<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
FIRST ALBANY COMPANIES 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
FIRST ALBANY COMPANIES INC.
April 16, 1999
Dear Shareholder:
The 1999 Annual Meeting of Shareholders of First Albany Companies Inc. will be
held at the offices of the Company at 30 South Pearl Street, Albany, New York on
Thursday, May 18, 1999, at 10:00 A.M.
(EDT).
The enclosed material includes the Notice of Annual Meeting and Proxy Statement
which describes the business to be transacted at the meeting. We ask that you
give it your careful attention.
As in the past, we will be reporting on your Company's activities and you will
have an opportunity to ask questions about its operations.
We hope that you are planning to attend the Annual Meeting personally and we
look forward to seeing you. Whether or not you are able to attend in person, it
is important that your shares be represented at the Meeting. Accordingly, the
return of the enclosed Proxy as soon as possible will be appreciated and will
ensure that your shares are represented at the Annual Meeting. Over 85% of the
outstanding shares were represented at last year's Annual Meeting. If you do
attend the Annual Meeting, you may, of course, withdraw your Proxy should you
wish to vote in person.
On behalf of the Board of Directors and management of First Albany Companies
Inc., I would like to thank you for your continued support and confidence.
Sincerely yours,
/s/ George C. McNamee
George C. McNamee
Chairman of the Board
<PAGE> 3
FIRST ALBANY COMPANIES INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 18, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
Albany Companies Inc. (the "Company") will be held at the offices of the
Company, 30 South Pearl Street, Albany, New York, on Tuesday, May 18, 1999 at
10:00 a.m. (EDT), for the following purposes:
(1) To elect three directors whose terms will expire at the 2002 Annual
Meeting of Shareholders;
(2) To consider and act upon a proposal to approve the adoption of the
First Albany Companies Inc. 1999 Long-Term Incentive Plan.
(3) To ratify the selection of PricewaterhouseCoopers L.L.P. as
independent auditors of the Company for the fiscal year ending
December 31, 1999; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock of record as of the close of business on April 2,
1999, are entitled to receive notice of and vote at the Annual Meeting of
Shareholders. A list of such shareholders may be examined at the offices of the
Company during regular business hours for ten full days prior to the Annual
Meeting as well as at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting. For
that reason we ask that you promptly sign, date, and mail the enclosed Proxy
card in the return envelope provided. Shareholders who attend the Annual Meeting
may revoke their proxies and vote in person.
By Order of the Board of Directors
/s/ Stephen P. Wink
Stephen P. Wink
Secretary
Albany, New York
April 16, 1999
2
<PAGE> 4
FIRST ALBANY COMPANIES INC.
30 SOUTH PEARL STREET
ALBANY, NEW YORK 12207
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------------
MAY 18, 1999
This Proxy Statement is being furnished to the Shareholders of First
Albany Companies Inc., a New York corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company (the "Board") of
proxies for use at the Annual Meeting of Shareholders of the Company to be held
at the offices of the Company, 30 South Pearl Street, Albany, New York, on
Tuesday, May 18, 1999 at 10:00 A.M. (EDT), and any postponements or adjournments
thereof (the "Meeting"). The mailing address of the Company is 30 South Pearl
Street, Albany, New York 12207 and its telephone number is (518) 447-8500.
At the Meeting, the Shareholders of the Company will be asked (i) to elect
three directors of the Company whose terms will expire at the 2002 Annual
Meeting of Shareholders, (ii) to consider and act upon a proposal to adopt the
First Albany Companies Inc. 1999 Long-Term Incentive Plan, (iii) to ratify the
selection by the Board of PricewaterhouseCoopers L.L.P. to serve as the
Company's independent auditors for 1999.
This Proxy Statement and the enclosed form of proxy are expected to be
mailed on or about April 15, 1999. The cost of solicitation of proxies will be
borne by the Company. All expenses of the Company in connection with this
solicitation will be borne by the Company. In addition to solicitation by mail,
proxies may be solicited by directors, officers and other employees of the
Company, by telephone, telegraph, telex, in person or otherwise, without
additional compensation. The Company will also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares held of record by such persons and will reimburse
such persons and the Company's transfer agent for their reasonable out-of-pocket
expenses in forwarding such materials. Proxies in the form enclosed, properly
executed by Shareholders and returned to the Company and not revoked, will be
voted at the Meeting. A proxy may be revoked at any time before it is exercised
by giving notice of revocation to the Secretary of the Company, by executing a
later-dated proxy or BY attending and voting in person at the Meeting.
3
<PAGE> 5
THE COMPANY
The Company, which was incorporated under the laws of the State of New
York in November 1985, is a holding company which, through its principal
wholly-owned subsidiary, First Albany Corporation ("First Albany"), is an
investment banking, securities trading, and brokerage firm serving corporations,
governments, and institutional and individual investors.
VOTING, RECORD DATE AND QUORUM
Proxies will be voted as specified or, if no direction is indicated on a
proxy, will be voted "FOR" the election of the three persons named under the
caption "Election of Directors"; "FOR" the adoption of the First Albany
Companies Inc. 1999 Long-Term Incentive Plan and "FOR" the ratification of the
selection of PricewaterhouseCoopers L.L.P. as independent auditors for 1999. The
persons named in the proxy also may vote in favor of a proposal to adjourn the
Meeting to a subsequent date or dates without further notice in order to solicit
and obtain sufficient votes to approve the matters being considered at the
Meeting. If a proxy is returned which specifies a vote against a proposal, such
discretionary authority will not be used to adjourn the Meeting in order to
solicit additional votes in favor of such proposal. As to any other matter or
business which may be brought before the Meeting, a vote may be cast pursuant to
the proxy in accordance with the judgment of the person or persons voting the
same, but the Board does not know of any such other matter or business.
The close of business on April 2, 1999 has been fixed as the record date
for the determination of Shareholders entitled to vote the 6,603,585 shares of
Common Stock that were outstanding as of that date at the Meeting. Each
Shareholder will be entitled to cast one vote, in person or by proxy, for each
share of Common Stock held. The presence, in person or by proxy, of the holders
of at least a majority of the shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting. The affirmative vote
of the holders of a plurality of the shares of Common Stock cast at the Meeting
is required for the election of directors. The affirmative vote of the holders
of a majority of the votes cast at the Meeting is required for the adoption of
the First Albany Companies Inc. 1999 Long-Term Incentive Plan. The affirmative
vote of the holders of a majority of the votes cast at the Meeting is required
for ratification of the selection of PricewaterhouseCoopers L.L.P. as
independent auditors. Accordingly, abstentions and broker non-votes will have no
effect on the items to be voted on at the Meeting. THE BOARD RECOMMENDS THE
ELECTION OF THE THREE PERSONS NAMED AS NOMINEES UNDER "ELECTION OF DIRECTORS",
APPROVAL OF THE PROPOSAL TO ADOPT THE FIRST ALBANY COMPANIES INC. 1999 LONG-TERM
INCENTIVE PLAN, AND RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT AUDITORS.
4
<PAGE> 6
STOCK OWNERSHIP OF PRINCIPAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of Common Stock of the Company as of March 24, 1999, by (i) persons
owning more than 5% of the Common Stock, (ii) each director of the Company and
the executive officers included in the Summary Compensation Table and (iii) all
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
<CAPTION>
Shares Beneficially Owned(7)
----------------------------
Name Number Percent
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
George C. McNamee (1)(2)(4) 1,125,247 15.51%
Alan P. Goldberg (2)(4)(6) 858,397 11.84%
Hugh A. Johnson, Jr. (2)(4) 217,812 3%
Peter Barton 888 <1%
J. Anthony Boeckh 9,419 <1%
Walter Fiederowicz (5) 8,285 <1%
Daniel V. McNamee III (1) 117,798 1.05%
Charles L. Schwager 14,376 <1%
Benaree P. Wiley 2,048 <1%
Timothy R. Welles (2) 1,830 <1%
Stephen P. Wink (2) 2,305 <1%
First Albany Employee Stock Bonus Plan (2) 1,971,164 27.18%
All officers and directors of the Company as a group (2)(3)(4) 4,418,431 60.92%
</TABLE>
(1) Does not include interest as residual beneficiary under the McNamee Family
Trust, and with respect to Daniel V. McNamee III as trustee under the Trust. Mr.
G. McNamee disclaims beneficial ownership of any such interest.
(2) The Board of Directors of the Company serves as the Administrative Committee
of the First Albany Companies Inc. Stock Bonus Plan (the "Stock Bonus Plan").
Daniel V. McNamee III serves as Trustee of the Trust created thereby. Pursuant
to the terms of the Stock Bonus Plan, individual employees are permitted to
direct the vote of shares allocated to their respective accounts. The number of
shares beneficially owned by Messrs. G. McNamee, Goldberg, Johnson, Welles and
Wink includes the shares allocated to the respective accounts of such person
under the Stock Bonus Plan as of December 31, 1998, all of which shares are
fully vested, except for (i) Mr. Wink's shares, of which 872 shares are fully
vested and (ii) Mr. Welles' shares, of which 267 are fully vested. Under the
terms of the Stock Bonus Plan Trust Agreement, the Trustee, under the direction
of the Administrative Committee, has the authority and power to dispose of the
assets of the Trust Fund, and therefore, the Trustee may be deemed to have
beneficial ownership of all the shares held in the Stock Bonus Plan.
(3) Includes all shares beneficially owned by such person, shares owned by the
McNamee Family Trust, and all shares held under the Stock Bonus Plan.
(4) Includes 299,039, 256,856, and 93,501 options to purchase shares, granted to
Messrs. G. McNamee, Goldberg and Johnson respectively, all of which options are
fully vested and exercisable in accordance with the Stock Incentive Plan.
(5) Includes 5,097 shares owned by Geraldine Fiederowicz, of which Mr.
Fiederowicz disclaims ownership.
(6) Includes 7,717 shares owned by the Goldberg Charitable Trust of which Mr.
Goldberg is co-trustee. Mr. Goldberg disclaims beneficial ownership of any such
shares.
(7) Except as noted, all shares are held individually or jointly with a spouse
and the named person has or shares the right to vote and to dispose of the
shares indicated.
5
<PAGE> 7
ELECTION OF DIRECTORS
The Bylaws of the Company currently provide that the Board shall consist
of nine directors elected in three classes. The Board recommends the election of
Messrs. George McNamee, Peter Barton and Walter Fiederowicz for a three-year
term expiring at the Annual Meeting of Shareholders in 2002. Accordingly, if the
enclosed proxy card is duly executed and received in time for the Meeting, and
if no contrary specification is made as provided therein, it will be voted in
favor of the election as directors of such nominees.
Should any nominee for director become unable or unwilling to accept
election, proxies will be voted for a nominee selected by the Board, or the size
of the Board may be reduced accordingly. The Board has no reason to believe that
any of the nominees will be unable or unwilling to serve if elected to office
and, to the knowledge of the Board, such nominees intend to serve the entire
term for which election is sought. Any vacancy occurring during the term of
office of any director may be filled by the remaining directors for a term
expiring at the next meeting of Shareholders at which the election of directors
is in the regular order of business. All the nominees for directors are
presently directors of the Company.
The information set forth below, based upon the information obtained in
part from the respective nominees and in part from the records of the Company,
sets forth information regarding each nominee as of March 24, 1999.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors nominated for election are as follows:
GEORGE C. McNAMEE, age 52, joined First Albany in 1969. From 1975 until 1989, he
served as President of First Albany. He has served as Chairman of First Albany
since 1984 and Co-Chief Executive Officer since 1993. Mr. McNamee is Chairman of
Mechanical Technology Inc., a director of MapInfo Corporation and a director of
The Meta Group, Inc., all publicly traded companies, and is Chairman of the
privately held Plug Power Inc. He also serves on the Board of Directors of the
New York State Science and Technology Foundation, and is Chairman of the
Regional Firms Advisory Committee to the Board of the New York Stock Exchange.
Mr. McNamee has been a director of the Company since its incorporation in 1985.
PETER BARTON, age 48, is President of Barton and Associates, a private
investment firm specializing in technology and software. From August 1994
through April 1997, Mr. Barton was President and Chief Executive Officer of
Liberty Media Corporation and Executive Vice President of Tele-Communications,
Inc. From its inception in 1991 to August 1994, Mr. Barton served as a President
and CEO of Liberty Media Corporation, then a separate public company. Mr. Barton
also serves as a director of Ascent Entertainment Group, Inc. Mr. Barton has
been a director of the Company since July 1997.
