PIONEER GROUP INC, DEF 14A, 1997-04-15

PIONEER GROUP INC
DEF 14A, 1997-04-15
INVESTMENT ADVICE

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]

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

Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

The Pioneer Group, Inc.
(Name of Registrant as Specified In Its Charter)

[ ]
(Name of Person(s) Filing Proxy Statement)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

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

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

- --------------------------------------------------------------------------------
<PAGE> 2

THE PIONEER GROUP, INC.

60 STATE STREET
BOSTON, MASSACHUSETTS 02109

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1997

The Annual Meeting of Stockholders of The Pioneer Group, Inc. (the
"Company") will be held at the offices of Hale and Dorr LLP, 26th Floor, 60
State Street, Boston, Massachusetts on Tuesday, May 20, 1997, at 2:00 p.m.,
local time, to consider and act upon the following matters:

1. To elect seven directors for the ensuing year.

2. To ratify and approve the Company's 1997 Stock Incentive Plan.

3. To ratify the selection by the Board of Directors of Arthur
Andersen LLP as the Company's independent accountants for the current year.

4. To transact such other business as may properly come before the
meeting or any adjournments of the meeting.

Stockholders of record at the close of business on March 24, 1997, are
entitled to notice of and to vote at the meeting. The stock transfer books of
the Company remain open.

All stockholders are cordially invited to attend the meeting.

By Order of the Board of Directors,

/s/ Joseph P. Barri
JOSEPH P. BARRI, Secretary

April 15, 1997

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.

0497-4088
<PAGE> 3

THE PIONEER GROUP, INC.

60 STATE STREET
BOSTON, MASSACHUSETTS 02109

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Pioneer Group, Inc. (the "Company") for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the offices of Hale and Dorr LLP, 26th Floor, 60 State Street, Boston,
Massachusetts 02109 at 2:00 p.m., local time, on Tuesday, May 20, 1997, and at
any adjournments of the Annual Meeting. All proxies will be voted in accordance
with the instructions contained in the proxies, and if no choice is specified,
the proxies will be voted in favor of the election of the director nominees and
the proposals set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by written or oral
request to the Secretary of the Company.

The Board of Directors has fixed March 24, 1997 (the "Record Date"), as the
date for the determination of stockholders entitled to vote at the Annual
Meeting. At the close of business on the Record Date, there were outstanding and
entitled to vote 25,130,568 shares of Common Stock of the Company. Each share is
entitled to one vote.

The Company is mailing its 1996 Annual Report to Stockholders together with
this proxy statement and the enclosed proxy on or about April 15, 1997, to
stockholders entitled to vote at the Annual Meeting.

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT
FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY, 60 STATE STREET, BOSTON,
MASSACHUSETTS 02109.

VOTES REQUIRED AND TABULATION OF VOTES

The holders of a majority of the shares of Common Stock issued, outstanding
and entitled to vote on any matter shall constitute a quorum at the Annual
Meeting. Shares of Common Stock present in person or represented by proxy
(including shares which abstain or do not vote with respect to one or more of
the matters presented for stockholder approval) will be counted for purposes of
determining whether a quorum is present.

Shares that abstain from voting as to a particular matter will not be
counted as votes in favor of such matter, but will be counted as shares voting
on such matter. Accordingly, an abstention from voting on a matter has the same
effect as a vote against the matter. Shares held in street name by brokers or
nominees who indicate on their proxy that they do not have discretionary
authority to vote such shares as to a particular matter will not be counted as
votes in favor of such matter and will also not be counted as shares voting on
such matter. Accordingly, a "broker non-vote" on a matter that requires the
affirmative vote of a certain percentage of the shares present and entitled to
vote on the matter, such as the election of directors, the ratification and
approval of the 1997 Stock Incentive Plan and the ratification of the selection
of independent accountants, has no effect on the voting of such matter.

The seven nominees who receive a plurality of the votes cast by the
stockholders entitled to vote at the Annual Meeting will be elected. The
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and voting at the Annual Meeting is required for the
ratification and approval of
<PAGE> 4

the 1997 Stock Incentive Plan and for the ratification of the selection of
Arthur Andersen LLP as the Company's independent accountants for the current
year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information, as of March 24, 1997,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the named executive officers of the Company as defined under the caption
"Executive Compensation" below, and (iv) all directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
PERCENT
OF SHARES
NAME AND ADDRESS NUMBER OF COMMON
OF BENEFICIAL OF NATURE OF STOCK
OWNER, OFFICER OR DIRECTOR SHARES(1) OWNERSHIP(1) OUTSTANDING(2)
- ---------------------------------------------------- --------- ------------ --------------
<S> <C> <C> <C>
John F. Cogan, Jr................................... 2,331,515(3) Direct 9.2%
60 State Street 1,259,386(4) Indirect 5.0%
Boston, Massachusetts 02109
Southeastern Asset Management, Inc.................. 3,928,400(5) Indirect 15.6%
6075 Poplar Avenue
Suite 900
Memphis, Tennessee 38119
Robert L. Butler.................................... 377,068(3)(6) Direct 1.5%
David D. Tripple.................................... 327,905(3) Direct 1.3%
Jaskaran S. Teja.................................... 6,600(3) Direct *
Maurice Engleman.................................... 4,000 Direct *
John H. Valentine................................... 4,000 Direct *
Alan J. Strassman................................... 0 -- --
William H. Smith, Jr................................ 264,628(3) Direct 1.0%
William H. Keough................................... 196,776(3) Direct *
All directors and executive officers as a group (17
persons).......................................... 3,898,974(3)(6) Direct 14.7%
1,265,178(4) Indirect 5.0%
</TABLE>

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

* Denotes ownership of less than 1% of outstanding shares of Common Stock.

(1) The inclusion herein of any shares of Common Stock deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
Unless otherwise indicated, each stockholder referred to above has sole
voting and investment power with respect to the shares listed.

(2) For purposes of this table, the number of outstanding shares of Common Stock
of the Company is adjusted for each director and executive officer to
include the number of shares of Common Stock into which any options held by
such director or executive officer are exercisable on or before May 23,
1997.

