account as of that
dividend record date before such increase. The number of Phantom
Stock Credits allocated to an Over 60 Participant's account instead
of dividends will be added to the total number of such Over 60
Participant's Phantom Stock Credits for calculating future amounts
to be allocated in lieu of dividends.
Over 60 Participants cannot transfer or assign their Phantom
Stock Credits awarded under the Plan other than by will or by the
laws of descent and distribution. If an Over 60 Participant's
employment is terminated (other than a Termination for Aggravated
Cause), he shall not forfeit the right to an award of Restricted
Shares on any Deferred Award Date, nor shall he forfeit Restricted
Shares awarded on any Deferred Award Date, merely because of such
a termination. If an Over 60 Participant's employment is
terminated before any Deferred Award Date because of death or
Disability, such Over 60 Participant (or his beneficiary, personal
representative or distributee, as applicable) shall be entitled to
receive at the time of such termination a stock certificate for the
whole number of shares of Common Stock equal to the number of
Phantom Stock Credits then credited to his account (rounded down to
the nearest whole number of shares). Any Deferred Award Date shall
occur and any applicable Restricted Period for Restricted Shares
awarded shall end immediately upon a Change in Control.
If an Over 60 Participant's termination is a Termination for
Aggravated Cause, he shall forfeit the right to an award of
Restricted Shares based on any Phantom Stock Credits attributable
to his account and shall forfeit all shares of Restricted Shares
still subject to a Restricted Period at the time of his Termination
for Aggravated Cause. An Over 60 Participant who engages in
Competition with the Company before any Deferred Award Date or the
end of any Restricted Period shall forfeit his Phantom Stock
Credits and Restricted Shares.
As of any specific Deferred Award Date, each Over 60
Participant shall be awarded that number of shares of Restricted
Shares equal to the number of Phantom Stock Credits (rounded down
to the nearest whole share) then credited to his account for the
applicable award year.
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<PAGE> 41
Restricted Shares awarded as of any Deferred Award Date shall be subject
to all of the previously described terms and restrictions applicable to
Restricted Shares, to the extent they are not inconsistent with the
provisions of this Section 6(e), except that any applicable Restricted
Period shall be for only nine months unless extended during a leave of
absence. Over 60 Participants have no rights as stockholders with respect
to their Phantom Stock Credits until their Restricted Shares are
awarded.
7. EMPLOYEE STOCK PURCHASE PLAN.
Solely for purposes of the Code, this Section 7 shall be
treated as a separate plan and referred to as the A.G. Edwards,
Inc. Employee Stock Purchase Plan ("Employee Stock Purchase Plan").
Notwithstanding anything to the contrary in the Plan, the following
provisions shall apply to any options ("Section 423 Options") to
purchase Common Stock awarded Participants ("Offering") in
accordance with this Section 7:
(a) Eligibility. Section 423 Options awarded in accordance
with the Employee Stock Purchase Plan shall be granted only to Employees.
To be eligible for an award of Section 423 Options in any specific
Offering, an Employee (a "Stock Purchase Plan Eligible Employee") must:
(i) be a full-time Employee or part-time salaried Employee on October 1
and on the Date of Grant (as hereinafter defined) for such Offering and
(ii) have one year of employment with the Company or a Subsidiary
or one year of experience in the securities industry during the 10
years preceding the Date of Grant for such Offering. Securities
industry experience shall include such experience as may be
determined by the Administrator.
Irrespective of any other provision of the Plan or the
Employee Stock Purchase Plan, no Section 423 Option may be granted
to an Employee who owns stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the
Company or a Subsidiary as determined in accordance with Section
423(b)(3) of the Code; and no Section 423 Option may be granted to
any Employee if such option permits the Employee's rights to
purchase stock under all employee stock purchase plans (as defined
in Section 423 of the Code) of the Company or any Subsidiary to
accrue at a rate that exceeds Twenty-Five Thousand Dollars
($25,000.00) of Market Value of such stock (determined at the time
the Section 423 Option is granted) for each calendar year in which
such option is outstanding at any time.
