<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [section]240.14a-11(c) or
[section]240.14a-12
United Asset Management Corporation
(Name of Registrant as Specified In Its Charter)
United Asset Management Corporation
(Name of Person(s) Filing Proxy Statement)
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 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
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<PAGE> 2
[UNITED ASSET MANAGEMENT CORPORATION LOGO]
March 21, 1997
Dear Stockholder:
I am pleased to invite you to attend the Annual Meeting of Stockholders of
United Asset Management Corporation on Thursday, May 15, 1997 at 9:30 a.m. at
The Four Seasons Hotel, 200 Boylston Street, Boston, Massachusetts.
The Notice of Annual Meeting of Stockholders and Proxy Statement on the
following pages describe the matters which are scheduled to be acted upon at the
meeting. We also look forward to reporting on current operations and future
plans, after which comments and questions from those present will be welcomed.
THE ABILITY TO HAVE YOUR VOTE COUNTED AT THE ANNUAL MEETING IS AN IMPORTANT
STOCKHOLDER'S RIGHT, AND I HOPE YOU WILL CAST YOUR VOTE IN PERSON OR BY PROXY
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY TO ENSURE THAT YOUR SHARES WILL BE VOTED.
If you plan to attend the Annual Meeting, please check the appropriate box
on the Proxy card before mailing it.
Annual meetings can play an important role in maintaining communications
and understanding between Management, the Board of Directors and our
stockholders. I hope that you will be able to join us.
Sincerely yours,
/s/ NORTON H. REAMER
--------------------------------------
Norton H. Reamer
President and Chief Executive Officer
<PAGE> 3
SPECIAL NOTICE TO BROKERS
Pursuant to Section 402.08(B)(12) of the New York Stock Exchange Listed
Company Manual, brokers do not have discretionary authority to give a proxy to
vote without instructions from beneficial owners with respect to Proposal 3,
"Approval of the UAM Amended and Restated 1994 Stock Option Plan," contained in
the enclosed Proxy Statement. Any instructions in the Proxy Statement to the
contrary should be disregarded.
March 21, 1997
<PAGE> 4
[UNITED ASSET MANAGEMENT CORPORATION LOGO]
Notice of Annual Meeting of Stockholders
TO BE HELD MAY 15, 1997
The Annual Meeting of the Stockholders of United Asset Management
Corporation (the "Company" or "UAM") will be held at The Four Seasons Hotel, 200
Boylston Street, Boston, Massachusetts on Thursday, May 15, 1997 at 9:30 a.m.,
Eastern Daylight Savings Time, for the following purposes:
(1) To fix the number of directors and elect a Board of Directors to
serve until the next Annual Meeting of Stockholders and until their
successors are elected and qualified;
(2) To approve compensation arrangements for certain Executive Officers;
(3) To approve the Company's Amended and Restated 1994 Stock Option
Plan;
(4) To ratify the selection of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending December 31,
1997; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Wednesday, March
19, 1997 as the record date for the determination of stockholders entitled to
notice of, and to vote at, this meeting. Accordingly, only stockholders of
record at the close of business on that date are entitled to vote at the meeting
or at any adjournment thereof. A list of stockholders entitled to vote will be
kept at the principal offices of the Company at One International Place, Boston,
Massachusetts 02110 for a period of 10 days prior to the meeting.
The business matters enumerated above are discussed more fully in the
accompanying Proxy Statement. Whether or not you plan to attend the meeting, we
urge you to study the Proxy Statement carefully and then fill out, sign and date
the enclosed Proxy card. Please mail your Proxy card promptly in the enclosed
return envelope, which requires no postage if mailed in the United States. If
you do plan to attend the meeting, please so indicate in the box provided on the
enclosed Proxy card.
By Order of the Board of Directors,
JOSEPH R. RAMRATH
Secretary
March 21, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY
THE ENCLOSED PROXY, WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
<PAGE> 5
[UNITED ASSET MANAGEMENT CORPORATION LOGO]
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
The Proxy accompanying this Proxy Statement is solicited by the Board of
Directors of United Asset Management Corporation (the "Company" or "UAM") to be
voted at the Annual Meeting of Stockholders to be held on Thursday, May 15, 1997
and at any adjournment thereof (the "Meeting").
It is expected that copies of the Notice of Meeting, this Proxy Statement
and the enclosed Proxy card will be mailed on approximately March 21, 1997 to
each stockholder entitled to vote at the Meeting. UAM's Annual Report to
Stockholders for the fiscal year ended December 31, 1996 accompanies this Proxy
Statement.
ELECTION OF DIRECTORS
The persons named as proxies in the accompanying Proxy card intend (unless
authority to vote therefor is specifically withheld) to vote to fix the number
of directors for the ensuing year at 14, and to vote for the election of the 14
persons named below, being the nominees of the present Board, as directors to
hold office until the next Annual Meeting and until their respective successors
are elected and qualified. If any of the nominees becomes unavailable to serve
as a director, the persons named as proxies have discretionary authority to vote
for a substitute. The Board of Directors has no reason to believe that any of
the nominees will be unavailable to serve if elected.
NOMINEES FOR ELECTION AS DIRECTORS
Information regarding each nominee is presented below.
Mr. Norton H. Reamer, age 61, is the founder of UAM and has been its
President, Chief Executive Officer and a director since its inception in 1980.
Mr. Reamer is also Chairman, President and a director of UAM Funds, Inc. and UAM
Funds Trust, each of which is an investment company, and a trustee or director
in the Eaton Vance Group of Funds, which consists of over 65 investment company
portfolios. He is also a trustee of Radcliffe College and of Union College.
Mr. John F. McNamara, age 55, joined UAM as Executive Vice President in
1992 and was elected a director in July of that year. In 1994, he was named
Chief Operating Officer. Prior to joining UAM, he served since 1990 as Managing
Director and Chief Executive Officer of Baring America Asset Management Co., the
U.S. investment management subsidiary of Baring Brothers, a London-based
investment management firm.
Mr. Harold J. Baxter, age 50, has served as Chairman and Chief Executive
Officer of Pilgrim Baxter & Associates, one of UAM's subsidiaries, for more than
the past five years. He has also been Chairman and Chief Executive Officer of
Newbold's Asset Management, Inc., a UAM subsidiary, since September 1996. Mr.
Baxter is the chairman of the board of directors of the PBHG Funds, Inc. and
PBHG Insurance Series Fund, Inc., both investment companies. He has been a
director of UAM since 1996.
Mr. Duncan Campbell, Jr., age 52, has been President of The Campbell Group,
Inc., one of UAM's subsidiaries, for more than the past five years. Mr. Campbell
previously served on UAM's Board of Directors from 1992 to 1993.
Mr. John P. Clay, age 62, has served as Co-Chairman of Clay Finlay Inc.,
one of UAM's subsidiaries, and as Chairman of Clay Finlay Ltd. and Clay Finlay
(UK) Ltd., wholly owned subsidiaries of Clay Finlay
<PAGE> 6
Inc., for more than the past five years. Mr. Clay is a director of Genesis
Condor Fund Ltd., Genesis Emerging Markets Fund, Flemings Japan Warrant Fund and
Korea International Investment Fund, each of which is an investment company.
Mr. Robert J. Greenebaum, age 79, retired as Treasurer of Inland Steel
Company in 1981. Since then, he has been a business consultant. Mr. Greenebaum
is Chairman and a director of Selected American Shares, Inc., Selected Special
Shares, Inc., and the Selected Capital Preservation Trust Series Funds, and is a
director of the Blue Chip Value Fund, each of which is an investment company. He
has been a director of UAM since 1982.
Mrs. Beverly L. Hamilton, age 50, has for more than the past five years
been President of ARCO Investment Management Co. and Vice President and
Investment Officer of Atlantic Richfield Company. From 1987 to 1991, she was
Deputy Comptroller - Asset Management of the City of New York, and prior to
that, held senior investment positions with United Technologies Corp. and Morgan
Stanley & Co. Mrs. Hamilton is also a director of Emerging Markets Growth Fund
(American Funds) and MassMutual Series and Institutional Funds, and a director
of Connecticut Natural Gas Company and Chairman of the board's pension
committee.
Mr. Bryant M. Hanley, Jr., age 62, has been the President of Barrow,
Hanley, Mewhinney & Strauss, Inc., one of UAM's subsidiaries, for more than the
past five years. Mr. Hanley previously served on UAM's Board of Directors from
1988 to 1990.
Professor Jay O. Light, age 55, has been a professor at the Harvard
Business School for more than five years and previously served as a Senior
Associate Dean. His special areas of concentration are capital markets and
investment management. From 1977 to 1979, Professor Light was the Director of
Investment Policies at the Ford Foundation. Professor Light is also a director
of Harvard Management Company, Inc. and a trustee of the College Retirement
Equity Fund (CREF), the GMO Funds and the Baupost Fund. Professor Light has been
a director of UAM since 1987.
Mr. David I. Russell, age 54, has been an independent financial consultant
since 1989. Prior to 1989, he was a director of Warburg Securities, part of S.G.
Warburg & Co., an international securities brokerage and investment banking
group, and a director of S.G. Warburg & Co., Inc., a U.S. subsidiary of S.G.
Warburg & Co. He has been a director of UAM since 1981.
Mr. Philip Scaturro, age 58, has been an Executive Vice President and a
Managing Director of Allen & Company Incorporated, an investment banking firm,
for more than the past five years. Mr. Scaturro is also a director of Intrenet,
Inc. He has been a director of UAM since 1981.
Mr. John A. Shane, age 64, has for more than the past five years been
President of Palmer Service Corporation, a venture capital management company.
Mr. Shane is also a director of Arch Communications Group, Inc., Eastern Bank,
Summa Four, Inc., Overland Data Inc. and Gensym Corporation and a trustee of the
TNE Fund Group. He has been a director of UAM since 1981.
Mr. Larry D. Tashjian, age 43, has been a Managing Director of Provident
Investment Counsel, Inc., one of UAM's subsidiaries, for more than the past five
years.
Mrs. Barbara S. Thomas, age 50, is Chairman of the Scotia Haven Food Group
Ltd. Prior to December 1994, she was Director, Business and Legal Affairs, for
News International plc. Prior to joining News International, Mrs. Thomas served
as a Managing Director of the investment banking firm Cramer Rosenthal McGlynn,
Inc. from 1990 to 1993. From 1980 to 1983, she served as a Commissioner of the
Securities and Exchange Commission. She has been a director of UAM since 1993.
Each of the nominees except Messrs. Campbell, Clay, Hanley, Tashjian and
Mrs. Hamilton is presently serving as a director and was elected to that
position at the 1996 Annual Meeting. It is the policy of UAM's Board of
Directors to nominate for election to the Board each year several principals of
its subsidiaries and generally to rotate these seats on the Board annually among
such firms. Messrs. Baxter, Campbell, Clay, Hanley and Tashjian are currently
being nominated for these seats.
2
<PAGE> 7
The Board of Directors met seven times during 1996 and acted by unanimous
consent on seven occasions. The Board of Directors has appointed an Executive
Committee, an Audit Committee and a Compensation Committee, all of which are
reappointed annually. The Executive Committee, consisting of Mr. Reamer,
Chairman, and Messrs. Light, Scaturro and Shane, met two times during the year
without taking any formal action. The Audit Committee, consisting of Mr. Shane,
Chairman, Mr. Greenebaum, and Mrs. Thomas, met four times in 1996, and has
recommended to the Board of Directors the selection of Price Waterhouse to serve
as the Company's independent accountants for the year ending December 31, 1997.
The Compensation Committee, consisting of Mr. Scaturro, Chairman, Mr.
Greenebaum, and Mrs. Thomas, met four times to consider directors' and officers'
compensation and other related matters. It also acted by unanimous consent 51
times in 1996 in granting stock options under UAM's stock option plans.
DIRECTORS' FEES
Outside directors (that is, directors other than those employed by UAM or
one of its subsidiaries) receive an annual fee of $28,000, plus $5,000 for each
regular meeting of the Board of Directors attended and an additional fee of
$5,000 for attendance at the Company's Annual Planning Meeting of the Board of
Directors. Each member of the Executive, Audit and Compensation Committees of
the Board receives an additional $8,000 annual fee for each committee on which
such director serves. The Chairman of each of the Audit and Compensation
Committees receives an additional $2,000 annual fee.
Pursuant to the terms of the Company's 1994 Eligible Directors Stock Option
Plan (the "Directors Option Plan"), each director who is not an officer or
employee of the Company or one of its subsidiaries and who is not eligible to
participate under any other Company stock-related plan and who is then serving
as a director (an "Eligible Director") has been granted 10,000 non-incentive
stock options on the 30th day following the Annual Meeting of Stockholders of
UAM during the term of the Directors Option Plan. The exercise price per share
for these options has been the fair market value on the date of the grant.