(3) Includes shares of Common Stock that the listed person has the right to
acquire under outstanding options which are exercisable on or before May 23,
1997, including 349,000 shares for Mr. Cogan, 228,500 shares for Mr. Butler,
229,000 shares for Mr. Tripple, 5,000 shares for Dr. Teja, 136,500 shares

2
<PAGE> 5

for Mr. Smith, 168,500 shares for Mr. Keough and 1,327,500 shares for all
directors and executive officers as a group.

(4) Includes an aggregate of 374,386 shares of Common Stock held in trusts with
respect to which Mr. Cogan may be deemed to be a beneficial owner by reason
of his interests as a beneficiary and/or position as a trustee, over which
shares Mr. Cogan exercises shared voting and investment power. Also includes
an aggregate of 885,000 shares of Common Stock held by voting trusts of
which Mr. Cogan is the sole trustee.

(5) Consists of shares of Common Stock held by a variety of investment advisory
clients, over which shares Southeastern Asset Management, Inc. exercises
sole, shared or no voting authority and exercises sole or shared investment
power. The foregoing is based solely on information provided by the
stockholder in Amendment No. 10 to Schedule 13G dated January 31, 1997.

(6) Includes 84,300 shares that Mr. Butler owns jointly with his wife.

ELECTION OF DIRECTORS

The persons named in the proxy will vote to elect as directors the seven
nominees named below, except with respect to any proxy marked against the
election of one or more of the nominees. The Board of Directors has fixed the
number of directors at seven and, accordingly, the proxy may be voted for only
seven directors. All of the nominees are currently directors of the Company. Mr.
Strassman was elected to the Board of Directors in November 1996 upon the
retirement of Philip L. Carret.

Each nominee who is elected will hold office until the next annual meeting
of stockholders and until his successor is elected and qualified. If a nominee
becomes unavailable, the person acting under the proxy may vote the proxy for
the election of a substitute. The Company does not anticipate that any of the
nominees will be unavailable.

The following table sets forth the name of each nominee, his age, the year
in which he first became a director of the Company, other offices and positions,
if any, which he holds with the Company or any significant subsidiary of the
Company, or his principal occupation, and the names of other publicly-held or
registered investment companies of which he serves as a trustee.

3
<PAGE> 6

<TABLE>
<CAPTION>
FIRST
NAME, OFFICES AND POSITIONS WITH THE COMPANY, BECAME A
PRINCIPAL OCCUPATION AND TRUSTEESHIPS/DIRECTORSHIPS AGE DIRECTOR
- ------------------------------------------------------------------------------- --- --------
<S> <C> <C>
John F. Cogan, Jr.*............................................................ 70 1962
President, Chief Executive Officer and Chairman of the Board of the Company
since 1962. Chairman of PMC since 1993 and President of PMC from 1962 to
1993. Director of PMC since 1962. Chairman and Director of PFD, PSC,
Pioneer Capital Corporation ("PCC"), PREA and Pioneer Forest, Inc.
Chairman, President and Trustee of each of the registered investment
companies in the Pioneer Family of Mutual Funds. President and Director of
Pioneer International, Pioneer Omega, Inc. ("Pioneer Omega") and Pioneer
First Russia, Inc. ("Pioneer First Russia"). Chairman and Director of
Pioneer Goldfields Limited ("PGL"), Teberebie Goldfields Limited, Closed
Joint Stock Company "Pioneer Metals International" ("Pioneer Metals"),
Closed Joint-Stock Company "Forest-Starma," Closed Joint-Stock Company
"Amgun-Forest," Closed Joint-Stock Company "Udinskoye" and Pioneer
Investments ("Pioneer Investments"). Chairman of Fonds Marketing. Chairman
of the Supervisory Board of Pioneer Poland and Pioneer Czech. Director of
Pioneer Ireland and each of the Irish Funds. Partner of the Boston law
firm, Hale and Dorr LLP, counsel to the Company.
Maurice Engleman............................................................... 70 1979
President of E.T. Software, a computer software distributor, since 1995.
President of Professional Equity Corporation, which markets financed
premium life insurance, since 1995. President of Marketing Two, Inc.,
which markets financed premium life insurance, since February 1996.
Principal of Engleman & Associates, an insurance sales and service firm.
Alan J. Strassman.............................................................. 57 1996
Partner and Chairman of the Board of Martingale Asset Management, an
investment advisory firm, since 1988. Previously, Trustee and Executive
Vice President of Batterymarch Investment Management, Inc. President of
the Board of Trustees of the Museum of Fine Arts, Boston, Massachusetts.
Member of the Board of WGBH (public television and radio).
Jaskaran S. Teja............................................................... 67 1994
Senior Vice President of Pioneer International since 1992. Director of PGL,
Pioneer Investments and Pioneer Metals. Independent international
consultant in financial services and corporate development from 1988 to
1992. Permanent Representative of India to the United Nations from 1986 to
1988. Secretary of Government of India, Ministry of External Affairs, from
1984 to 1986. Additional Secretary for Political Affairs, New Delhi, from
1981 to 1984. Indian Ambassador to Afghanistan from 1979 to 1981. Deputy
Chief of Mission, Indian Embassy, Moscow, from 1977 to 1979.
David D. Tripple*.............................................................. 53 1986
Executive Vice President of the Company since 1986. President of PMC since
1993 and Chief Investment Officer and Director of PMC since 1986.
Executive Vice President of PMC from 1986 to 1993. Executive Vice
President and Trustee of each of the registered investment companies in
the Pioneer Family of Mutual Funds. Director of PFD, PCC, PREA, Pioneer
International, Pioneer Investments, Pioneer Omega, Pioneer First Russia,
Pioneer Ireland and each of the Irish Funds. Member of the Supervisory
Board of Pioneer Poland and Pioneer Czech.
</TABLE>

4
<PAGE> 7

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

* Member of the Executive Committee.

DIRECTORS' MEETINGS AND FEES

During 1996, the Board of Directors held four meetings. Each director
currently standing for reelection attended at least 75% of the aggregate number
of Board meetings and the meetings held by all committees on which he then
served. The Company paid its non-management directors, Messrs. Engleman and
Valentine, $5,000 for each Board meeting attended during 1996. Board members who
serve on the Compensation Committee or Audit Committee receive an additional
annual payment of $2,500 per Committee. Expenses for attending meetings are
reimbursed. Management directors, Messrs. Cogan, Butler, Teja and Tripple,
receive $500 per annum for their services as directors. For 1996, directors
received aggregate fees of $66,000 and expense reimbursements of $11,588.

