EDWARDS A G INC, DEF 14A, 1999-05-14

EDWARDS A G INC
DEF 14A, 1999-05-14
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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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 (AMENDMENT NO. )

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material 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)(1) and
0-11.

(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:

- --------------------------------------------------------------------------------

(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:

- --------------------------------------------------------------------------------

(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE FILING
FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):

- --------------------------------------------------------------------------------

(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:

- --------------------------------------------------------------------------------

(5) TOTAL FEE PAID:

- --------------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

- --------------------------------------------------------------------------------

(4) Date Filed:

- --------------------------------------------------------------------------------

<PAGE>
<PAGE>
[A. G. EDWARDS, INC. LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 24, 1999

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 24,
1999, 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 an amendment
to the Company's 1988 Incentive Stock Plan to increase the
number of shares of Common Stock available under the Plan
from 39,492,188 to 54,492,188;

3. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year
ending February 29, 2000; 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 3, 1999 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
vote by proxy. 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 17, 1999
<PAGE>
<PAGE>
[A. G. EDWARDS, INC. LOGO]

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 24, 1999 (the
"1999 Annual Meeting") and at any adjournments thereof. 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 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 17, 1999. 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.

Only stockholders of record at the close of business on May 3,
1999 are entitled to notice of, and to vote at, the 1999 Annual
Meeting and any adjournments thereof. On May 3, 1999 the Company had
outstanding 94,493,186 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 1999 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 1999 Annual Meeting. Votes cast by proxy or in person at the
1999 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 1999 Annual Meeting.

Abstentions may be specified on Proposal 2 to approve the
amendment to the Company's 1988 Incentive Stock Plan and on Proposal
3 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

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elected as directors up to the maximum number of directors to be
elected at the 1999 Annual Meeting. Consequently, any shares represented
at the 1999 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 of Common Stock
represented at the meeting is required to approve Proposal 2 for the
adoption of the amendment to the Company's 1988 Incentive Stock Plan
and to approve Proposal 3 to ratify the appointment of the
independent auditors. Broker non-votes will not be counted with
respect to, and will have no effect on, whether the stockholders
approve the proposals. Abstentions, however, are counted in
determining whether the stockholders have approved the 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 1999 fiscal year.
Between Board meetings, Board responsibilities are delegated to the
Executive Committee, comprised of five Board members. The Executive
Committee held one meeting during the 1999 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
2000 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 1999 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 1999 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 1999 fiscal year, including
officers of the Company, with the exception of Benjamin F. Edwards
III and the awards under the Performance Plan for Executives for
four other executive officers. (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 1999 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

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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 1999 fiscal year, all directors attended all meetings
of the Board of Directors and the committees of the Board on which
each served.

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 1999 Annual Meeting, each to serve for a
term of three years. Each 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
2002 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. All of the current
directors were elected by the stockholders except for Robert L.
Proost who was elected by the Board of Directors to fill a vacancy
created by the death of a director and Ronald J. Kessler who was
elected by the Board of Directors to fill a vacancy created by the
resignation of a director.

<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 1999
FOR TERMS EXPIRING IN 2002
<S> <C> <C>
Benjamin F. Edwards III, 67<F1> Chairman of the Board, President and Chief 1983
Executive Officer of the Company; Chairman Member of the
of the Board, President and Chief Executive Committee
Executive Officer of the Brokerage
Company. Employee of the Brokerage Company
for 42 years. Director of the Brokerage
Company since 1967. Director of
Heilig-Meyers Company and National Life
Insurance Company of Vermont.

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<PAGE>

<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>
Samuel C. Hutchinson, Jr., 56 President, Interface Construction Corp. 1993
since 1978. Member of the
Audit Committee and
Compensation Committee

Robert L. Proost, 61 Vice President and Treasurer of the 1998
Company; Corporate Vice President, Member of the
Treasurer and Director of the Executive Committee
Administration Division of the Brokerage
Company. Employee of the Brokerage Company
for 11 years. Director of the Brokerage
Company since 1989. Director of Baldor
Electric Company and the Securities
Industry Automation Corporation.

<CAPTION>
DIRECTORS WITH TERMS EXPIRING IN 2001
<S> <C> <C>
Ronald J. Kessler, 51 Corporate Vice President and Director of 1999
the Operations Division of the Brokerage Member of the
Company since 1998; Assistant Director of Executive Committee
the Operations Division of the Brokerage
Company from 1988 to 1998. Employee of the
Brokerage Company for 31 years. Director
of the Brokerage Company since 1989.

