<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:
/ / Preliminary proxy statement
/X/ 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
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(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:
- --------------------------------------------------------------------------------
- ---------------
1Set 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
March 29, 1996
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 Tuesday, April 30, 1996, at 9:00 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 5 directors to the Board of Directors to hold office
for a term of 3 years.
2. The ratification of the selection by the Board of Directors of Ernst &
Young LLP as PW's independent public accountants for the 1996 fiscal
year.
3. 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 14,
1996 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 Tuesday,
April 30, 1996, at 9:00 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, 1995, is being
furnished to stockholders together with this Proxy Statement, and mailing to
stockholders is expected to begin on or about March 29, 1996.
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, and (ii) the ratification of the selection of Ernst & Young LLP
("Ernst & Young")as PW's independent public accountants for the 1996 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
As of the close of business on March 14, 1996 (the "Record Date"), there
were outstanding 94,905,788 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, and the ratification of the selection of
Ernst & Young as PW's independent public accountants for the 1996 fiscal year.
Abstentions from voting on the election of directors, and the ratification of
the selection of the 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.
As of the Record Date, PWI held of record for approximately 5,701 of its
customers, including officers and directors of the Company, 8,907,074 shares of
PW Common Stock (constituting approximately 9.4% of the then outstanding shares
of PW Common Stock).
<PAGE> 4
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, 1995.*
<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. 6,474,825(1) 6.7%
82 Devonshire Street
Boston, Massachusetts 02107
General Electric Company 21,500,000(2) 22.2
3135 Easton Turnpike
Fairfield, Connecticut 06431
Southeastern Asset Management, Inc. 10,530,892(3) 10.8
6075 Poplar Avenue
Memphis, Tennessee 38119
The Yasuda Mutual Life Insurance 7,500,000(4) 7.7
Company,
9-1, Nishishinjuku
1-chome, Shinjuku-ku,
Tokyo 169-92 Japan
</TABLE>
- ------------------
(1) According to an amended Schedule 13G filed as of December 31, 1995 with the
Securities and Exchange Commission, the amount and nature of beneficial
ownership was supplied by FMR Corp. and members of the Edward C. Johnson, 3d
family (who owns 49% of the outstanding voting common stock of FMR Corp.).
The Schedule 13G indicates that 6,198,125 shares of PW Common Stock are held
by investment companies for which a wholly owned subsidiary of FMR Corp.,
Fidelity Management and Research Company ("Fidelity"), serves as the
investment adviser. Mr. Johnson and FMR Corp., through their control of
Fidelity and the investment companies, each has sole power to dispose of
these 6,198,125 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 276,000
shares of PW Common Stock as a result of serving as an investment manager
for certain accounts. FMR Corp. and Mr. Johnson, through their control of
FMT, have sole dispositive power over 276,000 shares and sole power to vote
or direct the voting of 148,910 shares.
(2) As of October 17, 1994, and December 16, 1994, respectively PW, General
Electric Company ("GE") and Kidder, Peabody Group Inc. ("Kidder") entered
into an Asset Purchase Agreement (as supplemented) and a Stockholders
Agreement pursuant to which PW issued to a wholly owned subsidiary of Kidder
21,500,000 shares of PW Common Stock, 1,000,000 shares of 6% Cumulative
Convertible Redeemable Preferred Stock, Series A (the "Series A Preferred
Stock") and 2,500,000 shares of 9% Cumulative Redeemable Preferred Stock,
Series C. The Series A Preferred Stock is convertible into PW Common Stock
at a conversion price of $18.13, or approximately 5,515,719 shares of PW
Common Stock. Pursuant to the Stockholders Agreement, GE has agreed to vote
its shares with respect to certain matters in accordance with the
recommendations of PW's Board of Directors or, in the event such agreement
is held invalid or in violation of New York Stock Exchange policy, in the
same proportion as PW's other holders of voting securities. In connection
with this year's Annual Meeting, this voting requirement will apply to the
election of directors and the ratification of the selection of Ernst & Young
as PW's independent public accountants for the 1996 fiscal year.
(3) According to an amended Schedule 13G dated as of January 30, 1996 filed with
the Securities and Exchange Commission by Southeastern Asset Management,
Inc. ("Southeastern"), 10,530,892 shares of PW Common Stock are held by
mutual funds for which Southeastern serves as investment advisor or by other
investment advisory clients of Southeastern. The Schedule 13G indicates that
Southeastern has sole dispositive power over 8,126,592 shares, shared
dispositive power over 2,363,300 shares, sole power to direct the voting
over 7,851,592 shares and shared power over 2,363,300 shares.
(4) Pursuant to the Amended Investment Agreement dated as of November 3, 1992,
between The Yasuda Mutual Life Insurance Company ("Yasuda") and PW (the
"Investment Agreement"), Yasuda has agreed to vote its shares with respect
to certain matters either in accordance with the
2
<PAGE> 5
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 and the ratification of the selection of Ernst & Young as PW's
independent public accountants.
- ------------------
* The table above does not include 7,294,659 shares of PW Common Stock (8% of
class outstanding) held, as of December 31, 1995, by a trustee under the
Company's Savings Investment Plan for the benefit of the Company's
employees.
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 five
directors. Management proposes the election of the nominees named hereafter to
hold office for a term of 3 years, ending at the 1999 Annual Meeting. Each of
the nominees is currently a director of PW. The nine 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 1999
DONALD B. MARRON, 61, 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, 72, 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.
