<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ATALANTA/SOSNOFF CAPITAL CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION
101 Park Avenue
New York, N.Y. 10178
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------
To the Stockholders of
Atalanta/Sosnoff Capital Corporation
The Annual Meeting of Stockholders of Atalanta/Sosnoff Capital
Corporation (the "Company") will be held at Bear, Stearns & Co. Inc., 245 Park
Avenue, 10th Floor, New York, New York, on Thursday, May 8, 1997 at 11:00 a.m.
local time, to consider and vote upon:
1. The election of directors for the ensuing year;
2. Ratification of the appointment of independent auditors for
1997; and
3. Such other matters as may properly come before the meeting.
The close of business on March 28, 1997 has been fixed as the record
date for the determination of the stockholders entitled to notice of, and to
vote at, the Annual Meeting, and any adjournments thereof. The Company's stock
transfer books will not be closed.
By Order of the Board of Directors,
Anthony G. Miller
Secretary
Dated: March 28, 1997
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, AND WISH TO HAVE YOUR STOCK
REPRESENTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ACCOMPANYING FORM OF
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION
101 Park Avenue
New York, N.Y. 10178
-----------
PROXY STATEMENT
-----------
This proxy statement is being mailed to the stockholders of
Atalanta/Sosnoff Capital Corporation (the "Company"), on or about March 31, 1997
in connection with the Annual Meeting of Stockholders to be held at Bear,
Stearns & Co. Inc., 245 Park Avenue, 10th Floor, New York, New York, on
Thursday, May 8, 1997 at 11:00 a.m. and any adjournments thereof.
Record Date
The close of business on March 28, 1997 has been fixed as the record
date for the determination of stockholders entitled to receive notice of, and to
vote at, the Annual Meeting.
Solicitation
The enclosed proxy is solicited by the Board of Directors of the
Company. The Chairman of the Board, the President and the Secretary have been
designated by the Board of Directors to act as proxyholders. All proxies
delivered pursuant to this solicitation are revocable at the option of the
person executing the same at any time prior to the voting of the proxy, by
delivering a valid superseding proxy or a written notice of revocation signed in
the same manner as the original proxy, or by attending the meeting and voting in
person.
Expenses
The cost of preparing, assembling and mailing the notice, proxy
statement and proxy will be borne by the Company. In addition to solicitation by
mail, certain officers and employees of the Company, who will receive no
compensation for their services other than their regular salaries, may solicit
proxies in person or by telephone or telegraph. These persons may be reimbursed
for their expenses. The Company may also make arrangements with brokerage
houses, custodians, nominees and other fiduciaries to send proxy material to
their principals, and the Company will reimburse them for their expenses.
Voting by Mr. Sosnoff
Martin T. Sosnoff, the Company's Chairman of the Board and Chief
Executive Officer, who owns approximately 79.9% of the Company's outstanding
common stock, has advised the Company that he intends to vote for the Board's
nominees as directors of the Company, and for the other specified matters to be
voted upon at the Annual Meeting. Accordingly, such matters can be approved
without the vote of any other stockholders of the Company.
Dated: March 28, 1997
1
<PAGE>
Voting by Proxy
If the stockholder is a corporation, the accompanying proxy card should
be signed in its corporate name by an officer. If signed as attorney, executor,
administrator, trustee or guardian, the signer's full title should be given and,
if possible, a certificate or other evidence of appointment should be furnished.
If the stockholder specifies on the proxy card how the shares are to be
voted, they will be voted accordingly. If the stockholder does not specify on
the proxy card how the shares are to be voted, they will be voted "FOR" the
election of the nominees for directors listed herein; and "FOR" the ratification
of the appointment of Arthur Andersen LLP as independent auditors for 1997.
If the stockholder wishes to give a proxy to someone other than those
designated by the Board of Directors, the three names appearing on the enclosed
proxy card may be crossed out and the name of another person may be inserted.
The signed proxy card should be presented at the meeting by the person
representing the stockholder. Such person should have proof of identification.