Robert L. Bagby, 55 Vice Chairman of the Board of the Company 1995
and Vice Chairman of the Board of the Member of the
Brokerage Company since 1996; Executive Executive Committee
Vice President and since 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 24 years. Director of the
Brokerage Company since 1979.

Dr. E. Eugene Carter, 57 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
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<PAGE>

DIRECTORS WITH TERMS EXPIRING IN 2000
<S> <C> <C>
Charmaine S. Chapman, 59 President of the United Way of Greater St. 1997
Louis from 1994 to present. President of Member of the
the United Way of St. Paul, Minnesota from Audit Committee and
1989 until 1994. Compensation Committee

Benjamin F. Edwards IV, 43 <F1> Vice Chairman of the Board of the Company 1997
and Vice Chairman of the Board of the Member of the
Brokerage Company since 1999; Executive Executive Committee
Vice President and Director of the Sales
and Marketing Division of the Brokerage
Company since 1997 and Director of the
Investment Banking Division of the
Brokerage Company since 1999. Regional
Manager of the Brokerage Company from 1995
to 1997; Assistant Branch Manager of the
Brokerage Company from 1991 to 1995.
Employee of the Brokerage Company for 21
years. Director of the Brokerage Company
since 1994.

Dr. Louis Fernandez, 75 Chairman of the Board of Boehringer 1989
Ingelheim Corporation. Director of Member of the
Petrolite Corporation until 1997. Chairman Audit Committee and
of the Board, Celgene Corporation, from Compensation Committee
1990 to 1992. President, Chief Executive
Officer and Director, Celgene Corporation,
from 1986 to 1990. Chairman of the Board
of Monsanto Company until 1986.

<FN>
- -------
<F1> Benjamin F. Edwards III and Benjamin F. Edwards IV are father and son.
</TABLE>

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DIRECTOR COMPENSATION

Directors, except those who are officers or employees of the
Company or its subsidiaries, receive an annual fee of $12,000, a fee
of $1,000 for each Company Board of Directors' meeting attended and
a fee of $800 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 3, 1999 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 380,208<F1><F2> <F3>
Robert L. Bagby 82,734<F1><F4> <F3>
Dr. E. Eugene Carter 350,441 <F3>
Charmaine S. Chapman 567 <F3>
Benjamin F. Edwards III 831,707<F1><F5><F6> <F3>
Benjamin F. Edwards IV 64,303<F1> <F3>
Dr. Louis Fernandez 1,932<F7> <F3>
Alfred E. Goldman 8,880<F1> <F3>
Samuel C. Hutchinson, Jr. 1,745 <F3>
Ronald J. Kessler 113,519<F1><F8> <F3>
Robert L. Proost 25,328<F1><F9> <F3>
All Directors and Executive
Officers as a Group
(16 persons) 1,976,025<F1><F5> 2%

<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, 4,848 shares;
Mr. Bagby, 10,112 shares; Mr. Edwards III, 4,848 shares; Mr. Edwards IV,
10,112 shares; Mr. Goldman, 4,848 shares; Mr. Kessler, 10,112 shares; Mr.
Proost, 4,714 shares; and other executive officers, 33,647 shares.
<F2> Mr. Avis has shared voting and investment power over 69,085 shares held by
him as a co-trustee of a trust.
<F3> Percentages of less than 1% have been omitted.

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<PAGE>
<F4> Mr. Bagby has shared voting and investment power over 54,962 shares,
including 174 shares owned by his wife and 54,788 shares held jointly with
his wife.
<F5> Includes shares subject to exercisable stock options under the 1988 Plan
as follows: Mr. Edwards III, 6,627 shares; other executive officers, 0
shares.
<F6> Mr. Edwards III has shared voting and investment power over 333,323
shares, including 272,849 shares held by him as co-trustee of a trust and
60,474 shares held by his wife.
<F7> Mr. Fernandez has shared voting and investment power over 1,932 shares
held by him as a co-trustee of a trust.
<F8> Mr. Kessler has shared voting and investment power over 40,192 shares held
by him as co-trustee of a trust.
<F9> Mr. Proost has shared voting and investment power over 20,109 shares held
by him as a co-trustee of a trust.
</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 for each of the Company's
last three fiscal years the compensation of the Company's Chief
Executive Officer and its other four most highly compensated
executive officers serving at the end of the fiscal year (the "Named
Executive Officers").

