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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT / / FILED BY A PARTY OTHER THAN THE REGISTRANT / /
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Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-ll(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
UNITED ASSET MANAGEMENT CORPORATION
(Name of Registrant as Specified In Its Charter)
(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 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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UNITED ASSET MANAGEMENT CORPORATION NORTON H. REAMER
One International Place Chairman of the Board
Boston, Massachusetts 02110 and Chief Executive Officer
March 26, 1999
Dear Stockholder:
[UAM LOGO]
I am pleased to invite you to attend United Asset Management
Corporation's 1999 Annual Meeting of Stockholders on Thursday, May
20, 1999. We will hold the meeting at 9:30 a.m. at The Boston
Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts. Annual
meetings play an important role in maintaining communications and
understanding among Management, the Board of Directors and our
stockholders, and I hope that you will be able to join us.
On the pages following this letter you will find the Notice of
Annual Meeting of Stockholders, which lists the matters to be
considered at the Annual Meeting, and the Proxy Statement, which
describes the matters listed in the Notice. In this mailing, we
have also enclosed UAM's 1998 Annual Report.
If you are a shareholder of record, we have enclosed your Proxy
Card, which allows you to vote on these matters. Simply mark,
sign, date and mail your Proxy Card to our transfer agent, Boston
EquiServe, L.P., in the enclosed postage-paid envelope. Of course,
you may attend the Annual Meeting and vote in person, even if you
have sent in a Proxy Card.
If your shares are held in the name of a bank, broker or other
holder of record, you will receive instructions from the holder of
record that you must follow in order for your shares to be voted.
THE ABILITY TO HAVE YOUR VOTE COUNTED AT THE ANNUAL MEETING IS AN
IMPORTANT STOCKHOLDER RIGHT, AND I HOPE YOU WILL CAST YOUR VOTE IN
PERSON OR BY PROXY REGARDLESS OF THE NUMBER OF SHARES YOU HOLD.
Sincerely yours,
[SIGNATURE OF NORTON H. REAMER]
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UNITED ASSET MANAGEMENT CORPORATION
One International Place
Boston, Massachusetts 02110
Notice of Annual Meeting of Stockholders
TIME........................... 9:30 a.m. on Thursday, May 20, 1999
PLACE.......................... The Boston Harbor Hotel, 70 Rowes Wharf, Boston,
Massachusetts
ITEMS OF BUSINESS.............. (1) To elect directors to serve until the next
Annual Meeting of Stockholders and until
their successors are elected and qualified.
(2) To ratify the selection of
PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year
ending December 31, 1999.
(3) To transact such other business as may
properly come before the Annual Meeting and
any adjournment or postponement of the
Annual Meeting.
RECORD DATE.................... You can vote if you are a stockholder of record
at the close of business on Monday, March 22,
1999.
ANNUAL REPORT.................. We have enclosed UAM's 1998 Annual Report, which
is not a part of the proxy solicitation
material.
PROXY VOTING................... It is important that your shares be represented
and voted at the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, please
mark, sign, date and promptly mail your Proxy
Card to our transfer agent, Boston EquiServe,
L.P., in the enclosed postage-paid envelope.
You may revoke your proxy at any time prior to
its exercise at the Annual Meeting.
Joseph R. Ramrath
Secretary
March 26, 1999
[UAM LOGO]
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TABLE OF CONTENTS
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<TABLE>
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PAGE
----
<S> <C>
PROXY STATEMENT............................................. 1
Stockholders Entitled to Vote.......................... 1
Proxies................................................ 1
Voting at the Annual Meeting........................... 1
Voting on Other Matters................................ 1
Required Vote.......................................... 1
Cost of Proxy Solicitation............................. 2
Stockholder Account Maintenance........................ 2
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 2
GOVERNANCE OF THE COMPANY................................... 2
The Board of Directors................................. 2
The Audit Committee.................................... 2
The Compensation Committee............................. 3
The Executive Committee................................ 3
Compensation of Directors.............................. 3
Related Transactions................................... 4
Indemnification........................................ 4
ITEM 1 -- ELECTION OF DIRECTORS............................. 4
ITEM 2 -- SELECTION OF INDEPENDENT ACCOUNTANTS.............. 7
OWNERSHIP OF UAM'S COMMON STOCK............................. 7
Security Ownership of Management....................... 7
Security Ownership of Certain Beneficial Owners as of
December 31, 1998..................................... 8
EXECUTIVE OFFICERS.......................................... 9
EXECUTIVE COMPENSATION...................................... 10
Summary Compensation Table............................. 10
Total Option Exercises in 1998 and Year-End Values..... 11
Option Grants in 1998.................................. 11
Certain Employment Arrangements........................ 12
Employment Contracts.............................. 12
Compensation on Termination of Employment......... 12
Change-in-Control Arrangements.................... 12
Compensation Committee Report.......................... 13
Performance Graph...................................... 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 17
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY
PROPOSALS, NOMINATION OF DIRECTORS AND OTHER BUSINESS OF
STOCKHOLDERS.............................................. 17
</TABLE>
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UNITED ASSET MANAGEMENT CORPORATION
One International Place
Boston, Massachusetts 02110
PROXY STATEMENT
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The Board of Directors of United Asset Management Corporation (the "Company,"
"UAM," "we" or "us"), a Delaware corporation, is soliciting proxies to be voted
at our Annual Meeting of Stockholders and at any adjournment or postponement of
the Annual Meeting. We are delivering these proxy materials in connection with
this solicitation.
You are invited to attend our Annual Meeting of Stockholders on Thursday, May
20, 1999, beginning at 9:30 a.m. The Annual Meeting will be held at The Boston
Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts. The meeting room is
accessible to disabled persons and, upon request, we will provide equipment for
hearing amplification or sign interpretation. Please call us in advance at
617-261-7342 if you require either of these services or other special
accommodations.
This Proxy Statement, Proxy Card and voting instructions are being mailed on
Friday, March 26, 1999. In addition, we are enclosing a copy of UAM's 1998
Annual Report.
STOCKHOLDERS ENTITLED TO VOTE
Holders of record of UAM common stock at the close of business on Monday, March
22, 1999 are entitled to receive this notice and to vote their shares at the
Annual Meeting. As of that date, there were 59,609,136 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter
properly brought before the Annual Meeting.
