<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PAINE WEBBER GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PAINE WEBBER GROUP INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- ---------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
Paine Webber Group Inc.
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
April [ ], 1994
To the Stockholders of Paine Webber Group Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Paine
Webber Group Inc. ("PW") will be held on Thursday, May 5, 1994, at 10:00 a.m.,
in the PaineWebber Building, 1000 Harbor Boulevard, Weehawken, New Jersey 07087,
to consider and vote upon the following matters:
1. The election of 4 directors to the Board of Directors to hold office
for a term of 3 years.
2. The approval to amend the Restated Certificate of Incorporation of PW
to increase the number of shares of common stock, par value $1.00 per
share (the "PW Common Stock"), of PW authorized for issuance from
100,000,000 shares to 200,000,000 shares.
3. The approval of the 1994 Non-Employee Directors' Stock Plan.
4. The approval of the 1994 Executive Incentive Compensation Plan.
5. The approval of the 1994 Executive Stock Award Plan.
6. The ratification of the selection by the Board of Directors of Ernst &
Young as PW's independent public accountants for the 1994 fiscal year.
7. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Holders of PW Common Stock of record at the close of business on March 17,
1994 are entitled to notice of and to vote as set forth in the Proxy Statement
at the Annual Meeting and any adjournment thereof.
By order of the Board of Directors,
Theodore A. Levine
Secretary
1285 Avenue of the Americas
New York, New York 10019
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. IF YOU ATTEND THE MEETING, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE> 3
PAINE WEBBER GROUP INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
PROXY STATEMENT
To the holders of Paine Webber Group Inc. Common Stock:
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the stockholders of Paine Webber
Group Inc., a Delaware corporation ("PW" or the "Company"), in connection with
the solicitation of proxies by the Board of Directors of PW (the "Board of
Directors") for use at the Annual Meeting of Stockholders to be held on
Thursday, May 5, 1994, at 10:00 a.m., in the PaineWebber Building, 1000 Harbor
Boulevard, Weehawken, New Jersey 07087 (the "Annual Meeting"), and at any
adjournment or postponement thereof. The Annual Report of PW, including the
financial statements for the fiscal year ended December 31, 1993, is being
furnished to stockholders together with this Proxy Statement, and mailing to
stockholders is expected to begin on or about April [ ], 1994.
Each stockholder is encouraged to vote on all the matters to be acted upon
at the Annual Meeting by marking the enclosed Proxy Card as desired. If properly
executed and received in time for the meeting, the Proxy Card will be voted in
accordance with the choices specified. Where a signed Proxy Card is returned,
but a choice is not made, the shares will be voted FOR (i) the election as
directors of PW of the persons named under "Election of Directors" in this Proxy
Statement, (ii) the approval to amend the Company's Restated Certificate of
Incorporation to increase the number of shares of PW Common Stock authorized for
issuance from 100,000,000 shares to 200,000,000 shares, (iii) the approval of
the 1994 Non-Employee Directors' Stock Plan, (iv) the approval of the 1994
Executive Incentive Compensation Plan, (v) the approval of the 1994 Executive
Stock Award Plan, and (vi) the ratification of the selection of Ernst & Young as
PW's independent public accountants for the 1994 fiscal year. If any other
business is brought before the meeting (which management does not expect to
occur), the shares will be voted in accordance with the judgment of the proxies
voting them.
The execution of a Proxy Card will not affect a stockholder's right to
attend the Annual Meeting and vote in person. A stockholder who has given a
proxy may revoke it at any time before it is exercised at the Annual Meeting by
filing with the Secretary of PW an instrument revoking it or a duly executed
Proxy Card bearing a later date.
All expenses involved in the solicitation of proxies by the Board of
Directors will be paid by PW and will include reimbursement of brokerage firms
and others for expenses in forwarding proxy solicitation material to the
beneficial owners of shares of PW Common Stock. The solicitation of proxies will
occur primarily by mail but may include telephone or oral communications by
regular employees of PW and PW's major operating subsidiaries, PaineWebber
Incorporated ("PWI") and Mitchell Hutchins Asset Management Inc., acting without
special compensation.
VOTE AND PRINCIPAL STOCKHOLDERS
UNLESS OTHERWISE NOTED, ALL PW COMMON STOCK AND PER SHARE DATA DISCLOSED IN
THIS PROXY STATEMENT HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT THE
THREE-FOR-TWO PW COMMON STOCK SPLIT IN THE FORM OF A 50% STOCK DIVIDEND
EFFECTIVE MARCH 10, 1994.
As of the close of business on March 17, 1994 (the "Record Date"), there
were outstanding [ ] shares of PW Common Stock, par value $1.00 per
share (excluding treasury shares). The PW Common Stock is entitled to one vote
for each share held by the stockholder of record on the Record Date.
The presence, in person or by proxy, of a majority of the outstanding
shares of PW Common Stock is required for a quorum for the transaction of
business at the Annual Meeting. Abstentions and broker non-votes (as hereinafter
defined) are counted for purposes of determining the presence or absence of a
quorum. The affirmative vote of the holders of a majority of the shares of PW
Common Stock present in person or by proxy at the Annual Meeting is necessary
for the election as directors of PW of the persons named under "Election of
Directors" in this Proxy Statement, the approval of the various compensation
plans discussed herein, and the ratification of the selection of Ernst & Young
as PW's independent public accountants for the 1994 fiscal year. Abstentions
from voting on the election of directors, the approval of the various
compensation plans and the ratification of the selection of the
<PAGE> 4
independent public accountants will have the same effect as a vote against such
matter. Broker non-votes on the foregoing matters will have no impact on such
matters since they are not considered "shares present" for voting purposes.
The affirmative vote of the holders of a majority of the outstanding stock
entitled to vote thereon is necessary for the approval to amend the Company's
Restated Certificate of Incorporation to increase the number of shares of PW
Common Stock authorized for issuance. Accordingly, abstentions and broker
non-votes will have the same effect as a vote against the amendment.
As of the Record Date, PWI held of record for approximately [ ] of its
customers, including officers and directors of the Company, [ ] shares
of PW Common Stock (constituting approximately [ ]% of the then outstanding
shares of PW Common Stock).
The following table sets forth certain information regarding each person or
group known to the Company to own beneficially more than 5% of any class of PW's
voting stock as of December 31, 1993.*
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------------ ------------------------------ ----------------- ----------
<S> <C> <C> <C>
Common Stock FMR Corp. 6,334,620(1) 8.22%
82 Devonshire Street
Boston, Massachusetts 02107
The Yasuda Mutual Life 7,500,000(2)(3) 9.74%
Insurance Company,
9-1, Nishishinjuku
1-chome, Shinjuku-ku,
Tokyo 160 Japan
</TABLE>
- ------------------
(1) According to a Schedule 13G filed as of December 31, 1993 with the
Securities and Exchange Commission, the amount and nature of beneficial
ownership was supplied by FMR Corp. and Edward C. Johnson, 3d (who owns 34%
of the outstanding voting common stock of FMR Corp.). The Schedule 13G
indicates that 6,043,320 shares of PW Common Stock are held by mutual funds
for which a wholly owned subsidiary of FMR Corp., Fidelity Research and
Management Company ("Fidelity"), serves as the investment adviser. Mr.
Johnson and FMR Corp., through their control of Fidelity and the mutual
funds, each has sole power to dispose of these 6,043,320 shares, but neither
has the power to vote or direct the vote of these shares. In addition,
Fidelity Management Trust Company ("FMT"), a wholly owned subsidiary of FMR
Corp., is the beneficial owner of 280,800 shares of PW Common Stock as a
result of serving as an investment manager for certain accounts. FMR Corp.,
through its control of FMT, has sole dispositive power over 280,800 shares
and sole power to vote or direct the voting of 138,900 shares. In addition,
a partnership controlled by Mr. Johnson and his family owns 48.90% of the
shares of another investment adviser that has sole dispositive power over
10,500 shares of PW Common Stock.
(2) On April 1, 1993, The Yasuda Mutual Life Insurance Company ("Yasuda")
converted 5,000,000 shares of the Company's Cumulative Participating
Convertible Voting Preferred Stock, Series A (the "Series A Preferred
Stock") into 7,500,000 shares of PW Common Stock. On August 5, 1993, PW
repurchased Yasuda's remaining 2,758,632 shares of Series A Preferred Stock
for $75,862,380. Pursuant to the Amended Investment Agreement dated as of
November 3, 1992, between Yasuda and PW (the "Investment Agreement"), Yasuda
has agreed to vote its shares with respect to certain matters either in
accordance with the recommendations of PW's Board of Directors or in the
same proportion as PW's unaffiliated holders of voting securities. In
connection with this year's Annual Meeting, this voting agreement will apply
to the election of directors, the approval to amend PW's Restated
Certificate of Incorporation and the ratification of the selection of Ernst
& Young as PW's independent public accountants.
(3) The Company provides Yasuda with brokerage, investment banking and other
services. These transactions are in the ordinary course of business and on
substantially the same terms as those prevailing at the time for comparable
transactions with other persons.
- ------------------
* The table above does not include 7,505,261 shares of PW Common Stock (9.74%
of class outstanding) held, as of December 31, 1993, by a trustee under the
Company's Savings Investment Plan for the benefit of the Company's
individual employees.
2
<PAGE> 5
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with staggered terms
so that the term of one class expires at each annual meeting of stockholders.
The class whose term will expire at the Annual Meeting consists of four
directors. Management proposes the election of the nominees named hereafter to
hold office for a term of 3 years, ending at the 1997 Annual Meeting. Each of
the nominees is currently a director of PW. The eight remaining directors will
continue to serve in accordance with their previous election. In the event any
nominee is unable or declines to serve, which the Board does not anticipate, it
is intended that the proxies will be voted for the balance of those named and
for such substitute nominee(s) as the Nominating Committee of the Board may
designate, unless the Board has taken prior action to reduce its membership.
INFORMATION CONCERNING THE NOMINEES AND DIRECTORS
THE FOLLOWING INFORMATION IS PROVIDED CONCERNING DIRECTORS
OF PW, INCLUDING THE NOMINEES FOR ELECTION AS DIRECTORS.
------------------
NOMINEES FOR TERM EXPIRING IN 1997
E. GARRETT BEWKES, JR., 67, has been a consultant to PW since February 15,
1989. Prior thereto he was the Chairman of the Board, President and Chief
Executive Officer of American Bakeries Company from 1982 to December 23, 1988.
Mr. Bewkes is also Chairman of the Board and a director or trustee of
PaineWebber Cashfund, Inc., PaineWebber America Fund, PaineWebber Atlas Fund,
PaineWebber Olympus Fund, PaineWebber Managed Investments Trust, PaineWebber
Managed Municipal Trust, PaineWebber Investment Series, PaineWebber Municipal
Series, PaineWebber Master Series, Inc., PaineWebber Series Trust, PaineWebber
Regional Financial Growth Fund Inc., Global Income Plus Fund, Inc., PaineWebber
Mutual Fund Trust, PaineWebber RMA Money Fund, Inc., PaineWebber RMA Tax-Free
Fund, Inc., PaineWebber Managed Asset Trust, All-American Term Trust Inc.,
PaineWebber Premier Insured Municipal Income Fund Inc., PaineWebber Premier
Intermediate Tax-Free Income Fund Inc., PaineWebber Premier High Income Trust
Inc., PaineWebber Securities Trust, Global Small Cap Fund Inc., Global High
Income Dollar Fund Inc., 2002 Target Term Trust Inc., Triple A and Government
Series-1995, Inc., Triple A and Government Series-1997, Inc., PaineWebber
Premier Tax-Free Income Fund Inc. and Strategic Global Income Fund, Inc. Mr.
Bewkes is currently a director of Interstate Bakeries Corporation. Mr. Bewkes
became a director of PW in 1987.
YOZO FUJISAWA, 64, is a Deputy President and the Chief Investment Officer
of Yasuda, whose principal business is underwriting and marketing life
insurance. Mr. Fujisawa has been a Deputy President of Yasuda since April 1991
and Chief Investment Officer since April 1989. Mr. Fujisawa was a Senior
Managing Director of Yasuda from April 1988 to March 1991 and a Managing
Director from June 1983 to April 1988. Mr. Fujisawa became a director of PW in
1989.
EDWARD RANDALL, III, 67, is a private investor. He was associated with
Duncan, Cook & Co. (financial services) from 1985 to July 14, 1990. He was the
Chairman of the Board of Rotan Mosle Financial Corp. from 1977 to August 1985
and was Chief Executive Officer from 1977 to January 1984. Mr. Randall is also a
director of American Oil and Gas Company and Enron Oil & Gas Company. Mr.
Randall became a director of PW in 1983.
KYOSAKU SORIMACHI, 61, is a Managing Director and General Manager,
International Investment Department of Yasuda. He has been a Managing Director
of Yasuda since April 1987, General Manager, International Investment
Department, since June 1983 and a Senior Managing Director of Yasuda since
April, 1993. Mr. Sorimachi became a director of PW in 1987.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1995
JOHN A. BULT, 57, has been the Chairman of the Board of PaineWebber
International Inc. since May 1990. He was President of PaineWebber International
Inc. (previously PaineWebber Mitchell Hutchins International Inc.) from 1980 to
May 1990. Mr. Bult is also a director of
3
<PAGE> 6
The Germany Fund, Inc., The New Germany Fund, Inc., The Future Germany Fund,
Inc., The Brazilian Equity Fund, Inc., The Greater China Fund, Inc. and The
France Growth Fund, Inc. Mr. Bult became a director of PW in 1986.
PAUL B. GUENTHER, 53, is the President of PWI. He became President of PWI
in December 1988 and was Executive Vice President and Chief Administrative
Officer of PWI from May 1984 to December 1988. Mr. Guenther became a director of
PW in 1986.
ROBERT M. LOEFFLER, 70, is a retired attorney and was Of Counsel to the law
firm of Wyman, Bautzer, Kuchel & Silbert from August 1, 1987 to March 15, 1991.
He was Chairman of the Board, President and Chief Executive Officer of Northview
Corporation from January, 1987 to December, 1987 and a partner in the law firm
of Jones, Day, Reavis & Pogue until December, 1986. Mr. Loeffler has been a
director of PW since 1978.
HENRY ROSOVSKY, 66, is the Lewis P. and Linda L. Geyser University
Professor at Harvard University. From 1973 to June 1984 he served as Dean of the
Faculty of Arts and Sciences at Harvard University. Mr. Rosovsky is also a
director of Corning, Inc. and The Japan Fund, Inc. Mr. Rosovsky became a
director of PW in 1984.
TERM EXPIRING IN 1996
DONALD B. MARRON, 59, is the Chairman of the Board of Directors and Chief
Executive Officer of PW. He has been Chairman of the Board of PW since July 1981
and Chief Executive Officer since June 1980. Mr. Marron was President of PW from
July 1977 to March 1, 1988. Mr. Marron is also Chairman of the Board and Chief
Executive Officer of PWI. Mr. Marron became a director of PW in 1977.
T. STANTON ARMOUR, 70, has been a private investor since October 1983 and
was a financial consultant to PW from September 1980 to September 1983. Mr.
Armour became a director of PW in 1977.
JOHN E. KILGORE, JR., 73, is a private investor and was Chairman of the
Board of Directors and Chief Executive Officer of Cambridge Royalty Company (oil
and gas) until September 1986. Mr. Kilgore is also a director of Global Natural
Resources, Inc. Mr. Kilgore became a director of PW in 1975.
JOSEPH J. GRANO, JR., 46, is the President of Retail Sales and Marketing
for PWI (a position he has held since February 29, 1988). Mr. Grano is also a
director or trustee of PaineWebber Atlas Fund, PaineWebber America Fund,
PaineWebber Olympus Fund, PaineWebber Managed Investments Trust, PaineWebber
Master Series, Inc., PaineWebber Managed Municipal Trust, PaineWebber Investment
Series, PaineWebber Mutual Fund Trust, PaineWebber Municipal Series, PaineWebber
RMA Money Fund, Inc., PaineWebber RMA Tax-Free Fund, Inc., PaineWebber Cashfund,
Inc., PaineWebber Series Trust, PaineWebber Regional Financial Growth Fund Inc.,
PaineWebber Managed Assets Trust, Global Income Plus Fund, Inc., and Strategic
Global Income Fund, Inc. Mr. Grano became a director of PW in 1993.
In addition to the foregoing, Norikazu Okamoto, the Chairman of Yasuda,
serves as a non-voting senior advisor to the Board of Directors of PW.
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee meets to act on matters when the Board is not in
session. Members of this Committee are Messrs. Marron (chairman), Armour,
Bewkes, Kilgore and Loeffler, and it met four times during fiscal 1993.
The Audit Committee reviews internal and external audit procedures of the
Company. Members of this Committee are Messrs. Loeffler (chairman), Armour,
Kilgore, Rosovsky and Sorimachi, and it met five times during fiscal 1993.
The Nominating Committee recommends (i) nominees for the Board of Directors
as well as committees of the Board, and (ii) senior officers of the Company.
Members of this Committee are Messrs. Kilgore (chairman), Armour, Bewkes and
Rosovsky, and it met six times in fiscal 1993. The Nominating Committee also
considers nominees for the Board of Directors recommended by
4
<PAGE> 7
stockholders. Those wishing to submit recommendations should write to the
Secretary of PW at 1285 Avenue of the Americas, New York, New York 10019. PW's
By-Laws require that written notice of the intent to make a nomination at a
meeting of stockholders must be received by the Secretary of PW not later than
(i) 90 days in advance of an annual meeting of stockholders, or (ii) the close
of business on the seventh day following the date on which notice of a special
meeting of stockholders for the election of directors is first given to
stockholders. The notice must contain: (i) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (ii) a representation that the stockholder is a holder of record
of PW's stock entitled to vote at the meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (iv) such other information regarding each nominee proposed by
such stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each proposed nominee been nominated by the Board of Directors; and (v) the
consent of each proposed nominee to serve as a director of PW if so elected.
The Compensation Committee is responsible for establishing and
administering the compen-sation program of, among others, the key policy making
executive officers of the Company, some of whom are also directors of PW, and
approves and periodically evaluates generally applicable employee benefit plans
of PW. Members of this committee are Messrs. Bewkes (who became chairman on
November 3, 1993) and Loeffler, and it met seven times in fiscal 1993. Mr.
Armour served as a member of this committee and as its chairman until November
3, 1993.
The Board of Directors of PW met five times during fiscal 1993. During his
tenure on the Board in fiscal 1993, each incumbent director attended more than
75% of the aggregate of the total number of meetings of the Board of Directors
and of meetings held by all committees of the Board of Directors on which he
served except Messrs. Fujisawa, Rosovsky and Sorimachi.
CERTAIN ARRANGEMENTS WITH DIRECTORS
Pursuant to the Investment Agreement between Yasuda and PW, Messrs.
Fujisawa and Sorimachi were designated by Yasuda and elected to the PW Board of
Directors. PW has agreed that so long as Yasuda owns directly or indirectly a
specified minimum investment in PW, it will use its best efforts to cause at
least one-sixth of its Board of Directors to consist of persons designated by
Yasuda.
COMPENSATION OF DIRECTORS
During 1993, directors who were not employees of the Company were paid
$32,500 annually. In addition, directors who were not employees of the Company
were paid $1,200 for each meeting of the Board of Directors and committees
thereof which they attended, plus reasonable expenses relating to attendance at
such meetings. The chairman of each committee received compensation at a rate of
$5,000 per year. Effective January 1, 1994, the annual rate of compensation to
directors who are not employees of the Company was increased to $40,000, and the
rate of compensation to the chairman of each committee was increased to $15,000
per year. There was no change in the amount paid for meetings attended.
The Company has a deferred compensation plan for non-employee directors.