WALTER M. FIEDEROWICZ, age 52, since August 1997 has been a private investor and
consultant. Since 1998, Mr. Fiederowicz served as Chairman of the Board of CDT
Corporation (a provider of repair and other related services to the
telecommunications industry) and as Chairman of the Board of Meacock Capital PLC
(a provider of capital to the Lloyd's insurance market). From
6
<PAGE> 8
April 1997 until August 1997, he served as the President and Chief Executive
Officer of WorldCorp., Inc., a holding company owning shares of common stock of
World Airways, Inc. (a provider of long-range passenger and cargo air
transportation services to major airlines) and of InteliData Technologies
Corporation (a provider of caller identification based telecommunications
devices, smart telephones and on-line electronic information services). Mr.
Fiederowicz served as chairman of Colonial Data Technologies Corp., (a
distributor of telecommunications equipment which subsequently merged into
InteliData Technologies Corporation) from August 1994 to March 1996. From
January 1991 until July 1994, he held various positions, including executive
vice president and chairman and served as director of Conning & Company (the
parent company of an investment firm). Mr. Fiederowicz also serves as a director
of Photronics, Inc. (a photomask manufacturer) and Compensation Value Alliance,
Inc. (a provider of workers' compensation-related services).
The following directors terms shall expire at the Annual Meeting of Shareholders
in 2000:
HUGH A. JOHNSON, JR., age 58, joined First Albany in 1977. He is currently
Senior Vice President and the Chief Investment Officer. He has also been
Chairman of First Albany Asset Management Corporation, a subsidiary of the
Company, since 1991. He has served on the Board of Directors of First Albany
since 1985. Mr. Johnson is a Director of the New York State Business Development
Corporation and serves on other state and community boards. Mr. Johnson has
served as a director of the Company since 1990.
CHARLES L. SCHWAGER, age 55, founded Loanet, Inc. in 1981, a provider of
on-line, real time accounting services to support financial institutions engaged
in the business of borrowing and lending securities. Mr. Schwager served as
President of Loanet, Inc. from 1981 to 1994, when the company was sold. He
continues to be employed by Loanet, Inc. in a consulting capacity. Mr. Schwager
is a member of the Audit and Executive Compensation Committees and has been a
director of the Company since 1995.
DANIEL V. McNAMEE III, age 54, has been Chairman of The Publishing and Media
Group, formerly McNamee Consulting Company Inc., a management consulting firm
specializing in the media communications industry, since 1981. Mr. McNamee is a
member of the Audit Committee and has been a director of the Company since its
incorporation in 1985.
The following directors terms shall expire at the Annual Meeting of Shareholders
in 2001:
ALAN P. GOLDBERG, age 53, joined First Albany in 1980. Mr. Goldberg became
President of First Albany in 1989 and Co-Chief Executive Officer in 1993. Mr.
Goldberg is a Director of Mechanical Technology Incorporated. He is a past
member of the Board of Governors of the Boston Stock Exchange and past Chairman
of the District Business Conduct Committee of the National Association of
Securities Dealers. He also serves on other industry and community boards. Mr.
Goldberg has been a director of the Company since its incorporation in 1985.
J. ANTHONY BOECKH, Ph.D., age 60, has been Chairman and Chief Executive Officer
of BCA Publications Ltd., Montreal, Canada, and has been Editor-in-Chief of The
Bank Credit Analyst since 1971. Mr. Boeckh is also a principal of Greydanus,
Boeckh and Associates Inc., Montreal, Canada, a fixed income specialty manager.
He also serves on other industry and community boards. Mr. Boeckh has been a
director of the Company since 1986, and serves as a member of the Executive
Compensation Committee.
7
<PAGE> 9
BENAREE P. WILEY, age 52, is President and Chief Executive Officer of The
Partnership, a Boston-based organization formed by business and civic leaders to
promote the development of professionals of color through access to corporate,
municipal and state leaders. Ms. Wiley is a member of the Board of Directors of
Dreyfus/Laurel Funds, a Trustee of Boston College and serves on the Board of
Directors of each of Children's Hospital, WGBH Educational Foundation and the
Greater Boston Chamber of Commerce. Mr. Wiley was formerly a director of The
Boston Company. From 1989 to 1991, Ms. Wiley served as Director of Graduate
Admissions for Harvard Law School and from 1987 through 1991, she maintained a
private consulting practice. Ms. Wiley serves as Chairperson of the Audit
Committee and has been a director of the Company since 1993.
George C. McNamee and Daniel V. McNamee, III are brothers.
The executive officers who are not nominated for election as directors are as
follows:
TIMOTHY R. WELLES, age 39, joined the Company in July 1997 as Vice President and
Chief Financial Officer. Prior to joining the Company, Mr. Welles was Executive
Vice President, Chief Operating Officer and a member of the Board of Directors
of InteliData Technologies Corp. and its predecessor company, Colonial Data
Technologies Corp., from February 1996 through July 1997. Prior to that, Mr.
Welles was Senior Vice President - Investment Banking at First Albany since
1993.
STEPHEN P. WINK, age 40, joined First Albany in 1996. He has been Secretary and
General Counsel of the Company since August 1997. Mr. Wink has been Senior Vice
President, General Counsel and Secretary of First Albany since 1996, and was
Assistant Secretary of the Company from 1996 through July 1997. Before joining
First Albany, Mr. Wink was an attorney for the law firm of Cleary, Gottlieb,
Steen & Hamilton since prior to 1994.
8
<PAGE> 10
BOARD AND COMMITTEE MEETINGS
The Board of Directors held four meetings during the Company's fiscal year
ended December 31, 1998. Each current Director attended 75% or more of the
aggregate number of meetings of the Board of Directors and each committee to
which he/she was appointed that were held during the period in which he/she was
a director.
The Audit Committee, responsible for reviewing the Company's financial
statements, met three times during the fiscal year. Among other matters, the
Audit Committee reviews the Company's expenditures, reviews the Company's
internal accounting controls and financial statements, reviews with the
Company's independent auditors the scope of their audit, their report, and their
recommendations, and recommends the selection of the Company's independent
auditors. During fiscal year 1998, the Audit Committee was comprised of Messrs.
Schwager and D. McNamee, and Ms. Wiley.
The Executive Compensation Committee is responsible for reviewing and
approving the compensation of executive officers of the Company, compensation
under the Management Bonus Compensation Plan, and the granting of stock options
under the Stock Incentive Plan and awards under the Company's Restricted Stock
Plan. The Executive Compensation Committee met once during the fiscal year.
During fiscal year 1998, the Executive Compensation Committee was comprised of
Messrs. Boeckh and Schwager.
The Board of Directors does not have a nominating committee.
During 1998, the Company paid directors who are not executive officers of
the Company an annual retainer of $6,000 and $2,500 per meeting attended ($1,000
for attendance by conference call), plus reimbursement of reasonable expenses.
In addition, the Chair of any committee and non-employee members of such
committees were paid $250 and $200, respectively, per meeting attended.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE THREE DIRECTOR NOMINEES.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of its business, First Albany extends credit to
employees, including directors and executive officers, under Regulation T, which
regulates credit in cash and margin accounts. Such extensions of credit are
performing and are made on the same terms as for customers.
9
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to each of the
Co-Chief Executive Officers of the Company during fiscal year 1998, and the
other executive officers at the end of fiscal year 1998 constituting the most
highly compensated executive officers of the Company (the "Named Executive
Officers").
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION (1)
AWARD
--------------------------------------------------------------------------------------------------------
YEAR (1) SALARY BONUS SHARES
NAME & PRINCIPAL UNDERLYING
POSITION OPTIONS
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GEORGE C. MCNAMEE 1998 $300,000 $350,000 50,000 $6,400
CHAIRMAN & CO-CHIEF 1997 250,000 200,000 50,000 6,400
EXECUTIVE OFFICER 1996 250,000 320,000 50,000 6,000
--------------------------------------------------------------------------------------------------------
ALAN P. GOLDBERG 1998 300,000 350,000 50,000 6,400
PRESIDENT & CO-CHIEF 1997 250,000 200,000 50,000 6,400
EXECUTIVE OFFICER 1996 250,000 320,000 50,000 6,000
--------------------------------------------------------------------------------------------------------
HUGH A. JOHNSON, JR. 1998 200,000 300,000 30,000 6,400
SENIOR VICE PRESIDENT 1997 200,000 200,000 20,000 6,400
1996 200,000 256,000 0 6,000
--------------------------------------------------------------------------------------------------------
TIMOTHY R. WELLES (2) 1998 175,000 250,000 20,000 5,375
VICE PRESIDENT AND CHIEF 1997 75,609 54,006 25,000 0
FINANCIAL OFFICER
--------------------------------------------------------------------------------------------------------
STEPHEN P. WINK(3) 1998 175,000 135,000 15,000 2,917
SECRETARY AND 1997 150,000 100,000 20,000 875
GENERAL COUNSEL 1996 72,308 46,000 5,000 0
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents contributions by the Company to the Employee Stock Bonus Plan, a
tax qualified employee benefit plan in which all employees of the Company are
eligible to participate.
(2) Mr. Welles joined the Company on July 28, 1997. Accordingly, the table
includes only the compensation Mr. Welles received from that day forward.
(3) Mr. Wink joined the Company on May 28, 1996. Accordingly, the table includes
only the compensation Mr. Wink received from that day forward.
10
<PAGE> 12
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during 1998 to
the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (3)
OPTIONS EMPLOYEES EXERCISE OR ---------------------------
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) (1) YEAR ($/SH)(1) (2) DATE 5% 10%
---- ------- ---- ------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
George C. McNamee 55,125 18.72 11.872 03/27/08 $333,276.08 $918,336.58
Alan P. Goldberg 55,125 18.72 11.872 03/27/08 $333,276.98 $918,336.58
Hugh A. Johnson, Jr. 22,050 7.49 11.872 03/27/08 $133,310.79 $367,334.63
Timothy R. Welles 27,563 9.36 12.92 04/15/08 $137,755.49 $430,290.60
Stephen P. Wink 15,750 5.62 11.79 08/03/08 $ 96,513.49 $263,673.38
</TABLE>
(1) During the 1998 fiscal year, the Company issued two 5% stock dividends. As a
result, the number of securities underlying each option granted and the exercise
price have been adjusted to reflect such dividends where appropriate.
(2) All at fair market value at date of grant.
(3) Represents gain that would be realized assuming the options were held for
the entire option term and the stock price increased at annual compounded rates
of 5% and 10%. These amounts represent assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and common stock holdings will
be dependent on overall market conditions and on the future performance of the
Company and its common stock. There can be no assurance that the amounts
reflected in this table will be achieved.
11
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END
OPTION VALUES
The following table provides information concerning the exercise of stock
options during 1998 by each of the Named Executive Officers and the year-end
value of their unexercised options.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES FISCAL OPTIONS AT
ACQUIRED YEAR-END(#) FISCAL YEAR-END($)
ON VALUE ------------ ------------------
EXERCISE(#) REALIZED ($) (1)
NAME EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George C. McNamee --- --- 283,844/45,580 $1,490,467.03/
$ 118,969.02
Alan P. Goldberg --- --- 241,662/45,580 $1,179,993.86/
$ 118,969.02
Hugh A. Johnson, Jr --- --- 93,501/0 $449,528.31/$0
Timothy R. Welles --- --- 0/27,563 $0/$0
Stephen P. Wink 3,191 $16,152.51 0/25,019 $0/$24,093.36
</TABLE>
- ---------------
(1) Represents the difference between the fair market value of the shares at
date of exercise and the exercise price multiplied by the number of options
exercised.
12
<PAGE> 14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of reports filed by directors, executive
officers and 10% shareholders of the Company on Forms 3, 4 and 5 pursuant to
Section 16 of the Securities Exchange Act of 1934, all such reports were filed
on a timely basis during fiscal year 1998, except for a Form 5 that was required
to be filed by Mr. Wink, which was subsequently filed.
EXECUTIVE COMPENSATION COMMITTEE REPORT
OVERVIEW
The Executive Compensation Committee establishes the compensation policies
applicable to the executive officers of the Company.
COMPENSATION POLICIES
Compensation for senior executives of the Company has been strongly
influenced by the principle that the compensation of senior executives should be
structured to directly link the executives' financial reward to Company
performance. Thus, senior executives would both share in the success of the
Company as a whole and be adversely affected by poor Company performances,
thereby aligning their interests with the interests of the Company's
shareholders.
Salaries of executive officers are intended to be relatively moderate, and
are set at levels which the Executive Compensation Committee believes are
generally competitive with salaries of executives in similar positions at
comparable financial services companies. In addition, substantial emphasis is
placed on incentive compensation directly related to short and long-term
corporate performance through annual cash bonuses and stock option grants.