COMMITTEE MEETINGS

The Compensation Committee of the Board of Directors, consisting of Messrs.
Engleman and Valentine, met three times during 1996. This Committee determines
the base salary and short and long-term incentives granted to the President, the
named executive officers and certain other executives of the Company.
Additionally, the Compensation Committee grants awards under the Company's stock
option and restricted stock plans and otherwise administers such plans. The
Compensation Committee also makes recommendations to the Board of Directors on
any proposed plan or program which would benefit primarily the senior executive
group. See "Report of the Compensation Committee of the Board of Directors on
Executive Compensation" below.

The Audit Committee of the Board of Directors consists of Messrs. Engleman,
Strassman and Valentine. Mr. Strassman was appointed to the Audit Committee in
November 1996 following his election to the Board of Directors. The Audit
Committee meets at least annually with the Company's independent accountants and
periodically with the Company's internal accounting and auditing staff and
oversees generally the financial controls and practices of the Company. The
Audit Committee met two times during 1996.

The Company does not have a nominating committee or committee serving a
similar function. Nominations are made by and through the full Board of
Directors.

5
<PAGE> 8

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation for each of the last three fiscal years of the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company (such five executive officers are collectively referred
to in this proxy statement as the "named executive officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- -------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARDS($)(2) (#)(3) SATION($)(4)
- ----------------------------- ---- -------- -------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John F. Cogan, Jr., 1996 $525,000 $450,000 $11,083 -- 75,000 $30,000
President and Chief 1995 $500,000 $500,000 $11,500 -- 65,000 $30,000
Executive Officer of the 1994 $475,000 $500,000 $ 9,500 -- 30,000 $30,000
Company and Chairman of PMC
David D. Tripple, 1996 $425,000 $425,000 $11,083 $ 48,876 15,000 $27,268
Executive Vice 1995 $382,000 $520,000 $11,500 $ 54,843 15,000 $27,268
President of the Company 1994 $382,000 $458,400 $ 9,500 $ 72,105 12,500 $27,268
and President and Chief
Investment Officer of PMC
Robert L. Butler, 1996 $280,000 $276,250 $ 500 $148,146 17,500 $30,000
Executive Vice 1995 $265,000 $253,500 $ 500 $136,022 12,500 $30,000
President of the Company 1994 $240,000 $211,250 $ 500 $113,383 12,500 $30,000
and President of PFD
William H. Smith, Jr., 1996 $250,000 $221,000 -- $118,516 12,500 $30,000
Vice President of 1995 $235,000 $195,000 -- $104,633 12,500 $30,000
the Company and President 1994 $210,000 $191,750 -- $102,933 12,500 $30,000
of PSC
William H. Keough, 1996 $265,000 $178,750 -- $ 95,886 12,500 $30,000
Senior Vice President 1995 $250,000 $172,250 -- $ 92,446 12,500 $30,000
and Chief Financial Officer 1994 $225,000 $146,250 -- $ 78,375 12,500 $27,000
of the Company and
Treasurer of the Company
and PMC
</TABLE>

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

(1) Represents amounts paid to management directors for their services as
directors of the Company or as trustees of the registered investment
companies in the Pioneer Family of Mutual Funds.

(2) Dollar values of 1996 restricted stock awards are based on the market price
at the time of grant. With respect to each named executive officer's
unvested restricted stock holdings, the number of shares of Common Stock and
the dollar value thereof at December 31, 1996, are as follows: 0 and $0 for
Mr. Cogan; 15,354 and $363,775 for Mr. Tripple; 18,447 and $436,799 for Mr.
Butler; 15,576 and $368,821 for Mr. Smith; and 13,951 and $330,390 for Mr.
Keough. The value of restricted stock holdings is based on the fair market
value of the Common Stock on December 31, 1996 ($23.75) less the purchase
price paid by the executive for such shares, which is generally $.10 per
share, adjusted for stock splits. Dividends will be paid on shares of
restricted stock.

6
<PAGE> 9

(3) Options granted prior to December 1, 1994, have been adjusted for the
2-for-1 stock split effected in the form of a stock dividend on December 9,
1994.

(4) Represents a retirement contribution by the Company, some or all of which is
outside of the Company's Retirement Benefit Plan.

STOCK OPTION GRANTS AND EXERCISES

The following table summarizes stock option grants during 1996 to the named
executive officers.

OPTION GRANTS IN 1996

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
-------------------------------------------------- REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(1)
GRANTED IN FISCAL PRICE EXPIRATION ------------------------
NAME (#)(2) YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Cogan, Jr. .......... 75,000 26.69% $24.25 1/11/07 $1,155,872 $2,936,236
David D. Tripple............. 15,000 5.34% $24.25 1/11/07 $ 231,174 $ 587,247
Robert L. Butler............. 17,500 6.23% $24.25 1/11/07 $ 269,703 $ 685,122
William H. Smith, Jr. ....... 12,500 4.45% $24.25 1/11/07 $ 192,645 $ 489,373
William H. Keough............ 12,500 4.45% $24.25 1/11/07 $ 192,645 $ 489,373
</TABLE>

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

(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the dates the respective options were granted to their
expiration dates. Actual gains, if any, on stock option exercises will
depend on the future performance of the Common Stock and the dates on which
the options are exercised.

(2) Each option becomes exercisable in five equal annual installments beginning
one year after the date of grant. The Company has never granted stock
appreciation rights.

The following table summarizes stock options held as of December 31, 1996,
by the named executive officers. No options were exercised by the named
executive officers during 1996.

AGGREGATED OPTION EXERCISES IN 1996 AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Cogan, Jr. ..... -- -- 349,000 161,000 $5,993,250 $233,000
David D. Tripple........ -- -- 229,000 48,500 $4,173,500 $222,750
Robert L. Butler........ -- -- 228,500 49,000 $4,173,500 $222,750
William H. Smith, Jr.... -- -- 136,500 40,000 $2,419,750 $156,000
William H. Keough....... -- -- 168,500 44,000 $2,999,750 $222,750
</TABLE>

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

(1) Based on the fair market value of the Common Stock on December 31, 1996
($23.75), as reported on the Nasdaq National Market, less the option
exercise price.