Under the plan, non-employee directors may elect prior to January 1 of any year
to defer any or all of their compensation. Directors' deferred compensation
accounts will be credited as of December 31 each year with interest based on the
average quarterly balance during the year at a rate equal to the average of the
applicable U.S. Treasury Bill rate during each such quarter. Deferred amounts
are payable to a director in a lump sum on the February 1st following the plan
year in which he ceases to be a director.
The Company also has a retirement plan for non-employee directors.
Directors who have completed five or more years of credited service or whose
termination follows a change of control are eligible for retirement benefits
under this plan. Following their termination, eligible directors will receive an
annual retirement benefit equal to the annual retainer in effect on the date the
directors' service terminates for a period of time based on the length of their
credited service. In the event a director dies while serving as a director, a
death benefit will be paid to the director's beneficiaries in the same amount as
would have been payable in the event of retirement. In addition, non-employee
directors may participate in the Company's medical plans that are available to
all employees.
5
<PAGE> 8
In addition to the foregoing amounts, the Board of Directors has adopted,
and the stockholders of the Company are being requested to approve at the Annual
Meeting, the 1994 Non-Employee Directors' Stock Plan pursuant to which directors
of the Company who are not executive officers will be eligible to receive
periodic grants of stock options and PW Common Stock, and to defer some or all
of their directors' fees in an unfunded deferred compensation account
denominated and payable in shares of PW Common Stock. For a general discussion
of the terms of this plan, see "III. Approval of the 1994 Non-Employee
Directors' Stock Plan" below.
E. Garrett Bewkes, Jr. is an independent consultant to PWI and was paid
$161,506 for his services during 1993. Mr. Bewkes provides advice to the Company
in connection with investment banking, mergers and acquisitions, corporate
strategic planning, PWI's equity investments in operating businesses, and
origination of investment opportunities.
SECURITY OWNERSHIP
The following table sets forth the number of shares of PW Common Stock held
beneficially by each nominee and director, each executive officer named in the
Summary Compensation Table below and all nominees, directors and executive
officers of PW as a group. Shares owned are stated as of February 12, 1994, as
of which date there were outstanding 77,620,414 shares of PW Common Stock. All
shares are held directly by the persons shown with sole voting and dispositive
power, unless indicated otherwise.
<TABLE>
<CAPTION>
SHARES OF PW COMMON STOCK
NAME OWNED BENEFICIALLY (1)(2)
---- --------------------------
<S> <C>
T. Stanton Armour (2)..................................... 126,075
E. Garrett Bewkes, Jr..................................... 13,048
John A. Bult (4).......................................... 66,491
Regina A. Dolan (4)(5).................................... 62,462
Lee Fensterstock (2)(4)................................... 269,860
Yozo Fujisawa............................................. -0-
Joseph J. Grano, Jr. (3).................................. 381,248
Paul B. Guenther (2)(3)(4)(5)............................. 1,030,650
John E. Kilgore, Jr....................................... -0-
Robert M. Loeffler........................................ 7,497
Donald B. Marron (2)(3)(4)(5)............................. 1,974,785
Edward Randall, III (2)................................... 309,909
Henry Rosovsky............................................ 225
Kyosaku Sorimachi......................................... -0-
All present nominees, directors continuing in office and
executive officers as a group, including those named
above (16 persons)...................................... 4,309,379
</TABLE>
- ---------------
(1) No director, nominee or executive officer directly owns 1% or more of PW
Common Stock, except Mr. Marron and Mr. Guenther who own 2.5% and 1.3%,
respectively. All directors, nominees and executive officers as a group (16
persons) beneficially own 5.6%.
(2) Shares shown for the nominees, directors and named executive officers
include an aggregate of 117,639 shares of PW Common Stock as to which
direct beneficial ownership is disclaimed. Such shares are beneficially
owned in the amounts indicated by the spouses or children of Mr. Marron
(1,494), Mr. Armour (1,575), Mr. Guenther (2,025), Mr. Randall (112,500)
and Mr. Fensterstock (45).
(3) Shares shown for the nominees, directors and named executive officers
include an aggregate of 1,011,135 shares of PW Common Stock covered by
options presently exercisable or becoming exercisable within sixty days,
held by Mr. Marron (674,700), Mr. Guenther (304,650), and Mr. Grano
(31,785).
(4) Shares shown for the nominees, directors and named executive officers and
the aggregate for all present directors, nominees and executive officers as
a group include shares as to which they are vested held by a trust under
the Company's Savings Investment Plan, including the following
6
<PAGE> 9
nominees, directors and named executive officers: Mr. Marron (24,063), Mr.
Guenther (10,846), Mr. Bult (6,211), Mr. Fensterstock (46), and Ms. Dolan
(510).
(5) Shares shown for the nominees, directors and named executive officers and
the aggregate for all present directors, nominees and named executive
officers as a group include an aggregate of 627,718 shares of PW Common
Stock into which PW's 8% Convertible Debentures Due 1998 and 2000 and 6.5%
Convertible Debentures Due 2002 are presently convertible, including the
following shares for Mr. Marron (261,413), Mr. Guenther (355,006), and Ms.
Dolan (11,299).
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires PW's directors, certain of its officers and persons
who own more than ten percent of a registered class of PW's equity securities to
file reports of ownership and of changes in ownership with the Securities and
Exchange Commission. Based solely upon its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, PW believes that for the fiscal year
ended December 31, 1993, all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with,
except that Ms. Dolan did not file a form in 1992 disclosing her holdings of
6.5% Convertible Debentures Due 2002 or include this position in a Form 5 filing
made for 1993. This position was subsequently reported.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for establishing and
administering the compensation policy and program applicable to the executive
officers of PW. The Compensation Committee reviews the compensation of executive
officers on an ongoing basis and develops plans which are designed to support
PW's business strategies, reflect marketplace practices in a dynamic and
intensely competitive industry, and provide cost and tax-effective forms of
remuneration. The foundation of PW's executive compensation program is the
Compensation Committee's pay for performance policy which, among other things,
was designed:
- to attract and retain qualified and talented executives available in each
area of PW's business to lead the organization in the creation of
stockholder value,
- to motivate and reward annual and long term results achieved by these key
employees for PW stockholders based on corporate, business unit and
individual performance,
- to align management's interests with stockholders by increasing key
employee ownership of PW stock, and
- to pay competitively as measured against other companies in the industry.
In implementing its policy, the Compensation Committee evaluates
performance and strategic progress relative to the prior year and over a period
of years, rather than considering only a single year when external economic and
business conditions may produce results unrelated to management performance. As
part of this evaluation, the Compensation Committee also considers competitive
performance and pay levels based on a comparative group of financial services
companies selected and surveyed by a third-party consulting firm. This
comparative group as a whole represents the marketplace in which PW competes for
executive talent and is comprised of 13 companies. Six of the companies in the
comparative group are publicly-owned and make up the Peer Group Index used for
the Performance Graph set forth below. Seven other firms in the comparative
group were not publicly-owned or traded in 1993. Four of the 10 firms in the S&P
Financial Miscellaneous Index are included in the comparative group. The
Compensation Committee's philosophy is to position PW's compensation program
between the median and the 75th percentile of the comparative group based upon
performance.
As part of its evaluation process, the Compensation Committee considers
various quantitative as well as qualitative factors without assigning specific
quantifiable or relative weights. These factors include the level, quality,
consistency and growth of the earnings and revenues of the Company as well as of
the business units for which executive officers are responsible, return on
common equity, expense control, balance sheet strength and liquidity, risk
profile and the strategic progress of the Company's
7
<PAGE> 10
four core businesses. In addition, the individual contributions of each
executive officer to the success of the Company are evaluated by the
Compensation Committee.
Based on the above evaluation, executive officer compensation, including
that of Mr. Marron, is determined and administered by the Compensation Committee
on the basis of total compensation, rather than based on separate free-standing
components. Therefore, the total compensation program established by the
Compensation Committee is comprehensive and integrated to include salary, annual
cash and equity incentive awards, and long term equity incentives.
Salary. Salaries are reviewed annually by the Compensation Committee for
appropriateness and adjusted periodically in its judgment based primarily on
each individual officer's performance and length of service with the Company.
The salaries of Messrs. Marron and Guenther have not been increased since 1989
and 1990, respectively.
Annual Incentive Awards. As discussed above, in determining appropriate
pay levels for each executive officer, the Compensation Committee uses a total
compensation approach. At the end of each year, annual awards are determined
with reference to the factors outlined above, taking into consideration the
value of all components of the executive's compensation package. In 1993,
approximately three-fourths of the annual performance-based incentive awards
were paid in cash and one-fourth in the form of restricted stock (units) which
vest only upon completion of three years of future service. The range of annual
performance-based cash incentive awards which were awarded in 1993 varied from
$537,000 to $6,300,000.
In order to continue the grant of these highly effective performance-based
annual cash and stock incentive awards on a tax-efficient basis, the
Compensation Committee adopted and the Board of Directors approved the 1994
Executive Incentive Compensation Plan to comply with the new rules under recent
U.S. tax law changes. The 1994 Executive Incentive Compensation Plan, which is
recommended and described in detail below for stockholder approval at the Annual
Meeting, authorizes continuation of the Company's annual incentive program with
certain modifications intended to qualify compensation of the top five proxy
officers for exclusion from the $1 million limitation on corporate tax
deductions under new Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code").
Long Term Equity Incentives. To increase management's ownership and
investment in PW and the mutuality of interest with PW stockholders, executive
officers are generally considered by the Compensation Committee for stock option
grants on an annual basis. As a major component of executive officer
compensation, the size of such grants reflects the Compensation Committee's
judgment as to the current and potential contribution of the individual
executive officer to the current and future profitability of PW and its business
units.
In 1993, stock options were granted to executive officers by the
Compensation Committee under the 1990 Stock Award and Option Plan. The
Compensation Committee has adopted the 1994 Executive Stock Award Plan, which is
recommended by the Board of Directors for stockholder approval at the Annual
Meeting, to assure full corporate tax deductibility of the compensation paid to
the top five proxy officers while continuing to link a significant portion of
the financial interests of executive officers to the performance of PW's Common
Stock.
Development and submission to stockholders of the 1994 Executive Stock
Award Plan and the 1994 Executive Incentive Compensation Plan reflect the
Compensation Committee's strategy of maximizing corporate tax deductions, where
appropriate. With regard to future executive compensation arrangements, the
Compensation Committee's strategy is to maintain its flexibility to take actions
which it deems to be in the best interests of the Company and its stockholders
but which may not always qualify for tax deductibility under Section 162(m) or
other sections of the Internal Revenue Code.
Chief Executive Officer Compensation. Both the quantitative and
qualitative criteria referenced above are applied in assessing the performance
and determining the compensation of the Chairman and Chief Executive Officer of
the Company who participates in the Company's executive compensation program on
the same basis as all other executive officers.
8
<PAGE> 11
The Compensation Committee, in setting Mr. Marron's compensation, has taken
into account the outstanding performance of PW under his leadership. Six years
ago, PW developed a long term strategy, the stated objectives of which were:
- to improve the quality and diversity of its revenues,
- to improve the consistency and level of its earnings,
- to ensure a strong and liquid balance sheet, and
- to focus on its four core businesses.
The continued success of PW is reflected in its record pre-tax earnings of
$407,576,000 in 1993, representing an increase of 20% over 1992's pre-tax
earnings, its record net income of $246,183,000 in 1993, representing an
increase of 15% over 1992's net income, its record earnings per share (fully
diluted) of $2.95 in 1993, representing an increase of 24% over 1992's earnings
per share and its pre-tax return on total equity of 35.4% in 1993 versus 31.3%
in 1992. This reflects an increase in net revenues to a record $2,874,005,000,
an increase of 16% over 1992. As a result of these developments, PW continues to
have a very strong and liquid balance sheet.
For the five-year period ending December 31, 1993, total return on PW's
Common Stock grew at the compound rate of 23.3% per annum, reflecting cumulative
growth of 185% and outperforming the S&P 500, the S&P Financial Miscellaneous
Index and the Peer Group Index, as displayed in the Performance Graph set forth
below.
Mr. Marron's base salary of $600,000 has been unchanged since 1989. His
annual incentive award of cash and restricted stock for 1993 represents an
increase of 24% over 1992. As discussed above, the Compensation Committee based
its decision on PW's exceptional financial performance for 1993 and its
strategic progress since 1987. The award of restricted stock, as well as of
stock options on 187,500 shares, reflects the Compensation Committee's policy of
tying a substantial portion of Mr. Marron's compensation to the future
performance of PW Common Stock.
COMPENSATION COMMITTEE
E. Garrett Bewkes, Jr., Chairman
Robert M. Loeffler
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following information sets forth the compensation earned by the chief
executive officer of the Company and each of the four most highly compensated
executive officers of the Company who were serving as executive officers at the
end of the fiscal year ended December 31, 1993, for services rendered in all
capacities to the Company during the fiscal years indicated below. Stockholders
are urged to read the tables in conjunction with the accompanying footnote and
explanatory material.
Table I -- Summary Compensation Table provides a detailed overview of
annual and long term compensation for the fiscal years ended December 31, 1993,
1992 and 1991 with respect to the named executives for the years indicated.
Table II -- Option Grants in Last Fiscal Year -- Individual Grants provides
information for the period January 1, 1993 to December 31, 1993 on grants of
options by the Company.
Table III -- Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values Table provides information for the period January 1, 1993
to December 31, 1993 on exercises of stock options pursuant to the Company's
Stock Plans (as defined below under "V. Approval of the 1994 Executive Stock
Award Plan") and the 1989 Partnership (as defined below) discussed below and the
number and value of previously granted and unexercised stock options held on
December 31, 1993.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
--------------------------
RESTRICTED SECURITIES ALL OTHER
ANNUAL COMPENSATION STOCK UNDERLYING COMPEN-
NAME AND ------------------------------ AWARD(S) OPTIONS SATION
PRINCIPAL POSITION YEAR SALARY BONUS (1)(2)(3)(4) (# SHARES) (5)
- -------------------------------------------- ----- -------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald B. Marron 1993 $600,000 $6,300,000 $1,194,432 187,500 $ 534,432
Chairman of the Board and Chief Executive 1992 600,000 4,000,000 2,033,000 -0- 1,052,885
Officer, PW and PWI 1991 600,000 3,000,000 1,547,110 -0-
Paul B. Guenther 1993 400,000 3,780,000 716,649 112,000 307,824
President, PWI 1992 400,000 2,400,000 1,220,000 -0- 526,443
1991 400,000 1,800,000 928,252 -0-
Joseph J. Grano, Jr. 1993 375,000 4,625,000 -0- 75,000 321,567(6)
President,
Retail Sales
and Marketing, PWI
Lee Fensterstock 1993 200,000 1,682,000 2,090,283 60,000 37,177
Executive Vice President, PWI
Institutional Sales and Trading
Regina A. Dolan 1993 187,212(7) 537,000 409,518 15,000 13,248
Vice President, 1992 40,385 100,000 -0- -0- -0-
Chief Financial
Officer, PW, and
Senior Vice President,
Chief Financial
Officer, PWI
</TABLE>
- ------------
(1) Amounts shown include both restricted stock and restricted unit awards,
which are valued on the basis of the closing price of PW Common Stock on the
New York Stock Exchange on the applicable date of grant.
(2) The number and value of restricted stock and restricted units held by
executive officers named in the table as of December 31, 1993 based on the
closing price of PW's Common Stock ($18.00 ) on the New York Stock Exchange
on December 31, 1993, are as follows: Mr. Marron (210,190 shares and 151,416
units -- $6,508,917); Mr. Guenther (118,614 shares and 90,754 units --
$3,768,624); Mr. Grano (300,000 shares -- $5,400,000); Mr. Fensterstock
(269,767 shares -- $4,855,815); and Ms. Dolan (20,554 shares -- $369,981).
The number of shares of restricted stock reported in the table above for the
executive officers which will vest in under three years from the date of
grant are as follows: Mr. Marron (26,895, 36,958 and 22,222 shares vesting
in
10
<PAGE> 13
1994, 1995 and 1996, respectively); Mr. Guenther (16,137, 22,175 and 13,333
shares vesting in 1994, 1995 and 1996, respectively); Mr. Fensterstock (29,276,
30,665 and 20,139 shares vesting in 1994, 1995 and 1996, respectively); and Ms.
Dolan (7,500, 9,352 and 1,851 shares vesting in 1994, 1995 and 1996,
respectively).
(3) Dividends are paid on restricted stock and dividend equivalents are paid on
restricted units.
(4) To permit the Company to obtain the maximum deduction for awards of
restricted stock in 1993, Messrs. Marron and Guenther elected to declare as
income and immediately pay tax on the market value of their 1993 restricted
stock grants pursuant to Section 83(b) of the Internal Revenue Code, even
though they were not vested in the stock at the time and will be subject to
market risk and the risk of forfeiture until the restricted period lapses.
(5) Amounts shown result from the operation of the terms of the Key Executive
Equity Program, in which approximately 118 key executives participate. For a
description of the program, see "Certain Transactions and
Arrangements -- Key Executive Equity Program" below. These amounts include:
(i) interest paid by PW on the participants' bank loans in accordance with
the terms of the program -- Mr. Marron ($231,438); Mr. Guenther ($151,027);
and Mr. Fensterstock ($16,344); and (ii) forgiveness of a portion of the PW
loans to the participants for exceeding preset earnings targets for PW
established at the inception of the program -- Mr. Marron ($249,999); Mr.
Guenther ($124,999); and Mr. Fensterstock ($20,833). The program was
instituted in 1988 to give such executives an incentive linked to the price
of PW Common Stock, while requiring such executives to make an investment in
PW. The program includes a provision that, for a period following
termination of an executive's employment, he may not compete with the
Company or solicit its employees to leave the Company or interfere with its
business.
(6) This amount represents imputed interest on an employee loan to Mr. Grano.
(7) Ms. Dolan became employed by PW in October 1992.
The following table sets forth certain information concerning stock options
granted during 1993 by the Company to the Chief Executive Officer and each of
the four most highly compensated executive officers of the Company (other than
the Chief Executive Officer). The data in the column shown below relating to the
hypothetical grant date present value of stock options granted in 1993 are
presented pursuant to Securities and Exchange Commission rules and are
calculated under the modified Black-Scholes model for pricing options. The
Company is not aware of any model or formula which will determine with
reasonable accuracy a present value for stock options based on future unknown
factors. The actual amount, if any, realized upon the exercise of stock options
will depend upon the market price of PW Common Stock relative to the exercise
price per share of PW Common Stock of the stock option at the time the stock
option is exercised. There is no assurance that the hypothetical grant date
present values of the stock options reflected in this table actually will be
realized.
II. OPTION GRANTS IN LAST FISCAL YEAR --
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE VALUE($)(2)
- ----------------------- --------------------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
D.B. Marron............ 187,500 5% $ 18.00 12/31/03 $ 789,241
P.B. Guenther.......... 112,500 3 18.00 12/31/03 473,544
J.J. Grano, Jr......... 75,000 2 18.00 12/31/03 315,696
L. Fensterstock........ 60,000 1.6 18.00 12/31/03 252,557
R.A. Dolan............. 15,000 .4 18.00 12/31/03 63,139
</TABLE>
- ---------------
(1) Ten year non-qualified stock options granted in 1993 will first become
exercisable three years from the date of grant.
(2) The hypothetical grant date present values are calculated under the modified
Black-Scholes Model, which is a mathematical formula used to value options
traded on stock exchanges. The
11
<PAGE> 14
assumptions used in hypothesizing the above options' grant date present
value, include the stock's expected volatility (30%), risk free rate of
return (5.5%), projected dividend yield (2.2%), projected time to exercise
(7 years) and adjustment for non-transferability or risk of forfeiture
during vesting period (10% per annum).