As is common in the financial services industry, a significant portion of
total compensation of the Company's executive officers is paid in the form of
annual bonuses. For example, generally, over the last five years, most of the
annual cash compensation of Messrs. G. McNamee and Goldberg, the Company's
Co-Chief Executive Officers (the "Co-CEOs"), was paid as an annual bonus. This
is intended to maximize the portion of an individual's compensation that is
subject to fluctuation each year based upon corporate and individual
performance, as discussed below. The compensation program is structured to
recognize each executive's level of responsibility and to reward exceptional
individual and corporate performance.
BASE SALARY
A competitive base salary is important in fostering a career orientation
among executives consistent with the long-term nature of the Company's business
objectives. The Executive Compensation Committee determines the salary of each
of the executive officers based on its consideration of the Co-CEOs'
recommendations.
Salaries and salary adjustments are based on the responsibilities,
performance, and experience of each executive, regular reviews of competitive
positioning (comparing the Company's salary structure with that of similar
companies) and business performance. While there is no specific weighing of
these factors, the responsibilities, performance and experience of each
executive and reviews of competitive positioning are the most important
considerations.
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THE STOCK INCENTIVE PLAN
From time to time, awards under the Stock Incentive Plan have supplemented
the bonuses paid to Named Executive Officers. The number of options granted to
the executive officers, in general, reflect the decision of the Executive
Compensation Committee to allocate a portion of compensation in stock options,
the value of which is directly linked to the future financial success of the
Company.
COMPENSATION OF CO-CHIEF EXECUTIVE OFFICERS
The total compensation paid to each of the Company's Co-CEOs for the
fiscal year ended December 31, 1998, was $650,000. For fiscal year 1998, each of
the Co-CEOs received a base salary of $300,000, additional bonus compensation of
$350,000, and stock options for 50,000 shares of Common Stock of the Company. In
determining the bonus and other compensation of the Company's Co-CEOs for the
fiscal year 1998, the Committee compared the Company's performance to that of
industry peers, as well as to the market's performance as a whole. Among other
things, the Committee considered the performance of the Company's Common Stock,
its return on investments made in other businesses, its pre-tax return on
equity, its earnings per share and comparable market data.
The specific bonus an executive receives is dependent on his level of
responsibility and individual performance. Levels of responsibility are
evaluated annually by the Executive Compensation Committee without regard to any
specific formula. Assessments of individual performance are also made annually
by the Executive Compensation Committee after receiving the recommendations of
the Co-CEOs. Such assessments are based on a number of subjective factors,
including individual and corporate performance, initiative, business judgment,
and management skills. Messrs. G. McNamee and Goldberg's fiscal year 1998 award
reflects each of their significant personal contributions to the business and
leadership in building the Company's revenues, earnings, and capital position,
and the financial results for fiscal year 1998.
EXECUTIVE COMPENSATION COMMITTEE
J. Anthony Boeckh
Charles L. Schwager
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite 500 Stock Index and the Financial
Services Analytics, Inc. Regional Index, an index of publicly traded regional
brokerage firms for the Company's last five fiscal years. The graph assumes that
the value of the investment in the Company's Common Stock and each index was
$100 at September 30, 1994, and that all dividends, if any, were reinvested.
[FIRST ALBANY PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR(1) 1994 1995 1995 1996 1997 1998
----------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FIRST ALBANY 100 136.23 168.06 184.41 303.25 251.11
S&P 500 INDEX 100 129.69 137.48 169.06 225.44 289.80
FSA REGIONAL INDEX 100 161.01 137.77 201.35 372.90 418.64
</TABLE>
(1) In 1996, the Company changed its fiscal year to the calendar year, requiring
the Company to report both a twelve month and a three month fiscal 1995.
Accordingly, the Company's last five fiscal years are as follows: Fiscal 1998:
January 1, 1998 - December 31, 1998; Fiscal 1997: January 1, 1997 -December 31,
1997; Fiscal 1996: January 1, 1996 - December 31, 1996; Fiscal 1995: October 1,
1995 - December 31, 1995; Fiscal 1995: October 1, 1994 - September 30, 1995.
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<PAGE> 17
PROPOSED ADOPTION OF THE
FIRST ALBANY COMPANIES INC.
1999 LONG-TERM INCENTIVE PLAN
In 1999, the Executive Compensation Committee of the Board recommended to
the Board the adoption of the First Albany Companies Inc. 1999 Long-Term
Incentive Plan (the "1999 LTIP"), subject to shareholder approval. The Board
subsequently ratified the Executive Compensation Committee's recommendation and
determined to submit the 1999 LTIP to shareholders. Shareholders are now
requested to approve the adoption of the 1999 LTIP.
A general description of the basic features of the 1999 LTIP is set forth
below. Such description is qualified in its entirety by reference to the full
text of the 1999 LTIP which is set forth in full as Appendix A to this Proxy
Statement.
The Board recommends that shareholders adopt the First Albany Companies
Inc. 1999 Long-Term Incentive Plan.
PURPOSE
The purpose of the 1999 LTIP is to further and promote the interests of
the Company and its shareholders by enabling the Company to attract, retain and
motivate employees and officers or those who will become employees or officers,
and to align the interests of those individuals and the Company's stockholders.
To do this, the 1999 LTIP offers performance-based incentive awards and
equity-based opportunities to provide such persons with a proprietary interest
in maximizing the growth, profitability and overall success of the Company.
NUMBER OF SHARES
The maximum number of shares of Common Stock as to which awards could be
granted may not exceed 800,000 shares. During any calendar year, all
participants in the aggregate may not receive an award subject to performance
criteria exceeding, in the aggregate, 500,000 underlying shares of Common Stock.
The maximum amount payable in respect of awards subject to performance criteria
in any calendar year may not exceed 500,000 shares of common stock in the
aggregate to all participants and 300,000 shares of common stock in the case of
any individual participant. The limits on the numbers of shares described in
this paragraph are subject to proportional adjustment to reflect certain stock
changes, such as stock dividends and stock splits.
If, however, any awards expire or terminate unexercised, the shares of
Common Stock allocable to the unexercised or terminated portion of such award
shall again be available for awards under the 1999 LTIP to the extent of such
expiration or termination, subject to certain limitations under the 1999 LTIP.
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<PAGE> 18
ADMINISTRATION
The administration, interpretation and operation of the 1999 LTIP will be
vested in the Executive Compensation Committee. Members of the Executive
Compensation Committee will serve at the pleasure of the Company's Board of
Directors, which may at any time remove or add members to it. No member of the
Executive Compensation Committee, nor any other director who is not a salaried
employee or officer of the Company will be eligible to receive an award under
the 1999 LTIP. The day-to-day administration of the 1999 LTIP will be carried
out by officers and employees of the Company designated by the Executive
Compensation Committee. The Executive Compensation Committee may, in its sole
discretion, delegate its authority to one or more senior executive officers for
the purposes of making awards to participants who are not subject to Section 16
of the Securities Exchange Act of 1934.
ELIGIBILITY
Key employees and officers or those who will become key employees or
officers of the Company are eligible to receive awards under the 1999 LTIP.
Awards under the 1999 LTIP will be made by the Executive Compensation Committee
or by a senior executive officer who has been delegated authority to grant
awards to participants who are not subject to Section 16 of the Securities
Exchange Act of 1934 pursuant to the 1999 LTIP by the Executive Compensation
Committee. Awards will be made pursuant to individual award agreements between
the Company and each participant.
AWARDS UNDER THE 1999 LTIP
Introduction. Awards under the 1999 LTIP may consist of stock options,
stock appreciation rights, restricted shares or performance unit awards, each of
which is described below. All awards will be evidenced by an agreement approved
by the Executive Compensation Committee. In the discretion of the Executive
Compensation Committee, an eligible employee may receive awards from one or more
of the categories described below, and more than one award may be granted to an
eligible employee. In the event of any change in the outstanding shares of
Common Stock of the Company by reason of certain stock changes, including
without limitation stock splits, the terms of awards and number of shares of any
outstanding award may be equitably adjusted by the Board in its sole discretion.
However, in the event of a stock dividend, the terms of awards and number of
shares of any outstanding award will be equitably adjusted automatically, with
no action being required by the Board. No determination has been made as to
future awards which may be granted under the 1999 LTIP, although it is
anticipated that recipients of awards will include the current executive
officers of the Company.
Stock Options and Stock Appreciation Rights. A stock option is an award
that entitles a participant to purchase shares of Common Stock at a price fixed
at the time the option is granted. Stock options granted under the 1999 LTIP may
be in the form of incentive stock options (which qualify for special tax
treatment) or non-qualified stock options and may be granted alone or in
addition to other awards under the 1999 LTIP. Non-qualified stock options may be
granted alone or in tandem with stock appreciation rights (SARs).
SARs entitle a participant to receive, upon exercise, cash, restricted
shares or unrestricted shares of Common Stock as provided in the relevant award
agreement, with a value equal to (a) the difference between (i) the fair market
value on the exercise date of the shares with respect to which
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<PAGE> 19
an SAR is exercised and (ii) the fair market value on the date the SAR was
granted, multiplied by (b) the number of shares of Common Stock for which the
SAR has been exercised.
No SAR may be exercised until six months after its grant or prior to the
exercisability of the stock option with which it is granted in tandem, whichever
is later.
The exercise price and other terms and conditions of such options will be
determined by the Executive Compensation Committee at the time of grant, and in
the case of incentive stock options, such exercise price will not be less than
100 percent of the fair market value of the Common Stock on the date of the
grant. No term of any incentive stock options shall exceed ten years after
grant. An option or SAR grant under the 1999 LTIP does not provide an optionee
any rights as a shareholder and such rights will accrue only as to shares
actually purchased through the exercise of an option or the settlement of an
SAR.
Exercise of an option (or an SAR) will result in the cancellation of the
related option (or SAR) to the extent of the number of shares in respect of
which such option (or SAR) has been exercised. Unless otherwise determined by
the Executive Compensation Committee or provided in the relevant award
agreement, stock options shall become exercisable over a four-year period from
the date of grant with 25% vesting on each anniversary of the grant in that time
period.
Payment for shares issuable pursuant to the exercise of an option may be
made either in cash, by certified check, bank draft, or money order by delivery
of shares of Common Stock already owned by the participant for at least six
months, or, if permitted by the Executive Compensation Committee and applicable
law, by delivery of a fully-secured promissory note or some other form of
payment acceptable to the Executive Compensation Committee.
Restricted Share Awards. Restricted share awards are grants of Common
Stock made to a participant subject to conditions established by the Executive
Compensation Committee in the relevant award agreement. The restricted shares
only become unrestricted in accordance with the conditions and vesting schedule,
if any, provided in the relevant award agreement, but in no event shall
restricted shares vest prior to six months after the date of grant. A
participant may not sell or otherwise dispose of restricted shares until the
conditions imposed by the Executive Compensation Committee have been satisfied.
Restricted share awards under the 1999 LTIP may be granted alone or in addition
to any other awards under the 1999 LTIP. Restricted shares which vest will be
reissued as unrestricted Common Stock.
Each participant who receives a grant of restricted shares will have the
right to receive all dividends and vote or execute proxies for such shares. Any
stock dividends will be treated as additional restricted shares.
Performance Units. Performance units (with each unit representing a
monetary amount designated in advance by the Executive Compensation Committee)
are awards which may be granted to participants alone or in addition to any
other awards under the 1999 LTIP. Participants receiving performance unit grants
will only earn such units if the Company and/or the participant achieve certain
performance goals during a designated performance period. The Executive
Compensation Committee will establish such performance goals and may use such
measures as total shareholder return, return on equity, net earnings growth,
sales or revenue growth, comparison to peer companies, individual or aggregate
participant performance or such other measures the Executive Compensation
Committee deems appropriate. The participant may forfeit such units in
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<PAGE> 20
the event the performance goals are not met. If all or a portion of a
performance unit is earned, payment of the designated value thereof will be made
in cash, in unrestricted Common Stock or in restricted shares or in any
combination thereof, as provided in the relevant award agreement.
FORFEITURE UPON TERMINATION
Unless otherwise provided in the relevant award agreement, if a
participant's employment is terminated for any reason, any unexercisable stock
option or SAR shall be forfeited and canceled by the Company. Such participant's
right to exercise any then-exercisable stock option or SAR will terminate [90
days] after the date of such termination (but not beyond the stated term of such
stock option or SAR); provided, however, the Executive Compensation Committee
may (to the extent options were exercisable on the date of termination) extend
such period. If a participant dies, becomes totally disabled or retires, such
participant (or the estate or other legal representative of the participant), to
the extent the stock options of SARs are exercisable immediately prior to the
date of death, total disability or retirement, will be entitled to exercise any
stock options or SARs at any time within the one-year period following such
death, disability or retirement, but not beyond the stated term of such stock
option or SAR.