A list of stockholders entitled to vote will be available at the Annual Meeting
and for 10 days prior to the Annual Meeting, between the hours of 8:30 a.m. and
5:30 p.m., at our offices at One International Place, Boston, Massachusetts
02110, by contacting the Secretary of the Company.
PROXIES
Your vote is important. Stockholders of record may vote their proxies by
marking, signing, dating and mailing a Proxy Card to our transfer agent, Boston
EquiServe, L.P. If you are a stockholder of record, we have enclosed a
postage-paid envelope. Stockholders whose shares are held in the name of a bank,
broker or other holder of record will receive instructions from the holder of
record explaining how your shares may be voted.
You may revoke your proxy at any time before the vote at the Annual Meeting by
(1) written notice to the Secretary of the Company, (2) timely delivery of a
valid later-dated proxy or (3) voting by ballot at the Annual Meeting.
VOTING AT THE ANNUAL MEETING
Returning a proxy now will in no way limit your right to vote at the Annual
Meeting if you later decide to attend in person. If your shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
Annual Meeting. All shares that have been properly voted by proxy and not
revoked will be voted at the Annual Meeting in accordance with your
instructions. If you sign your Proxy Card but do not give voting instructions,
the persons named as proxies will vote your shares as recommended by the Board
of Directors.
VOTING ON OTHER MATTERS
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed form of Proxy Card will have
the discretion to vote on those matters for you. At the date this Proxy
Statement went to press, we do not know of any other matters to be raised at the
Annual Meeting.
REQUIRED VOTE
The necessary quorum at the Annual Meeting is the presence, in person or by
proxy, of the holders of a majority of the shares of UAM common stock that are
outstanding and entitled to vote. For purposes of determining a quorum,
abstentions and broker "nonvotes" are counted as present and entitled to vote. A
broker "nonvote" occurs when a nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary voting power for that particular item and has not received
instructions from the beneficial owner.
A plurality of the votes cast is required for the election of Directors, meaning
that the Director nominee with the most affirmative votes for a particular seat
is elected for that seat. Abstentions are not counted for purposes of the
election of Directors. Brokers have discretionary voting power in the election
of Directors.
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The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote on the matter is
required to ratify the selection of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending December 31, 1999.
Abstentions are effectively counted as votes against this ratification. Brokers
have discretionary voting power in the ratification of independent accountants.
COST OF PROXY SOLICITATION
We will pay the expenses of soliciting proxies. Proxies may be solicited on our
behalf by Directors, officers or employees in person or by telephone, electronic
mail, facsimile transmission or by telegram. We will not pay additional
compensation to these individuals for soliciting proxies. We will also request
banks, brokers and other nominees holding shares for a beneficial owner to
forward copies of the proxy material to those beneficial owners and to request
instructions for voting those shares. We will reimburse these banks, brokers and
other nominees for their related reasonable expenses.
STOCKHOLDER ACCOUNT MAINTENANCE
Our transfer agent is Boston EquiServe, L.P. All communications concerning
accounts of stockholders of record, including address changes, name changes,
inquiries as to requirements to transfer shares of common stock and similar
issues can be handled by calling them at
800-733-5001 or 781-575-3400 or by contacting Boston EquiServe's website at
www.equiserve.com. For other information about UAM, stockholders can visit our
website at www.uam.com.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our Directors and
executive officers to file reports of holdings and transactions in UAM common
stock with the SEC and the New York Stock Exchange. Based on our records and
other information, we believe that in 1998 our Directors and executive officers
met all applicable SEC filings requirements under Section 16(a), with the
following exceptions. George E. Handtmann, III, a Director of UAM, failed to
accurately report holdings on the Form 3 that he filed following his election as
a Director. This filing was subsequently corrected. J. Duncan Campbell, Jr., a
Director of UAM until May 21, 1998, failed to file on a timely basis a report on
Form 4 with respect to one transaction. Robert J. Greenebaum, a Director of UAM,
failed to file on a timely basis a report on Form 4 with respect to one
transaction and a report on Form 5 with respect to one transaction. These
transactions were subsequently reported.
GOVERNANCE OF THE COMPANY
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THE BOARD OF DIRECTORS
UAM is governed by a Board of Directors that presently consists of 13 Directors.
During 1998, the Board met seven times. The Board has three ongoing committees:
an Audit Committee, a Compensation Committee and an Executive Committee. During
1998, no Director attended fewer than 75% of the total of the number of Board
meetings and the number of meetings held by committees on which the Director
served.
The nominees for election as Directors are identified below under "Item
1 -- Election of Directors."
THE AUDIT COMMITTEE
The Audit Committee consists of Directors who meet the requirements of Section
303 of The New York Stock Exchange Listed Company Manual and, therefore, are
considered independent of management of the Company. The Committee is
responsible annually for recommending the Board's selection of the public
accounting firm to be our independent accountants, subject to ratification by
the stockholders. Under the charter adopted by the Board, the Committee:
* reviews with the independent accountants the scope of the audit, the
auditors' fees and related matters;
* receives copies of the annual comments from the independent accountants on
accounting procedures and systems of control;
* reviews with the independent accountants any questions, comments or
suggestions they may have relating to our internal controls, accounting
practices or procedures or those of our affiliates;
* reviews with management and the independent accountants our annual and
quarterly financial statements and any material changes in accounting
principles or practices used in preparing the statements;
* reviews the programs of our Finance Group, including procedures for assuring
implementation of accepted
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recommendations made by the independent accountants; and
* reviews compliance with laws, regulations and internal procedures, and
contingent liabilities and risks that may be material to us.
During 1998, the Committee met four times. The current composition of the
Committee is:
John A. Shane, Chairman
Robert J. Greenebaum
Beverly L. Hamilton
Barbara S. Thomas
THE COMPENSATION COMMITTEE
Generally, the Compensation Committee consists entirely of Directors who qualify
as "outside" directors under Internal Revenue Code Section 162(m) and as
"nonemployee" directors under Rule 16b-3 under the Securities Exchange Act of
1934. (During a portion of 1998, Mr. Scaturro did not qualify as a nonemployee
director under Rule 16b-3 because of an engagement of Allen & Company
Incorporated by UAM. See "Governance of the Company -- Related Transactions."