Options granted to Eligible Directors are exercisable in full beginning six
months after the date of grant and terminate after five years. Such options
generally cease to be exercisable six months after an Eligible Director ceases
to be a director. In addition, each Eligible Director has been entitled under
the Directors Option Plan to elect on a semi-annual basis to receive discounted
stock options in lieu of all or any portion of the annual retainer fee payable
to such director with respect to such six-month period. Discounted options have
been exercisable at 75% of the market value of common stock, $.01 par value, of
the Company ("Common Stock") on the grant date. The number of shares of Common
Stock under option will equal the amount of the cash retainer fee foregone
divided by 25% of the market value of the Common Stock on the date of grant.
The separate Directors Option Plan will be terminated if the stockholders
approve the Amended and Restated 1994 Stock Option Plan, but its basic
provisions will be retained in the amended plan (see "Approval of the Amended
and Restated 1994 Stock Option Plan" on page 12 and "Eligible Director Options"
thereunder).
CERTAIN TRANSACTIONS
During 1996, Mr. David I. Russell, a director of the Company, served as a
consultant to the Company for an annual fee of $250,000. He will continue to
serve in such capacity during 1997, for an annual fee of $275,000, pursuant to a
consulting agreement.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company are elected by the Board of Directors
and hold office until the first meeting of the Board of Directors following the
Annual Meeting. Norton H. Reamer is the Company's President and Chief Executive
Officer and John F. McNamara is an Executive Vice President and Chief
3
<PAGE> 8
Operating Officer. Certain information concerning their respective backgrounds
is presented above under Nominees for Election as Directors. The other executive
officers of the Company are:
Mr. William H. Park, age 49, joined UAM as Vice President in 1982 and was
named Senior Vice President and Treasurer in 1985 and Executive Vice President
and Chief Financial Officer in 1994. Mr. Park is also a Vice President of UAM
Funds, Inc. and UAM Funds Trust, each of which is an investment company.
Mr. Franklin H. Kettle, age 39, joined UAM in September 1986 and was named
Vice President in December of that year; Senior Vice President in 1991; Director
of Corporate Development in 1994; and Executive Vice President and Director of
Corporate Development in May 1996.
Mr. Charles H. Salisbury, age 56, joined UAM as a Senior Vice President in
1994 and was named Executive Vice President and Director of Marketing and
Service Strategies in January 1997. For more than four years prior to joining
UAM, he was a Managing Director of T. Rowe Price Associates.
Mr. William B. Budd, age 61, joined UAM as a Senior Vice President in 1989.
Prior to joining UAM, he had been with Chemical Investment Management Company,
Inc., where he served as Managing Director in charge of fixed-income
investments.
Mr. George D. McClelland, age 50, joined UAM as a Senior Vice President in
1994. Prior to joining UAM, he worked as a consultant and served briefly as
Chief Administrative Officer of Kendall Square Research Corp. in October 1993.
Prior to that, he held various management positions at subsidiaries and
divisions of Fidelity Investments, including Managing Director of Fidelity
Capital from 1992 to 1993, and Managing Director of Fidelity International, Ltd.
and President of Audit Operations and Analysis from 1990 to 1992.
Mr. Gregory S. Dimit, age 39, joined UAM as a Vice President in 1990 and
was named a Senior Vice President in May 1996. Prior to joining UAM, he was a
senior manager with Price Waterhouse LLP in the United States and London.
Mr. Joseph R. Ramrath, age 40, joined UAM as a Senior Vice President,
General Counsel and Secretary in April 1996. For more than five years prior to
joining UAM, he was a member of the Boston law firm of Hill & Barlow, a
Professional Corporation, and, more recently, a member of that firm's Management
Committee.
Mr. Richard S. Robie, III, age 36, joined UAM as a Vice President in 1992
and was named a Senior Vice President in January 1997. Prior to joining UAM, he
was an attorney with the Boston law firm of Ropes & Gray.
Mr. Amit M. Nanavati, age 51, joined UAM as a Vice President in August 1996
and was named Senior Vice President in January 1997. For more than five years
prior to joining UAM, Mr. Nanavati held various positions in the financial
division of Digital Equipment Corporation, most recently as Vice President,
Finance, Components & Peripherals Business Unit.
4
<PAGE> 9
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below shows all compensation paid for
services rendered during the past three years to the Chief Executive Officer of
the Company and each of the Company's four other most highly compensated
executive officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- -----------------
NUMBER OF
SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS GRANTED COMPENSATION(1)
- --------------------------- ---- -------- -------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Norton H. Reamer................. 1996 $800,000 $814,000 75,000 $58,844
President, Chief Executive 1995 800,000 638,000 68,000 58,844
Officer and Director 1994 770,000 456,000 58,400 58,844
John F. McNamara................. 1996 700,000 651,200 63,200 54,458
Executive Vice President, 1995 700,000 510,400 100,000 54,458
Chief Operating Officer 1994 670,000 364,800 100,000 55,580
and Director
William H. Park.................. 1996 500,000 447,700 48,000 52,953
Executive Vice President 1995 480,000 319,000 36,000 53,451
and Chief Financial Officer 1994 450,000 182,400 31,000 55,055
Franklin H. Kettle............... 1996 400,000 406,800 51,200 51,371
Executive Vice President 1995 370,000 582,000 36,800 51,371
and Director of Corporate 1994 340,000 305,700 26,200 51,948
Development
Charles H. Salisbury............. 1996 446,000 447,700 38,800 61,170
Executive Vice President 1995 367,500 319,000 33,600 60,455
and Director of Marketing and 1994 329,500 172,500 80,000 9,805
Service Strategies
</TABLE>
- ---------------
(1) Includes Company-paid life insurance premiums, Company contributions to the
individual's profit sharing retirement plan account and Company
contributions to the individual's Deferred Compensation Plan account,
respectively, in the following amounts for the year ended December 31, 1996:
Mr. Reamer, $8,844, $22,500 and $27,500; Mr. McNamara, $4,458, $22,500 and
$27,500; Mr. Park, $2,953, $22,500 and $27,500; Mr. Kettle, $1,371, $22,500
and $27,500; and Mr. Salisbury, $11,170, $22,500 and $27,500.
STOCK OPTIONS
The Company has had two stock option plans in effect, the UAM 1994 Stock
Option Plan (the "1994 Plan") and the Directors Option Plan, pursuant to which
6,400,000 shares of Common Stock have been reserved for issuance to directors,
executive officers and key employees and other persons who provide significant
services to UAM and its 47 affiliated firms. As of March 10, 1997, an aggregate
of 1,485,367 shares of Common Stock remained available for issuance under those
plans. If the proposal to approve the Amended and Restated 1994 Stock Option
Plan (the "Amended 1994 Plan") is approved by the stockholders at the annual
meeting, that plan will supersede the current option plans. The Company will
then have available 6,985,367 shares of Common Stock for option grants,
including the 1,485,367 shares available under current plans which will be
carried forward under the Amended 1994 Plan, and an additional 5,500,000 shares
authorized under the Amended 1994 Plan. The table below shows information
relating to grants of, options to, and the exercise of options under the 1994
Plan and former stock option plans of the Company by the Named Executive
Officers during the year ended December 31, 1996, as well as information
relating to the unexercised options held by the Named Executive Officers as of
December 31, 1996.
5
<PAGE> 10
OPTION GRANTS IN 1996(1)
<TABLE>
<CAPTION>
NUMBER OF
SHARES EXERCISE GRANT
UNDERLYING PERCENT OF TOTAL OR BASE DATE
OPTIONS OPTIONS GRANTED TO PRICE EXPIRATION PRESENT
NAME GRANTED EMPLOYEES IN 1996 PER SHARE DATE VALUE(2)
- ---- ---------- ------------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Norton H. Reamer.............. 75,000 4.72% $ 18.75 1/22/2001 $308,700
John F. McNamara.............. 63,200 3.98 18.75 1/22/2001 260,100
William H. Park............... 48,000 3.02 18.75 1/22/2001 197,600
Franklin H. Kettle............ 51,200 3.22 18.75 1/22/2001 210,700
Charles H. Salisbury.......... 38,800 2.44 18.75 1/22/2001 159,700
</TABLE>
- ---------------
(1) The per-share option exercise price in the table is the fair market value of
the Common Stock on the date of the grant. All options are exercisable 25% a
year over a period of four years. The Company's Stock Option Plan is
administered by the Compensation Committee of the Board of Directors, which
has authority to determine the key employees and executive officers of the
Company and its subsidiaries to whom, and the terms and conditions on which,
options will be granted under the Stock Option Plan.
(2) The Company has used the Black-Scholes Model for option pricing to calculate
present value as of the date of the grant. This Model relies on the
following assumptions, which may prove to be inaccurate in the future: stock
price volatility of .2422; dividend yield of 3.20%; risk-free rate of return
of 5.34%; and exercise date of January 22, 2001. The Model also assumes a
liquid market for options, although the options awarded under the Company's
plans generally may not be transferred. Further, exchange-traded options may
be exercised immediately; however, the Company's options are subject to
certain vesting rules. For these reasons, the Company believes that the
Model may overstate the value of the options it awards. Their actual value,
if any, will depend on the market price of the Company's Common Stock on the
date of exercise.
AGGREGATED OPTION EXERCISES IN 1996 AND
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
DECEMBER 31, OPTIONS AT
1996 DECEMBER 31, 1996(1)
SHARES --------------- -----------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- --------------- ---------------------
<S> <C> <C> <C> <C>
Norton H. Reamer............ 54,000 $ 641,250 129,750/169,050 $1,300,394/$1,374,006
John F. McNamara............ 275,000 2,843,563 75,000/213,200 528,125/ 1,747,700
William H. Park............. 36,000 303,750 72,300/ 98,100 730,175/ 796,100
Franklin H. Kettle.......... 42,000 498,750 42,100/ 98,500 391,400/ 799,850
Charles H. Salisbury........ 48,400 408,800 --/104,000 --/ 937,900
</TABLE>
- ---------------
(1) An "In-the-Money" option is an option for which the option price of the
underlying stock is less than the December 31, 1996 market price; the value
shown reflects stock price appreciation since the date of the granting of
the option.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has primary
responsibility for establishing the compensation of executives, including
administering the Company's stock option plans. The principles laid out below in
determining annual compensation opportunities and payments for Named Executive
Officers also generally apply to other executive officers.
6
<PAGE> 11
In allocating compensation opportunities between salary, bonuses and stock
options, the Committee has sought to provide appropriate balance between base
pay in the form of salary and performance-related compensation. Presently, this
allocation results in over sixty percent of senior management's compensation
being tied to (1) Company performance, as measured by Operating Cash Flow
(defined as net income plus amortization and depreciation) per share, in
determining bonus awards, if any, and (2) the Company's stock price, as measured
by the gains, if any, in stock option awards. For Mr. Kettle, company
performance is also measured by UAM's share of revenues from acquisitions in
determining bonus awards. Thus, for 1996, the compensation arrangements for Mr.
Reamer, President and Chief Executive Officer, and the other Named Executive
Officers were structured to increase the alignment of compensation with the
interests of stockholders. This was accomplished typically by having the
combination of annual bonus opportunities and stock option values account for
approximately twice the individual salary amounts. Thus, target annual bonuses
for 1996 were set at levels equal to the Named Executive Officers' salary, and
stock options were granted having an aggregate value, using the Black-Scholes
Model, that approximated 1996 bonus awards. As a result, salary increases were
significantly restricted, but compensation potential was increased through
higher bonus opportunities and larger stock option grants.
The Committee also initiated UAM Stock ownership guidelines for Mr. Reamer
and the other Named Executive Officers. These guidelines require Mr. Reamer to
maintain an ownership position of shares having a value of no less than five
times his annual salary; and Messrs. McNamara, Park, and Kettle to own shares
having a value of no less than three times their respective annual salaries by
the year 2001. Mr. Salisbury must meet these requirements by the year 2002.
In determining annual compensation opportunity levels for its Named
Executive Officers, including Mr. Reamer, the Committee has taken into
consideration company size, performance as measured by Operating Cash Flow per
share, revenues, earnings, and assets under management. It also looks at the
amounts of annual compensation being paid to the key executives of competitors
in the industry, including those comprising the peer group index appearing on
page 9. Based on publicly available information, the Committee believes the
annual compensation opportunities for Mr. Reamer and the other Named Executive
Officers approximated the median of the range of annual compensation
opportunities offered by the Company's competitors in the industry.