Unless otherwise provided in the relevant award agreement, if a
participant's employment is terminated for any reason (other than due to death,
total disability or retirement) (a) prior to the lapsing of any applicable
restriction period, or the satisfaction of any other restrictions, applicable to
any grant of restricted shares, or, (b) prior to the completion of any
performance period in respect of any grant of performance units, such restricted
shares or performance units, as the case may be, will be forfeited by such
participant; provided, however, that the Executive Compensation Committee may,
in its sole discretion, determine within 90 days after such termination that all
or a portion of such restricted shares or performance units, as the case may be,
shall not be so forfeited. In the case of death, total disability or retirement,
the participant (or the estate or other legal representatives of the
participant) shall become 100% vested in any restricted shares as of the date of
termination or shall be entitled to earn into the participant's performance
units.
CHANGE OF CONTROL
If a Change of Control, as defined in the 1999 LTIP, occurs (i) all Stock
Options and/or SARs then unexercised and outstanding will become fully vested
and exercisable, (ii) all restrictions, terms and conditions applicable to
restricted shares then outstanding will be deemed lapsed and satisfied and (iii)
all performance units will be deemed to have been fully earned, each as of the
date of the Change of Control; provided, however, that such Change of Control
provisions will only apply to those participants who are employed by the Company
as of the date of the Change of Control or who are terminated before the Change
in Control and reasonably demonstrate that such termination was in connection
with or in anticipation of the Change in Control.
AMENDMENT, SUSPENSION OR TERMINATION OF THE 1999 LTIP
The Board may amend, suspend or terminate the 1999 LTIP (or any portion
thereof) at any time; provided, however, that no amendment by the Board may,
without the approval of a majority of the stockholders, (i) increase the number
of shares of Common Stock which may be issued under the 1999 LTIP, except as
provided therein, (ii) materially modify the requirements as to eligibility for
participation in the 1999 LTIP, (iii) materially increase the benefits accruing
to participants under the 1999 LTIP except as permitted therein, provided Rule
16b-3 of the Securities and Exchange Act of
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<PAGE> 21
1934 does not require shareholder approval. No amendment, suspension or
termination by the Board of Directors shall (a) materially adversely affect the
rights of any participant under any outstanding share grants, without the
consent of such participant, or (b) make any change that would disqualify the
1999 LTIP from the exemption provided by Rule 16b-3 of the Exchange Act or from
the benefits or entitlements to deductions provided under Sections 422 and
162(m) of the Internal Revenue Code of 1986 (the "Code"), respectively.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1999 LTIP
Incentive Stock Options. Stock options granted under the 1999 LTIP may be
incentive stock options (within the meaning of Section 422 of the Code) or
non-qualified stock options. Upon the grant of an incentive stock option, the
optionee will not recognize any income. No income is recognized by the optionee
upon the exercise of an incentive stock option if the holding period
requirements contained in the 1999 LTIP and in the Code are met, including the
requirement that the optionee remain an employee of the Company (or a
subsidiary) during the period beginning with the date of the grant of the option
and ending on the day three months (one year if the optionee becomes disabled)
before the date the option is exercised. The optionee must increase his or her
alternative minimum taxable income for the taxable year in which he or she
exercised the incentive stock option by the amount that would have been ordinary
income had the option not been an incentive stock option.
Upon the subsequent disposition of shares acquired upon the exercise of an
incentive stock option, the federal income tax consequences will depend upon
when the disposition occurs and the type of disposition. If the shares are
disposed of by the optionee after the later to occur of (i) the end of the
two-year period beginning the day after the day the incentive stock option is
awarded to the optionee, or (ii) the end of the one-year period beginning on the
day after the day the shares are issued to the optionee, any gain or loss
realized upon such disposition will be long-term capital gain or loss, and the
Company (or a subsidiary) will not be entitled to any income tax deduction in
respect of the option or its exercise. For purposes of determining the amount of
such gain or loss, the optionee's tax basis in the shares will be the option
price.
Generally, if the shares are disposed of by the optionee in a taxable
disposition within (i) the two-year period beginning on the day after the day
the option was awarded to the optionee, or (ii)the one-year period beginning on
the day after the day the shares are issued to the optionee, the excess, if any,
of the amount realized (up to the fair market value of the shares on the
exercise date) over the option price will be compensation taxable to the
optionee as ordinary income, and the Company will be entitled to a deduction
(subject to the provisions of Section 162(m) of the Code discussed below under
the caption "Limits on Deductions") equal to the amount of ordinary income
realized by the optionee.
If an optionee has not remained an employee of the Company during the
period beginning with the grant of an incentive stock option and ending on the
day three months (one year if the optionee becomes disabled) before the date the
option is exercised, the exercise of such option will be treated as the exercise
of a non-qualified stock option with the tax consequences described below.
Non-Qualified Stock Options. Upon the grant of a non-qualified stock
option, an optionee will not recognize any income. At the time a nonqualified
option is exercised, the optionee will recognized compensation taxable as
ordinary income, and the Company will be entitled to a
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deduction (subject to the provisions of Section 162(m) of the Code discussed
below under the caption "Limits on Deductions"), in an amount equal to the
difference between the fair market value on the exercise date of the shares
acquired pursuant to such exercise and the option price. Upon a subsequent
disposition of the shares, the optionee will recognize long- or short-term
capital gain or loss, depending upon the holding period of the shares. For
purposes determining the amount of such gain or loss, the optionee's tax basis
in the shares will be the fair market value of such shares on the exercise date.
Effect of Share-for-Share Exercise. If an optionee elects to tender shares
of Common Stock in partial or full payment of the option price for shares to be
acquired through the exercise of an option, generally the optionee will not
recognize any gain or loss on such tendered shares. However, if the shares
tendered in connection with any share-for-share exercise were previously
acquired upon the exercise of an incentive stock option, and such
share-for-share exercise occurs within one year after the tendered shares will
be a taxable disposition with the tax consequences described above for the
taxable dispositions within one year of shares acquired upon the exercise of an
incentive stock option.
If the optionee tenders shares upon the exercise of an option which would
result in the receipt of compensation by the optionee, as described above under
the caption "Non-Qualified Stock Options", the optionee will recognize
compensation taxable is as ordinary income and the Company will be entitled to a
deduction (subject to the provisions of Section 162(m) of the Code discussed
below under the caption "Limits on Deductions") in an amount equal only to the
fair market value of the number of shares received by the optionee upon exercise
which is in excess of the number of tendered shares, less any cash paid by the
optionee.
Restricted Shares. A participant will not recognize any income upon the
award of restricted shares unless the participant makes an election under
Section 83(b) of the Code in respect of such grant, as described below. Unless a
participant has made an election under Section 83(b) of the Code in respect of
any restricted shares, any dividends received by the participant with respect to
restricted shares prior to the date the participant recognizes income with
respect to such award (as described below) must be treated by the participant as
compensation taxable as ordinary income, and the Company will be entitled to a
deduction, in an amount equal to the amount of ordinary income recognized by the
participant. After the terms and conditions applicable to the restricted shares
are satisfied, or if the participant has made an election under Section 83(b) of
the Code in respect of the restricted shares, any dividends received by the
participant in respect of such award will be treated as a dividend taxable as
ordinary income, and the Company will not be entitled to a deduction in respect
of any such dividend payment.
At the time the terms and conditions applicable to the restricted shares
are satisfied, a participant will recognize compensation taxable as ordinary
income, and the Company will be entitled to a deduction, in an amount equal to
the then fair market value of the shares of unrestricted Common Stock received
by the participant. The participant's tax basis for any such shares of Common
Stock would be the fair market value on the date such terms and conditions are
satisfied.
A participant may irrevocably elect under Section 83(b) of the Code to
recognize compensation taxable as ordinary income, and the Company will be
entitled to a corresponding deduction, in an amount equal to the fair market
value of such restricted shares (determined without regard to any restrictions
thereon) on the date of grant. Such an election must be made by the participant
not later than 30 days after the date of grant. If such an election is made, no
income
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would be recognized by the participant (and the Company will not be entitled to
a corresponding deduction) at the time the applicable terms and conditions are
satisfied. The participant's tax basis for the restricted shares received and
for any shares of Common Stock subsequently held in respect thereof would be the
fair market value of the restricted shares (determined without regard to any
restrictions thereon) on the date of grant. If a participant makes such an
election and subsequently all or part of the award is forfeited, the participant
will not be entitled to a deduction as a result of such forfeiture.
The holding period for capital gain or loss purposes in respect of the
Common Stock underlying an award of restricted shares shall commence when the
terms and conditions applicable to the restricted shares are satisfied, unless,
the participant makes a timely election under Section 83(b) of the Code. In such
case, the holding period will commence immediately after the grant of such
restricted shares.
Performance Units. A participant will not recognize any income upon the
award of a performance unit. If the performance goals applicable to the
performance units are achieved during the applicable performance period and such
performance units are earned, a participant will recognize compensation taxable
as ordinary income, and the Company will be entitled to a deduction equal to the
amount of cash or the then fair market value of unrestricted Common Stock
received by the participant in payment of the performance units. The
participant's tax basis for any such shares of Common Stock would be the fair
market value on the date such unrestricted shares are transferred to the
participant. If all or a portion of the performance units are paid in restricted
shares, see "Restricted Shares" above for a discussion of the applicable tax
treatment.
Limits on Deductions. Under Section 162(m) of the Code, the amount of
compensation paid to the chief executive officer and the four other most highly
paid executive officers of the Company in the year for which a deduction is
claimed by the Company (including its subsidiaries) is limited to $1,000,000 per
person in any year, except that compensation which is performance-based will be
excluded for purposes of calculating the amount of compensation subject to this
$1,000,000 limitation. The ability of the Company to claim a deduction for
compensation paid to any other executive officer or employee of the Company
(including its subsidiaries) is not affected by this provision.
The Company has structured the 1999 LTIP so that any compensation for
which the Company may claim a deduction in connection with the exercise of
non-qualified stock options and related SARs and the disposition by an optionee
of shares acquired upon the exercise of incentive stock options will be
performance-based within the meaning of Section 162(m) of Code. Because the
restricted share awards under the 1999 LTIP are not deemed to be
performance-based under Section 162(m) of the Code, amounts for which the
Company may claim a deduction upon the lapse of any restrictions on such
restricted share awards will be subject to the limitations on deductibility
under Section 162(m).
Additional Information. The recognition by an employee of compensation
income with respect to a grant or an award under the 1999 LTIP will be subject
to withholding for federal income and employment tax purposes. If an employee,
to the extent permitted by the terms of a grant or award under the 1999 LTIP,
uses shares of Common Stock to satisfy the federal income and employment tax
withholding obligation, or any similar withholding obligation for state and
local tax obligations, the employee will recognize a capital gain or loss,
short-term or long-term, depending on the tax basis and holding period for such
shares of Common Stock.
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If the provisions of the 1999 LTIP relating to a change in control
become applicable, certain compensation payments or other benefits received by
"disqualified individuals" (as defined in Section 280G(c) of the Code) under the
1999 LTIP or otherwise may cause or result in "excess parachute payments" (as
defined in Section 280G(b)(I) of the code). Section 4999 of the code generally
imposes a 20% excise tax on the amount of any such excess parachute payment
received by such a disqualified individual, and any such excess parachute
payments will not be deductible by the Company (or a subsidiary). In addition,
certain disqualified individuals may receive reimbursement payments from the
Company to eliminate the adverse effect of such 20% excise tax.
Any such reimbursement payments will be compensation income to the
recipient subject to additional income and excise taxation, but will not be
deductible by the Company (or any subsidiary).
* * * * * *
At March 24, 1999 the total number of outstanding shares of Common
Stock was 6,603,585 shares, and the closing price of the Common Stock on the
NASDAQ National Market was $14.00 per share.
EFFECTIVE DATE
The 1999 LTIP is effective as of March 26, 1999, the date of its
adoption by the Board of Directors subject to shareholder approval. The 1999
LTIP will terminate on December 31, 2009, except with respect to awards then
outstanding. After such date no further awards will be granted under the 1999
LTIP unless the 1999 LTIP is extended by the Board.
APPROVAL OF THE FIRST ALBANY COMPANIES INC. 1999 LONG-TERM INCENTIVE PLAN
To become effective, First Albany Companies Inc. 1999 Long-Term
Incentive Plan must be approved by the affirmative vote of a majority of the
votes cast at the Annual Meeting on this proposal by the holders of the shares
of Common Stock entitled to vote thereat.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THIS PROPOSAL.