Therefore, he abstained from all votes of the Committee during that period with
respect to equity security awards to "reporting persons" under Section 16 of the
Securities Exchange Act of 1934. Because of a new engagement of Allen & Company
Incorporated by UAM, Mr. Scaturro does not presently qualify as a nonemployee
director under Rule 16b-3, and therefore he is presently abstaining from such
votes.)
Under the charter adopted by the Board, the Committee is responsible for
establishing annual and long-term performance goals for our senior officers.
This responsibility includes establishing the compensation and evaluating the
performance of the Chairman and Chief Executive Officer and other executive
officers. In addition, the Committee:
* grants options and awards under UAM's stock option plans and deferred
compensation plans;
* administers UAM's stock option plans and deferred compensation plans;
* monitors compliance by certain executive officers with our program of
required UAM stock ownership; and
* publishes an annual Compensation Committee Report for the stockholders.
During 1998, the Committee met eight times. The current composition of the
Committee is:
Philip Scaturro, Chairman
Robert J. Greenebaum
Barbara S. Thomas
THE EXECUTIVE COMMITTEE
The Executive Committee performs such duties and exercises the powers delegated
to the Committee by the Board of Directors. During 1998, the Committee met four
times. The current composition of the Committee is:
Norton H. Reamer, Chairman
Jay O. Light
Philip Scaturro
John A. Shane
COMPENSATION OF DIRECTORS
UAM does not pay additional compensation to Directors who are employed by UAM or
one of its affiliates. UAM does have an overall compensation program for
nonemployee Directors, which is reviewed annually in July.
Annual Cash Retainer Fees UAM pays nonemployee Directors an annual cash retainer
fee of $30,000. UAM pays nonemployee Directors who serve on the Audit or
Compensation Committee an additional annual fee of $9,000 per committee. Until
October 1, 1998, UAM paid nonemployee Directors who serve on the Executive
Committee an additional annual fee of $9,000. Effective October 1, 1998, this
annual fee rate was raised to $12,000. In addition, UAM pays the chairman of
each of the Audit Committee and the Compensation Committee an additional annual
fee of $2,000.
Meeting Fees UAM also pays nonemployee Directors a fee of $5,500 for attending
each regular Board meeting and our annual Planning Meeting. UAM does not pay any
fees for attendance at committee meetings.
Regular Stock Options Under UAM's Amended and Restated 1994 Stock Option Plan,
as approved by our stockholders, on the 30th day after each annual meeting of
stockholders, all of our nonemployee Directors receive nonqualified stock
options to purchase 14,000 shares of common stock. The exercise price per share
for these options is the closing price of our common stock on the grant date.
These options are exercisable in full beginning six months after the date of
grant. These options terminate five years from the date of grant or, if sooner,
six months after the Director's Board service ends.
Retainer Stock Options UAM's Amended and Restated 1994 Stock Option Plan
entitles all of our nonemployee
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Directors to elect on a semiannual basis to receive discounted stock options in
lieu of all or any portion of their annual cash retainer fee. The exercise price
per share for these options is 75% of the closing price of our common stock on
the grant date. The number of shares of stock under option equals the amount of
the annual cash retainer fee foregone divided by 25% of the closing price of our
stock on the date of grant. For example, if a Director elects to receive options
in lieu of her entire annual cash retainer fee for a particular six-month period
($15,000) and the closing price of our stock is $24.00 on the date of grant, she
will receive an option to purchase 2,500 shares ($15,000 divided by $6.00) at
$18.00 per share. These options are exercisable in full beginning six months
after the date of grant. These options terminate five years from the date of
grant or, if sooner, six months after the Director's Board service ends.
RELATED TRANSACTIONS
During 1998, UAM and its affiliates were parties to certain transactions in
which our Directors had an interest.
During 1998, we engaged David I. Russell under a contract to provide consulting
services in connection with our business interests in Europe for an annual fee
of $275,000. We are currently continuing this engagement in 1999, although Mr.
Russell's time commitment has been reduced and his annual rate of compensation
has been reduced to $225,000.
From time to time in 1998, we asked Professor Jay O. Light to provide consulting
services in connection with our strategic planning. We paid him approximately
$27,500 for these services. We anticipate that Professor Light will continue to
provide similar services to us in the future, and we will pay him based on his
standard hourly rate.
In December 1997, UAM Shareholder Service Center, Inc., an affiliate of UAM,
entered into a nine-year sublease of office space from Pilgrim Baxter &
Associates, Ltd., also an affiliate of UAM. Harold J. Baxter is Chairman, Chief
Executive Officer and a revenue sharing principal of Pilgrim Baxter. Rent under
the sublease is calculated from a base annual rate of approximately $780,000,
which increases annually on November 1 by approximately 2% per year. During
1998, payments to Pilgrim Baxter under this sublease totaled approximately
$781,000.
Philip Scaturro is an Executive Vice President and a Managing Director of Allen
& Company Incorporated. In 1998, we engaged Allen & Company Incorporated to
provide investment banking services in connection with a proposed sale of a UAM
affiliate. Under the contract, we did not incur any fee for this engagement,
because no transaction was completed. In the first quarter of 1999, we engaged
Allen & Company Incorporated to provide services in connection with a possible
sale of certain assets of UAM. We will not incur any fees for this engagement
unless a transaction is closed.
We believe that each of these transactions is on terms that are no less
favorable to UAM or its affiliates than could be obtained from unaffiliated
third parties.
INDEMNIFICATION
We indemnify our Directors and officers to the fullest extent permitted by law
for their acts or omissions in their capacity as a Director or officer of UAM,
so that they will serve free from undue concern for liability for actions taken
on behalf of UAM. This is required under our By-laws.
ITEM 1 -- ELECTION OF DIRECTORS
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UAM's By-laws provide that the Board shall consist of between one and 15
Directors. From time to time, the number of Directors is determined by the Board
or at an annual meeting of stockholders. Most recently, the Board has fixed the
number of Directors at 13.
The persons named in the enclosed Proxy Card intend to vote the proxy for the
election of each of the 13 nominees, unless you indicate on the Proxy Card that
your vote should be withheld from any or all of these nominees. Each nominee
elected as a Director will continue in office until his or her successor has
been elected, or until his or her death, resignation or retirement.