(b) Timing of Offerings. An Offering shall be made for each
fiscal year of the Company during the term of the Plan as of the
first Business Day in October of each such fiscal year. The total
number of shares offered ("Offered Shares") to all Stock Purchase
Plan Eligible Employees in any specific Offering shall be
determined by the Administrator. Subject to a Stock Purchase Plan
Eligible Employee's election to participate in an Offering pursuant
to Section 7(e), Section 423 Options shall be granted to each
individual who is a Stock Purchase Plan Eligible Employee on the
Date of Grant of any Offering. For purposes of this Section 7,
"Date of Grant" shall have the same meaning as set forth in
Treasury Regulation 1.421-7(c).
(c) Amount of Shares Purchasable. Section 423 Options
granted to a Participant in connection with any specific Offering
shall entitle such Participant to purchase individually at
12
<PAGE> 42
the end of the applicable Offering Period (as hereinafter defined) his
proportionate share of the Offered Shares for such Offering, based
on the percentage that his individual contributions represent of
the total contributions of all Stock Purchase Plan Eligible
Employees with respect to such Offering; provided, however, a Stock
Purchase Plan Eligible Employee may not purchase more than $25,000
worth of Common Stock as provided in Section 7(a).
Only full shares of Common Stock may be purchased, and no
fractional shares will be issued; provided, any amounts not used to
purchase Common Stock shall be refunded on terms established by the
Administrator. If any Offering is oversubscribed, any amount
received from any Participant that is not used to purchase Common
Stock shall be refunded on terms established by the Administrator.
No Section 423 Option awarded in accordance with the terms of the
Employee Stock Purchase Plan shall be transferable otherwise than
by will or by the laws of descent and distribution, and shall be
exercisable only by the Participant to whom it is granted or by a
transferee as permitted herein.
(d) Purchase Price. The price ("Purchase Price") per share
at which Participants can purchase Common Stock pursuant to their
Section 423 Options granted with respect to any specific Offering
shall be the lesser of the following two amounts: (1) the greater
of (A) 85% of the Market Value of the Common Stock on the
applicable Date of Grant, or (B) 85% of the average of the Market
Values of the Common Stock on the first Business Day of each month
for thirteen (13) consecutive months from and including the month
of the applicable Date of Grant; and (2) 85% of the Market Value on
the first Business Day in October of the next year after the
applicable Date of Grant.
(e) Participation and Contributions. To participate in any
specific Offering, a Stock Purchase Plan Eligible Employee must
elect to contribute between 1% and 10% of his total cash
compensation (based on salary, commission, bonus and overtime) paid
during the period from the applicable Date of Grant until the first
Business Day in October of the next year after such date (an
"Offering Period").
During any Offering Period, a Participant may not increase or
decease his contributions; provided, he may stop future
contributions for the remainder of such Offering Period and either
use amounts contributed up to that date to purchase Common Stock at
the end of the Offering Period, or request a refund of the total
amount contributed during such Offering Period. A Participant may
request a refund of all, but not less than all, of his
contributions prior to the end of any specific Offering Period, in
which case he would cease to be a Participant in that Offering. If
a Participant's employment is terminated prior to the end of a
specific Offering Period, he will not be able to continue
participation in that Offering, and contributions with respect to
that Offering will be automatically refunded.
The Administrator may establish and adopt uniform rules and
forms relating to how and when elections, contributions,
withdrawals and refunds may be made by or paid to Participants.
All employees granted Section 423 Options under the Employee Stock
Purchase Plan shall have the same rights and privileges as required
by Section 423(b)(5) of the Code.
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<PAGE> 43
(f) Purchase of Stock. Common Stock shall be purchased
automatically for Participants using their accumulated
contributions to the maximum possible extent at the end of any
specific Offering Period. Participants must be Employees at the
end of a specific Offering Period to purchase Common Stock in the
Offering.