SELECTION OF THE COMPANY'S INDEPENDENT AUDITORS
The Board has recommended that the accounting firm of
PricewaterhouseCoopers L.L.P. be selected as the Company's independent auditors
for the fiscal year ending December 31, 1999, subject to shareholder
ratification.
PricewaterhouseCoopers L.L.P. conducted the audit for the fiscal year
ended December 31, 1998. Representatives of PricewaterhouseCoopers L.L.P. are
expected to be present at the Meeting, and will have an opportunity to make a
statement and to respond to appropriate questions.
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In the event the shareholders fail to ratify the selection of
PricewaterhouseCoopers L.L.P., the selection of independent auditors will be
submitted to the Board for reconsideration and selection. Even if the selection
is ratified, the Board, in its discretion, may direct the appointment of a new
independent accounting firm at any time during the year if the Board believes
that such a change would be in the best interests of the Company and its
shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT AUDITORS OF THE
COMPANY.
OTHER MATTERS
At the date of this Proxy Statement, the Company has no knowledge of
any business other than that described above that will be presented at the
Meeting. If any other business should come before the Meeting, it is intended
that the persons named in the enclosed proxy will have discretionary authority
to vote the shares that they represent.
Any shareholder who wishes to submit a proposal for inclusion in the
proxy materials to be distributed by the Company in connection with its Annual
Meeting of Shareholders to be held in 2000, must do so no later than December
18, 1999.
You are urged to sign and to return your Proxy promptly in the enclosed
return envelope to make certain your shares will be voted at the Meeting.
By Order of the Board of Directors
/s/ Stephen P. Wink
----------------------------------
Stephen P. Wink
Secretary
April 16, 1999
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APPENDIX A
FIRST ALBANY COMPANIES INC.
1999 LONG-TERM INCENTIVE PLAN
* * * * *
1. PURPOSE. The purpose of the 1999 Long-Term Incentive Plan (the
"Plan") is to further and promote the interests of First Albany Companies Inc.
(the "Company"), its Subsidiaries and its shareholders by enabling the Company
and its Subsidiaries to attract, retain and motivate employees and officers or
those who will become employees or officers, and to align the interests of those
individuals and the Company's shareholders. To do this, the Plan offers
performance-based incentive awards and equity-based opportunities providing such
employees and officers with a proprietary interest in maximizing the growth,
profitability and overall success of the Company and its Subsidiaries.
2. DEFINITIONS. For purposes of the Plan, the following terms shall
have the meanings set forth below:
2.1 "AWARD" means an award or grant made to a Participant
under Sections 6, 7, 8 and/or 9 of the Plan.
2.2 "AWARD AGREEMENT" means the agreement executed by a
Participant pursuant to Sections 3.2 and 17.7 of the Plan in connection with the
granting of an Award.
2.3 "BOARD" means the Board of Directors of the Company, as
constituted from time to time.
2.4 "CODE" means the Internal Revenue Code of 1986, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.
2.5 "COMMITTEE" means the committee of the Board established
to administer the Plan, as described in Section 3 of the Plan.
2.6 "COMMON STOCK" means the Common Stock, par value $.01 per
share, of the Company or any security of the Company issued by the Company in
substitution or exchange therefor.
2.7 "COMPANY" means First Albany Companies Inc., a New York
corporation, or any successor corporation to First Albany Companies Inc.
2.8 "DISABILITY" means disability as defined in the
Participant's then effective employment agreement, or if the participant is not
then a party to an effective employment agreement with the Company which defines
disability, "Disability" means disability as determined by the Committee in
accordance with standards and procedures similar to those under the Company's
long-term disability plan, if any. Subject to the first sentence of this Section
2.8, at any time that the
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Company does not maintain a long-term disability plan, "Disability" shall mean
any physical or mental disability which is determined to be total and permanent
by a physician selected in good faith by the Company.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as in effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.
2.10 "FAIR MARKET VALUE" means on, or with respect to, any
given date(s), the average of the highest and lowest market prices of the Common
Stock, as reported on the NASDAQ NMS for such date(s) or, if the Common Stock
was not traded on such date(s), on the next preceding day or days on which the
Common Stock was traded. If at any time the Common Stock is not traded on such
exchange, the Fair Market Value of a share of the Common Stock shall be
determined in good faith by the Board.
2.11 "INCENTIVE STOCK OPTION" means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is intended to be (and is specifically designated as) an
"incentive stock option" within the meaning of Section 422 of the Code.
2.12 "NON-QUALIFIED STOCK OPTION" means any stock option
granted pursuant to the provisions of Section 6 of the Plan (and the relevant
Award Agreement) that is not (and is specifically designated as not being) an
Incentive Stock Option.
2.13 "PARTICIPANT" means any individual who is selected from
time to time under Section 5 to receive an Award under the Plan.
2.14 "PERFORMANCE UNITS" means the monetary units granted
under Section 9 of the Plan and the relevant Award Agreement.
2.15 "PLAN" means the First Albany Companies Inc. 1999
Long-Term Incentive Plan, as set forth herein and as in effect and as amended
from time to time (together with any rules and regulations promulgated by the
Committee with respect thereto).
2.16 "RESTRICTED SHARES" means the restricted shares of Common
Stock granted pursuant to the provisions of Section 8 of the Plan and the
relevant Award Agreement.
2.17 "RETIREMENT" means the voluntary retirement by the
Participant from active employment with the Company and its Subsidiaries on or
after the attainment of (i) age 65, or (ii) 60, with the consent of the Board.
2.18 "STOCK APPRECIATION RIGHT" means an Award described in
Section 7.2 of the Plan and granted pursuant to the provisions of Section 7 of
the Plan.
2.19 "SUBSIDIARY(IES)" means any corporation (other than the
Company) in an unbroken chain of corporations, including and beginning with the
Company, if each of such corporations, other than the last corporation in the
unbroken chain, owns, directly or indirectly, more than fifty percent (50%) of
the voting stock in one of the other corporations in such chain.
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3. ADMINISTRATION.
3.1 THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall be appointed from time to time by the Board and
shall be comprised of not less than two (2) of the then members of the Board who
are Non-Employee Directors (within the meaning of SEC Rule 16b-3(b)(3)) of the
Company and Outside Directors (within the meaning of Section 162(m) of the
Code). No member of the Committee shall be eligible to receive awards under the
Plan. Consistent with the Bylaws of the Company, members of the Committee shall
serve at the pleasure of the Board and the Board, subject to the immediately
preceding sentence, may at any time and from time to time remove members from,
or add members to, the Committee.
3.2 PLAN ADMINISTRATION AND PLAN RULES. The Committee is
authorized to construe and interpret the Plan and to promulgate, amend and
rescind rules and regulations relating to the implementation, administration and
maintenance of the Plan. Subject to the terms and conditions of the Plan, the
Committee shall make all determinations necessary or advisable for the
implementation, administration and maintenance of the Plan including, without
limitation, (a) selecting the Plan's Participants, (b) making Awards in such
amounts and form as the Committee shall determine, (c) imposing such
restrictions, terms and conditions upon such Awards as the Committee shall deem
appropriate, and (d) correcting any technical defect(s) or technical
omission(s), or reconciling any technical inconsistency(ies), in the Plan and/or
any Award Agreement. The Committee may designate persons other than members of
the Committee to carry out the day-to-day ministerial administration of the Plan
under such conditions and limitations as it may prescribe, except that the
Committee shall not delegate its authority with regard to the selection for
participation in the Plan and/or the granting of any Awards to Participants. The
Committee's determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated. Any determination, decision or action of the Committee in connection
with the construction, interpretation, administration, implementation or
maintenance of the Plan shall be final, conclusive and binding upon all
Participants and any person(s) claiming under or through any Participants. The
Company shall effect the granting of Awards under the Plan, in accordance with
the determinations made by the Committee, by execution of written agreements
and/or other instruments in such form as is approved by the Committee. The
Committee may, in its sole discretion, delegate its authority to one or more
senior executive officers for the purpose of making Awards to Participants who
are not subject to Section 16 of the Exchange Act.
3.3 LIABILITY LIMITATION. Neither the Board nor the Committee,
nor any member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan (or
any Award Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys' fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under any directors and officers liability insurance coverage which may be in
effect from time to time.
4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.
4.1 TERM. The Plan shall terminate on December 31, 2009,
except with respect to Awards then outstanding. After such date no further
Awards shall be granted under the Plan.
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4.2 COMMON STOCK. The maximum number of shares of Common Stock
in respect of which Awards may be granted or paid out under the Plan, subject to
adjustment as provided in Section 14.2 of the Plan, shall not exceed 800,000
shares. In the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be the Common Stock
for purposes of the Plan. Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have been
reacquired by the Company (in the open-market or in private transactions) and
which are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan.
4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of
computing the total number of shares of Common Stock available for Awards under
the Plan, there shall be counted against the limitations set forth in Section
4.2 of the Plan the maximum number of shares of Common Stock potentially subject
to issuance upon exercise or settlement of Awards granted under Sections 6 and 7
of the Plan, the number of shares of Common Stock issued under grants of
Restricted Shares pursuant to Section 8 of the Plan and the maximum number of
shares of Common Stock potentially issuable under grants or payments of
Performance Units pursuant to Section 9 of the Plan, in each case determined as
of the date on which such Awards are granted. If any Awards expire unexercised
or are forfeited, surrendered, cancelled, terminated or settled in cash in lieu
of Common Stock, the shares of Common Stock which were theretofore subject (or
potentially subject) to such Awards shall again be available for Awards under
the Plan to the extent of such expiration, forfeiture, surrender, cancellation,
termination or settlement of such Awards.
5. ELIGIBILITY. Individuals eligible for Awards under the Plan shall
consist of key employees and officers, or those who will become key employees or
officers, of the Company and/or its Subsidiaries whose performance or
contribution, in the sole discretion of the Committee, benefits or will benefit
the Company or any Subsidiary.
6. STOCK OPTIONS.
6.1 TERMS AND CONDITIONS. Stock options granted under the Plan
shall be in respect of Common Stock and may be in the form of Incentive Stock
Options or Non-Qualified Stock Options (sometimes referred to collectively
herein as the "Stock Option(s))". Such Stock Options shall be subject to the
terms and conditions set forth in this Section 6 and any additional terms and
conditions, not inconsistent with the express terms and provisions of the Plan,
as the Committee shall set forth in the relevant Award Agreement.
6.2 GRANT. Stock Options may be granted under the Plan in such
form as the Committee may from time to time approve. Stock Options may be
granted alone or in addition to other Awards under the Plan or in tandem with
Stock Appreciation Rights. Special provisions shall apply to Incentive Stock
Options granted to any employee who owns (within the meaning of Section
422(b)(6) of the Code) more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent corporation or any
subsidiary of the Company, within the meaning of Sections 424(e) and (f) of the
Code (a "10% Shareholder").
6.3 EXERCISE PRICE. The exercise price per share of Common
Stock subject to a Stock Option shall be determined by the Committee, including,
without limitation, a determination
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based on a formula determined by the Committee; provided, however, that the
exercise price of an Incentive Stock Option shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the date of the
grant of such Incentive Stock Option; provided, further, however, that, in the
case of a 10% Shareholder, the exercise price of an Incentive Stock Option shall
not be less than one hundred ten percent (110%) of the Fair Market Value of the
Common Stock on the date of grant.
6.4 TERM. The term of each Stock Option shall be such period
of time as is fixed by the Committee; provided, however, that the term of any
Incentive Stock Option shall not exceed ten (10) years (five (5) years, in the
case of a 10% Shareholder) after the date immediately preceding the date on
which the Incentive Stock Option is granted.
6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Secretary of the
Company, or the Secretary's designee, specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the exercise
price in cash, by certified check, bank draft, or money order payable to the
order of the Company, by delivery of shares of Common Stock already owned by the
Participant for at least six (6) months, or, if permitted by the Committee (in
its sole discretion) and applicable law, by delivery of, alone or in conjunction
with a partial cash or instrument payment, (a) a fully-secured promissory note
or notes, or (b) some other form of payment acceptable to the Committee. Payment
instruments shall be received by the Company subject to collection. The proceeds
received by the Company upon exercise of any Stock Option may be used by the
Company for general corporate purposes. Any portion of a Stock Option that is
exercised may not be exercised again.
6.6 EXERCISABILITY. In respect of any Stock Option granted
under the Plan, unless otherwise (a) determined by the Committee (in its sole
discretion) at any time and from time to time in respect of any such Stock
Option, or (b) provided in the Award Agreement or in the Participant's
employment agreement in respect of any such Stock Option, such Stock Option
shall become exercisable as to the aggregate number of shares of Common Stock
underlying such Stock Option, as determined on the date of grant, as follows:
- 25%, on the first anniversary of the date of grant of
the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries;
- 50%, on the second anniversary of the date of grant
of the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries;
- 75%, on the third anniversary of the date of grant of
the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries;
- 100%, on the fourth anniversary of the date of grant
of the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries.