7
<PAGE> 10

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION

The Company's overall executive compensation program is designed to
motivate, reward and retain the management talent needed to achieve its business
objectives and maintain competitive positions in the investment management and
gold mining and other natural resources industries. The Company's program does
this by providing incentives to achieve short-term and long-term objectives, by
rewarding exceptional performance and accomplishments that contribute to its
businesses and by utilizing competitive base salaries and benefits that
recognize a philosophy of career continuity.

The Company's success is highly dependent upon favorable long-term
investment performance of its mutual funds and other managed accounts as well as
the continuing development of its gold mining operation and other businesses.
Therefore, incentive awards for executive officers are generally granted with an
orientation toward long-term performance and may not fluctuate as greatly as
year-to-year results. In keeping with this long-term view, retention of
executive officers like those named is vital to the Company's competitive
strength. Incentives for the Company's Chief Investment Officer, Mr. Tripple,
and key investment advisory personnel are substantially correlated with annual
performance of assets under management; but such awards also reflect prevailing
compensation standards in the investment management industry which continues to
reward its top performing executives especially well.

The philosophical basis of the compensation program is to pay for
performance, to reflect appropriately the individual's level of responsibility
and to ensure compensation that is competitive with or better than peer group
businesses. It is important to encourage a performance-based environment that
motivates individual performance by recognizing the past year's results and by
providing incentives for further progress in the future. Individual performance
includes the ability to implement the Company's business plans, to react to
unanticipated external factors that can have a significant impact on corporate
performance, to focus on cost containment and to retain and develop necessary
staff and organization. Compensation decisions for the President, the named
executive officers and the Company's other executives are generally based on the
same criteria.

There are three major components of the Company's compensation program:
Base Salaries, Bonus Awards, and Stock Incentive Awards.

Base Salaries

Competitive base salaries are vital to support the philosophy of management
development and career orientation of executives and are consistent with the
long-term nature of the Company's business. Base salaries and related periodic
adjustments are derived primarily from frequent reviews of competitive
positioning (how the Company's salary structure for comparable positions
compares with that of other relevant companies), business performance, and
general economic factors. While there is no specific weighting of these factors,
competitive positioning is the primary consideration in setting base salaries.
Business and other economic factors such as net income and estimates of
inflation are secondary considerations. Executive salaries also relate to the
executive's performance, level of responsibility and experience.

The Compensation Committee of the Board of Directors (the "Committee"),
comprised of the undersigned, makes recommendations to the Board of Directors as
to the base salary, incentive bonus and long-term awards of the President and
sets the salaries and reviews the bonus potential of the other named executive
officers and certain other key executives. The Committee typically meets several
times, commencing in December each year, to recommend the salaries for the
President and the other named executive officers. As a general rule, any changes
in approved salaries of executives are reviewed with the Committee before
implementation.

8
<PAGE> 11

John F. Cogan, Jr. became President in 1962. His 1996 base salary was
$525,000 and his 1997 base salary, as recommended by the Committee in December
1996, will continue at the same level.(1) Also in 1996, Mr. Cogan was awarded
options to purchase 75,000 shares of Common Stock to encourage his continuing
focus on profitability of new ventures and the enterprise as a whole. Mr.
Cogan's base salary reflects his extensive hands-on efforts to renew and
reinvigorate the Company's domestic investment management business, to oversee
the continuing development of the Company's gold mining operations, timber
venture and other natural resources businesses in foreign countries and to
nurture the Company's other international businesses, including its mutual fund
and financial services operations in Poland, its powdered-metals and related
operations in Western Russia, its Russian investment management business based
in Moscow and its mutual fund management joint venture in India. These efforts
have involved considerable travel and extraordinary personal contributions on a
continuing basis.

Bonus Awards

Bonus awards to executives are granted in bonuses paid out in cash and
restricted stock, primarily to recognize contributions to the business during
the past year. Performance bonuses generally include a portion that is paid by
Restricted Stock Award (see below). The specific bonus an executive receives is
dependent on individual performance and level of responsibility. Assessment of
an individual's relative performance is made annually based on a number of
factors which include initiative, business judgment, technical expertise and
management skills and goals and objectives met.

In its meetings commencing in December each year, the Committee also
approves bonuses for the President and certain other executive officers and key
employees. In this regard, Mr. Cogan's 1996 bonus award reflects his leadership
of, and other significant personal contributions to, the business in 1996. Most
importantly, Mr. Cogan has demonstrated an exceptional ability to explore and
develop new business opportunities that the Committee is convinced would not
otherwise be available to the Company. The Committee also believes that Mr.
Cogan's contributions to various elements of the Company's business will enhance
the Company's future performance.

The Committee's determination was based on its subjective judgment
regarding Mr. Cogan's overall unique contribution as President. Narrow
quantitative measures or formulas are not viewed as sufficiently comprehensive
for this purpose.

Stock Incentive Awards

Stock incentive awards provided by the stockholder-approved Restricted
Stock Plan and Stock Option Plan are long-term incentives that are designed to
develop and maintain strong management through share ownership in the Company.

The Committee believes that a significant portion of senior executives'
compensation should be dependent on "value" created for the stockholders. In
this way, senior executives share responsibility for the success of all the
Company's businesses. Accordingly, the named executive officers and certain
other executive officers received stock options, and the named executive
officers, other than Mr. Cogan, received restricted

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

1 Mr. Cogan is also a partner of Hale and Dorr LLP, counsel to the Company,
to which the Company, the Company's subsidiaries and the registered investment
companies in the Pioneer Family of Mutual Funds paid approximately $1.9 million
for legal services rendered and related expenses incurred in 1996. Fees paid to
Hale and Dorr LLP are not considered relevant to Mr. Cogan's compensation
although Mr. Cogan may participate in any law firm net income with respect to
such fees. Mr. Cogan does not participate in the provision of any legal services
to the Company, all of which are provided by other attorneys at market rates.

9
<PAGE> 12

stock awards in 1996. Restricted stock and stock option awards are excellent
vehicles to focus executives on stockholder values by linking the executives'
interests to the share price of the Company's Common Stock. Restricted stock
awards vest at the rate of 40% after two years and 20% on each anniversary
thereafter. Ten-year options are granted at the fair market value of the
Company's Common Stock on the date of grant and become exercisable in 20% annual
increments.

