SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
( ) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
(x ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Interstate/Johnson Lane, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
(x ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
(Set forth the amount on which the filing fee is calculated and state how
it was determined)
( ) Fee previously paid with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
(INTERSTATE/JOHNSON LANE LOGO APPEARS HERE)
INTERSTATE/JOHNSON LANE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 23, 1996
------------------------------------------------------
TO THE SHAREHOLDERS OF
INTERSTATE/JOHNSON LANE, INC.
The annual meeting of the shareholders of Interstate/Johnson Lane, Inc.
(the "Company") will be held on Tuesday, January 23, 1996, at 3:00 P.M. at the
Radisson Plaza Hotel, 101 South Tryon Street, Charlotte, North Carolina, for the
following purposes:
(1) To elect ten directors to serve until their successors are
elected and qualified.
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as
the Company's independent certified public accountants for the
fiscal year ending September 30, 1996.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed December 1, 1995, as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting.
Michael D. Hearn, Secretary
Dated: December 15, 1995
- --------------------------------------------------------------------------------
AFTER VOTING THE ENCLOSED PROXY, PLEASE SIGN, DATE AND MAIL IN THE ENCLOSED
ENVELOPE SO AS TO INSURE A QUORUM AT THE MEETING. THIS IS IMPORTANT WHETHER YOU
OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY SUBJECT THE COMPANY TO
ADDITIONAL EXPENSE.
- --------------------------------------------------------------------------------
<PAGE>
INTERSTATE/JOHNSON LANE, INC.
INTERSTATE TOWER
POST OFFICE BOX 1012
CHARLOTTE, NORTH CAROLINA 28201-1012
-------------------------
PROXY STATEMENT
-------------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Interstate/Johnson Lane, Inc. (the
"Company") for use at the annual meeting of shareholders of the Company to be
held on Tuesday, January 23, 1996, and at any adjournment thereof. Unless the
context requires otherwise, all references in this proxy statement to the
Company refer to Interstate/Johnson Lane, Inc. and its subsidiaries. This proxy
statement and the accompanying proxy card are first being mailed to shareholders
on or about December 15, 1995.
Only shareholders of record at the close of business on December 1,
1995, are entitled to vote at the meeting. As of such date, the Company had
outstanding and entitled to vote 6,157,666 shares of common stock, par value
$.20 per share (the "Common Stock"), and approximately 1,086 shareholders of
record. Each outstanding share entitles the shareholder of record to one vote.
All proxies which are properly executed and received prior to the
meeting will be voted at the meeting. If a shareholder specifies how the proxy
is to be voted on any of the business to come before the meeting, the proxy will
be voted in accordance with such specification. If no specification is made, the
proxy will be voted for the election of directors and for the ratification of
the appointment of Coopers & Lybrand L.L.P. as the Company's independent
certified public accountants for the fiscal year ending September 30, 1996. A
proxy may be revoked, to the extent it has not been exercised, at any time prior
to its exercise, by written notice to the Secretary of the Company, by executing
and delivering a proxy with a later date or by voting in person at the meeting.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1995, the number and
percentage of outstanding shares beneficially owned by each person known by the
Company to own more than 5% of the Company's Common Stock, by each director,
nominee for director and named executive officer of the Company, and by
directors and executive officers of the Company as a group. Unless otherwise
indicated, each shareholder named has sole voting and dispositive power with
respect to such shareholder's shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED(1) OF CLASS
<S> <C> <C>
Claude S. Abernethy, Jr. 286,408 (2) 4.65%
Edwin A. Dalrymple 23,557 (3) *
Parks H. Dalton 82,263 (4) 1.34%
John B. Ellis 3,951 (5) *
W. Clay Hamner 2,951 (5) *
Harvey D. Harrelson 22,458 (6) *
Peter R. Kellogg 1,052,000 (7) 17.08 %
James H. Morgan 66,061 (8) 1.07%
NationsBank of North Carolina, Trustee of
Interstate/ Johnson Lane Corporation Employee
Stock Ownership and PAYSOP Plan and Trust 446,732 (9) 7.25%
Dudley G. Pearson 10,901 (10) *
Richard S. Pechter 30,399 (11) *
Edward C. Ruff 122,815 (12) 1.99%
Lewis F. Semones, Jr. 22,741 (13) *
Grady G. Thomas, Jr. 100,424 (14) 1.63%
All directors and executive officers
as a group (16 persons) 1,920,940 (15) 30.90%
*Less than 1%
</TABLE>
(1) Does not include shares that might be deemed to be beneficially owned by a
director, nominee or executive officer serving on a committee which may direct
the investment of Common Stock in the Company's Profit Sharing and Capital
Accumulation Plan and Trust ("PSP/CAP") or Employee Stock Ownership and PAYSOP
Plan and Trust ("ESOP/ PAYSOP").