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Notwithstanding anything to the contrary contained in this Section 6.6, such
Stock Option shall become one hundred percent (100%) exercisable as to the
aggregate number of shares of Common Stock underlying such Stock Option upon the
death, Disability or Retirement of the Participant.
6.7 TANDEM GRANTS. If Non-Qualified Stock Options and Stock
Appreciation Rights are granted in tandem, as designated in the relevant Award
Agreements, the right of a Participant to exercise any such tandem Stock Option
shall terminate to the extent that the shares of Common Stock subject to such
Stock Option are used to calculate amounts or shares receivable upon the
exercise of the related tandem Stock Appreciation Right.
7. STOCK APPRECIATION RIGHTS.
7.1 TERMS AND CONDITIONS. The grant of Stock Appreciation
Rights under the Plan shall be subject to the terms and conditions set forth in
this Section 7 and any additional terms and conditions, not inconsistent with
the express terms and provisions of the Plan, as the Committee shall set forth
in the relevant Award Agreement.
7.2 STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is
an Award granted with respect to a specified number of shares of Common Stock
entitling a Participant to receive an amount equal to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the Fair
Market Value of a share of Common Stock on the date of grant of the Stock
Appreciation Right, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.
7.3 GRANT. A Stock Appreciation Right may be granted in
addition to any other Award under the Plan or in tandem with or independent of a
Non-Qualified Stock Option.
7.4 DATE OF EXERCISABILITY. Unless otherwise provided in the
Participant's employment agreement or the Award Agreement in respect of any
Stock Appreciation Right, a Stock Appreciation Right may be exercised by a
Participant, in accordance with and subject to all of the procedures established
by the Committee, in whole or in part at any time and from time to time during
its specified term. Notwithstanding the preceding sentence, in no event shall a
Stock Appreciation Right be exercisable prior to the date which is six (6)
months after the date on which the Stock Appreciation Right was granted or prior
to the exercisability of any Non-Qualified Stock Option with which it is granted
in tandem. The Committee may also provide, as set forth in the relevant Award
Agreement and without limitation, that some Stock Appreciation Rights shall be
automatically exercised and settled on one or more fixed dates specified therein
by the Committee.
7.5 FORM OF PAYMENT. Upon exercise of a Stock Appreciation
Right, payment may be made in cash, in Restricted Shares or in shares of
unrestricted Common Stock, or in any combination thereof, as the Committee, in
its sole discretion, shall determine and provide in the relevant Award
Agreement.
7.6 TANDEM GRANT. The right of a Participant to exercise a
tandem Stock Appreciation Right shall terminate to the extent such Participant
exercises the Non-Qualified Stock Option to which such Stock Appreciation Right
is related.
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8. RESTRICTED SHARES.
8.1 TERMS AND CONDITIONS. Grants of Restricted Shares shall be
subject to the terms and conditions set forth in this Section 8 and any
additional terms and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the relevant Award
Agreement. Restricted Shares may be granted alone or in addition to any other
Awards under the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Restricted Shares to be granted to a Participant and the
Committee may provide or impose different terms and conditions on any particular
Restricted Share grant made to any Participant. With respect to each Participant
receiving an Award of Restricted Shares, there shall be issued a stock
certificate (or certificates) in respect of such Restricted Shares. Such stock
certificate(s) shall be registered in the name of such Participant, shall be
accompanied by a stock power duly executed by such Participant, and shall bear,
among other required legends, the following legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including, without limitation, forfeiture events)
contained in the First Albany Companies Inc. 1999 Long-Term
Incentive Plan and an Award Agreement entered into between the
registered owner hereof and First Albany Companies Inc. Copies
of such Plan and Award Agreement are on file in the office of
the Secretary of First Albany Companies Inc., 30 S. Pearl
Street, Albany, New York 12207. First Albany Companies Inc.
will furnish to the recordholder of the certificate, without
charge and upon written request at its principal place of
business, a copy of such Plan and Award Agreement. First
Albany Companies Inc. reserves the right to refuse to record
the transfer of this certificate until all such restrictions
are satisfied, all such terms are complied with and all such
conditions are satisfied."
Such stock certificate evidencing such shares shall, in the sole discretion of
the Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.
8.2 RESTRICTED SHARE GRANTS. A grant of Restricted Shares is
an Award of shares of Common Stock granted to a Participant, subject to such
restrictions, terms and conditions as the Committee deems appropriate,
including, without limitation, (a) restrictions on the sale, assignment,
transfer, hypothecation or other disposition of such shares, (b) the requirement
that the Participant deposit such shares with the Company while such shares are
subject to such restrictions, and (c) the requirement that such shares be
forfeited upon termination of employment for specified reasons within a
specified period of time or for other reasons (including, without limitation,
the failure to achieve designated performance goals).
8.3 RESTRICTION PERIOD. In accordance with Sections 8.1 and
8.2 of the Plan and unless otherwise determined by the Committee (in its sole
discretion) at any time and from time to time, Restricted Shares shall only
become unrestricted and vested in the Participant in accordance with such
vesting schedule relating to such Restricted Shares, if any, as the Committee
may establish in the relevant Award Agreement (the "Restriction Period").
Notwithstanding the preceding sentence, in no event shall the Restriction Period
be less than six (6) months after the date of grant.
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During the Restriction Period, such stock shall be and remain unvested and a
Participant may not sell, assign, transfer, pledge, encumber or otherwise
dispose of or hypothecate such Award. Upon satisfaction of the vesting schedule
and any other applicable restrictions, terms and conditions, the Participant
shall be entitled to receive payment of the Restricted Shares or a portion
thereof, as the case may be, as provided in Section 8.4 of the Plan.
8.4 PAYMENT OF RESTRICTED SHARE GRANTS. After the satisfaction
and/or lapse of the restrictions, terms and conditions established by the
Committee in respect of a grant of Restricted Shares, a new certificate, without
the legend set forth in Section 8.1 of the Plan, for the number of shares of
Common Stock which are no longer subject to such restrictions, terms and
conditions shall, as soon as practicable thereafter, be delivered to the
Participant.
8.5 SHAREHOLDER RIGHTS. A Participant shall have, with respect
to the shares of Common Stock underlying a grant of Restricted Shares, all of
the rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and shall be subject to the same restrictions and
other terms and conditions that apply to the unvested Restricted Shares in
respect of which such stock dividends are issued.
9. PERFORMANCE UNITS.
9.1 TERMS AND CONDITIONS. Performance Units shall be subject
to the terms and conditions set forth in this Section 9 and any additional terms
and conditions, not inconsistent with the express provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement.
9.2 PERFORMANCE UNIT GRANTS. A Performance Unit is an Award of
units (with each unit representing such monetary amount as is designated by the
Committee in the Award Agreement) granted to a Participant, subject to such
terms and conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit such units (or a
portion thereof) in the event certain performance criteria or other conditions
are not met within a designated period of time.
9.3 GRANTS. Performance Units may be granted alone or in
addition to any other Awards under the Plan. Subject to the terms of the Plan,
the Committee shall determine the number of Performance Units to be granted to a
Participant and the Committee may impose different terms and conditions on any
particular Performance Units granted to any Participant.
9.4 PERFORMANCE GOALS AND PERFORMANCE PERIODS. Participants
receiving a grant of Performance Units shall only earn into and be entitled to
payment in respect of such Awards if the Company and/or the Participant achieves
certain performance goals (the "Performance Goals") during and in respect of a
designated performance period (the "Performance Period"). The Performance Goals
and the Performance Period shall be established by the Committee, in its sole
discretion. The Committee shall establish Performance Goals for each Performance
Period prior to, or as soon as practicable after, the commencement of such
Performance Period. The Committee shall also establish a schedule or schedules
for Performance Units setting forth the portion of the Award which will be
earned or forfeited based on the degree of achievement, or lack thereof, of the
Performance Goals at the end of the relevant Performance
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Period. In setting Performance Goals, the Committee may use, but shall not be
limited to, such measures as total shareholder return, return on equity, net
earnings growth, sales or revenue growth, cash flow, comparisons to peer
companies, individual or aggregate Participant performance or such other measure
or measures of performance as the Committee, in its sole discretion, may deem
appropriate. Such performance measures shall be defined as to their respective
components and meaning by the Committee (in its sole discretion). During any
Performance Period, the Committee shall have the authority to adjust the
Performance Goals and/or the Performance Period in such manner as the Committee,
in its sole discretion, deems appropriate at any time and from time to time.
9.5 PAYMENT OF UNITS. With respect to each Performance Unit,
the Participant shall, if the applicable Performance Goals have been achieved,
or partially achieved, as determined by the Committee in its sole discretion, by
the Company and/or the Participant during the relevant Performance Period, be
entitled to receive payment in an amount equal to the designated value of each
Performance Unit times the number of such units so earned. Payment in settlement
of earned Performance Units shall be made as soon as practicable following the
conclusion of the respective Performance Period in cash, in unrestricted Common
Stock, or in Restricted Shares, or in any combination thereof, as the Committee
in its sole discretion, shall determine and provide in the relevant Award
Agreement.
10. DEFERRAL ELECTIONS/TAX REIMBURSEMENTS/OTHER PROVISIONS.
10.1 DEFERRALS. The Committee may permit a Participant to
elect to defer receipt of any payment of cash or any delivery of shares of
Common Stock that would otherwise be due to such Participant by virtue of the
exercise, earn out or settlement of any Award made under the Plan. If any such
election is permitted, the Committee shall establish rules and procedures for
such deferrals, including, without limitation, the payment or crediting of
reasonable interest on such deferred amounts credited in cash, and the payment
or crediting of dividend equivalents in respect of deferrals credited in units
of Common Stock. The Committee may also provide in the relevant Award Agreement
for a tax reimbursement cash payment to be made by the Company in favor of any
Participant in connection with the tax consequences resulting from the grant,
exercise, settlement, or earn out of any Award made under the Plan.
10.2 PERFORMANCE-BASED AWARDS. Performance Units,
performance-based Restricted Shares, and other Awards subject to performance
criteria are intended to be "qualified performance-based compensation" within
the meaning of section 162(m) of the Code and shall be paid solely on account of
the attainment of one or more preestablished, objective performance goals within
the meaning of section 162(m) and the regulations thereunder. Until otherwise
determined by the Committee, the performance goals shall be the attainment of
preestablished levels of any of net income, market price per share, earnings per
share, return on equity, return on capital employed and/or cash flow. The payout
of any such Award to a Covered Employee may be reduced, but not increased, based
on the degree of attainment of other performance criteria or otherwise at the
discretion of the Committee. For purposes of the Plan, "Covered Employee" has
the same meaning as set forth in Section 162(m) of the Code.
10.3 MAXIMUM YEARLY AWARDS. The maximum annual Common Stock
amounts in this Section 10.3 are subject to adjustment under Section 14.2 and
are subject to the Plan maximum under Section 4.2.
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10.3.1 PERFORMANCE-BASED AWARDS. All Participants in
the aggregate may not receive in any calendar year Performance Units,
performance-based Restricted Shares and other Awards subject to
performance criteria exceeding, in the aggregate, 500,000 underlying
shares of Common Stock. The maximum amount payable in respect of such
Awards in any calendar year may not exceed 500,000 shares of Common
Stock (or the then equivalent Fair Market Value thereof) in the
aggregate to all Participants and 300,000 shares of Common Stock (or
the then equivalent Fair Market Value thereof) in the case of any
individual Participant.
10.3.2 STOCK OPTIONS AND SARS. All Participants in
the aggregate may not receive in any calendar year Awards of Options
and Stock Appreciation Rights, in the aggregate, exceeding 500,000
underlying shares of Common Stock. Each individual Participant may not
receive in any calendar year Awards of Options or Stock Appreciation
Rights exceeding 300,000 underlying shares of Common Stock.
11. DIVIDEND EQUIVALENTS. In addition to the provisions of Section 8.5
of the Plan, Awards of Stock Options, and/or Stock Appreciation Rights, may, in
the sole discretion of the Committee and if provided for in the relevant Award
Agreement, earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant shall be
credited with an amount equal to the amount of cash or stock dividends that
would have been paid on the shares of Common Stock covered by such Award had
such covered shares been issued and outstanding on such dividend record date.
The Committee shall establish such rules and procedures governing the crediting
of such dividend equivalents, including, without limitation, the amount, the
timing, form of payment and payment contingencies and/or restrictions of such
dividend equivalents, as it deems appropriate or necessary.