In addition to the factors listed above, in determining salary increases
for the Named Executive Officers, including Mr. Reamer, the Compensation
Committee subjectively considered: each officer's performance; his
responsibility for and the increase in his responsibilities during the year as a
result of the Company's continued growth and other factors; the importance of
the individual to the future growth and profitability of the Company; and the
success of the management team in achieving the Company's short-term and
long-term goals.
The Committee and the Board of Directors consider Operating Cash Flow per
share to be the most important basis for measuring the value of the Company to
its stockholders. Accordingly, bonus payments for 1996 to its executive officers
with broad executive and operating responsibilities were based primarily on the
sum of the Company's Operating Cash Flow per share as reported each quarter. The
formula used by the Committee in calculating each quarterly cash flow bonus for
the Named Executive Officers in 1996 provides, in effect, that generally no
bonuses would have been paid unless return on equity (calculated using quarterly
Operating Cash Flow per share) exceeded approximately 13% ($0.25 quarterly
Operating Cash Flow per share threshold under the formula divided by average
quarterly stockholders' equity per share for 1996 of $1.87). The four quarterly
cash flow bonuses earned for 1996 and reflected in the table on page 5 total
$2,666,000 and are based on Operating Cash Flow per share as reported in each
quarter of 1996. The level of bonuses earned reflects a return on equity, based
on such Operating Cash Flow per share of approximately 41%. Bonuses for
executive officers with primary responsibility for acquisitions were based on
the annualized amount of base revenue sharing that will accrue to the Company
for acquisitions completed during the year. For the bonus earned by Mr. Kettle
for 1996, 75% was based on the Operating Cash Flow per share formula and 25% was
based on the acquisition formula.
7
<PAGE> 12
As noted above, the Committee granted stock options to Mr. Reamer and the
other Named Executive Officers for 1996 in an amount equal to such officer's
bonus divided by the value per share based on the Black-Scholes Model, without
any adjustment for the size of previous option grants made to them. The
Committee based option grants to other executive officers of the Company for
1996 on the relative base salaries and bonuses of such officers of the Company,
without any adjustment for the size of previous option grants made to them.
Ultimately, stock options have value only if the value of the underlying shares
increases because the exercise price for the options is set at the market value
of the shares on the date of grant.
The Revenue Reconciliation Act of 1993 included a provision that
established a limit for the deduction of compensation paid by public companies
to certain executive officers. However, it also provides that amounts paid
pursuant to a performance-based compensation arrangement meeting certain
conditions are deductible even if they result in total compensation over the
limit. The Committee believes that the annual bonus payments described above and
the gains from stock options when they are exercised meet the performance-based
exemption and therefore will be deductible to the Company for federal income tax
purposes.
Compensation Committee
Philip Scaturro, Chairman
Robert J. Greenebaum
Barbara S. Thomas
8
<PAGE> 13
COMPANY STOCK PERFORMANCE
Set forth below is a graph comparing, over a five-year period beginning
December 31, 1991 (the "Commencement Date"), the total return on the Company's
Common Stock with the cumulative total return of companies in the Standard &
Poor's 500 Stock Index and an asset management industry composite, a self-
constructed peer group index (the "Indexes"). This graph assumes a common
starting point of $100 invested on December 31, 1991. Total return for the
Company's Common Stock as well as for the Indexes is determined on a yearly
basis by adding (a) the cumulative amount of dividends from the Commencement
Date to the end of the year in question (assuming dividend reinvestment) and (b)
the difference between the share price at the Commencement Date and at the end
of such year, the sum of which is then divided by the share price at the
Commencement Date.
CUMULATIVE TOTAL RETURN FOR THE FIVE-YEAR PERIOD ENDING DECEMBER 31, 1996
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) UAM S&P 500 PEER GROUP
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 100.82 107.61 110.93
1993 138.58 118.41 150.27
1994 129.41 120.01 126.47
1995 138.63 164.95 180.02
1996 198.09 202.73 241.12
</TABLE>
* Includes Alliance Capital Management L.P., Atalanta Sosnoff Capital Corp.,
Bull & Bear Group, Inc., Colonial Group, Inc. (included through 1994 only, as
this company was acquired by Liberty Financial Companies, Inc. in 1995),
Dreyfus Corp. (included through 1993 only, as this company was acquired by
Mellon Bank Corp. in 1994), Duff & Phelps Corp. (included through 1994 only,
as this company merged with a unit of Phoenix Home Life Mutual Insurance
Company in 1995), Eaton Vance Corp., Franklin Resources, Inc., New England
Investment Companies, Inc. (formerly Reich & Tang L.P.), Oppenheimer Capital,
L.P., The Pioneer Group, Inc., T. Rowe Price Associates, and PIMCO Advisors,
L.P. (formerly Thomson Advisory Group L.P.).
9
<PAGE> 14
VOTING SECURITIES
Only the record holders of shares of Common Stock of the Company at the
close of business on March 19, 1997 may vote at the Meeting. Each share of
Common Stock is entitled to one vote on the matters to be voted upon at the
Meeting.
On March 10, 1997, there were 70,024,162 shares of Common Stock issued and
outstanding. The following table sets forth certain information, as of March 10,
1997, with respect to the beneficial ownership of UAM's Common Stock (i) by each
person or entity known by UAM to own beneficially more than 5% of its Common
Stock, (ii) by each of UAM's directors and nominees, (iii) by the Named
Executive Officers and (iv) by all of UAM's executive officers and directors as
a group. Unless otherwise noted, the persons or entities named in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them, subject to community property laws where applicable.
Under the heading "Number of Shares Issuable" are listed (and under the heading
"Total" are included) shares issuable within 60 days of the date of this Proxy
Statement upon the exercise of warrants or stock options owned by the party
indicated. The percentage owned is calculated with respect to each party by
treating its issuable shares as outstanding, in accordance with rules of the
Securities and Exchange Commission.
BENEFICIAL OWNERSHIP OF COMMON STOCK
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER (AND ADDRESS OF NUMBER OF NUMBER OF
OWNER OF MORE THAN FIVE PERCENT) ISSUED SHARES SHARES ISSUABLE TOTAL PERCENT
- ---------------------------------------- ------------- --------------- --------- -------
<S> <C> <C> <C> <C>
Norton H. Reamer(1)................... 2,236,002 151,950 2,387,952 3.40%
Tiger Management L.L.C.(2)............ 7,236,800 -- 7,236,800 10.33
101 Park Avenue
New York, NY 10178
FMR Corp.(3).......................... 5,172,200 -- 5,172,200 7.39
82 Devonshire Street
Boston, MA 02109
Harold J. Baxter(4)................... -- 802,495 802,495 1.13
Duncan Campbell, Jr.(4)(5)............ 8,696 570,867 579,563 *
John P. Clay(4)....................... 1,478,080 -- 1,478,080 2.11
John K. Dwight(4)(6).................. -- 221,518 221,518 *
Robert J. Greenebaum(7)............... 35,113 44,462 79,575 *
Beverly L. Hamilton................... -- -- -- *
Bryant M. Hanley, Jr.(4).............. 853,160 47,522 900,682 1.29
Jay O. Light.......................... 17,612 47,231 64,843 *
John F. McNamara...................... 62,000 165,800 227,800 *
David I. Russell...................... 20,000 42,000 62,000 *
Philip Scaturro(8).................... 96,964 42,848 139,812 *
John A. Shane(9)...................... 27,400 42,000 69,400 *
Larry D. Tashjian(4).................. 235,540 169,146 404,686 *
Barbara S. Thomas..................... 2,000 47,231 49,231 *
C. Giles H. Weaver(4)(6).............. 33,686 8,300 41,986 *
John S. Williams(6)................... 44,002 12,488 56,490 *
William H. Park(1).................... 158,655 83,650 242,305 *
Franklin H. Kettle(1)................. 56,850 77,250 134,100 *
Charles H. Salisbury(1)............... 15,304 38,100 53,404 *
All UAM Executive Officers and
Directors as a Group (21 Persons)... 2,862,623 1,998,574 4,861,197 6.75
</TABLE>
- ---------------
* Indicates less than 1%
10
<PAGE> 15
(1) Does not include amounts allocated to the named security holder's account in
the UAM Deferred Compensation Plan as notional shares. Mr. Reamer and Mr.
Park each hold 4,172 of such notional shares, Mr. Salisbury holds 2,513 of
such notional shares, and Mr. Kettle holds 845 of such notional shares.
(2) The named security holder reported having shared voting power and shared
dispositive power with respect to all such shares as of December 31, 1996.
(3) The named security holder has sole dispositive power with respect to all
such shares and sole voting power with respect to 23,000 of such shares as
of December 31, 1996.
(4) The named security holder is a former owner of a UAM subsidiary, and as such
received (directly or indirectly) a portion of the purchase price paid in
connection with such transaction in UAM Common Stock or warrants to purchase
shares of UAM Common Stock. The security holder had no connection with UAM
prior to such acquisition.
(5) Includes 4,252 shares held in various charitable organizations of which Mr.
Campbell is a director. Mr. Campbell has shared voting and investment power
with respect to such shares.
(6) The named security holder is a current director of UAM who is not standing
for reelection.
(7) Includes 14,400 shares owned by Mr. Greenebaum's wife, as to which Mr.
Greenebaum disclaims beneficial ownership.
(8) Does not include 2,310,000 shares of Common Stock owned by entities
affiliated with Allen Holding Inc., of which Mr. Scaturro is an Executive
Vice President and Managing Director. Also does not include 7,100 shares of
Common Stock owned by the Philip Scaturro Foundation, of which Mr. Scaturro
is President, Treasurer and Trustee. Mr. Scaturro disclaims beneficial
ownership of all such shares.
(9) Includes 2,264 shares of Common Stock owned by Palmer Service Corporation,
of which Mr. Shane is President.
APPROVAL OF CERTAIN TERMS AND CONDITIONS OF
COMPENSATION ARRANGEMENTS FOR CERTAIN EXECUTIVE OFFICERS
FOR PURPOSES OF INTERNAL REVENUE CODE SECTION 162(M)
Under Section 162(m) of the Internal Revenue Code, public companies are not
allowed to deduct for income tax purposes annual compensation paid to certain
executive officers in excess of $1,000,000 per executive except to the extent
that such excess is paid pursuant to an arrangement tied to performance and for
which certain terms and conditions have been approved by stockholders. Under
arrangements used by UAM's Compensation Committee as described in the
Compensation Committee Report on page 7, the Company's Operating Cash Flow per
share is the measure used for determining cash flow bonuses for executive
officers with broad executive and operating responsibilities. Bonuses for
executive officers with responsibility for acquisitions are based on the
annualized amount of base revenue sharing that will accrue to the Company for
acquisitions completed during the year. In some instances, an executive officer
may participate in both bonus arrangements. The maximum individual annual bonus
payments under either or both arrangements cannot exceed $2,000,000, and these
bonus arrangements will apply to any person whose annual compensation is subject
to Code Section 162(m).
Bonuses paid under the foregoing arrangements are deductible so long as the
Company's Compensation Committee is composed of outside Directors, and each year
(before April 1) the Committee adopts non-discretionary cash-flow and
acquisition bonus schedules, and certifies the level of performance attainment
after the close of the bonus year. All of these requirements were satisfied for
1996 bonuses.
VOTE REQUIRED
Approval of the revised compensation arrangements described above for
purposes of Internal Revenue Code Section 162(m) requires the affirmative vote
of the holders of at least a majority of the shares of Common Stock present or
represented at the meeting and voting thereon. See "Quorum and Voting
Procedures" below. The Board of Directors recommends a vote FOR approval of such
compensation arrangements. Unless there is a change in the material terms of the
arrangements, including a change in the
11
<PAGE> 16
performance goals or the payment formula, such compensation arrangements will
not be resubmitted to the stockholders for another vote for five years.
APPROVAL OF THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN
The Board has adopted and recommends that the stockholders approve the
United Asset Management Corporation Amended and Restated 1994 Stock Option Plan
(the "Amended 1994 Plan"). The Amended 1994 Plan has been adopted to ensure that
an adequate number of option shares will be available to provide appropriate
incentives to key employees, directors and other persons who provide significant
services to UAM and its 47 affiliated firms. The success of an institutional
investment management organization such as UAM is highly dependent on the
retention and continuing motivation of the key professionals and administrative
staff who work in the operating firms and the parent company corporate offices
or perform other key services for the Company. The Company has found that an
active program of awarding stock options to those key employees and other
persons has been, and management believes will continue to be, an important
component of their compensation arrangements in a manner that will directly
associate their interests with those of the stockholders of the Company.