Outstanding Stock
The Company's common stock, $.01 par value, of which there were
8,812,401 shares outstanding as of March 28, 1997, constitutes the only class of
voting securities issued by the Company. Stockholders will be entitled to cast
one vote, in person or by proxy, for each share of the Company's common stock
they hold.
GENERAL INFORMATION
Board of Directors
The Board of Directors has responsibility for establishing broad
corporate policies and for the overall management and performance of the
Company, although it is not involved in day-to-day operating details. The
members of the Board who are not senior officers of the Company are kept
informed of the Company's business by various reports and documents given to
them from time to time, as well as by operating, financial and other reports
made at Board and Committee meetings.
Regular meetings of the Board of Directors are generally held four
times per year and special meetings are scheduled when required. The Board held
four regular meetings in 1996, and acted by written consent on four occasions.
Compensation of Directors
Non-employee directors receive an annual retainer of $12,000. They also
receive a fee of $2,000 for each Board meeting attended, plus travel and
incidental expenses. The maximum annual director's fee is $20,000. The two
full-time employees who serve as directors receive only reimbursement of
expenses, if any, actually incurred in attending meetings. During fiscal 1996
Messrs. Kenneth H. Iscol and Thurston Twigg-Smith received $20,000 each in
compensation for serving as the non-employee directors of the Company. For
information about the deferral of Mr. Iscol's compensation as a Board member,
see "Agreements and Transactions with Directors and Executive Officers"
hereinafter in this proxy statement.
2
<PAGE>
Committees of the Board
The Committees established by the Board of Directors to assist it in
the discharge of its responsibilities are described below. The biographical
information on the directors, set forth hereinafter in the proxy statement,
identifies the Committee memberships held by each director.
The Audit Committee recommends to the Board (for appointment by the
Board and ratification by the stockholders) independent public accountants to be
used by the Company, reviews recommendations made by the independent public
accountants concerning the Company's accounting methods and system of internal
controls, reviews and reports to the Board with respect to the audit conducted
by the Company's independent public accountants, reviews with the independent
auditors the firm's relationship with management, and approves each major
professional service provided by the independent auditors in non- audit fields.
The Audit Committee, which consists of two non- employee directors, met once in
1996.
The Executive Committee has, subject to certain exceptions, all the
powers and duties of the Board of Directors in the management of the Company
when the Board is not in session and which are not in conflict with specific
powers conferred by the Board upon any other Committee. The Executive Committee
currently consists of the two employee directors. The Executive Committee did
not formally meet during 1996.
The Compensation Committee acts on recommendations of management
concerning the compensation of executive officers of the Company, including the
Chief Executive Officer, and sets compensation policy. A Sub-Committee of the
Compensation Committee administers the Company's Management Incentive Plan. The
Compensation Committee and the Sub-Committee met once in 1996. The Stock Option
Committee administers the Company's Stock Option, Incentive Stock Purchase and
Restricted Stock Bonus Plans. This Committee did not meet in 1996.
The Company has no standing Nominating Committee.
Compensation Committee Interlocks and Insider Participation
Mr. Sosnoff, the Company's Chief Executive Officer and principal
stockholder, is a member of the Compensation Committee and the Stock Option
Committee. He does not participate in decisions relating to his compensation, is
not a member of the Compensation Sub-Committee, and does not participate in
decisions relating to the Management Incentive Plan. See "Board Compensation
Committee Report" hereinafter in this proxy statement. These committees have two
non-employee directors as members.
3
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PROPOSAL 1
ELECTION OF DIRECTORS
A Board of four directors is to be elected at the Annual Meeting, each
director so elected to hold office for a term of one year and until the election
and qualification of a successor. It is intended that the proxies will be voted
for the following nominees:
Kenneth H. Iscol, Robert J. Kobel, Martin T. Sosnoff and Thurston
Twigg-Smith
Each of the nominees has indicated his willingness to serve as a member
of the Board of Directors, if elected; however, in case any nominee shall for
any reason become unavailable for election the proxy holders will have
discretionary authority to use the proxies they hold to vote for a substitute.
