<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive Proxy Statement Commission Only (as permitted by
/ / Definitive Additional Materials Rule 14a-6(e)(2))
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 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/ No Fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
---------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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 19, 1997
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 19, 1997, at 10:00
a.m., local time, for the following purposes:
1. To elect 3 directors;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending February 28,
1998; and
3. 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, 1997 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 12, 1997
<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 19, 1997 (the "1997 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 and 2. This Proxy Statement and form of proxy are first being
mailed to the stockholders of the Company on or about May 12, 1997.
Only stockholders of record at the close of business on May 1, 1997 are
entitled to notice of, and to vote at, the 1997 Annual Meeting and any
adjournments thereof. On May 1, 1997 the Company had outstanding 63,964,792
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 1997 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
1997 Annual Meeting. Votes cast by proxy or in person at the 1997 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 1997 Annual Meeting.
Abstentions may be specified on Proposal 2 to ratify the appointment of
independent auditors, but not on Proposal 1 to elect 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 1997 Annual Meeting.
Consequently, any shares represented at the 1997 Annual Meeting, but not voted
for any reason, have no impact on the election of directors.
2
<PAGE> 4
The affirmative vote of a majority of the shares represented at the meeting
is required 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 this proposal. Abstentions, however, are counted in
determining whether the stockholders have approved this proposal and, thus,
have the effect of a vote against the proposal.
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 1997 fiscal year. Between Board meetings, Board responsibilities are
delegated to the Executive Committee, comprised of five Board members. The
Executive Committee did not meet during the 1997 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 1998 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 1997 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 1997 fiscal year.
The Compensation Committee of A.G. Edwards & Sons, Inc., a wholly-owned
subsidiary of the Company (the "Brokerage Company"), determined the
compensation of all employees for the 1997 fiscal year, including officers of
the Company, with the exception of Benjamin F. Edwards III and the award under
the Performance Plan for Executives for Benjamin F. Edwards III, Robert G. Avis
and Robert L. Bagby. (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 1997 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 auditor's management letter
and management's response thereto; (iv) recommended the selection of outside
auditors; (v) reviewed the quality and depth of the Company's internal audit,
accounting and financial staffs; and (vi) reviewed and approved the rendering
of audit and nonaudit services by the outside auditors.
During the 1997 fiscal year, all directors attended 89% or more of the
aggregate meetings of the Board of Directors and the committees of the Board on
which each served.
3
<PAGE> 5
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 1997 Annual
Meeting, each to serve for a term of three years. One of the nominees is now a
director 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 2000 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 a 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 1997
FOR TERMS EXPIRING IN 2000
<S> <C> <C>
Charmaine S. Chapman, 57 President of the United Way of St. Louis
from February 1994 to present. President of
the United Way of St. Paul, Minnesota from
1989 until January 1994.
Dr. Louis Fernandez, 73 Chairman of the Board of Boehringer 1989
Ingelheim Corporation; Director of Member of the
Petrolite Corporation. Chairman of the Audit Committee and
Board, Celgene Corporation from June 1990 Compensation Committee
to May 1992. President, Chief Executive
Officer and Director, Celgene Corporation
from August 1986 to June 1990. Chairman of
the Board of Monsanto Company until March
1986.
4
<PAGE> 6
<CAPTION>
YEAR FIRST ELECTED
DIRECTOR OF THE
PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD
NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP
------------ ---------------------------------- --------------------
<S> <C> <C>
Benjamin F. Edwards IV, 41<F1> Executive Vice President of the Brokerage
Company; Director of the Sales & Marketing
Division of the Brokerage Company since
March 1997. Regional Manager of the
Brokerage Company from March 1995 to
February 1997; Assistant Branch Manager of
the Brokerage Company from April 1991 to
February 1995; Investment Broker of the
Brokerage Company from January 1986 to
February 1995. Employee of the Brokerage
Company for 19 years. Director of the
Brokerage Company since 1994.
