<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MCDONALD & COMPANY INVESTMENTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MCDONALD & COMPANY INVESTMENTS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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:
(4) Proposed maximum aggregate value of transaction:
/ / 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:
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<PAGE> 2
MCDONALD & COMPANY
INVESTMENTS, INC.
800 SUPERIOR AVENUE
CLEVELAND, OH 44114 - 216/443-2300
June 30, 1994
T.M. O'DONNELL
CHAIRMAN
To the Stockholders of McDonald & Company Investments, Inc.:
This year's Annual Meeting of Stockholders will be held at 9:30
A.M. (EDT), on Wednesday, August 3, 1994, at The National City Bank
Auditorium, Fourth Floor, Atrium Building, 1900 East Ninth Street,
Cleveland, Ohio.
We will be reporting on your Company's activities and you will
have an opportunity to ask questions about our operations.
We hope that you are planning to attend the Annual Meeting
personally, and we look forward to seeing you. Whether or not you
expect to attend in person, the return of the enclosed Proxy as soon as
possible would be greatly appreciated and will ensure that your shares
will be represented at the Annual Meeting. If you do attend the Annual
Meeting, you may, of course, withdraw your Proxy should you wish to
vote in person.
On behalf of the Board of Directors and management of McDonald &
Company Investments, Inc., I would like to thank you for your continued
support and confidence.
Sincerely yours,
THOMAS M. O'DONNELL
<PAGE> 3
MCDONALD & COMPANY
INVESTMENTS, INC.
800 SUPERIOR AVENUE
CLEVELAND, OH 44114
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 3, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of McDonald
& Company Investments, Inc. (the "Company") will be held at The National City
Bank Auditorium, Fourth Floor, Atrium Building, 1900 East Ninth Street,
Cleveland, Ohio, on Wednesday, August 3, 1994 at 9:30 A.M. (EDT), for the
following purposes:
1. To elect two Directors of the class whose three-year term of office
will expire in 1997; and
2. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Holders of Common Stock of record as of the close of business on June 10,
1994 are entitled to receive notice of and vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting. For
that reason we ask that you promptly sign, date and mail the enclosed Proxy card
in the return envelope provided. Stockholders who attend the Annual Meeting may
revoke their Proxies and vote in person.
By order of the Board of Directors
THOMAS F. MCKEE
Secretary
Cleveland, Ohio
June 30, 1994
<PAGE> 4
MCDONALD & COMPANY
INVESTMENTS, INC.
PROXY STATEMENT
MAILED ON JUNE 30, 1994
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 3, 1994
------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of McDonald & Company Investments, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company to be
held on August 3, 1994, and any adjournments thereof. The time, place and
purposes of the Annual Meeting are stated in the Notice of Annual Meeting of
Stockholders which accompanies this Proxy Statement.
The accompanying Proxy is solicited by the Board of Directors of the
Company and will be voted in accordance with the instructions contained thereon,
if it is returned duly executed and is not revoked. If no choice is specified on
the Proxy, it will be voted FOR the election of each of the individuals
nominated by the Board of Directors. A stockholder may revoke a Proxy at any
time before it is exercised by delivery of written notice to the Secretary of
the Company or by a duly executed Proxy bearing a later date.
The record date for determination of stockholders entitled to vote at the
Annual Meeting was the close of business on June 10, 1994. On that date, there
were outstanding and entitled to vote 9,198,411 shares of Common Stock of the
Company. Each share of Common Stock is entitled to one vote. The Company's
Certificate of Incorporation does not provide for cumulative voting rights.
The costs of soliciting Proxies will be borne by the Company. Brokers,
custodians and fiduciaries will be requested to forward proxy soliciting
material to the owners of stock held in their name and the Company will
reimburse them for their out-of-pocket expenses in connection therewith. In
addition to solicitation by mail, the Company's Directors, officers and
employees, without additional compensation, may solicit proxies by telephone,
mail and personal interview.
At the Annual Meeting, in accordance with the Delaware General Corporation
Law and the Company's Certificate of Incorporation, the inspectors of election
appointed by the Board of Directors for the Annual Meeting will determine the
presence of a quorum and will tabulate the results of stockholder voting.
Pursuant to the Company's By-Laws, at the Annual Meeting the holders of a
majority of the outstanding shares of the Company's Common Stock entitled to
vote at the meeting, present in person or by proxy, will constitute a quorum.
The shares represented at the Annual Meeting by proxies which are marked, with
respect to the election of Directors, as "withheld" or, with respect to any
other proposals, "abstain", will be counted as shares present for purposes of
determining whether a quorum is present.
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<PAGE> 5
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name for beneficial owners have the authority to vote on certain items
when they have not received instructions from such beneficial owners. Under
applicable Delaware law, if a broker returns a proxy and has not voted on a
certain proposal, such broker non-votes will count for purposes of determining a
quorum.