RETO BRAUN, 54, is the Chairman of the Board, President and Chief Executive
Officer of Moore Corporation Limited, a business information company. Mr. Braun
has been President and Chief Executive Officer of Moore Corporation Limited
since September 1993 and Chairman of the Board since April 1995. Prior thereto
he was President and Chief Operating Officer of Unisys Corporation from 1991 to
September 1993 and Executive Vice President thereof from 1990 to 1991. Mr. Braun
became a director of PW in 1994.
JAMES W. KINNEAR, 68, was President and Chief Executive Officer of Texaco
Inc. from January 1987 to April 1993. Mr. Kinnear is also a director of Corning
Inc., ASARCO Incorporated and an advisory director of Unilever PLC and Unilever
N.V. Mr. Kinnear became a director of PW in 1994.
JOSEPH J. GRANO, JR., 48, is the President of PWI. He has been President of
PWI since December 1994. Prior thereto he was President of Retail Sales and
Marketing for PWI from February 29, 1988 to December 1994. Mr. Grano became a
director of PW in 1993.
3
<PAGE> 6
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1997
E. GARRETT BEWKES, JR., 69, was a consultant to PW from February 15, 1989
to December 31, 1995. 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 Olympus Fund,
PaineWebber Managed Investments Trust, PaineWebber Managed Municipal Trust,
PaineWebber Investment Series, PaineWebber Municipal Series, PaineWebber Master
Series, Inc., PaineWebber Series Trust, PaineWebber Financial Services Growth
Fund Inc., PaineWebber Mutual Fund Trust, PaineWebber RMA Money Fund, Inc.,
PaineWebber RMA Tax-Free Fund, Inc., PaineWebber Managed Assets Trust,
All-American Term Trust Inc., Insured Municipal Income Fund Inc., Managed High
Yield Fund 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-1997, Inc., Investment Grade Municipal Income Fund, Inc.,
Strategic Global Income Fund, Inc. and Managed Account Services Portfolio Trust.
Mr. Bewkes is currently a director of Interstate Bakeries Inc. and NaPro
BioTherapeutics, Inc. Mr. Bewkes became a director of PW in 1987.
FRANK P. DOYLE, 65, is Executive Vice President (retired) of General
Electric Company. He was Executive Vice President from July 30, 1992 to December
31, 1995 and was a Senior Vice President from 1981 to July 1992. Mr. Doyle is
also a director of Digital Equipment Corporation and Roadway Corporation. Mr.
Doyle became a director of PW in December 1994.
NAOSHI KIYONO, 53, is a Managing Director and the General Manager,
International Investment Department and the General Manager, Securities
Investment Department of Yasuda whose principal business is underwriting and
marketing life insurance. He became a Managing Director and General Manager,
International Investment Department of Yasuda on April 1, 1995, and was a
Director from July 1991 to March 1995 and the General Manager, Securities
Investment Department from April 1990 to the present. Mr. Kiyono became a
director of PW in March 1995.
EDWARD RANDALL, III, 69, 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 KN Energy Inc. and Enron Oil & Gas Company. Mr. Randall became a
director of PW in 1983.
YOSHINAO SEKI, 61, became a Senior Managing Director and Chief Investment
Officer of Yasuda as of April 1, 1995. He was a Managing Director of Yasuda from
April 1993 to March 1995, a Managing Director and General Manager, Loan
Department from April 1993 to March 1994, a Director of Yasuda from July 1989 to
March 1993 and the General Manager, Tohoku Regional Office of Yasuda from April
1990 to March 1993. Mr. Seki became a director of PW in March 1995.
TERM EXPIRING IN 1998
JOHN A. BULT, 59, is a director of PaineWebber International Inc. and was
the Chairman of the Board of PaineWebber International Inc. from May 1990 until
March, 1996. 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 The Germany Fund, Inc., The New Germany Fund, Inc.,
The Central Europe Equity 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.
JOHN E. KILGORE, JR., 75, 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 became a director of PW in 1975.
ROBERT M. LOEFFLER, 72, 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.
4
<PAGE> 7
HENRY ROSOVSKY, 68, 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.
In addition to the foregoing, Yuji Oshima, the President of Yasuda, serves
as a non-voting senior advisor to the Board of Directors of PW.
Mr. Paul B. Guenther was President and a director of PW until his
resignation in May, 1995.
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, Doyle, Kilgore and Loeffler, and it met six times during fiscal 1995.
The Audit Committee reviews internal and external audit procedures of the
Company. Members of this Committee are Messrs. Loeffler (chairman), Armour,
Braun, Doyle, Kilgore, Kinnear, Kiyono, Randall and Rosovsky, and it met four
times during fiscal 1995. Mr. Kyosaku Sorimachi was a member of the Committee
until his resignation in March 1995.
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,
Randall and Rosovsky, and it met five times in fiscal 1995. The Nominating
Committee also considers nominees for the Board of Directors recommended by
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 (chairman), Doyle, Kilgore
and Loeffler, and it met ten times in fiscal 1995.
The Public Policy Committee is responsible for reviewing and advising on
matters regarding the PaineWebber art collection, approving, subject to Board
approval, charitable contributions by PaineWebber and political contributions on
the municipal, state and other governmental levels. Members of this committee
are Messrs. Rosovsky (chairman), Bewkes and Marron, and it met four times in
fiscal 1995.