The Company currently has only 1,485,367 shares available for future option
grants under all existing plans. The Company believes that additional option
shares should be made available to give the Company maximum flexibility in
providing appropriate incentives to key personnel and directors. If approved at
the Meeting, the Amended 1994 Plan will replace the 1994 Eligible Directors
Stock Option Plan (the "Directors Option Plan") and will become the Company's
only stock option plan. Upon stockholder approval, 5,500,000 additional shares
of Common Stock will become available under the Amended 1994 Plan. The
additional shares represent 7.9% of UAM Common Stock currently outstanding and,
with the 1,485,367 shares carried forward from the existing 1994 Plan, represent
less than 10% of currently outstanding Common Stock. As of March 10, 1997, there
were 6,891,113 shares covered by outstanding stock options under the 1994 Plan
and all prior plans.
In addition to the 6,985,367 shares currently reserved for issuance under
the Amended 1994 Plan, the Compensation Committee may designate for issuance
under the Amended 1994 Plan any shares of Common Stock that are repurchased by
the Company (the "Repurchased Shares") under its existing Stock Repurchase
Program on the open market or in private transactions in which the Company pays
fair market value, so long as the aggregate price paid for the Repurchased
Shares does not exceed the cumulative amount received in cash by the Company for
the exercise of options granted under the Amended 1994 Plan.
MATERIAL FEATURES OF THE AMENDED 1994 PLAN
The Amended 1994 Plan provides for the granting of Incentive Stock Options
("ISOs") and Non-Incentive Stock Options ("NISOs") to purchase shares of Common
Stock. The Amended 1994 Plan also provides for the granting of "approved"
options to employees working in the United Kingdom ("U.K. Options") and will,
upon approval by the stockholders, provide for the granting of NISOs to the
Company's directors (see "Eligible Director Options" below). Under the Amended
1994 Plan, ISOs, NISOs and U.K. Options may be granted in the future for the
purchase of up to 6,985,367 shares of the Common Stock. The closing price of the
Common Stock as reported by the New York Stock Exchange on March 10, 1997 was
$27.875 per share.
The general purpose of the Amended 1994 Plan is to encourage employees who
have substantial responsibility for the Company's (including affiliated firms')
management and growth to maintain their employment and to increase their
proprietary interest in the success of the Company and to motivate other
individuals who provide important services to the Company. All executive
officers and other key employees of the Company and its subsidiaries, as well as
non-employees other than directors who provide important services to the Company
(all such individuals hereinafter "Employees"), are eligible to participate in
the Amended 1994 Plan. At present, the Company and its subsidiaries have
approximately 2,340 such employees (including the Executive Officers) who will
be eligible to participate in the Amended 1994 Plan.
12
<PAGE> 17
The Amended 1994 Plan and the grant of options thereunder will continue to
be administered by the Compensation Committee of the Board of Directors
consisting, where required, of not less than three directors who are both
"non-employee," as that term is defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and "outside,"
as that term is defined in regulations relating to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Compensation Committee has the power to determine which Employees will
be granted options under the Plan, whether such options will be ISOs, NISOs or
U.K. Options (subject in each case to applicable legal restrictions), the number
of shares of Common Stock covered by, and the duration of, each option so
granted under the Amended 1994 Plan, and other terms and conditions applicable
to each option so granted under the Amended 1994 Plan. These determinations are
made at the time the option is granted. The Compensation Committee is also
authorized to interpret the Amended 1994 Plan and prescribe rules and
regulations relating to the Amended 1994 Plan. In selecting the Employees to
whom options will be granted and in deciding how many shares will be subject to
each option, the Compensation Committee considers, among other relevant factors,
the importance of an Employee's duties, the Employee's experience with the
Company or a subsidiary of the Company, the Employee's future value to the
Company or a subsidiary of the Company, and the Employee's present and potential
contribution to the success of the Company and its subsidiaries.
In accordance with Code Section 162(m), a public company may not deduct
certain executives' compensation in excess of $1,000,000 per individual unless
such compensation is performance-based. Options are deemed performance-based
only to the extent that, among other things, the plan to which they relate
specifies the maximum number of options which may be granted to any Employee
during a specified period of time. Accordingly, the Amended 1994 Plan indicates
that the maximum number of options which may be granted to an Employee in any
calendar year is 300,000.
The price at which shares of Common Stock may be purchased upon the
exercise of options granted under the Amended 1994 Plan also will be determined
by the Compensation Committee at the time the option is granted within certain
parameters. In the case of ISOs and U.K. Options, the exercise price per share
may not be less than the fair market value of a share of Common Stock on the
date the option is granted, or, in the case of an ISO granted to an employee who
owns over 10% of the Common Stock at the time of grant, the exercise price per
share may not be less than 110% of such fair market value. A non-employee may
not be granted ISOs or U.K. Options under the Amended 1994 Plan. The exercise
price per share for NISOs granted to key Employees and directors may not be less
than 50% of the fair market value of a share of Common Stock on the date of
grant, except that the exercise price per share of a NISO granted to a Covered
Employee may not be less than 100% of the fair market value of a share of Common
Stock on the grant date. The term "Covered Employee" includes the Chief
Executive Officer of UAM at the end of any taxable year and those individuals
whose compensation is required to be disclosed in the Proxy Statement Summary
Compensation Table. No option under the Amended 1994 Plan may be granted with an
exercise price less than the par value of the Common Stock.
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which ISOs are exercisable for the first
time by an individual during any calendar year under the Amended 1994 Plan may
not exceed $100,000. The aggregate fair market value (determined at the time the
option is granted) of the stock with respect to which U.K. Options are
outstanding for an individual under the Amended 1994 Plan may not exceed U.K.
L30,000 sterling.
In the event an option granted under the Amended 1994 Plan expires or
terminates before it has been exercised in full, the shares of Common Stock
allocable to the unexercised portion of such option will be available for the
grant of future options under the Amended 1994 Plan.
Any ISO or U.K. Option granted under the Amended 1994 Plan will be
transferable only by will or under the laws of descent and distribution. The
form of option grant adopted under the Amended 1994 Plan will permit the option
holder to transfer NISOs to family members, either outright or in trust. In the
event that an Employee who holds an option granted under the Amended 1994 Plan
dies before the date of expiration of such option, such option will terminate
one year following the date of death (subject to the condition that no
13
<PAGE> 18
ISO or U.K. Option may be exercisable after the expiration of five or ten years
from its date of grant, as applicable), and may be exercised prior to such
termination by the executors or administrators of the estate of such holder or
(except for U.K. Options) by any person to whom such option may have been
transferred. All options granted under the Amended 1994 Plan to Employees will
terminate no later than three months after the severance of the employment or
other service relationship between the Company and the optionee for any reason,
for cause or without cause, other than death.
Employees who exercise options to purchase securities under the Amended
1994 Plan shall pay cash in the full amount of the option price at the time of
exercise and/or shall deliver other shares of Common Stock owned by the Employee
with a fair market value equal to the exercise price of the option shares to be
purchased. If, however, the Compensation Committee determines in good faith that
an exercise of an option through the delivery of shares of the Company's Common
Stock is not in the best interest of the Company, the Committee may withhold the
right to so exercise the option and require payment of the purchase price in
cash.
At the discretion of the Compensation Committee, options granted under the
Amended 1994 Plan may be made exercisable in installments which become available
to the optionee from time to time during the term of the option, and the
expiration date of each option will be determined by the Compensation Committee
at the time such option is granted. However, no ISO or U.K. Option granted under
the Amended 1994 Plan may be exercised more than ten years after the date of
grant, and no ISO granted to a person who owns over 10% of the Common Stock at
the time of grant may be exercised more than five years following the date of
grant. The Amended 1994 Plan itself will expire in 2007. The 1994 Plan prior to
amendment and restatement expired in 2004.
The aggregate number and kind of shares reserved under the Amended 1994
Plan, the number of shares as to which options have been granted to any
individuals, and the option prices per share shall be appropriately adjusted by
the Board of Directors of the Company (with the advice of the Company's auditors
and the consent of the Board of Inland Revenue, in the case of shares with
respect to which U.K. Options are outstanding) in the event of any
recapitalization, stock split, stock dividend, combination of shares, or other
similar change in the capitalization of the Company, but no adjustment in any
option price shall be made which would reduce the option price to less than the
par value per share. In the event of a dissolution, liquidation, merger,
consolidation or reorganization of the Company, the Board may decide to
terminate each outstanding option as of the date of such event, and if it does
so, shall suspend the exercise of all outstanding options a reasonable time
prior to any such event upon fourteen days advance notice of such suspension to
each optionee so as to permit exercise of vested outstanding options prior to
such suspension.
The Compensation Committee may also grant NISOs which in one or more
respects do not meet the requirements for ISOs established by Section 422 of the
Code. Options which otherwise qualify as ISOs may be issued as NISOs under the
Amended 1994 Plan, if the option so specifies at the time of the grant. Subject
to the terms of the Amended 1994 Plan, the Compensation Committee, in its sole
discretion, may establish the terms and conditions for each NISO which it
grants.
Within certain limits, the Board has the right to alter, amend or revoke
the Amended 1994 Plan. The Board may not, however, without the approval of the
shareholders, alter or amend the Plan to increase the maximum number of shares
of Common Stock that may be issued under the Amended 1994 Plan or materially
modify the requirements as to eligibility for participation in the Amended 1994
Plan.
U.K. OPTIONS
The Amended 1994 Plan provides for the granting of "approved" options to
Employees of the Company or its subsidiaries who are subject to income tax laws
of the United Kingdom. U.K. Options will be subject to certain additional terms
as required by Sections 185-187 and Schedule 9 of the Taxes Act 1988. U.K.
Options shall be granted only to Employees who are required to work at least 20
hours per week for the Company or its subsidiaries (25 hours per week, in the
case of Employees who are also directors of the Company or its subsidiaries).
U.K. Options shall not be granted to any Employee who at the time of the grant
would hold outstanding U.K. Options under all plans of the Company to purchase
shares of the Common Stock with a value in excess of that described in the
preceding section on page 13. The Company expects that the Board of
14
<PAGE> 19
Inland Revenue of the United Kingdom will approve the portions of the Amended
1994 Plan under which the U.K. Options will be granted, and thus the U.K.
Options are expected to provide significant U.K. income tax benefits to
Employees who receive and exercise such options.
ELIGIBLE DIRECTOR OPTIONS
As part of the proposed Amended 1994 Plan, the UAM Board of Directors has
also approved and recommends that the stockholders approve an Eligible Director
stock option program. Upon approval at the annual meeting, that program will
supersede the existing Directors Option Plan. "Eligible Director" means any
director who is not an officer or employee of the company or its subsidiaries.
Currently there are six Eligible Directors on UAM's Board.
The Eligible Director stock option program is designed to attract, retain
and motivate directors and to promote a strong identity of interests among the
Company, the directors, and the Stockholders. In addition, the discounted option
program described below (discounted options granted in lieu of cash retainer
fees) results in the Company receiving the benefit of greater equity investment
by its directors while saving the cash otherwise payable as fees. The Company
believes that this aspect of the Eligible Director stock option program has
encouraged directors to make a greater equity investment in UAM and further
aligned the interests of its directors and stockholders.
Because of recent changes in Exchange Act Rule 16b-3, it is now possible to
provide more flexibility in the granting of options to directors of the Company
without risk of violating the six-month trading provisions of Section 16 of the
Exchange Act. This flexibility has permitted the inclusion of director options
under the general provisions of the Amended 1994 Plan for the granting of NISOs.
Nevertheless, the following provisions will specifically apply to "Eligible
Director" options (as defined below): (1) automatic grant of NISOs for 14,000
shares of Common Stock annually; (2) election by any Eligible Director to waive
his or her annual cash retainer fee in exchange for a discounted stock option;
(3) expiration of options after five years; and (4) an overall ceiling on
Eligible Director option grants of 800,000 shares, which are included in the
6,985,367 total shares authorized for issuance under the Amended 1994 Plan.
Each Eligible Director then serving as a director will automatically be
granted NISOs for 14,000 shares of Common Stock on the 30th day following the
date of the Annual Meeting of Stockholders in each of the years during the term
of the Amended 1994 Plan. Shares may be purchased under these options at the
fair market value on the date of grant, no less than six months after the grant
date. The total number of shares underlying options automatically granted this
year to the Eligible Directors as a group will be 98,000 assuming that the
Company will have seven Eligible Directors.
Eligible Directors will also be entitled, on a semi-annual basis, to elect
to receive discounted options in lieu of all or any portion of the annual cash
retainer fee payable to them with respect to such six-month period. The election
must be made prior to receipt of the cash retainer fee.