Pursuant to the Company's By-Laws, at the Annual Meeting, a plurality of
the votes cast is sufficient to elect a nominee as a Director. In the election
of Directors, votes may be cast in favor or withheld; votes that are withheld or
broker non-votes will have no effect on the outcome of the election of
Directors.
Pursuant to the Company's By-Laws, all other questions and matters brought
before the meeting will be decided by the vote of the holders of a majority of
the outstanding shares entitled to vote thereon present in person or by proxy at
the meeting, unless otherwise provided by law or by the Certificate of
Incorporation. In voting for such other matters, votes may be cast in favor,
against or abstained. Abstentions will count as present for purposes of the
proposal on which the abstention is noted and will have the effect of a vote
against the proposal. Broker non-votes, however, are not counted as present and
entitled to vote for purposes of determining whether a proposal has been
approved and will have no effect on the outcome of such proposal.
THE COMPANY
McDonald & Company Investments, Inc. is a holding company which was
incorporated under the laws of the State of Delaware on May 20, 1983, and
through its principal subsidiary, McDonald & Company Securities, Inc. ("McDonald
Securities"), operates a regional investment banking, investment advisory, and
brokerage business. As used in this Proxy Statement, the "Company" refers,
unless the context requires otherwise, to McDonald & Company Investments, Inc.
and its subsidiaries. The Company succeeded to the business of McDonald &
Company, a partnership (the "Partnership") on July 20, 1983.
2
<PAGE> 6
STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
(i) each person who is known to the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each Director of the Company, (iii) each of the
executive officers named in the Summary Compensation Table included elsewhere
herein, and (iv) all Directors and executive officers as a group as of June 10,
1994 and the percentage of the outstanding shares represented thereby:
<TABLE>
<CAPTION>
PERCENT
NAME OF BENEFICIAL OWNER, DIRECTOR, EXECUTIVE AMOUNT AND NATURE OF OF
OFFICER OR NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) CLASS
- - ------------------------------------------------- ----------------------- -------
<S> <C> <C>
Peter R. Kellogg (2)
115 Broadway
New York, New York 10006....................... 600,000 6.35%
Bennett E. Bidwell(3)............................ 3,988(7) *
Rena J. Blumberg(3).............................. 5,040(7) *
Eugene H. Bosart III(4).......................... 58,159(8) *
Robert T. Clutterbuck(4)......................... 95,372(7)(8) 1.01
David W. Ellis III(4)............................ 55,979(8) *
James A. Karman(3)............................... 5,040(7) *
David W. Knall(4)................................ 136,590 1.44
Frederick R. Nance(3)............................ 2,770(7) *
Willard E. Carmel(5)............................. 205,728(9) 2.81
Thomas M. O'Donnell(6)........................... 166,166(8) 1.76
William B. Summers, Jr.(6)....................... 171,141(7)(8) 1.81
Donald E. Weston(6).............................. 303,150(8) 3.21
All Directors and executive officers
as a group (22 persons)........................ 1,654,336(7)(8) 17.50
<FN>
- - ---------------
* Less than one percent.
(1) Does not include vested beneficial interests in certain of the Company's
employee benefit plans. See "Compensation of Executive Officers."
(2) Based solely upon information contained in a Schedule 13D filed with the
Securities and Exchange Commission.
(3) Director of the Company.
(4) Executive officer of the Company.
(5) Director and officer of the Company.
(6) Director and executive officer of the Company.
(7) Includes the following number of shares of Common Stock which such
individual or group had the right to acquire within 60 days of the date of
the mailing of this Proxy Statement through the exercise of stock options:
1,920 shares (Mr. Bidwell); 3,840 shares (Ms. Blumberg); 2,400 shares (Mr.
Clutterbuck); 3,840 shares (Mr. Karman); 1,920 shares (Mr. Nance); 6,000
shares (Mr. Summers); and 64,200 shares (all Directors and executive
</TABLE>
3
<PAGE> 7
officers as a group). These individuals directly own the balance of their
shares. For purposes of calculating the percentage of outstanding shares
beneficially owned by such individual or group, the shares which such
individual or group had the right to acquire during that period by exercise
of stock options are deemed to be outstanding.
(8) Includes shares of Common Stock owned under the Company's 1992 Restricted
Stock Bonus Plan and 1993 Stock Bonus Plan.
(9) Includes 60,000 shares of Common Stock owned by Mr. Carmel's spouse and
40,000 shares of Common Stock owned by a partnership, of which Mr. Carmel is
a partner.