<CAPTION>
DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AND
WHOSE TERMS CONTINUE BEYOND 1997
DIRECTORS WITH TERMS EXPIRING 1998
<S> <C> <C>
Robert G. Avis, 65<F2> Vice Chairman of the Board of the Company 1984
and Vice Chairman of the Board, Executive Member of the
Vice President, Director of the Investment Executive Committee
Banking Division since March 1989 and
Director of the Sales and Marketing
Division of the Brokerage Company from
September 1984 to February 1997. Chairman
of A.G. Edwards Trust Company since May
1987. Employee of the Brokerage Company for
31 years. Director of the Brokerage Company
since 1970. Director of American Stock
Exchange, Inc. and Director or Trustee of
16 funds of the Oppenheimer Funds Group and
7 funds of the Centennial Funds Group.
Dr. E. Eugene Carter, 55 Trustee, Charlotte R. Boschan Trust. 1983
Research Fellow, Lincoln Institute of Land Member of the
Policy. Director of the Brokerage Company Audit Committee and
from 1976 to 1983. 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
------------ ---------------------------------- --------------------
<S> <C> <C>
Robert L. Bagby, 53 Vice Chairman of the Board of the Company 1995
and Vice Chairman of the Board of the Member of the
Brokerage Company since March 1996; Executive Committee
Executive Vice President and since March
1995 Director of the Branch Division of the
Brokerage Company. Assistant Director of
the Branch Division of the Brokerage
Company from 1980 to 1995. Employee of the
Brokerage Company for 22 years. Director of
the Brokerage Company since 1979.
<CAPTION>
DIRECTORS WITH TERMS EXPIRING 1999
<S> <C> <C>
Benjamin F. Edwards III, Chairman of the Board, President and Chief 1983
65<F1><F2> Executive Officer of the Company; Chairman Member of the
of the Board, President and Chief Executive Executive Committee
Officer of the Brokerage Company. Employee
of the Brokerage Company for 40 years.
Director of the Brokerage Company since
1967. Director of Heilig-Meyers Company and
National Life Insurance Company of Vermont.
Robert C. Dissett, 59 Executive Vice President of the Brokerage 1990
Company; Director of the Operations Member of the
Division of the Brokerage Company. Employee Executive Committee
of the Brokerage Company for 35 years.
Director of the Brokerage Company since
1973.
Samuel C. Hutchinson, Jr., 54 President, Interface Construction Corp. 1993
since 1978. Member of the
Audit Committee and
Compensation Committee
<FN>
- ------------
<F1> Benjamin F. Edwards III and Benjamin F. Edwards IV are father and son.
<F2> Benjamin F. Edwards III and Robert G. Avis are stepbrothers.
</TABLE>
6
<PAGE> 8
DIRECTOR COMPENSATION
Directors, except those who are officers or employees of the Company or its
subsidiaries, receive an annual fee of $10,000, a fee of $800 for each Company
Board of Directors' meeting attended and a fee of $600 for each committee
meeting or Brokerage Company Board of Directors meeting attended. Non-employee
directors do not participate in any of the Company's employee benefit plans.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of May 1, 1997 by (i) each director and nominee, (ii) each
executive officer named in the Summary Compensation Table, and (iii) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
NAME OF SHARES OF CLASS
---- --------- ----------
<S> <C> <C>
Robert G. Avis 270,600<F1><F2> <F3>
Robert L. Bagby 53,934<F1><F4> <F3>
Dr. E. Eugene Carter 242,278 <F3>
Charmaine S. Chapman 0 <F3>
Robert C. Dissett 56,569<F1><F5> <F3>
Benjamin F. Edwards III 654,247<F1><F6><F7> 1.02%
Benjamin F. Edwards IV 38,994<F1> <F3>
Dr. Louis Fernandez 1,288<F8> <F3>
Alfred E. Goldman 29,042<F1> <F3>
Samuel C. Hutchinson, Jr. 1,164 <F3>
David W. Mesker 576,660<F6> <F3>
Donna C. E. Williamson 3,334 <F3>
All Directors and Executive
Officers as a Group
(16 persons) 2,219,566<F1><F6><F9> 3.47%
<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, 3,354 shares;
Mr. Bagby, 10,380 shares; Mr. Dissett, 10,380 shares; Mr. Edwards III,
3,354 shares; Mr. Edwards IV, 8,436 shares; Mr. Goldman, 3,354 shares;
other executive officers, 37,693 shares.