Although the number of shares of restricted stock that the Committee grants
to executive officers is based on individual performance (determined as
described under "Bonus Awards") and level of responsibility, the award level
must be sufficient in size to provide a strong incentive for executives to work
for long-term business interests and become significant owners of the business.
The number of stock options currently held by an executive is not a factor in
determining individual grants since employing that factor would encourage the
exercise of options and the sale of shares.

Compliance with Internal Revenue Code Section 162(m)

The Company does not believe that Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), which disallows a tax deduction to public
companies for certain compensation in excess of $1 million paid to the
corporation's Chief Executive Officer and five other most highly compensated
executive officers, will have a material effect on the Company. The Committee
intends to periodically review the potential consequences of Section 162(m) and
may, in the future, structure some or all of the performance-based portion of
its executive officer compensation to comply with certain exemptions provided in
Section 162(m).

Summary

The Committee has the responsibility for ensuring that the Company's
compensation programs continue to be in the best interest of its stockholders.
The Committee consists of outside directors who are not eligible for awards
under the Company's compensation programs. Compensation programs providing
stock-based compensation to executives, such as the Restricted Stock Plan and
the Stock Option Plan, are periodically submitted to stockholders for review and
approval. The Company has had, and continues to have, appropriate and
competitive compensation programs. The balance of a sound base salary position,
competitive short-term bonus orientation, and emphasis on long-term incentives
is the foundation which builds stability and supports the Company's businesses.

Maurice Engleman and John H. Valentine,
Compensation Committee of the
Board of Directors

10
<PAGE> 13

COMPARATIVE STOCK PERFORMANCE

The graph and table below compare the cumulative stockholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the Russell 3000 Index and a peer group index consisting of 11
investment management companies (including the Company) for the same period
(assuming the investment of $100 in the Company's Common Stock, the Russell 3000
Index and the peer group index on December 31, 1991, and reinvestment of all
dividends). Measurement points are the last trading days of the years ended
December 31, 1991, 1992, 1993, 1994, 1995 and 1996.

<TABLE>
<CAPTION>
Measurement Period The Pioneer The Russell 3000
(Fiscal Year Covered) Group, Inc. Index Peer Group Index
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 119.95 109.68 118.40
1993 215.99 121.60 162.39
1994 374.95 121.81 140.22
1995 472.07 166.65 196.41
1996 417.65 203.00 269.66
</TABLE>

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

(1) The Russell 3000 Index is composed of 3,000 large U.S. companies by
market capitalization, representing approximately 98% of the dollar
value of the U.S. equity market. The largest company in the Russell
3000 Index has a market value of approximately $80 billion and the
smallest approximately $60 million.

(2) In addition to the Company, the peer group index consists of:
Atlanta/Sosnoff Capital Corp., Bull & Bear Group, Inc., Eaton Vance
Corp., Franklin Resources, Inc., New England Investment, Oppenheimer
Capital, L.P., T. Rowe Price Associates, Inc., SEI Investment Company,
United Asset Management Corp., and Value Line, Inc. Dreyfus Corp.,
which was included in the peer group index in the Company's 1994 Proxy
Statement, ceased to be publicly-traded during 1994. Colonial Group,
Inc. and Thomson Advisory Group L.P., which were included in the peer
group index in the Company's 1995 Proxy Statement, ceased to be
publicly-traded during 1995.

11
<PAGE> 14

CERTAIN TRANSACTIONS

Mr. Cogan, President, Chief Executive Officer and Chairman of the Board of
the Company, is a partner of Hale and Dorr LLP, counsel to the Company, and
Joseph P. Barri, Secretary of the Company, is a partner of Hale and Dorr LLP.
Hale and Dorr LLP is a partner in the London-based law firm, Brobeck Hale and
Dorr International. The Company and its subsidiaries and the registered
investment companies in the Pioneer Family of Mutual Funds paid an aggregate of
approximately $1,867,000 and $188,000 in legal fees to Hale and Dorr LLP and
Brobeck Hale and Dorr International, respectively, in 1996.

RATIFICATION AND APPROVAL OF 1997 STOCK INCENTIVE PLAN

The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting and retaining key personnel. As of
March 24, 1997, the number of shares available for future grant under the
Company's 1988 Stock Option Plan, as amended (the "1988 Plan"), was 37,000 and
under the Company's 1995 Restricted Stock Plan, as amended (the "1995 Plan"),
was 383,801. On February 3, 1997, the Board of Directors adopted, subject to
stockholder approval, the Company's 1997 Stock Incentive Plan (the "1997 Plan"),
which replaces both the 1988 Plan and the 1995 Plan and provides for the
issuance of up to 1,500,000 shares of Common Stock of the Company (subject to
proportionate adjustment for certain changes in the Company's capitalization).
The Company will terminate the 1988 Plan and the 1995 Plan and will not grant
any further options or make any further awards of restricted stock to executive
officers under these Plans, whether or not the 1997 Plan is approved.

In approving the adoption of the 1997 Plan and the termination of the 1988
and 1995 Plans, the Board of Directors considered the following: (i) that the
1988 Plan terminates in early 1998; (ii), that, given the Company's historical
pattern of option grants under the 1988 Plan, the remaining shares available
under the 1988 Plan will likely not be sufficient to accommodate year-end 1997
grants; (iii) that neither the 1988 Plan nor the 1995 Plan permit the issuance
of options or restricted stock, as the case may be, that qualify as
performance-based compensation under Section 162(m) of the Code; and (iv) that
the consolidation of option grants and restricted stock awards under one plan
will provide certain administrative and financial reporting efficiencies.

THE BOARD OF DIRECTORS BELIEVES THAT THE 1997 PLAN IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR THIS PROPOSAL.

The following is a brief summary of the provisions of the 1997 Plan. This
summary is qualified in all respects by reference to the full text of the 1997
Plan, copies of which are available upon request to the Chief Financial Officer
of the Company.

The 1997 Plan provides for the grant of incentive stock options,
nonstatutory stock options, restricted stock and other stock-based awards
("Awards"). No Award may be made under the 1997 Plan after February 3, 2007, but
Awards previously granted may extend beyond that date. The 1997 Plan may be
sooner terminated and may be amended by the Board of Directors.