ELECTION OF DIRECTORS
The members of the Company's Board of Directors are divided into three
classes with the term of office of one class expiring each year. At the Annual
Meeting, two Directors will be elected to serve a three-year term until the
Annual Meeting in 1997 and until their successors have been elected and
qualified. At its May 4, 1994 meeting, the Board of Directors nominated Thomas
M. O'Donnell and Donald E. Weston to stand for election as Directors at the
Annual Meeting. Messrs. O'Donnell and Weston are presently Directors of the
Company.
Unless otherwise directed, the persons named in the accompanying Proxy will
vote for the election of the two nominees set forth in the table below as
Directors of the Company for a three-year term. In the event of the death of or
inability to act of either of the nominees, the Proxies will be voted for the
election as a Director of such other person as the Board of Directors may
recommend. The Board of Directors has no reason, however, to anticipate that
this will occur. In no event will the accompanying Proxy be voted for more than
two nominees or for persons other than those named below and any such substitute
nominee for any of them.
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<PAGE> 8
The following table lists the nominees for election at the Annual Meeting
and those Directors who will continue in office subsequent to the Annual
Meeting, and certain other information with respect to each individual,
including the year certain individuals were partners in the Partnership, the
predecessor to the Company's business.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND DIRECTORSHIPS(1)
- - ---------------------------------- --- -----------------------------------------------
<S> <C> <C>
Thomas M. O'Donnell (2)(5)(8) 58 Director of the Company since June 7, 1983;
Chairman of the Board of the Company and
McDonald Securities since April 1, 1989;
Chief Executive Officer of the Company and
McDonald Securities from April 1, 1989 to
January 1, 1994; President of the Company and
McDonald Securities from July 23, 1984 to
April 1, 1989; Secretary of the Company from
June 7, 1983 to July 23, 1984; Managing
Director (Corporate Finance and Special
Products) and Secretary of McDonald Securi-
ties from June 7, 1983 to July 23, 1984;
Partner from 1968 to 1990 and Managing
Partner from 1989 to 1990.
Donald E. Weston (2) 59 Director of the Company since October 4, 1991;
Chairman and Chief Executive Officer of the
Gradison Division of McDonald Securities
since October 4, 1991; Chairman of the Board
and Chief Executive Officer of Gradison &
Company Incorporated from January, 1982 to
October 4, 1991; Trustee and Chairman of the
Board of the Gradison-McDonald U.S. Govern-
ment Trust from January, 1982 to September
27, 1993, of the Gradison Growth Trust since
August, 1983, of the Gradison-McDonald Gov-
ernment Income Fund since September, 1987 and
of the Gradison-McDonald Municipal Custodian
Trust since September, 1992.
</TABLE>
5
<PAGE> 9
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND DIRECTORSHIPS(1)
- - ---------------------------------- --- -----------------------------------------------
<S> <C> <C>
William B. Summers, Jr. (3)(5) 44 Director of the Company since June 7, 1983;
Chief Executive Officer of the Company and
McDonald Securities since January 1, 1994;
President of the Company and McDonald Se-
curities since April 1, 1989; Executive Vice
President of the Company and McDonald Se-
curities from November 1, 1988 to April 1,
1989; Managing Director (Fixed Income Insti-
tutional Sales) of McDonald Securities from
June 7, 1983 to November 1, 1988; Partner
from 1975 to 1990.
Bennett E. Bidwell (3)(6)(7)(8) 67 Director of the Company since February 18,
1992; Retired; Chairman of the Pentastar
Transportation Group, Inc., a subsidiary of
Chrysler Corporation from January, 1991 to
December, 1992; Chairman of Chrysler Motors
Corp. from November, 1988 to December, 1990;
President, Product & Marketing, Chrysler
Motors Corp. from January, 1988 to November,
1988; Vice Chairman of Chrysler Corporation
from 1985 to 1988.
Frederick R. Nance (3)(6)(7) 40 Partner since 1987 and member of the Manage-
ment Committee of Squire, Sanders & Dempsey,
Attorneys-at-Law, Cleveland, Ohio. Mr. Nance
also serves on the board of various civic and
charitable organizations, including St.
Ignatius High School, Ohio State Legal
Services Association, Parmadale and the
Cleveland State University Foundation.
Willard E. Carmel (4)(5)(6) 64 Director of the Company since June 7, 1983;
Chairman of the Board (Retired) of the Com-
pany since 1989; Investment Broker of Mc-
Donald Securities since April 1, 1989;
Chairman of the Board of the Company and
McDonald Securities from June 7, 1983 to
April 1, 1989; President of the Company and
McDonald Securities from June 7, 1983 to July
23, 1984; Partner from 1965 to 1989 and
Managing Partner from 1979 to 1989.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND DIRECTORSHIPS(1)
- - ---------------------------------- --- -----------------------------------------------
<S> <C> <C>
James A. Karman (4)(6)(7)(8) 57 Director of the Company since May 1, 1990;
President and Chief Operating Officer for
more than five years of RPM, Inc., Medina,
Ohio, a diversified manufacturer of products
for the waterproofing, corrosion control and
general maintenance markets, and products for
the do-it-yourself homeowner and hobby
markets.