(2) Mr. Abernethy's shares include 21,400 shares owned by his wife; 32,800
shares owned by his children; 8,749 shares of restricted stock; 7,067 shares
issuable under currently exercisable stock options; 43,268 shares issuable upon
conversion of the Company's 7 3/4% Convertible Subordinated Debentures due March
31, 2011 (the "Debentures"), which consist of 22,592 shares owned by his wife
and children, and 20,676 shares held by a trust of which Mr. Abernethy is the
Trustee; and 13,475 shares held in the ESOP/PAYSOP and PSP/CAP plans.
(3) Mr. Dalrymple's shares include 1,317 shares of restricted stock, 218 shares
held in the Dividend Reinvestment Plan ("DRIP"), and 1,639 shares held in the
ESOP/PAYSOP and PSP/CAP plans.
(4) Mr. Dalton's shares include 7,263 shares held in the ESOP/PAYSOP and
PSP/CAP plans.
(5) Messrs. Ellis' and Hamner's shares each include 1,013 shares of restricted
stock obtained from the Company in lieu of their annual director retainer fee.
(6) Mr. Harrelson's shares include 406 shares of restricted stock; 3,000 shares
issuable under currently exercisable stock options; and 2,087 shares held in the
ESOP/PAYSOP and PSP/CAP plans.
(7) Mr. Kellogg's shares include 100,000 shares held by his wife; 100,000 shares
held by a Trust, of which he is a trustee; 499,500 shares held by IAT
Reinsurance Syndicate Ltd., a Bermuda corporation, of which he is the sole
holder of the voting stock; and 1,013 shares of restricted stock obtained from
the Company in lieu of the annual director retainer fee.
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<PAGE>
(8) Mr. Morgan's shares include 86 shares owned by his wife, 274 shares owned by
his children, 2,659 shares of restricted stock, and 213 shares held in the
ESOP/PAYSOP and PSP/CAP plans.
(9) This shareholder has dispositive power with respect to these shares, and
voting power only as to shares not allocated to participants' accounts. The
address of this holder is: One NationsBank Plaza, Charlotte, North Carolina
28255-0001.
(10) Mr. Pearson's shares include 2,226 shares of restricted stock;
120 shares held in the DRIP plan; and 155 shares held in the ESOP/PAYSOP and
PSP/CAP plans.
(11) Mr. Pechter's shares include 248 shares received in a 'net exchange'
exercise of his 10,000-share stock option; and 1,013 shares of restricted stock
obtained from the Company in lieu of annual director retainer fee.
(12) Mr. Ruff's shares include 1,013 shares of restricted stock; 18,500 shares
issuable under currently exercisable stock options; 112 shares issuable upon
conversion of the Company's Debentures, owned by his mother; and 6,165 shares
held in the ESOP/PAYSOP and PSP/CAP plans.
(13) Mr. Semones' shares include 5,263 shares of restricted stock; 789 shares
issuable upon conversion of the Company's Debentures, 42 shares held in the DRIP
plan; and 208 shares held in the ESOP/PAYSOP and PSP/CAP plans.
(14) Mr. Thomas' shares include 15,000 shares issuable under currently
exercisable stock options; and 3,977 shares held in the ESOP/PAYSOP and PSP/CAP
plans.