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<TABLE>
SUMMARY COMPENSATION TABLE

<CAPTION>
ANNUAL LONG TERM
COMPENSATION 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, 1999 $433,630 $1,392,648 $101,816 0 $100,000
Chairman of the Board, President and 1998 417,630 1,352,421 98,105 0 100,000
Chief Executive Officer of the Company; 1997 401,630 1,190,021 111,577 0 100,000
Chairman of the Board, President and
Chief Executive Officer of the
Brokerage Company

Robert G. Avis, 1999 $276,840 $ 955,141 $101,816 0 $100,000
Chairman and President of A.G. 1998 271,420 961,956 98,105 0 100,000
Edwards Capital, Inc.; Executive Vice 1997 268,630 920,107 111,577 0 100,000
President of the Brokerage Company;
until March 1, 1999, Vice Chairman of
the Board of the Company and Vice
Chairman and Director of the
Investment Banking Division of the
Brokerage Company

Robert L. Bagby, 1999 $239,630 $ 969,136 $101,816 0 $100,000
Vice Chairman of the Board of the 1998 228,630 944,935 98,105 0 100,000
Company; Vice Chairman of the 1997 216,630 824,351 111,577 0 100,000
Board, Executive Vice President and
Director of the Branch Division of
the Brokerage Company

Benjamin F. Edwards IV, 1999 $206,840 $ 858,780 $101,816 0 $100,000
Vice Chairman of the Board of the 1998 196,840 799,158 98,105 0 90,655
Company; Vice Chairman of the 1997 126,840 568,895 111,577 0 69,783
Board, Executive Vice President,
Director of the Sales and Marketing
Division and Director of the
Investment Banking Division of the
Brokerage Company

Alfred E. Goldman, 1999 $189,630 $ 755,605 $101,816 0 $100,000
Corporate Vice President and Director 1998 183,630 783,867 98,105 0 100,000
of Market Analysis of the Brokerage 1997 179,630 696,217 111,577 0 95,151
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.

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<PAGE>

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.
<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, 1999,
are as follows: Mr. Edwards III, 4,848 shares and 5,426 credits--$340,069;
Mr. Avis, 4,848 shares and 5,426 credits--$340,069; Mr. Bagby, 10,112
shares and 0 credits--$334,707; Mr. Edwards IV, 10,112 shares and 0
credits--$334,707; and Mr. Goldman, 4,848 shares and 5,426 credits--
$340,069.
<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 1997, 1998 and 1999
fiscal years, respectively--Mr. Edwards III, $17,552, $18,803 and $18,638;
Mr. Avis, $17,552, $18,803 and $18,638; Mr. Bagby, $17,552, $18,803 and
$18,638; Mr. Edwards IV, $17,552, $18,803 and $18,638; and Mr. Goldman,
$17,552, $18,803 and $18,638; and (ii) amounts credited to accounts under
the Company's Excess Profit Sharing Deferred Compensation Plan for the
1997, 1998 and 1999 fiscal years, respectively--Mr. Edwards III, $82,448,
$81,197 and $81,362; Mr. Avis, $82,448, $81,197 and $81,362; Mr. Bagby,
$82,448, $81,197 and $81,362; Mr. Edwards IV, $52,231, $71,852 and
$81,362; and Mr. Goldman, $77,599, $81,197 and $81,362.
</TABLE>

The following table sets forth certain information regarding the
exercise of options to purchase Company Common Stock during the
Company's 1999 fiscal year by the Named Executive Officers and the
unexercised options to purchase Company Common Stock held by such
persons on February 28, 1999.

<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-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 6,627 -- $131,877 $0
Robert G. Avis -- 0 -- -- 0 0
Robert L. Bagby -- 0 -- -- 0 0
Benjamin F. Edwards IV -- 0 -- -- 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>

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

All of the members of the Compensation Committee of the
Brokerage Company (as named on page 15) are or were officers of the
Company or one of its subsidiaries. Messrs. Bagby, Edwards III,
Edwards IV, Kessler and Proost are all directors of the Company and
are officers and directors of the Company or one of its
subsidiaries. Mr. Avis was a director of the Company and an officer
and director of certain subsidiaries until March 1, 1999 and
continues as an officer and director of certain 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, 1999 (the "1999 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 the other Named Executive Officers. The Compensation Committee of
the Company (the "Company Committee") determined the compensation of
Benjamin F. Edwards III and certain performance-based compensation
of the other Named Executive Officers.