Rena J. Blumberg (4)(6) 59 Director of the Company since July 31, 1990;
Community Relations Director for more than
five years for WRMR-AM/WDOK-FM radio
stations, Cleveland, Ohio; Community Con-
sultant since 1988 for Sun Newspapers, Inc.,
Cleveland, Ohio, a publisher of suburban
newspapers. Ms. Blumberg also serves as a
Director of Blue Cross/Blue Shield of Ohio,
Inc., as a Trustee of Brandeis University,
and as a director of various other civic and
charitable organizations.
<FN>
- - ---------------
(1) The following Directors of the Company also serve as directors for the
publicly-held corporations listed opposite their names below:
Bennett E. Bidwell Kerr McGee Corporation
James A. Karman RPM, Inc.
Thomas M. O'Donnell Seaway Food Town, Inc.
(2) Term as Director expires in 1994. Nominee for election to three-year term to
expire in 1997.
(3) Term as Director expires in 1995.
(4) Term as Director expires in 1996.
(5) Member of the Management Committee.
(6) Member of the Compensation Committee.
(7) Member of the Audit Review Committee.
(8) Member of the Nominating Committee.
</TABLE>
The Company pays its Directors who are not employees of the Company an
annual retainer of $6,000 plus $1,500 for each Board of Directors meeting
attended and $500 for each Committee meeting. Effective for Committee meetings
held after January 26, 1994, each Director who is not an executive officer
of the Company receives $1,000 for each Committee meeting attended. The Board
of Directors generally meets quarterly.
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<PAGE> 11
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Management Committee, an Audit Review
Committee, a Compensation Committee and a Nominating Committee, the members of
each of which are indicated in the foregoing table.
The Management Committee exercises the power and authority of the Board of
Directors in the interim period between Board meetings. The Management Committee
met once during the last fiscal year. The Audit Review Committee reviews the
activities of the Company's internal auditors and independent public
accountants, as well as various Company policies and practices. The Audit Review
Committee met three times during the last fiscal year. The Compensation
Committee is responsible for the determination of compensation payable to the
executive officers of the Company and McDonald Securities. The Compensation
Committee is also responsible for the administration of the Company's 1992
Restricted Stock Bonus Plan and 1993 Stock Bonus Plan and has the authority,
under both Plans, to determine to whom shares are granted, the number of shares
granted and the time the shares are granted, all subject to the provisions of
the Plans. The Compensation Committee met four times during the last fiscal
year. The Nominating Committee reviews potential candidates for election as
Directors of the Company and makes recommendations to the Board of Directors as
to nominees for election. The Nominating Committee did not meet during the last
fiscal year. Stockholders of the Company desiring to submit names of potential
candidates for consideration by the Nominating Committee for election as
Directors of the Company may do so by writing to the Chairman of the Nominating
Committee, at the address of the Company's principal executive offices, 800
Superior Avenue, Cleveland, Ohio 44114.
The Company's Board of Directors met four times during the last fiscal
year. No Director attended fewer than 75% of the aggregate number of meetings of
the Board of Directors and the committees on which he or she served during the
period for which he or she was a member of the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors includes Willard E.
Carmel, the Chairman of the Board (Retired) of the Company and an Investment
Broker of McDonald Securities.
Frederick R. Nance, a member of the Compensation Committee of the Board of
Directors, is a partner in the law firm of Squire, Sanders & Dempsey, which
rendered legal services to the Company during fiscal 1994.
CERTAIN TRANSACTIONS
In the ordinary course of its business McDonald Securities has extended
credit to employees, including Directors and officers, under Regulation T, which
regulates credit in cash and margin accounts. Such extensions of credit are
performing and are made on the same terms as for customers.