We expect each nominee for election as a Director to be able to serve if
elected. If any nominee is not able to serve, proxies will be voted in favor of
the remainder of those nominated and may be voted for substitute nominees,
unless the Board chooses to reduce the number of Directors serving on the Board.
The principal occupation and certain other information about the nominees are
presented in the following table.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING
NOMINEES FOR ELECTION AS DIRECTORS.
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<TABLE>
<CAPTION>
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Name and Age as of the May 20, 1999 Meeting Date Position, Principal Occupation, Business, Experience and Directorships
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<S> <C> <C>
Norton H. Reamer................................... 63 The founder of UAM and our Chief Executive Officer
since UAM's incorporation in 1980. UAM's President
from 1980 until March 1998. Chairman, President and a
director or trustee of UAM Funds, Inc. and UAM Funds
Trust, each of which is an investment company.
Currently nominated a director of PBHG Advisor Funds,
Inc. (which is expected to be renamed UAM Funds, Inc.
II), and expected to be elected Chairman and President
of this investment company. A director or trustee of
82 investment companies in the Eaton Vance Group of
Funds, and a trustee of Union College. A Director of
UAM since 1980, Chairman of the Board since March
1998, and Chairman of the Executive Committee.
Charles E. Haldeman, Jr............................ 50 UAM's President since March 1998, and Chief Operating
Officer since May 1998. From 1976 until joining UAM, a
principal and a director of Cooke & Bieler, Inc., one
of our affiliates. A Director of UAM from May 1988 to
May 1989, from May 1990 to May 1991, from May 1995 to
May 1996, and since March 1998.
Harold J. Baxter................................... 53 For more than five years, Chairman and Chief Executive
Officer of Pilgrim Baxter & Associates, Ltd., one of
our affiliates. Chairman of the board of directors of
the PBHG Funds, Inc., PBHG Insurance Series Fund, Inc.
and PBHG Advisor Funds, Inc., all of which are
investment companies. A Director of UAM since May
1996.
Francis Finlay..................................... 56 For more than five years, Co-Chairman and Chief
Executive Officer of Clay Finlay Inc., one of our
affiliates. A director of the American Friends of the
British Museum, Blakeney Investors, Boyar Allan Global
Fund, Inc., The Eastern European Development Fund
Limited, EastWest Institute, Lebanon Holdings, and The
Scottish Investment Trust Plc. A Director of UAM since
May 1998.
Robert J. Greenebaum............................... 81 Retired as Treasurer of Inland Steel Company in 1981.
Since then, a business consultant. A director of the
Blue Chip Value Fund, which is an investment company.
A Director of UAM since 1982, and a member of the
Audit and Compensation Committees.
Beverly L. Hamilton................................ 52 Since 1991, President of ARCO Investment Management
Company and Vice President and Investment Officer of
Atlantic Richfield Company. From 1987 to 1991, Deputy
Comptroller -- Asset Management of the City of New
York, and, prior to that, senior investment positions
with United Technologies Corp. and Morgan Stanley &
Co. A director of Emerging Markets Growth Fund
(American Funds), an investment company, and chairman
of the board's committee on directors. A director or
trustee of MassMutual Series and Institutional Funds
and The Common Fund, each of which is an investment
company. A director of CTG Resources, chairman of the
board's pension committee and a member of the board's
committee on directors. A Director of UAM since May
1997, and a member of the Audit Committee.
</TABLE>
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<TABLE>
<CAPTION>
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Name and Age as of the May 20, 1999 Meeting Date Position, Principal Occupation, Business, Experience and Directorships
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<S> <C> <C>
George E. Handtmann, III........................... 46 Since January 1998, Executive Managing Director of
Provident Investment Counsel, Inc., one of our
affiliates. For more than five years prior to that
date, a Managing Director of Provident. A Director of
UAM since May 1998.
Jay O. Light....................................... 57 For more than five years, a professor at the Harvard
Business School concentrating in capital markets and
investment management. Since September 1998, Senior
Associate Dean for Planning and Development at the
Harvard Business School. From 1977 to 1979, Director
of Investment Policies at the Ford Foundation. A
director of Harvard Management Company, Inc. A trustee
of the College Retirement Equity Fund (CREF), the GMO
Funds and the Baupost Fund, each of which is an
investment company. A Director of UAM since 1987, and
a member of the Executive Committee.
Michael C. Mewhinney............................... 54 For more than five years, a principal of Barrow,
Hanley, Mewhinney & Strauss, Inc., one of our
affiliates. A Director of UAM from May 1992 to May
1994.
David I. Russell................................... 56 Since 1989, an independent financial consultant.
Before 1989, 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. A Director of UAM since 1981.
Philip Scaturro.................................... 60 For more than five years, an Executive Vice President
and a Managing Director of Allen & Company
Incorporated, an investment banking firm. A director
of Intrenet, Inc. and a member of that firm's
compensation committee. A Director of UAM since 1981,
Chairman of the Compensation Committee and a member of
the Executive Committee.
John A. Shane...................................... 66 For more than five years, President of Palmer Service
Corporation, a venture capital management company. A
director of Arch Communications Group, Inc., Eastern
Bank, Overland Data Inc. and Gensym Corporation, and a
trustee of the TNE Funds Group, which is an investment
company. A Director of UAM since 1981, Chairman of the
Audit Committee and a member of the Executive
Committee.
Barbara S. Thomas.................................. 52 Executive Chairman of Whitworths Group Ltd. Before
December 1994, Director, Business and Legal Affairs,
for News International plc. Prior to joining News
International, from 1990 to 1993, a Managing Director
of the investment banking firm Cramer Rosenthal
McGlynn, Inc. From 1980 to 1983, a Commissioner of the
Securities and Exchange Commission. A Director of UAM
since 1993, and a member of the Audit and Compensation
Committees.
</TABLE>
Each of the nominees except Mr. Mewhinney is presently serving as a Director. It
is our policy to nominate for election to the Board each year several principals
of our affiliates, and to rotate these seats on the Board among our firms.
Messrs. Baxter, Finlay, Handtmann and Mewhinney are being nominated for these
seats. The seat for which Mr. Mewhinney is being nominated is presently held by
Bryant M. Hanley, Jr.
