<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:________
(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:________________________________________________________
/ / 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.
McDonald Investment Center
800 SUPERIOR AVENUE
CLEVELAND, OH 44114 - 216/443-2300
June 27, 1996
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 7, 1996, at The National City Auditorium, Fourth Floor,
Annex 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., we would like to thank you for your continued support and
confidence.
Sincerely yours,
/s/ Thomas M. O'Donnell /s/ William B. Summers, Jr.
THOMAS M. O'DONNELL WILLIAM B. SUMMERS, JR.
Chairman President and Chief Executive Officer
<PAGE> 3
MCDONALD & COMPANY
INVESTMENTS, INC.
McDonald Investment Center
800 SUPERIOR AVENUE
CLEVELAND, OH 44114
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 7, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of McDonald
& Company Investments, Inc. (the "Company") will be held at The National City
Auditorium, Fourth Floor, Annex Building, 1900 East Ninth Street, Cleveland,
Ohio, on Wednesday, August 7, 1996 at 9:30 A.M. (EDT), for the following
purposes:
1. To nominate and elect three individuals as Directors of the Company
for a three-year term ending at the Annual Meeting of Stockholders in 1999;
2. To consider and act upon a proposal to approve and adopt the
Company's 1995 Stock Option Plan for Non-Officer Directors; and
3. 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,
1996 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 27, 1996
<PAGE> 4
MCDONALD & COMPANY
INVESTMENTS, INC.
PROXY STATEMENT
MAILED ON JUNE 27, 1996
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 7, 1996
------------------
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 7, 1996, 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 all of the individuals nominated
by the Board of Directors and FOR the proposal to approve and adopt the
Company's 1995 Stock Option Plan for Non-Officer 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, 1996. On that date, there
were outstanding and entitled to vote 8,953,642 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.
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
1
<PAGE> 5
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, as of June 10, 1996, 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, 1996, and the percentage of the
outstanding shares represented thereby:
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER, DIRECTOR, EXECUTIVE AMOUNT AND NATURE OF PERCENT
OFFICER OR NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
- ---------------------------------------------------- ----------------------- ---------
<S> <C> <C>
Peter R. Kellogg (2)
120 Broadway
New York, New York 10271.......................... 600,000 6.61%
Daniel F. Austin(3)................................. 56,242(8)(9) *
Rena J. Blumberg(4)................................. 6,000(8) *
Jeanette Grasselli Brown(4)......................... 500 *
Willard E. Carmel(6)................................ 204,628(10) 2.25
Robert T. Clutterbuck(3)(5)......................... 136,808(8)(9)(11) 1.51
David W. Ellis III(3)............................... 68,006(9)(12) *
Edward Fruchtenbaum(4).............................. 1,000 *
James A. Karman(4).................................. 6,000(8) *
David W. Knall(3)................................... 136,590 1.50
Frederick R. Nance(4)............................... 4,890(8) *
Thomas M. O'Donnell(7).............................. 152,596(9) 1.68
William B. Summers, Jr.(7).......................... 182,598(8)(9) 2.01
Donald E. Weston(7)................................. 283,430(9) 3.12
All Directors and executive officers
as a group (25 persons)........................... 1,679,427(8)(9) 18.50
- ---------------
<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) Executive officer of the Company.
(4) Director of the Company.
(5) Nominee for election as a Director of the Company.
(6) Director of the Company and Chairman of the Board (Retired) of McDonald
Securities.
(7) Director and executive officer of the Company.
(8) 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:
11,280 shares (Mr. Austin); 4,800 shares (Ms. Blumberg); 7,200 shares (Mr.
Clutterbuck); 4,800 shares (Mr. Karman); 3,840 shares (Mr. Nance); 18,000
shares (Mr. Summers); and 85,080 shares (all Directors and executive
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.
(9) Includes shares of Common Stock owned under the Company's 1995 Stock Bonus
Plan and the Company's 1993 Stock Bonus Plan.
(10) 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.
(11) Includes 20,122 shares of Common Stock owned by Mr. Clutterbuck's spouse
and 84 shares of Common Stock owned by Mr. Clutterbuck as custodian for his
minor children.
(12) Includes 2,102 shares of Common Stock beneficially owned by Mr. Ellis
through a trust.
</TABLE>
3
<PAGE> 7
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, three Directors will be elected to serve a three-year term until the
Annual Meeting in 1999 and until their successors have been elected and
qualified. At its May 1, 1996 meeting, the Board of Directors nominated James A.
Karman, Rena J. Blumberg and Robert T. Clutterbuck to stand for election as
Directors at the Annual Meeting. Mr. Karman and Ms. Blumberg are presently
Directors of the Company. Mr. Clutterbuck is currently Treasurer of the Company
and President and Chief Operating Officer of McDonald Securities. After many
years of dedicated service, Willard E. Carmel, the Company's retired Chairman of
the Board, advised the Board of his decision not to stand for election to
another term as a Director.
Unless otherwise directed, the persons named in the accompanying Proxy will
vote for the election of the three 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 any 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
three nominees or for persons other than those named below and any such
substitute nominee for any of them.