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<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for each of
the fiscal years ended March 25, 1994, March 26, 1993 and March 27, 1992 of
those persons who were (i) the chief executive officers during the fiscal year
ended March 25, 1994 and (ii) the other four most highly compensated executive
officer of the Company for the fiscal year ended March 25, 1994 (the "Named
Executive Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------------
------------------------------------------------------- NUMBER OF
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK UNDERLYING COMPEN-
POSITION YEAR SALARY BONUS SATION(3)(4) AWARDS(2) OPTIONS(7) SATION(3)(5)
- - ------------------------ ---- -------- ---------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas M. O'Donnell 1994 $165,000 $ 330,000 $ 12,150 -- -- $ 5,224
Chairman of the 1993 165,000 418,750 5,963 $121,573 -- 8,021
Board and former Chief 1992 165,000 411,250 -- 44,160 -- --
Executive Officer of
the Company and
McDonald Securities
William B. Summers, Jr. 1994 162,500 836,207(1)(2) 6,745 -- 30,000 6,328
President and Chief 1993 145,833 467,500 5,102 138,604 -- 8,685
Executive Officer 1992 137,500 422,188 -- 45,931 -- --
of the Company and
McDonald Securities
David W. Knall 1994 0 1,985,181(6) 6,745 -- -- 0
Managing Director, 1993 0 1,633,593(6) 5,102 0 -- 0
Investment Broker and 1992 0 1,290,075(6) -- 0 -- --
Resident Manager
(Indianapolis, IN) of
McDonald Securities
David W. Ellis III 1994 35,000 1,098,080(1)(2)(6) 6,745 -- -- 1,803
Senior Vice President, 1993 17,500 958,462 15,152 0 -- 768
Fixed Income Asset 1992 0 307,206(8) -- 0 -- --
Management, Gradison
Division of McDonald
Securities
Eugene H. Bosart III 1994 0 853,007(6) 6,745 -- -- 8,773
Managing Director, 1993 0 598,169(6) 5,102 0 -- 11,565
(Regional Sales Manager 1992 0 544,644(6) -- 0 -- --
- - --Michigan) of McDonald
Securities
Robert T. Clutterbuck, 1994 110,000 641,164(1)(2) 6,745 -- 12,000 5,155
Treasurer of the 1993 108,333 407,499 5,102 117,779 -- 6,480
Company, Executive 1992 100,000 318,722 -- 29,095 -- --
Managing Director and
Chief Financial
Officer of McDonald
Securities
</TABLE>
- - ---------------
No Named Executive Officer received personal benefits or perquisites during
fiscal 1994 in excess of the lesser of $50,000 or 10% of his aggregate salary
and bonus.
9
<PAGE> 13
(1) For Mr. Summers, Mr. Ellis, and Mr. Clutterbuck, the bonus amount reported
includes, in addition to cash compensation, amounts granted for fiscal 1994
under the Company's 1993 Stock Bonus Plan. Shares were valued at the
closing price of the Company's Common Stock on the dates of grant. The
number of shares and the value of the shares of Common Stock granted to each
of these individuals during fiscal 1994 was as follows: 11,893 shares
valued at $163,807 (Mr. Summers); 2,837 shares valued at $45,037 (Mr.
Ellis); and 8,990 shares valued at $123,163 (Mr. Clutterbuck).
(2) The cumulative number of shares and value of each executive's cumulative
restricted stock awards at March 25, 1994 was 14,761 shares valued at
$230,641 (Mr. O'Donnell), 28,272 shares valued at $441,750 (Mr. Summers),
2,837 shares valued at $44,328 (Mr. Ellis), and 21,758 shares valued at
$339,969 (Mr. Clutterbuck). For fiscal 1994 under the 1993 Stock
Bonus Plan, shares are restricted from transfer for a period of two years
from the date of grant. For fiscal years 1993 and 1992, shares granted under
the 1992 Restricted Stock Bonus Plan were subject to vesting requirements.
Shares awarded under the terms of the 1992 Restricted Stock Bonus Plan vest
on the first day of June two years subsequent to the fiscal year with
respect to which such awards were made. Dividends were paid on the shares
issued pursuant to the 1992 Restricted Stock Bonus Plan and the 1993 Stock
Bonus Plan.
(3) In accordance with the transitional provisions of the rules on executive
officer compensation adopted by the Securities and Exchange Commission,
amounts under "Other Annual Compensation" and "All Other Compensation" are
excluded for the Company's 1992 fiscal year.
(4) For fiscal 1994, includes amounts contributed to the McDonald & Company
Securities, Inc. Retirement Savings Plan and, for Mr. O'Donnell, the
compensatory value of above-market interest earned on deferred compensation.
For the fiscal year ended March, 1993, includes amounts contributed to the
Company's Profit Sharing Plan and the Company's Employee Stock Ownership
Plan for each of the Named Executive Officers (except David W. Ellis III
for whom the amount represents the contribution to the Gradison Retirement
Savings Plan) and, for Mr. O'Donnell, the compensatory value of above-market
interest earned on deferred compensation.
(5) Includes the compensation value of Split Dollar Life Insurance premiums and
Executive Supplemental Life Insurance premiums for each of the Named
Executive Officers.
(6) Bonuses for Messrs. Knall, Ellis, and Bosart include (i) sales commissions,
representing a percentage of gross commissions on sales, (ii) incentive
bonuses, based on a formula relating to net commissions on sales and, (iii)
with respect to Messrs. Knall and Bosart, a sales manager's bonus,
representing a discretionary bonus earned as resident or regional manager.