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ITEM 2 -- SELECTION OF INDEPENDENT ACCOUNTANTS
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The Board of Directors, upon the recommendation of its Audit Committee, has
selected PricewaterhouseCoopers LLP as independent accountants for the fiscal
year ending December 31, 1999, subject to ratification by our stockholders. This
firm served as our independent accountants in 1998.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to answer appropriate questions. They will also have the opportunity to
make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999.
OWNERSHIP OF UAM'S COMMON STOCK
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SECURITY OWNERSHIP OF MANAGEMENT
On February 28, 1999, UAM had 60,222,712 shares of common stock issued and
outstanding. The following table lists certain information about the beneficial
ownership of UAM common stock as of that date by:
* each of our current Directors;
* each nominee for Director;
* our Chief Executive Officer;
* each of our four other most highly compensated executive officers; and
* all of our Directors and executive officers as a group.
Unless otherwise noted, these individuals have sole voting and investment power
over all shares listed. Where applicable, ownership is subject to community
property laws. The column headed "Number of Shares Issuable" lists:
(a) shares issuable upon the exercise of warrants or stock options within 60
days after February 28, 1999;
(b) amounts allocated as notional shares in this individual's account in UAM's
Deferred Compensation Plan; and
(c) shares subject to deferred delivery under UAM's Stock Option Deferral Plan.
Notional shares under UAM's Deferred Compensation Plan, and shares subject to
deferred delivery under UAM's Stock Option Deferral Plan, are evidenced by a
bookkeeping entry. Holders of these shares have no voting or investment power.
In accordance with SEC rules, the percentage listed in the final column is
calculated for each individual by treating his or her issuable shares as
outstanding.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME ISSUED SHARES SHARES ISSUABLE TOTAL PERCENT
---- ------------- --------------- --------- -------
<S> <C> <C> <C> <C>
Harold J. Baxter(1)...................................... -- 888,440 888,440 1.5%
Francis Finlay(1)........................................ 1,398,605 -- 1,398,605 2.3%
Robert J. Greenebaum(2).................................. 45,351 60,462 105,813 *
Charles E. Haldeman, Jr.................................. 180,000 51,009 231,009 *
Beverly L. Hamilton...................................... 1,000 34,517 35,517 *
George E. Handtmann, III(1).............................. 213,860 201,741 415,601 *
Bryant M. Hanley, Jr.(1)(3).............................. 896,798 5,000 901,798 1.5%
Jay O. Light............................................. 12,612 75,748 88,360 *
Michael C. Mewhinney(1).................................. 496,178 5,000 501,178 *
Norton H. Reamer......................................... 2,149,996 237,613 2,387,609 4.0%
David I. Russell(4)...................................... 25,000 58,000 83,000 *
Philip Scaturro(5)....................................... 62,000 55,644 117,644 *
John A. Shane(6)......................................... 33,400 58,000 91,400 *
Barbara S. Thomas........................................ 2,000 75,748 77,748 *
William H. Park.......................................... 166,370 134,583 300,953 *
Franklin H. Kettle....................................... 67,330 127,858 195,188 *
</TABLE>
7
<PAGE> 12
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME ISSUED SHARES SHARES ISSUABLE TOTAL PERCENT
---- ------------- --------------- --------- -------
<S> <C> <C> <C> <C>
George D. McClelland..................................... 20,300 43,850 64,150 *
All UAM Executive Officers and Directors as a Group
(23 individuals)....................................... 5,796,909 2,228,433 8,025,342 12.9%
</TABLE>
- ---------------
* Less than 1%
(1) This individual is a former owner of a UAM affiliate. When UAM acquired
this affiliate, this individual received(directly or indirectly) a portion
of the purchase price in UAM common stock or warrants to purchase shares of
UAM common stock. This individual had no connection with UAM before such
acquisition.
(2) Includes 14,400 shares owned by Mr. Greenebaum's wife. Mr. Greenebaum
disclaims beneficial ownership of these shares.
(3) This individual is a current Director of UAM who is not standing for
re-election.
(4) Includes 5,000 shares held in trust. Mr. Russell has shared voting and
investment power over these shares.
(5) Does not include 1,937,772 shares of Common Stock owned by entities
affiliated with Allen & Company Incorporated. Mr. Scaturro is an Executive
Vice President and a Managing Director of this company. Also does not
include 2,000 shares of common stock owned by the Philip Scaturro
Foundation. Mr. Scaturro is President, Treasurer and Trustee of this
foundation. Mr. Scaturro disclaims beneficial ownership of all shares
described in this footnote.
(6) Includes 2,264 shares of common stock owned by Palmer Service Corporation.
Mr. Shane is President of this company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AS OF DECEMBER 31, 1998
The following table lists certain information, to the best of our knowledge,
about the beneficial ownership of UAM stock as of December 31, 1998 by each
person or entity owning beneficially more than 5% of UAM's common stock. This
table is based on Schedules 13G filed with the SEC by these persons or entities.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME AND ADDRESS UAM COMMON STOCK PERCENT
- ---------------- ------------------- -------
<S> <C> <C>
Franklin Resources, Inc. (1)................................ 9,610,700 15.6%
777 Mariners Island Boulevard
San Mateo, CA 94404
Tiger Management L.L.C. (2)................................. 9,330,262 15.2%
101 Park Avenue
New York, NY 10178
Oak Value Capital Management, Inc. (3)...................... 4,044,890 6.6%
3100 Tower Boulevard, Suite 700
Durham, NC 27707
</TABLE>
- ---------------
(1) This entity reported that its subsidiary, Franklin Mutual Advisers, Inc.,
has sole voting power and sole dispositive power over all such shares as of
December 31, 1998.
(2) This includes shares owned by Tiger Performance L.L.C., an entity under
common control with Tiger Management L.L.C. These entities reported having
shared voting power and shared dispositive power over all such shares as of
December 31, 1998.
(3) This entity reported having shared voting power over 3,770,940 of such
shares, and shared dispositive power over all such shares as of December
31, 1998.
8
<PAGE> 13
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
UAM's executive officers are elected by the Board of Directors and hold office
until the first meeting of the Board following the annual meeting of
stockholders. Norton H. Reamer is UAM's Chairman of the Board and Chief
Executive Officer. Charles E. Haldeman, Jr. is UAM's President and Chief
Operating Officer. Certain information about Messrs. Reamer and Haldeman is
presented on page 5 under "Item 1 -- Election of Directors." Certain information
about UAM's other executive officers is presented in the following table.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name and Age as of the May 20, 1999 Meeting Date Position with UAM and Business Experience
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
William H. Park.................................... 51 Executive Vice President and Chief Financial Officer
since 1994, and a member of our Management Committee.