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>
James A. Karman (2)(6)(7)(8) 59 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 (2)(6)(7) 61 Director of the Company since July 31, 1990; Chief
Executive Officer of Rainmaker, Inc. since
January 1, 1992, a corporate advisory organiza-
tion; Community Relations Director for more than
five years for WRMR-AM/WDOK-FM radio stations,
Cleveland, Ohio; Community Consultant since 1988
for Sun Newspapers, Inc., Cleveland, Ohio, a pub-
lisher 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.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND DIRECTORSHIPS(1)
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Robert T. Clutterbuck (3) 45 Treasurer of the Company since January 1, 1994;
President and Chief Operating Officer of McDonald
Securities since June 1, 1995; Chief Financial
Officer of McDonald Securities from January 1,
1994 to June 14, 1996; Executive Managing
Director at McDonald Securities from January 1,
1994 to June 1, 1995; Senior Managing Director
(Municipal Bond Trading and Underwriting) from
June 1, 1992 to December 31, 1993; Managing
Director from May 1, 1987 to May 31, 1992; Senior
Vice President from May 1, 1984 to April 30,
1987; First Vice President from June 7, 1983 to
April 30, 1984; Partner from 1978 to 1990.
DIRECTORS CONTINUING IN OFFICE
Thomas M. O'Donnell (4)(8)(9) 60 Director of the Company since June 7, 1983; Chair-
man of the Board of the Company since April 1,
1989; Chairman of McDonald Securities from April
1, 1989 to June 1, 1995; 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 Securities from June 7,
1983 to July 23, 1984; Partner from 1968 to 1990
and Managing Partner from 1989 to 1990.
Donald E. Weston (4) 61 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. Government Trust from
January, 1982 to September 27, 1993, of the
Gradison Growth Trust since August, 1983, of the
Gradison-McDonald Government Income Fund since
September, 1987 and of the Gradison-McDonald
Municipal Custodian Trust since September, 1992.
Edward Fruchtenbaum (4)(6) 48 Director of the Company since November 25, 1995;
President and Chief Operating Officer of American
Greetings Corporation since March 1, 1992; Presi-
dent, U.S. Greeting Card Division of American
Greetings Corporation from January 1, 1990 to
February 29, 1992.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND DIRECTORSHIPS(1)
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
William B. Summers, Jr. (5)(9) 46 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 since April 1, 1989; President of
McDonald Securities from April 1, 1989 to June 1,
1995; Executive Vice President of the Company and
McDonald Securities from November 1, 1988 to
April 1, 1989; Managing Director (Fixed Income
Institutional Sales) of McDonald Securities from
June 7, 1983 to November 1, 1988; Partner from
1975 to 1990.
Frederick R. Nance (5)(7) 42 Director of the Company since July 28, 1992;
Partner since 1987 and member of the Management
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.
Jeanette Grasselli Brown (5)(6)(8) 67 Director of the Company since January 31, 1996;
Retired Director of Corporate Research, Environ-
mental and Analytical Sciences, BP America, Inc.
since January 1989; Distinguished Visiting
Professor and Director, Research Enhancement,
Ohio State University from 1989 to 1995; past
Chair of the Board of Trustees of Ohio
University; Member, Ohio Board of Regents, Board
of Trustees of the Cleveland Playhouse, Holden
Arboretum and the Musical Arts Association, White
House Joint High Level Advisory Panel on US/Japan
Science and Technology Agreements; Chair of the
Board of Trustees of the Cleveland Scholarship
Programs, Inc.
</TABLE>
- ---------------
(1) The following Directors of the Company also serve as directors for the
publicly-held corporations listed opposite their names below:
<TABLE>
<S> <C>
Jeanette Grasselli Brown AGA Gas, Inc.
BDM International, Inc.
USX Corp.
B. F. Goodrich Company
Edward Fruchtenbaum American Greetings Corporation
James A. Karman RPM, Inc.
A. Schulman, Inc.
Sudbury, Inc.
Shiloh Industries, Inc.
Thomas M. O'Donnell Seaway Food Town, Inc.
</TABLE>
(2) Term as Director expires in 1996. Nominee for election to three-year term to
expire in 1999.
(3) Nominee for election to three-year term to expire in 1999.
(4) Term as Director expires in 1997.
(5) Term as Director expires in 1998.
(6) Member of the Audit Review Committee.
(7) Member of the Compensation Committee.
(8) Member of the Nominating Committee.
(9) Member of the Management Committee.
6
<PAGE> 10
The Company pays its Directors who are not officers of the Company an
annual retainer of $16,000 plus $1,500 for each Board of Directors meeting
attended. Each Director who is not an officer of the Company receives $1,000 for
each Committee meeting attended. The Chairperson of each Committee receives
$1,500 for each committee meeting attended. The Board of Directors generally
meets quarterly.
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
did not meet 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 twice 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 1995 Stock Bonus Plan
and the 1995 Key Employees Stock Option 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 three 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. Although the Nominating Committee did not formally meet during the
last fiscal year, a number of informal discussions were held among the members
of this Committee concerning potential Director nominees. 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, McDonald Investment Center, 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 1996.
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.
7
<PAGE> 11
UNTIMELY BENEFICIAL OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and Directors, and persons who own
more than ten percent of the Company's Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Executive officers, Directors and greater than
ten-percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the fiscal year ended March 29, 1996 all Section 16(a)
filing requirements applicable to its executive officers, Directors and greater
than ten-percent beneficial owners were complied with.