The following table sets forth information for the named executive officers
of the Company with respect to exercises of stock options during the period
January 1, 1993 to December 31, 1993 and unexercised options held as of December
31, 1993:
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT FY-END OPTIONS AT FY-END
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE (1) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------ ---------- -------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
D.B. Marron.......... 139,218 $2,714,752 674,700 187,500 $7,312,191 $ 0
P.B. Guenther........ 89,099 1,737,441 304,650 112,500 3,296,706 0
J.J. Grano, Jr....... 55,687 1,085,901 31,785 75,000 330,841 0
L. Fensterstock...... 52,910 844,083 -0- 60,000 -0- 0
R.A. Dolan........... -0- -0- -0- 15,000 -0- 0
</TABLE>
- ---------------
(1) These option exercises reflect the interests of the named executive officers
in the exercise during August 1993 by the general partner of PW Partners
1989 Dedicated L.P., a Delaware limited partnership (the "1989
Partnership"), of the remaining balance of its option granted to such
partnership to purchase PW Common Stock. For a discussion of the 1989
Partnership, see "Certain Transactions and Arrangements -- Dedicated
Partnerships" below. The shares and related values realized are all
attributable to the named executive officers' interests in the 1989
Partnership except that the amounts for Mr. Fensterstock include the
acquisition of 19,498 shares on exercise of other options ($192,542 value
realized).
PW's Pension Plan. The PW Pension Plan is a "defined benefit" plan under
the Employee Retirement Income Security Act of 1974, as amended, under which
benefits are determined on the basis of an employee's "career average" of
earnings. Generally, all employees of the Company are eligible to participate in
PW's Pension Plan. Directors of PW who are employees of the Company may
participate, and their benefits are calculated in the same manner as the
benefits of any other eligible employee. As of December 31, 1993, approximately
15,131 employees were participating in the PW Pension Plan. Upon retirement an
employee is entitled to receive retirement income equal to the sum of his
benefits for service prior to January 1, 1987 and benefits for each year
thereafter based on the Social Security taxable wage base. Under applicable
federal tax law, the maximum amount of earnings of an employee taken into
account under the PW Pension Plan's current formula for computing benefits for
plan years beginning on or after January 1, 1994 is $150,000 and the maximum
annual pension benefit which may be accrued for calendar year 1993 is $1,875.
The years of credited service for purposes of determining benefits under
the PW Pension Plan as of December 31, 1993 for certain executive officers were:
Messrs. Marron (16.6 years), Guenther (26.6 years), Grano (4.8 years),
Fensterstock (6.8 years), and Dolan (0.2 years). The estimated annual benefits
payable on retirement at age 65, taking into account actual pension benefits
accrued to December 31, 1993 and projecting future benefits to retirement at the
current maximum additional annual benefit of ($1,875), for certain executive
officers are: Messrs. Marron ($118,800), Guenther ($77,804), Grano ($45,725),
Fensterstock ($45,421) and Dolan($49,219).
In addition, employees of the Company who were employees of Paine, Webber,
Jackson & Curtis Inc. ("PWJC") (the predecessor of PWI) on July 1, 1975, and who
also were previously partners of Paine, Webber, Jackson & Curtis, are eligible
to receive retirement benefits under the PWJC Supplemental Pension Plan.
Benefits are payable under the PWJC Supplemental Pension Plan in the amount of
the excess, if any, of (a) the annual amount of retirement income which would
have been payable under PW's Pension Plan had the employee's period of PWJC
partnership service counted as credited service under the PW Pension Plan over
(b) the amount of retirement income actually payable to the employee under the
PW Pension Plan. The minimum payable under the PWJC
12
<PAGE> 15
Supplemental Pension Plan is an amount which, when added to the employee's
benefit under the PW Pension Plan, equals $10,000 annually (or a lesser amount
in the event of early retirement).
Supplemental Employees Retirement Plan. The Company has adopted a
non-qualified Supplemental Employees Retirement Plan for Certain Senior Officers
("SERP") in order to supplement retirement income. The SERP provides a benefit
equal to a percentage of base compensation for participants who retire at age 65
with 15 or more years of service. Such percentage of base compensation is 100%
in the case of the initial two participants and 75% in the case of all other
participants. A participant must have at least 5 years of service to receive any
benefit and between 5 and 15 years of service a participant receives
proportionate benefits. Retirement benefits are also paid upon early retirement
or termination of employment. Those benefits may, at the participant's election,
be deferred to commence at age 65, or be payable as early as age 55, in which
case they are reduced by 3% per year between age 60 and 65 and 6% per year
between age 55 and 60 for each year that the benefits commence before age 65.
Full benefits without reduction are also payable in case of a Change in Control
(as defined in the Plan) and disability retirement. In addition, SERP contains
certain non-compete provisions pursuant to which benefits would be forfeited.
The table below summarizes expected SERP benefits before subtracting Social
Security and PW Pension Plan benefits. The actual benefits from the SERP are the
net amounts after subtracting Social Security and PW Pension Plan benefits.
<TABLE>
<CAPTION>
INITIAL PARTICIPANTS SUBSEQUENT PARTICIPANTS
(100%) (75%)
YEARS OF SERVICE YEARS OF SERVICE
------------------------ ------------------------
REMUNERATION 10 15 10 15
------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 125,000 $ 83,333 $ 125,000 $ 62,500 $ 93,750
150,000 100,000 150,000 75,000 112,500
175,000 116,667 175,000 87,500 131,250
200,000 133,333 200,000 100,000 150,000
275,000 183,333 275,000 137,500 206,250
300,000 200,000 300,000 150,000 225,000
400,000 266,667 400,000 200,000 300,000
500,000 333,333 500,000 250,000 375,000
600,000 400,000 600,000 300,000 450,000
720,000 480,000 720,000 360,000 540,000
</TABLE>
The initial participants include Messrs. Marron and Guenther and the
amounts of their base compensation reflected for the purposes of the SERP during
1993 are $600,000 and $400,000, respectively. Messrs. Grano and Fensterstock are
subsequent participants and the amounts of their base compensation reflected for
the purposes of the SERP during 1993 are $275,000 and $200,000, respectively.
13
<PAGE> 16
PERFORMANCE GRAPH
The following chart compares the Company's cumulative total return on
stockholder investment over a five-year period with that of the S&P 500, the S&P
Financial Miscellaneous Index (which includes Merrill Lynch & Co. Inc., American
Express Company, American General Corporation, Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association, MBNA Corp., The Travelers
Inc. (formerly Primerica Corporation), Transamerica Corporation, Dean Witter,
Discover & Co. and Salomon Inc), and a Peer Group Index (comprised of American
Express Company, The Bear Stearns Companies Inc., Merrill Lynch & Co., Inc.,
Morgan Stanley Group, Inc., Salomon Inc, and Dean Witter, Discover & Co.). The
Peer Group Index has been included in the Performance Graph below since it
covers the 6 publicly traded companies which the Compensation Committee reviews
and evaluates in making compensation determinations. The chart assumes $100
invested on December 31, 1988 and reinvestment of all dividends.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P FINANCIAL
(FISCAL YEAR COVERED) PAINEWEBBER S&P 500 PEER GROUP MISCELLANEOUS
<S> <C> <C> <C> <C>
1988 100.00 100.00 100.00 100.00
1989 107.53 131.69 124.00 139.82
1990 090.99 127.60 090.53 112.68
1991 236.09 166.47 137.03 178.77
1992 251.34 179.16 154.74 210.23
1993 284.27 197.21 199.89 251.14
</TABLE>
14
<PAGE> 17
OTHER BENEFIT PLANS AND AGREEMENTS
During 1987, PW entered into employment agreements with Messrs. Marron and
Guenther having a three-year term (the "Term of the Agreement") which will
commence on that date (the "Operative Date"), if any, following a Change in
Control (as defined) of PW, so designated by a majority of the Disinterested
Directors (as defined). During the Term of the Agreement, each executive would
continue to be employed in his present position receiving a salary not less than
that being paid to him on the Operative Date and an annual bonus not less than
the average of the bonuses received by him during the three years preceding the
Operative Date and being entitled to participate in all compensation and benefit
plans of the Company. In the event of the termination of such executive's
services during the Term of the Agreement either without Cause (as defined) or
because of a Constructive Termination (as defined), he would be entitled to a
lump sum payment equal to the present value of (i) his base salary until the end
of the Term of the Agreement, (ii) a bonus for the year of such termination and
each subsequent year until the end of the Term of the Agreement, at an
annualized rate equal to the average of the bonuses awarded to him with respect
to the three years preceding the year of termination and (iii) any deferred or
unpaid bonus. The agreement of Mr. Marron also provides that, if his employment
is terminated without Cause or because of a Constructive Termination, PW will
for ten years continue to provide him with comparable office space, an executive
assistant and medical and disability coverage.
In addition, the PW Partners 1991 Dedicated L.P., a Delaware limited
partnership (the "1991 Partnership") and PW Partners 1992 Dedicated L.P., a
Delaware limited partnership (the "1992 Partnership") generally provide for the
acceleration of the vesting and exercisability of the options granted to the
partnerships in the event of a Change in Control (as defined) of the Company,
unless the Compensation Committee elects to waive the occurrence of the Change
in Control. Similarly, grants of options, restricted stock and cash awards under
the 1990 Stock Award and Option Plan provide that, unless the Compensation
Committee waives the occurrence of a Change in Control (as defined in the
applicable award agreements) as a vesting event, awards granted under the plan
will be immediately vested upon the occurrence of the Change in Control of the
Company. As noted above, the SERP provides that full pension benefits without
reduction are payable in the event of a Change in Control of the Company.
CERTAIN TRANSACTIONS AND ARRANGEMENTS
Key Executive Equity Program. The Key Executive Equity Program ("KEEP")
authorizes the sale of 8% Convertible Debentures Due 1998 (the "Debentures Due
1998"), 8% Convertible Debentures Due 2000 (the "Debentures Due 2000") and 6.5%
Convertible Debentures Due 2002 (the "Debentures Due 2002") (the Debentures Due
1998, the Debentures Due 2000 and the Debentures Due 2002 being collectively
referred to as the "Debentures") to approximately 132 key employees of the
Company. KEEP contains certain non-compete provisions and other restrictions
affecting a participant's right to convert the Debentures or, if converted, to
retain the benefits therefrom. The outstanding Debentures have an aggregate
principal amount of $64,550,000, with the Debentures Due 1998 having $9,100,000
aggregate principal amount outstanding, the Debentures Due 2000 having
$3,750,000 aggregate principal amount outstanding and the Debentures Due 2002
having $51,700,000 aggregate principal amount outstanding. The Debentures are
convertible, at the option of the holders thereof, into shares of convertible
preferred stock having an aggregate liquidation preference equal to the
aggregate principal amount of the debentures being converted. This conversion
right is now fully exercisable for the Debentures Due 1998 and the Debentures
Due 2000. One-third of the Debentures Due 2002 are now convertible and the
remaining amounts become exercisable in equal annual installments on December
31, 1994 and December 31, 1995. Shares of the convertible preferred stock, which
have a liquidation value of $25.00 per share, are convertible, at the option of
the holder, into the number of shares of PW Common Stock determined by dividing
the aggregate liquidation value of the shares being converted by the conversion
value per share of PW Common Stock, which is presently $9.10 per share for the
preferred stock to be received upon conversion of the Debentures Due 1998, $9.25
for the preferred stock to be received upon conversion of the Debentures Due
2000 and $14.75 for the preferred stock to be received upon conversion of the
Debentures Due 2002. The number of shares issuable upon conversion of shares of
the convertible preferred stock is subject to adjustment in certain events,
including stock dividends on, and subdivisions or combinations of, PW Common
Stock. The Debentures are ultimately convertible into an aggregate of 4,910,637
shares of PW Common
15
<PAGE> 18
Stock (approximately [ ]% of the total number of shares of PW Common Stock
outstanding on March 17, 1994).
KEEP provides that the employee will pay in cash 5% of the principal amount
of the Debenture as a down payment and that the Company will finance on a full
recourse basis to the employee 25% of the principal amount of the Debentures Due
1998 and the Debentures Due 2000 at 8.62% and 7.85% annual interest rate
respectively, and 95% of the principal amount of the Debentures Due 2002 at 5.6%
annual interest. So long as the employee remains employed by the Company, the
Company will pay 66 2/3% of the interest payment due on the bank financing for
the remaining balance of the purchase price of the Debentures Due 1998 and the
Debentures Due 2000 and will waive 66 2/3% of the interest payment due on an
equivalent amount of the Company financing for the Debentures Due 2002. The loan
by the Company for the Debentures Due 1998 and 2000 will be forgiven as follows:
25% for any year the Company's pre-tax earnings equal or exceed $150 million but
are less than $200 million, 33 1/3% for any year pre-tax earnings equal or
exceed $200 million but are less than $250 million, and 50% for any year pre-tax
earnings are at least $250 million. As a result of PW achieving certain
specified pre-tax earnings over the last three years, the Company loans for the
Debentures Due 1998 and 2000 have been forgiven. (See footnote 4 to "Executive
Compensation -- I. Summary Compensation Table" above regarding loan forgiveness
as a result of PW reaching certain specified levels of pre-tax earnings.) A
portion of the financing by the Company for the Debentures Due 2002 will be
forgiven as follows: 25% for any year the Company's pre-tax earnings equal or
exceed $339 million but are less than $389 million, 33 1/3% for any year pre-tax
earnings equal or exceed $389 million but are less than $439 million, and 50%
for any year pre-tax earnings are at least $439 million. As a result of PW
achieving record pre-tax earnings in 1993 of $407,576,000, 33 1/3% of a portion
of the Company financing for the Debentures Due 2002 will be forgiven.
Substantial restrictions apply to an employee's right to convert Debentures
or, if converted, to retain the benefits therefrom. These restrictions apply
upon: the death or disability of the employee; the voluntary termination of
employment or termination of employment for cause of an employee; termination of
employment without cause or termination by employee for good reason; acceptance
of a position by an employee with a competitor or solicitation of employees of
the Company to leave the Company or to interfere with its business. In the event
of a Change in Control (as defined) of the Company, the Debenture will be fully
convertible for a period of one year following such Change in Control or the
employee may elect to have the Debentures redeemed for a period of six months
following such Change in Control, and the Company loan will become payable in
full at the time of such conversion or redemption.
In addition to redemptions that may occur in connection with the events
described in the preceding paragraph and subject to the terms of KEEP, an
employee also has the right to cause the Company to redeem the Debentures Due
2000 during the fifth and sixth years after purchase at its principal amount.
During the fifth and sixth years after the date of purchase, if the employee
causes the Company to redeem the Debentures Due 2000 while he is employed or
following his death or disability, his employer will pay the employee a special
bonus equal to $1.90 for each share of PW Common Stock into which the amount of
the Debentures Due 2000 redeemed would have been convertible on the date of
original issuance of the Debentures Due 2000 had it been convertible on such
date. However, the bonus will not be payable if the market price of PW Common
Stock reaches $15.11 per share at any time during the fifth or sixth year. In
the event of a redemption during the six months following a Change in Control,
the employee will receive a bonus equal to the greater of the book value per
share on the date of redemption or the book value per share at the date of
purchase for each share into which the Debentures are convertible, less in
either case the principal amount of the Debentures.
Dedicated Partnerships. In 1989, PW formed the 1989 Partnership for
approximately 75 key employees for the purpose of investing in PW Common Stock.
Messrs. Marron, Guenther, Grano and Fensterstock were limited partners in this
partnership which was dissolved in August, 1993. The general partner, a wholly
owned subsidiary of PW, made a capital contribution of $20,202 and the limited
partners contributed an aggregate of $2,000,000. The 1989 Partnership purchased
250,000 shares of PW Common Stock from PW at a purchase price of $8 per share
and acquired an option from PW to purchase 2,250,000 of PW Common Stock at $8
per share for 10 years. The closing price of PW Common Stock on the New York
Stock Exchange on the date the partnership acquired the shares and the option
was $7.50. Whenever a cash dividend was paid on PW Common Stock, PWI paid to the
1989 Partnership a bonus compensation payment equal to the dividend per share
multiplied by the number of shares of PW Common Stock subject to the option. The
1989 Partnership
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exercised a portion of the option in 1992. During 1993, the 1989 Partnership
exercised the remaining portion of the option and received 1,537,137 shares of
PW Common Stock. The partnership sold these shares and distributed the proceeds
to the general partner and the limited partners. There are no remaining options
to be exercised or shares owned and the 1989 Partnership has been dissolved.
In 1991, PW formed the 1991 Partnership for approximately 99 key employees
for the purpose of investing in PW Common Stock. Messrs. Marron, Guenther, Grano
and Fensterstock are limited partners in this partnership. The general partner,
a wholly owned subsidiary of PW, made a capital contribution to the 1991
Partnership of $20,202 and the limited partners contributed an aggregate of
$2,020,202. The 1991 Partnership purchased 180,000 shares of PW Common Stock
from PW at a purchase price of $11.11 per share and acquired an option from PW
to purchase 2,250,000 shares of PW Common Stock at $11.11 per share for 10
years. The closing price of PW Common Stock on the New York Stock Exchange on
the date the partnership acquired the shares and the option was $11.11. Whenever
a cash dividend is paid on PW Common Stock, PWI will pay to the 1991 Partnership
a bonus compensation payment in the same manner as described above for the 1989
Partnership.
In 1992, PW formed the 1992 Partnership for approximately 41 key employees
for the purpose of investing in PW Common Stock. Messrs. Marron, Guenther,
Grano, and Fensterstock and Ms. Dolan are limited partners in this partnership.
In 1993 the general partner, a wholly owned subsidiary of PW, made a capital
contribution to the 1992 Partnership of $20,000 and the limited partners
contributed an aggregate of $1,980,000. The 1992 Partnership purchased 135,592
shares of PW Common Stock from PW at a purchase price of $14.75 per share and
acquired an option from PW to purchase 1,500,000 of PW Common Stock at $14.75
per share for 10 years. The closing price of PW Common Stock on the New York
Stock Exchange on the date the partnership acquired the shares and the option
was $15.83. Whenever a cash dividend is paid on PW Common Stock, PWI will pay to
the 1992 Partnership a bonus compensation payment in the manner described above
for the 1989 Partnership.
Investment Partnership. On February 2, 1994, the Company formed a limited
partnership for 80 key employees for the purpose of permitting these employees
collectively to invest in certain investment opportunities offering a potential
for long-term capital appreciation. Each of the named executive officers are
limited partners in the partnership. The general partner, a wholly owned
subsidiary of the Company, made a capital contribution to the partnership of
$84,848 and the limited partners contributed an aggregate of $8,400,000. In
addition, the general partner agreed to make an unsecured loan to the
partnership in the amount of $42,424,242. The interest rate on the loan is the
greater of (i) LIBOR plus thirty-five basis points and (ii) the applicable
Federal rate promulgated under Section 1274(d) of the Internal Revenue Code, for
short-term loans with semiannual compounding. The interest rate on the loan is
reset, and interest on the loan is payable, semiannually. The principal amount
of the loan is generally subject to repayment by the partnership prior to the
time that distributions are made to the partners.
Other Transactions. During 1993, certain executive officers of PW
maintained margin accounts with PWI in the ordinary course of business. The
margin indebtedness of such officers is on substantially the same terms,
including interest rates and collateral, as those prevailing for clients, and
does not present more than a normal risk of non-collectibility.
In November 1987, at the same time as Yasuda's initial investment in the
Company's preferred stock, PW and Yasuda entered into a Joint Venture Agreement.
Pursuant to this agreement, PW and Yasuda have established a corporation in
England to focus on such areas as asset management, investment advisory and
financial consulting.