<F2> Mr. Avis has shared voting and investment power over 45,689 shares held by
him as a co-trustee of a trust.
<F3> Percentages of less than 1% have been omitted.
7
<PAGE> 9
<F4> Mr. Bagby has shared voting and investment power over 32,147 shares,
including 116 shares owned by his wife and 32,031 shares held jointly with
his wife.
<F5> Mr. Dissett has shared voting and investment power over 46,092 shares held
by him as a co-trustee of a trust.
<F6> Includes shares subject to exercisable stock options under the 1988 Plan as
follows: Mr. Edwards III, 4,418 shares; Mr. Mesker, 26,719 shares; other
executive officers, 0 shares.
<F7> Mr. Edwards III has shared voting and investment power over 294,579 shares,
including 254,233 shares held by him as co-trustee of a trust and 40,346
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.
<F9> Includes 26,795 shares with shared voting and investment power in addition
to those described for the named directors and executive officers.
</TABLE>
OWNERSHIP BY CERTAIN OTHER PERSONS
To the knowledge of the Company, no person is the beneficial owner of more
than five percent of the Common Stock of the Company.
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
-----------------------------
AWARDS
-----------------------------
NUMBER OF
ANNUAL COMPENSATION 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, 1997 $401,630 $1,190,021 $111,577 0 $100,000
Chairman of the Board, President 1996 386,787 926,119 99,721 0 100,000
and Chief Executive Officer of the 1995 372,840 702,682 70,796 0 70,000
Company; Chairman of the Board,
President and Chief Executive
Officer of the Brokerage Company
Robert G. Avis, 1997 $268,630 $ 920,107 $111,577 0 $100,000
Vice Chairman of the Board of the 1996 258,787 715,526 99,721 0 100,000
Company; Vice Chairman of the 1995 248,840 539,618 70,796 0 70,000
Board, Executive Vice President,
Director of the Investment Banking
Division and, until February 1997,
Director of the Sales and Marketing
Division of the Brokerage Company
Robert L. Bagby, 1997 $216,630 $ 824,351 $111,577 0 $100,000
Vice Chairman of the Board of the 1996 206,787 640,129 99,721 0 83,945
Company; Vice Chairman of the 1995 191,840 426,153 70,796 0 70,000
Board, Executive Vice President and
Director of the Branch Division of
the Brokerage Company
Robert C. Dissett, 1997 $179,630 $ 696,217 $111,577 0 $ 96,170
Executive Vice President and 1996 178,287 538,805 99,721 0 77,036
Director of the Operations Division 1995 171,840 403,884 70,796 0 70,000
of the Brokerage Company
Alfred E. Goldman 1997 $179,630 $ 696,217 $111,577 0 $ 95,151
Corporate Vice President and 1996 173,814 532,281 99,721 0 75,794
Director of Technical Market 1995 167,840 399,431 70,796 0 70,000
Analysis 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 restrictions applicable to other Restricted Shares,
except the restrictions last for only nine months.
9
<PAGE> 11
<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, 1997,
are as follows: Mr. Edwards III, 3,354 shares and 7,249 credits--$376,406;
Mr. Avis, 3,354 shares and 7,249 credits--$376,406; Mr. Bagby, 10,380
shares and 0 credits--$368,490; Mr. Dissett, 10,380 shares and 0
credits--$368,490, and Mr. Goldman, 3,354 shares and 7,249 cred-
its--$376,406.
<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 1995, 1996 and 1997
fiscal years, respectively--Mr. Edwards III, $15,273, $17,634 and $17,552;
Mr. Avis, $15,273, $17,634 and $17,552; Mr. Bagby, $15,273, $17,634 and
$17,552; Mr. Dissett, $15,273, $17,634 and $17,552; and Mr. Goldman,
$15,273, $17,634 and $17,552; and (ii) amounts credited to accounts under
the Company's Excess Profit Sharing Deferred Compensation Plan for the
1995, 1996 and 1997 fiscal years, respectively--Mr. Edwards III, $54,727,
$82,366 and $82,448; Mr. Avis, $54,727, $82,366 and $82,448; Mr. Bagby,
$54,727, $66,311 and $82,448; Mr. Dissett, $54,727, $59,402 and $78,618;
and Mr. Goldman, $54,727, $58,160 and $77,599.