12. TERMINATION OF EMPLOYMENT.
12.1 GENERAL. Except as is otherwise provided (a) in the
relevant Award Agreement as determined by the Committee (in its sole
discretion), or (b) in the Participant's then effective employment agreement, if
any, the following terms and conditions shall apply as appropriate and as not
inconsistent with the terms and conditions, if any, contained in such Award
Agreement and/or such employment agreement:
12.1.1 OPTIONS/SARS. Subject to any determination of
the Committee pursuant to Section 6.6 of the Plan, if a Participant's
employment with the Company terminates for any reason, any then
unexercisable Stock Options and/or Stock Appreciation Rights shall be
forfeited and cancelled by the Company. Except as otherwise provided in
this Section 12.1.1, if a Participant's employment with the Company and
its Subsidiaries terminates for any reason, such Participant's rights,
if any, to exercise any then exercisable Stock Options and/or Stock
Appreciation Rights, if any, shall terminate ninety (90) days after the
date of such termination (but not beyond the stated term of any such
Stock Option and/or Stock Appreciation Right as determined under
Sections 6.4 and 7.4) and thereafter such Stock Options or Stock
Appreciation Rights shall be forfeited and cancelled by the Company.
The Committee, in its sole discretion, may determine that any such
Participant's Stock Options and/or Stock Appreciation Rights, if any,
to the extent exercisable immediately prior to any termination of
employment (other than a termination due to death, Retirement or
Disability), may remain exercisable for an additional specified time
period
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after such ninety (90) day period expires (subject to any other
applicable terms and provisions of the Plan and the relevant Award
Agreement), but not beyond the stated term of any such Stock Option
and/or Stock Appreciation Right. If any termination of employment is
due to death, Retirement or Disability, a Participant (and such
Participant's estate, designated beneficiary or other legal
representative, as the case may be and as determined by the Committee)
shall have the right, to the extent exercisable immediately prior to
any such termination, to exercise such Stock Options and/or Stock
Appreciation Rights, if any, at any time within the one (1) year period
following such termination due to death, Retirement or Disability (but
not beyond the term of any such Stock Option and/or Stock Appreciation
Right as determined under Sections 6.4 and 7.4).
12.1.2 RESTRICTED SHARES. If a Participant's
employment with the Company and its Subsidiaries terminates for any
reason (other than due to Disability, Retirement or death) prior to the
satisfaction and/or lapse of the restrictions, terms and conditions
applicable to a grant of Restricted Shares, such Restricted Shares
shall immediately be cancelled and the Participant (and such
Participant's estate, designated beneficiary or other legal
representative) shall forfeit any rights or interests in and with
respect to any such Restricted Shares. Notwithstanding anything to the
contrary in this Section 12, the Committee, in its sole discretion, may
determine, prior to or within ninety (90) days after the date of such
termination, that all or a portion of any such Participant's Restricted
Shares shall not be so cancelled and forfeited. If the Participant's
employment terminates due to death, Disability or Retirement, the
Participant shall become 100% vested in any such Participant's
restricted Shares as of the date of any such termination.
12.1.3 PERFORMANCE UNITS. If a Participant's
employment with the Company and its Subsidiaries terminates for any
reason (other than due to Disability, Retirement or death) prior to the
completion of any Performance Period, any Performance Units granted in
respect of such Performance Period shall immediately be cancelled by
the Company and the Participant (and such Participant's estate,
designated beneficiary or other legal representative) shall forfeit any
rights or interests in and with respect to any such Performance Units.
Notwithstanding anything to the contrary in this Section 12, the
Committee, in its sole discretion may determine, prior to or within
ninety (90) days after the date of any such termination, that all or a
portion of any such Participant's Performance Units shall not be so
cancelled and forfeited upon termination of employment for any reason
or for a particular reason. If the Participant's employment terminates
due to death, Disability or Retirement, the Participant shall be
entitled to earn into such Participant's Performance Units in
accordance with Section 9 of the Plan; provided, however, that any such
earn out (determined in good faith by the Committee) shall be
proportionately reduced based on the number of days transpired in the
relevant Performance Periods prior to such death, Disability or
Retirement over the total number of calendar days in any such relevant
Performance Period.
13. NON-TRANSFERABILITY OF AWARDS. Unless otherwise provided in the
Award Agreement, no Award under the Plan or any Award Agreement, and no rights
or interests herein or therein, shall or may be assigned, transferred, sold,
exchanged, encumbered, pledged, or otherwise hypothecated or disposed of by a
Participant or any beneficiary(ies) of any Participant, except by testamentary
disposition by the Participant or the laws of intestate succession. No such
interest shall be subject to execution, attachment or similar legal process,
including, without limitation, seizure for the payment of the Participant's
debts, judgements, alimony, or separate maintenance. Unless otherwise
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provided in the Award Agreement, during the lifetime of a Participant, Stock
Options and Stock Appreciation Rights are exercisable only by the Participant.
14. CHANGES IN CAPITALIZATION AND OTHER MATTERS.
14.1 NO CORPORATE ACTION RESTRICTION. The existence of the
Plan, any Award Agreement and/or the Awards granted hereunder shall not limit,
affect or restrict in any way the right or power of the Board or the
shareholders of the Company to make or authorize (a) any adjustment,
recapitalization, reorganization or other change in the Company's or any
Subsidiary's capital structure or its business, (b) any merger, consolidation or
change in the ownership of the Company or any Subsidiary, (c) any issue of
bonds, debentures, capital, preferred or prior preference stocks ahead of or
affecting the Company's or any Subsidiary's capital stock or the rights thereof,
(d) any dissolution or liquidation of the Company or any Subsidiary, (e) any
sale or transfer of all or any part of the Company's or any Subsidiary's assets
or business, or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person shall have any claim
against any member of the Board or the Committee, the Company or any Subsidiary,
or any employees, officers or agents of the Company or any subsidiary, as a
result of any such action. Notwithstanding anything herein contained to the
contrary, any Award granted hereunder shall be cancelled immediately prior to
the effective time of a transaction between the Company and another party
pursuant to a written agreement whereby the consummation of the transaction is
conditioned upon the availability of "pooling of interests" accounting treatment
(within the meaning of A.P.B. No. 16 or any successor thereto); provided,
however, that the cancellation of such Awards shall be subject to the following
conditions:
(i) the existence of the Awards would (in the opinion of the
firm of independent certified public accountants regularly engaged to
audit the Company's financial statements) render the transaction
ineligible for pooling of interests accounting treatment;
(ii) the cancellation of the Awards would (in the opinion of
the firm of independent certified public accountants regularly engaged
to audit the Company's financial statements) render the transaction
eligible for pooling of interests accounting treatment;
(iii) the transaction is, in fact, consummated; and
(iv) the written agreement providing for the transaction
provides for each Participant to whom an Award has been granted and
whose Award must be cancelled in accordance with this provision to
receive, upon the effective date of such transaction, property with a
fair market value at least equal to the monetary payment that would be
made upon exercise of such Award.
14.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change
in capitalization affecting the Common Stock of the Company, including, without
limitation, a distribution, stock split, reverse stock split, recapitalization,
consolidation, subdivision, split-up, spin-off, split-off, combination or
exchange of shares or other form of reorganization or recapitalization, or any
other change affecting the Common Stock, the Board shall authorize and make such
proportionate adjustments, if any, as the Board deems appropriate to reflect
such change, including, without limitation, with respect to the aggregate number
of shares of the Common Stock for which
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Awards in respect thereof may be granted under the Plan, the maximum number of
shares of the Common Stock which may be granted or awarded to any Participant,
the number of shares of the Common Stock covered by each outstanding Award, and
the exercise price or other price per share of Common Stock in respect of
outstanding Awards. Notwithstanding the foregoing, in the event of a stock
dividend, the proportionate adjustments described in this Section 14.2 shall
occur automatically, without any Board action being required.
14.3 CERTAIN MERGERS.
14.3.1 If the Company enters into or is involved in
any merger, reorganization or other business combination with any
person or entity (such merger, reorganization or other business
combination to be referred to herein as a "Merger Event") and as a
result of any such Merger Event the Company will be or is the surviving
corporation, a Participant shall be entitled, as of the date of the
execution of the agreement evidencing the Merger Event (the "Execution
Date") and with respect to both exercisable and unexercisable Stock
Options and/or Stock Appreciation Rights (but only to the extent not
previously exercised), to receive substitute stock options and/or stock
appreciation rights in respect of the shares of the surviving
corporation on such terms and conditions, as to the number of shares,
pricing and otherwise, which shall substantially preserve the value,
rights and benefits of any affected Stock Options or Stock Appreciation
Rights granted hereunder as of the date of the consummation of the
Merger Event. Notwithstanding anything to the contrary in this Section
14.3, if any Merger Event occurs, the Company shall have the right, but
not the obligation, to pay to each affected Participant an amount in
cash or certified check equal to the excess of the Fair Market Value of
the Common Stock underlying any affected unexercised Stock Options or
Stock Appreciation Rights as of the Execution Date (whether then
exercisable or not) over the aggregate exercise price of such
unexercised Stock Options and/or Stock Appreciation Rights, as the case
may be. However, the Company shall not make any such payments where the
consummation of the Merger Event is pursuant to a written agreement
between the Company and another party conditioned upon the availability
of "pooling of interests" accounting treatment (within the meaning of
A.P.B. No. 16 or any successor thereto).
14.3.2 If, in the case of a Merger Event in which the
Company will not be, or is not, the surviving corporation, and the
Company determines not to make the cash or certified check payment
described in Section 14.3.1 of the Plan, the Company shall compel and
obligate, as a condition of the consummation of the Merger Event, the
surviving or resulting corporation and/or the other party to the Merger
Event, as necessary, or any parent, subsidiary or acquiring corporation
thereof, to grant, with respect to both exercisable and unexercisable
Stock Options and/or Stock Appreciation Rights (but only to the extent
not previously exercised), substitute stock options or stock
appreciation rights in respect of the shares of common or other capital
stock of such surviving or resulting corporation on such terms and
conditions, as to the number of shares, pricing and otherwise, which
shall substantially preserve the value, rights and benefits of any
affected Stock Options and/or Stock Appreciation Rights previously
granted hereunder as of the date of the consummation of the Merger
Event.
14.3.3 Upon receipt by any affected Participant of
any such cash, certified check, or substitute stock options or stock
appreciation rights as a result of any such Merger Event, such
Participant's affected Stock Options and/or Stock Appreciation Rights
for
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which such cash, certified check or substitute awards was received
shall be thereupon cancelled without the need for obtaining the consent
of any such affected Participant.
14.3.4 The foregoing adjustments and the manner of
application of the foregoing provisions, including, without limitation,
the issuance of any substitute stock options and/or stock appreciation
rights, shall be determined in good faith by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of
fractional shares.
15. CHANGE OF CONTROL.
15.1 ACCELERATION OF AWARDS VESTING. Anything in the Plan to
the contrary notwithstanding, if a Change of Control of the Company occurs (a)
all Stock Options and/or Stock Appreciation Rights then unexercised and
outstanding shall become fully vested and exercisable as of the date of the
Change of Control, (b) all restrictions, terms and conditions applicable to all
Restricted Shares then outstanding shall be deemed lapsed and satisfied as of
the date of the Change of Control, and (c) the Performance Period shall be
deemed completed, all Performance Goals shall be deemed attained at the highest
levels and all Performance Units shall be deemed to have been fully earned as of
the date of the Change of Control. The immediately preceding sentence shall
apply to only those Participants (i) who are employed by the Company and/or one
of its Subsidiaries as of the date of the Change of Control, or (ii) to whom
Section 15.3 below is applicable.
15.2 PAYMENT AFTER CHANGE OF CONTROL. Notwithstanding anything
to the contrary in the Plan, within thirty (30) days after a Change of Control
occurs, (a) the holder of an Award of Restricted Shares vested under Section
15.1(b) above shall receive a new certificate for such shares without the legend
set forth in Section 8 of the Plan (and, in the case only of a Change of Control
under Section 15.4.1 of the Plan, such holder shall have the right, but not the
obligation, to elect, within ten (10) business days after the Participant has
actual or constructive knowledge of the occurrence of such Change of Control, to
require the Company to purchase such shares from the Participant at their then
Fair Market Value, (b) the holder of Performance Units shall receive payment of
the value of such grants in cash at the highest levels, and (c) in the case only
of a Change of Control under Section 15.4.1 of the Plan, the holders of any
Stock Options and/or Stock Appreciation Rights shall have the right, but not the
obligation, to elect, within ten (10) business days after the Participant has
actual or constructive knowledge of the occurrence of such Change of Control, to
require the Company to purchase such Stock Options and/or Stock Appreciation
Rights from the Participant for an aggregate amount equal to the then aggregate
Fair Market Value of the Common Stock underlying such Awards tendered, less the
aggregate exercise price of such tendered Awards.