Messrs. Kobel and Sosnoff were first elected by the stockholders in
1986, prior to the Company's initial public offering. Mr. Iscol was first
elected by the stockholders in 1993, and Mr. Twigg-Smith was first elected by
the stockholders in 1994.
Messrs. Kobel and Sosnoff are senior executive officers of the Company.
Information about the proposed nominees' principal occupations, Company
committee memberships and other information follows. Information about their
ownership of the outstanding common stock of the Company appears hereinafter
under the caption, "Beneficial Ownership of Securities of the Company."
Name, Principal Occupation
and Other Information
KENNETH H. ISCOL, 57, for more than five years has been President and sole
stockholder of Zackiva Communications Corporation (telecommunications
investments), and a majority partner of Amarillo Celltelco (operator of
cellular communications systems).
Mr. Iscol serves on the Audit, Compensation and Stock Option Committees.
ROBERT J. KOBEL, 47, has been President and Chief Operating Officer,
and held other offices, with the Company and its subsidiaries since their
inception. (1)
Mr. Kobel serves on the Executive Committee.
MARTIN T. SOSNOFF, 65, is the founder of the Company and has been Chairman
of the Board and Chief Executive Officer of the Company and its
subsidiaries since their inception. (1)
Mr. Sosnoff serves on the Executive, Compensation and Stock Option Committees.
THURSTON TWIGG-SMITH, 75, for more than five years has been Chairman of Board
and Chief Executive Officer of Persis Corporation (newspaper publishing).
Mr. Twigg-Smith serves on the Audit, Compensation and Stock Option Committees.
- -----------
(1) For information with respect to the voting agreement between Messrs.
Sosnoff and Kobel, see the description of Mr. Kobel's employment
agreement under the caption "Agreements and Transactions with Directors
and Executive Officers" hereinafter in this proxy statement.
4
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers based on annual compensation earned during
fiscal 1996.
<TABLE>
<CAPTION>
Annual Compensation
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Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation (6)
------------------ ---- ------ ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Martin T. Sosnoff 1996 $1,000,000 $245,700 (1) $6,250
Chairman of the Board, 1995 1,000,000 580,800 (1) 5,769
Chief Executive Officer and 1994 1,000,000 375,400 (1) 5,769
Director
Robert J. Kobel 1996 700,000 (2) 245,700 (1) 7,500
President, Chief 1995 600,000 (2) 580,800 (1) 7,500
Operating Officer and Director 1994 600,000 (2) 375,400 (1) 7,500
Craig B. Steinberg 1996 500,000 245,700 (1) 7,500
Executive Vice President 1995 500,000 (3) 348,600 (1) 7,500
of subsidiaries 1994 400,000 (3) 225,200 (1) 7,500
James D. Staub 1996 140,000 $415,824 (4) 7,000
Senior Vice President 1995 100,000 390,080 (4) 5,000
of subsidiaries 1994 100,000 352,981 (4) 5,000
William M. Knobler 1996 366,667 (5) 238,032 (5) 7,500
Senior Vice President 1995 300,000 (5) 96,738 (5) 7,500
of subsidiary 1994 400,000 (5) 158,391 (5) 7,500
</TABLE>
- ---------------------
(1) Represents amounts received as bonuses by participants in the
Company's Management Incentive Plan. See "Management Incentive
Plan" hereinafter in this proxy statement.
(2) Mr. Kobel entered into a new employment agreement with the Company in
December 1995. See "Agreements and Transactions with Directors and
Executive Officers" hereinafter in this proxy statement.
(3) Compensation received under an employment agreement with the Company.
See "Agreements and Transactions with Directors and Executive
Officers" hereinafter in this proxy statement.
(4) Represents additional compensation paid to Mr. Staub in lieu of bonus
based upon a percentage of investment advisory fees received by the
Company from clients solicited by Mr. Staub under an agreement with
the Company. See "Agreements and Transactions with Directors and
Executive Officers" hereinafter in this proxy statement.