</TABLE>
The following table sets forth certain information regarding the exercise
of options to purchase Company Common Stock during the Company's 1997 fiscal
year by the Named Executive Officers and the unexercised options to purchase
Company Common Stock held by such persons on February 28, 1997:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
NUMBER OF OPTIONS AT FISCAL YEAR-END THE-MONEY OPTIONS AT
SHARES ---------------------------- FISCAL YEAR-END<F1>
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 -- $69,363 $0
Robert G. Avis 4,846 143,296 -- -- 0 0
Robert L. Bagby -- 0 -- -- 0 0
Robert C. Dissett 4,257 106,723 -- -- 0 0
Alfred E. Goldman -- 0 -- -- 0 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, Bagby, Dissett, and Edwards III are all directors of the Company
and are officers of the Company or one of its subsidiaries.
JOINT REPORT OF THE COMPENSATION COMMITTEES
OF THE BROKERAGE COMPANY AND THE COMPANY
The Compensation Committee of the Brokerage Company (the "Brokerage
Committee") determined the compensation for the fiscal year ended February 28,
1997 (the "1997 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 Benjamin F. Edwards III 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 III.
For the 1997 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 1997
fiscal year by the Brokerage Committee for each Named Executive Officer other
than Mr. Edwards III and by the Company Committee for Mr. Edwards III. Base
salaries are intended to be relatively moderate, but competitive, for the
Company's industry. The increase in the Base Salary for Mr. Edwards III of 3.9%
for the 1997 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 III).
Executive Bonus Plan. The Executive Bonus Plan is designed to provide
certain officers and key employees of the Company and its subsidiaries with
direct participation in the profitability of the Company. Unless the Company
has a specified minimum of pre-tax earnings ($2,500,000 in the 1997 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
11
<PAGE> 13
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 1997 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 III, were assigned shares for the
1997 fiscal year by the Brokerage Committee. The Company Committee assigned 100
shares to Mr. Edwards III for the 1997 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 1997 fiscal year, 12 officers, including all of the Named
Executive Officers and Mr. Edwards III, had 100 shares. Since the Executive
Bonus Plan was adopted in 1979, Mr. Edwards III has received the maximum number
of shares assigned to any individual under the plan each year. At the beginning
of the 1997 fiscal year, a total of 11,309 shares were assigned to 371 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
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 $2,420,000 for fiscal year 1997. 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 1997
fiscal year and the amounts paid to Mr. Edwards III, Mr. Avis and Mr. Bagby are
included in the Summary Compensation Table.
Discretionary Bonus. Mr. Edwards III may award a discretionary bonus to any
officer other than himself and the Company Committee may award a discretionary
bonus to Mr. Edwards III. The discretionary bonus is intended to reward 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 1997 fiscal year,
the Company Committee determined at the end of the year to make an award of
$85,000 to Mr. Edwards III 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. Four other
executive officers received discretionary bonuses totaling $230,000 for the
1997 fiscal year.
1988 Incentive Stock Plan. The 1988 Plan is designed to motivate employees
of the Company and its subsidiaries through the incentives inherent in stock
ownership by providing the opportunity to obtain or increase a proprietary
interest in the Company on a favorable basis. The 1988 Plan provides for the
granting of Options or Restricted Shares, or both. If Options are granted, the
participant receives an option to purchase 2.5 times the number of shares that
would have been granted as Restricted Shares. The Named Executive Officers,
including Mr. Edwards III, are
13
<PAGE> 15
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,
$100,000 in the 1997 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 except those shares converted
from Phantom Stock Credits are subject to a nine month restricted period after
conversion. 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 23, 1996, the Board of Directors of the Company
approved an accrual formula for the discretionary contribution to the Profit
Sharing Plan for the 1997 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 compensation in the Profit Sharing Plan, the actual
maximum Company contribution with respect to any employee was less than that
amount.