Mr. Fujisawa and Mr. Sorimachi are directors of Yasuda Realty America
Corporation ("YRAC"), a wholly owned subsidiary of Yasuda. PWI became a lessee
of a certain property in Chicago, effective December 1, 1990, which is partially
and indirectly owned by YRAC. During the fiscal year 1993, PWI paid $2,646,000
as rents for such property, which exceeded 5% of YRAC's consolidated gross
revenues, and during the fiscal year 1994, will pay approximately the same
amount of rents subject to certain adjustments. The terms of the lease agreement
are substantially the same as those prevailing at the time for comparable
transactions with unrelated parties.
During 1993, Mr. Grano was indebted to PWI for $4,000,000 for a loan made
to him in 1991 for which interest is imputed at an annual rate of 3.83%. As of
March 17, 1994, the outstanding principal amount of this loan was $4,000,000.
In February and March of 1994, the Company advanced $223,135 on behalf of
Mr. Bult, which amounts have been repaid with interest.
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During 1993, Mr. Marron converted $4,000,000 of Debentures Due 1998 into
convertible preferred stock which was in turn converted into 293,040 of PW
Common Stock (or 439,560 on a post-split basis) and Mr. Fensterstock converted
$500,000 of Debentures Due 2000 into convertible preferred stock which was in
turn converted into 36,049 shares of PW Common Stock (or 54,073 on a post-split
basis). In addition to 22 other holders of Debentures Due 1998 and Debentures
Due 2000, Mr. Marron and Mr. Fensterstock immediately sold all such shares of PW
Common Stock to PW under its corporate repurchase program for a net gain amount
of $4,196,268 and $588,957, respectively, representing the difference between
the fair market value of the shares on the date of sale, less $.50 per share,
and the conversion price of the PW Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1993, the Company's Compensation
Committee was composed of Messrs. Armour (the chairman, who held this position
until November 3, 1993), Bewkes (the chairman since November 3, 1993) and
Loeffler. Mr. Armour was an officer and director of a subsidiary of PW from 1977
to 1980. Mr. Bewkes was paid $161,506 for consulting services rendered during
1993.
II. APPROVAL OF AN INCREASE IN AUTHORIZED COMMON STOCK
On February 22, 1994, the Board of Directors approved an amendment to the
Restated Certificate of Incorporation of the Company to increase to 200,000,000
the number of shares of PW Common Stock authorized for issuance, and directed
that the amendment (the "Amendment") be submitted to a vote of stockholders at
the Annual Meeting. In connection therewith, the Board of Directors proposes for
approval the Amendment in the form set forth as Annex I.
Section I of Article IV of the Company's Restated Certificate of
Incorporation as currently in effect authorizes the issuance of up to an
aggregate of 100,000,000 shares of PW Common Stock. As of December 31, 1993,
83,603,262 shares of PW Common Stock were issued, of which 6,568,433 were held
as treasury shares of the Company. Approximately 14,610,000 shares of PW Common
Stock have been reserved for issuance pursuant to various employee compensation
and benefit plans of the Company and of the Company's subsidiaries.
Approximately 4,911,000 shares of treasury stock will be issuable upon
conversion of outstanding convertible securities of the Company that are or
become convertible over the next two years. The Board of Directors believes it
would be desirable to increase the number of shares of authorized PW Common
Stock in order to make available additional shares for possible stock dividends,
stock splits, employee benefit plan issuances, acquisitions, financings and for
such other corporate purposes as may arise. Therefore, the Board of Directors
has approved and recommends to stockholders an increase in the number of shares
of authorized PW Common Stock to an aggregate of 200,000,000 shares in
accordance with the Amendment.
Other than as set forth above, the Company has no specific plans currently
calling for issuance of any of the additional shares of PW Common Stock. The
rules of the New York Stock Exchange currently require stockholder approval of
issuances of PW Common Stock under certain circumstances including those in
which the number of shares to be issued is equal to or exceeds 20% of the voting
power outstanding (or, for the Company as of December 31, 1993, issuance of more
than approximately 15,407,000 shares of PW Common Stock). In other instances,
the issuance of additional shares of authorized PW Common Stock would be within
the discretion of the Board of Directors, without the requirement of further
action by stockholders. All newly authorized shares would have the same rights
as the presently authorized shares, including the right to cast one vote per
share and to participate in dividends when and to the extent declared and paid.
Under the Company's Restated Certificate of Incorporation, stockholders do not
have preemptive rights. Accordingly, the rights of existing stockholders may,
depending on how additional shares of PW Common Stock are issued, be diluted by
their issuance. While the issuance of shares in certain instances may have the
effect of forestalling a hostile takeover, the Board of Directors does not
intend or view the increase in authorized PW Common Stock as an anti-takeover
measure, nor is the Company aware of any proposed or contemplated transaction of
this type.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE TO
200,000,000 THE NUMBER OF SHARES OF PW COMMON STOCK AUTHORIZED FOR ISSUANCE.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of all the shares of PW Common Stock outstanding is
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required for adoption of the proposed Amendment to the Company's Restated
Certificate of Incorporation. Under applicable Delaware law, in determining
whether the proposal has received the requisite number of affirmative votes,
abstentions and instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned a proxy
("broker non-votes") will be counted and will have the same effect as a vote
against the proposal.
III. APPROVAL OF THE 1994 NON-EMPLOYEE DIRECTORS' STOCK PLAN
On February 22, 1994, the Board of Directors approved the adoption of the
1994 Non-Employee Directors' Stock Plan (the "Non-Employee Directors Stock
Plan") and directed that such plan be submitted to a vote of stockholders at the
Annual Meeting. In connection therewith, the Board of Directors proposes for
approval the Non-Employee Directors Stock Plan in the form set forth in Annex
II. The purpose of the Non-Employee Directors Stock Plan is to promote ownership
by non-employee directors of a greater proprietary interest in the Company,
thereby aligning such directors' interests more closely with the interests of
stockholders of the Company, and to assist the Company in attracting and
retaining highly qualified persons to serve as non-employee directors.
The total number of shares of PW Common Stock reserved and available for
delivery under the Non-Employee Directors Stock Plan is 600,000, subject to
adjustment. The Non-Employee Directors Stock Plan will be administered by the
Board of Directors of the Company, provided that any action by the Board of
Directors relating to the Non-Employee Directors Stock Plan will be taken only
if approved by the affirmative vote of a majority of the directors who are not
then eligible to participate under the plan.
Only directors (hereinafter "Non-Employee Directors") of the Company who
are not employees of the Company or any subsidiary of the Company on the date on
which an option or stock award is to be granted or on which fees are to be
deferred will be eligible to participate in the Non-Employee Directors Stock
Plan on such date.
An option to purchase 15,000 shares of PW Common Stock (an "Option") will
be granted to Non-Employee Directors on the effective date of the Non-Employee
Directors Stock Plan and, beginning in 1999 and each fifth year thereafter, at
the close of business of each Annual Meeting of stockholders at which directors
(or a class of directors if the Company then has a classified Board of
Directors) are elected or reelected by the Company's stockholders. In addition,
an Option to purchase 15,000 shares of PW Common Stock will be granted to each
Non-Employee Director who is first elected or appointed to serve as a director
of the Company after the Annual Meeting. No Non-Employee Director, however, may
be granted Options to purchase more than 15,000 shares during any one calendar
year under the Non-Employee Directors Stock Plan. Options granted under the
Non-Employee Directors Stock Plan will be non-qualified stock options which will
be subject to, among other things, the following terms and conditions: (i) The
exercise price per share of PW Common Stock purchasable under an Option will be
equal to 100% of the fair market value of PW Common Stock on the date of grant
of the Option; (ii) each Option will expire at the earliest of (a) ten years
after the date of grant, (b) 36 months after the Non-Employee Director ceases to
serve as a director of the Company due to death, disability, or retirement at or
after age 65, (c) 12 months after the Non-Employee Director ceases to serve as a
director of the Company for any reason other than death, disability, or
retirement at or after age 65, or (d) immediately upon the Non-Employee
Director's removal for cause; (iii) each Option will become exercisable as to
100% of the shares of PW Common Stock relating to the Option on the third
anniversary of the date of grant, and will thereafter remain exercisable until
the Option expires; provided that an Option previously granted to a participant
(a) will be fully exercisable in the event of a Change in Control (as defined in
Annex II), (b) will be fully exercisable after the Non-Employee Director ceases
to serve as a director of the Company due to death, disability, or retirement at
or after age 65, and (c) will be exercisable after the Non-Employee Director
ceases to serve as a director of the Company for any reason other than death,
disability, or retirement at or after age 65 only if the Option was exercisable
at the date of such cessation of service; and (iv) each Option may be exercised,
in whole or in part, at such time as it is exercisable and prior to its
expiration by, among other things, giving written notice of exercise to the
Company specifying the Option to be exercised and the number of shares to be
purchased, and accompanied by payment in full of the exercise price in cash
(including by check) or by surrender of shares of PW Common Stock or a
combination thereof.
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Three hundred and seventy-five shares of PW Common Stock will be granted to
each Non-Employee Director on the effective date of the Non-Employee Directors
Stock Plan and, beginning in 1995, at the close of business of each Annual
Meeting. No Non-Employee Director, however, may be granted more than 375 shares
during any one calendar year under the Non-Employee Directors Stock Plan.
The Company will establish a deferral account for each Non-Employee
Director who elects to defer fees or PW Common Stock awarded under the plan and
will credit such deferral account with an amount, expressed as deferred PW
Common Stock, equal to the number of shares of PW Common Stock having an
aggregate fair market value at the date the deferred fees or PW Common Stock
would have otherwise been payable equal to the amount of such fees or PW Common
Stock deferred. Whenever dividends are paid or distributions made with respect
to PW Common Stock, a Non-Employee Director will be entitled to be paid an
amount equal in value to the amount of the dividend paid or property distributed
on a single share of PW Common Stock multiplied by the number of shares of
deferred PW Common Stock (including fractions) credited to his or her deferral
account as of the record date for such dividend or distribution. The interest of
each Non-Employee Director in any benefit payable with respect to a deferral
account hereunder will be at all times fully vested and non-forfeitable.
The Non-Employee Directors Stock Plan provides that, in the event of a
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange or other
similar corporate transaction or event affecting the PW Common Stock, the Board
of Directors will make certain equitable adjustments to prevent dilution or
avoid enlarging rights of directors under the plan.
The Board of Directors may amend, alter, suspend, discontinue, or terminate
the Non-Employee Directors Stock Plan, except that any such action shall be
subject to the approval of the Company's stockholders at the Annual Meeting next
following such Board of Directors action if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the PW Common Stock may then be
listed or quoted, or if the Board of Directors determines in its discretion to
seek such stockholder approval.
If the Non-Employee Directors Stock Plan is approved by the stockholders of
the Company at the Annual Meeting, each Non-Employee Director will receive the
automatic grant of Options and PW Common Stock described above. Except as noted
above, no other grants are contemplated under the plan for 1994.
The federal tax consequences related to the grant and exercise of Options
to Non-Employee Directors under the Non-Employee Directors Stock Plan are
substantially similar to the tax consequences described below with respect to
the grant of nonqualified stock options under the Executive Stock Award Plan
(see "V. Approval of the 1994 Executive Stock Award Plan"), except that income
and payroll taxes are not required to be withheld by the Company in connection
with the ordinary income recognized by Non-Employee Directors upon exercise of
the Options.
A copy of the Non-Employee Directors Stock Plan is annexed to this Proxy
Statement as Annex II. Stockholders are encouraged to review the Non-Employee
Directors Stock Plan carefully. Any description in this Proxy Statement of the
Non-Employee Directors Stock Plan is qualified in its entirety to Annex II.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE NON-EMPLOYEE DIRECTORS STOCK PLAN. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of all the shares of PW Common
Stock present in person or by proxy at the Annual Meeting is required for
adoption of the proposal concerning the Non-Employee Directors Stock Plan. Under
applicable Delaware law, in determining whether the proposal has received the
requisite number of affirmative votes, abstentions will be counted and will have
the same effect as a vote against the proposal. Broker non-votes will have no
impact on such matter since they are not considered "shares present" for voting
purposes.
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IV. APPROVAL OF THE 1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
On February 22, 1994, the Board of Directors approved the adoption,
effective January 1, 1994, of the 1994 Executive Incentive Compensation Plan
(the "Incentive Compensation Plan") and directed that such plan be submitted to
a vote of stockholders at the Annual Meeting. In connection therewith, the Board
of Directors proposes for approval the Incentive Compensation Plan in the form
set forth in Annex III hereto.
Stockholder approval of the Incentive Compensation Plan is recommended by
the Board of Directors, in order to provide an incentive to executive officers
and other selected key executives of PW to contribute to the growth and annual
profitability of PW, to encourage such executives to remain in the employ of the
Company, and to endeavor to maintain the tax-deductible status of such incentive
payments to the Company's Chief Executive Officer and four most-highly paid
executive officers at year end who are named in the Company's proxy statement
for the year in which such amounts are claimed as a deduction by the Company.
The Incentive Compensation Plan has been designed and will be administered to
grant "performance-based" incentives which are intended to qualify for tax
deductibility under new Section 162(m) of the Internal Revenue Code. The
affirmative vote of a majority of the PW Common Stock outstanding and present or
represented and entitled to vote at the Annual Meeting is required to approve
the proposal set forth herein. The persons named in this Proxy Statement will
vote for the proposal to approve the Incentive Compensation Plan, which is
described in greater detail below and in Annex III.
The Incentive Compensation Plan will be administered by the Compensation
Committee. The Compensation Committee will select plan participants from among
executive officers and other key executives of PW. It is estimated that up to 15
such participants may be selected in any year. Awards under the Incentive
Compensation Plan may, in the discretion of the Compensation Committee, be paid
in cash, PW Common Stock, and/or other awards authorized by PW's 1994 Executive
Stock Award Plan or other applicable equity award plans (that portion of the
Award Pool (as defined below) payable to a participant is an "Award"). To the
extent Awards are paid in shares of PW Common Stock, such payments shall count
against the number of shares or awards reserved under the 1994 Executive Stock
Award Plan or other applicable equity award plans.
The Incentive Compensation Plan provides for a total award pool (the "Award
Pool") to be based on a percentage of consolidated pre-tax operating income for
the Performance Period (as defined below) before accounting for certain cost
items (collectively, "Annual Profits"). The Award Pool for each Performance
Period will equal 4.5% of Annual Profits in excess of $100 million and up to
$870 million plus 5.5% of Annual Profits in excess of $870 million. "Performance
Period" means the calendar year or such other shorter or longer period
designated by the Compensation Committee, performance during all or part of
which a Participant's entitlement to receive payment of an Award is based. In no
event may more than 33% of the Award Pool for a Performance Period be awarded to
any participant in the Incentive Compensation Plan.
The Compensation Committee is authorized at any time during or after a
Performance Period, in its sole and absolute discretion, to reduce or eliminate
the Award Pool or the portion of the Award Pool allocated to any participant,
for any reason, including changes in the participant's position or duties with
PW or any subsidiary during a Performance Period, whether due to any termination
of employment (including death, disability, retirement, or termination with or
without cause) or otherwise. The Compensation Committee is also authorized
during or after a Performance Period to adjust the calculation of Annual Profits
or the Award Pool to avoid enlargement of a participant's rights or dilution as
a result of corporate reorganizations, unusual or nonrecurring corporate
transactions or the Compensation Committee's assessments of economic and
business conditions; provided that, unless otherwise determined by the
Compensation Committee, in its sole discretion, no such adjustment may cause
Awards to fail to qualify as "performance based compensation" under Section
162(m) of the Internal Revenue Code.
Under the Incentive Compensation Plan, each participant has the right to
defer receipt of part or all of any payment due with respect to an Award,
subject to the terms, conditions and administrative guidelines of the PW Senior
Officer Deferred Compensation Plan or other applicable deferred compensation
plan of PW or its subsidiaries.
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In the event a participant terminates his or her employment for any reason
during a Performance Period or prior to an Award payment, he or she (or his or
her beneficiary, in the case of death) will generally not be entitled to receive
any Award for such Performance Period unless the Compensation Committee, in its
sole and absolute discretion, elects to pay an Award to such participant. In the
event of the death of a participant, any payments due to such participant will
generally be paid to his or her beneficiary or, failing such designation, to his
or her estate.
In the event of a Change in Control (as defined in Annex III), the Award
Pool will be computed as if the Performance Period ended immediately prior to
the Change in Control, and the Award Pool will be computed by annualizing the
amount of the Annual Profits achieved during the Performance Period. Following a
Change in Control, the Compensation Committee may not reduce or eliminate the
Award Pool or the portion of the Award Pool allocated to any participant.
However, the Award paid to the participant will be prorated to reflect the
period of time elapsed during the Performance Period. Any resulting amount due
to a participant will be paid in a cash lump sum no later than 15 days after a
Change in Control unless the participant has irrevocably elected to defer
payment prior to such event.
Notwithstanding anything herein to the contrary, the Board of Directors
may, at any time, terminate or, from time to time, amend, modify or suspend the
Incentive Compensation Plan and the terms and provisions of any Award
theretofore awarded to any participant which has not been settled (either by
payment or deferral). No Award may be granted during any suspension of the Plan
or after its termination. Any such amendment may be made without stockholder
approval.
The Incentive Compensation Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. Under the terms of the plan, a
participant has only rights which are no greater than those of a general
creditor of PW. The Incentive Compensation Plan permits the Compensation
Committee to authorize the creation of trusts and deposit therein cash, stock or
other property or make other arrangements, to meet PW's obligations under the
Incentive Compensation Plan. Such trusts or other arrangements are required to
be consistent with the "unfunded" status of the Incentive Compensation Plan
unless the Compensation Committee otherwise determines with the consent of each
affected participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Compensation Committee may specify in
accordance with applicable law.
The Incentive Compensation Plan became effective on January 1, 1994,
subject to approval of the stockholders at the Annual Meeting. Since amounts
payable under the Incentive Compensation Plan will be based on 1994 performance
and will be contingent on the right of the Compensation Committee to exercise
negative discretion to reduce the amount of the final payments, such amounts are
therefore not determinable at the present time.
A copy of the Incentive Compensation Plan is annexed to this Proxy
Statement as Annex III. Stockholders are encouraged to review the Incentive
Compensation Plan carefully. Any description in this Proxy Statement of the
Incentive Compensation Plan is qualified in its entirety by reference to Annex
III.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE INCENTIVE COMPENSATION PLAN. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of all the shares of PW Common
Stock present in person or by proxy at the Annual Meeting is required for
adoption of the proposal concerning the Incentive Compensation Plan. Under
applicable Delaware law, in determining whether the proposal has received the
requisite number of affirmative votes, abstentions will be counted and will have
the same effect as a vote against the proposal. Broker non-votes will have no
impact on such matter since they are not considered "shares present" for voting
purposes.
V. APPROVAL OF THE 1994 EXECUTIVE STOCK AWARD PLAN
On February 22, 1994, the Board of Directors approved the adoption of the
1994 Executive Stock Award Plan (the "Executive Stock Award Plan") and directed
that such plan be submitted to a vote of stockholders at the Annual Meeting. In
connection therewith, the Board of Directors proposes for approval by the
stockholders of PW the Executive Stock Award Plan in the form set forth in Annex
IV hereto. PW currently has in effect the 1980 Stock Option Plan (the "1980
Plan"), the 1983 Stock Option Plan (the "1983 Plan") and the 1990 Stock Award
and Option Plan (the "1990 Plan")
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(collectively, the "Stock Plans"). The Stock Plans provide for the grants of
nonqualified stock options and incentive stock options to officers and other key
employees to purchase shares of PW Common Stock. In addition, the 1990 Plan
provides for the grants or awards of stock appreciation rights ("SARs"),
restricted stock, and cash awards. The Stock Plans are of indefinite duration,
continuing until all shares reserved therefor have been issued or until
terminated by the Board of Directors. The Board of Directors has determined to
terminate the 1990 Plan and replace it with the Executive Stock Award Plan for
executive officers and other key executives and the 1994 Stock Award Plan (the
"1994 Stock Award Plan") for other employees of the Company. To the extent
deemed appropriate by the Compensation Committee, amounts paid or distributed
under the Executive Stock Award Plan may qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code. On March 17,
1994, there were [ ] shares of PW Common Stock available under the 1980
Plan, [ ] shares available under the 1983 Plan for future grant and [ ]
shares available for issuance under the 1990 Plan.