8
<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 29, 1996, March 31, 1995 and March 25, 1994 of
those persons who were (i) the chief executive officer during the fiscal year
ended March 29, 1996 and (ii) the other four most highly compensated executive
officers of the Company for the fiscal year ended March 29, 1996 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
------------------------------------------------------- RESTRICTED NUMBER OF
OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- AWARDS UNDERLYING COMPEN-
POSITION YEAR SALARY BONUS SATION(4) (1)(3) OPTIONS(7) SATION(5)
- ------------------------- ---- -------- ---------- ------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William B. Summers, Jr., 1996 $200,000 $ 820,000 $ 4,500 $211,786 -- $ 2,504
President and Chief 1995 200,000 757,371(1)(2) 3,000 -- -- 1,738
Executive Officer 1994 162,500 836,207(1)(2) 6,745 -- 30,000 6,328
of the Company,
Chief Executive Officer
of McDonald Securities
David W. Knall, 1996 0 1,953,338(6) 0 -- -- 0
Senior Managing Director, 1995 0 1,764,659(6) 3,000 -- -- 0
Investment Consultant and 1994 0 1,985,181(6) 6,745 -- -- 0
Co-Resident Manager
(Indianapolis, IN) of
McDonald Securities
David W. Ellis III,
C.P.A., 1996 5,000 1,230,786(1)(2)(6) 4,500 -- -- 2,404
Managing Director/ 1995 16,250 1,048,457(1)(2)(6) 3,000 -- -- 2,404
Portfolio Manager, 1994 35,000 1,098,080(1)(2)(6) 6,745 -- -- 1,803
Gradison-McDonald Asset
Management
Division of McDonald
Securities
Robert T. Clutterbuck, 1996 150,000 740,000 4,500 188,258 -- 5,131
Treasurer of the 1995 143,333 757,371(1)(2) 3,000 -- -- 4,096
Company, President and 1994 110,000 641,164(1)(2) 6,745 -- 12,000 5,155
Chief Operating Officer
of McDonald Securities
Daniel F. Austin, 1996 120,000 620,000 4,500 152,969 -- 6,652
Vice Chairman of 1995 118,333 509,938(1)(2) 3,000 -- -- 7,182
McDonald Securities 1994 110,000 615,846(1)(2) 6,745 -- 16,800 4,844
</TABLE>
- ---------------
No Named Executive Officer received personal benefits or perquisites during
fiscal 1996 in excess of the lesser of $50,000 or 10% of his aggregate salary
and bonus.
(1) Includes the value of awards of shares of Common Stock under the Company's
stock bonus plans. The Company's 1995 Stock Bonus Plan and 1993 Stock Bonus
Plan provide for issuance of shares of the Company's Common Stock in lieu of
a portion of the cash bonus that participants in the Plan would otherwise be
entitled to receive. For fiscal year 1996 under the 1995 Stock Bonus Plan,
participants may elect to receive shares of Common Stock which are subject
to forfeiture for a period of three years from the June 1st following the
end of the plan year with respect to which such shares are awarded. If such
an election is not made, the shares of Common Stock issued to the
participant may not be sold or transferred for a period of two years from
the June 1st following the end of the plan year with respect to which such
shares are awarded. Shares issued under the 1995 Stock Bonus Plan which are
subject to forfeiture for three years are issued at an Adjusted Purchase
Price equal to 85% of the Market Value of the Common Stock, as determined
under the provisions of the Plan. Shares issued under the Plan which are
subject to restriction from sale or transfer for two years are issued at an
Adjusted Purchase Price equal to 95% of the Market Value of the Common
Stock, as determined under the provisions of the Plan. For fiscal years 1995
and 1994 under the 1993 Stock Bonus Plan, shares are restricted from
transfer for a period of two years from the date of grant. Dividends were
paid on the shares issued pursuant to the 1995 Stock Bonus Plan and the 1993
Stock Bonus Plan.
9
<PAGE> 13
(2) For fiscal 1996, the bonus amount reported for Mr. Ellis includes (i)
commissions, (ii) cash bonus awards and (iii) $66,290, the value of 3,417
shares granted under the Company's 1995 Stock Bonus Plan. Under the terms of
the 1995 Stock Bonus Plan, Mr. Ellis elected to receive shares which were
subject to restriction from sale or transfer for a period of two years from
the June 1 following the date of grant. For fiscal 1995 and 1994, the bonus
amount reported for Messrs. Summers, Ellis, Clutterbuck and Austin includes
(i) cash bonus awards and (ii) the value of shares granted under the
Company's 1993 Stock Bonus Plan. Under the 1993 Stock Bonus Plan, shares
were issued subject to a two year restriction from sale or transfer. Shares
were valued based on the Market Value of the Company's Common Stock, as
determined under the provisions of the Plan. The number of shares and the
value of the shares of Common Stock granted to each of these individuals
during fiscal 1995 and 1994, respectively, was as follows: 9,182 shares
valued at $147,371, and 11,893 shares valued at $163,807 (Mr. Summers);
6,508 shares valued at $87,370, and 2,837 shares valued at $45,037 (Mr.
Ellis); 9,182 shares valued at $147,371, and 8,990 shares valued at $123,163
(Mr. Clutterbuck); and 6,002 shares valued at $95,812, and 8,584 shares
valued at $117,896 (Mr. Austin).
(3) For fiscal 1996, Messrs. Summers, Clutterbuck and Austin elected to receive
Shares of Common Stock under the 1995 Stock Bonus Plan which were subject to
forfeiture for three years. Shares were valued based on the Market Value of
the Company's Common Stock, as determined under the provisions of the Plan.
The number of shares of Common Stock granted to each of these individuals
during fiscal 1996 was as follows: 10,975 shares (Mr. Summers), 9,770 shares
(Mr. Clutterbuck) and 7,953 shares (Mr. Austin).
(4) Represents amounts contributed to the McDonald & Company Securities, Inc.
Retirement Savings Trust and Plan.