(15) Shares of all directors, nominees for director and executive officers as a
group include 63,067 shares issuable under currently exercisable stock options;
39,399 shares of restricted stock; 44,395 shares issuable upon conversion of the
Company's Debentures; 380 shares held in the DRIP plan; and 42,899 shares held
in the ESOP/PAYSOP and PSP/CAP plans.
ELECTION OF DIRECTORS
At the annual meeting, ten directors are to be elected to serve until the
next annual meeting and until their successors are elected and qualified. It is
the intention of the persons named in the proxy to vote for the persons named as
directors for the ensuing year. Should any nominee be unable to serve (which is
not anticipated), the proxy will be voted for the election of such other person
as shall be designated by the Board of Directors. Information with respect to
each current director and nominee, including biographical data for at least the
last five years, is set forth below:
CLAUDE S. ABERNETHY, JR.
Mr. Abernethy, age 68, was elected a director of the Company in June, 1985.
He was a director of Interstate/Johnson Lane Corporation, the Company's wholly
owned subsidiary, ("IJL Corporation") from 1953 to 1987 and has been a Senior
Vice President since 1963. He has been affiliated with IJL Corporation since
1951. Mr. Abernethy is also a director of Air Transportation Holding Company, an
air freight company.
PARKS H. DALTON
Mr. Dalton, age 66, served as Chairman of the Company from 1985 until his
retirement in 1988, and as Chief Executive Officer from 1985 to 1986. He was
re-elected as a director of the Company in July, 1990 and as Chairman and Chief
Executive Officer of the Company in September, 1990. He served as Chief
Executive Officer from September, 1990, until October, 1994, and still serves as
Chairman. He also was a director of IJL Corporation from 1985 until his
retirement in 1988, and served as Chief Executive Officer of IJL Corporation
from 1968 to 1988, President from 1968 to 1983, and Chairman from 1983 to 1988.
In November, 1990, he was re-elected Chairman and Chief Executive Officer of IJL
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Corporation. Mr. Dalton is also a director of ISC Realty Corporation, which is
managing general partner of The Carolinas Real Estate Fund, Marketplace Income
Properties, Atlantic Income Properties Limited Partnership, Interstate Land
Investors I Limited Partnership, and Interstate Land Investors II Limited
Partnership; all publicly held real estate investment partnerships.
JOHN B. ELLIS
Mr. Ellis, age 71, was elected a director of the Company in April, 1992. He
retired in 1986 as Senior Vice President-Finance and Treasurer from Genuine
Parts Company, a national distributor of automotive replacement parts, and is
presently director emeritus of that firm. Mr. Ellis is also a director of
Flowers Industries, Inc., Hughes Supply Inc., Integrity Music, Inc., Intermet
Corp., Oxford Industries, Inc. and UAP, Inc.
W. CLAY HAMNER
Mr. Hamner, age 50, was elected a director of the Company in January, 1992.
He has been Chairman and Chief Executive Officer of Montrose Capital
Corporation, a privately held investment corporation, since 1980. Mr. Hamner is
also Chairman and director of The Pantry, Inc., a convenience store chain with
approximately 400 locations. Mr. Hamner is also a director of Vista Resources
Inc., Wendy's International, Inc., and Southeast Interactive Technology Fund I,
L.L.C., a venture capital fund which is registered as an investment company.
PETER R. KELLOGG
Mr. Kellogg, age 53, was elected a director of the Company in October,
1989. Mr. Kellogg is Senior Managing Director and Chief Executive Officer of the
investment firm of Spear, Leeds & Kellogg ("SLK"), having joined them in 1967.
Mr. Kellogg is also the Chairman of IAT Reinsurance Syndicate Ltd. The Troster
Singer Division of SLK provides execution services to the Company on certain
transactions in over-the-counter securities.
JAMES H. MORGAN
Mr. Morgan, age 48, was elected President and Chief Operating Officer of
both the Company and IJL Corporation in September, 1990, and as a director of
both in October, 1990. He served as Chief Operating Officer from September, 1990
until October, 1994, when he was elected President and Chief Executive Officer,
positions in which he currently serves. From July 1989 to September 1990, Mr.