(g) Reporting Person Restrictions and Limitations.
Notwithstanding any provision contained in this Section 7 to the
contrary, the terms of this Section 7(g) shall apply to any Section
423 Options granted to any Reporting Person.
(1) Refunds. If a Reporting Person who is a Participant
in the Employee Stock Purchase Plan requests a refund pursuant to
Section 7(e), such Participant must cease further purchases in the
Employee Stock Purchase Plan for six (6) months, or the Common Stock
so distributed must be held by such Participant six (6) months
prior to disposition, unless otherwise permitted under Rule
16b-3(d)(2)(i)(B).
(2) Termination of Participation. If a Reporting Person who
is a Participant in the Employee Stock Purchase Plan ceases
participation in the Employee Stock Purchase Plan, such Participant
may not participate again for at least six (6) months.
8. OTHER BENEFITS.
A Disinterested Administrator may award Common Stock or the
right to acquire Common Stock to any Employee upon such terms and
conditions as such Disinterested Administrator in its discretion
shall determine. Such awards may consist of any single Benefit, or
a combination of the Benefits, described in the preceding sections
(in addition to the award of any such Benefits pursuant to the
terms, conditions and formulae contained in such preceding
sections), or any other right to acquire Common Stock (including,
without limitation, options granted in the form of "Incentive Stock
Options" which are intended to qualify as incentive stock options
within the meaning of Section 422A of the Code or stock
appreciation rights), and may be subject to any conditions such
Disinterested Administrator may prescribe, such as a right of first
refusal by the Company to repurchase the shares; provided, however,
that any Benefit awarded in accordance with the provisions of the
Plan which grants the right to purchase shares of Common Stock,
except any Benefit which is subject to restrictions that in the
aggregate would amount to a substantial risk of forfeiture for
purposes of Section 83 of the Code, shall require that the price at
which the Participant may purchase such shares shall be at least
85% of the Market Value of such shares as determined by such
Disinterested Administrator at the time such benefit is awarded.
The Administrator may make any type of awards that can be made
by a Disinterested Administrator; provided, unless the Plan is
amended as provided below, such awards are made only to Employees
who are not Reporting Persons. The Board of Directors may amend
the Plan, from time to time as provided or limited herein, (i) to
change any terms, conditions or formulae pursuant to which an award
of Benefits as described in the preceding sections may be awarded
(either increasing or decreasing the amount of such awards);
provided, such changes comply with Rule 16b-3 and/or (ii) to
provide terms, conditions and a formula (complying with
14
<PAGE> 44
Rule 16b-3) pursuant to which any right to acquire Common Stock
(including, without limitation, Incentive Stock Options and stock
appreciation rights) may be awarded, in addition to the Benefits described
in the preceding sections. If any such amendments are made, the
awards of Benefits authorized by such amendments may be
administered by the Administrator.
9. SHARES SUBJECT TO PLAN.
Subject to the provisions of Section 10 (relating to
adjustment for changes in capital stock), the maximum number of
shares that may be issued under the Plan (including shares to be
issued under the Employee Stock Purchase Plan) shall not exceed in
the aggregate twenty-six million three hundred twenty-eight
thousand one hundred and twenty-five (26,328,125) shares of Common
Stock of the Company. Such shares may be unissued shares or
treasury shares.
If there is a lapse, expiration, termination or cancellation
of any Benefit without the issuance of shares, or if shares are
issued in connection with any Benefit and later are reacquired by
the Company pursuant to rights reserved on issuance, the shares
subject to or reserved for such Benefit may again be used in
connection with the grant of any of the Benefits described in this
Plan; provided, that in no event may the number of shares of Common
Stock issued under this Plan exceed twenty-six million three
hundred twenty-eight thousand one hundred and twenty-five
(26,328,125), subject to adjustment as described in Section 10.