DESCRIPTION OF AWARDS

Incentive Stock Options and Nonstatutory Options. Options granted under
the 1997 Plan entitle recipients to purchase a fixed number of shares of Common
Stock during specified periods at an option price and subject to such terms and
conditions as are established at the time of the grant. Incentive stock options
and options that the Compensation Committee intends to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the

12
<PAGE> 15

Common Stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding 10% or more of
the voting stock of the Company). All other options may be granted at an
exercise price which may be less than, equal to or greater than the fair market
value of the Common Stock on the date of grant. On March 24, 1997, the closing
sale price of the Company's Common Stock on the Nasdaq National Market was
$26.75.

Restricted Stock. Restricted stock awards entitle recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares. The Board of Directors or the Compensation Committee of the
Board of Directors administering the 1997 Plan will determine the price at which
shares of Common Stock will be sold to participants, which may not be less than
the par value of the Common Stock. All awards may be granted at a price that may
be less than, equal to or greater than the fair market value of the Common Stock
on the date of award. The purchase price will in most cases be nominal (equal to
the par value of $.10 per share), and may vary among participants.

Shares purchased under the 1997 Plan will be subject, for the period set
forth in the document evidencing the applicable restricted stock award (the
"Restricted Period"), to certain restrictions upon transfer and provisions
relating to forfeiture in the event of termination of employment. In general,
with limited exceptions, it is the Company's policy that the recipient's right
to sell the awarded stock is restricted as to 100% of the shares awarded during
the first two years following the award, 60% during the third year and 20% less
each year thereafter. The Company may, in its discretion, waive its right to
repurchase any shares which become forfeitable under the 1997 Plan. In addition,
the Company may impose upon the recipient of an award such other restrictions on
the shares awarded under the 1997 Plan as the Board of Directors may deem
advisable and in the best interests of the Company. During the Restricted
Period, the recipient retains the right to vote the shares and receive dividends
on the shares.

Other Awards. The 1997 Plan provides for the issuance of other stock-based
awards, such as stock appreciation rights ("SARs") and conditional stock grants.
The Company does not currently grant such other stock-based awards.

ELIGIBILITY

All of the employees, officers, directors, consultants and advisors of the
Company and certain of its subsidiaries (approximately 700 persons as of March
24, 1997), are eligible to participate in the 1997 Plan. Incentive stock
options, however, may only be granted to persons eligible to receive incentive
stock options under the Code. The 1997 Plan provides that the maximum number of
shares of Common Stock with respect to which Awards may be granted to any
employee may not exceed 200,000 during any calendar year. To date, no Awards
have been granted under the 1997 Plan. The grant of Awards under the 1997 Plan
is discretionary, and the Company cannot now determine the number or type of
Awards to be granted in the future to any particular person or group, including
the named executive officers.

ADMINISTRATION

The 1997 Plan is administered by the Board of Directors of the Company and
the Compensation Committee of the Board of Directors. The Board has the
authority to adopt, amend and repeal the 1997 Plan and the administrative rules,
guidelines and practices relating to the 1997 Plan, to interpret the provisions
of the 1997 Plan and to accelerate the vesting of Awards. Pursuant to the terms
of the 1997 Plan, the Board has appointed the Compensation Committee to
administer certain aspects of the 1997 Plan, including the grant of options and
the issuance of restricted stock to executive officers. To the extent an
amendment to the 1997 Plan is required to grant a particular Award that is
intended to qualify as performance-based compensation under Section 162(m) of
the Code, such Award shall not become vested until the required amendment to the
1997

13
<PAGE> 16

Plan is approved by the Company's stockholders. Upon the occurrence of certain
acquisitions or mergers of the Company, the Board shall provide for the
disposition or continuation of outstanding Awards.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
1997 Plan and with respect to the sale of Common Stock acquired under the 1997
Plan.

Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will generally recognize taxable income with respect to an
incentive stock option only upon the sale of Common Stock acquired through the
exercise of the option ("ISO Stock"). The exercise of an incentive stock option
however, may subject a participant to the alternative minimum tax. Generally,
the tax consequences of selling ISO Stock will vary with the length of time that
the participant has owned the ISO Stock at the time it is sold. If the
participant sells ISO Stock after having owned it for at least two years from
the date the option was granted (the "Grant Date") and one year from the date
the option was exercised (the "Exercise Date"), then the participant will
recognize long-term capital gain in an amount equal to the excess of the sale
price of the ISO Stock over the exercise price. If the participant sells ISO
Stock prior to having owned it for at least two years from the Grant Date and
one year from the Exercise Date (a "Disqualifying Disposition"), then generally
all or a portion of the gain recognized will be ordinary compensation income and
the remaining gain will be a capital gain, long term if the participant has held
the ISO Stock for more than one year prior to the date of the sale. If a
participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of the sale.

Nonstatutory Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
option. Unlike the case of an incentive stock option, however, a participant who
exercises a nonstatutory option generally will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the Common
Stock acquired through the exercise of the option (the "NSO Stock") on the
Exercise Date over the exercise price. With respect to any NSO Stock, a
participant will have a tax basis equal to the exercise price plus any income
recognized upon the exercise of the option. Upon selling NSO Stock, a
participant generally will recognize capital gain or loss in an amount equal to
the excess of the sale price of the NSO Stock over the participant's tax basis
in the NSO Stock. This capital gain or loss will be a long-term capital gain or
loss if the participant has held the NSO Stock for more than one year prior to
the date of the sale.

Restricted Stock. The recipient of a restricted stock award will not
realize any federal income tax consequences at the time any award is made unless
the recipient makes an election under Section 83(b) of the Code. If the
recipient makes a Section 83(b) election within 30 days of the date of grant,
then he or she will recognize ordinary income, for the year in which the award
is received, in an amount equal to the difference between the fair market value
of the Common Stock at the time the award is made and the purchase price for the
Common Stock. If the Section 83(b) election is not made, the recipient will
recognize ordinary income, at the time that the forfeiture provisions and
restriction on transfer lapse, in an amount equal to the difference between the
fair market value of the Common Stock at that time and the original purchase
price for the Common Stock. Upon a sale of the Common Stock acquired pursuant to
a restricted stock award, the recipient will recognize a capital gain or loss on
the difference between his or her basis (the price paid plus any ordinary income
previously recognized) and the sale price. The gain or loss will be a long-term
gain or loss if the Common Stock is held for more than one year. For this
purpose, the holding period shall begin just after

14
<PAGE> 17

the date on which the forfeiture provisions or restrictions lapse if a Section
83(b) election is not made, or just after the award is granted if a Section
83(b) election is made.