15.3 TERMINATION AS A RESULT OF A CHANGE OF CONTROL. Anything
in the Plan to the contrary notwithstanding, if a Change of Control occurs and
if the Participant's employment is terminated before such Change of Control and
it is reasonably demonstrated by the Participant that such employment
termination (a) was at the request, directly or indirectly, of a third party who
has taken steps reasonably calculated to effect the Change of Control, or (b)
otherwise arose in connection with or in anticipation of the Change of Control,
then for purposes of this Section 15, the Change of Control shall be deemed to
have occurred immediately prior to such Participant's employment termination
(for all purposes other than those set forth in Section 15.2(c) of the Plan).
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15.4 CHANGE OF CONTROL. For the purpose of this Agreement,
"Change of Control" shall mean:
15.4.1 The acquisition, after the effective date of
the Plan, by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (a) the shares of the Common
Stock, or (b) the combined voting power of the voting securities of the
Company entitled to vote generally in the election of directors (the
"Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition by any individual who, on the effective date of the Plan,
beneficially owned 10% or more of the Common Stock, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, (iii) any acquisition
by any underwriter in connection with any firm commitment underwriting
of securities to be issued by the Company, or (iv) any acquisition by
any corporation if, immediately following such acquisition, more than
70% of the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities
of such corporation (entitled to vote generally in the election of
directors), is beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who, immediately
prior to such acquisition, were the beneficial owners of the Common
Stock and the Voting Securities in substantially the same proportions,
respectively, as their ownership, immediately prior to such
acquisition, of the Common Stock and Voting Securities; or
15.4.2 Individuals who, as of the effective date of
the Plan, constitute the Board (the "Incumbent Board") cease thereafter
for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent
to the effective date of the Plan whose election, or nomination for
election by the Company's shareholders, was approved by at least a
majority of the directors then serving and comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents; or
15.4.3 Approval by the shareholders of the Company of
a reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially all
of the individuals and entities who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation, of
the Common Stock and Voting Securities beneficially own, directly or
indirectly, immediately after such reorganization, merger or
consolidation more than 70% of the then outstanding common stock and
voting securities (entitled to vote generally in the election of
directors) of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization, merger
or consolidation, of the Common Stock and the Voting Securities; or
15.4.4 Approval by the shareholders of the Company of
(a) a complete liquidation or substantial dissolution of the Company,
or (b) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a Subsidiary, wholly-owned,
directly or indirectly, by the Company.
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16. AMENDMENT, SUSPENSION AND TERMINATION.
16.1 IN GENERAL. The Board may suspend or terminate the Plan
(or any portion thereof) at any time and may amend the Plan at any time and from
time to time in such respects as the Board may deem advisable to insure that any
and all Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to benefit from any
change in applicable laws or regulations, or in any other respect the Board may
deem to be in the best interests of the Company or any Subsidiary. No such
amendment, suspension or termination shall (x) materially adversely effect the
rights of any Participant under any outstanding Stock Options, Stock
Appreciation Rights, Performance Units, or Restricted Share grants, without the
consent of such Participant, or (y) make any change that would disqualify the
Plan, or any other plan of the Company or any Subsidiary intended to be so
qualified, from the benefits provided under Section 422 of the Code, or any
successor provisions thereto.
16.2 AWARD AGREEMENT MODIFICATIONS. The Committee may (in its
sole discretion) amend or modify at any time and from time to time the terms and
provisions of any outstanding Stock Options, Stock Appreciation Rights,
Performance Units, or Restricted Share grants, in any manner to the extent that
the Committee under the Plan or any Award Agreement could have initially
determined the restrictions, terms and provisions of such Stock Options, Stock
Appreciation Rights, Performance Units, and/or Restricted Share grants,
including, without limitation, changing or accelerating (a) the date or dates as
of which such Stock Options or Stock Appreciation Rights shall become
exercisable, (b) the date or dates as of which such Restricted Share grants
shall become vested, or (c) the performance period or goals in respect of any
Performance Units. No such amendment or modification shall, however, materially
adversely affect the rights of any Participant under any such Award without the
consent of such Participant.
17. MISCELLANEOUS.
17.1 TAX WITHHOLDING. The Company shall have the right to
deduct from any payment or settlement under the Plan, including, without
limitation, the exercise of any Stock Option or Stock Appreciation Right, or the
delivery, transfer or vesting of any Common Stock or Restricted Shares, any
federal, state, local or other taxes of any kind which the Committee, in its
sole discretion, deems necessary to be withheld to comply with the Code and/or
any other applicable law, rule or regulation. Shares of Common Stock may be used
to satisfy any such tax withholding. Such Common Stock shall be valued based on
the Fair Market Value of such stock as of the date the tax withholding is
required to be made, such date to be determined by the Committee.
17.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan,
the granting of any Award, nor the execution of any Award Agreement, shall
confer upon any employee of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right, if any, of the Company or any Subsidiary to
terminate the employment of any employee at any time for any reason.
17.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company
shall not be required to segregate any assets in connection with any Awards
under the Plan. Any liability of the Company to any person with respect to any
Award under the Plan or any Award Agreement shall be based solely upon the
contractual obligations that may be created as a result of the Plan or any such
award or agreement. No such obligation of the Company shall be deemed to be
secured by any
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pledge of, encumbrance on, or other interest in, any property or asset of the
Company or any Subsidiary. Nothing contained in the Plan or any Award Agreement
shall be construed as creating in respect of any Participant (or beneficiary
thereof or any other person) any equity or other interest of any kind in any
assets of the Company or any Subsidiary or creating a trust of any kind or a
fiduciary relationship of any kind between the Company, any Subsidiary and/or
any such Participant, any beneficiary thereof or any other person.
17.4 PAYMENTS TO A TRUST. The Committee is authorized to cause
to be established a trust agreement or several trust agreements or similar
arrangements from which the Committee may make payments of amounts due or to
become due to any Participants under the Plan.
17.5 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments
and other benefits received by a Participant under an Award made pursuant to the
Plan shall not be deemed a part of a Participant's compensation for purposes of
the determination of benefits under any other employee welfare or benefit plans
or arrangements, if any, provided by the Company or any Subsidiary unless
expressly provided in such other plans or arrangements, or except where the
Board expressly determines in writing that inclusion of an Award or portion of
an Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.
17.6 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No
Awards or shares of the Common Stock shall be required to be issued or granted
under the Plan unless legal counsel for the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance, that
certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Certificates for shares of the Restricted Shares and/or Common
Stock delivered under the Plan may be subject to such stock-transfer orders and
such other restrictions as the Committee may deem advisable under the rules,
regulations, or other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. In addition, if, at any time
specified herein (or in any Award Agreement or otherwise) for (a) the making of
any Award, or the making of any determination, (b) the issuance or other
distribution of Restricted Shares and/or Common Stock, or (c) the payment of
amounts to or through a Participant with respect to any Award, any law, rule,
regulation or other requirement of any governmental authority or agency shall
require either the Company, any Subsidiary or any Participant (or any estate,
designated beneficiary or other legal representative thereof) to take any action
in connection with any such determination, any such shares to be issued or
distributed, any such payment, or the making of any such determination, as the
case may be, shall be deferred until such required action is taken. With respect
to persons subject to Section 16 of the Exchange Act, transactions under the
Plan are intended to comply with all applicable conditions of SEC Rule 16b-3. To
the extent any provision of the Plan or
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any action by the administrators of the Plan fails to so comply with such rule,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
17.7 AWARD AGREEMENTS. Each Participant receiving an Award
under the Plan shall enter into an Award Agreement with the Company in a form
specified by the Committee. Each such Participant shall agree to the
restrictions, terms and conditions of the Award set forth therein and in the
Plan.
17.8 DESIGNATION OF BENEFICIARY. Each Participant to whom an
Award has been made under the Plan may designate a beneficiary or beneficiaries
to exercise any option or to receive any payment which under the terms of the
Plan and the relevant Award Agreement may become exercisable or payable on or
after the Participant's death. At any time, and from time to time, any such
designation may be changed or cancelled by the Participant without the consent
of any such beneficiary. Any such designation, change or cancellation must be on
a form provided for that purpose by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been designated by a
deceased Participant, or if the designated beneficiaries have predeceased the
Participant, the beneficiary shall be the Participant's estate. If the
Participant designates more than one beneficiary, any payments under the Plan to
such beneficiaries shall be made in equal shares unless the Participant has
expressly designated otherwise, in which case the payments shall be made in the
shares designated by the Participant.
17.9 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the
power to promulgate rules and regulations and to make determinations, as it
deems appropriate, under the Plan in respect of any leave of absence from the
Company or any Subsidiary granted to a Participant. Without limiting the
generality of the foregoing, the Committee may determine whether any such leave
of absence shall be treated as if the Participant has terminated employment with
the Company or any such Subsidiary. If a Participant transfers within the
Company, or to or from any Subsidiary, such Participant shall not be deemed to
have terminated employment as a result of such transfers.
17.10 LOANS. Subject to applicable law, the Committee may
provide, pursuant to Plan rules, for the Company or any Subsidiary to make loans
to Participants to finance the exercise price of any Stock Options, as well as
the withholding obligation under Section 17.1 of the Plan and/or the estimated
or actual taxes payable by the Participant as a result of the exercise of such
Stock Option and the Committee may prescribe the terms and conditions of any
such loan.
17.11 GOVERNING LAW. The Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
New York, without reference to the principles of conflict of laws thereof. Any
titles and headings herein are for reference purposes only, and shall in no way
limit, define or otherwise affect the meaning, construction or interpretation of
any provisions of the Plan.
17.12 EFFECTIVE DATE. The Plan shall be effective upon its
approval by the Board and adoption by the Company, subject to the approval of
the Plan by the Company's shareholders in accordance with Sections 162(m) and
422 of the Code.
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IN WITNESS WHEREOF, this Plan is adopted by the Company as of
the 26th day of March, 1999.
FIRST ALBANY COMPANIES INC.
By: ______________________
Name:
Title:
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<PAGE> 45
8888
FIRST ALBANY COMPANIES INC.
30 South Pearl Street
Albany, New York 12207
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
George C. McNamee and Alan P. Goldberg, and each of them, as proxies, with full
power of substitution, are hereby authorized to represent and to vote, as
designated on the reverse side, all Common Stock of First Albany Companies Inc.
held of record by the undersigned on April 2, 1999 at the Annual Meeting of
Shareholders to be held at 10:00 A.M. (EDT) on Tuesday, May 18, 1999 at the
offices of the Company at 30 South Pearl Street, Albany, New York, or at any
adjournment thereof. IN THEIR DISCRETION, THE ABOVE-NAMED PROXIES ARE AUTHORIZED
TO VOTE ON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF. THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO DIRECTION
IS INDICATED, WILL BE VOTED FOR EACH OF THE PROPOSALS.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If the shareholder is a corporation, the signature should
be that of an authorized officer who should indicate his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________________ ______________________________________
<PAGE> 46
FIRST ALBANY COMPANIES INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 18,
1999.
Thank you in advance for you prompt consideration of these matters.
Sincerely,
First Albany Companies Inc.
[down Please Detach and Mail in the Envelope Provided [down
arrow] arrow]
A [X] Please mark your
votes as in this
example.
Please be sure to sign and date this Proxy.
FOR WITHHOLD
1. The Election of [ ] [ ] Nominee:
three Directors GEORGE C. McNAMEE
whose terms will PETER BARTON
will expire at the 2002 Annual Meeting WALTER M. FIEDEROWICZ
of Shareholders.
[ ] For All Except:
NOTE: If you do note wish your shares voted "For" a particular nominee, mark
the "For All Except" box, and strike a line through the nominee's name,
your shares will be voted for the remaining nominee(s).
FOR AGAINST ABSTAIN
2. To act upon a proposal to approve the adoption [ ] [ ] [ ]
of the First Albany Companies Inc. 1999 Long-
Term Incentive Plan.
3. The Ratification of the Selection of [ ] [ ] [ ]
PricewaterhouseCoopers L.L.P. as Certified Public
Accountants to audit the financial statements of
the Company for the fiscal year ending December 31,
1999.
4. In their discretion, the proxies are authorized to [ ] [ ] [ ]
vote upon any other business that may properly
come before the meeting.
Check here if you plan to attend the Annual Meeting.
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Check here if an address change or comment has been noted on the reverse
side of this card.
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