14
<PAGE> 16
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 $100,000; accordingly, the maximum benefit with respect to any
employee under the Excess Benefit Plan was the difference between $100,000 and
the Profit Sharing Plan Company contribution with respect to such employee.
Procedures for Compensation of Mr. Edwards III. Prior to the beginning of
the 1997 fiscal year, the Company Committee considered the compensation of Mr.
Edwards III. 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 III
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 III) that the increase for Mr. Edwards III
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 the base salary for
Mr. Edwards III should be 3.9% and that the other components of his
compensation should not be changed from the prior year.
At the end of the 1997 fiscal year, the Company Committee reviewed the
components of the compensation of Mr. Edwards III, the performance of the
Company for the 1997 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 III for the 1997 fiscal year in the amount
of $85,000.
<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 L. Bagby
Samuel C. Hutchinson, Jr. Donnis L. Casey
Donna C. E. Williamson Robert C. Dissett
Benjamin F. Edwards III, Chairman
Douglas L. Kelly
Robert L. Proost
</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 29, 1992 to
February 28, 1997) with the cumulative total return of the Standard & Poor's
500 Stock Index, and a peer group index consisting of nine companies: The Bear
Stearns Companies, Inc., The Charles Schwab Corporation, Dean Witter, Discover
& Co., J.P. Morgan & Co. Incorporated, Lehman Brothers Holdings Inc., Merrill
Lynch & Co., Inc., Morgan Stanley Group Inc., PaineWebber Group Inc., and
Salomon Inc. The graph assumes that the value of the investment in Common Stock
and each index was $100 at February 29, 1992, and that all dividends were
reinvested. Stock price performances shown on the graph are not necessarily
indicative of future price performances.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
A.G. Edwards, Inc. 100 97 109 114 126 188
Peer Group 100 130 133 141 195 236
S&P 500 Index 100 111 120 129 173 219
</TABLE>
16
<PAGE> 18
CERTAIN TRANSACTIONS
Directors and executive officers of the Company have been clients 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: 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 28, 1998.
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 for more than fifty years. 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 28, 1998. 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 1998 annual meeting of
stockholders must be received by the Company no later than January 11, 1998 at
its principal executive office at One North Jefferson Avenue, St. Louis,
Missouri 63103 in order to be considered for inclusion in the Company's proxy
statement and proxy relating to that meeting.
Stockholders wishing to nominate one or more candidates for election to the
Board of Directors, or propose any other business to be considered at any
stockholder meeting, must comply with a Bylaw provision dealing with such
matters. Pursuant to the Company's Bylaw provision, any stockholder of the
Company eligible to vote in an election of directors may nominate one or more
candidates for election to the Board of Directors, or propose business to be
brought before a stockholder meeting, by giving written notice to the Company
not less than 60 nor more than 90 days prior to the date of the meeting (if the
Company gives less than 70 days notice or prior public disclosure of the date
of the meeting, then the notice by the stockholder
17
<PAGE> 19
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 12, 1997
18
<PAGE> 20
----------------------------------------
Proxy Statement
and
Notice of the
Annual Meeting
of Stockholders
to be held
June 19, 1997
A.G. Edwards, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
----------------------------------------
<PAGE> 21
A.G. EDWARDS, INC.
May 12, 1997
Dear Stockholder:
The 1997 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 19, 1997, at 10:00
a.m. local time. At the meeting, stockholders will elect three
directors, act on a proposal to ratify the appointment of the
independent auditors of the Company for the fiscal year ending
February 28, 1998, 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 19,
1997, 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 FOR / / all nominees WITHHOLD AUTHORITY
DIRECTORS listed below / / to vote
(except as marked for all nominees
to the contrary listed below
below)
Dr. Louis Fernandez, Benjamin F. Edwards IV and Charmaine S. Chapman
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
- -------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
3. In their sole discretion on such other matters as may properly come before
such meeting and any adjournment or adjournments thereof;
<PAGE> 22
(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 AND 2.
Dated: , 1997
---------------------------
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> 23
APPENDIX
Printed page 16 contains a Performance Graph. The data contained in the graph
is depicted in the table that immediately follows the graph.