Sales commissions for Messrs. Knall, Ellis, and Bosart, respectively, for
the 1994 fiscal year equalled $1,747,155, $966,745, and $535,550, for the
1993 fiscal year equalled $1,402,210, $848,825 and $302,550; and for the
1992 fiscal year equalled $1,139,284, $285,964 and $284,697. Incentive
bonuses for Messrs. Knall, Ellis, and Bosart, respectively, for the 1994
fiscal year were $192,813, $131,335 and $58,932; for the 1993 fiscal year
were $182,942, $109,637 and $51,366; and for the 1992 fiscal year were
$117,578, $21,242 and $36,966. The branch manager's bonus for the Messrs.
Knall and Bosart, respectively, for the 1994 fiscal year were $45,213 and
$258,525; for the 1993 fiscal year were $48,411 and $244,253; and for the
1992 fiscal year were $33,213 and $222,981.
10
<PAGE> 14
(7) Options were awarded under the Company's Stock Option Plan, vest in equal
amounts over five years after the date of grant and expire ten years after
the date of grant.
(8) Mr. Ellis joined McDonald Securities on October 4, 1991. He was formerly an
executive officer at Gradison & Company Incorporated.
OPTION GRANTS
The following table sets forth information concerning options granted
during the fiscal year ended March 25, 1994, to the Named Executive Officers
under the Company's Stock Option Plan:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
- - ----------------------------------------------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES IN OR BASE EXPIRATION --------------------------------
NAME (1) FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ------------ -------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. O'Donnell................ 0 N.A. N.A. N.A. N.A. N.A.
William B. Summers, Jr............. 30,000 29.4% $12.708 April 27, 2003 $239,760 $607,590
David W. Knall..................... 0 N.A. N.A. N.A. N.A. N.A.
David W. Ellis III................. 0 N.A. N.A. N.A. N.A. N.A.
Eugene H. Bosart III............... 0 N.A. N.A. N.A. N.A. N.A.
Robert T. Clutterbuck.............. 12,000 11.7 12.604 June 2, 2003 95,112 241,032
<FN>
- - ---------------
(1) The options were granted at an exercise price equal to the market value of
the Common Stock at the date of grant. The options vest over a period of
five years from the date of grant and expire ten years from the date of
grant.
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the exercise of options to
purchase the Company's Common Stock by the Named Executive Officers and
unexercised options to purchase the Company's Common Stock for the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND MARCH 25, 1994 OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. O'Donnell -- $0 0 0 $0 $0
William B. Summers, Jr. -- 0 0 30,000 0 $87,510
David W. Knall -- 0 0 0 0 0
David W. Ellis III -- 0 0 0 0 0
Eugene H. Bosart III -- 0 0 0 0 0
Robert T. Clutterbuck -- 0 0 12,000 0 $36,252
<FN>
- - ---------------
(1) Based on the difference between the exercise price of the options and the
closing price of the Common Stock on the New York Stock Exchange on March
25, 1994.
</TABLE>
11
<PAGE> 15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors reviews the Company's
existing and proposed executive compensation plans and makes recommendations to
the Board of Directors regarding such plans and the awards to be made
thereunder. All members of the Committee, with the exception of Willard E.
Carmel, are outside Directors.
COMPENSATION PHILOSOPHY
The Company seeks to provide executives with compensation that rewards
individual performance during the year and provides incentives to executives to
improve the long-term performance of the Company. The Company has traditionally
paid relatively modest base salaries to its salaried officers and has
supplemented these salaries with performance-based bonuses. A portion of these
bonuses are paid in shares of Common Stock.
In 1993, Congress adopted Section 162(m) of the Internal Revenue Code.
Section 162(m) limits the ability of public companies to deduct compensation in
excess of $1,000,000 paid to certain executive officers, unless such
compensation is "performance based" within the meaning of Section 162(m). While
the Committee believes it is essential that there be a correlation between the
Company's performance and the compensation of its executive officers, it
believes that the criteria under Section 162(m) necessary for items of
compensation to qualify as "performance based" unduly limits the Committee's
flexibility in determining compensation arrangements and in administering
compensation programs. Therefore, the Committee has determined not to make
changes to the Company's compensation programs or to the composition of the
Committee in response to the adoption of Section 162(m). However, the Committee
has determined to require that all amounts in excess of $1,000,000 which may be
paid to an executive subject to Section 162(m) must be deferred to subsequent
periods pursuant to a deferred compensation program.
FISCAL 1994 COMPENSATION DECISIONS
SALARIES. Investment brokers generally receive minimal or no base
salaries, and are compensated primarily or exclusively on a commission basis. In
making decisions on base salaries, the Committee evaluated the performance of
each individual considered during the prior year, the Company's results of
operations and the responsibilities of the executive officers. In keeping with
its desire to base much of the compensation of the Company's executives on
performance during the year, the Committee generally determined to make only
modest changes in the base salaries of certain executives due to their new
positions and increased responsibilities, and to maintain salaries for most
other executive officers at the same level as the prior year.