Morgan was President of Morgan Investments, Inc., a privately owned and operated
investment advisory business. Mr. Morgan served as Vice President of the Company
from 1987 to 1989, and was a director and Senior Vice President of IJL
Corporation in various research, equity marketing and investment policy roles
from 1986 to 1989.
DUDLEY G. PEARSON
Mr. Pearson, age 52, was elected a director of the Company in January,
1991. Mr. Pearson is Senior Vice President and Regional Manager, having joined
IJL Corporation in January, 1987. Mr. Pearson served as Branch Manager of the
Atlanta Monarch office from October, 1988, through April, 1995.
RICHARD S. PECHTER
Mr. Pechter, age 50, was elected a director of the Company in June, 1985.
Since 1979, he has been a director of Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), an independently operated investment firm owned by the Equitable Life
Assurance Society of the United States. From 1975 to 1984, Mr. Pechter was
Executive Vice President of DLJ. From 1984 to 1987, he was President & Chief
Operating Officer of the Financial Services Group of DLJ. Mr. Pechter was
elected Chairman of the Financial Services Group in 1987 and still serves in
such capacity. DLJ provides execution services to the Company on certain options
exchanges. Mr. Pechter is also a director of Depository Trust Company.
EDWARD C. RUFF
Mr. Ruff, age 56, was elected a director of the Company in 1988 and has
served as its Chief Financial Officer since 1985. He has been a director, Senior
Vice President and Chief Financial Officer of IJL Corporation since he joined
that firm in 1976. Mr. Ruff is also a director of ISC Realty Corporation,
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<PAGE>
which is the managing general partner of The Carolinas Real Estate Fund,
Marketplace Income Properties, Atlantic Income Properties Limited Partnership,
Interstate Land Investors I Limited Partnership and Interstate Land Investors II
Limited Partnership, all publicly held real estate investment partnerships.
GRADY G. THOMAS, JR.
Mr. Thomas, age 52, was elected a director of the Company in November,
1988. He joined IJL Corporation in 1977, was elected Senior Vice President in
1978 and served as a director from 1987 to 1991. Mr. Thomas is responsible for
specialized institutional products and is Manager of The Interstate Group, a
division of IJL Corporation.
MEETINGS AND COMMITTEES
BOARD OF DIRECTORS
During the fiscal year ended September 30, 1995, there were four meetings
of the Company's Board of Directors.
AUDIT COMMITTEE
Messrs. Hamner, Kellogg and Pechter served as the members of the Audit
Committee during the fiscal year ended September 30, 1995. The principal
functions of this Committee are to review the Company's internal controls and
confer with the Company's independent public accountants concerning the scope
and results of their audit and any recommendations they may have, and to
consider such other matters relating to auditing and accounting as the Committee
may deem appropriate. During the fiscal year ended September 30, 1995, the Audit
Committee held two meetings.
COMPENSATION COMMITTEE
Messrs. Ellis, Kellogg and Pechter served as the members of the
Compensation Committee during the fiscal year ended September 30, 1995. The
principal function of this Committee is to review and approve the compensation
of the executive officers of the Company. During the fiscal year ended September
30, 1995, the Compensation Committee held five meetings. On October 24, 1995,
the Board of Directors combined the following committees: COMPENSATION
COMMITTEE, NON-QUALIFIED STOCK OPTION PLAN COMMITTEE, AND THE STOCK AWARD PLAN
COMMITTEE. The newly-formed committee is the Compensation and Stock Plans
Committee, and will consist of Messrs. Ellis, Kellogg and Pechter.
NON-QUALIFIED STOCK OPTION PLAN
Messrs. Kellogg and Pechter served as the administrative committee for the
Company's 1985 Non-Qualified Stock Option Plan during the fiscal year ended
September 30, 1995. The principal function of this Committee is to determine who
will receive options and/or stock appreciation rights under the Company's 1985
Non-Qualified Stock Option Plan. During the fiscal year ended September 30,
1995, the Non-Qualified Stock Option Plan Committee held no meetings. On
October 24, 1995, this Committee became part of the new Compensation and
Stock Plans Committee defined above.