Tax Consequences to the Company. The grant of a stock option or restricted
stock award under the 1997 Plan will have no tax consequences to the Company.
Moreover, in general, neither the exercise of an incentive stock option acquired
under the 1997 Plan nor the sale of any Common Stock acquired under the 1997
Plan will have any tax consequences to the Company. The Company generally will
be entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the 1997 Plan.
Any such deduction will be subject to the limitations of Section 162(m) of the
Code. The Company will have a withholding obligation with respect to any
ordinary compensation income recognized by participants under the 1997 Plan who
are employees or otherwise subject to withholding in connection with a
restricted stock award or the exercise of a nonstatutory stock option.

SELECTION OF INDEPENDENT ACCOUNTANTS

The Board of Directors of the Company, subject to ratification by the
stockholders, has selected the firm of Arthur Andersen LLP, independent
accountants, as accountants of the Company for the year ending December 31,
1997. Arthur Andersen LLP has acted as the Company's accountants since 1979.

Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.

If the stockholders do not ratify the selection of Arthur Andersen LLP as
the Company's independent accountants, the selection of such accountants will be
reconsidered by the Board of Directors.

STOCKHOLDER PROPOSALS

The Company will consider appropriate stockholder proposals for inclusion
on the agenda of its 1998 Annual Meeting of Stockholders if such proposals are
submitted on or before December 15, 1997. Such proposals must be in writing and
should be submitted to the attention of the Chief Financial Officer of the
Company, 60 State Street, Boston, Massachusetts 02109.

OTHER MATTERS

The Board of Directors does not know of any other matters that may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise to act, in accordance with their
judgment.

15
<PAGE> 18

All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone and
personal interviews. In addition, the Company reserves the right to engage
outside agencies to assist in the solicitation of proxies. Brokers, custodians
and fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names and the Company will reimburse them for
their out-of-pocket expenses in this regard.

By Order of the Board of Directors,

/s/ Joseph P. Barri
JOSEPH P. BARRI, Secretary

April 15, 1997

THE BOARD OF DIRECTORS HOPES THAT YOU WILL ATTEND THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING AND YOUR COOPERATION WILL
BE APPRECIATED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR STOCK
PERSONALLY EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.

16
<PAGE> 19
Appendix A

THE PIONEER GROUP, INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS

ANNUAL MEETING OF STOCKHOLDERS - MAY 20, 1997

Those signing on the reverse side, revoking any prior proxies, hereby appoint(s)
Robert L. Butler, John F. Cogan, Jr. and William H. Keough, or each or any of
them with full power of substitution, as proxies for those signing on the
reverse side to act and vote at the 1997 Annual Meeting of Stockholders of The
Pioneer Group, Inc. and at any adjournments thereof as indicated upon all
matters referred to on the reverse side and described in the Proxy Statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the Meeting.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES WILL
VOTE "FOR" PROPOSALS 1, 2 AND 3.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.

Please sign exactly as your name appears hereon. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the capacity in which
they sign. If a corporation or partnership, the signature should be that of an
authorized officer who should indicate his or her title.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED: DO YOU HAVE ANY COMMENTS?

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

<PAGE> 20
Appendix A

<TABLE>

<S> <C> <C> <C> <C>
X PLEASE MARK VOTES AS IN
THIS EXAMPLE

- -------------------------
THE PIONEER GROUP, INC.
- ------------------------- 1. Election of Directors. With- For All
For hold Except
ROBERT L. BUTLER JASKARAN S. TEJA
JOHN F. COGAN, JR. DAVID D. TRIPPLE
MAURICE ENGLEMAN JOHN H. VALENTINE ___ ___ ___
ALAN J. STRASSMAN
Record Date Shares:
NOTE: If you do not wish your shares
voted "For" a particular nominee,
mark the "For All Except" box and
strike a line through the nominee(s)
name. Your shares will be voted for
the remaining nominee(s).

For Against Abstain
2. Ratification and approval of 1997
Stock Incentive Plan. ___ ___ ___

3. Ratification of the selection of
independent accountants. ___ ___ ___

A VOTE FOR THE DIRECTOR NOMINEES AND
FOR PROPOSALS 2 AND 3 IS RECOMMENDED
BY THE BOARD OF DIRECTORS.
</TABLE>

Please be sure to sign and date this Proxy. Date:

- ------------------- -------------------
Stockholder sign here Co-owner sign here

DETACH CARD
THE PIONEER GROUP, INC.

Dear Stockholder,

Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.

Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.

Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.

Your vote must be received prior to the Annual Meeting of Stockholders to be
held on Tuesday, May 20, 1997.

Thank you in advance for your prompt consideration of these matters.

Sincerely,

The Pioneer Group, Inc.

<PAGE> 21
Appendix B

THE PIONEER GROUP, INC.

1997 STOCK INCENTIVE PLAN

I. Purpose
-------

The purpose of this 1997 Stock Incentive Plan (the "Plan") of The Pioneer
Group, Inc., a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any present or
future subsidiary corporations of The Pioneer Group, Inc. as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code") (a "Subsidiary").

II. Eligibility
-----------

All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".

III. Administration, Delegation
--------------------------

A. ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable
from time to time, to interpret and correct the provisions of the Plan and any
Award. No member of the Board shall be liable for any action or determination
relating to the Plan. All decisions by the Board shall be made in their sole
discretion and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award.

B. DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to make Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of shares
subject to Awards and the maximum number of shares for any one Participant to be
made by such executive officers.

C. APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). For so long as the
common stock, $.10 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Board shall appoint one such Committee of not less than two members,
each member of which shall be an "outside director" within the meaning of
Section 162(m) of the Code and a "non-employee director" as defined in Rule
16b-3 promulgated under the Exchange Act. All references in the Plan to the
"Board" shall mean a Committee or the Board or the executive officer referred to
in Section 3(b) to the extent of such delegation.