10. ADJUSTMENT UPON CHANGES IN STOCK.
If any change is made in the shares of Common Stock of the
Company by reason of any merger, consolidation, reorganization,
recapitalization, stock dividend, split up, combination of shares,
exchange of shares, change in corporate structure, or otherwise,
appropriate adjustments shall be made by the Administrator to:
(i) the kind and maximum number of shares subject to the Plan,
(ii) the kind and number of shares and price per share of stock
subject to each outstanding Benefit, (iii) the number of Offered
Shares referred to in Section 7(b) and (iv) any other amount herein
which is so indicated. Any increase in the shares, or the right to
acquire shares, as the result of such an adjustment shall be
subject to the same terms and conditions that apply to the Benefit
for which such increase was received. No fractional shares of
Common Stock shall be issued under the Plan on account of any such
adjustment, and rights to shares always shall be limited after such
an adjustment to the lower full share.
11. AMENDMENT OF THE PLAN.
Except as provided below, the Board of Directors of the
Company may at any time amend the Plan (including the provisions of
the Employee Stock Purchase Plan); provided, the Board may not,
without approval (within twelve months before or after the date of
such change) of such number of the stockholders as may be required
by either federal income tax or securities law for any particular
amendment: (a) increase the maximum number of shares of Common
Stock in the aggregate which may be issued under the Plan, except
as may be permitted under the adjustment provisions of Section 10,
or (b) adopt any other amendment for which shareholder approval is
required by federal income tax or securities laws. The Board of
15
<PAGE> 45
Directors may not alter or impair any Benefit previously granted
under the Plan without the consent of the person to whom the
Benefit was granted.
If required to qualify the Plan under Rule 16b-3, no amendment
to the Plan shall be made more than once every six months that
would change the amount, price or timing of any Benefits awarded by
the terms of any formula contained in the Plan, other than to
comport with changes in the Code, the Employment Retirement Income
Security Act of 1974 (as amended), or the rules thereunder.
12. TERMINATION OF THE PLAN.
The Plan shall continue in force until it is terminated by the
Board of Directors. The Board of Directors may terminate or
suspend the Plan (including the Employee Stock Purchase Plan) at
any time. No Benefit shall be awarded after termination of the
Plan. Rights and obligations under a Benefit awarded while the
Plan is in effect shall not be altered or impaired by termination
or suspension of the Plan except by consent of the person to whom
the Benefit was awarded.
13. WITHHOLDING TAX.
The Company shall have the right to withhold with respect to
any payments made to Participants under the Plan any taxes required
by law to be withheld because of such payments.
14. RULES OF CONSTRUCTION.
The terms of the Plan shall be construed in accordance with
the laws of the State of Missouri; provided, that the terms of the
Plan as they relate to Incentive Stock Options shall be construed
first in accordance with the meaning under and in a manner that
will result in the Plan satisfying the requirements of the
provisions of the Code governing incentive stock options; provided,
further, that the terms of Section 7 of the Plan shall be construed
first in accordance with the meaning under, and in a manner that
will result in the Employee Stock Purchase Plan satisfying the
requirements of, the Code governing such plans. The Plan is
intended to qualify under Rule 16b-3 and shall be interpreted and
administered in a manner consistent with such intention. Unless
otherwise expressly provided, any calculation required by any
provision of the Plan shall be rounded down to the nearest whole
number. Any word contained in the text of the Plan shall be read
in the singular or plural or as masculine, feminine or neuter as
may be applicable or permissible in the particular context.
15. NONTRANSFERABILITY.
Each Option or similar right (including a Stock Appreciation
Right) granted under this Plan shall not be transferable other than
by will or by the laws of descent and distribution, and shall be
exercisable during the holder's lifetime only by the holder or the
holder's guardian or legal representative.
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<PAGE> 46
16. EFFECTIVE DATE.
The Plan originally became effective as of April 21, 1988.
The Plan as currently revised and restated shall become effective
on the date stated on the first page hereof.
17