(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 and Ellis include (i) sales commissions,
representing a percentage of gross commissions on sales and (ii) incentive
bonuses, based on a formula relating to gross commissions on sales. Sales
commissions for Messrs. Knall and Ellis, respectively, for the 1996 fiscal
year equalled $1,739,501 and $1,091,535; for the 1995 fiscal year equalled
$1,556,917 and $918,421; and for the 1994 fiscal year equalled $1,747,155
and $966,745. Incentive bonuses for Messrs. Knall, and Ellis, respectively,
for the 1996 fiscal year were $213,837 and $139,251; for the 1995 fiscal
year were $207,742 and $130,036; and for the 1994 fiscal year were $192,813
and $131,335. In addition, the bonus amount for Mr. Knall for the 1994
fiscal year included $45,213, as a branch manager's bonus, representing a
discretionary bonus earned as a resident manager.
(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.
10
<PAGE> 14
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 29, 1996 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>
William B. Summers, Jr. -- $0 18,000 12,000 $ 117,756 $78,504
David W. Knall -- 0 0 0 0 0
David W. Ellis III -- 0 0 0 0 0
Robert T. Clutterbuck -- 0 7,200 4,800 47,851 31,901
Daniel F. Austin -- 0 12,720 10,080 114,789 66,992
- ---------------
<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
29, 1996.
</TABLE>
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 non-employee 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 compensation subject to 162(m) 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 1996 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
11
<PAGE> 15
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 only make 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
1996 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.
The amount allocated to the incentive bonus plan for fiscal 1996 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 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 and average equity, net revenues
per employee, pre-tax earnings per employee, compensation as a percent of net
revenues, pre-tax earnings gain, common stock performance, increase in equity
capital and profit margin improvement. Compared to the five other regional
investment banking firms, the Company ranked in the top third with respect to
each of these measures of financial performance, except for pre-tax return on
average equity and increase in equity capital. The incentive bonuses paid to
individual executives were based primarily 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 the executive during the fiscal year. In determining the overall
levels of compensation payable to each of the Company's executive officers, the
Committee also considered the results of an independent survey of compensation
paid by other securities firms to persons serving in similar capacities. The
firms included in the independent survey included a broader range of securities
firms than those included in the Lipper Regional Brokerage Firm Index.
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 did not grant any stock options during the
1996 fiscal year.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
William B. Summers, Jr. has been Chief Executive Officer of the Company
since January 1, 1994.
Consistent with the Committee's desire to base much of the compensation of
the Company's executives on performance during the year, the Committee
determined not to make any adjustments to Mr. Summers' base salary for fiscal
1996. Mr. Summers' salary was last adjusted in January 1994, when he assumed the
responsibilities of Chief Executive Officer.
Mr. Summers participates in the incentive bonus program and, as with other
participants, the Committee's decisions concerning his bonus are based primarily
upon its assessment of his individual performance. In determining the amount of
Mr. Summers' bonus, the Committee
12
<PAGE> 16
considered the fact that as Chief Executive Officer, Mr. Summers has
responsibility for managing the Company's operations and has direct
responsibility for its financial performance. Therefore, the Committee primarily
measures his performance by reference to the Company's overall financial
performance and its assessment of his contributions to achieving strategic
objectives during the year. In assessing Mr. Summers' contribution to the
Company's financial performance, the Committee took into account the fact that
the Company achieved its highest level of revenues and second highest level of
net income and earnings per share during fiscal 1996. In assessing Mr. Summers'
contribution to achieving the Company's strategic objectives, the Committee
considered the fact that during the year, the Company further expanded the range
of services that it was able to provide to customers, increased the number of
its sales personnel, continued its cost containment efforts and made certain
enhancements to its operations.
After considering the foregoing factors, the Committee determined to pay
Mr. Summers total compensation, including salary and bonus, $1,200,000 for
fiscal 1996.
THE COMPENSATION COMMITTEE
James A. Karman, Chairman
Rena J. Blumberg
Willard E. Carmel
Frederick R. Nance
13
<PAGE> 17
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, 1991 to March 31,
1996. The companies comprising the Lipper Regional Brokerage Firm Index are: The
Advest Group, Inc.; Alex. Brown Incorporated; 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, 1991 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
[GRAPHIC]
<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>
3/31/91 100 100 100
3/31/92 163 111 187
3/31/93 235 128 208
3/31/94 251 130 228
3/31/95 241 150 249
3/31/96 324 198 341
</TABLE>
ADOPTION OF 1995 STOCK OPTION PLAN FOR NON-OFFICER DIRECTORS
BACKGROUND
The stockholders will be asked at the meeting to vote on a proposal to
approve and adopt the McDonald & Company Investments, Inc. 1995 Stock Option
Plan for Non-Officer Directors (the "1995 Directors Plan" or "Plan").
The Company's Board of Directors adopted the 1995 Directors Plan on
November 1, 1995, subject to stockholder approval. The purpose of the Plan is to
provide the Company's current non-officer Directors with additional incentives
to continue in the service of the Company and to assist in attracting and
retaining qualified Directors.
The Company currently maintains the 1990 Stock Option Plan for Outside
Directors (the "1990 Directors Plan"), which provides for each outside Director
to receive a one-time award of options to purchase 4,000 shares of the Company's
Common Stock at the time such Director joins the Board. After adjustment for a
20% share dividend declared by the Company in
14
<PAGE> 18
July 1993, Messrs. Karman and Nance and Ms. Blumberg have options to purchase an
aggregate of 14,400 shares of Common Stock under the 1990 Directors Plan. All
options awarded under the 1990 Directors Plan were awarded at exercise prices
equal to the fair market value of a share of Common Stock on the date of grant,
have a term of 10 years, and vest in equal increments over a five year period
beginning on the first anniversary of the date of grant.
The 1995 Directors Plan is intended to replace the 1990 Directors Plan.