Joined UAM as Vice President in 1982, and named Senior
Vice President and Treasurer in 1985. Also Vice
President of UAM Funds, Inc. and UAM Funds Trust, each
of which is an investment company. Expected to be
elected Vice President of PBHG Advisor Funds, Inc.
(which is expected to be renamed UAM Funds, Inc. II),
an investment company.
Franklin H. Kettle................................. 41 Executive Vice President and Director of Corporate
Development since 1996, and a member of our Management
Committee. Joined UAM in 1986, and named Vice
President later in 1986, Senior Vice President in 1991
and Director of Corporate Development in 1994.
Joseph R. Ramrath.................................. 42 Senior Vice President, General Counsel and Secretary
since 1996, and a member of our Management Committee.
For more than five years prior to joining UAM, a
member of the Boston law firm of Hill & Barlow, a
Professional Corporation.
Richard S. Robie III............................... 39 Senior Vice President since 1997, head of our
Operations Group, and a member of our Management
Committee. Joined UAM as Vice President in 1992.
George D. McClelland............................... 52 Senior Vice President since joining UAM in 1994, in
our Operations Group. Senior Vice President and Chief
Administrative Officer at Kendall Square Research
Corp. in October 1993. Prior to that, 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.
Amit M. Nanavati................................... 53 Senior Vice President since 1997, in our Finance
Group. Joined UAM as Vice President in 1996. For more
than five years prior to joining UAM, various
financial positions at Digital Equipment Corporation,
most recently Vice President, Finance, Components &
Peripherals Business Unit.
Thomas Leavitt, III................................ 39 Senior Vice President since 1997, in our Operations
Group. For more than five years prior to joining UAM,
various positions at Alliance Capital Management
Corporation, most recently Senior Vice President.
Juliana M. Coyle................................... 43 Senior Vice President since September 1998, and
Treasurer since 1994. Joined UAM as Assistant
Treasurer in 1993, and named Vice President in 1997.
</TABLE>
9
<PAGE> 14
<TABLE>
<CAPTION>
Name and Age as of the May 20, 1999 Meeting Date Position with UAM and Business Experience
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kevin P. O'Brien................................... 41 Senior Vice President since September 1998, in our
Corporate Development Group. Joined UAM as Vice
President in 1996. For more than five years prior to
joining UAM, Vice President and Counsel at Copley Real
Estate Advisors, Inc.
</TABLE>
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following table shows certain information about the compensation paid to our
Chief Executive Officer and each of our four other most highly compensated
executive officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
----------------------------------------- SHARES
OTHER ANNUAL UNDERLYING
COMPENSATION ($) OPTIONS GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (1) (#) COMPENSATION ($)
--------------------------- ---- ---------- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Norton H. Reamer............... 1998 850,000 621,600 58,800 185,000 --
Chairman of the Board, 1997 850,000 772,000 58,800 126,000 --
Chief Executive Officer and 1996 800,000 814,000 58,800 75,000 --
Director
- ----------------------------------------------------------------------------------------------------------------------
Charles E. Haldeman, Jr. (2)... 1998 791,700 466,200 82,900 285,000 203,100
President, Chief Operating
Officer and Director
- ----------------------------------------------------------------------------------------------------------------------
William H. Park................ 1998 570,000 475,000 52,800 139,000 --
Executive Vice President 1997 550,000 463,200 52,800 70,000
and Chief Financial Officer 1996 500,000 447,700 53,000 48,000 --
- ----------------------------------------------------------------------------------------------------------------------
Franklin H. Kettle............. 1998 490,000 500,000 51,300 138,000 --
Executive Vice President 1997 450,000 482,000 51,300 62,000 --
and Director of Corporate 1996 400,000 406,800 51,400 51,200 --
Development
- ----------------------------------------------------------------------------------------------------------------------
George D. McClelland........... 1998 360,000 235,000 52,800 44,000 --
Senior Vice President 1997 330,000 231,600 52,800 20,000 --
1996 300,000 203,500 53,000 23,400 --
</TABLE>
- ---------------
(1) This amount includes Company-paid life insurance premiums, Company
contributions to the individual's profit-sharing retirement plan account
and Company contributions to the individual's account in UAM's Deferred
Compensation Plan. For 1998, the respective portions of these benefits
were: Mr. Reamer, $8,800, $24,000 and $26,000; Mr. Haldeman, $2,900,
$24,000 and $26,000; Mr. Park, $2,800, $24,000 and $26,000; Mr. Kettle,
$1,300, $24,000 and $26,000; and Mr. McClelland, $2,800, $24,000 and
$26,000. The amount for Mr. Haldeman also includes $30,000 of rent paid by
UAM for temporary housing near our executive offices in Boston.
(2) Mr. Haldeman became an executive officer of UAM in March 1998. Before that
time, Mr. Haldeman was a principal of Cooke & Bieler, Inc., one of our
affiliates. The Salary listed in the table includes amounts paid by Cooke &
Bieler for Mr. Haldeman's full-time services before he joined UAM. The All
Other Compensation listed in the table was paid by Cooke & Bieler to Mr.
Haldeman after he joined UAM in connection with the termination of his
employment and the transition of his responsibilities for Cooke & Bieler's
clients.
10
<PAGE> 15
TOTAL OPTION EXERCISES IN 1998 AND YEAR-END VALUES
This table gives information for options exercised in 1998 by our Chief
Executive Officer and each of our four other most highly compensated executive
officers, and the value (stock price less exercise price) of the remaining
options held by those executive officers at year end, using the closing price
($26.00) of our common stock on December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS HELD AT 12/31/1998 AT 12/31/1998 (1)
ACQUIRED VALUE ---------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norton H. Reamer............. 55,400 374,000 178,400 334,000 1,008,400 942,900
Charles E. Haldeman, Jr...... 39,832 250,300 -- 285,000 -- 1,082,500
William H. Park.............. 61,400 362,100 68,500 224,500 390,000 693,000
Franklin H. Kettle........... -- -- 94,900 219,300 553,800 703,800
George D. McClelland......... 20,300 218,000 31,850 75,850 223,500 273,000
</TABLE>
- ---------------
(1) An "in-the-money" option is an option for which the exercise price of the
underlying stock is less than the closing price ($26.00) of our common
stock on December 31, 1998; the value shown reflects stock price
appreciation since the option's date of grant.