STOCK AWARD PLAN COMMITTEE
Messrs. Kellogg and Pechter served as the administrative committee for the
Company's 1987 Stock Award Plan, as amended and restated, during the fiscal year
ended September 30, 1995. The principal function of this Committee is to
determine who will receive options, restricted stock, and/or stock appreciation
rights under the Company's 1987 Stock Award Plan. During the fiscal year ended
September 30, 1995, the Stock Award Committee held three meetings. On October
24, 1995, this Committee became part of the new Compensation and Stock Plans
Committee defined above.
5
<PAGE>
INCENTIVE STOCK OPTION PLAN COMMITTEE
Messrs. Abernethy, Kellogg and Pechter served as the administrative
committee for the Company's 1985 Incentive Stock Option Plan during the 1995
fiscal year from October 1, 1994, through May 17, 1995, when this plan
terminated by its own terms. The principal function of this Committee was to
determine the employees of the Company who would receive options and stock
appreciation rights under the 1985 Incentive Stock Option Plan. During the
fiscal year ended September 30, 1995, the Incentive Stock Option Plan
Committee held no meetings. As this plan is terminated, no new options
will be issued, but all currently outstanding options will remain in
effect until they are exercised or expire.
NOMINATING COMMITTEE
Messrs. Dalton, Kellogg and Ellis served as the members of the Nominating
Committee during the fiscal year ended September 30, 1995. The principal
function of this Committee is to nominate directors for the Board of Directors
of the Company. During the fiscal year ended September 30, 1995, the Nominating
Committee held one meeting.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
during the last three fiscal years of the Company's former Chief Executive
Officer, its Chief Executive Officer at September 30, 1995, and each of its four
other most highly compensated executive officers (the "named executive
officers"):
SUMMARY COMPENSATION TABLE (7)
<TABLE>
<CAPTION>
Compensation
Annual
Yr.End
Executive Officer 9/30 Salary Bonus Other Annual All Other
Compensation Compensation
Cash Stock Total (5) (6)
------ ------- -------
(3) (4)
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Parks H. Dalton 1995 93,750 50,000 0 50,000 0 3,018
CHAIRMAN AND FORMER 1994 150,000 50,000 0 50,000 0 3,528
CHIEF EXECUTIVE OFFICER 1993 150,000 175,000 0 175,000 0 3,820
James H. Morgan (1) 1995 200,000 248,750 26,258 275,008 0 3,018
PRESIDENT AND 1994 200,000 297,500 52,500 350,000 0 3,528
CHIEF EXECUTIVE OFFICER 1993 200,000 540,000 135,000 675,000 9,608 3,820
Edward C. Ruff 1995 150,000 140,000 10,003 150,003 0 3,018
CHIEF FINANCIAL OFFICER 1994 150,000 157,500 17,505 175,005 0 3,528
1993 150,000 255,000 45,000 300,000 5,677 3,820
Edwin A. Dalrymple, Jr. 1995 140,000 167,000 13,005 180,005 0 3,018
SR. VP - IJL CORPORATION 1994 135,000 180,000 20,003 200,003 0 3,528
RETAIL DIVISION 1993 135,000 255,000 45,000 300,000 10,690 3,820
Harvey D. Harrelson 1995 120,000 76,000 4,009 80,009 0 3,018
SR. VP - IJL CORPORATION 1994 120,000 72,000 8,003 80,003 0 3,518
FIXED INCOME DIVISION 1993 120,000 336,000 59,000 395,000 4,864 3,820
Lewis F. Semones, Jr. (2) 1995 110,000 105,000 24,257 129,257 2,642 3,018
SR. VP - IJL CORPORATION 1994 -- -- -- -- -- --
STRATEGIC PLANNING 1993 -- -- -- -- -- --
&TECHNOLOGY
</TABLE>
(1) Mr. Morgan was elected Chief Executive Officer on October 25, 1994.
(2) Mr. Semones became an executive officer on October 26, 1994.
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(3) In fiscal 1995, 1994 and 1993, the named executive officers (who served as
executive officers in these years) were awarded 7,902 shares, 13,068
shares, and 28,400 shares, respectively, of Company stock restricted for
one year and bearing the rights to dividends, if any.