The Executive Stock Award Plan provides for issuance under such plan of a
maximum of 975,000 shares (650,000 shares pre-split) of PW Common Stock for each
calendar year during any part of which the plan is effective (which number will
be increased in any calendar year by the number of shares available for grant or
award in such previous calendar years but which neither are subject to
outstanding awards nor were previously delivered to participants in settlement
of awards), subject to adjustments in the event of certain changes in
capitalization of PW. In addition, the number of shares reserved for issuance
under the Executive Stock Award Plan will include the remaining shares of stock
that are available or become available under the 1990 Plan immediately prior to
the termination of the 1990 Plan. Shares subject to an award that is forfeited
or settled in cash or otherwise terminated without delivery of shares to the
participant (including shares withheld for taxes and delivered upon exercise of
awards) will again be available for awards under the Executive Stock Award Plan.
In each calendar year during any part of which the Executive Stock Award Plan is
in effect, a Participant may not be granted an award relating to more than
450,000 shares (300,000 shares pre-split) of PW Common Stock, subject to
adjustment and as more fully set forth in Annex IV.
On March 17, 1994, the last sale price of PW's Common Stock on the New York
Stock Exchange was $[ ] per share. It is estimated that up to 15 executive
officers and other key executives of PW would be currently eligible to
participate in the Executive Stock Award Plan. The Executive Stock Award Plan
will be of indefinite duration, continuing until it is terminated by the Board
of Directors.
The Executive Stock Award Plan will be administered by the Compensation
Committee. The Compensation Committee shall have full and final authority to
select participants, grant awards under the Executive Stock Award Plan,
determine the type, number, and other terms and conditions of, and all other
matters relating to, awards, prescribe award agreements (which need not be
identical for each participant) and interpret the Executive Stock Award Plan.
The Executive Stock Award Plan authorizes both the grant of options which
are not qualified for special tax treatment under the Internal Revenue Code, and
the grant of incentive stock options ("ISOs") which do qualify for special
federal income tax treatment under Section 422 of the Internal Revenue Code. All
options intended to qualify as ISOs must be granted within ten years of the
adoption of the Executive Stock Award Plan and no more than 1,500,000 shares of
PW Common Stock will be available for grants of ISOs or SARs in tandem with
ISOs. The exercise price of each option granted under the Executive Stock Award
Plan will not be less than the fair market value of the shares of PW Common
Stock purchasable thereunder on the date of grant of such options except in
situations where the options are granted by the Compensation Committee in lieu
of other cash compensation. In addition, the Executive Stock Award Plan provides
that, if so provided in the related agreement, options or stock appreciation
rights shall be forfeited upon termination of the participant's employment for
cause, as specified in such agreement.
The Executive Stock Award Plan also permits the grant of Stock Appreciation
Rights ("SARs") and limited stock appreciation rights ("LSARs"). SARs permit the
holder to receive an amount equal to the difference between the fair market
value per share of PW Common Stock on the date of exercise of the SAR (or, if
the Compensation Committee determines in the case of SARs unrelated to ISOs, the
fair market value of one share at any time during a specified period before or
after the date of exercise or, in the case of LSARs, the fair market value
determined by reference to amounts paid or payable in connection with a change
of control of PW as specified by the Committee) and the grant
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<PAGE> 26
price of the SAR (or LSAR) determined by the Compensation Committee at the time
of grant. The Executive Stock Award Plan permits the Compensation Committee to
establish specific terms and conditions related to a grant of SARs (or LSARs)
including the period of exercise and settlement, the forms of consideration paid
on settlement and whether the SAR (or LSAR) is granted alone or in tandem with
any other Award.
The Executive Stock Award Plan also permits the award of PW Common Stock in
the form of restricted stock ("Restricted Stock"), which shares will be
restricted for a period of time as determined by the Compensation Committee. The
restricted period may be shortened by the attainment of specified objectives.
During the restricted period, the participant may not sell, assign, transfer,
pledge, margin or otherwise encumber the shares. With limited exceptions, the
participant will forfeit Restricted Stock under the Executive Stock Award Plan
if he or she ceases to be an employee of PW or any of its subsidiaries during
the restricted period. The Compensation Committee or the applicable award
agreement may also specify or waive forfeiture upon specified events resulting
in the termination of employment. For the past three years, the majority of
Restricted Stock awarded under predecessor plans has constituted a portion of
each recipient's bonus for the year in lieu of cash.
The Executive Stock Award Plan also permits the grant of restricted units
("Restricted Units") which are rights to receive PW Common Stock, cash or a
combination thereof at the end of a deferral period specified by the
Compensation Committee. Restricted Units may be subject to such restrictions as
the Compensation Committee may impose. The restricted period may be shortened by
the attainment of specified objectives. Subject to the right of the Compensation
Committee to waive forfeiture, Restricted Units may be forfeited if the
participant ceases to be an employee of PW or any of its subsidiaries during the
deferral period. Unless the award states otherwise, dividend equivalents on the
specified number of shares of PW Common Stock covered by the Restricted Unit
will be paid in cash or PW Common Stock or reinvested in additional Restricted
Units, other awards under the Executive Stock Award Plan or other investment
vehicles as the Compensation Committee determines or the recipient elects.
Restricted Units may be further deferred at the election of the participants.
Under the Executive Stock Award Plan, the Compensation Committee may also
grant PW Common Stock as a bonus, or grant PW Common Stock or other awards in
lieu of PW's obligations to pay cash or deliver other property under other
plans, except that, in the case of participants subject to Section 16 of the
Exchange Act, such grants or awards will generally be made in a manner that
complies with applicable requirements of Rule 16b-3 under the Exchange Act, to
the extent that such compliance is deemed necessary or appropriate by the
Compensation Committee.
Under the Executive Stock Award Plan, the Compensation Committee is also
authorized to grant dividend equivalents to a participant, entitling the
participant to receive cash, PW Common Stock, other awards, or other property
equal in value to dividends paid with respect to a specified number of shares of
PW Common Stock, or other periodic payments. Dividend equivalents may be awarded
on a free-standing basis or in connection with another award. The Executive
Stock Award Plan also permits the Compensation Committee to make other forms of
awards under the plan which are denominated or payable in whole or in part in PW
Common Stock, including purchase rights, convertible securities, book value
shares and awards valued with reference to the securities of PW's subsidiaries.
Awards under the Executive Stock Award Plan may, in the discretion of the
Compensation Committee, be granted alone or in tandem with other awards or in
substitution for previously granted awards under any plan of the Company. In
addition, awards made in lieu of cash compensation may be appropriately
discounted (for example, options may be granted with any exercise price that is
less than the fair market value of a share of PW Common Stock at the time of
grant) to take into account the value of the forgone cash compensation.
The Executive Stock Award Plan permits the Compensation Committee to
specify that the exercisability or settlement of awards (other than an option or
SAR granted with an exercise price equal to 100% of the fair market value of a
share of PW Common Stock at the time of grant) may be conditioned upon the
achievement of objective performance goals, if the award is granted to an
executive officer of the Company whose compensation, at the time of grant, is
subject to the limit on deductible compensation under Section 162(m) of the
Internal Revenue Code. The Executive Stock
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<PAGE> 27
Award Plan contemplates that only the following performance goals may be
selected by the Compensation Committee: (1) net earnings, (2) fully diluted
earnings per share, (3) return on average common equity, (4) pre-tax income, and
(5) annual pre-tax operating income before accounting for restructuring and
discontinued operations and certain other costs. Achievement of the goals will
be measured over a performance period that may extend for up to four years, as
specified by the Compensation Committee. The Executive Stock Award Plan
contemplates that the Compensation Committee will establish the targets
applicable to the performance goals for each performance period. The plan
permits the Compensation Committee to provide that awards will be payable upon
achievement of any one of the performance goals or upon achievement of two or
more goals applicable to the performance period. The Executive Stock Award Plan
permits the Compensation Committee to exercise discretion to reduce the amount
of any award payable upon achievement of the performance goals.
Performance-based awards are subject to the individual limit discussed above on
awards that may be made to a participant in any calendar year.
The Board may amend, alter, suspend, discontinue, or terminate the
Executive Stock Award Plan, except that any such action will be subject to the
approval of PW stockholders at the annual meeting next following such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the PW Common Stock may then be listed or quoted. The Executive Stock
Award Plan also permits the Compensation Committee to authorize the
establishment of one or more trusts and to contribute cash, PW Common Stock or
other property to such trusts to meet PW's obligations under the plan. The
trustee of such trusts may be authorized to dispose of trust assets and reinvest
the proceeds in alternative investments, subject to such terms and conditions as
the Compensation Committee may specify in accordance with applicable law.
Unless otherwise determined by the Compensation Committee, in the event of
a forfeiture of an award with respect to which a participant paid cash or other
consideration, the participant shall be repaid the amount of such cash or other
consideration.
The Executive Stock Award Plan became effective February 22, 1994, subject
to approval by PW stockholders at the Annual Meeting.
A copy of the Executive Stock Award Plan is annexed to this Proxy Statement
as Annex IV. Stockholders are encouraged to review the Executive Stock Award
Plan carefully. Any description in this Proxy Statement of the Executive Stock
Award Plan is qualified in its entirety by reference to Annex IV.
The following is a discussion of certain federal income tax consequences of
the issuance and exercise of stock options under the Executive Stock Award Plan
to the participant and to the Company. The discussion does not purport to be
complete and does not cover, among other things, the state and local tax
consequences in connection with the grant and exercise of options.
In general, a participant will not be subject to tax at the time a
non-qualified stock option is granted. Upon exercise of a non-qualified stock
option, the participant generally must include in ordinary income at the time of
exercise an amount equal to the excess, if any, of the fair market value of the
PW Common Stock at the time of exercise over the exercise price, and will have a
tax basis in such shares equal to the cash paid upon exercise plus the amount
taxable as ordinary income to the participant. In addition, special rules apply
under the Internal Revenue Code which may delay the recognition of income upon
exercise of non-qualified stock options by executive officers who are subject to
the reporting rules under Section 16(a) of the Exchange Act and would be subject
to liability under Sections 16(b) of the Exchange Act.
The Company generally will be entitled to a deduction in the amount of a
participant's ordinary income at the time such income is recognized by the
participant upon the exercise of a non-qualified stock option. It is currently
intended that income recognized by participants upon the exercise of non-
qualified stock options granted under the Executive Stock Award Plan will not be
subject to the $1 million dollar limit on deductible compensation imposed by
Section 162(m) of the Internal Revenue Code and will therefore be deductible by
the Company. Income and payroll taxes are required to be withheld on the amount
of ordinary income resulting from the exercise of a non-qualified stock option.
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No taxable income will be realized by an option holder upon the grant or
exercise of an ISO. If shares of PW Common Stock are issued to the participant
pursuant to the exercise of an ISO granted under the Executive Stock Award Plan
and if a disqualifying disposition of such shares is not made by such option
holder (i.e., no disposition is made within two years after the date of grant or
within one year after the receipt of such shares by such option holder), then
(i) upon sale of such shares, any amount realized in excess of the exercise
price of the ISO will be taxed to such participant as a long-term capital gain
and any loss sustained will be a long-term capital loss and (ii) no deduction
will be allowed to the Company. However, if shares acquired upon the exercise of
an ISO are disposed of prior to the expiration of either holding period
described above, generally (x) the participant will realize ordinary income in
the year of disposition in an amount equal to the excess (if any) of the fair
market value of the shares at the time of exercise (or, if less, the amount
realized on the disposition of the shares), over the exercise price thereof, and
(y) the Company will be entitled to deduct an amount equal to such income. Any
additional gain recognized by the participant upon a disposition of such shares
prior to the expiration of the holding period described above will be taxed as a
short-term or long-term capital gain, as the case may be, and will not result in
any deduction by the Company.
The amount by which the fair market value of the PW Common Stock on the
exercise date of an ISO exceeds the exercise price generally will constitute an
item which increases the participant's "alternative minimum taxable income."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE EXECUTIVE STOCK AWARD PLAN. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of all the shares of PW Common
Stock present in person or by proxy at the Annual Meeting is required for
adoption of the proposal concerning the Executive Stock Award Plan. Under
applicable Delaware law, in determining whether the proposal has received the
requisite number of affirmative votes, abstentions will be counted and will have
the same effect as a vote against the proposal. Broker non-votes will have no
impact on such matter since they are not considered "shares present" for voting
purposes.
VI. SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of Ernst & Young to
examine PW's accounts for the 1994 fiscal year. Ernst & Young is the result of a
merger in 1989 between Ernst & Whinney and Arthur Young & Company. Arthur Young
& Company had been the independent public accountants of PW and predecessor
entities since 1943. The submission of the selection of Ernst & Young to the
stockholders of PW is not required. The Board of Directors is, nevertheless,
submitting it to the stockholders to ascertain their views. If the selection is
not ratified at the Annual Meeting, the Board of Directors intends to reconsider
its selection of independent public accountants.
It is expected that a representative of Ernst & Young will attend the
Annual Meeting. He or she will have an opportunity to make a statement if he or
she so desires and will be available to respond to appropriate stockholder
questions.
The Board of Directors unanimously recommends a vote FOR ratification of
the selection of Ernst & Young as PW's independent public accountants.
VII. OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
As of the date of this Proxy Statement, the Company does not intend to
present and has not been informed that any other person intends to present any
matter for action not specified herein. If any other matters properly come
before the Annual Meeting, it is intended that the holders of proxies will vote
in respect thereof in accordance with their best judgment.
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STOCKHOLDER PROPOSALS FOR 1995 MEETING
Proposals of stockholders intended for presentation at the 1995 Annual
Meeting must be received by the office of the Secretary of PW no later than
December 1, 1994.
Theodore A. Levine
Secretary
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<PAGE> 30
ANNEX I
PROPOSED AMENDMENT TO ARTICLE IV
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF PAINE WEBBER GROUP INC.
Article IV, Section 1, is hereby amended to read in its entirety as
follows:
SECTION 1. Shares, Classes and Series Authorized. The total number of
shares of capital stock which the Corporation shall have authority to issue is
20,000,000 shares of Series Preferred Stock of the par value of $20 each and
200,000,000 shares of Common Stock of the par value of $1 each. Such Series
Preferred Stock and Common Stock are sometimes hereinafter collectively called
"capital stock."
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ANNEX II
PAINEWEBBER GROUP INC.
1994 NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. Purpose. The purpose of this 1994 Non-Employee Directors' Stock Plan
(the "Plan") of Paine Webber Group Inc. ("PaineWebber") is to promote ownership
by non-employee directors of a greater proprietary interest in PaineWebber,
thereby aligning such directors' interests more closely with the interests of
stockholders of PaineWebber, and to assist PaineWebber in attracting and
retaining highly qualified persons to serve as non-employee directors.
2. Definitions. In addition to terms defined elsewhere in the Plan, the
following additional terms are defined as set forth below:
(a) "Change in Control" shall mean the occurrence of any of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than PaineWebber, a subsidiary, any
trustee or other fiduciary holding securities under an employee
benefit plan of PaineWebber or a subsidiary, or any corporation
owned, directly or indirectly, by the stockholders of PaineWebber
in substantially the same proportions as their contemporaneous
ownership of voting securities of PaineWebber, is or becomes a "20%
Beneficial Owner." For purposes of this provision, a "20%
Beneficial Owner" shall mean a person who is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of PaineWebber
representing 20% or more of the combined voting power of
PaineWebber's then-outstanding voting securities (a "20% Beneficial
Owner"); provided that (A) the term "20% Beneficial Owner" shall
not include any Beneficial Owner who has crossed such 20% threshold
solely as a result of an acquisition of securities directly from
PaineWebber, or solely as a result of an acquisition by PaineWebber
of PaineWebber securities, until such time thereafter as such
person acquires additional voting securities other than directly
from Paine-
Webber and, after giving effect to such acquisition, such person
would constitute a 20% Beneficial Owner and (B) with respect to any
person who is and remains eligible to file a Schedule 13G pursuant
to Rule 13d-1(b)(1) under the Exchange Act with respect to
PaineWebber securities, there shall be excluded from the number of
securities deemed to be beneficially owned by such person for
purposes of determining whether such person is a 20% Beneficial
Owner a number of securities representing 10% of the combined
voting power of PaineWebber's then-outstanding voting securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
PaineWebber, together with any new director (other than a director
designated by a person who has entered into an agreement with
PaineWebber to effect a transaction described in paragraph (i),
(iii), or (iv) hereof) whose election by the Board or nomination
for election by PaineWebber's stockholders was approved by a vote
of at least two-thirds ( 2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (the
"Continuing Directors"), cease for any reason to constitute at
least a majority thereof;
(iii) the stockholders of PaineWebber approve a merger, consolidation,
recapitalization, or reorganization of PaineWebber, or a reverse
stock split of any class of voting securities of PaineWebber, or
the consummation of any such transaction if stockholder approval is
not obtained, other than any such transaction which would result in
at least 80% of the total voting power represented by the voting
securities of PaineWebber or the surviving entity outstanding
immediately after such transaction being beneficially owned by
persons who together beneficially owned at least 80% of the
combined voting power of the voting securities of PaineWebber
outstanding immediately prior to such transaction, with the
relative voting power of each such continuing holder compared to
the voting power of each other continuing holder not substantially
altered as a result of
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the transaction; provided that, for purposes of this paragraph
(iii), such continuity of ownership (and preservation of relative
voting power) shall be deemed to be satisfied if the failure to
meet such 80% threshold (or to substantially preserve such relative
voting power) is due solely to the acquisition of voting securities
by an employee benefit plan of PaineWebber or such surviving entity
or of any subsidiary of PaineWebber or such surviving entity;
(iv) the stockholders of PaineWebber approve a plan of complete
liquidation of PaineWebber or an agreement for the sale or
disposition by PaineWebber of all or substantially all of
PaineWebber's assets (or any transaction having similar effect); or
(v) any other event which the Board of Directors determines shall
constitute a Change in Control for purposes of this Plan;
provided that a Change in Control shall not be deemed to have occurred if,
prior to the occurrence of a specified event that would otherwise
constitute a Change in Control under paragraphs (i) through (iv) hereof,
the Continuing Directors of PaineWebber then in office, by a majority vote
thereof, determine that the occurrence of such specified event shall not be
deemed to be a Change in Control hereunder or shall not be deemed to be a
Change in Control with respect to a particular Participant under this Plan
if the Change in Control results from actions or events in which such
Participant is a participant in a capacity other than solely as an officer,
employee or director of PaineWebber or its subsidiaries.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time including regulations thereunder and successor provisions
and regulations thereto.
(c) "Deferred Stock" shall mean the credits to a Participant's
deferral account under Section 8, each of which represents the right to
receive one share of Stock upon settlement of the deferral account;
Deferral accounts, and Deferred Stock credited thereto, are maintained
solely as bookkeeping entries by PaineWebber evidencing unfunded,
non-transferable obligations of PaineWebber.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(e) "Fair Market Value" of Stock as of any given date shall be the
mean between the high and low sales prices of Stock on the stock exchange
or market on which Stock is primarily traded on the date as of which such
value is being determined or, if there shall be no sale on that date, then
on the basis of the average of the high and low sales prices of Stock on
the nearest date before and the nearest date after the date on which such
value is being determined.
(f) "Option" shall mean the right, granted to a Participant under
Section 6, to purchase Stock at the exercise price for a specified period
of time under the Plan.
(g) "Participant" shall mean a non-employee director who is eligible
to receive and is granted Options or Stock, or who defers fees or Stock in
the form of Deferred Stock, under the Plan.