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 1999 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
1999 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 1999 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).

Corporate Executive Bonus Plan. The Corporate 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 1999 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

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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 1999 fiscal year was the same as for the prior fiscal year. The
Board of Directors has discretion to increase or decrease the amount
subject to the plan.

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 1999 fiscal year by the Brokerage
Committee. The Company Committee assigned 100 shares to Mr. Edwards
III for the 1999 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 1999 fiscal year, five officers, including two of
the Named Executive Officers and Mr. Edwards III, had 100 shares.
Since the Corporate 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
1999 fiscal year, a total of 11,989 shares were assigned to 433
eligible officers.

Under the Corporate 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 bonus under
the Corporate Executive Plan for the fiscal year, and is paid after
the end of the fiscal year.

The Corporate Executive Bonus Plan limits the amount that can be
paid to individual participants so that all compensation paid under
the Corporate Executive Bonus Plan is tax deductible by the Company.
To the extent amounts may not be paid under the Corporate 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 in 1994 solely in response to the enactment of 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 Corporate Executive Bonus Plan was
amended to limit compensation which would otherwise be payable under
the Corporate Executive Bonus Plan and the Performance Plan was
adopted in order to pay the compensation which, but for the
limitation, would have been payable under the Corporate Executive
Bonus Plan. The Company intends and the provisions of the Plans are
drafted to provide that the combined plans will operate in the same
manner as the Corporate Executive Bonus Plan operated prior to the
enactment of Section 162(m), subject only to certain limitations on
payments.

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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 Corporate
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
Corporate 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 Corporate
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 Corporate 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
Corporate 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
$2,928,200 for fiscal year 1999. 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 1999 fiscal year and the amounts paid to Mr.
Edwards III and each of the Named Executive Officers 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 1999 fiscal year, the Company Committee determined
at the end of the year to make an award of $75,000 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. Two
other Named Executive Officers received discretionary bonuses
totaling $100,000 for the 1999 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

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<PAGE>
granted as Restricted Shares. The Named Executive Officers,
including Mr. Edwards III, are awarded an amount equal to 25% of
each such officer's Corporate 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 1999 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
Corporate 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, as amended (the "Internal Revenue 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 20, 1998,
the Board of Directors of the Company approved an accrual formula
for the discretionary contribution to the Profit Sharing Plan for
the 1999 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.

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<PAGE>
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
Internal Revenue 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 Internal
Revenue Code on the benefits of highly compensated employees. The
maximum aggregate contribution by the employer for any one employee
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 1999 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 1999 fiscal year, the Company Committee
reviewed the components of the compensation of Mr. Edwards III, the
performance of the Company for the 1999 fiscal year, the
compensation of other officers of the Company and its subsidiaries,
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 $75,000
discretionary bonus should be paid to Mr. Edwards III for the 1999
fiscal year.

<TABLE>
<CAPTION>
MEMBERS OF THE COMPENSATION MEMBERS OF THE COMPENSATION
COMMITTEE OF THE COMPANY COMMITTEE OF THE BROKERAGE
("COMPANY COMMITTEE") COMPANY ("BROKERAGE COMMITTEE")
- ----------------------------- ---------------------------------------------------------------
<S> <C> <C>
Dr. E. Eugene Carter Robert G. Avis Benjamin F. Edwards IV
Charmaine S. Chapman Robert L. Bagby Douglas L. Kelly
Dr. Louis Fernandez, Chairman Donnis L. Casey Ronald J. Kessler
Samuel C. Hutchinson, Jr. Benjamin F. Edwards III, Robert L. Proost
Chairman
</TABLE>

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<PAGE>
PERFORMANCE GRAPH

The following graph compares the Company's cumulative total
stockholder return on its Common Stock for a five year period
(February 28, 1994 to February 28, 1999) with the cumulative total
return of the Standard & Poor's 500 Stock Index, and a peer group
index consisting of seven companies: The Bear Stearns Companies,
Inc., The Charles Schwab Corporation, J.P. Morgan & Co.
Incorporated, Lehman Brothers Holdings Inc., Merrill Lynch & Co.,
Inc., Morgan Stanley Dean Witter & Co., and PaineWebber Group Inc.
The graph assumes that the value of the investment in Common Stock
and each index was $100 at February 28, 1994, 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>
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A.G. Edwards, Inc. 100 104 115 172 313 245
Peer Group 100 104 149 223 343 509
S&P 500 Index 100 107 145 182 246 295
- --------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>
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 clients and did not and do not involve more
than normal risk of collectibility or present other unfavorable
features.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires all executive officers, directors and beneficial
owners of more than 10% of the Company's Common Stock to report any
changes in the ownership of Common Stock of the Company to the
Securities and Exchange Commission, the New York Stock Exchange and
the Company. Based solely upon a review of these reports and written
representations regarding the filing of the reports, the Company
believes that all reports were filed on a timely basis.