The Board of Directors of PW met five times during fiscal 1995. During his
tenure on the Board in fiscal 1995, 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. Kinnear, Kiyono and Seki.
CERTAIN ARRANGEMENTS WITH DIRECTORS
Pursuant to the Investment Agreement between Yasuda and PW, Messrs. Kiyono
and Seki were designated by Yasuda and elected to the PW Board of Directors. PW
has agreed that so long as Yasuda
5
<PAGE> 8
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. Messrs. Yozo Fujisawa and Kyosaku
Sorimachi were members of the Board of Directors from 1989 and 1987 respectively
until their resignation in March 1995 at which time they were replaced as
directors by Messrs. Kiyono and Seki. Pursuant to the Stockholders Agreement
between GE and PW, Mr. Doyle was designated by GE and elected to the PW Board of
Directors. PW has agreed that as long as GE owns a specified minimum investment
in PW, GE will have the right to designate one person as a member of the PW
Board. In the event that designee ceases to serve as a director for any reason,
GE has the right to designate a successor, subject to the approval of the
Nominating Committee.
COMPENSATION OF DIRECTORS
During 1995, directors who were not employees of the Company were paid
$40,000 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
$15,000 per year.
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.
The Company also has 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.
During 1995, E. Garrett Bewkes, Jr. was an independent consultant to PWI
and was paid $200,000 for his services during the year. Mr. Bewkes provided
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.
6
<PAGE> 9
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 15, 1996, as
of which date there were outstanding 96,483,060 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)..................................... 112,183
E. Garrett Bewkes, Jr..................................... 13,802
Reto Braun................................................ 3,295
John A. Bult (4).......................................... 53,909
Regina A. Dolan (3)(4)(5)................................. 77,716
Frank P. Doyle............................................ 2,227
Joseph J. Grano, Jr. (3)(4)............................... 360,507
John E. Kilgore, Jr....................................... 750
James W. Kinnear.......................................... 875
Naoshi Kiyono............................................. 375
Theodore A. Levine (3)(4)................................. 55,888
Robert M. Loeffler........................................ 8,247
Donald B. Marron (2)(3)(4)(5)............................. 1,422,603
Edward Randall, III (2)................................... 310,680
Henry Rosovsky............................................ 979
Yoshinao Seki............................................. 375
Pierce R. Smith (4)....................................... 22,009
All present nominees, directors continuing in office and
executive officers as a group, including those named
above (18 persons)...................................... 2,453,621
</TABLE>
- ---------------
(1) No director, nominee or executive officer directly owns 1% or more of PW
Common Stock, except Mr. Marron who owns 1.5%. All directors, nominees and
executive officers as a group (18 persons) beneficially own 2.5%.
(2) Shares shown for the nominees, directors and named executive officers
include an aggregate of 115,569 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), and Mr. Randall (112,500) .
(3) Shares shown for the nominees, directors and named executive officers
include an aggregate of 418,048 shares of PW Common Stock covered by
options presently exercisable or becoming exercisable within sixty days,
held by Mr. Marron (325,000), Ms. Dolan (15,000), Mr. Grano (69,298), and
Mr. Levine (8,750).
(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 nominees,
directors and named executive officers: Mr. Marron (25,498), Mr. Bult
(6,633), Ms. Dolan (1,103), Mr. Grano (46), Mr. Levine (63), and Mr. Smith
(362).
(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 385,707 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 (351,809), and Ms. Dolan (33,898).
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
7
<PAGE> 10
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, 1995, all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with
except that Mr. Braun filed six days late a Form 4 regarding the purchase of
1,000 shares of PW Common Stock.
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
Company'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 the Company's 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 12 companies. Five of the companies in the
comparative group of 12 are publicly-owned and make up the Peer Group Index used
for the Performance Graph set forth below. The firms excluded from the Peer
Group Index were either not publicly-owned or traded for all of 1995, or have a
mix of businesses not representative of PW on an overall basis, although various
segments are comparable to units of PW. 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, with the opportunity
for total remuneration to rise above this level upon achievement of exceptional
results.
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 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 integrates all components including
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 responsibility level as well as
competitive salary levels for similar positions. Increases were granted in 1995
to Mr. Marron and to Mr. Grano, who was elected President of Paine Webber
Incorporated
8
<PAGE> 11
during 1995, based on their performance and competitive pay levels. Mr. Marron's
and Mr. Grano's salaries had not been increased since 1989 and 1992,
respectively.
Annual Incentive Awards. In order to continue the grant of highly
effective performance-based annual cash and stock incentive awards on a
tax-efficient basis, the stockholders previously approved the 1994 Executive
Incentive Compensation Plan (the "EICP") to qualify compensation of proxy
officers for exclusion from the $1 million limitation on corporate tax
deductions under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). In accordance with and in compliance with Section 162(m) of the
Code and the provisions of the EICP, before March 31st of the performance year,
the Compensation Committee establishes a formula for the funding of an annual
incentive award pool for executive officers based on the Annual Profits (as
defined) of the firm and allocates a maximum share in the pool to each
participating executive using the total compensation approach discussed above.
At the end of each year, the Compensation Committee ascertains the firm's
Annual Profits (as defined) and the maximum potential award opportunity for each
participating executive officer for the performance year. Within this framework,
the Committee determines final individual award levels, exercising negative
discretion, where appropriate, based on its evaluation of the quantitative and
qualitative factors outlined above, taking into consideration the value of all
components in the executive's compensation package.