While each Director who was awarded options under the 1990 Outside Directors
Plan will continue to have the right to exercise such options in accordance with
the terms thereof, if the Plan is approved by stockholders, no new awards under
the 1990 Directors Plan will be made.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote, present in person or by proxy at the meeting,
is required for the adoption of the 1995 Directors Plan. Broker non-votes,
however, are not counted as present and entitled to vote for determining whether
this proposal has been approved and have no effect on its outcome.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE MCDONALD & COMPANY
INVESTMENTS, INC. 1995 STOCK OPTION PLAN FOR NON-OFFICER DIRECTORS.
The following is a summary of the material features of the 1995 Directors
Plan and is qualified in its entirety by reference to it. A copy of the 1995
Directors Plan is attached hereto as Appendix A.
GENERAL
The 1995 Directors Plan provides for the issuance of options to purchase a
maximum of an aggregate of 50,000 shares of the Company's Common Stock to
Directors of the Company who are not officers of the Company or any subsidiary
(the "Non-Officer Directors"). There are presently five eligible Non-Officer
Directors, Rena J. Blumberg, Jeanette Grasselli Brown, Edward Fruchtenbaum,
James A. Karman and Frederick R. Nance. The 1995 Directors Plan will terminate
on November 1, 2005, unless earlier terminated by resolution of the Board of
Directors.
GRANTS OF OPTIONS
If the Plan is approved by the stockholders, each Non-Officer Director will
automatically be granted a non-qualified stock option to purchase 1,000 shares
of Common Stock on the first business day of the Company's fiscal year, in
addition to grants already made to the Non-Officer Directors. Upon the
appointment of a Non-Officer to the Board of Directors, such individual will
receive an option to purchase 1,000 shares of Common Stock. The exercise price
of all such options will be the closing price of the Common Stock on the New
York Stock Exchange on the date of grant.
Options to purchase an aggregate of 10,000 shares of Common Stock have been
granted to the Non-Officer Directors, subject to stockholder approval of the
Plan. Each of Messrs. Karman and Nance and Ms. Blumberg have been granted an
option to purchase 1,000 shares of Common Stock as of November 1, 1995, the date
of adoption of the Plan by the Board of Directors. Mr. Fruchtenbaum was granted
an option to purchase 1,000 shares of Common Stock as of November 25, 1995, the
effective date of Mr. Fruchtenbaum's appointment to the Board of Directors of
the Company. Ms. Brown was granted an option to purchase 1,000 shares of Common
Stock as of January 31, 1996, the effective date of Ms. Brown's appointment to
the Board of Directors of the Company. In accordance with the terms of the Plan,
Messrs. Karman, Nance and Fruchtenbaum and Ms. Blumberg and Ms. Brown were each
granted an option to purchase 1,000 shares of Common Stock as of April 1, 1996,
the first business day of the 1997 fiscal year. All such options were granted at
the closing price of the Common Stock on the New York Stock Exchange on the date
of grant and are subject to approval of the Plan by the stockholders of the
Company.
15
<PAGE> 19
The table below sets forth the option grants which have been awarded under
the 1995 Directors Plan, subject to stockholder approval.
NEW PLAN BENEFITS
1995 STOCK OPTION PLAN FOR NON-OFFICER DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OR POSITION UNDERLYING OPTIONS
-------------------------------------------------------------------------------
<S> <C>
William B. Summers, Jr. 0
David W. Knall 0
David W. Ellis III, C.P.A. 0
Robert T. Clutterbuck 0
Daniel F. Austin 0
All executive officers (20 persons) 0
Non-officer Directors (5 persons) 10,000
Non executive officer employees (1,162 persons) 0
</TABLE>
EXERCISE OF OPTIONS
Each option granted under the 1995 Directors Plan will expire on the tenth
anniversary of the date the option was granted. Each option granted under the
Plan will become fully vested and exercisable on the first anniversary of the
date of grant. In the event of a Change in Control, as defined in the 1995
Non-Officer Directors Plan, a Non-Officer Director may exercise his or her
option with respect to all shares of Common Stock which are covered by the
option, notwithstanding vesting requirements. In the event of a Non-Officer
Director's death, only the Non-Officer Director's Personal Representative may
exercise vested options. Upon satisfaction of all conditions, the option may be
exercised in whole or in part at any time until expiration of the right to
exercise the option, but this right of exercise is limited to whole shares.
Options may be exercised by the Non-Officer Director giving written notice to
the Company of the exercise of the option accompanied by full payment of the
purchase price either in cash or in other consideration (including shares of
Common Stock) having a fair market value, as defined in the 1995 Non-Officer
Directors Plan, on the date the option is exercised equal to that portion of the
purchase price for which payment in cash is not made.
SECURITIES SUBJECT TO THE 1995 NON-OFFICER DIRECTORS PLAN
Not more than 50,000 shares of Common Stock of the Company may be issued
pursuant to the 1995 Non-Officer Directors Plan in the aggregate, except that in
the event of stock splits, stock dividends, combinations, exchanges of shares or
similar capital adjustments, an appropriate adjustment in the stock subject to
the 1995 Non-Officer Directors Plan will be made. If any option expires without
having been fully exercised, the shares with respect to which such option has
not been exercised will not be available for further options.
TERMINATION OF DIRECTORSHIP
If a Non-Officer Director ceases to be a Director of the Company because of
death or disability, the option may be exercised until the earlier to occur of
either (i) three months after the Non-Officer Director's termination of
directorship or (ii) the expiration of the option, but only to the extent the
option was exercisable at the date of the Non-Officer Director's termination of
directorship. If any option is exercisable following the Non-Officer Director's
death, then that option may be exercisable by the Non-Officer Director's estate,
or the person designated in the Non-Officer Director's Last Will and Testament,
or the person to whom the option was transferred by the applicable laws of
descent and distribution.