BONUSES. The bonuses paid to the Company's executive officers for fiscal
1994 were awarded under its incentive bonus program. Participants in this
program have an opportunity to earn significant cash bonuses based on the
Company's financial performance, as compared to certain other regional
investment firms, and the participant's performance during the fiscal year.
12
<PAGE> 16
The amount allocated to the incentive bonus plan for fiscal 1994 was
based on the Committee's assessment of the Company's financial performance as
compared to prior years and to the performance of five other regional
investment banking firms. Certain of the companies used for comparative
purposes are included in the Lipper Regional Brokerage Firm Index, and were
chosen because their mix of business was deemed comparable to that of the
Company. In measuring the Company's comparative performance, the Committee
considered various financial ratios, including pre-tax return on revenues,
average equity and average capital, revenues and pre-tax earnings per employee,
compensation as a percentage of net revenues, pre-tax earnings gain, common
stock performance, increase in equity capital and profit margin improvement.
The incentive bonuses paid to individual executives were based upon the
Committee's assessment of their individual performance. An executive's
individual performance is measured primarily by reference to the volume of
business generated by or under the direction of an executive during the
fiscal year.
STOCK OPTIONS AND BONUSES. The Company has established a stock bonus plan,
which provides for participants to receive a portion of their annual incentive
bonus, which would otherwise be paid in cash, in shares of the Company's Common
Stock. In general, the portion of an incentive bonus that is payable in Common
Stock increases with the size of a participant's incentive bonus in accordance
with a formula set forth in the Stock Bonus Plan. The amount of awards to each
executive officer of the Company who participated in the Stock Bonus Plan were
determined by reference to this formula. Participation in the Stock Bonus Plan
was not optional for the participants, except for certain age and stock
ownership limitations.
The Committee also granted options to purchase Common Stock under its stock
option plan, which expired on June 6, 1993. In an effort to provide a greater
incentive to serve and promote the interests of the Company and its
stockholders, the Committee granted options to purchase 74,400 shares of Common
Stock to the executive officers of the Company. All option awards were made at
the fair market value of a share of Common Stock on the date of grant, vest over
a five-year period commencing on the first anniversary of the date of grant and
expire ten years from the date of grant. In determining the executive officers
who would receive options and the number of options to be granted to each
executive officer, the Committee considered each recipient's appropriate level
of long-term incentive compensation including, among other things, the
performance, experience and responsibilities of the individuals in question. The
amount of an individual's share ownership and the number of options previously
awarded to that individual were not a factor in the Committee's decisions with
respect to option awards.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Thomas M. O'Donnell was Chief Executive Officer of the Company until
January 1, 1994 when William B. Summers, Jr. assumed that title. The Committee
determined not to make any adjustments to Mr. O'Donnell's base salary for the
year. The Committee increased Mr. Summers' base salary for the year in order to
provide a level of compensation that it deemed appropriate in light of his
assumption of the responsibilities of Chief Executive Officer of the Company.
Messrs. O'Donnell and Summers participate in the incentive bonus program
and, as with other participants, the Committee's decisions concerning their
bonuses are based primarily upon its assessment of their individual performance.
However, because of responsibilities associated with their positions, the
Committee primarily measured their performance by reference to the
13
<PAGE> 17
Company's financial performance and its assessment of their contributions to
achieving strategic objectives during the year.
In determining the amount of Mr. O'Donnell's bonus, the Committee
considered the fact that as Chairman, Mr. O'Donnell's responsibilities now
focused primarily on the development and maintenance of client relationships and
community involvement, while Mr. Summers has assumed responsibility to manage
the Company's operations and has direct responsibility for its financial
performance. Consequently, the Committee determined that the amount of Mr.
O'Donnell's bonus for fiscal 1994 should provide incentives for him to continue
his efforts to accomplish these business objectives. In light of Mr. Summers'
responsibilities, the Committee decided that his bonus should reflect the
significant improvement in the Company's revenues and profitability during the
year. The Committee also awarded options to purchase 30,000 shares of Common
Stock to Mr. Summers, in order to provide additional long-term incentives to
him. The number of options awarded to Mr. Summers was based upon the Committee's
subjective judgment concerning the appropriate level of his long-term incentive
compensation.