In recognition of 1995 performance during which revenues rose 32%,
operating earnings increased 120%, and net income grew 155%, annual incentives
awarded by the Compensation Committee to executive officers increased 63% above
amounts awarded to these individuals in 1994 and ranged from $550,000 up to
$4,200,000. Continuing the Committee's policy of paying a meaningful portion of
annual incentive awards in equity, over 22% of these awards were paid in the
form of restricted stock which generally vests pro rata upon completion of each
of the following three years of future service. In addition, a portion of 1995
annual incentive awards was paid in the form of restricted stock units under the
1995 Dedicated Partnership Equity Program discussed below under Long Term Equity
Incentives.
Long Term Equity Incentives. The Committee made two stock option grants
under the 1994 Executive Stock Award Plan to executive officers for 1995. One
grant was the standard annual component of total compensation to link a
significant portion of executive officers' financial interests to the
performance of PW's common stock. The size of such annual 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 and to the creation of long term shareholder value.
Messrs. Marron and Grano's regular grants for 1995 were significantly below
those granted for 1994 when major awards were made to executive officers
principally responsible for the successful Kidder Peabody acquisition.
The second grant was made under the 1995 Dedicated Partnership Equity
Program (the "Program") which was instituted by the Committee under the 1994
Executive Stock Award Plan to replace the prior Dedicated Partnership in order
to preserve the tax deductibility of proxy officer participation in Dedicated
Partnerships under Section 162(m) of the Code. The terms of the Program mirror
as closely as possible the form of the prior Partnerships whose purpose is to
encourage investment by key employees in PW common stock, thereby creating a
mutuality of interests among Program participants and with PW shareholders. In
1995, approximately 50 key employees selected by the Compensation Committee,
including the executive officers, participated in the Program.
Each participation in the Program consisted of 500 restricted stock units
and an option to acquire 3,000 shares of PW common stock at an exercise price of
$20.00 per share. The average of the high and low prices of PW common stock on
the New York Stock Exchange on the date of grant of options under the Program
was $19.188 and the closing price was $19.125. Restricted stock units were
valued at $20.00 per share at the time of grant and were awarded in lieu of a
portion of the cash bonus compensation otherwise payable to the participants in
the Program. The number of interests awarded to an executive officer was
determined by the Committee based on responsibility level and potential impact
on the creation of long term shareholder value. Dividend equivalents were
granted in a number equal to the number of restricted stock units and options
acquired under the Program. The value of restricted stock units as of year-end
for each proxy officer is shown in the footnotes to Table I. Summary
Compensation. The number of shares on which options were granted to each proxy
officer
9
<PAGE> 12
under the Program is shown in Table II. Option Grants in Last Fiscal Year. Both
Table I and Table II follow this Report.
Under the Program, restricted stock units and options generally vest three
years after date of grant and expire on the tenth anniversary of grant. Options
granted under the Program may be exercised solely by the Committee from date of
vesting until December 27, 2004 after which they may be exercised by the
executive officer until expiration on June 27, 2005. Restricted stock units will
be settled for cash, stock or a combination thereof on June 27, 2005 to the
extent not previously settled, deferred or forfeited. In the event termination
of employment occurs and interests are not vested, options will be immediately
forfeited and restricted stock units cancelled with a formula price paid equal
to $20.00 per unit less the amount of all dividend equivalents received.
The Committee does not consider the stock holdings, prior option,
restricted stock, and other equity grants or the appreciation thereon when
making future equity award determinations, nor does the Committee have a
specific policy as to the proportion of total compensation represented by stock
options and other long term equity awards.
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.
The Compensation Committee, in setting Mr. Marron's compensation, has taken
into account the outstanding long term performance of PW under his leadership
and the firm's strategic progress. Factors considered by the Committee include
the successful integration of Kidder Peabody, the operating performance and
profitability of PW and total return to shareholders in 1995, as well as the
Company's strategic redirection to businesses with superior returns accompanied
by inception of a highly effective cost reduction and control program. As a
result of the Chief Executive Officer's successful efforts during 1995, the
Compensation Committee believes that PW is a demonstrably stronger and more
competitive firm that is well positioned for the future.
As noted earlier, Mr. Marron's salary, unchanged since 1989, was increased
from $600,000 to $800,000 in 1995. His annual incentive award of cash,
restricted stock and restricted stock units of $4,207,656 for 1995 represented
an increase of 53% over 1994 as compared to a decline of 63% from 1993 to 1994.
As discussed above, Mr. Marron's regular annual stock option grant of 100,000
shares represented a significant decline from 1994.
Tax Considerations. As noted above, the Committee's executive compensation
strategy is to be cost and tax effective. Therefore, the Committee's policy is
to preserve corporate tax deductions, while maintaining the flexibility to
approve compensation arrangements which it deems to be in the best interests of
the Company and its stockholders, but which may not always qualify for full tax
deductibility.
COMPENSATION COMMITTEE
E. Garrett Bewkes, Jr., Chairman
Frank P. Doyle
John E. Kilgore, Jr.
Robert M. Loeffler
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, 1995, 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.