Discounted options granted to an Eligible Director for a six-month period
will become exercisable six months after the date of grant, at a discounted
price of 75% of the market value of the Common Stock on the date of grant. The
number of shares of Common Stock under option will equal the amount of the cash
retainer fee divided by 25% of the market value of the Common Stock on the date
of grant. The operation of the formula can be illustrated as follows: if a
director elects to receive a discounted stock option in lieu of all of his
semi-annual retainer fee (currently $14,000) and UAM's stock price is $30.00 on
the grant date, an option will be granted to purchase 1,867 shares of Common
Stock ($14,000 divided by $7.50) at $22.50 per share. A discounted option may be
granted only with respect to a director's retainer fee and not in lieu of fees
paid for attendance at meetings of the Board of Directors or any committee
thereof, or any expenses of the director which the Company reimburses.
Options granted to Eligible Directors will cease to be exercisable six
months after an Eligible Director ceases to be a director for any reason other
than death. In the event of an Eligible Director's death, his or her outstanding
options (whether exercisable or not on the date of death) may be exercised
within 12 months after such date (subject to the condition that no such option
may be exercised after the expiration of five years from
15
<PAGE> 20
its date of grant) by the executors or administrators of his or her estate or by
any person to whom such option may have been transferred.
Certain other provisions of the Amended 1994 Plan will also apply to
Eligible Director option grants, including so-called "pyramiding" or cashless
exercise, transferability, and adjustment for recapitalizations.
U.S. INCOME TAX ASPECTS OF STOCK OPTIONS
The rules governing the tax treatment of options and stock acquired upon
the exercise of options are quite technical. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change, as
are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws and the tax laws of other countries may not be the same as under
the federal income tax laws.
ISOs granted pursuant to the Amended 1994 Plan are intended to qualify as
"Incentive Stock Options" within the meaning of Section 422 of the Code. If the
participant makes no disposition of the shares acquired pursuant to exercise of
an ISO within one year after the transfer of shares to such participant and
within two years from grant of the option, such participant will realize no
taxable ordinary income as a result of the grant or exercise of such option; any
gain or loss that is subsequently realized will be treated as long-term capital
gain or loss, as the case may be. Under these circumstances, the Company will
not be entitled to a deduction for federal income tax purposes with respect to
either the issuance of such incentive options or the transfer of shares upon
their exercise. Under current law, long-term capital gain is taxed at a maximum
rate of 28%.
If shares subject to ISOs are disposed of prior to the expiration of the
above time periods, the participant will recognize ordinary income in the year
in which the disqualifying disposition occurs, the amount of which will
generally be the lesser of (i) the excess of the market value of the shares on
the date of exercise over the option price, or (ii) the gain recognized on such
disposition. Such amount will ordinarily be deductible by the Company for
federal income tax purposes in the same year, provided that the Company
satisfies certain federal income tax withholding requirements. In addition, the
excess, if any, of the amount realized on a disqualifying disposition over the
market value of the shares on the date of exercise will be treated as capital
gain.
A participant who acquires shares by exercise of a NISO generally
recognizes as taxable ordinary income, at the time of exercise, the difference
between the exercise price and the fair market value of the shares on the date
of exercise. The amount of the participant's taxable income will ordinarily be
deductible by the Company in the same year in which the participant recognizes
the taxable income, provided that the Company satisfies certain federal income
tax withholding requirements and subject to the requirements of Section 162(m)
with respect to Covered Employees described above.
BENEFITS UNDER THE 1994 PLAN
As a result of the discretionary nature of the Amended 1994 Plan, it is not
possible to determine who the participants in such Plan will be, or the number
of options or other awards to be received by any person or group under such
Plan. The following table sets forth information with respect to the grant of
options under the 1994 Plan to the executive officers named in the Summary
Compensation Table (the "Executive
16
<PAGE> 21
Officers"), to all current executive officers as a group, to all non-executive
directors as a group, and to all other employees (excluding executive officers)
as a group, during the last fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY
OPTIONS AT
NAME AND POSITION NUMBER OF UNITS MARCH 10, 1997(1)
- ----------------- --------------- --------------------
<S> <C> <C>
Norton H. Reamer........................................... 75,000 $ 684,375
President and Director
John F. McNamara........................................... 63,200 576,700
Executive Vice President and Director
William H. Park............................................ 48,000 438,000
Executive Vice President
Franklin H. Kettle......................................... 51,200 467,200
Executive Vice President
Charles H. Salisbury....................................... 38,800 354,050
Executive Vice President
All Current Executive Officers as a Group (11 persons)..... 419,400 3,717,025
All Non-Executive Directors as a Group (10 persons)(2)..... 70,108 266,743
All Employees (excluding Executive Officers) as a Group.... 1,169,136 7,399,119
</TABLE>
- ---------------
(1) An "in-the-money" option is an option for which the option price of the
underlying stock is less than the March 10, 1997 market price; the value
shown reflects stock price appreciation since the date of the granting of
the option.
(2) None of the directors who are principals of UAM subsidiaries were granted
options in 1996.
VOTE REQUIRED
Approval of the Amended and Restated 1994 Stock Option Plan described above
requires the affirmative vote of the holders of at least a majority of the
shares of Common Stock present or represented at the meeting and voting thereon,
provided that the number of votes cast for and against the Amended 1994 Plan
must exceed 50% of the number of shares entitled to vote thereon. See "Quorum
and Voting Procedures" below. The shares represented by the proxies solicited by
the Board of Directors will be voted for the approval of the Amended 1994 Plan
unless a contrary choice is specifically indicated. The Board of Directors
recommends a vote FOR approval of the Amended and Restated 1994 Stock Option
Plan.
SELECTION OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
selected the firm of Price Waterhouse LLP ("Price Waterhouse") as independent
accountants of the Company for the year ending December 31, 1997, subject to
ratification by vote of the holders of a majority of the shares of Common Stock
voting thereon at the Annual Meeting. A representative of Price Waterhouse,
which served as independent accountants for 1996, is expected to be present at
the Meeting, with the opportunity to make a statement if he or she desires to do
so, and to be available to respond to appropriate questions.
The persons named as proxies in the accompanying form of Proxy intend
(unless specific contrary instructions are given) to vote for ratification of
the selection of Price Waterhouse as independent accountants for the 1997 fiscal
year.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its offices at One
International Place, Boston, Massachusetts 02110 no later than November 21, 1997
in order to be considered for inclusion in the Proxy Statement and Proxy card
relating to that meeting.
17
<PAGE> 22
QUORUM AND VOTING PROCEDURES
The By-laws of the Company (the "By-laws") provide that a majority of the
shares of Common Stock issued and outstanding and entitled to vote, present in
person or by proxy, shall constitute a quorum at a meeting of stockholders of
the Company. Shares of Common Stock represented by a properly signed and
returned proxy are considered as present at the Meeting for purposes of
determining a quorum. Abstentions are counted as present for purposes of
determining the existence of a quorum.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If specific
instructions are not received, however, brokers may vote these shares in their
discretion, depending on the type of proposal involved. However, the New York
Stock Exchange can preclude brokers from exercising their voting discretion on
certain proposals. Without specific instructions from the beneficial owner in
such case, the broker may not vote on that proposal. This results in what is
known as a "broker non-vote" on such a proposal. In the event of a broker
non-vote with respect to any issue coming before the Meeting, the Proxy will
nonetheless be counted as present for purposes of determining the existence of a
quorum. The effect of broker non-votes on each agenda item is described below.
The vote required for the election of directors is the affirmative vote of
a plurality of the shares present or represented at the Meeting and entitled to
vote thereon. Unless authority to vote for any director is withheld in the
Proxy, votes will be cast in favor of election of the nominees listed herein.
Votes withheld from election of directors will be excluded entirely from the
vote and will have no effect.
The vote required for approval of the Compensation Arrangements for Certain
Executive Officers and approval of amendments to the 1994 Stock Option Plan is
the affirmative vote of a majority of the shares of Common Stock present or
represented at the Meeting and voting thereon. Neither abstentions as to this
proposal nor broker non-votes will count as votes cast "for" or "against" this
proposal and accordingly, they will not be included in calculating the number of
votes necessary for approval of this proposal. Brokers have discretionary
authority to vote on this proposal.
If a properly signed Proxy is returned to the Company by a stockholder of
record and is not marked, it will be voted in accordance with the Board's
recommendations on all proposals.
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that shown above. However, if any other
proper business should come before the Meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the Proxies in respect to
any such business in accordance with their best judgment. Matters with respect
to which the enclosed form of Proxy confers such discretionary authority are as
follows: (i) matters which the Board of Directors does not know are to be
presented at the Meeting as of a reasonable time before the mailing of this
Proxy Statement; (ii) approval of the minutes of the prior meeting of
stockholders, such approval not constituting ratification of the action taken at
such meeting; (iii) election of any person as a director if any of the nominees
named herein is unable to serve or for good cause will not serve; and (iv)
matters incident to the conduct of the Meeting.
Any stockholder giving a Proxy in the accompanying form retains the power
to revoke it, by appropriate written notice to the Secretary of the Company or
by the giving of a later-dated Proxy, at any time prior to the exercise of the
powers conferred thereby. Attendance in person at the Meeting will not itself be
deemed to revoke a Proxy unless the stockholder gives an affirmative notice at
the Meeting that the stockholder intends to revoke the Proxy and to vote in
person.
The shares represented by the Proxy will be voted as directed by the
stockholder giving the Proxy.
IF NO CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED (1) TO FIX THE
NUMBER OF DIRECTORS AT 14 AND TO ELECT THE PERSONS NAMED UNDER "ELECTION OF
DIRECTORS"; (2) TO APPROVE THE COMPENSATION ARRANGEMENTS FOR CERTAIN EXECUTIVE
OFFICERS; (3) TO APPROVE THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN; (4) TO
RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS FOR
1997; AND (5) IN THE DISCRETION OF THE PROXYHOLDER AS TO ANY OTHER MATTERS WHICH
MAY PROPERLY COME BEFORE THE MEETING.
18
<PAGE> 23
OTHER MATTERS
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. In addition to the use of the mails, certain officers and
regular employees of the Company, without additional compensation, may use their
personal efforts, by telephone or otherwise, to obtain Proxies. The Company will
also request brokerage houses, custodians, nominees and fiduciaries to forward
copies of the proxy material to those persons for whom they hold shares and to
request instructions for voting the Proxies. The Company will reimburse such
brokerage houses and other persons for their reasonable expenses in connection
therewith.
By Order of the Board of Directors,
JOSEPH R. RAMRATH
Secretary
March 21, 1997
Boston, Massachusetts
19
<PAGE> 24
3/19/97
UNITED ASSET MANAGEMENT CORPORATION
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
PREAMBLE
--------
The plan (the "Plan") comprises three subplans: Subplan A covers
options to be granted to any key employees, including officers, and any
non-employees (other than directors) who provide important services to United
Asset Management Corporation, a Delaware corporation ("UAM") or any of its
subsidiaries or parents. Subplan B covers options to be granted to employees of
UAM or of its subsidiaries who are subject to the income tax laws of the United
Kingdom, to the extent that such options can be granted with favorable income
tax treatment under such United Kingdom laws. Subplan C covers options to be
granted to non-employee directors of UAM.
Subject to the adjustments provided in the Plan, the aggregate number
of shares of Common Stock of UAM which may be issued and sold pursuant to
incentive stock options (as defined below) granted under Subplan A or Options
(as defined below) granted under Subplan B of the Plan shall not exceed
6,985,367 shares of Common Stock (as defined below), which may be either
authorized but unissued shares or treasury shares. The aggregate number of
shares of Common Stock which may be issued and sold pursuant to non-incentive
stock options (as defined below) granted under Subplan A or Subplan C of the
Plan shall not exceed the sum of (1) the number of shares specified in the
preceding sentence, less the number of shares (a) issued pursuant to Subplan A
incentive stock options and Subplan B Options and (b) underlying outstanding
Subplan A incentive stock options and Subplan B Options, plus (2) shares of
Common Stock reacquired by UAM for fair market value, provided that the
cumulative amount received in cash by UAM upon the exercise of options granted
under the Plan shall not be less than the aggregate amount paid for such
reacquired shares underlying non-incentive stock options. If any option granted
under the Plan shall terminate or expire without being fully exercised, the
shares which have not been purchased will again become available for purposes of
the Plan.
SUBPLAN A--U.S. SUBPLAN PORTION OF THE
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE OF SUBPLAN A
The purpose of this Subplan A is to encourage key employees, including
officers, of UAM and any present or future subsidiary and parent of UAM
(hereinafter collectively referred to as the "Company") as well as non-employees
(other than directors of UAM) who provide important services to the Company to
acquire shares of common stock of UAM, $.01 par value per share (the "Common
Stock"), and thereby increase their proprietary interest in the Company's
success and provide an added incentive to remain in
<PAGE> 25
the employ of the Company. For purposes of this Subplan A, the words parent and
subsidiary shall be interpreted in accordance with Section 422 and Section 424
of the Internal Revenue Code of 1986, as from time to time amended (the "Code").