(h) "Stock" shall mean the Common Stock of PaineWebber, par value $1
per share, and such other securities as may be substituted (or
resubstituted) for Stock or such other securities pursuant to Section 9.
3. Shares Available Under the Plan. The total number of shares of Stock
reserved and available for delivery under the Plan is 600,000, subject to
adjustment as provided in Section 9 below. Such shares may be authorized but
unissued shares or treasury shares. If any Option expires or terminates for any
reason without having been exercised in full, the unpurchased shares subject to
the Option will again be available for delivery under the Plan.
4. Administration of the Plan. The Plan will be administered by the Board
of Directors of PaineWebber, provided that any action by the Board of Directors
relating to the Plan will be taken only if approved by the affirmative vote of a
majority of the directors who are not then eligible to participate under the
Plan.
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5. Eligibility. Each director of PaineWebber who, on any date on which an
Option or Stock is to be granted under Section 6 or 7 or on which fees are to be
deferred under Section 8, is not an employee of PaineWebber or any subsidiary of
PaineWebber, will be eligible to receive Options or Stock or defer fees under
the Plan at such date. No person other than those specified in this Section 5
will participate in the Plan.
6. Stock Options. An Option to purchase 15,000 shares of Stock will be
granted to each director of PaineWebber who is then eligible to receive an
Option grant on the effective date of the Plan and, beginning in 1999 and each
fifth year thereafter, at the close of business of each annual meeting of
stockholders at which directors (or a class of directors if PaineWebber then has
a classified Board of Directors) are elected or reelected by PaineWebber's
stockholders (the "Annual Meeting"). In addition, an Option to purchase 15,000
shares of Stock will be granted to each person who is first elected or appointed
after the effective date of the Plan to serve as a director of PaineWebber at
the date of such election or appointment, if such director is then eligible to
receive an Option grant. The foregoing notwithstanding, no director may be
granted Options to purchase more than 15,000 shares during any one calendar year
under the Plan. Options granted under the Plan will be non-qualified stock
options which will be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock purchasable
under an Option will be equal to 100% of the Fair Market Value of Stock on
the date of grant of the Option.
(b) Option Term. Each Option will expire at the earliest of (i) ten
years after the date of grant, (ii) 36 months after the Participant ceases
to serve as a director of PaineWebber due to death, disability, or
retirement at or after age 65, (iii) 12 months after the Participant ceases
to serve as a director of PaineWebber for any reason other than death,
disability, or retirement at or after age 65 or (iv) immediately upon the
Participant's removal for cause.
(c) Exercisability. Each Option will become exercisable as to 100% of
the Option Shares on the third anniversary of the date of grant, and will
thereafter remain exercisable until the Option expires; provided that an
Option previously granted to a Participant (i) will be fully exercisable in
the event of a Change in Control, (ii) will be fully exercisable after the
Participant ceases to serve as a director of PaineWebber due to death,
disability, or retirement at or after age 65, and (iii) will be exercisable
after the Participant ceases to serve as a director of PaineWebber for any
reason other than death, disability, or retirement at or after age 65 only
if the Option was exercisable at the date of such cessation of service.
(d) Method of Exercise. Each Option may be exercised, in whole or in
part, at such time as it is exercisable and prior to its expiration by
giving written notice of exercise to PaineWebber specifying the Option to
be exercised and the number of shares to be purchased, and accompanied by
payment in full of the exercise price in cash (including by check) or by
surrender of shares of Stock of PaineWebber acquired by the Participant at
least six months prior to the exercise date and having a Fair Market Value
at the time of exercise equal to the exercise price, or a combination of a
cash payment and surrender of such Stock.
7. Stock Grants. 375 shares of Stock will be granted to each director of
PaineWebber who is then eligible to receive such grant on the effective date of
the Plan and, beginning in 1995, at the close of business of each Annual
Meeting. The foregoing notwithstanding, no director may be granted more than 375
shares during any one calendar year under the Plan.
(a) Condition of Grant and Delivery. The grant and delivery of Stock
hereunder shall be contingent upon the Participant's agreeing to serve as a
director of PaineWebber and serving as such through the first meeting of
the Board of Directors at or after the date of the grant. As promptly as
practicable thereafter, PaineWebber will deliver to the Participant one or
more certificates representing the Stock, registered in the name of the
Participant (or, if directed by the Participant, in the joint names of the
Participant and his or her spouse).
(b) Rights of the Participant. A Participant granted Stock hereunder
will have all of the rights of a holder of the Stock, including the right
to receive dividends paid on such Stock and the right to vote such Stock.
Upon delivery, such Stock will be non-forfeitable.
(8) Deferral of Fees in Deferred Stock. Each director of PaineWebber may
elect to defer fees and Stock received in his or her capacity as a director
(including annual retainer fees and fees for service
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<PAGE> 34
on committees or as chairman thereof) under the terms and conditions set forth
in this Section 8, provided that such director is eligible to defer fees at the
date any such fee is otherwise payable.
(a) Deferral Elections. Each director who elects to defer fees and
Stock for any calendar year must file an irrevocable written deferral
election with the Chief Administrative Officer of PaineWebber Incorporated
no later than the June 30 of the preceding year, provided that, with
respect to 1994, directors may file such election at any time prior to the
effective date of the Plan, and any newly elected or appointed director may
file such election not later than 30 days after the date of such election
or appointment. Any election of the director shall be deemed to be
continuing and therefore applicable to subsequent Plan years unless the
director revokes or changes such election by filing a new election form.
The election to defer must specify the following:
(i) A percentage of the Participant's fees for the year to be
deferred under the Plan;
(ii) A percentage of the Participant's Stock grant for the year to be
deferred under the Plan;
(iii) Whether dividend equivalents on amounts credited to the
Participant's deferral account will be paid directly to the
Participant or credited to his or her deferral account and deemed
to be reinvested in Deferred Stock;
(iv) The period during which receipt will be deferred; and
(v) The date(s) and/or event(s) on which payment(s) will be made and
whether in lump sum or installments, provided no such payments
shall be made more than ten years after the Participant ceases to
be a director.
In the event directors' fees or Stock grants are increased during any year,
a Participant's deferral election in effect for such year will apply to the
amount of such increase. Notwithstanding anything to the contrary in the
Plan or any deferral election form, the amounts credited to a Participant's
deferral account shall be paid in a single installment promptly following a
Change in Control.
(b) Crediting of Amounts to Deferral Account. PaineWebber will
establish a deferral account for each Participant who elects to defer fees
or Stock under this Section 8 and will credit such deferral account with an
amount, expressed as Deferred Stock, equal to the number of shares of Stock
having an aggregate Fair Market Value at the date the deferred fees or
Stock would have otherwise been payable equal to the amount of such fees or
Stock deferred. The amount of Deferred Stock so credited shall include
fractional shares carried to three decimal places. The foregoing
notwithstanding, if any deferral occurs less than six months after the
Participant filed the irrevocable election with respect to such deferral,
the amount deferred shall be credited to the Participant's deferral account
as cash, accruing deemed interest thereon at the Applicable Federal Rate
promulgated under Section 1274(d) of the Code for short-term loans with
semiannual compounding, until the date six months plus one day after the
date of the irrevocable election, at which time the deferral account will
be credited with an amount, expressed as Deferred Stock, equal to the
number of shares of Stock having an aggregate Fair Market Value at that
date equal to the cash amount plus interest then credited to the deferral
account (and such cash credits will be eliminated).
(c) Payment or Crediting of Dividend Equivalents. Whenever dividends
are paid or distributions made with respect to Stock, a Participant shall
be entitled to be paid an amount equal in value to the amount of the
dividend paid or property distributed on a single share of Stock multiplied
by the number of shares of Deferred Stock (including fractions) credited to
his or her deferral account as of the record date for such dividend or
distribution. Such dividend equivalents shall, in accordance with the
Participant's election under Section 8(a), either be paid directly to the
Participant or credited to the Participant's deferral account as an amount,
in shares of Deferred Stock, equal to the number of shares of Stock having
an aggregate Fair Market Value at the payment date of the dividend or
distribution equal to the value of such dividend equivalents.
(d) Vesting. The interest of each Participant in any benefit payable
with respect to a deferral account hereunder shall be at all times fully
vested and non-forfeitable.
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(e) Designation of Beneficiary. Each Participant may designate one or
more beneficiaries to receive the amounts distributable from the
Participant's deferral account under the Plan in the event of such
Participant's death, on forms provided by the Chief Administrative Officer
of PaineWebber Incorporated. PaineWebber may rely upon the beneficiary
designation last filed in accordance with the terms of the Plan.
(f) Settlement of Deferral Account. PaineWebber will settle the
Participant's deferral account by delivering to the Participant (or his or
her beneficiary) the number of shares of Stock equal to the number of whole
shares of Deferred Stock credited to the deferral account (or a specified
portion in the event of any partial settlement), with cash to be paid in
lieu of any fractional share remaining at a time that less than one whole
share of Deferred Stock is credited to such deferral account.
9. Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, stock or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase or share exchange or other similar corporate transaction
or event, affects the Stock such that an adjustment is determined by the Board
of Directors to be appropriate in order to prevent dilution or enlargement of
Participants' rights under the Plan, then the Board of Directors shall, in a
manner that is proportionate to the change to the Stock and is otherwise
equitable, adjust any or all of (i) the number and kind of shares of Stock
reserved for issuance under the Plan, (ii) the number and kind of shares of
Stock to be subject to each automatic grant of Options and Stock under Sections
6 and 7, (iii) the number and kind of shares of Stock issuable upon exercise of
outstanding Options, and/or the exercise price per share thereof (provided that
no fractional shares will be issued upon exercise of any Option), and (iv) the
number and kind of shares of Stock to be delivered upon settlement of deferral
accounts under Section 8. The foregoing notwithstanding, no adjustment may be
made hereunder except as shall be necessary to maintain the proportionate
interest of a Participant under the Plan and to preserve, without exceeding, the
value of outstanding Options and Deferred Stock and potential grants of Options
and Stock. If at any date an insufficient number of shares is available for the
automatic grant of Options or Stock or the deferral of fees at that date, Stock
will first be automatically granted under Section 6 proportionately to
Participants, to the extent shares are available, and then, if any shares
remain, Options will be automatically granted under Section 7 proportionately to
Participants, to the extent shares are available, and then, if any shares
remain, fees shall be deferred in the form of Deferred Stock proportionately
among Participants under Section 8, to the extent shares are available.
10. Changes to the Plan. The Board of Directors may amend, alter, suspend,
discontinue, or terminate the Plan or authority to grant Options or Stock under
the Plan without the consent of stockholders or Participants, except that any
such action shall be subject to the approval of PaineWebber's stockholders at
the Annual Meeting next following such Board action if such stockholder approval
is required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, or if the Board of Directors determines in its discretion to seek such
stockholder approval; provided that, without the consent of an affected
Participant, no such action may impair the rights of such Participant with
respect to any previously granted Option or shares of Stock or any previous
deferral under the Plan; and provided further, that any Plan provision that
specifies the directors who may receive grants of Options or Stock, the amount
and price of securities to be granted to such directors, and the timing of
grants to such directors, or is otherwise a "plan provision" referred to in Rule
16b-3(c)(2)(ii)(B) under the Exchange Act, shall not be amended more than once
every six months, other than to comport with changes in the Code or the rules
thereunder.
11. General Provisions.
(a) Consideration for Grants; Agreements. Options and Stock shall be
granted under the Plan in consideration of the services of Participants
and, except for the payment of the exercise price in the case of an Option,
no other consideration shall be required therefor. Grants of Options will
be evidenced by agreements executed by PaineWebber and the Participant
containing the terms and conditions set forth in the Plan together with
such other terms and conditions not inconsistent with the Plan as the Board
of Directors may from time to time approve.
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(b) Compliance with Laws and Obligations. PaineWebber shall not be
obligated to issue or deliver Stock in connection with any Option, any
grant of Stock, or settlement of any deferral account in a transaction
subject to the registration requirements of the Securities Act of 1933, as
amended, or any state securities law, any requirement under any listing
agreement between PaineWebber and the New York Stock Exchange or any other
national securities exchange or automated quotation system, or subject to
any other law, regulation, or contractual obligation, until PaineWebber is
satisfied that such laws, regulations, and other obligations of PaineWebber
have been complied with in full. Certificates representing shares of Stock
delivered under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations, and
other obligations of PaineWebber, including any requirement that a legend
or legends be placed thereon.
(c) Non-transferability. Options, Deferred Stock, and any other right
under the Plan that may constitute a "derivative security" as generally
defined in Rule 16a-1(c)(3) under the Exchange Act shall not be
transferable by a Participant except by will or the laws of descent and
distribution (or to a designated beneficiary in the event of a
Participant's death), and shall be exercisable during the lifetime of a
Participant only by such Participant or his or her guardian or legal
representative.
(d) Compliance with Rule 16b-3. It is the intent of PaineWebber that
this Plan comply in all respects with applicable provisions of Rule 16b-3
under the Exchange Act in connection with any grant of Options or Stock or
deferral of fees in the form of Deferred Stock to or by a Participant.
Accordingly, if any provision of this Plan or any agreement hereunder does
not comply with the requirements of Rule 16b-3 as then applicable to any
such Participant, or would cause any Participant to no longer be deemed a
"disinterested person" within the meaning of Rule 16b-3, such provision
shall be construed or deemed amended to the extent necessary to conform to
such requirements with respect to such Participant. In addition, the Board
of Directors shall have no authority to make any amendment, alteration,
suspension, discontinuation, or termination of the Plan or any agreement
hereunder or take other action if and to the extent such authority would
cause a Participant's transactions under the Plan not to be exempt, or
Participants no longer to be deemed "disinterested persons," under Rule
16b-3 under the Exchange Act.
(e) Future Service as an Employee. If a Participant ceases serving as
a director and, immediately thereafter, he or she is employed by
PaineWebber or any subsidiary, then, solely for the purposes of Section
6(b) and (c) of the Plan, such Participant shall not be deemed to have
ceased service as a director at that time, and his or her continued
employment by PaineWebber or any subsidiary shall be deemed to be continued
service as a director; provided that such former director shall not be
eligible for additional grants of Options or Stock or deferrals under the
Plan.
(f) No Right to Continue as a Director. Nothing contained in the Plan
or any agreement hereunder shall confer upon any Participant any right to
continue to serve as a director of PaineWebber.
(g) No Stockholder Rights Conferred. Nothing contained in the Plan or
any agreement hereunder shall confer upon any Participant any rights of a
stockholder of PaineWebber unless and until shares of Stock are in fact
issued to such Participant upon the valid exercise of an Option or
delivered under Section 7 or upon settlement of deferral accounts under
Section 8.
(h) Governing Law. The validity, construction, and effect of the Plan
and any agreement hereunder shall be determined in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts
of laws, and applicable federal law.
12. Effective Date and Duration of Plan. The Plan shall become effective
upon approval by PaineWebber stockholders. Unless earlier terminated by action
of the Board of Directors, the Plan shall remain in effect until such time as no
Stock remains available for issuance under the Plan and PaineWebber has no
further rights or obligations under the Plan with respect to outstanding Options
or Deferred Stock under the Plan.
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ANNEX III
PAINE WEBBER GROUP INC.
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purposes. The purposes of this 1994 Executive Incentive Compensation
Plan are to provide an incentive to executive officers and other selected key
executives of Paine Webber Group Inc. ("PaineWebber") to contribute to the
growth and annual profitability of PaineWebber and its subsidiaries, to
encourage such executives to remain in the employ of PaineWebber, and to
endeavor to qualify the compensation paid under the Plan for tax deductibility
under Section 162(m) of the Code to the extent deemed appropriate by the
Compensation Committee of the Board of Directors of PaineWebber.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Annual Profits" shall mean the annual consolidated pre-tax
operating income of PaineWebber for the Performance Period before
accounting for incentive compensation and corporate charges and the cost of
restructuring and discontinued operations.
(b) "Award" shall mean a portion of the Award Pool payable to a
Participant as determined pursuant to Section 4. Awards may be paid in
cash, common stock of PaineWebber, and/or other awards authorized by
PaineWebber's 1994 Executive Stock Award Plan and 1994 Stock Award Plan, as
determined by the Committee. To the extent Awards are paid in a form other
than cash, such payments shall count against the number of shares or awards
reserved under the 1994 Executive Stock Award Plan or the 1994 Stock Award
Plan.
(c) "Award Pool" shall mean a pool of funds specified by the
Committee, in accordance with Section 4, out of which Awards may be made to
Participants.
(d) "Board" shall mean PaineWebber's Board of Directors.
(e) "Change in Control" shall mean the occurrence of any of the
following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than PaineWebber, a subsidiary, any
trustee or other fiduciary holding securities under an employee
benefit plan of PaineWebber or a subsidiary, or any corporation
owned, directly or indirectly, by the stockholders of PaineWebber
in substantially the same proportions as their contemporaneous
ownership of voting securities of PaineWebber, is or becomes a "20%
Beneficial Owner." For purposes of this provision, a "20%
Beneficial Owner" shall mean a person who is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of PaineWebber
representing 20% or more of the combined voting power of
PaineWebber's then-outstanding voting securities (a "20% Beneficial
Owner"); provided that (A) the term "20% Beneficial Owner" shall
not include any Beneficial Owner who has crossed such 20% threshold
solely as a result of an acquisition of securities directly from
PaineWebber, or solely as a result of an acquisition by PaineWebber
of PaineWebber securities, until such time thereafter as such
person acquires additional voting securities other than directly
from PaineWebber and, after giving effect to such acquisition, such
person would constitute a 20% Beneficial Owner and (B) with respect
to any person who is and remains eligible to file a Schedule 13G
pursuant to Rule 13d-1(b)(1) under the Exchange Act with respect to
PaineWebber securities, there shall be excluded from the number of
securities deemed to be beneficially owned by such person for
purposes of determining whether such person is a 20% Beneficial
Owner a number of securities representing 10% of the combined
voting power of PaineWebber's then-outstanding voting securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
PaineWebber, together with any new
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director (other than a director designated by a person who has
entered into an agreement with PaineWebber to effect a transaction
described in paragraph (i), (iii), or (iv) hereof) whose election
by the Board or nomination for election by PaineWebber's
stockholders was approved by a vote of at least two-thirds ( 2/3)
of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for
election was previously so approved (the "Continuing Directors"),
cease for any reason to constitute at least a majority thereof;
(iii) the stockholders of PaineWebber approve a merger, consolidation,
recapitalization, or reorganization of PaineWebber, or a reserve
stock split of any class of voting securities of PaineWebber, or
the consummation of any such transaction if stockholder approval is
not obtained, other than any such transaction which would result in
at least 80% of the total voting power represented by the voting
securities of PaineWebber or the surviving entity outstanding
immediately after such transaction being beneficially owned by
persons who together beneficially owned at least 80% of the
combined voting power of the voting securities of PaineWebber
outstanding immediately prior to such transaction, with the
relative voting power of each such continuing holder compared to
the voting power of each other continuing holder not substantially
altered as a result of the transaction; provided that, for purposes
of this paragraph (iii), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be
satisfied if the failure to meet such 80% threshold (or to
substantially preserve such relative voting power) is due solely to
the acquisition of voting securities by an employee benefit plan of
PaineWebber or such surviving entity or of any subsidiary of
PaineWebber or such surviving entity;
(iv) the stockholders of PaineWebber approve a plan of complete
liquidation of PaineWebber or an agreement for the sale or
disposition by PaineWebber of all or substantially all of
PaineWebber's assets (or any transaction having a similar effect);
or
(v) any other event which the Board of Directors (or the Compensation
Committee of the Board of Directors, if and to the extent that the
Compensation Committee must exercise sole discretion over the
matter in order to comply with applicable requirements of Rule
16b-3 under the Exchange Act) determines shall constitute a Change
in Control for purposes of this Plan;
provided that a Change in Control shall not be deemed to have occurred if,
prior to the occurrence of a specified event that would otherwise
constitute a Change in Control under paragraphs (i) through (iv) hereof,
the Continuing Directors of PaineWebber then in office, by a majority vote
thereof, determine that the occurrence of such specified event shall not be
deemed to be a Change in Control hereunder or shall not be deemed to be a
Change in Control with respect to a particular Participant under this Plan
if the Change in Control results from actions or events in which such
Participant is a participant in a capacity other than solely as an officer,
employee or director of PaineWebber or its subsidiaries.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor
provisions and regulations thereto.