16
<PAGE> 20
INCOME TAX TREATMENT
The Company has been advised that under current law certain of the income
tax consequences under the laws of the United States to Non-Officer Directors
and the Company of options granted under the 1995 Non-Officer Directors Plan
generally should be as set forth in the following summary. The summary only
addresses income tax consequences for Non-Officer Directors and the Company.
The options granted under the 1995 Non-Officer Directors Plan will be
non-qualified options for federal income tax purposes. A Non-Officer Director to
whom an option is granted will not recognize income at the time of grant of such
option. When such Non-Officer Director exercises such non-qualified option, the
Non-Officer Director will recognize ordinary compensation income equal to the
difference, if any, between the option price paid and the fair market value, as
of the date of option exercise, of the shares the Non-Officer Director receives.
The tax basis of such shares to such Non-Officer Director will be equal to the
option price paid, and the Non-Officer Director's holding period for such shares
will commence on the day on which the Non-Officer Director recognized taxable
income in respect of such shares. Subject to applicable provisions of the
Internal Revenue Code and regulations thereunder, the Company generally will be
entitled to a federal income tax deduction in respect of non-qualified options
in an amount equal to the ordinary compensation income recognized by the
Non-Officer Director.
The discussion set forth above does not purport to be a complete analysis
of all potential tax consequences relevant to recipients of options or the
Company or to describe tax consequences based on particular circumstances. It is
based on United States federal income tax law and interpretational authorities
as of the date of this Proxy Statement, which are subject to change at anytime.
The discussion does not address state or local income tax consequences or income
tax consequences for taxpayers who are not subject to taxation in the United
States.
17
<PAGE> 21
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.
A representative of the firm of Ernst & Young LLP, 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 1997 must do so no later than February 27, 1997.
To be eligible for inclusion in the 1997 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.
McDonald Investment Center
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 27, 1996
18
<PAGE> 22
APPENDIX A
1995 STOCK OPTION PLAN FOR NON-OFFICER DIRECTORS
McDonald & Company Investments, Inc., hereinafter referred to as the
"Company," hereby adopts a stock option plan for eligible Directors of the
Company (hereinafter referred to sometimes as "Optionees") pursuant to the
following terms and provisions:
1. PURPOSE OF THE PLAN. The purpose of this plan, hereinafter referred to
as the "Plan," is to provide additional incentive to those Directors of the
Company who are not officers of the Company or any of its subsidiaries or
affiliates by encouraging them to acquire a new or an additional share ownership
in the Company, thus increasing their proprietary interest in the Company's
business and providing them with an increased personal interest in the Company's
continued success and progress. These objectives will be promoted through the
grant of options to acquire Common Stock, par value $1.00 per share (the "Common
Stock"), of the Company pursuant to the terms of the Plan. Only those Directors
who meet the qualifications stated above are eligible for and shall receive
options under this Plan.
2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective upon the
date the Plan is adopted by the Board of Directors, subject to the approval of
the Plan by holders of a majority of the outstanding shares of voting capital
stock of the Company present and entitled to vote thereon at a meeting or
otherwise. If the Company's stockholders have not approved the Plan within
twelve (12) months after the date the Plan is adopted by the Board of Directors,
the Plan and the options granted hereunder shall be null and void.
3. SHARES SUBJECT TO THE PLAN. The shares to be issued upon the exercise of
the options granted under the Plan shall be shares of Common Stock of the
Company. Either treasury or authorized and unissued shares of Common Stock, or
both, as the Board of Directors shall from time to time determine, may be so
issued. No shares of Common Stock which are subject of any lapsed, expired or
terminated options may be made available for reoffering under the Plan. If an
option granted under this Plan is exercised pursuant to the terms and conditions
of subsection 5(b), any shares of Common Stock which are the subject thereof
shall not thereafter be available for reoffering under the Plan.
Subject to the provisions of the next succeeding paragraph of this Section
3, the aggregate number of shares of Common Stock for which options may be
granted under the Plan shall be Fifty Thousand (50,000) shares of Common Stock.
In the event that subsequent to the date of effectiveness of the Plan, the
Common Stock should, as a result of a stock split, stock dividend, combination
or exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation, recapitalization or other
such change, be increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, then (i) there shall automatically be substituted for
each share of Common Stock subject to an unexercised option (in whole or in
part) granted under the Plan, each share of Common Stock available for
additional grants of options under the Plan and each share of Common Stock made
available for grant to each eligible Director pursuant to Section 4 hereof, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for which each such share
of Common Stock shall be exchanged, (ii) the option price per share of Common
Stock or unit of securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject to the option shall
remain the same as immediately prior to such event and (iii) the Board shall
make such other adjustments as may be appropriate and equitable to prevent
enlargement or dilution of option rights. Any such adjustment may provide for
the elimination of fractional shares.
A-1
<PAGE> 23
4. GRANT OF OPTIONS.
(a) Automatic Grants. Subject to the terms of the Plan (including without
limitation the receipt of shareholder approval contemplated by Section 2
hereof), each eligible Director shall be granted a non-qualified stock option
for 1,000 shares of Common Stock on the later of (1) the date of the Plan's
adoption by the Board of Directors or (2) the effective date of such Director's
initial election as a member of the Board of Directors. In addition, subject to
the terms of the Plan, each Director shall be granted a non-qualified stock
option for 1,000 shares of Common Stock on the first day of each fiscal year of
the Company commencing with the fiscal year beginning in 1996. Such grant shall
occur automatically without any further action by the Board of Directors.