It is intended that options granted under this Subplan A shall constitute either
"incentive stock options" within the meaning of Section 422 of the Code, or
"non-incentive stock options", as determined by the Committee named in Section 3
of this Subplan in its sole discretion and indicated on each form of option
grant (the "Option Grant"), and the terms of this Subplan and the Option Grants
shall be construed accordingly.
2. SHARES RESERVED UNDER SUBPLAN A
Subject to the adjustment provided in Section 9, the aggregate number
of shares of Common Stock which may be issued and sold pursuant to options
granted under this Subplan A of the Plan shall be determined in accordance with
the Preamble above.
3. ADMINISTRATION
Except to the extent otherwise provided in Subplan B, the Plan shall be
administered by a committee (the "Committee") consisting of not less than three
(3) members of the Board of Directors of UAM (the "Board"). Each of the members
of the Committee shall be a person who in the opinion of counsel to the Company
is (i) a "non-employee" as such term is used in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"), and (ii) an "outside
director" as such term is used in Treasury regulation Section 1.162-27(e) (3)
under Section 162(m) of the Code. The Committee shall be appointed by, and shall
serve at the pleasure of, the Board of Directors. A majority of the members
present at any meeting at which a quorum is present, and any acts approved in
writing by all the members of the Committee without a meeting, shall constitute
the acts of the Committee. The Committee shall have the powers granted to it in
Sections 3, 4, 5, 7 and 8 of this Subplan A. The Committee is authorized to
interpret this Subplan A and, subject to the provisions of the Subplan, to
prescribe, amend, and rescind rules and regulations relating thereto. The
Committee is further authorized, subject to the express provisions of this
Subplan A, to alter or amend the form of Option Grant attached hereto as Exhibit
A and to make all other determinations necessary or advisable in the
administration of the Subplan. The interpretation and administration by the
Committee of any provisions of this Subplan A and the Option Grant shall be
final and conclusive on all persons having any interest therein.
Notwithstanding any other provision of this Plan, if the Committee
determines that a person to whom an option may be granted under this Subplan A
will neither be a "covered employee" within the meaning of Section 162(m) of the
Code nor an employee subject to the short-swing profits rules of Section 16(b)
of the Act at any time from the date of grant until the end of the term of any
option which could be granted under this Subplan A at the time of such
determination, such options may be granted to such person by a committee
consisting of any number of members of the Board, any or all of whom would not
then be eligible to serve on the Committee. With respect to all options referred
to in this paragraph, the committee referred to in this paragraph shall have all
powers
2
<PAGE> 26
otherwise granted to the Committee in Sections 3, 4, 5, 7 and 8 of this Subplan
A, but the committee referred to in this paragraph shall not otherwise
administer this Subplan A.
No members of the Committee or of any committee referred to in the
preceding paragraph or of the Board shall be held liable for any action or
determination made in good faith with respect to the Plan, this Subplan A, or
any option granted hereunder.
4. OPTION GRANTS
Options to purchase shares of Common Stock under this Subplan A may be
granted to key employees (including officers and directors who are employees) of
the Company and to non-employees who provide important services to the Company.
The term "Employee" will include, for purposes of this Subplan A key employees
as well as such non-employees who provide important services to the Company. In
selecting the Employees to whom options will be granted and in deciding how many
shares of Common Stock will be subject to each option, the Committee shall give
consideration to the importance of an Employee's duties, to his experience with
the Company, to his future value to the Company, to his present and potential
contribution to the success of the Company, and to such other factors as the
Committee may deem relevant. Subject to the express provisions of the Plan and
the form of Option Grant incorporated herein by reference as from time to time
altered or amended, the Committee shall have authority to determine with respect
to each Option Grant the number of installments, the number of shares of Common
Stock in each installment, and the exercise dates, and, to the extent not
inconsistent with the applicable provisions of the Code, if any, may specify
additional restrictions and conditions for any Option Grant. Each incentive
stock option shall expire not later than ten years from the date of the grant of
such option.
Except as provided in Section 7 of this Subplan A, no incentive stock
option may be granted to any Employee who, at the time such option is granted
owns stock possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company within the meaning of Section 422 of the
Code. Non-employees who provide services to the Company shall not be eligible to
receive incentive stock options under the Plan.
The date of grant of an option under this Subplan A shall be the date
the Committee votes to grant the option, but no optionee shall have the right to
exercise his option until the Company has executed and delivered the Option
Grant to such optionee. Each option granted under this Subplan A shall be
evidenced by and subject to the terms and conditions of the Option Grant which
is incorporated into the Plan by reference as from time to time altered or
amended.
No incentive stock option may be transferred by the optionee, other
than by will or the laws of descent and distribution. An incentive stock option
can be exercised during such individual's life only by him. Notwithstanding the
foregoing, the Committee may grant non-incentive stock options under this
Subplan A or under Subplan C that are transferable (subject to any terms and
conditions imposed by the Committee) by the
3
<PAGE> 27
optionee, either directly or in trust, to one or more members of the optionee's
family. Following any transfer permitted pursuant to this paragraph, of which
the optionee has notified the Committee in writing, such option may be exercised
by the transferee(s), subject to all terms and conditions of the Option Grant.
For these purposes, the members of the optionee's family are only the
optionee's: (i) spouse; (ii) lineal descendants; (iii) lineal ancestors; and
(iv) siblings and spouses and children of such siblings.
5. OPTION PRICE
The price per share at which each option granted under this Subplan A
may be exercised shall be determined by the Committee subject to the provisions
of this Section 5. In the case of an incentive stock option, the exercise price
shall not be less than the fair market value per share on the date of the grant,
as determined by the Committee in accordance with applicable provisions of the
Code then in effect. In the case of a non-incentive stock option, the exercise
price shall not be less than 50% of the fair market value per share on the date
of grant, as so determined. In no event shall the option price per share for any
option under the Plan be less than the par value per share.
6. LIMITATION ON AMOUNT
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by an individual during any calendar year under
all plans of the Company shall not exceed $100,000. To the extent that the
aggregate value of such options (determined in the order in which they were
granted) exceeds such amount, such options shall be treated as non-incentive
stock options.
The maximum number of shares with respect to which any options may be
granted under the Plan (including this Subplan A, to any individual during any
single calendar year shall be 300,000 shares.
7. SPECIAL RULE FOR 10 PERCENT SHAREHOLDERS
The Committee may grant incentive stock options under this Subplan A to
Employees who own more than 10 percent of the combined voting stock of the
Company if (i) at the time of the Option Grant the price per share at which the
option may be exercised is at least 110 percent of the fair market value of the
stock subject to the option and (ii) such option is not exercisable after the
expiration of five years from the date such option is granted.
8. NON-INCENTIVE STOCK OPTIONS
Notwithstanding the provisions of Sections 4, 5, 6 and 7 of this
Subplan A, the Committee may grant options which in one or more respects do not
meet the requirements for incentive stock options established by Section 422 of
the Code. The Committee shall indicate on each Option Grant whether an incentive
stock option within
4
<PAGE> 28
the meaning of Section 422 of the Code or a non-incentive stock option is
thereby granted.
Except as otherwise provided in this Subplan A, the Committee, in its
sole discretion, shall establish the terms and conditions for each non-incentive
stock option which it grants. Such terms and conditions may, but need not,
include some or all of the provisions of Sections 4, 5, 6 and 7 of this Subplan
A with respect to incentive stock options. If the Committee grants an option
which in all respects meets the requirements for incentive stock options it may
nonetheless designate such option a non-incentive stock option on the Option
Grant.
9. ADJUSTMENT OF SHARES RESERVED UNDER THE PLAN
The aggregate number and kind of shares reserved under the Plan, the
maximum number of shares as to which options may be granted to any individual
and the option price per share shall be appropriately adjusted by the Board in
the event of any recapitalization, stock split, stock dividend, combination of
shares, or other similar change in the capitalization of the Company, but no
adjustment in the option price shall be made which would reduce the option price
per share to less than the par value per share, and any adjustment in the option
price for options granted under Subplan B of the Plan shall be subject to the
requirements of Rule 5 of Subplan B.
10. DISSOLUTION OR REORGANIZATION
Prior to a dissolution, liquidation, merger, consolidation, or
reorganization of the Company (the "Event"), the Board may decide to terminate
each outstanding option granted under this Subplan A. If the Board so decides,
such option shall terminate as of the effective date of the Event, but the Board
shall suspend the exercise of all outstanding options a reasonable time prior to
the Event, giving each optionee not less than fourteen days written notice of
the date of suspension, prior to which an optionee may purchase in whole or in
part the shares available to him as of the date of receipt of the notice. If the
Event is not consummated, the suspension shall be removed and all options shall
continue in full force and effect, subject to the terms of their respective
Option Grants.
11. AMENDMENT AND TERMINATION OF PLAN AND SUBPLAN A
The Board may amend, suspend, or terminate the Plan and/or this Subplan
A, including the form of Option Grant incorporated herein by reference. No such
action, however, may, without approval or ratification by the shareholders,
increase the maximum number of shares reserved under the Plan except as provided
in Section 9 of this Subplan A, Rule 5 of Subplan B, or Section 8 of Subplan C,
alter the class or classes of individuals eligible for options, or make any
other change which, pursuant to the Code or regulations thereunder or Section
16(b) of the Act and the rules and regulations promulgated thereunder, requires
action by the shareholders. No such action may, without the consent of the
holder of the option, alter or impair any option previously granted.
5
<PAGE> 29
In any event, the Plan shall terminate 10 years from the date of
adoption of the amended and restated Plan by the Board of Directors, or if
earlier, from the date of its approval by the shareholders. Any shares remaining
under the Plan at the time of termination which are not subject to outstanding
options and any shares which thereafter become available because of the
expiration or termination of an option shall cease to be reserved for purposes
of the Plan.
12. RIGHT TO TERMINATE EMPLOYMENT
Nothing contained herein or in any Option Grant executed pursuant hereto shall
restrict the right of the Company to terminate the employment of any optionee at
any time.
13. DATE OF ADOPTION
The date of adoption of this amended and restated Plan by the Board is
January 20, 1997.
14. DATE OF APPROVAL
The date of approval of this amended and restated Plan by the shareholders and
the Plan's effective date is May 15, 1997.
6
<PAGE> 30
3/19/97
SUBPLAN B - UK SUBPLAN PORTION OF
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
RULES OF THE UNITED ASSET MANAGEMENT CORPORATION
------------------------------------------------
EMPLOYEE SHARE OPTION SCHEME
----------------------------
<TABLE>
1. DEFINITIONS
-----------
In this Scheme (hereinafter sometimes referred to as the "UK Subplan"),
unless the context otherwise requires, the following words and
expressions shall have the following meanings:
<CAPTION>
<S> <C>
"Act" the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
"Adoption Date" the date on which the Scheme is adopted by the Company.
"Associated Company" the meaning given to that term in Section 416 of the U.K. Income and
Corporation Taxes Act 1988.
"Auditors" the auditors for the time being of the Company (acting as experts and not
as arbitrators).
"Board" the board of directors of the Company.
"Code" the U.S. Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
"Committee" the committee established by the Board pursuant to Rule 10.4.
"Company" United Asset Management Corporation.
"Control" the meaning given to that word by Section 840 of the U.K. Income and
Corporation Taxes Act 1988.
"Date of Grant" the date on which an Option is, was or is to be granted under the Scheme.
"Eligible Employee" any employee of any Participating Company who is subject to the income tax
laws of the United Kingdom and who is normally required to devote to his
duties not less than 20 hours per week (excluding meal breaks) (in the
case of an employee who is also a director of any Participating Company,
25 hours per week (excluding meal breaks)) and is not precluded by
paragraph 8 of Schedule 9 from participating in the Scheme.
</TABLE>
<PAGE> 31
<TABLE>
<S> <C>
"Event" the dissolution, liquidation, merger, consolidation, or reorganization of
the Company.
"Group" that group comprising all of the Participating Companies.
"Market Value" on any day the closing sales price in U.S. Dollars of a Share as derived
from the consolidated tape of The New York Stock Exchange for such day or, if
such day was not a trading day or if no Shares were sold on such day, such
closing sales price on the next previous trading day on which a sale occurred.
"Option" a right to purchase Shares under the Scheme.
"Option the certificate embodying an Option
Certificate" granted in accordance with these Rules.
"Participating the Company and any other corporation
Company" which it Controls.
"Plan" the United Asset Management Corporation 1994 Stock Option Plan, of which
this Scheme is an integral part.
"Price" the price determined by the Committee in U.S. Dollars at which each Share subject
to an Option may be acquired on the exercise of that Option, which price
shall be, subject to Rule 5, not less than the higher of:
(i) the par value (if any) of a Share and
(ii) the Market Value of a Share on the Date of Grant of that Option.