(g) "Committee" shall mean the Compensation Committee of the Board, or
such other Board committee as may be designated by the Board to administer
the Plan; provided that the Committee shall consist solely of two or more
directors, each of whom is a "disinterested person" within the meaning of
Rule 16b-3 under the Exchange Act.
(h) "Eligible Employee" shall mean each executive officer of
PaineWebber, including those employed by subsidiaries, and other key
executives selected by the Committee.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(j) "PaineWebber" shall mean Paine Webber Group Inc. and shall include
any corporation which is or hereafter becomes a subsidiary corporation of
Paine Webber Group Inc. within the meaning of Section 424(f) of the Code.
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(k) "Participant" shall mean an Eligible Employee designated by the
Committee to participate in the Plan for a designated Performance Period.
(l) "Plan" shall mean this Paine Webber Group Inc. 1994 Executive
Incentive Compensation Plan.
(m) "Performance Period" shall mean the calendar year or such other
shorter or longer period designated by the Committee, performance during
all or part of which a Participant's entitlement to receive payment of an
Award is based.
3. Administration. The Plan shall be administered by the Committee, no
member of which shall be eligible to participate in the Plan. The Committee is
authorized, subject to the provisions of the Plan, in its discretion, from time
to time to select Participants; to grant Awards under the Plan; to establish,
modify, or rescind such rules and regulations as it deems necessary for the
proper administration of the Plan; and to make such determinations and
interpretations and to take such steps in connection with the Plan or the Awards
granted thereunder as it deems necessary or advisable. All such actions by the
Committee under the Plan or with respect to the Awards granted thereunder shall
be final and binding on all persons. No member of the Committee shall be liable
for any action taken, or determination made, in good faith.
4. Awards.
(a) Creation of Award Pool. The Award Pool for each Performance Period
shall equal 4.5% of Annual Profits in excess of $100 million and up to $870
million plus 5.5% of Annual Profits in excess of $870 million.
(b) Allocation of Award Pool. Prior to the commencement of each
Performance Period, the Committee shall allocate in writing, on behalf of
each Participant, a portion of the Award Pool (not to exceed 33% on behalf
of any Participant) to be paid for such Performance Period; provided that
the allocation of the Award Pool for the 1994 Performance Period may occur
no later than March 31, 1994.
(c) Adjustments. The Committee is authorized at any time during or
after a Performance Period, in its sole and absolute discretion, to reduce
or eliminate the Award Pool or the portion of the Award Pool allocated to
any Participant, for any reason, including changes in the position or
duties of any Participant with PaineWebber or any subsidiary during a
Performance Period, whether due to any termination of employment (including
death, disability, retirement, or termination with or without cause) or
otherwise. In addition, the Committee is authorized at any time during or
after a Performance Period, in its sole and absolute discretion, to adjust
or modify the calculation of Annual Profits, the Award Pool, and
allocations thereunder, in order to prevent dilution or enlargement of the
rights of Participants, (i) in the event of any dividend or other
distribution (whether in the form of cash, securities, or other property),
recapitalization, reorganization, merger, consolidation, spin off,
combination, repurchase, share exchange, liquidation, dissolution, or other
similar corporate transaction or event, (ii) in recognition of any other
unusual or nonrecurring events affecting PaineWebber, any subsidiary, or
any business division or unit or the financial statements of PaineWebber or
any subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions,
and (iii) in view of the Committee's assessment of the business strategy of
the Company and divisions and subsidiaries thereof, performance of
comparable organizations, economic and business conditions, personal
performance of the Participant, and any other circumstances deemed
relevant; provided that, unless otherwise determined by the Committee in
its sole discretion, no such adjustment shall be authorized or made if and
to the extent that such authority or the making of such adjustment would
cause Awards to fail to qualify as "performance-based compensation" under
Section 162(m)(4)(C) of the Code and regulations thereunder (including
Proposed Regulation 1.162-27(e)(2)).
(d) Payment of Awards.
(i) Following the completion of each Performance Period, the
Committee shall certify in writing the amount of the Award Pool
and the Awards payable to Participants.
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(ii) Except as provided below, each Participant shall receive
payment, in a cash lump sum, of his or her Award as soon as
practicable following the determination in respect thereof made
pursuant to this Section 4(d).
(iii) The Committee may specify, either before or after completion of
any Performance Period, that all or a portion of any Award
shall be paid by issuance or delivery of shares of
PaineWebber's common stock or other awards, including
restricted stock and/or restricted units, as authorized by
PaineWebber's 1994 Executive Stock Award Plan or 1994 Stock
Award Plan, having a fair market value equal to the cash value
of the Award that would otherwise have been payable. Such
shares or other awards shall be subject to such conditions,
including deferral of delivery, restrictions on
transferability, and other terms and conditions as shall be
specified by the Committee. The fair market value of any
stock-based payment shall be determined by the Committee or
under procedures established by the Committee. Unless otherwise
determined by the Committee, the fair market value of
PaineWebber common stock as of any given date shall be the mean
between the high and low sales prices of PaineWebber common
stock on the stock exchange or market on which the stock is
primarily traded on the date as of which such value is being
determined, or if there shall be no sale on that date, then on
the basis of the average of the high and low sales prices of
PaineWebber common stock on the nearest date before and the
nearest date after the date on which such value is being
determined.
(iv) Each Participant shall have the right to defer receipt of part
or all of any payment due with respect to an Award, subject to
the terms, conditions and administrative guidelines of the
PaineWebber Senior Officer Deferred Compensation Plan or other
applicable deferred compensation plan of PaineWebber or its
subsidiaries.
(v) In the event a Participant terminates employment for any reason
during a Performance Period or prior to Award payment, he or she
(or his or her beneficiary, in the case of death) shall not be
entitled to receive any Award for such Performance Period unless
the Committee, in its sole and absolute discretion, elects to
pay an Award to such Participant.
(vi) In the event of the death of a Participant, any payments
hereunder due to such Participant shall be paid to his or her
beneficiary as designated in writing to the Committee or,
failing such designation, to his or her estate, unless otherwise
provided in an irrevocable deferral election form filed by the
Participant. No beneficiary designation shall be effective
unless it is in writing and received by the Committee prior to
the date of death of the Participant.
(vii) In the event of a Change in Control, the Award Pool shall be
computed as if the Performance Period ended immediately prior
to the Change in Control, and the Award Pool shall be computed
by annualizing the amount of the Annual Profits achieved during
such Performance Period. Notwithstanding Section 4(c), in the
event of a Change in Control, the Committee shall not be
authorized to reduce or eliminate the Award Pool or the portion
of the Award Pool allocated to any Participant; provided that a
Participant's Award to which he or she would otherwise be
entitled shall be multiplied by a fraction, the numerator of
which is the number of days in the Performance Period prior to
the Change in Control and the denominator of which is 365. Any
resulting amount hereunder due to a Participant shall be paid
in a cash lump sum no later than fifteen (15) days after a
Change in Control unless otherwise provided in an irrevocable
deferral election form filed by the Participant prior to such
event.
5. General Provisions
(a) Taxes. PaineWebber or any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of PaineWebber common stock, or any payroll
or other payment to a Participant, amounts of withholding and other taxes
due in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable PaineWebber and
Participants to satisfy obligations for the payment of withholding taxes
and other tax obligations
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relating to any Award. This authority shall include authority for
PaineWebber to withhold or receive PaineWebber common stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, either on a mandatory or elective basis in
the discretion of the Committee.
(b) Limitations on Rights Conferred under Plan and
Beneficiaries. Neither status as a Participant nor receipt nor completion
of a deferral election form shall be construed as a commitment that any
Award will become payable under the Plan. Nothing contained in the Plan or
in any documents related to the Plan or to any Award shall confer upon any
Eligible Employee or Participant any right to continue as an Eligible
Employee, Participant or in the employ of PaineWebber or a subsidiary or
constitute any contract or agreement of employment, or interfere in any way
with the right of PaineWebber or a subsidiary to reduce such person's
compensation, to change the position held by such person or to terminate
the employment of such Eligible Employee or Participant, with or without
cause, but nothing contained in this Plan or any document related thereto
shall affect any other contractual right of any Eligible Employee or
Participant. No benefit payable under, or interest in, this Plan shall be
transferable by a Participant except by will or the laws of descent and
distribution or otherwise be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge.
(c) Changes to the Plan and Awards. Notwithstanding anything herein to
the contrary, the Board may, at any time, terminate or, from time to time,
amend, modify or suspend the Plan and the terms and provisions of any Award
theretofore awarded to any Participant which has not been settled (either
by payment or deferral). No Award may be granted during any suspension of
the Plan or after its termination. Any such amendment may be made without
stockholder approval.
(d) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any amounts payable to a Participant pursuant
to an Award, nothing contained in the Plan (or in any documents related
thereto), nor the creation or adoption of the Plan, the grant of any Award,
or the taking of any other action pursuant to the Plan shall give any such
Participant any rights that are greater than those of a general creditor of
PaineWebber; provided that the Committee may authorize the creation of
trusts and deposit therein cash, stock, or other property or make other
arrangements, to meet PaineWebber's obligations under the Plan. Such trusts
or other arrangements shall be consistent with the "unfunded" status of the
Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to
dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee may
specify in accordance with applicable law.
(e) Non-Exclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of PaineWebber for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem necessary.
(f) Governing Law. The validity, construction, and effect of the Plan,
any rules and regulations relating to the Plan, and any Award shall be
determined in accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of laws, and applicable federal
law.
(g) Effective Date. The Plan shall become effective on January 1,
1994, subject to subsequent approval thereof by PaineWebber's stockholders
at the 1994 annual meeting and shall remain in effect until it has been
terminated pursuant to Section 5(f).
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ANNEX IV
PAINE WEBBER GROUP INC.
1994 EXECUTIVE STOCK AWARD PLAN
1. Purpose. The purpose of this 1994 Executive Stock Award Plan (the
"Plan") is to assist Paine Webber Group Inc. ("PaineWebber") and its
subsidiaries in attracting, retaining, and rewarding high-quality executive
officers and other key executives, enabling such executives to acquire or
increase a proprietary interest in PaineWebber in order to strengthen the
mutuality of interests between such executives and PaineWebber's stockholders,
and providing such executives with performance incentives to expend their
maximum efforts in the creation of long-term stockholder value. The Plan is also
intended to endeavor to qualify the compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Internal Revenue Code to the extent
deemed appropriate by the Compensation Committee of the Board of Directors of
PaineWebber.
2. Definitions. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Restricted Units,
Stock granted as a bonus or in lieu of other awards, Dividend Equivalents, and
Other Stock-Based Awards are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." The following additional terms shall be defined as
set forth below:
(a) "Board" shall mean PaineWebber's Board of Directors.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor
provisions and regulations thereto.
(c) "Committee" shall mean the Compensation Committee of the Board, or
such other Board committee as may be designated by the Board to
administer the Plan; provided that the Committee shall consist
solely of two or more directors, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 of the Exchange Act.
(d) "Eligible Employee" shall mean each executive officer of
PaineWebber, including those employed by subsidiaries, and other
key executives selected by the Committee.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and
successor provisions and rules thereto.
(f) "Fair Market Value" shall mean the fair market value of Stock,
Awards, or other property determined by the Committee or under
procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock as of
any given date shall be the mean between the high and low sales
prices of Stock on the stock exchange or market on which Stock is
primarily traded on the date as of which such value is being
determined and the four preceding trading days on which a sale
occurred.
(g) "ISO" shall mean any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the
Code.
(h) "Participant" shall mean an Eligible Employee who has been granted
an Award under the Plan.
(i) "PaineWebber" shall mean Paine Webber Group Inc.
(j) "Stock" shall mean PaineWebber's Common Stock, par value $1.00 per
share, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 4.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee, no member of which shall be eligible to participate in the Plan.
The Committee shall have full and final authority, in each case subject to
and consistent with the provisions of the Plan, to select Participants,
grant Awards, determine the type, number, and other terms and conditions
of, and
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all other matters relating to, Awards, prescribe Award agreements (which
need not be identical for each Participant) and rules and regulations for
the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions, or reconcile
inconsistencies therein, and to make all other decisions and determinations
as the Committee may deem necessary or advisable for the administration of
the Plan.
(b) Manner of Exercise of Committee Authority. The Committee shall
exercise sole and exclusive discretion on any matter relating to a
Participant subject to Section 16 of the Exchange Act. Any action of the
Committee shall be final, conclusive, and binding on all persons, including
PaineWebber, its subsidiaries, Participants, persons claiming rights from
or through a Participant, and stockholders. The express grant of any
specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of
PaineWebber or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee shall determine, to perform
administrative functions and, with respect to Participants not subject to
Section 16 of the Exchange Act, to perform any such other functions as the
Committee may determine, to the extent permitted under Rule 16b-3 and
applicable law.
(c) Limitation of Liability. The Committee may appoint agents to
assist it in administering the Plan. The Committee and each member thereof
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or employee of PaineWebber or a
subsidiary, PaineWebber's independent certified public accountants,
consultants or any other agent assisting in the administration of the Plan.
Members of the Committee and any officer or employee of PaineWebber or a
subsidiary acting at the direction or on behalf of the Committee shall not
be personally liable for any action or determination taken or made in good
faith with respect to the Plan, and shall, to the extent permitted by law,
be fully indemnified and protected by PaineWebber with respect to any such
action or determination.
4. Stock Subject to Plan. Subject to adjustment as provided in Section
8(c), the total number of shares of Stock reserved and available for issuance in
connection with Awards granted under the Plan in each calendar year during any
part of which the Plan is in effect shall be 975,000; provided that such number
shall be increased in any calendar year by the number of shares of Stock which
were available in such previous calendar years but which neither are subject to
outstanding Awards nor were previously delivered to Participants (or a trust
established under Section 9(g)) in settlement of Awards. In addition, during the
term in which the Plan is in effect, the number of shares of Stock reserved and
available for issuance in connection with Awards under the Plan shall include
the remaining shares of Stock that are available or become available following
termination of the PaineWebber 1990 Stock Award and Option Plan. Notwithstanding
anything to the contrary, no more than 1,500,000 shares of Stock shall be
available for grants of ISOs or Stock Appreciation Rights in tandem with ISOs.
When Awards that may be settled by delivery of stock to the Participant are
granted and while they are outstanding, shares relating to an Award will be
counted against the limitation set forth in this Section 4 in accordance with
Rule 16b-3. In the case of Awards valued by reference to Stock but which may be
settled only by delivery to the Participant of cash or property other than Stock
("Other Awards"), no such Other Award may be granted if and to the extent that a
number of shares to which such Other Award relates, when added to the number of
shares to which all Other Awards relate, exceeds a number equal to the total
number of shares of Stock reserved and available in such calendar year (without
adjustment for grants in that year of Awards that may be settled by delivery of
Stock to Participants). The Committee may adopt reasonable counting procedures,
consistent with Rule 16b-3, to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards), and make
adjustments if the number of shares actually delivered differs from the number
of shares previously counted in connection with an Award. Shares subject to an
Award that is forfeited or settled in cash or otherwise terminated without a
delivery of shares to the Participant, including shares withheld in payment of
taxes relating to Awards and the number of shares equal to the number of shares
surrendered in payment of the exercise price of Options (or any other Awards in
the nature of purchase rights) or taxes relating to Awards, will again be
available for Awards under the Plan, except that, if any such shares could not
again be available under Rule 16b-3 for Awards to a Participant who is subject
to Section 16 of the Exchange Act, such shares shall be available exclusively
for Awards to Participants who are not subject to
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Section 16. Any shares delivered under the Plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
5. Eligibility. Eligible Employees may be granted Awards under the Plan. In
each calendar year during any part of which the Plan is in effect, an Eligible
Employee may not be granted Awards relating to more than 450,000 shares of
Stock, subject to adjustment as provided in Section 8(c), under each of Sections
6(b), 6(c), 6(d), 6(e), 6(f) or 6(h) of the Plan. With respect to cash awards
under Section 6(h) or Other Awards settled in cash, no amount may be paid that
exceeds the greater of the Fair Market Value of the number of shares of Stock
set forth in the preceding sentence at the date of grant or the date of
settlement of the Award (this limitation is separate and not affected by the
number of Awards granted during such calendar year subject to the limitation in
the preceding sentence).
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award
or the exercise thereof, at the date of grant or thereafter (subject to
Section 8(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of
employment by the Participant. The Committee shall retain full power to
accelerate or waive, at any time, any term or condition of an Award that is
not mandatory under the Plan. Except in cases in which the Committee is
specifically authorized to require other forms of consideration by the
Plan, or to the extent other forms of consideration must be paid to satisfy
the requirements of the Delaware General Corporation Law, only services may
be required as consideration for the grant (but not the exercise) of any
Award.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee, provided
that such exercise price shall be not less than the Fair Market
Value of a share on the date of grant of such Option except as
provided under Section 7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall at the date of
grant or thereafter, determine the time or times at which or the
circumstances under which an Option may be exercised in whole or
in part, the methods by which such exercise price may be paid or
deemed to be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards issued under
other PaineWebber plans, or other property (including notes or
other contractual obligations of Participants to make payment on
a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the
methods by or forms in which Stock will be delivered or deemed to
be delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirements that no ISO shall
be granted more than ten years after the effective date of the
Plan, no ISO shall be exercisable more than ten years after the
date of grant, and ISOs shall not be transferable otherwise than
by will or the laws of descent and distribution and shall be
exercisable, during the Participant's lifetime, only by the
Participant.
(c) Stock Appreciation Rights. The committee is authorized to grant
Stock Appreciation Rights ("SARs") to Participants on the following terms
and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the
date of exercise (or, if the Committee shall so determine in the
case of any such right other than one related to an ISO, the Fair
Market Value of one share at any time during a specified period
before or after the date of exercise, or, in the case of a
"Limited SAR," the Fair Market Value determined by reference to
amounts paid or payable in connection with a change in control of
PaineWebber, as specified by the
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Committee), over (B) the grant price of the SAR as determined by
the Committee as of the date of grant of the SAR.
(ii) Other Terms. The Committee shall determine at the date of grant
or thereafter, the time or times at which and the circumstances
under which an SAR may be exercised in whole or in part, the
method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Participants, whether or
not an SAR shall be in tandem or in combination with any other
Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a change in
control or other event as specified by the Committee may be
granted on such terms, not inconsistent with this Section 6(c),
as the Committee may determine. Limited SARs may be either
freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if
any, as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the
Committee may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of the Plan and
any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights
of a stockholder including, without limitation, the right to vote
Restricted Stock or the right to receive dividends thereon.
During the restricted period applicable to the Restricted Stock,
subject to Section 8(b) below, the Restricted Stock may not be
sold, transferred, pledged, margined or otherwise encumbered by
the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment during the applicable restriction
period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by PaineWebber;
provided that the Committee may provide, by rule or regulation
or in any Award agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event
of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are
registered in the name of the Participant, the Committee may
require such certificates to bear an appropriate legend
referring to the terms, conditions, and restrictions applicable
to such Restricted Stock, with PaineWebber to retain physical
possession of the certificates, and/or the Participant to
deliver a stock power to PaineWebber, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend,
and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other
property has been distributed. As a condition to the grant of an
Award of Restricted Stock, the Committee may require that any
cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock
or applied to the purchase of additional Awards under the Plan.