<PAGE> 22

IV. Stock Available for Awards
--------------------------

A. NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards may
be made under the Plan for up to 1,500,000 shares of Common Stock. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as defined hereinafter), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

B. PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c), the
maximum number of shares with respect to which an Award may be granted to any
Participant under the Plan shall be 200,000 per calendar year. The
Per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.

C. ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off, or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 4(c) applies and Section 8(e)(1)
applies for any event, Section 8(e)(1) shall be applicable to such event, and
Section 4(c) shall not be applicable.

V. Stock Options
-------------

A. GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

B. INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

C. EXERCISE PRICE. The Board shall establish the exercise price at the time
each Option is granted and specify it in the applicable option agreement.

D. DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.
<PAGE> 23

E. EXERCISE OF OPTION. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

F. PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

1. in cash or by check, payable to the order of the Company;

2. except as the Board may otherwise provide in an Option, delivery of
an irrevocable and unconditional undertaking by a credit worthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price, or
delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a credit worthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price;

3. to the extent permitted by the Board and explicitly provided in the
Option, (i) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by the Board in good faith
("Fair Market Value"), which Common Stock was owned by the Participant at least
six months prior to such delivery, (ii) by delivery of a promissory note of the
Participant to the Company on terms determined by the Board (provided that, if
determined by the Company to be required by law, the Participant shall pay cash
equal to at least the par value of the shares purchased), or (iii) by payment of
such other lawful consideration as the Board may determine; or

4. any combination of the above permitted forms of payment.

VI. Restricted Stock
----------------

A. GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

B. TERMS AND CONDITIONS. The Board shall determine the terms and conditions
of any such Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any (provided that, if determined by the
Company to be required by law, the Participant shall pay cash equal to at least
the par value of the shares purchased). Any stock certificates issued in respect
of a Restricted Stock Award shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction periods, the Company
(or such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated by a Participant, in a manner determined by the Board, to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

<PAGE> 24

VII. Other Stock-Based Awards
------------------------

The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

VIII. General Provisions Applicable to Awards
---------------------------------------

A. TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to Participant, to the extent relevant in the
context, shall include references to authorized transferees.

B. DOCUMENTATION. Each Award under the Plan shall be evidenced by a written
instrument in such form as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

C. BOARD DISCRETION. Except as otherwise provided by the Plan, each type of
Award may be made alone, in addition to or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board need
not treat Participants uniformly.

D. TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

E. ACQUISITION EVENTS
------------------

1. CONSEQUENCES OF ACQUISITION EVENTS. Upon the occurrence of an
Acquisition Event (as defined below), or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall take any one or
more of the following actions with respect to then outstanding Awards: (i)
provide that outstanding Options shall be assumed, or equivalent Options shall
be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such Options substituted for Incentive Stock Options
shall satisfy, in the determination of the Board, the requirements of Section
424(a) of the Code; (ii) upon written notice to the Participants, provide that
all then unexercised Options will become exercisable in full as of a specified
date (the "Acceleration Date") prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the Participants between the Acceleration Date and the
consummation of such Acquisition Event; (iii) in the event of an Acquisition
Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock surrendered
pursuant to such Acquisition Event (the "Acquisition Price"), provide that all
outstanding Options shall terminate upon consummation of such Acquisition Event
and each Participant shall receive, in exchange therefor, a cash payment equal
to the amount (if any) by which (A) the Acquisition Price multiplied by the
number of shares of Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such Options;
(iv) provide that all Restricted Stock Awards then outstanding shall become free
of all restrictions prior to the consummation of the

<PAGE> 25

Acquisition Event; and (v) provide that any other stock-based Awards outstanding
(A) shall become exercisable, realizable or vested in full, or shall be free of
all conditions or restrictions, as applicable to each such Award, prior to the
consummation of the Acquisition Event, or (B), if applicable, shall be assumed,
or equivalent Awards shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof).

Each Option or other Award assumed or substituted pursuant to clause (i) or
(v)(B) above shall include a provision to the effect that such Option or Award
shall become immediately exercisable (or vested) in full if, within the
remaining period during which such Option or Award shall otherwise become
exercisable pursuant to its terms, the Participant is relocated more than 100
miles from Boston or is terminated for any reason. The provisions of this
paragraph (x) shall not apply to any employee who is terminated following an
Acquisition Event if such employee was or is a member of the group which has
acquired 25% of the combined voting power pursuant to clause d of the following
paragraph, and (y) shall be in addition to and not in lieu of any other
provisions of this Section VIII(E).

An "Acquisition Event" shall mean: (a) any merger or consolidation with
another corporation unless such merger or consolidation does not change in any
material way the voting control of the Company; (b) any sale of all or
substantially all of the assets of the Company; (c) the complete liquidation of
the Company; or (d) the acquisition of "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities (other than through a merger or consolidation or an acquisition of
securities directly from the Company) by any "person", as such term is used in
Sections 13(d) and 14(d) of the Exchange Act other than the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of stock of
the Company; PROVIDED, HOWEVER, that this clause d of this subsection (E)(1)
shall not apply to the acquisition of securities by John F. Cogan, Jr., who is
currently the beneficial owner of approximately 15% of the securities of the
Company.

2. ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may grant
Awards under the Plan in substitution for stock and stock-based awards held by
employees of another corporation who become employees of the Company as a result
of a merger or consolidation of the employing corporation with the Company or
the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.

F. WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

G. AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

<PAGE> 26

H. CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

I. ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions, or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

IX. MISCELLANEOUS
-------------

A. NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

B. NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder thereof.

C. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a Participant
designated as subject to Section 162(m) by the Board shall become exercisable,
vested or realizable, as applicable to such Award, unless and until the Plan has
been approved by the Company's stockholders. No Awards shall be granted under
the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved
by the Company's stockholders, but Awards previously granted may extend beyond
that date.

D. AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no Award granted to a Participant
designated as subject to Section 162(m) by the Board after the date of such
amendment shall become exercisable, realizable or vested, as applicable to such
Award (to the extent that such amendment to the Plan was required to grant such
Award to a particular Participant), unless and until such amendment shall have
been approved by the Company's stockholders.

E. STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder approval
shall mean approval by a vote of the stockholders in accordance with the
requirements of Section 162(m) of the Code.

<PAGE> 27

F. GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

Adopted by the Board of Directors on February 3, 1997.

Approved by the Stockholders on May __, 1997.