(b) Option Price. The price at which each share of Common Stock may be
purchased pursuant to an option granted under the Plan shall be equal to the
"fair market value" (as determined pursuant to Section 7) for each such share as
of the date on which the option is granted (the "Date of Grant"), but in no
event shall such price be less than the par value of such shares of Common
Stock. Anything contained in this subsection (b) to the contrary
notwithstanding, in the event that the number of shares of Common Stock subject
to any option is adjusted pursuant to Section 3, a corresponding adjustment
shall be made in the price at which the shares of Common Stock subject to such
option may thereafter be purchased.
(c) Duration of Options. Each option granted under the Plan shall expire
and all rights to purchase shares of Common Stock pursuant thereto shall cease
on the date (the "Expiration Date") which shall be the tenth anniversary of the
Date of Grant of such option.
(d) Vesting of Options. Each option granted under the Plan shall become
fully vested and exercisable on the first anniversary of the Date of Grant.
5. OPTION PROVISIONS.
(a) Limitation on Exercise and Transfer of Options. Only the Director to
whom the option is granted may exercise the same except where a guardian or
other legal representative has been duly appointed for such Director and except
as otherwise provided in the case of such Director's death. No option granted
hereunder shall be transferable otherwise than by the Last Will and Testament of
the Director to whom it is granted or, if the Director dies intestate, by the
applicable laws of descent and distribution. No option granted hereunder may be
pledged or hypothecated, nor shall any such option be subject to execution,
attachment or similar process.
(b) Exercise of Option. Each option granted hereunder may be exercised in
whole or in part (to the maximum extent then exercisable) from time to time
during the option period, but this right of exercise shall be limited to whole
shares. Options shall be exercised by the Optionee (i) giving written notice to
the Secretary of the Company at its principal business office, by certified
mail, return receipt requested, of intention to exercise the same and the number
of shares with respect to which the Option is being exercised (the "Notice of
Exercise of Option") accompanied by full payment of the purchase price in cash
or, with the consent of the Board, in whole or in part in shares of Common Stock
having a fair market value on the date the option is exercised equal to that
portion of the purchase price for which payment in cash is not made and (ii)
making appropriate arrangements with the Company with respect to income tax
withholding, as required, which arrangements may include, in lieu of other
withholding arrangements, (a) the Company withholding from issuance to the
Optionee such number of shares of Common Stock otherwise issuable upon exercise
of the option as the Company and the Optionee may agree; provided that such
Optionee has had on file with the Board of Directors, for at least six (6)
months prior thereto, an effective standing election to satisfy said Optionee's
tax withholding obligations in such a fashion, which election form by its terms
shall not be revocable or amendable for at least six (6) months or (b) with the
consent of the Board of Directors, the Optionee's delivery to the Company of all
of Common Stock having a fair market value on the date the option is exercised
equal to that portion of the withholding obligation for which
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<PAGE> 24
payment in cash is not made. Such Notice of Exercise of Option shall be deemed
delivered upon deposit into the mails.
(c) Termination of Directorship. If the Optionee ceases to be a Director of
the Company, his or her option shall terminate three (3) months after the
effective date of termination of his or her directorship and neither he or she
nor any other person shall have any right after such date to exercise all or any
part of such option. If the termination of the directorship is due to death,
then the option may be exercised within three (3) months after the Optionee's
death by the Optionee's estate or by the person designated in the Optionee's
Last Will and Testament or to whom transferred by the applicable laws of descent
and distribution (the "Personal Representative"). Notwithstanding the foregoing,
in no event shall any option be exercisable after the expiration of the option
period and not to any greater extent than the Optionee would have been entitled
to exercise the option at the time of death.
(d) Acceleration of Exercise of Options in Certain Events. Notwithstanding
anything in the foregoing to the contrary, in the event of a "change in control"
the eligible Director shall have the immediate right and option (notwithstanding
the provisions of Section 4) to exercise the option with respect to all shares
of Common Stock covered by the option, which exercise, if made, shall be
irrevocable. The term "change in control" shall include, but not be limited to:
(i) the first purchase of shares pursuant to a tender offer or exchange (other
than a tender offer or exchange by the Company) for all or part of the Company's
shares of any class of common stock or any securities convertible into such
common stock; (ii) the receipt by the Company of a Schedule 13D or other advice
indicating that a person is the "beneficial owner" (as that term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of twenty percent (20%) or
more of the Company's shares of capital stock calculated as provided in
paragraph (d) of said Rule 13d-3; (iii) the date of approval by stockholders of
the Company of an agreement providing for any consolidation or merger of the
Company in which the Company will not be the continuing or surviving corporation
or pursuant to which shares of capital stock, of any class or any securities
convertible into such capital stock, of the Company would be converted into
cash, securities, or other property, other than a merger of the Company in which
the holders of shares of all classes of the Company's capital stock immediately
prior to the merger would have the same proportion of ownership of common stock
of the surviving corporation immediately after the merger; (iv) the date of the
approval by stockholders of the Company of any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; or (v) the adoption of any plan or
proposal for the liquidation (but not a partial liquidation) or dissolution of
the Company.
(e) Option Agreements. Options granted under the Plan shall be subject to
the further terms and provisions of an Option Agreement, a copy of which is
attached hereto as Exhibit A, the execution of which by each Optionee shall be a
condition to the receipt of an option.