(e) Restricted Units. The Committee is authorized to grant Restricted
Units ("RUs") to Participants which are rights to receive Stock, cash or a
combination thereof at the end of a specified deferral period, subject to
the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an RU Award will occur
upon expiration of the deferral period specified for an Award of
RUs by the Committee (or, if permitted by the
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Committee, as elected by the Participant). In addition, RUs shall
be subject to such restrictions as the Committee may impose, if
any, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times, separately or in
combination, in installments, or otherwise, as the Committee may
determine. RU Awards may be satisfied by delivery of Stock, cash
equal to the Fair Market Value of the specified number of shares
of Stock covered by the RU Award, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria
established by the Committee) during the applicable deferral
period or portion thereof to which forfeiture conditions apply
(as provided in the Award agreement evidencing the RUs), all RUs
that are at that time subject to deferral (other than a deferral
at the election of the Participant) shall be forfeited; provided
that the Committee may provide, by rule or regulation or in any
Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to RUs will be
waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of RUs.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by the RU Award will
be paid with respect to RU Awards either at the dividend payment
date in cash or in shares of unrestricted Stock having a Fair
Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or
value thereof automatically reinvested in additional RUs, other
Awards, or other investment vehicles, as the Committee shall
determine or permit the Participant to elect. Unless otherwise
determined by the Committee, Stock distributed in connection
with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions, a
risk of forfeiture, and/or deferral to the same extent as the
RUs with respect to which such Stock or other property has been
distributed.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards
in lieu of PaineWebber obligations to pay cash or deliver other property
under other plans, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, such grants or Awards are made in a manner
that complies with applicable requirements of Rule 16b-3 so that the
acquisition of Stock or Awards hereunder shall be exempt from liability
under Section 16(b) of the Exchange Act, to the extent such compliance is
deemed necessary or appropriate by the Committee. Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by
the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing
basis or in connection with another Award. The Committee may provide that
Dividend Equivalents will be paid or distributed when accrued or will be
deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles as the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including,
without limitation, convertible or exchangeable debt securities, other
rights convertible or exchangeable into Stock, purchase rights for Stock,
Awards with value and payment contingent upon performance of PaineWebber or
any other factors designated by the Committee, and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries. The Committee shall determine the
terms and conditions of such Awards. Stock delivered pursuant to an Award
in the nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other
Awards, or other property, as the
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Committee shall determine. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be authorized pursuant to this
Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or award granted under any plan of
PaineWebber, any subsidiary, or any business entity to be acquired by
PaineWebber or a subsidiary, or any other right of a Participant to receive
payment from PaineWebber or any subsidiary. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is
granted in substitution or exchange for another Award or award, the
Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, grants of Awards
in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of PaineWebber, in which the value of Stock subject to
the Award is equal to the value of the cash compensation (for example, RUs
or Restricted Stock), or in which the exercise price, grant price, or
purchase price of the Award in the nature of a right that may be exercised
is equal to Fair Market Value of the underlying Stock minus the value of
the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation
surrendered), are specifically authorized.
(b) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the
Committee. Any Award subject to such conditions may be denominated
"performance shares," "performance units," or any other title deemed
appropriate by the Committee.
(c) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the
term of any ISO or any SAR granted in tandem therewith exceed a period of
ten years (or such shorter term as may be required under Section 422 of the
Code).
(d) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made
by PaineWebber or a subsidiary upon the exercise of an Option or other
Award or settlement of an Award may be made in such forms as the Committee
shall determine, including, without limitation, cash, Stock, other Awards,
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or
more specified events, including a change in control as defined by the
Committee. Installment or deferred payments may be required by the
Committee (subject to Section 8(e) of the Plan) or permitted at the
election of the Participant. Payments may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments denominated in
Stock.
(e) Rule 16b-3 Compliance. It is the intent of PaineWebber that this
Plan comply in all respects with applicable provisions of Rule 16b-3 or
Rule 16a-1(c)(3) under the Exchange Act in connection with any grant of
Awards to or other transaction by a Participant who is subject to Section
16 of the Exchange Act (except for transactions exempted under alternative
Exchange Act Rules or acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will
be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b). In addition, the per
share exercise price of any Option, grant price of any SAR, or purchase
price of any other Award conferring a right to purchase Stock shall be not
less than any specified percentage of the Fair Market Value of Stock at the
date of grant of the Award then required in order to comply with Rule
16b-3.
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(f) Performance-Based Awards to "Covered Employee". Other provisions
of the Plan notwithstanding, the provisions of this Section 7(f) shall
apply to any Award the exercisability or settlement of which is subject to
the achievement of performance conditions (other than an Option or SAR
granted with an exercise or base price at least equal to 100% of Fair
Market Value of Stock on the date of grant) if such Award is granted to a
person who, at the time of grant, is a "covered employee." The definition
of "covered employee," and other terms used in this Section 7(f), shall be
interpreted in a manner consistent with Section 162(m) of the Code and
regulations thereunder (including Proposed Regulation 1.162-27). The
performance goals for an Award subject to this Section 7(f) shall consist
of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the Committee
but consistent with this Section 7(f). Performance goals shall be objective
and shall otherwise meet the requirements of Section 162(m)(4)(C) of the
Code and regulations thereunder (including Proposed Regulation
1.162-27(e)(2)). The following business criteria for PaineWebber on a
consolidated basis shall be used by the Committee in connection with a
performance goal: (1) net earnings; (2) fully diluted earnings per common
share; (3) return on average common equity; (4) pre-tax income; and (5)
pre-tax operating income before accounting for incentive compensation and
corporate charges for the cost of advertising, systems development,
finance, credit, treasury, human resources, President's Group, Chairman's
Office, restructuring and discontinued operations.
Achievement of performance goals shall be measured over a period of
one, two, three or four years, as specified by the Committee. No business
criteria other than those named above may be used in establishing the
performance goal for an Award to a covered employee. For each such Award
relating to a covered employee, the Committee shall establish the targeted
level or levels of performance for each business criterion. Performance
goals may differ for Awards under this Section 7(f) to different covered
employees. The Committee may determine that an Award under this Section
7(f) shall be payable upon achievement of any one of the performance goals
or may require that two or more of the performance goals must be achieved
in order for an Award to be payable. The Committee may, in its discretion,
reduce the amount of a payout otherwise to be made in connection with an
Award under this Section 7(f), but may not exercise discretion to increase
such amount, and the Committee may consider other performance criteria in
exercising such discretion. All determinations by the Committee as to the
achievement of performance goals shall be made in writing. The Committee
may not delegate any responsibility under this Section 7(f).
8. General Provisions.
(a) Compliance With Legal and Other Requirements. PaineWebber may, in
its discretion, postpone the issuance or delivery of Stock under any Award
until completion of such registration or qualification of such Stock or
other required action under any federal or state law, rule, or regulation,
listing or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other PaineWebber
securities are listed or designated, or compliance with any other
contractual obligation of PaineWebber, as PaineWebber may consider
appropriate, and may require any Participant to make such representations
and furnish such information as it may consider appropriate in connection
with the issuance or delivery of Stock in compliance with applicable laws,
rules, and regulations, listing or designation, or other contractual
obligations.
(b) Limits on Transferability; Beneficiaries. No Award or other right
or interest of a Participant under the Plan shall be pledged, encumbered,
or hypothecated to or in favor or subject to any lien, obligation, or
liability of such Participant to any party other than PaineWebber or a
subsidiary, or assigned or transferred by such Participant otherwise than
by will or the laws of descent and distribution, and such Awards or rights
shall be exercisable during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative. Notwithstanding
the foregoing, subject to the transferability restrictions applicable to
derivative securities under Rule 16b-3 of the Exchange Act and the limits
on the transferability of Options under any registration statement in
effect and applicable to the grant and exercise of such Options, the
Committee may, in its sole discretion, provide that Awards or other rights
or interests of a
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Participant granted pursuant to the Plan be transferable, without
consideration, to immediate family members (i.e., children, grandchildren
or spouse), to trusts for the benefit of such immediate family members and
to partnerships in which such family members are the only partners. The
Committee may attach to such transferability feature such terms and
conditions as it deems advisable. In addition, a Participant may, in the
manner established by the Committee, designate a beneficiary (which may be
a person or a trust) to exercise the rights of the Participant, and to
receive any distribution, with respect to any Award upon the death of the
Participant. A beneficiary, guardian, legal representative, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the
Committee, and to any additional restrictions deemed necessary or
appropriate by the Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event, affects the Stock such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the rights of Participants under the
Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of shares of Stock which may
thereafter be issued in connection with Awards (including the limitations
set forth in Sections 4 and 5), (ii) the number and kind of shares of Stock
issued or issuable in respect of outstanding Awards, and (iii) the exercise
price, grant price, or purchase price relating to any Award or, if deemed
appropriate, make provisions for payment of cash or other property with
respect to any outstanding Award; provided, in each case, that, with
respect to ISOs, no such adjustment shall be authorized or made to the
extent that such authority or the making of such adjustment would cause the
Plan or the ISO not to comply with Section 422 of the Code. In addition,
the Committee is authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence) affecting PaineWebber, any subsidiary, or any business
division or unit, or the financial statements of PaineWebber or any
subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or
in view of the Committee's assessment of the business strategy of the
Company and divisions and subsidiaries thereof, performance of comparable
organizations, economic and business conditions, personal performance of
the Participant, and any other circumstances deemed relevant; provided
that, unless otherwise determined by the Committee in its sole discretion,
no such adjustment shall be authorized or made if and to the extent that
such authority or the making of such adjustment would cause Options, or
Awards subject to Section 7(f), granted to "covered employees" (as defined
in Section 7(f) hereof) to fail to qualify as "performance-based
compensation" under Section 162(m)(4)(C) of the Code and regulations
thereunder (including Proposed Regulation 1.162-27(e)(2)).
(d) Taxes. PaineWebber or any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due in connection
with any transaction involving an Award, and to take such other action as
the Committee may deem advisable to enable PaineWebber and Participants to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority
for PaineWebber to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant's tax
obligations, either on a mandatory or elective basis in the discretion of
the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the approval
of PaineWebber's stockholders at not later than the annual meeting next
following such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted,
and the Board may otherwise, in its discretion, determine to submit other
such
D-8
<PAGE> 50
changes to the Plan to stockholders for approval; provided that, without
the consent of an affected Participant, no such Board action may materially
and adversely affect the rights of such Participant under any Award
theretofore granted to him. The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue, or terminate, any
Award theretofore granted and any Award agreement relating thereto;
provided that, without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of such
Participant under such Award.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible
Employee or Participant the right to continue as an Eligible Employee,
Participant or in the employ of PaineWebber or a subsidiary, (ii)
interfering in any way with the right of PaineWebber or a subsidiary to
terminate any Eligible Employee's or Participant's employment at any time,
(iii) giving an Eligible Employee or Participant any claim to be granted
any Award under the Plan or to be treated uniformly with other Participants
and employees, or (iv) conferring on a Participant any of the rights of a
stockholder of PaineWebber unless and until the Participant has validly
exercised an Option or Stock is otherwise duly issued or transferred to the
Participant in accordance with the terms of the Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments payable to a Participant or
obligation to issue Stock pursuant to an Award, nothing contained in the
Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of PaineWebber; provided that the
Committee may authorize the creation of trusts and deposit therein cash,
Stock, other Awards, or other property, or make other arrangements, to meet
PaineWebber's obligations under the Plan. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the
Committee otherwise determines with the consent of each affected
Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject
to such terms and conditions as the Committee may specify and in accordance
with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of PaineWebber for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable.
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an
Award with respect to which a Participant paid cash or other consideration,
the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether
cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan,
any rules and regulations relating to the Plan, and any Award agreement
shall be determined in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of laws, and applicable
federal law.
(k) Effective Date. The Plan shall become effective on February 22,
1994, subject to subsequent approval by PaineWebber stockholders at the
1994 annual meeting.
D-9
<PAGE> 51
CONFIDENTIAL VOTING INSTRUCTIONS TO: MELLON BANK, N.A.
AS CUSTODIAN UNDER PAINE WEBBER GROUP INC. STOCK AWARD PLAN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having received the accompanying Notice of Annual
Meeting and Proxy Statement of Paine Webber Group Inc. ("PW") dated April [ ],
1994, hereby instructs the Custodian to vote as indicated on this instruction
card all the shares of PW common stock held for me by the Custodian on March
17, 1994 at the Annual Meeting of Stockholders of PW to be held May 5, 1994 or
any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL NOT BE VOTED UNLESS THIS INSTRUCTION
CARD IS APPROPRIATELY MARKED, DATED, SIGNED AND RETURNED BY MAY 5, 1994.
IF YOUR SIGNED INSTRUCTION CARD IS RETURNED BUT YOUR PREFERENCE IS NOT
INDICATED, THE CUSTODIAN WILL NOT VOTE SUCH COMMON STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4, 5 AND 6
SET FORTH ON THE REVERSE SIDE HEREOF.
<PAGE> 52
(1) ELECTION OF DIRECTORS
(nominees listed to the right hereof)
FOR
All nominees listed
(except as marked
to the contrary)*
/ /
WITHHOLD
AUTHORITY
to vote for all
nominees listed
/ /
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
E.G. Bewkes, Jr., Y. Fujisawa, E. Randall, III, K. Sorimachi
(2) Approval to amend the Company's Restated Certificate of Incorporation to
increase the number of shares of the Company's common stock from
100,000,000 shares to 200,000,000 shares
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval of the 1994 Non-Employee Directors' Stock Plan
FOR AGAINST ABSTAIN
/ / / / / /
(4) Approval of the 1994 Executive Incentive Compensation Plan
FOR AGAINST ABSTAIN
/ / / / / /
(5) Approval of the 1994 Executive Stock Award Plan
FOR AGAINST ABSTAIN
/ / / / / /
(6) Ratification of Ernst & Young as PW's independent public accountants.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, give full
title as such. If a corporation or partnership, sign in full corporate or
partnership name by an authorized officer or person.
Dated______________________________________________________, 19____
____________________________________________________________________
Signature
____________________________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE> 53
CONFIDENTIAL VOTING INSTRUCTIONS TO: CITIBANK, N.A.
AS TRUSTEE UNDER PAINE WEBBER GROUP INC. SAVINGS INVESTMENT PLAN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having received the accompanying Notice of Annual
Meeting and Proxy Statement of Paine Webber Group Inc. ("PW") dated April [ ],
1994, hereby instructs the Trustee to vote as indicated on this instruction
card all the shares of PW common stock held for me by the Trustee on March 17,
1994 at the Annual Meeting of Stockholders of PW to be held May 5, 1994 or any
adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL NOT BE VOTED UNLESS THIS INSTRUCTION CARD
IS APPROPRIATELY MARKED, DATED, SIGNED AND RETURNED BY MAY 5, 1994. IF
YOUR SIGNED INSTRUCTION CARD IS RETURNED BUT YOUR PREFERENCE IS NOT
INDICATED, THE TRUSTEE WILL NOT VOTE SUCH COMMON STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4, 5 AND 6
SET FORTH ON THE REVERSE SIDE HEREOF.
<PAGE> 54
(1) ELECTION OF DIRECTORS
(nominees listed to the right hereof)
FOR
All nominees listed
(except as marked
to the contrary)*
/ /
WITHHOLD
AUTHORITY
to vote for all
nominees listed
/ /
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
E.G. Bewkes, Jr., Y. Fujisawa, E. Randall, III, K. Sorimachi
(2) Approval to amend the Company's Restated Certificate of Incorporation to
increase the number of shares of the Company's common stock from
100,000,000 shares to 200,000,000 shares
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval of the 1994 Non-Employee Directors' Stock Plan
FOR AGAINST ABSTAIN
/ / / / / /
(4) Approval of the 1994 Executive Incentive Compensation Plan
FOR AGAINST ABSTAIN
/ / / / / /
(5) Approval of the 1994 Executive Stock Award Plan
FOR AGAINST ABSTAIN
/ / / / / /
(6) Ratification of Ernst & Young as PW's independent public accountants.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, give full
title as such. If a corporation or partnership, sign in full corporate or
partnership name by an authorized officer or person.
Dated______________________________________________________, 19____
____________________________________________________________________
Signature
____________________________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE> 55
PROXY
PAINE WEBBER GROUP INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 5, 1994
The undersigned, having received the accompanying Notice of Annual
Meeting and Proxy Statement of Paine Webber Group Inc. ("PW") dated April [ ],
1994, hereby appoints Donald B. Marron, Pierce R. Smith and Theodore A. Levine
and each of them as proxies of the undersigned, with full power of substitution
and with discretionary authority as to matters for which my choice is not
specified, to vote as indicated on the reverse side hereof all the shares of PW
common stock held of record by the undersigned on the books of PW on March 17,
1994 at the Annual Meeting of Stockholders of PW to be held May 5, 1994 or any
adjournment thereof.
SHARES REPRESENTED BY PROXIES THAT ARE DATED, SIGNED AND RETURNED WILL BE
VOTED "FOR" ITEMS 1 AND 2 IN THE ABSENCE OF CONTRARY INSTRUCTIONS AND IN
THE PROXIES' DISCRETION ON OTHER BUSINESS PROPERLY BEFORE THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ITEMS SET
FORTH ON THE REVERSE SIDE HEREOF.
<PAGE> 56
(1) ELECTION OF DIRECTORS
(nominees listed to the right hereof)
FOR
All nominees listed
(except as marked
to the contrary)*
/ /
WITHHOLD
AUTHORITY
to vote for all
nominees listed
/ /
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
E.G. Bewkes, Jr., Y. Fujisawa, E. Randall, III, K. Sorimachi
(2) Approval to amend the Company's Restated Certificate of Incorporation to
increase the number of shares of the Company's common stock from
100,000,000 shares to 200,000,000 shares
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval of the 1994 Non-Employee Directors' Stock Plan
FOR AGAINST ABSTAIN
/ / / / / /
(4) Approval of the 1994 Executive Incentive Compensation Plan
FOR AGAINST ABSTAIN
/ / / / / /
(5) Approval of the 1994 Executive Stock Award Plan
FOR AGAINST ABSTAIN
/ / / / / /
(6) Ratification of Ernst & Young as PW's independent public accountants.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, give full
title as such. If a corporation or partnership, sign in full corporate or
partnership name by an authorized officer or person.
Dated______________________________________________________, 19____
____________________________________________________________________
Signature
____________________________________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE> 57
PAINE WEBBER GROUP INC.
1285 AVENUE OF THE AMERICAS, NEW YORK, NY 10019
Please send me an admission card to the Annual Meeting of Stockholders
to be held at 10:00 A.M. on Thursday, May 5, 1994 in The Paine Webber Building,
Weehawken, New Jersey.
NAME:___________________________________________________________________________
Please Print
STREET:_________________________________________________________________________
CITY AND
STATE:____________________________________________________ZIP:_________________
PLEASE RETURN THIS CARD ONLY IF YOU PLAN TO ATTEND THE MEETING.
<PAGE> 58
STOCK AWARD PLAN
(RESTRICTED STOCK)
In connection with the Annual Meeting of Paine Webber Group Inc.
("PW") to be held May, 1994 we are enclosing an instruction card relative to
shares of PW common stock held by the Custodian for your account under PW's
Stock Award Plans. We have also mailed to you in a separate envelope the
Notice of Annual Meeting and Proxy Statement and the Annual Report of PW
together with a proxy card for shares of PW's common stock held by the Trustee
for you under PW's Savings Investment Plan. These shares should be voted
separately according to the instructions on each card. Additional copies of
the Notice of Annual Meeting and Proxy Statement and the Annual Report are
available upon request by writing to the office of the Secretary of PW.