(5) Represents the revenues received by the Company from clients of the
Company to whom Mr. Knobler provides investment management services,
net of the costs associated with such revenues under an arrangement
with the Company. Mr. Knobler's salary is set by him within levels of
such net revenues projected by the Company for each year.
(6) Represents contributions by the Company to the account of such officers
under the Company's Profit Sharing Plan for its employees. See "Profit
Sharing Plan" hereinafter in this proxy statement.
None of the individuals listed above received non-cash compensation
during 1996 in excess of the lesser of $50,000 or 10% of his total
annual salary and bonus.
5
<PAGE>
Comparative Stock Performance
The following line graph compares the cumulative total shareholder
return on the Company's common stock with the cumulative total return of the
Russell 2000 Index(1) and the Russell 2000/Financial Services Index(2) over the
five year period ended December 31, 1996 (assuming the investment in the
Company's common stock and such indices of $100 on December 31, 1991, and the
reinvestment of all dividends):
Comparison of Five Year Cumulative Total Stockholder Return Among the
Company, Russell 2000 Index, and Russell 2000/Financial Services Index
[GRAPHIC OMITTED]
YEAR ENDED DECEMBER 31
RUSSELL 2000/
COMPANY RUSSEL 2000 INDEX FINANCIAL SERVICES INDEX
------- ----------------- -------------------------
1991 100 100 100
1992 96 118 148
1993 150 141 182
1994 99 138 183
1995 259 178 254
1996 159 207 328
<TABLE>
<CAPTION>
Russell 2000/
Company Russell 2000 Financial Services
<S> <C> <C> <C>
Annualized rates of return:
5 years ended 12/31/96 9.7% 15.7% 26.8%
</TABLE>
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(1) The Russell 2000 Index is published by the Frank Russell Company and
is widely recognized as a measure of the performance of small market
capitalization stocks like the Company's common stock.
(2) The Russell 2000/Financial Services Index is an index of the
performance of financial services companies within the Russell 2000
Index.
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<PAGE>
Board Compensation Committee Report
The Board has requested that the Compensation Committee describe in
this Report (a) its compensation policies generally applicable to the executive
officers of the Company, including the specific relationship of corporate
performance to executive compensation for 1996; and (b) the basis for Mr.
Sosnoff's compensation in 1996, including the factors and criteria on which Mr.
Sosnoff's compensation was based and the relationship of the Company's
performance to such compensation describing the measures of performance on which
such compensation was based.
Compensation Policies Generally Applicable to Executive Officers
In formulating its compensation policies for executive officers, the
Committee considers many factors, including the major factors described below:
Industry Compensation Standards, Salary History, Performance in Position, Tenure
of Employment.
The Committee believes that in order to attract and retain executive
officers of the highest quality the Company must provide a total package of
compensation which is competitive with other companies in the Company's segment
of the financial services industry. The Committee also reviews the salary
histories of current and prospective executive officers in making compensation
recommendations. In addition, the Committee reviews information about the
performance of executive officers. In formulating its compensation policies the
Committee generally places less weight on the qualitative elements of executive
officer performance, and more weight on the economic indices of the officer's
performance measured by the financial performance of the aspect of the Company's
business for which the officer is primarily responsible. (See "Company
Performance-Financial.") The Committee believes that an officer's employment
tenure is entitled to some weight in assessing appropriate levels of
compensation.
Company Performance-General
The Committee believes that in the Company's case in the formulation of
executive officer compensation policy the Committee should not accord
significant weight to the market performance of the Company's common stock. The
Committee notes that the Company has made substantial improvement in all indices
of operating financial performance during the seven years ended December 31,
1996. Because of the ownership structure (only approximately 12% of the
Company's common stock is held by non-employees) and lack of coverage by
analysts, there is very little trading activity in the common stock of the
Company. During 1996, aggregate market transactions in the Company's common
stock equaled approximately 6.4% of the common stock outstanding. As a result,
the performance of the common stock has not reliably reflected the financial
results or prospects for the Company; instead, it generally reflects market
forces which result in volatile stock performance because of the lack of market
liquidity. Thus, in the Committee's view, the investment performance of the
Company's common stock has not offered the Committee reliable guidance in
formulating executive officer compensation policy and in setting appropriate
compensation levels for the Company's executive officers.