6. INVESTMENT REPRESENTATION; APPROVALS AND LISTING. The options to be
granted hereunder shall be further conditioned upon receipt of the following
investment representation from the Optionee:
"I further agree that any shares of Common Stock of McDonald & Company
Investments, Inc. which I may acquire by virtue of this option shall be
acquired for investment purposes only and not with a view to distribution
or resale; provided, however, that this restriction shall become
inoperative in the event the said shares of Common Stock subject to this
option shall be registered under the Securities Act of 1933, as amended, or
in the event McDonald & Company Investments, Inc. is otherwise satisfied
that the offer or sale of the shares of Common Stock subject to this option
may be lawfully made without registration of the said shares of Common
Stock under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate or certificates for
shares of Common Stock upon the exercise of an option granted under the Plan
prior to (i) the obtaining of any
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<PAGE> 25
approval from any governmental agency which the Company shall, in its sole
discretion, determine to be necessary or advisable, (ii) the admission of such
shares of Common Stock to listing on any national securities exchange on which
the Common Stock may be listed, (iii) the completion of any registration or
other qualification of the shares of Common Stock under any state or federal law
or ruling or regulations of any governmental body which the Company shall, in
its sole discretion, determine to be necessary or advisable or the determination
by the Company, in its sole discretion, that any registration or other
qualification of the shares of Common Stock is not necessary or advisable and
(iv) the obtaining of an investment representation from the Optionee in the form
stated above or in such other form as the Company, in its sole discretion, shall
determine to be adequate.
7. GENERAL PROVISIONS. For all purposes of this Plan the fair market value
of a share of Common Stock shall be determined as follows: so long as the Common
Stock of the Company is listed upon an established stock exchange or exchanges
such fair market value shall be determined to be the highest closing price of a
share of such Common Stock on such stock exchange or exchanges on the day the
option is granted (or the date the shares of Common Stock are tendered as
payment, in the case of determining fair market value for that purpose) or if no
sale of such Common Stock shall have been made on any stock exchange on that
day, then on the closest preceding day on which there was a sale of such Common
Stock; and during any period of time as such Common Stock is not listed upon an
established stock exchange the fair market value per share shall be the mean
between dealer "Bid" and "Ask" prices of such Common Stock in the
over-the-counter market on the day the option is granted (or the day the shares
of Common Stock are tendered as payment, in the case of determining fair market
value for that purpose), as reported by the National Association of Securities
Dealers, Inc.
The liability of the Company under the Plan and any distribution of Common
Stock made hereunder is limited to the obligations set forth herein with respect
to such distribution and no term or provision of the Plan shall be construed to
impose any liability on the Company in favor of any person with respect to any
loss, cost or expense which the person may incur in connection with or arising
out of any transaction in connection with the Plan, including, but not limited
to, any liability to any federal, state, or local tax authority and/or any
securities regulatory authority.
Nothing in the Plan or in any option agreement shall confer upon any
Optionee any right to continue as a Director of the Company, or to be entitled
to any remuneration or benefits not set forth in the Plan or such option.
Nothing contained in the Plan or in any option agreement shall be construed
as entitling any Optionee to any rights of a stockholder as a result of the
grant of an option until such time as shares of Common Stock are actually issued
to such Optionee pursuant to the exercise of an option.
The Plan may be assumed by the successors and assigns of the Company.
The Plan shall not be amended more than once every six (6) months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
The cash proceeds received by the Company from the issuance of Common Stock
pursuant to the Plan will be used for general corporate purposes or in such
other manner as the Board of Directors deems appropriate.
The expense of administering the Plan shall be borne by the Company.
The captions and section numbers appearing in the Plan are inserted only as
a matter of convenience. They do not define, limit, construe or describe the
scope or intent of the provisions of the Plan.
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<PAGE> 26
8. TERMINATION OF THE PLAN. The Plan shall terminate ten (10) years from
the date of its adoption by the Board of Directors of the Company and thereafter
no options shall be granted hereunder. All options outstanding at the time of
termination of the Plan shall continue in full force and effect in accordance
with and subject to their terms and the terms and conditions of the Plan.
9. TAXES. Appropriate provisions shall be made for all taxes required to be
withheld and/or paid in connection with the options or the exercise thereof, and
the transfer of shares of Common Stock pursuant thereto, under the applicable
laws or other regulations of any governmental authority, whether federal, state,
or local and whether domestic or foreign.
10. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable federal
law.
11. VENUE. The venue of any claim brought hereunder by an eligible Director
shall be Cleveland, Ohio.
12. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein to
the Internal Revenue Code, or sections thereof, or to rules and regulations of
the Department of Treasury or of the Securities and Exchange Commission, shall
mean and include the Code sections thereof and such rules and regulations as are
now in effect or as they may be subsequently amended, modified, substituted or
superseded.
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<PAGE> 27
MCDONALD & COMPANY INVESTMENTS, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- AUGUST 7, 1996
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 THOMAS F. MCKEE, 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, Annex Building, 1900 East Ninth
Street, Cleveland, Ohio, on Wednesday, August 7, 1996, 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 THREE DIRECTORS NOMINATED BY THE BOARD OF
DIRECTORS AND "FOR" THE PROPOSAL TO APROVE AND ADOPT THE COMPANY'S 1995 STOCK
OPTION PLAN FOR NON-OFFICER 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>
JAMES A. KARMAN, RENA J. BLUMBERG and ROBERT T. CLUTTERBUCK
(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) PROPOSAL to approve and adopt the Company's 1995 Stock Option Plan for
Non-Officer Directors.
/ / FOR the Proposal / / AGAINST the Proposal / / ABSTAIN
(3) 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:............... , 1996
............................
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 AND THE PROPOSAL
LISTED ABOVE