OPTION GRANTS IN 1998
This table shows all options to purchase our common stock granted in 1998 to our
Chief Executive Officer and each of our four other most highly compensated
executive officers, and the potential value of such grants based on the
Black-Scholes option pricing model. This method of valuation is required to be
disclosed by SEC rules, and is not meant to forecast possible future
appreciation in our stock price.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF TOTAL EXERCISE OR BASE
UNDERLYING OPTIONS OPTIONS GRANTED TO PRICE ($/SH) GRANT DATE PRESENT
NAME GRANTED (#) (1) EMPLOYEES IN 1998 (2) EXPIRATION DATE VALUE ($) (3)
- ---- ------------------ ------------------ ---------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Norton H. Reamer....... 140,000 4.11 23.625 1/20/2003 671,900
45,000 1.32 21.500 9/30/2003 173,200
- -----------------------------------------------------------------------------------------------------------------------------
Charles E. Haldeman,
Jr................... 200,000 5.87 22.500 2/02/2003 901,200
85,000 2.50 21.500 9/30/2003 327,200
- -----------------------------------------------------------------------------------------------------------------------------
William H. Park........ 84,000 2.47 23.625 1/20/2003 403,200
55,000 1.62 21.500 9/30/2003 211,700
- -----------------------------------------------------------------------------------------------------------------------------
Franklin H. Kettle..... 83,000 2.44 23.625 1/20/2003 398,400
55,000 1.62 21.500 9/30/2003 211,700
- -----------------------------------------------------------------------------------------------------------------------------
George D. McClelland... 24,000 0.71 23.625 1/20/2003 115,200
20,000 0.59 21.500 9/30/2003 77,000
</TABLE>
- ---------------
(1) All options are exercisable in cumulative 25% installments on each of the
first four anniversaries of the date of the grant.
(2) The exercise or base price for all stock option grants shown in this column
is the closing price of our common stock on the date of the grant.
(3) The Black-Scholes model is used typically to price exchange-traded options.
This model relies on the following assumptions, which may prove to be
inaccurate in the future:
11
<PAGE> 16
<TABLE>
<CAPTION>
FOR OPTIONS EXPIRING ON FOR OPTIONS EXPIRING ON FOR OPTIONS EXPIRING ON
1/20/2003 2/2/2003 9/30/2003
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Stock Price Volatility.......... 22.408% 22.680% 23.231%
Dividend Yield.................. 3.386% 3.556% 3.721%
Risk-free Rate of Return........ 5.410% 5.410% 4.230%
Option Term..................... 5 years 5 years 5 years
</TABLE>
The model also assumes a liquid market for options, although the options awarded
under UAM's stock option plan generally may not be transferred. Further,
exchange-traded options may be exercised immediately; however, UAM's options are
subject to certain vesting rules. For these reasons, we believe that the model
may overstate the value of the options UAM awards. The actual value of these
options, if any, will depend on the market price of our common stock on the date
of exercise.
CERTAIN EMPLOYMENT ARRANGEMENTS
EMPLOYMENT CONTRACTS
UAM has entered into an employment agreement with Charles E. Haldeman, Jr., its
President and Chief Operating Officer. This agreement includes the following
provisions:
* a term of three years, commencing March 1, 1998;
* an annual salary of not less than $800,000;
* an annual bonus of (a) UAM's Operating Cash Flow (as defined in the
Compensation Committee Report below) per share in excess of $2.00, multiplied
by (b) 720,000, subject to modification by the Compensation Committee as
described in the Compensation Committee Report below; and
* annual stock option grants for a number of shares equal to (a) the bonus
payable to Mr. Haldeman for the year, divided by (b) the value of an option
on a single share of UAM common stock based on the Black-Scholes model,
subject to modification by the Compensation Committee as described in the
Compensation Committee Report below.
COMPENSATION ON TERMINATION OF EMPLOYMENT
Deferred Compensation Plan The Plan provides some officers of UAM with enhanced
retirement security through tax-deferred benefits payable upon retirement, death
or other termination of employment. The Plan contemplates annual contributions
by UAM, which are then deemed invested in shares of UAM common stock or shares
of one or more mutual funds at the employee's election. Benefits are subject to
a five-year vesting schedule.
Stock Option Deferral Plan The Plan allows employees who hold certain
nonqualified stock options to defer receipt of shares of UAM's common stock
otherwise issuable on an exercise of the stock option until retirement, death or
other termination of employment. Most tax withholding is deferred until the
issuance of shares. The Plan provides these employees with enhanced retirement
security, and encourages these employees to own and hold UAM common stock.
CHANGE-IN-CONTROL ARRANGEMENTS
Some of UAM's compensation plans contain provisions that are triggered by a
change-in-control of UAM. If a change-in-control occurs, under the Deferred
Compensation Plan and Stock Option Deferral Plan, all benefits become
immediately payable, and, under all stock option plans (including plans
previously in effect that have options still outstanding), all options become
immediately fully vested and exercisable.
Under these plans, a change-in-control includes any of the following events:
* any "person," as defined in the Securities Exchange Act of 1934, as amended,
acquires 20 percent or more of our voting securities;
* a majority of UAM's Directors are replaced; or
* UAM's stockholders approve certain mergers, or a liquidation or sale of
substantially all of our assets.
Based on account balances at December 31, 1998, upon a change-in-control the
following aggregate benefits would become immediately payable to UAM's current
officers participating in these compensation plans:
* approximately 20,400 shares of UAM common stock (based on notional share
account balances) and approximately $367,300 (based on mutual fund account
balances) under the Deferred Compensation Plan; and
* 8,780 shares of UAM common stock under the Stock Option Deferral Plan.
12
<PAGE> 17
COMPENSATION COMMITTEE REPORT
Please see the glossary at the end of this report for definitions of the
capitalized terms used in this report that have not already been defined in the
Proxy Statement.