(4) Aggregate restricted shareholdings and their respective values at
September 30, 1995, for each of the named executive officers were as
follows: Mr. Morgan, 7,000 shares, $70,000; Mr. Ruff, 2,334 shares,
$23,340; Mr. Dalrymple, 2,667 shares, $26,670; Mr. Harrelson, 1,067
shares, $10,670; and Mr. Semones, 5,253 shares, $52,530.
(5) Amounts reported herein reflect the price discount on stock deemed
purchased as of September 30, 1993, by the named executive officers under
the Company's 1992-1993 Employee Deferred Stock Purchase Program, which
shares were issued subsequent to the close of the 1995 fiscal year.
(6) Amounts reported herein reflect allocations of contributions by the Company
to the defined contribution plans enumerated on pages 7 and 8 of this proxy
statement.
(7) There were no awards or payoffs of long-term compensation as defined in
Item 402(b)(2)(iv) of Regulation S-K under the Securities Exchange Act
of 1934.
STOCK OPTIONS
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
No options or stock appreciation rights were granted to any of the
named executive officers during the fiscal year ended September 30, 1995.
AGGREGATE OPTION/SAR EXERCISES DURING FISCAL YEAR 1995
AND SEPTEMBER 30, 1995 OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised *Value of Unexercised
Option Options/SARs at In-The-Money Options/
Exercises Fiscal Year-End SARs at Fiscal Year-End
Shares Value
Acquired Realized Exercisable Unexercisable Exercisable Unexercisable
Executive Officer (#) ($) (#) (#) ($) ($)
- ----------------- -------------- -------------- --------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Edward C. Ruff 0 0 18,500 0 $23,400 0
Harvey D. Harrelson 0 0 3,000 0 $12,000 0
</TABLE>
*BASED ON THE DIFFERENCE BETWEEN THE EXERCISE PRICE OF THE
OPTIONS AND THE CLOSING PRICE OF THE COMPANY'S COMMON STOCK
ON THE NEW YORK STOCK EXCHANGE AT SEPTEMBER 30, 1995.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
No long-term incentive awards were granted to any of the named executive
officers with respect to the fiscal year ended September 30, 1995.
COMPENSATION OF DIRECTORS
The Company has adopted a policy of paying directors who are not employees
of the Company an annual retainer of $10,000 in restricted stock, plus $1,000
and reimbursement of reasonable expenses for each directors' meeting attended,
and $1,000, plus expenses, for each committee meeting not held in conjunction
with a directors' meeting. Non-salaried employees receive $1,000 per meeting,
plus expenses. The Company anticipates that the Board of Directors will continue
to meet quarterly.
PROFIT SHARING AND CAPITAL ACCUMULATION PLAN AND TRUST
The Company maintains the PSP/CAP, which provides for participant
contributions on a pretax compensation reduction basis (a 401(k) arrangement).
To participate, an employee must have at least one full calendar quarter of
service, and complete 1,000 hours of service for that Plan year. An employee
meeting the standards of service required under the plan may elect to defer
receipt of a percentage of his annual compensation and contribute that amount to
the Capital Accumulation Plan. That amount was limited by federal regulation to
$9,240 in 1995. The employee's deferrals are fully vested at all times.
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The Company may, at its discretion, match employee contributions, up to
three percent of covered compensation. A participant's interest in the Company's
matching contributions vests over five years. This interest also becomes fully
vested upon retirement at age 65, early retirement (age 62 with ten years of
service), death or total disability. Additional discretionary contributions may
be made annually by the Company and are allocated among participating employees
at the end of each fiscal year on the basis of their relative eligible
compensation.
EMPLOYEE STOCK OWNERSHIP (ESOP) AND PAYSOP PLAN AND TRUST
The Company maintains an ESOP/PAYSOP, to which it may make annual
contributions of cash, securities of the Company or other property for the
benefit of participating employees. The eligibility and vesting provisions and
administration responsibilities of the ESOP/PAYSOP are the same as those which
apply to the Profit Sharing and Capital Accumulation Plan and Trust. Cash
contributions to the ESOP/PAYSOP have been primarily invested in the Company's
Common Stock and are allocated among participating employees at the end of each
fiscal year on the basis of their relative eligible compensation.