"Relevant Emoluments" the meaning given to that term in sub-paragraph (2) of paragraph 28
of Schedule 9 by virtue of subparagraph (4) of that paragraph.
"Rules" the terms of the Scheme, as expressed herein and as amended from time to
time.
"Schedule 9" Schedule 9 to the U.K. Income and Corporation Taxes Act 1988.
"Scheme" this U.K. Subplan, as set forth in these Rules as amended from time to time.
"Share" A share of common stock, U.S. $.01 par value, in the capital of the Company
which satisfies the conditions specified in paragraphs 10 to 14 inclusive of
Schedule 9 and which may either be an authorized but unissued share or a
treasury share.
"Sterling Value" In respect of an Option, the sterling equivalent of the appropriate
Price, calculated by reference to the U.S. Dollar/Sterling exchange rate
prevailing on the Date of Grant of that Option.
</TABLE>
-2-
<PAGE> 32
<TABLE>
<S> <C>
"Subplan A" the portion of the Plan applicable to key employees of, and non-employees
(other than directors of the Company) who provide important services to, a
Participating Company.
"Subplan C" the portion of the Plan applicable to non-employee directors of the
Company.
"Subsisting Option" an Option which has neither lapsed nor been exercised or released, given
up, or surrendered by its holder.
"UK Subplan" the portion of the Plan comprising the Scheme as set forth in these Rules.
"Year of Assessment" year beginning on any 6th April and ending on the following 5th April.
</TABLE>
Where the context permits the singular shall include the plural and
vice versa and the masculine shall include the feminine. References to any Act
or statute shall include any statutory modification, amendment or re-enactment
thereof.
2. GRANT OF OPTION
---------------
2.1 Subject to the terms of these Rules, the Committee may at its
absolute discretion, from time to time, grant Options to any
Eligible Employees under the Scheme by issuing Option
Certificates to them, complying with Rule 2.2 below.
2.2 Each Option Certificate shall be under seal and shall specify:
(i) the Date of Grant of the relevant Option;
(ii) the number of Shares for which the Option is granted
(which shall not be so large that the grant of an
Option for that number of Shares would cause the
applicable limits specified in Rule 3 to be
exceeded);
(iii) the Price at which the relevant Shares can be
acquired; and
(iv) any conditions on the Option imposed by the
Committee, including (without limitation) any vesting
schedule.
In addition each Option Certificate shall indicate that Options cannot
be transferred, assigned or charged and that any purported transfer, assignment
or charge shall cause the relevant Option to lapse forthwith.
Each Option Certificate shall be accompanied by a "form of acceptance"
(as described in Rule 4.3) which shall indicate that the Option to which it
relates will automatically lapse if the Option holder does not sign and return
such form to the Company within 3 months of the Date of Grant.
3. LIMITATIONS
-----------
3.1 Subject to adjustment as provided in Rule 5, the aggregate
number of Shares in respect of which Options may be granted
under the Scheme on any Date of Grant or which my be issued
and sold pursuant to such Options shall not exceed 6,985,367
Shares, less (i) any Shares then subject to any outstanding
incentive stock option granted under Subplan A of the
-3-
<PAGE> 33
Plan or previously issued pursuant to any such incentive stock
option and (ii) any shares that are then subject to any
outstanding non-incentive stock option granted under Subplan A
or Subplan C or previously issued pursuant to any such
non-incentive stock option and are not reacquired shares (as
described in the Preamble to the Plan). If any Option granted
under the Plan shall lapse or shall be released, given up or
surrendered without being fully exercised, the Shares which
have not been purchased under the Option shall again become
available for purposes of the Plan.
3.2 No Option shall be granted to an Eligible Employee if
immediately following such grant he would hold Subsisting
Options with an aggregate Sterling Value exceeding
(pound)30,000.
For the purposes of this Rule 3.2, Options shall include all Options
granted under this Scheme and all options granted under any other
scheme approved under Schedule 9 and established by the Company or any
Associated Company.
3.3 The maximum number of Shares with respect to which any options
may be granted under the Plan (including this UK Subplan) to
any individual during any single calendar year shall be
100,000 Shares.
4. EXERCISE OF OPTIONS
-------------------
4.1 Unless the Committee otherwise agrees, any Option which has
not lapsed may be exercised only after the earliest of the
following events:
(i) the first anniversary of the Date of Grant;
(ii) the death of the Option holder;
(iii) the Option holder ceasing to be an employee of any
Participating Company by reason of injury,
disability, redundancy or retirement or, at the
discretion of the Committee, for any other reason.
Provided always that when granting an Option the Committee may
provide, as regards all or any part(s) of it, that the Option
or such part(s) of it shall not become exercisable under sub
Rules (i), (ii) or (iii) above until after such time(s) as the
Committee may previously have determined. Any such restriction
shall be set forth in the Option Certificate for that Option.
4.2 Once an Option has become exercisable under Rule 4.1 above, it
may be exercised either in whole or in part at any time unless
or until it shall lapse under Rule 4.3 below, but subject in
all cases to Rule 6 below.
4.3 An Option shall lapse on the earliest of the following events:
(i) the expiry of three months from the Date of Grant,
unless the Option holder has previously given notice
to the Company of his acceptance of the Scheme's
Rules using the form of acceptance supplied to him
with the relevant Option Certificate;
(ii) subject to a shorter period specified in the Option
Certificate, the tenth anniversary of the Date of
Grant;
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<PAGE> 34
(iii) subject to a shorter period specified in the Option
Certificate, the first anniversary of the Option
holder's death;
(iv) the Option holder ceasing to be an employee of any
Participating Company by reason of gross misconduct;
(v) subject to a shorter period specified in the Option
Certificate, the expiry of three months after the
date on which the Option holder ceases to be an
employee of any Participating Company otherwise than
by reason of death or gross misconduct in
circumstances in which sub-clause (iv) applies;
(vi) the Option holder being adjudicated bankrupt; and
(vii) the first date upon which the Option holder purports
to transfer, assign or charge the Option.
5. VARIATION OF SHARE CAPITAL
--------------------------
In the event of any capitalization or rights issue or any stock split
or stock dividend or any consolidation, sub-division or reduction of
capital by the Company, the number of Shares subject to any Option and
the Price payable for each of those Shares shall be adjusted in such
manner as the Auditors confirm to be fair and reasonable provided that:
(i) the aggregate amount payable on the exercise of any
Option in full is not increased;
(ii) the Price of a Share is not reduced below its par
value if any;
(iii) no adjustments shall be made without the prior
approval of the Board of Inland Revenue; and
(iv) following the adjustment the Shares continue to
satisfy the conditions specified in paragraphs 10 to
14 inclusive of Schedule 9.
6. MANNER OF EXERCISE OF OPTIONS
-----------------------------
6.1 No Option may be exercised by an individual at any time when
he is precluded by paragraph 8 of Schedule 9 from
participating in the Scheme.
6.2 An Option shall be exercised by the Option holder, or as the
case may be his personal representative, giving notice to the
Company in writing of the number of Shares in respect of which
he wishes to exercise the Option and making arrangements
reasonably acceptable to the Committee for payment of the
appropriate amount, and submitting the relevant Option
Certificate. Any such notice shall be effective on the date of
its receipt by the Company.
6.3 Shares shall be allocated and issued pursuant to a notice of
exercise within 30 days of the date of exercise.
7. RIGHTS ATTACHING TO SHARES
--------------------------
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<PAGE> 35
All Shares allocated pursuant to the exercise of an Option shall rank
pari passu in all respects with all other Shares in issue at the date
of such allocation.
8. AVAILABILITY OF SHARES
----------------------
The Company shall at all times procure that it can secure the issue or
the transfer of sufficient Shares to permit the exercise of all
Subsisting Options.
9. LOSS OF OFFICE
--------------
If any Option holder shall cease to be an employee of a Participating
Company within the Group for any reason, he shall not be entitled by
way of compensation for loss of office or otherwise howsoever to any
sum or other benefit to compensate him for any loss of any right under
the Scheme, and in returning the form of acceptance referred to in Rule
4.3 he shall be deemed to have agreed to this.
10. ADMINISTRATION AND AMENDMENT
----------------------------
10.1 No member of the Committee or the Board shall be held liable
for any action or determination made in good faith with
respect to the Plan, the UK Subplan, these Rules or any Option
granted hereunder.
10.2 The cost of establishing and operating the Scheme shall be
borne by the Participating Companies in such proportions as
the Board shall determine.
10.3 The Board may from time to time suspend or terminate the Plan
and/or the UK Subplan or amend these Rules or the form of
Option Certificate, provided that:
(i) no such action may, without approval or ratification
by the Company's shareholders, increase the maximum
number of Shares reserved under the UK Subplan
(except as provided in Rule 5) or under the Plan
(except as otherwise expressly provided in the Plan),
alter the class or classes of employees eligible for
Options, or make any other such change which,
pursuant to Section 16(b) of the Act and the rules
and regulations promulgated thereunder, requires
action by the Company's shareholders;
(ii) except as provided in Rule 10.5, no such action may
detrimentally affect an Option holder as regards an
Option granted prior to the taking of such action;
and
(iii) no amendment to these Rules shall have effect until
approved by the Board of the Inland Revenue.
10.4 The Scheme shall be administered by the Committee, the members
of which shall be appointed by and shall serve at the pleasure
of the Board (subject to the restrictions of this Rule 10.4).
Notwithstanding the foregoing, until and unless the Board
shall have constituted the Committee pursuant to this Rule
10.4, the committee serving from time to time as administrator
of the Plan generally shall also serve as the Committee for
purposes of the UK Subplan. Actions taken by a majority of the
members present at any meeting of the Committee at which a
quorum is present, and any acts approved in writing by all
members of the Committee without a meeting, shall constitute
the acts of the Committee. The Committee shall have all powers
of administration granted under these Rules, except such
powers as are
-6-
<PAGE> 36
expressly reserved to the Board. The Committee is authorized
to interpret these Rules and, subject to the provisions of
Rule 10.3, to prescribe, amend, and rescind rules and
regulations relating thereto. The Committee is further
authorized, subject to the express provisions of the Plan and
these Rules, to alter or amend the form of Option Certificate
pursuant to which Options may be granted under the Scheme from
time to time and to make all determinations necessary or
advisable in the administration of the Scheme. The
interpretation and administration by the Committee of any
provisions of the Plan and the UK Subplan, including these
Rules, and any Option Certificate issued pursuant to the
Scheme shall be final, binding and conclusive on all persons
having any interest therein.
10.5 Prior to the occurrence of an Event, the Board may elect to
terminate each Subsisting Option. If the Board so elects, such
Option shall terminate as of the effective date of the Event,
but the Board shall suspend the exercise of all Subsisting
Options a reasonable time prior to the Event, giving each
Option holder not less than fourteen days written notice of
the date of suspension, prior to which an Option holder may
purchase in whole or in part the Shares available to him as of
the date of receipt of the notice. If the Event is not
consummated, the suspension shall be removed and all Options
shall continue in full force and effect, subject to the terms
of their respective Option Certificates.
10.6 Any notice or communication to be given by or on behalf of the
Company to any Eligible Employee may be given by personal
delivery or by sending the same by ordinary post to his last
known address in which case it shall be deemed to have been
received on the day after it was posted. Any notice, document,
option, share certificate or other communication sent by post
shall be sent at the risk of the Eligible Employee involved.
10.7 Unless otherwise provided any notice or other communication to
be given by an Eligible Employee to the Company shall be
regarded as having been properly given if sent or delivered to
the company secretary of the Participating Company by whom he
is employed at that company's registered office, any such
communication being effective only upon receipt.
10.8 The Scheme shall at all times be read in accordance with the
provisions of the U.K. Income and Corporation Taxes Act 1988
and insofar as any of its Rules shall be inconsistent with any
of the said provisions and/or with any requirements of the
Board of Inland Revenue necessary for its approval or
continued approval under the said Act they shall be deemed
automatically varied or deleted in such a way as to ensure
compliance with the same.
-7-
<PAGE> 37
3/19/97
SUBPLAN C - NON-EMPLOYEE ("ELIGIBLE") DIRECTOR PORTION
OF AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE OF SUBPLAN C
The purpose of this Subplan C is to grant options to purchase shares of
the common stock, $.01 par value (the "Common Stock"), of United Asset
Management Corporation (the "Company") to Eligible Directors (as defined in
Section 4 of this Subplan) of the Company at market value on the date of grant,
and to permit the granting of stock options to Eligible Directors at an exercise
price less than market value at the date of grant as an alternative to the
payment of Directors' fees in cash. The Company believes that the granting of
such options will serve to enhance the Company's ability to attract and retain
the services of such persons, to provide additional incentives to them and to
encourage the highest level of performance by them by offering them a
proprietary interest in the Company's success. The Company also believes that
the Plan will encourage directors to make greater equity investment in the
Company, more closely aligning the interests of the directors and the
stockholders.