Financial Performance
The Committee has developed a number of financial performance criteria
in formulating its executive compensation policy and a number of specific
criteria assessing the appropriateness of specific executive officer
compensation.
In evaluating the performance of the executive officers of the Company
as a group generally, and in reference to 1996 compensation, the Committee has
reviewed the efficiency and productivity of the Company, and the Company's
employees managed by the executive officers as measured by the following
financial performance criteria: (1) Operating revenues, pre-tax operating income
and pre-tax operating income per employee, (2) pre-tax operating income yield on
assets under management, (3) pre-tax operating margin, (4) investment
performance of managed assets, and (5) other financial criteria.
7
<PAGE>
In reviewing the compensation of specific executive officer positions,
the Committee places more weight on criteria relevant to the responsibilities of
that position. Thus, relatively more weight is attributed to revenue criteria in
evaluating the performance of executives engaged primarily in marketing and
investment management and related support activities and relatively more weight
is attributed to income criteria in fixing the compensation of personnel engaged
in cost management and related support activities.
1996 Compensation and the Management Incentive Plan. The general year
to year increases in compensation of the executive officers of the Company
reflects the steady improvement in the operations of the Company. Operating
revenues, operating income, operating margin and operating income per employee
all reached seven year highs in 1996, and showed significant growth over 1995.
The changes in 1996 overall compensation as compared to 1995 compensation for
executive officers, with the exception of James D. Staub and William M. Knobler
who have separate arrangements with the Company, are attributable to reduced
bonus payments made under the Management Incentive Plan ("MIP"), as a result of
a decline in the rate of growth in adjusted operating earnings in 1996 as
compared with 1995. In the case of Mr. Kobel, his Employment Agreement provided
for increased salary in 1996. See "Agreements and Transactions with Directors
and Executive Officers" hereinafter in this proxy statement.
The MIP is designed to reflect the financial performance criteria which
should be applied in determining executive officer compensation. It is based on
pre-tax operating earnings before non-cash charges, which the Committee believes
is an appropriate measure of the performance of executive personnel who function
in the revenue producing and in the cost control areas of the Company. The MIP
is administered by a Sub-Committee of the Compensation Committee, which is
composed entirely of non-employee directors. The Committee believes that the MIP
provides a stimulus to a continuing high level of commitment to further
improvement in the financial performance of the Company. The Committee notes
that (a) no awards are payable under the MIP unless there is a 9.5% or better
improvement in adjusted operating earnings (as defined in the MIP) over the
highest level of adjusted operated earnings achieved in any of the three
immediately preceding fiscal years, (b) the annual award pool cannot exceed 50%
of incremental adjusted operating earnings above the threshold and (c) aggregate
annual bonuses under the MIP are capped at 10% of earnings per share in any one
year. The Sub-Committee believes that these limitations strike an appropriate
balance by fulfilling the need to continue to motivate executive personnel while
not unduly impacting the financial results of the Company. For the three years
ended December 31, 1998, the MIP was amended to change the method of allocation
of the Award Bonus Pool and to provide for the participation by the three senior
portfolio managers of the Company, Messrs. Sosnoff, Kobel and Steinberg, at 25%
and by two other officers, Mr. Anthony G. Miller, Senior Vice President,
Finance, and a former Vice President and Portfolio Manager in the Company's
subsidiaries, at 12 1/2 % each. The MIP does not preclude the Board of Directors
of the Company, upon approval of the Sub-Committee, from making discretionary
bonus payments to participants in the MIP in addition to the amounts determined
under the Plan.
1996 Compensation of Mr. Sosnoff. Mr. Sosnoff has not participated
in this part of the Committee's review or Report, or in its description of
the basis for his compensation generally.