RELATED TRANSACTIONS
From time to time, directors and executive officers of the Company may
borrow money from IJL Corporation through margin accounts. These loans are made
in the normal course of IJL Corporation's business as a broker-dealer, are made
on substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and do not involve more than the normal risks of credit or
present other unfavorable features.
Mr. Hamner, a director of the Company, is a director of Southeast
Interactive Technology Fund I, L.L.C. ("the Fund"), and a principal in the
investment adviser for that fund. IJL Corporation raised the initial capital for
the Fund and received approximately $300,000 in commissions and expenses
for that effort. IJL Corporation is also an investor in the Fund. Additionally,
the Fund has contracted with Sovereign Capital Management, Inc., a wholly-owned
subsidiary of the Company, for capital management services.
COMPENSATION COMMITTEE REPORT
The Compensation Committee establishes base salaries for the Company's
executive officers at the beginning of the fiscal year upon the subjective
recommendation of the Chief Executive Officer. Salary levels are intended to
reflect responsibilities in one or more of the Company's operating units and to
be competitive with positions of similar responsibility in other comparable
investment and financial services organizations, whether publicly owned or
privately held, some of which may be included in the Peer Group Index.
Compensation surveys by independent third parties, industry associations and ad
hoc conference groups, as well as published proxy data for firms of comparable
size and scope, all serve as resources to the Chief Executive and to this
Committee in its deliberations.
Annual bonuses for executive officers are discretionary, not contractual.
Messrs. Dalrymple and Harrelson are compensated primarily from the contributions
of the respective business units that they direct. They, the other named
executive officers, and certain additional executive officers also participate
in a corporate bonus pool which is based in part on the Company's annual pretax
return on average beginning equity (ROBE), after giving effect to such bonuses,
and in part on discretionary adjustments by the Committee. The specifics of the
formularized portion of the corporate bonus pool vary from year to year. For
fiscal 1995 it provided for a bonus pool in an amount equal to 3/4% of pretax
profits (before giving effect to such bonuses) at a 3% ROBE, up to a maximum 10%
of pretax profits when a 36% or greater ROBE was achieved. In fiscal 1995 the
pretax ROBE was 16.9%, and total funds available from the corporate pool were
$650,000, of which $575,000 was allocated in cash and stock among the named
executive officers on the basis of subjective recommendations to the Committee
by the Chairman of the Board and by the Chief Executive Officer.
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<PAGE>
The Company encourages ownership of its own stock by all employees,
especially its senior executive group. To that end, upon recommendation of the
Chief Executive Officer, portions of the named executive officers' discretionary
annual bonuses, ranging from 0% to 19%, and totaling $77,532, have been awarded
in the Company's common stock that is restricted for one year as enumerated in
the Summary Compensation Table. Current ownership levels, among other
non-quantifiable factors, were taken into consideration in stipulating the
percentages for each individual.
In assessing total 1995 compensation for the named executive officers
relative to the Company's performance, the Committee considered the following
factors:
(Bullet)Compensation paid to senior executives of other regional full-service
securities firms (including but not limited to some firms in the Peer Group
Index), as disclosed in proxy statements, relative to various financial
characteristics of those firms such as revenues, net income, and return on
equity.
(Bullet)Operating results in all areas, except the Fixed Income Division,
declined from fiscal 1994.
Mr. Morgan succeeded Mr. Dalton as Chief Executive Officer in October,
1994. Mr. Dalton's salary was subsequently reduced by 50% in recognition of his
diminished responsibilities, and Mr. Morgan's salary was maintained at its
previous level to ensure that a significant portion of his total compensation
was performance-oriented. Mr. Morgan's proportionate share of the corporate
bonus pool was based upon a subjective assessment of his contribution to the
Company's performance in 1995.
In regard to the $1 million limit on tax deductible compensation, the
Committee believes it is important to balance the effectiveness of executive
compensation plans with the materiality of potentially reduced tax deductions.
Accordingly, the Committee may from time to time recommend modifications to
corporate compensation plans to be responsive to both factors.