PROPOSAL 2: AMENDMENT TO THE COMPANY'S
1988 INCENTIVE STOCK PLAN

On February 19, 1999, the Board of Directors of the Company
adopted an amendment to the 1988 Plan and directed that the
amendment be submitted to the stockholders for their approval. The
amendment provides for an increase in the number of shares of the
Company's Common Stock available under the 1988 Plan by 15,000,000
shares. The amendment 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 1999 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 amendment 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. The 1988 Plan became
effective in April 1988. The 1988 Plan was amended in June 1990 to
provide for the award or purchase of an additional 2,300,000 shares
of Common Stock, in June 1992 to provide for the award or purchase
of an additional 6,250,000 shares of Common Stock and in June 1995
to provide for the award or purchase of an additional 9,000,000
shares of Common Stock and to extend the term of the Plan
indefinitely. After adjusting for stock splits and stock dividends,
the maximum number of shares available under the Plan is 39,492,188
shares of Common Stock of which all except 2,643,698 shares already
have been issued or reserved for issuance since the inception of the
Plan in 1988.

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

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<PAGE>

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 3, 1999 on the New York Stock
Exchange was $35 11/16 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
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 consider
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
Exchange Act and the rules thereunder) may make determinations
relating to forfeitures of benefits by participants who are
reporting persons within the meaning 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. However, 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.

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<PAGE>

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, require that the purchase
price of such shares be at least 85% of the fair market value of the
shares at the time such Other Benefits are awarded.

OPTIONS AND RESTRICTED SHARES

For the 1999 fiscal year, 1,781 participants received awards of
Options or Restricted Shares under the 1988 Plan. 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 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 aggregate bonus of the eligible participant under the
Corporate Executive Bonus Plan and the Performance Plan, 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. 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) $20
(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 years after the applicable Award Date (a "Vesting Period"),
and must be exercised no later than eight 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

19
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<PAGE>
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 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) $20 (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.

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

20
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<PAGE>
Shares still subject to a Restricted Period at the 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 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 1988 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 1988 Plan as of the first
business day of October of each fiscal year (each, an "Offering").
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 the 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 are full-time employees or part-time
salaried employees on October 1 and on the Date of Grant for an
Offering and have one year of employment with the Company or a
subsidiary or one year of experience in the securities industry
during the ten years preceding the Date of Grant. 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 would permit 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 Date
of Grant 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 Date of Grant 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, and (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

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<PAGE>
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.

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 Internal
Revenue Code, the Employee 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 continues indefinitely absent termination 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

22
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<PAGE>
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 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 the 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 the 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 participant 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, the participant, in the year in which the participant
disposes of the shares, 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 the
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 comply
with the holding requirements, the Company will receive, in its taxable

23
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<PAGE>
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 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 1988 Plan will be deductible 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
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 is
as follows: awards of Restricted Shares will generally be recognized
as compensation expense when 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 amendment 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, 2000.

Deloitte & Touche LLP or its predecessor firms have 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 1999
Annual Meeting, will have the opportunity to make a statement 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, 2000. 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.

24
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<PAGE>

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 2000 Annual
Meeting of Stockholders must be received by the Company no later
than January 18, 2000 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 record 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 any
nomination or propose the business, (2) the name and address of the
candidate or candidates 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 anyone else pursuant to which any nomination is 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.

25
<PAGE>
<PAGE>

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 17, 1999

26
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<PAGE>
---------------------------------------------

Proxy Statement
and
Notice of the
Annual Meeting
of Stockholders
to be held
June 24, 1999

[A. G. EDWARDS, INC. LOGO]

One North Jefferson Avenue
St. Louis, Missouri 63103

---------------------------------------------

A.G. Edwards, Inc. [LOGO] VOTE BY TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE
800-481-9819 MAIL

Use any touch-tone telephone to vote your Mark, sign and date your proxy
proxy. Have your proxy card in hand when card and return it in the postage-
you call. You will be prompted to enter paid envelope we have provided.
your control number, located in the box
below, and then follow the simple
directions.