10
<PAGE> 13
Table I -- Summary Compensation Table provides a detailed overview of
annual and long term compensation for the fiscal years ended December 31, 1995,
1994 and 1993 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, 1995 to December 31, 1995 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, 1995
to December 31, 1995 on exercises of stock options pursuant to the Company's
Stock Plans and the number and value of previously granted and unexercised stock
options held on December 31, 1995.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
------------------------------- ALL
SECURITIES OTHER
ANNUAL COMPENSATION RESTRICTED UNDERLYING COMPEN-
NAME AND ------------------------------ STOCK AWARD(S) OPTIONS SATION
PRINCIPAL POSITION YEAR SALARY BONUS (1)(2)(3)(4)(5) (# SHARES)(6) (7)
- -------------------------------------- ---- -------- ---------- --------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Donald B. Marron 1995 $800,000 $2,975,000 $ 1,232,656 175,000 $139,057
Chairman of the Board and Chief 1994 600,000 1,925,000 828,359 400,000 320,068
Executive Officer, PW and PWI 1993 600,000 6,300,000 1,194,432 187,500 534,432
Joseph J. Grano, Jr. 1995 412,500 1,790,000 891,347 114,000 153,200(8)
President, PWI 1994 375,000 945,000 406,638 150,000 153,200(8)
1993 375,000 4,625,000 -0- 75,000 319,200(8)
Theodore A. Levine(9) 1995 200,000 702,500 629,966 79,000 -0-
Vice President, General Counsel, PW, 1994 200,000 650,000 235,744 35,000 -0-
and Executive Vice President, PWI 1993 106,923 765,165 249,975 30,000 -0-
Regina A. Dolan 1995 200,000 702,500 349,672 79,000 13,248
Vice President, Chief Financial 1994 200,000 455,000 195,785 60,000 54,914
Officer, PW, and Executive Vice 1993 187,212 550,000 409,518 15,000 13,248
President, Chief Financial Officer,
PWI
Pierce R. Smith 1995 175,000 387,500 163,516 25,000 -0-
Treasurer, PW, Executive Vice 1994 175,000 350,000 105,000 -0- -0-
President, Treasurer, PWI 1993 175,000 600,000 127,500 -0- 46,763
</TABLE>
- ------------
(1) Amounts shown for 1995 include awards of restricted stock made in January
1996 for performance in 1995.
(2) Amounts shown include both restricted stock, and restricted unit awards
granted under the 1995 Dedicated Partnership Equity Program, 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. For a discussion of the 1995
Dedicated Partnership Equity Program, see "Certain Transactions and
Arrangements -- Dedicated Equity Program" below.
(3) The number and value of restricted stock and restricted units held by
executive officers named in the table as of December 31, 1995 plus shares
and units granted in 1996 for 1995 performance based on the closing price of
PW's Common Stock ($20.00) on the New York Stock Exchange on December 29,
1995, are as follows: Mr. Marron (161,807 shares and 96,689
units -- $5,169,920); Mr. Grano (317,134 shares and 9,000
units -- $6,522,680); Mr. Levine (40,575 shares and 6,500
units -- $941,500); Mr. Smith (19,047 shares and 2,500 units -- $430,940);
and Ms. Dolan (27,312 shares and 6,500 units -- $676,240). The number of
shares of restricted stock and units 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 (40,181; 34,209; 46,709; and 16,250 shares
vesting in 1996, 1997, 1998 and 1999, respectively); Mr. Grano (40,985;
20,652; 29,652; and 9,666 shares vesting in 1996, 1997, 1998 and 1999,
respectively); Mr. Levine (14,850; 13,525; 15,075; and 3,625 shares vesting
in 1996, 1997, 1998 and 1999, respectively); Mr. Smith (4,647; 4,161; 6,661;
and 1,875 shares vesting in 1996, 1997, 1998 and 1999, respectively); and
Ms. Dolan (6,096; 7,870; 14,370; and 3,625 shares vesting in 1996, 1997,
1998 and 1999, respectively).
(4) Dividends are paid on restricted stock and dividend equivalents are paid on
restricted units. Dividend equivalents are also paid on options granted
under the 1995 Dedicated Partnership Equity Program.
11
<PAGE> 14
(5) To permit the Company to obtain the maximum deduction for awards of
restricted stock in 1993, Mr. Marron elected to declare as income and
immediately pay tax on the market value of his 1993 restricted stock grant
pursuant to Section 83(b) of the Internal Revenue Code, even though he was
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.
(6) Amounts shown for 1995 include option grants made in January 1996 for
performance in 1995 and options granted under the 1995 Dedicated Partnership
Equity Program.
(7) Amounts shown for 1995 result from the operation of the terms of the Key
Executive Equity Program, in which approximately 111 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 or waived on loans
by PW in accordance with the terms of the program -- Mr. Marron ($139,057);
and Ms. Dolan ($13,248). 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 or she may not compete with the Company or solicit its
employees to leave the Company or interfere with its business.
(8) This amount represents imputed interest on an employee loan to Mr. Grano.
(9) Mr. Levine was employed by PW in June 1993. Amounts indicated for Mr. Levine
for 1994 and 1993 (other than option information) were paid or awarded
pursuant to the terms of an agreement between Mr. Levine, PW and PWI entered
into in May 1993. The bonus for 1993 includes a special one-time bonus of
$400,000. For a description of this agreement, see "Other Benefit Plans and
Agreements" below.