2. SHARES RESERVED UNDER SUBPLAN C
Subject to the adjustment provided in Section 8, the aggregate number
of shares of Common Stock which may be issued and sold pursuant to options
granted under this Subplan C of the Plan shall not exceed 800,000 shares (or, if
less, the then remaining aggregate number of shares determined in accordance
with the Preamble to the Plan), which may be either authorized but unissued
shares or treasury shares. If any option granted under the Plan shall terminate
or expire without being fully exercised, the shares which have not been
purchased will again become available for purposes of the Plan.
3. ADMINISTRATION
This Subplan C shall be interpreted and administered by a committee
(the "Committee") consisting of not less than three (3) members of the Board of
Directors of the Company (the "Board") appointed pursuant to Section 3 of
Subplan A of the Plan. The interpretation and administration by the Committee of
any provisions of the Plan and any option granted thereunder shall be final and
conclusive on all persons having any interest therein.
No members of the Committee or the Board shall be held liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
<PAGE> 38
4. OPTION GRANTS
"Eligible Directors" shall mean directors of the Company who are
directors on the date of grant and who are not officers or employees of the
Company. All options granted under this Subplan C shall be non-incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
(a) REGULAR OPTIONS
Each Eligible Director who is such on the 30th day
following the date on which each Annual Meeting of the
Stockholders of the Company (the "Annual Meeting") is held
during the term of the Plan shall on such 30th day be granted
a stock option to purchase 14,000 shares of Common Stock. Each
such option is defined herein as a "Regular Option."
The date of grant of an option to an Eligible
Director under this Subplan C shall be the applicable day
referred to immediately above.
(b) DISCOUNTED OPTIONS
(i) Subject to such other rules as the Committee
may adopt from time to time, during the term of the Plan,
options to purchase Common Stock at a discount from fair
market value on the date of grant ("Discounted Options") shall
be granted to any Eligible Director who, no later than June
30, with respect to the six-month period following such date,
and no later than December 31, with respect to the six-month
period following such date (each six month period, a
"Semi-Annual Period"), has filed with the Company an
irrevocable election to receive a stock option in lieu of all
or a specified portion (expressed in terms of a percentage of
the Semi-Annual Fee) of the Semi-Annual Fee (as defined in
Subsection 4(b) (iii)) earned or expected to be earned by such
Director for the Semi-Annual Period specified in the election.
(ii) Discounted Options shall be granted to an
electing Eligible Director on the first day (July 1 or January
1) of each applicable Semi-Annual Period.
A separate election must be made for each Semi-Annual
Period, although a Director may specify that a particular
election shall apply to future Semi-Annual Periods unless
amended or revoked; provided, however, that no amendment or
revocation may be made with respect to a Semi-Annual Period
after the applicable election date for such Semi-Annual
Period. The Director shall not be entitled to receive in cash
any portion of the Semi-Annual Fee for which an election has
been made to receive an option.
2
<PAGE> 39
(iii) Option Formula. The number of shares
of Common Stock subject to each Discounted Option granted to
any Eligible Director for a Semi-Annual Period shall be equal
to the nearest number of whole shares of Common Stock, with
cash payment for fractional shares, determined in accordance
with the following formula:
Semi--Annual Fee
----------------------- = Number of Shares
Fair Market Value minus
Discounted Option Price
"Discounted Option Price" and "Fair Market Value" shall be defined as
set forth in Section 5 below. "Semi-Annual Fee" shall mean the quarterly
retainer fees which the Director will be entitled to receive during a
Semi-Annual Period for serving as a Director pursuant to the policy in effect
for each year during the term of the Plan, but expressly excluding fees paid for
attendance at or participation in meetings of the Board or any committee
thereof; provided, however, that if a Director elects to receive a stock option
in lieu of only a portion of the Semi-Annual Fee, the Semi-Annual Fee for
purposes of the foregoing formula shall equal the portion of the Semi-Annual Fee
so elected. For purposes of this Subplan C, "Semi-Annual Fee" shall also not
include expenses reimbursed by the Company for attendance at or participation in
meetings of the Board or any committee of the Board or fees for any other
services to be provided to the Company.
5. OPTION PRICE
(a) REGULAR OPTION
The price per share at which each Regular Option
granted under this Subplan C to an Eligible Director may be
exercised ("Regular Option Price") shall be the fair market
value of the Common Stock as determined by the closing sales
price of such Common Stock on the consolidated tape of the
principal exchange on which such Common Stock is traded on the
date of grant, or if there are no sales on such date, on the
trading day next preceding the date of grant on which a sale
took place, or, if the Common Stock is not so traded, then as
determined by a principal market maker for such Common Stock
selected by the Committee ("Fair Market Value").
(b) DISCOUNTED STOCK OPTIONS
The price per share at which each Discounted Option
granted under this Subplan C to an Eligible Director may be
exercised (the "Discounted Option Price," the Regular Option
Price and the Discounted Option Price being sometimes
hereinafter referred to as the "Option Price") shall be
seventy-five percent (75%) of the Fair Market Value of the
Common Stock on the date the Discounted Option is granted.
3
<PAGE> 40
(c) In no event shall the Option Price per share for any option
under this Subplan C be less than the par value per share.
6. TERMS OF GRANT
Each option granted under this Subplan C shall be evidenced by and
subject to the terms and conditions of an Option Grant attached hereto as
Exhibit A. Each Option Grant executed and delivered to an Eligible Director
shall contain the following terms and conditions. Each option shall expire 5
years from the date of grant of such option, and shall be exercisable in full
beginning on or after the date which is 6 months after the date of grant
thereof. Each Eligible Director to whom an option is granted may exercise such
option from time to time, in whole or in part, during the period that it is
exercisable, by payment of the Option Price of each share purchased, in cash, or
by delivery to the Company of a number of shares of Common Stock having an
aggregate Fair Market Value of not less than the product of the Option Price
multiplied by the number of shares the participant intends to purchase upon
exercise of the option on the date of delivery. The shares of Common Stock
issued upon exercise of an option granted under this Subplan C will be acquired
for investment and not with a view to distribution thereof unless there shall be
an effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), with respect thereto. In the event that the Company, upon the
advice of counsel, deems it necessary to list upon official notice of issuance
shares to be issued pursuant to the Plan on a national securities exchange or to
register under the 1933 Act or other applicable federal or state statute any
shares to be issued pursuant to the Plan, or to qualify any such shares for
exemption from the registration requirements of the 1933 Act under the Rules and
Regulations of the Securities and Exchange Commission or for similar exemption
under state law, then the Company shall notify each Eligible Director to that
effect and no shares of Common Stock subject to an option shall be issued until
such registration, listing or exemption has been obtained. The Company shall
make prompt application for any such registration, listing or exemption pursuant
to federal or state law or rules of such securities exchange which it deems
necessary and shall make reasonable efforts to cause such registration, listing
or exemption to become and remain effective. Nothing in this Subplan C or in the
Option Grant will confer upon any Eligible Director the right to continue as a
director of the Company. The shares of Common Stock issued on exercise of the
option shall be subject to any restrictions on transfer then in effect pursuant
to the Certificate of Incorporation or Bylaws of the Company.
Options granted under this Subplan C shall be transferable (subject to
any terms and conditions imposed by the Committee) by the optionee, either
directly or in trust, to one or more members of the optionee's family. Following
any transfer permitted pursuant to this paragraph, of which the optionee has
notified the Committee in writing, such option may be exercised by the
transferee(s), subject to all terms and conditions of the Option Grant. For
these purposes, the members of the optionee's family are only the optionee's:
(i) spouse; (ii) lineal descendants; (iii) lineal ancestors; and (iv) siblings
and spouses and children of such siblings.
4
<PAGE> 41
7. TERMINATION OF DIRECTORSHIP
An Eligible Director's right to participate in this Subplan C shall
automatically terminate if and when such Director becomes an employee of the
Company. Options granted to an Eligible Director shall cease to be exercisable 6
months after the date such Director ceases to be a director for any reason other
than death. If an Eligible Director ceases to be a director on account of his
death, any option previously granted to him, whether or not exercisable at the
date of death, may be exercised by his executor, administrator or the person or
persons to whom his rights under the option shall pass by will or the applicable
laws of descent and distribution, at any time within 12 months after the date of
death, but in no event after the expiration of the option.
8. ADJUSTMENT OF SHARES RESERVED UNDER THE PLAN
The aggregate number and kind of shares that may be issued under this
Subplan C, the maximum number of shares as to which options may be granted to
any individual and the Option Price per share shall be appropriately adjusted by
the Board in the event of any recapitalization, stock split, stock dividend,
combination of shares, or other similar change in the capitalization of the
Company, but no adjustment in the Option Price shall be made which would reduce
the Option Price per share to less than the par value per share.
9. DISSOLUTION OR REORGANIZATION
Prior to a dissolution, liquidation, merger, consolidation, or
reorganization of the Company (the "Event"), the Board may decide to terminate
each outstanding option. If the Board so decides, such option shall terminate as
of the effective date of the Event, but the Board shall suspend the exercise of
all outstanding options a reasonable time prior to the Event, giving each
optionee not less than fourteen days written notice of the date of suspension,
prior to which an optionee may purchase in whole or in part the shares available
to him as of the date of receipt of the notice. If the Event is not consummated,
the suspension shall be removed and all options shall continue in full force and
effect subject to the terms of their respective Option Grants.
10. AMENDMENT AND TERMINATION OF SUBPLAN C
The Board may amend, suspend, or terminate this Subplan C, including the form of
Option Grant incorporated herein by reference. No such action, however, may,
without approval or ratification by the shareholders, increase the maximum
number of shares reserved under this Subplan C except as provided in Section 8,
alter the class or classes of individuals eligible for options, or make any
other change which, pursuant to the Code or regulations thereunder or Section
16(b) of the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, requires action by the shareholders. No such action may,
without the consent of the holder of the option, alter or impair any option
previously granted.
5
<PAGE> 42
[set vertically on left side of page] P R O X Y
DETACH HERE UAM2
UNITED ASSET MANAGEMENT CORPORATION
MEETING OF STOCKHOLDERS - MAY 15, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF UNITED ASSET MANAGEMENT CORPORATION
The undersigned stockholder in United Asset Management Corporation (the
"Company") hereby appoints Norton H. Reamer, John F. McNamara, and William H.
Park, and each of them, attorneys, agents and proxies, with power of
substitution to each, to vote all shares of Common Stock that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at The Four Seasons Hotel, 200 Boylston Street, Boston, Massachusetts on May 15,
1997 at 9:30 a.m., Eastern Daylight Savings Time, and any adjournments thereof.
Also to vote and act upon any other business which may properly come
before the meeting or any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
undersigned.
IF NO CONTRARY INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES FOR DIRECTORS LISTED ON THE REVERSE SIDE AND IN FAVOR OF PROPOSALS 2,
3 AND 4.
-----------
|SEE REVERSE|
(PLEASE SIGN AND DATE ON REVERSE) | SIDE |
<PAGE> 43
<TABLE>
<S> <C>
DETACH HERE UAM3
| X | PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
FOR AGAINST ABSTAIN
1. To fix the number of persons constituting the full Board of 2. To approve the compensation | | | | | |
Directos at fourteen and to elect the following nominees as arrangements for certain executive
Directors; Harold J. Baxter, J. Duncan Campbell, Jr., officers as described in the
John P. Clay, Robert J. Greenebaum, Beverly L. Hamilton, Company's Proxy Statement.
Bryant M. Hanley, Jr., Jay O. Light, John F. McNamara,
Norton H. Reamer, David I. Russell, Philip Scaturro,
John A. Shano, Larry D. Tashjian and Barbara S. Thomas.
FOR AGAINST ABSTAIN
FOR | | WITHHELD | | MARK HERE | | 3. To approve the UAM Amended and | | | | | |
all from all IF YOU PLAN Restated 1994 Stock Option Plan.
nominees nominees TO ATTEND
THE MEETING
FOR AGAINST ABSTAIN
| | MARK HERE | | 4. To approve the selection of Price | | | | | |
FOR ADDRESS Waterhouse LLP as independent
FOR all nominees except as noted. CHANGE AND accountants of the Company for the
(To withhold authority to vote for NOTE BELOW current fiscal year ending
any individual nominee, print that December 31, 1997.
nominee's name(s) above.)
Please sign exactly as your name is printed hereon. When signing as
attorney-in-fact, executor, administrator, trustee or guardian, please
give title.
Signature: ____________________________________ Date: ___________ Signature: ____________________________________ Date: ___________
</TABLE>