Your telephone vote authorizes the named
proxies to vote your shares in the same
manner as if you marked, signed and
returned the proxy card.

---------------------
CALL TOLL-FREE TO VOTE * IT'S FAST AND CONVENIENT CONTROL NUMBER FOR
800-481-9819 TELEPHONE
---------------------

DETACH PROXY FORM HERE IF YOU ARE NOT VOTING BY TELEPHONE
- -------------------------------------------------------------------------

/ /

PROXY SOLICITED BY THE BOARD OF DIRECTORS OF A.G. EDWARDS, INC.

1. ELECTION OF FOR all nominees WITHHOLD AUTHORITY to *EXCEPTIONS / /
DIRECTORS Listed below / / vote for all nominees
listed below. / /

Nominees: Benjamin F. Edwards III, Samuel C. Hutchinson, Jr., Robert L.
Proost (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW).
*Exceptions
------------------------------------------------------------

2. To approve an amendment to the Company's 1988 Incentive Stock Plan
to increase the number of shares available.

FOR / / AGAINST / / ABSTAIN / /

3. To ratify the selection of Deloitte & Touche LLP as independent
auditors of 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.

Change of Address or
Comments Mark Here / /

The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors,
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.

Dated: , 1999
--------------------------------------------------------

- --------------------------------------------------------------------
Signature

VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. / /

(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE)

PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE

A.G. Edwards, Inc. [LOGO]

May 17, 1999

Dear Stockholder:

The 1999 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, 63103 on Thursday, June 24, 1999, at 10:00 a.m. local
time. At the meeting, stockholders will elect three directors, act on a
proposal to approve an amendment to the Company's 1988 Incentive Stock Plan
to increase the number of shares of Common Stock available under the Plan,
act on a proposal to ratify the appointment of the independent auditors of
the Company for the fiscal year ending February 29, 2000, 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 and vote by telephone or by completing the proxy form attached
below and mailing the proxy form in the envelope provided.

PLEASE VOTE BY TELEPHONE AS EXPLAINED ON THE REVERSE SIDE
OR
DETACH AND MARK THE PROXY, SIGN IT AND RETURN IT IN THE
POSTAGE PAID ENVELOPE ENCLOSED IN THIS PACKAGE.

DETACH PROXY FORM HERE IF YOU ARE NOT VOTING BY TELEPHONE
- ----------------------------------------------------------------------------

A. G. Edwards, Inc. [LOGO]
PROXY/VOTING INSTRUCTION CARD

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
A.G. EDWARDS, INC. FOR THE ANNUAL MEETING ON JUNE 24, 1999.

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 24, 1999, 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.

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.

(Continued, and to be signed and dated on reverse side.)

A. G. EDWARDS. INC.
P.O. BOX 11321
NEW YORK, N.Y. 10203-0321
<PAGE>
<PAGE>

Appendix A

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.

"Business Day" means any day on which the New York Stock Exchange
is open for business.

<PAGE>
<PAGE>
"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.

"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.

2
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<PAGE>
"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.

"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.

3
<PAGE>
<PAGE>
"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.

"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"

4
<PAGE>
<PAGE>
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 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.

5
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<PAGE>
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").

(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. The
Award Amount hereunder to an Eligible Employee is for services rendered
by the Eligible Employee during the fiscal year of the Company on which
such Award Amount is based. 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

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<PAGE>
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.

(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.

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(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>

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

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<PAGE>
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.

(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 to delivery of a
certificate representing shares of Common Stock until the
expiration of the Restricted Period applicable to such 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.

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<PAGE>
(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 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

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<PAGE>
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.
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

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<PAGE>
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 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

12
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<PAGE>
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.

(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

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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 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

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<PAGE>
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 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

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<PAGE>
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.

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.

CERTIFICATION

The undersigned hereby certifies that the foregoing A.G. Edwards,
Inc. 1988 Incentive Stock Plan (as amended and restated) is restated in
a form that reflects separate amendments thereto duly adopted by the
Board of Directors of A.G. Edwards, Inc. on February 24, 1995, and by
the stockholders of A.G. Edwards, Inc. on June 22, 1995.

IN WITNESS WHEREOF, the undersigned has executed this Certification
this 5th day of July, 1995.

/s/ Douglas L. Kelly
------------------------------------------
Douglas L. Kelly, Secretary

APPENDIX

Page 16 of the printed Proxy contains a Performance Graph. The information
contained in the graph appears in the table immediately following the graph.