The following table sets forth certain information concerning stock options
granted by the Company to the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (other than the Chief
Executive Officer) in June 1995 and in January 1996 for performance in 1995. The
data in the column shown below relating to the potential realizable value of
stock options granted in 1995 and 1996 at the end of a ten year period are
presented pursuant to Securities and Exchange Commission rules and are
calculated using assumed annual rates of stock appreciation. The Company is not
aware of any model or formula which will determine with reasonable accuracy a
realizable future value for stock options in ten years. The actual amount, if
any, realized upon the exercise of stock options will depend upon the market
price of PW Common Stock relative to the exercise price per share of PW Common
Stock of the stock option at the time the stock option is exercised. There is no
assurance that the potential value of the stock options reflected in this table
will actually be realized.
II. OPTION GRANTS IN LAST FISCAL YEAR --
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM (10 YRS.)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ----------------------------- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
D.B. Marron.................. 75,000 (1) 1.6% $ 20.000(3) 6/27/05 $ 943,342 $2,390,614
100,000 (2) 2.2 20.000 1/22/06 1,257,789 3,187,485
J.J. Grano, Jr............... 54,000 (1) 1.2 20.000(3) 6/27/05 679,206 1,721,242
60,000 (2) 1.3 20.000 1/22/06 754,674 1,912,491
R.A. Dolan................... 39,000 (1) 0.8 20.000(3) 6/27/05 490,538 1,243,119
40,000 (2) 0.9 20.000 1/22/06 503,116 1,274,994
P.R. Smith................... 15,000 (1) 0.3 20.000(3) 6/27/05 188,668 478,123
10,000 (2) 0.2 19.1875 6/27/05 120,669 305,799
T.A. Levine.................. 39,000 (1) 0.8 20.000(3) 6/27/05 490,538 1,243,119
40,000 (2) 0.9 20.000 1/22/06 503,116 1,274,994
</TABLE>
- ---------------
(1) Ten-year non-qualified stock options granted under the 1994 Executive Stock
Award Plan as part of the 1995 Dedicated Partnership Equity Program (the
"Program"). Options will vest on the third anniversary of the date of grant
or upon the earlier of a Change in Control or the date of the executive
officer's termination of employment by reason of death, disability or
approved
12
<PAGE> 15
retirement. Vested options may be exercised solely by the Compensation
Committee at any time until December 27, 2004. Recipient may exercise the
option after December 27, 2004 until their expiration. Under the Program,
each named executive officer received a grant of 500 restricted stock units
("RSUs") for each 3,000 shares subject to the options. RSUs were valued at
$20.00 per share at the time of grant and were awarded in lieu of a portion
of the cash bonus compensation otherwise payable to the named executive
officer. Dividend equivalents on the RSUs and the unexercised portion of
the options will be paid.
(2) Ten year non-qualified stock options granted in 1996 for performance in 1995
will become exercisable in equal installments over a four year period from
the date of grant.
(3) Options granted under the 1995 Dedicated Partnership Equity Program at an
exercise price of $20.00. The average of the high and low prices of PW
Common Stock on the New York Stock Exchange on the date of grant was
$19.188.
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, 1995 to December 31, 1995 and unexercised options held as of December
31, 1995:
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 OPTIONS AT FY-END OPTIONS AT FY-END
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE(1) REALIZED(1) EXERCISABLE(2) UNEXERCISABLE(3) EXERCISABLE(2) UNEXERCISABLE(3)
- -------------- ------------ ---------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
D.B. Marron... 278,437 $2,474,999 862,275 762,500 $9,647,011 $2,250,000
J.J. Grano,
Jr.......... 66,825 594,001 121,798 339,000 867,075 853,125
T.A. Levine... -0- -0- -0- 144,000 -0- 147,500
R.A. Dolan.... -0- -0- 30,000 154,000 157,500 311,250
P.R. Smith.... 33,413 297,005 22,500 25,000 118,125 8,125
</TABLE>
- ---------------
(1) These option exercises reflect the interests of the named executive officers
in the exercise during August 1995 by the general partner of PW Partners
1991 Dedicated L.P., a Delaware limited partnership (the "1991
Partnership"), of the remaining balance of its option granted to such
partnership to purchase PW Common Stock. For a discussion of the 1991
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 1991
Partnership.
(2) These options include the interests of the named executive officers in an
option granted to PW Partners 1992 Dedicated L.P., a Delaware limited
partnership (the "1992 Partnership"). For a discussion of the 1992
Partnership, see "Certain Transactions and Arrangements -- Dedicated
Partnership" below. The shares and related values under the 1992 Partnership
are attributable as follows: Mr. Marron (187,500 shares -- $984,375); Mr.
Grano (90,000 shares -- $472,500); Ms. Dolan (30,000 shares -- $157,500) and
Mr. Smith (22,500 shares -- $118,125).
(3) Includes securities underlying options granted in 1996 for performance in
1995 and options granted under the 1995 Dedicated Partnership Equity
Program.
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, 1995, approximately
16,857 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, 1995 is $150,000 and the maximum
annual pension benefit which may be accrued for calendar year 1995 is $1,875.
The years of credited service for purposes of determining benefits under
the PW Pension Plan as of December 31, 1995 for certain executive officers were:
Messrs. Marron (18.6 years), Grano
13
<PAGE> 16
(6.8 years), Levine (1.5 years), Mr. Smith (7.0 years) and Ms. Dolan (2.2
years). The estimated annual benefits payable on retirement at age 65, taking
into account actual pension benefits accrued to December 31, 1995 and projecting
future benefits to retirement at the current maximum additional annual benefit
of ($1,875), for certain executive officers are: Messrs. Marron ($120,000),
Grano ($45,725), Levine ($29,063), Smith ($36,495) and Ms. 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 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 participant 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, the SERP
contains certain non-compete provisions pursuant to which benefits would be
forfeited.