The Committee notes that there are certain qualitative factors in the
analysis of Mr. Sosnoff's compensation generally and in 1996 that, in its view,
should be taken into account in establishing appropriate bases for such
compensation. Mr. Sosnoff is the founder of the Company, which was founded in
1986 to acquire its operating subsidiaries and make a public offering of its
Common Stock. Mr. Sosnoff is the founder of such subsidiaries and is the
Company's principal stockholder. The Company bears his name. He also is a widely
known and respected member of the financial community and has written regularly
in the financial press. The Committee believes his reputation has enhanced the
stature of the Company and has had a salutary affect on its marketing
activities.
8
<PAGE>
In conjunction with the Company's other executive officers, Mr.
Sosnoff's compensation is evaluated under the compensation policies generally
applicable to executive officers, including the financial performance criteria
considered relevant by the Committee.
It is also the policy of the Committee to review Mr. Sosnoff's
compensation in relation to the performance of the Company's client accounts for
which he has primary responsibility in setting investment policy and the
performance of the Company's own account. From 1990 through 1995, the Company
significantly improved its standing in the performance ratings among investment
management organizations which manage aggregate client assets of comparable
size. However, in 1996 the investment performance in client accounts was
significantly less than the performance of relevant benchmarks. In the
Committee's view, the reduced bonus payments made to the three senior portfolio
managers, including Mr. Sosnoff, under the MIP in 1996 accurately reflects the
impact of underperformance in client accounts on the Company's operating
earnings growth experienced in 1996.
Dated: March 11, 1997
The Committee
Kenneth H. Iscol
Martin T. Sosnoff
Thurston Twigg-Smith
The Sub-Committee
Kenneth H. Iscol
Thurston Twigg-Smith
9
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Stock Option, Purchase, Bonus, and Long Term Incentive Plans
On December 7, 1995 the Company granted non-qualified options with an
exercise price of $9.50 per share for 800,00 shares of its common stock to three
senior executives under the Company's 1987 Stock Option Plans (" SOP "). Options
on 650,000 shares were granted to Mr. Kobel, options on 100,000 shares were
granted to Mr. Steinberg, and options on 50,000 shares were granted to Mr.
Miller. No awards were made in 1996 under the Company's Restricted Stock Bonus
Plan (" RSBP ") or the SOP. The 1996 Long Term Incentive Plan (" LTIP ") was
approved in 1996. No awards were made under this Plan in 1996.
No stock options or purchase rights were exercised during fiscal 1996
under the SOP and Incentive Stock Purchase Plan, and such Plans were canceled in
connection with stockholder approval of the LTIP.
Grants and Awards Outstanding
At December 31, 1996 there were an aggregate of 516,944 shares of
Company common stock issued under the RSBP, all of which are owned by Mr. Kobel
and fully vested. See "Agreements and Transactions with Directors and Executive
Officers" hereinafter in this proxy statement.
At December 31, 1996 there were options to purchase 885,000 shares
outstanding under the SOP. Options to purchase 235,000 shares are currently
exercisable. Of such options, Mr. Kobel owns non-qualified options for 650,000
shares at an exercise price of $9.50 per share, 130,000 of which are
exercisable. Such options had a value of $1.7 million at December 31, 1996. Mr.
Steinberg owns non-qualified options for 100,000 shares at an exercise price of
$9.50 per share, 20,000 of which are currently exercisable. Such options had a
value of $262,500 at December 31, 1996. Mr. Staub owns non-qualified options
exercisable to purchase 25,000 shares at an exercise price of $14.00 per share.
Such options had no value at December 31, 1996. Mr. Staub also owns incentive
stock options for 50,000 shares at an exercise price of $6.13 per share, 40,000
of which are currently exercisable. Such options had a value of $225,000 at
December 31, 1996.