COMPENSATION COMMITTEE: JOHN B. ELLIS
PETER R. KELLOGG
RICHARD S. PECHTER
On October 24, 1995, the Board of Directors combined the following
committees: Compensation Committee, Non-Qualified Stock Option Plan Committee,
and the Stock Award Plan Committee. The new committee is the Compensation and
Stock Plans Committee, and will consist of Messrs. Ellis, Kellogg and Pechter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, Messrs. Kellogg and Pechter serve as members of the
Compensation Committee. Mr. Pechter is Chairman of the Financial Services Group
of DLJ, which provides execution services to the Company on certain option
exchanges. Mr. Kellogg is Senior Partner and Chief Executive Officer of SLK,
which, through its Troster Singer Division, provides execution services to the
Company on certain transactions in over-the-counter securities.
STOCK PERFORMANCE GRAPHS
The following graph compares the five-year cumulative total return on
shares of the Company's Common Stock with the cumulative total return of the S&P
500 Index and a Peer Group Index comprised of eleven comparable regional
securities firms. The graph assumes that $100 was invested on September 30,
1990, in the Company's common stock and each of the other indexes, and that all
dividends were reinvested.
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<PAGE>
The Peer Group Index, which is weighted by market values, includes the
following firms:
Advest Group, Inc. Piper Jaffray Companies, Inc.
First Albany Companies, Inc. Rodman & Renshaw Capital Group, Inc.
Inter-Regional Financial Group, Inc. Scott & Stringfellow Financial, Inc.
Legg Mason, Inc. Southwest Securities Group, Inc.
McDonald & Company Investments, Inc. Stifel Financial Corp.
Morgan Keegan, Inc.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
(The Performance Graph appears here. The plot points are listed in the
table below.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
INTERSTATE/JOHNSON LANE $100.00 $114.82 $181.48 $296.30 $235.66 $303.27
S & P 500 $100.00 $131.26 $146.07 $165.08 $170.28 $220.93
Peer Group $100.00 $206.53 $235.68 $373.71 $293.78 $422.33
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. as independent
certified public accountants to examine the Company's financial statements for
the fiscal year ending September 30, 1996. A representative of such firm is
expected to attend the meeting, to respond to appropriate questions from
shareholders present at the meeting and, if such representative desires, to make
a statement.
The Board of Directors recommends that shareholders vote FOR ratification
of the appointment of Coopers & Lybrand L.L.P. as the Company's independent
accountants for the 1996 fiscal year.
OTHER MATTERS
MATTERS TO BE PRESENTED
The Board of Directors of the Company knows of no matters which will be
presented for consideration at the meeting other than those set forth in this
proxy statement. However, if any other matters are properly presented for
action, it is the intention of the persons named in the proxy to vote on them in
accordance with their best judgment.
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<PAGE>
A quorum being present, directors will be elected by a plurality of the
votes of the shares and all other matters will be decided by the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote thereon. Abstentions will not be taken into account
in the election of directors, but will effectively be counted as a vote against
any other proposal. Broker non-votes will not be taken into account in either
case.
SHAREHOLDER PROPOSALS
Shareholder proposals relating to the Company's 1996 annual meeting of
shareholders must be received by the Company no later than Thursday, August 17,
1996. Shareholders should send their proposals to the attention of the Company's
Secretary at its principal offices, P. O. Box 1012, Interstate Tower, Charlotte,
North Carolina 28201-1012.
SOLICITATION
The expense of preparing, printing and mailing the proxy statement to
shareholders will be borne by the Company. In addition to soliciting proxies by
mail, the Company may make requests for proxies by telephone or by personal
solicitation by employees of the Company at nominal cost to the Company. W. F.
Doring & Co. has been retained by the Company on behalf of the Board of
Directors to assist in the solicitation of proxies from brokers and nominees for
a fee of approximately $3,500, plus reimbursement of reasonable out-of-pocket
expenses. The Company also will reimburse brokers, dealers, banks and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy solicitation materials to beneficial owners of the Company's Common Stock.
The Board of Directors
INTERSTATE/JOHNSON LANE, INC.
DECEMBER 15, 1995
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