THE COMPENSATION COMMITTEE
James A. Karman, Chairman
Bennett E. Bidwell
Rena J. Blumberg
Willard E. Carmel
Frederick R. Nance
14
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite-500 Stock Index and the Lipper
Regional Brokerage Firm Index for the period from March 31, 1989 to March 31,
1994. The companies comprising the Lipper Regional Brokerage Firm Index are:
Advest Group, Inc.; Alex. Brown & Sons, Inc.; First Albany Companies, Inc.;
InterRegional Financial Group, Inc.; Interstate/Johnson Lane, Inc.; Kinnard
Investments, Inc.; Legg Mason, Inc.; Morgan Keegan & Company, Inc.; Piper
Jaffray Companies, Inc.; Raymond James Financial, Inc.; Rodman & Renshaw Capital
Group, Inc.; Scott & Stringfellow Financial, Inc.; Southwest Securities Group,
Inc.; Stifel Financial Corp.; and the Company. The graph assumes that the value
of the investment in the Company's Common Stock and each index was $100 at March
31, 1989 and that all dividends, if any, were reinvested.
COMPARISON OF THE COMPANY'S COMMON STOCK,
S&P 500 INDEX AND THE LIPPER REGIONAL BROKERAGE FIRM INDEX
<TABLE>
<CAPTION>
LIPPER RE-
MEASUREMENT PERIOD MCDONALD & GIONAL FIRM
(FISCAL YEAR COVERED) COMPANY (MDD) S&P 500 (S&P) INDEX (LRI)
<S> <C> <C> <C>
3/31/89 100 100 100
3/31/90 82 119 107
3/31/91 100 136 131
3/31/92 166 151 245
3/31/93 247 174 273
3/31/94 269 177 299
</TABLE>
OTHER MATTERS
The Board of Directors is not aware of any matter to come before the Annual
Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. If other matters, however, properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote in accordance with their best judgment on such matters insofar as the
Proxies are not limited to the contrary.
15
<PAGE> 19
A representative of the firm of Ernst & Young, the Company's independent
auditors, will be present at the Annual Meeting and will have an opportunity to
make a statement if so desired and to respond to appropriate questions from
stockholders.
Any stockholder who wishes to submit a proposal for inclusion in the proxy
materials to be distributed by the Company in connection with its Annual Meeting
of Stockholders to be held in 1995 must do so no later than March 2, 1995. To be
eligible for inclusion in the 1995 proxy materials of the Company, proposals
must conform to the requirements set forth in Regulation 14A under the Exchange
Act.
UPON THE RECEIPT OF A WRITTEN REQUEST FROM ANY STOCKHOLDER, THE COMPANY
WILL MAIL, AT NO CHARGE TO THE STOCKHOLDER, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13A-1
UNDER THE EXCHANGE ACT, FOR THE COMPANY'S MOST RECENT FISCAL YEAR. WRITTEN
REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO:
MR. ROBERT T. CLUTTERBUCK
TREASURER
MCDONALD & COMPANY INVESTMENTS, INC.
800 SUPERIOR AVENUE
CLEVELAND, OHIO 44114
You are urged to sign and return your Proxy promptly in the enclosed return
envelope to make certain your shares will be voted at the Annual Meeting.
By order of the Board of Directors
THOMAS F. MCKEE
SECRETARY
June 30, 1994
16
<PAGE> 20
MCDONALD & COMPANY INVESTMENTS, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- AUGUST 3, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints THOMAS M. O'DONNELL, WILLIAM B. SUMMERS,
JR. and ROBERT T. CLUTTERBUCK, and each of them, as Proxy holders and attorneys,
with full power of substitution, to appear and vote all of the shares of Common
Stock of McDonald & Company Investments, Inc. which the undersigned shall be
entitled to vote at the Annual Meeting of Stockholders of the Company, to be
held at The National City Bank Auditorium, Fourth Floor, Atrium Building, 1900
East Ninth Street, Cleveland, Ohio, on Wednesday, August 3, 1994, at 9:30 A.M.
(EDT), and at any adjournments thereof, hereby revoking any and all proxies
heretofore given, and (ii) authorizes and directs said Proxy holders to vote all
of the shares of Common Stock of the Company represented by this Proxy as
follows, WITH THE UNDERSTANDING THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID
SHARES WILL BE VOTED "FOR" THE ELECTION OF THE TWO DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS.
(1) ELECTION OF DIRECTORS
<TABLE>
<S> <C>
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
</TABLE>
THOMAS M. O'DONNELL and DONALD E. WESTON
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
---------------------------------------------------------------------------
(Continued and to be signed on other side)
PROXY NO. SHARES
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
Please date, sign and return
promptly in the accompanying
envelope.
Dated:................, 1994
............................
Your signature to this Proxy
form should be exactly the
same as the name imprinted
hereon. Persons signing as
executors, administrators,
trustees or in similar
capacities should so
indicate. For joint
accounts, the name of each
joint owner must be signed.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE NOMINEES LISTED ABOVE
---