Management Incentive Plan
The purpose of the Management Incentive Plan (the "MIP") is to directly
relate year end bonuses of participants to a minimum of 9.5% year-to-year growth
in operating earnings of the Company (adjusted for non-cash charges under the
RSBP and current year accruals under the MIP). The maximum aggregate award
payable to participants under the MIP is subject to the limitation that it
cannot result in a reduction of earnings per share of more than 10%. Incremental
year-to-year adjusted operating earnings growth of less than 9.5% will result in
no awards under the MIP. For every one percent of growth in year-to-year
operating earnings above 9.5%, the aggregate award payable under the MIP
increases in one and one quarter percent increments from 25% (at 9.5%) to a
maximum of 50% (at 29.5%) of the amount of increase in adjusted operating
earnings achieved in any of the immediately preceding three fiscal years of the
Company. Each participant's share of the aggregate award is payable at year end
in assigned percentages.
For fiscal 1996, an aggregate of $860,000 in bonuses was awarded under
the MIP, computed as described above, based upon an increase of 25.2% in
adjusted operating earnings in fiscal 1996 as compared to fiscal 1995, resulting
in a decrease in earnings per share for 1996 of 5%, or $0.05 per share after
giving effect to the bonuses.
Profit-Sharing Plan
The Company has a Profit-Sharing Plan for its employees. For the year
ended December 31, 1996, contributions in the amount of $138,224 were made to
the Plan.
10
<PAGE>
AGREEMENTS AND TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Mr. Kobel is party to an employment agreement (the "Agreement") entered
into in December 1995, and continuing in effect until December, 1998. The
Agreement provides for Mr. Kobel's employment with the Company in his current
capacity at a base annual salary of $700,000, or such greater compensation as
the Company shall from time to time determine, and in no event less than 60% of
Mr. Sosnoff's base salary. In addition, the Agreement provides for a one-time
$100,000 increase in base annual salary based upon the performance of the
Company's managed client accounts as described in the Agreement.
Under the Agreement, Mr. Kobel is entitled to treat his employment
under the Agreement as terminated and receive the greater of the balance of the
compensation due thereunder or two years compensation, if his duties or
authority are adversely changed or in the event of a change of control of the
Company, as defined. Upon termination of his employment Mr. Kobel is subject to
non-competition and non-solicitation restrictions. Under the Agreement, Mr.
Sosnoff has agreed to vote for Mr. Kobel as a director of the Company so long as
he is employed by the Company and to grant Mr. Kobel a limited conditional right
of first refusal upon certain sales of his Company common stock, as described in
the Agreement. As set forth in the Agreement, subject to certain exceptions, if
Mr. Kobel exercises his right to terminate after a change in control (as
defined) he must remain an employee with the Company for one year in order to
receive his termination compensation.
Upon termination of his employment Mr. Steinberg is subject to
non-competition and non-solicitation restrictions under his employment agreement
with the Company.
Pursuant to Company policy, certain expenses of Mr. Sosnoff which were
initially paid by the Company, to the extent the Company and Mr. Sosnoff have
determined that such expenses would not be borne by the Company, were repaid to
the Company with interest.
Mr. Staub and certain other members of the marketing and sales
staffs of the Company and its subsidiaries receive additional compensation
based on varying percentages of the revenues attributable to Company clients
they have solicited. Such compensation under certain conditions may continue
after termination of employment.
Mr. Iscol is a party to an agreement with the Company pursuant to which
his director's compensation is deferred until he ceases to be a member of the
Company's Board of Director's. Under this agreement, Mr. Iscol's deferred
compensation fluctuates based upon an index of the investment performance of the
Company's proprietary investment account.
Options issued under the SOP and shares granted under the RSBP provide
for accelerated vesting in the event of a change in control of the Company, as
defined. Certain of the Company's agreements with employees provide for
additional payments to them, or the right for such employee to terminate his
employment and continue to receive payments from the Company in the event of a
change in control, as defined.
The directors, officers and employees of the Company or its operating
subsidiaries are ordinarily required to execute personal securities transactions
through the Company's broker-dealer subsidiary at a discount from the commission
rates offered to unaffiliated customers. In addition, the Company provides
personal investment management and advisory services to certain officers of the
Company and its operating subsidiaries and their associates without charge.