The table below summarizes expected SERP benefits before subtracting Social
Security, PW Pension Plan benefits and any other pension benefits. The actual
benefits from the SERP are the net amounts after subtracting Social Security, PW
Pension Plan benefits and any other pension 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>
$ 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
450,000 301,500 450,000 225,000 337,500
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
800,000 533,333 800,000 100,000 600,000
</TABLE>
The initial participant was Mr. Marron and the amount of his base
compensation reflected for the purposes of the SERP during 1995 is $800,000.
Messrs. Grano and Levine are subsequent participants and the amount of their
base compensation reflected for the purposes of the SERP during 1995 is $450,000
and $200,000 respectively.
14
<PAGE> 17
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, and a
Peer Group Index (comprised of, 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 5 publicly traded companies which the Compensation Committee
reviews and evaluates in making compensation determinations. The Peer Group
Index has been changed from the prior year to omit American Express Company
which no longer is in PW's principal lines of business due to the disposition of
both Lehman Brothers Inc. and Shearson. In addition, the S&P Financial
Miscellaneous Index has been omitted from the Performance Graph since it was
reconstituted by S&P in March 1995 and no longer includes entities in PW's
principal line of business. The chart assumes $100 invested on December 31, 1990
and reinvestment of all dividends.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
Year-End Data 1990 1991 1992 1993 1994 1995
- ------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PaineWebber $100.00 $261.89 $279.14 $315.41 $270.56 $370.79
PeerGroup 100.00 209.04 220.52 318.56 276.82 369.98
S&P 550 100.00 130.47 140.40 154.55 156.59 215.31
</TABLE>
15
<PAGE> 18
OTHER BENEFIT PLANS AND AGREEMENTS
During 1987, PW entered into an employment agreement with Mr. Marron 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, Mr. Marron 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 Mr. Marron'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 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 1993, PW and PWI entered into an agreement with Mr. Levine having a
three-year term (the "Term of the Agreement"). As a result of certain amendments
to the agreement in 1995, during the Term of the Agreement, Mr. Levine will be
employed by PW as General Counsel and by PWI as Executive Vice President, and
will be paid an annual salary of no less than $200,000, and will receive a grant
of 14,850 shares of restricted stock each year which will vest one-third
annually following the date of each grant. The restricted stock will vest
immediately upon a Change of Control (as defined). In the event of Mr. Levine's
termination of employment without Cause (as defined) or because of Constructive
Termination (as defined), he would be entitled to his base salary through the
date of termination and an amount equal to the greater of (a) $3,300,000 less
the total amount of base salary and annual bonus awards previously received (to
the extent vested) or (b) $850,000.
In addition, the PW Partners 1991 Dedicated L.P., a Delaware limited
partnership (the "1991 Partnership"), and the 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 stock award plans of PW 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 plans 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. Under the Company's Key Executive Equity
Program ("KEEP"), the Company sold certain convertible debentures to key
employees of the Company, including executive officers of the Company, in 1988,
1991 and 1992.
Pursuant to KEEP, the Company financed on a full recourse basis to the
employee 25% of the principal amount of the debentures issued in 1988 and 1991
at 8.62% and 7.85% annual interest rate, respectively, and 95% of the principal
amount of the debentures issued in 1992 at 5.6% annual interest. The Company
pays 66 2/3% of the interest payment due on the bank financing for the remaining
balance of the purchase price of the debentures issued in 1991 and waives
66 2/3% of the interest payment due on an equivalent amount of the Company
financing for the debentures issued in 1992.
Investment Partnership. In 1994, the Company formed a limited partnership
which does not vest for five years 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
16
<PAGE> 19
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 employee limited partners
contributed an aggregate of $8,400,000. In addition, the general partner has
made an unsecured loan to the partnership of which $31.6 million was outstanding
at December 31, 1995. During 1995 the interest rate on the loan was computed at
the rate of LIBOR plus thirty-five basis points. The interest rate on the loan
is reset, and the interest on the loan is payable, semi-annually. 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. In February 1996, an
independent third party lender made a four year unsecured loan to the
partnership in the amount of $25.5 million and the proceeds of this loan were
used to repay the entire amount of the general partners loan which was
outstanding at the time. The Company has agreed to purchase the loan from this
lender in certain specified circumstances.
In 1995, the Company formed a limited partnership which does not vest for
three years for 49 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
$71,212 and the employee limited partners contributed an aggregate of
$7,050,000. In February 1996, an independent third party lender entered into a
revolving credit agreement with the partnership whereby it committed to make a
four year unsecured loan to the partnership in an aggregate amount of not more
than $35.1 million. The Company has agreed to purchase the loan from this lender
in certain specified circumstances. No loans are currently outstanding under
this facility.
Dedicated Partnerships. PW formed the 1991 Partnership and the 1992
Partnership for the purpose of providing an investment vehicle through which
selected employees could invest in PW Common Stock. A subsidiary of PW serves as
the general partner of both partnerships and made a capital contribution equal
to approximately 10% of the total capital contributed by the limited partners.