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<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
OF THE COMPANY
The following table sets forth information as of March 28, 1997 as to
the beneficial ownership of Company common stock by (1) each person known by the
Company to own 5% or more of the common stock, (2) each director and nominee for
director of the Company, (3) the Company's Chief Executive Officer, (4) each of
the Company's other four most highly compensated executive officers for fiscal
1996, and (5) the directors and executive officers of the Company as a group.
The persons named in the table have sole voting and investment power with
respect to all shares of common stock owned by them and use the Company's
address as their business address, unless otherwise noted.
<TABLE>
<CAPTION>
Percent of
Beneficial Owners Shares Beneficially Owned Class (9)
<S> <C> <C>
Martin T. Sosnoff 7,043,516 (1) 77.9%
Robert J. Kobel 726,944 (2) 8.0%
Kenneth H. Iscol(3) 1,000 (10)
William M. Knobler 1,100 (4) (10)
James D. Staub 65,000 (5) .7%
Craig B. Steinberg 20,800 (6) .2%
Thurston Twigg-Smith(7) 1,000 (10)
All executive officers and directors
as a Group (10 persons) 7,879,947 (8) 87.1%
</TABLE>
- -----------
(1) includes 6,000 shares owned as custodian for a minor child under the
Uniform Gift to Minors Act.
(2) includes 516,944 shares issued under the Company's RSBP. See
"Agreements and Transactions with Directors and Executive Officers" in
this proxy statement. Includes 130,000 shares issuable upon exercise of
currently exercisable options issued under the Company's Option Plans
at an exercise price of $9.50 per share. Does not include non-currently
exercisable options to purchase 520,000 shares at an exercise price of
$9.50 per share.
(3) Mr. Iscol's business address is 63 Lyndel Road, Pound Ridge, New York,
10576.
(4) includes 600 shares held in his Individual Retirement Account, 100
shares held by his wife, 200 shares held by her Individual Retirement
Account, and 200 shares held by a private charitable foundation
controlled by Mr. Knobler.
(5) includes 25,000 shares issuable upon exercise of currently exercisable
options issued under the Company's Option Plans at an exercise price of
$14.00 per share and 40,000 shares so issuable at an exercise price of
$6.13 per share. Includes non-currently exercisable options to purchase
10,000 shares at an exercise price of $6.13 per share.
(6) includes 20,000 shares issuable upon exercise of currently exercisable
options issued under the Company's Option Plans at an exercise price of
$9.50 per share. Does not include non-currently exercisable options to
purchase 80,000 shares at an exercise price of $9.50 per share.
(7) Mr. Twigg-Smith's business address is Persis Corporation, P.O. Box
3110, Honolulu, Hawaii 96802.
(8) includes shares owned by executive officers of subsidiaries who have
been designated as executive officers of the Company. Includes 235,000
shares subject to currently outstanding options under the Option Plans.
Does not include non-currently exercisable options to purchase 650,000
shares.
(9) Calculated on the basis of 8,812,401 shares outstanding plus 235,000
shares subject to currently exercisable options.
(10) less than .1% of shares outstanding.
12
<PAGE>
PROPOSAL 2
APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee,
reappointed the firm of Arthur Andersen LLP as independent auditors for the
Company for 1997 subject to ratification by the stockholders. Arthur Andersen
LLP has served as the independent auditors for the Company since 1989.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement if he so desires
and to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the proposal to ratify
the appointment of Arthur Andersen LLP as independent auditors.
STOCKHOLDER PROPOSALS
Any proposal to be presented at next year's Annual Meeting must be
received at the principal executive offices of the Company not later than
November 21, 1997 directed to the attention of the Secretary, for consideration
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting. Any such proposal must comply in all respects with the rules and
regulations of the Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors knows of no other matters which may come before
the meeting. If any matters other than those referred to above should properly
come before the meeting, it is the intention of the persons designated by the
Board to serve as proxies to vote such proxies in accordance with their best
judgment.
If any of the proposed nominees for election to the Board of Directors
should become unavailable to serve at or before the time of the meeting, a
substitute nominee or nominees may be chosen by the persons authorized by the
Board to vote the proxies.
By Order of the Board of Directors,
Anthony G. Miller
Secretary
13