Messrs. Marron, Grano and Smith are limited partners in both partnerships and
Ms. Dolan is a limited partner in the 1992 partnership. The 1991 Partnership and
the 1992 Partnership purchased 180,000 and 135,592 shares of PW Common Stock and
acquired an option to purchase 2,250,000 and 1,500,000 shares of PW Common
Stock, respectively. Dividend equivalents are paid to the partnerships on the
option shares. Following the option exercise and sale of the remaining shares in
the 1991 Partnership in August 1995, and the distribution of proceeds to limited
partners, the 1991 Partnership has been terminated.
Other Transactions. During 1995, 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.
During 1995 PW and certain of its subsidiaries have engaged in transactions
in the ordinary course of business with The Yasuda Mutual Life Insurance
Company, General Electric Company and FMR Corp. and certain of their respective
affiliates, which are beneficial owners of more than 5% of the outstanding
shares of PW Common Stock; such transactions were on substantially the same
terms as those prevailing at the time for comparable transactions with others.
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.
Messrs. Kiyono and Seki 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 1995, PWI paid $4,320,000 as
rents for such property, which exceeded 5% of YRAC's consolidated gross
revenues, and during the fiscal year 1996, 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.
17
<PAGE> 20
During 1995, Mr. Grano was indebted to PWI for $4,250,000 for loans
originally made to him in 1991 and 1994. Interest is imputed at an annual rate
of 3.83% for the $4,000,000 loan issued in 1991. The $250,000 loan issued in
1994, accrued interest monthly based on a variable rate equal to broker call
plus 1%. As of March 1996, the $250,000 loan has been repaid with accrued
interest and Mr. Grano has repaid $1,300,000 of the $4,000,000 loan, the
interest rate on which has been changed to an annual rate of 7%. The current
amount of the outstanding loan to Mr. Grano is $2,700,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1995, the Company's Compensation
Committee was composed of Messrs. Bewkes, Doyle, Kilgore and Loeffler. Mr.
Bewkes was paid $200,000 for consulting services rendered during 1995.
II. SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of Ernst & Young to
examine PW's accounts for the 1996 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.
III. 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.
STOCKHOLDER PROPOSALS FOR 1997 MEETING
Proposals of stockholders intended for presentation at the 1997 Annual
Meeting must be received by the office of the Secretary of PW no later than
November 29, 1996.
Theodore A. Levine
Secretary
18
<PAGE> 21
PROXY
PAINE WEBBER GROUP INC.
1285 Avenue of the Americas
New York, New York 10019
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 30, 1996
The undersigned having received the accompanying Notice of Annual
Meeting and Proxy Statement of Paine Webber Group Inc. ("PW") dated March 29,
1996, 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 14,
1996 at the Annual Meeting of Stockholders of PW to be held April 30, 1996 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.
- FOLD AND DETACH HERE -
<PAGE> 22
PLEASE MARK YOUR VOTES
AS INDICATED IN /X/
THIS EXAMPLE
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
D.B. Marron, T.S. Armour, R. Braun, J.W. Kinnear, J.J. Grano, Jr.
(1) ELECTION OF DIRECTORS (nominees listed above)
FOR WITHHOLD
All nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
/ / / /
(2) Ratification of Ernst & Young LLP as PW's independent public accountants
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) _______________________________________ Date _______________
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as an 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.
- FOLD AND DETACH HERE -
<PAGE> 23
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 March 29,
1996, 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 14,
1996 at the Annual Meeting of Stockholders of PW to be held April 30, 1996 or
any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL NOT BE VOTED UNLESS THIS INSTRUCTION CARD
IS APPROPRIATELY MARKED, DATED, SIGNED AND RETURNED BY APRIL 30, 1996.
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 AND 2
SET FORTH ON THE REVERSE SIDE HEREOF.
- FOLD AND DETACH HERE -
<PAGE> 24
PLEASE MARK YOUR VOTES
AS INDICATED IN /X/
THIS EXAMPLE
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
D.B. Marron, T.S. Armour, R. Braun, J.W. Kinnear, J.J. Grano, Jr.
(1) ELECTION OF DIRECTORS (nominees listed above)
FOR WITHHOLD
All nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
/ / / /
(2) Ratification of Ernst & Young LLP as PW's independent public accountants
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) _______________________________________ Date _______________
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as an 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.
- FOLD AND DETACH HERE -
<PAGE> 25
CONFIDENTIAL VOTING INSTRUCTIONS TO: MELLON BANK, N.A.
AS CUSTODIAN UNDER PAINE WEBBER GROUP INC. STOCK AWARD PLANS
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 March 29,
1996, 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
14, 1996 at the Annual Meeting of Stockholders of PW to be held April 30, 1996
or any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL NOT BE VOTED UNLESS THIS INSTRUCTION CARD
IS APPROPRIATELY MARKED, DATED, SIGNED AND RETURNED BY APRIL 30, 1996.
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 AND 2
SET FORTH ON THE REVERSE SIDE HEREOF.
- FOLD AND DETACH HERE -
<PAGE> 26
PLEASE MARK YOUR VOTES
AS INDICATED IN /X/
THIS EXAMPLE
*INSTRUCTION: TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE FOR ANY INDIVIDUAL
DRAW A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
D.B. Marron, T.S. Armour, R. Braun, J.W. Kinnear, J.J. Grano, Jr.
(1) ELECTION OF DIRECTORS (nominees listed above)
FOR WITHHOLD
All nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
/ / / /
(2) Ratification of Ernst & Young LLP as PW's independent public accountants
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) _______________________________________ Date _______________
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as an 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.
- FOLD AND DETACH HERE -