The Compensation Committee consists entirely of Directors who are not officers
or employees of UAM or its affiliates. The Committee establishes the salaries
and other compensation of UAM's executive officers, including its Chief
Executive Officer and the other Named Executive Officers. The Committee also
administers UAM's Deferred Compensation Plan, Stock Option Plan and Stock Option
Deferral Plan.
GENERAL COMPENSATION PHILOSOPHY
The Company's executive compensation program is designed to:
* retain executive officers by paying them competitively, motivate them to
contribute to the Company's success, and reward them for their performance;
* link a substantial part of each executive officer's compensation to the
performance of both the Company and the individual executive officer; and
* encourage ownership of UAM common stock by executive officers, to further tie
the interests of management to the interests of UAM stockholders.
The Committee applies these principles to determine annual compensation
opportunities and payments for the Named Executive Officers and UAM's other
executive officers.
ESTABLISHING TOTAL COMPENSATION OPPORTUNITIES
In determining total annual compensation opportunities for the Named Executive
Officers, the Committee considers many factors including:
* the experience and compensation history of the executive officer;
* the Company's performance as measured by Operating Cash Flow per share,
revenues, earnings, changes in assets under management by its affiliates, and
total stockholder return compared to that of the New Peer Group; and
* the total annual compensation paid by competitors in the asset management
industry to their senior management.
We believe that UAM's most direct competitors for executive talent are not
necessarily all of the companies that would be included in a peer group
established to compare stockholder returns. Therefore, the compensation peer
group is not the same as the New Peer Group used for the performance graph on
page 16. Based on available public data, the Committee believes that the 1998
annual compensation for each of the Named Executive Officers was near the median
of the range of annual compensation paid for comparable positions by UAM's most
direct competitors for executive talent in the asset management business.
BALANCING THE ELEMENTS OF COMPENSATION
The Committee's compensation program is intended to balance three
elements--salaries, bonuses and stock options. The Committee also tries to align
the compensation opportunities of executive officers closely with the interests
of UAM's stockholders in allocating compensation opportunities among these
elements. Therefore, bonuses are tied to UAM's performance, as measured by
Operating Cash Flow per share, revenues, earnings, changes in assets under
management by its affiliates, and total stockholder return compared to that of
the New Peer Group, and the ultimate value of stock option grants is
intrinsically tied to increases in the price of UAM's common stock.
For UAM's Chief Executive Officer, President, and Executive Vice Presidents, the
combination of target quarterly bonuses and the aggregate Option Value of stock
option grants equals approximately twice the individual's salary amounts. Thus,
target bonuses for 1998 were set at levels roughly corresponding to these
officers' salaries, and, except for Mr. Haldeman, stock options were granted
with an aggregate Option Value on the date of grant that approximated their 1997
bonus awards. Because Mr. Haldeman joined UAM in 1998, the Committee granted him
stock options as part of his signing package. For Mr. McClelland, a Senior Vice
President, the target bonus for 1998 was set at approximately 80% of his salary,
and stock options were granted for a number of shares equal to the total of his
salary for 1998 and bonus for 1997 divided by the exercise price.
Salaries Salaries for each of the Named Executive Officers are based on the
Committee's evaluation of:
* the executive officer's job performance;
* the executive officer's contribution to the Company's growth and
profitability;
* any increase in the executive officer's responsibilities, whether as a result
of the Company's growth and other factors or a reassignment of
responsibilities among members of the management team;
13
<PAGE> 18
* the success of the management team in achieving the Company's short-term and
long-term goals;
* the importance of the executive officer to the future growth and
profitability of the Company;
* the salaries and total compensation mix paid to executive officers holding
equivalent positions by companies in the compensation peer group described
above; and
* the experience and compensation history of the executive officer.
Bonuses Although the Committee and the Board of Directors continue to consider
Operating Cash Flow per share to be the most important basis for measuring the
value of UAM to its stockholders, for 1998, the Committee made two significant
adjustments intended to make these cash flow bonuses even more responsive to
Company performance. First, in calculating target bonuses, the Committee raised
the quarterly Operating Cash Flow per share threshold from $0.25 to $0.50, while
recalibrating the calculation so that this change, by itself, would not reduce
target bonuses. Second, the Committee now considers UAM's total stockholder
return compared to that of the New Peer Group, changes in UAM's earnings per
share, net client cash flow at UAM's affiliates and other elements of the
Company's performance in determining whether to modify the amount of cash flow
bonus payable to each executive officer under the strictly formulaic approach.
With respect to executive officers other than the Chief Executive Officer and
the President, the Committee also considers the performance of the executive
officers in their respective functional areas.
The cash flow bonuses earned by the Chief Executive Officer and President for
1998 and reported in the table on page 10 were approximately 30% below the bonus
targets calculated by the formula. This adjustment reflects the Committee's
overall assessment of UAM's performance in 1998, based on the criteria described
above.
The cash flow bonuses earned by the other Named Executive Officers for 1998 and
reported in the table on page 10 were between 10% and 18% below the bonuses
calculated by the formula. These adjustments reflect both the Committee's
overall assessment of UAM's performance in 1998, based on the criteria described
above, and the Committee's assessment of the performance in 1998 of these
executive officers' respective functional areas.
Stock Option Awards In January 1998, the Committee granted stock options to
each of the Named Executive Officers, except for Mr. Haldeman, under UAM's Stock
Option Plan. To determine the size of the grants to UAM's Chief Executive
Officer and Executive Vice Presidents, the Committee divided the officer's bonus
for 1997 by the Option Value on the date of grant. Because Mr. Haldeman joined
UAM in 1998, the Committee granted him stock options as part of his signing
package. To determine the size of the grants to each of the other executive
officers of the Company, the Committee divided the total of the executive
officer's salary for 1998 and bonus for 1997 by the exercise price. In granting
stock options to its executive officers, the Committee does not take into
consideration the size of previous options granted to each executive officer.
In September 1998, the Committee granted additional stock options to each of the
Named Executive Officers. Through 1998 UAM made changes in its senior management
team and developed a new comprehensive strategy to improve its affiliates'
internal growth and strengthen stockholder value. As a result, the Committee
made these additional grants to further align the compensation opportunities for
senior management with the success of this new strategy.
The exercise price for all stock options granted to executive officers equals
the market value of the underlying shares on the date of grant. Therefore,
ultimately, the stock options have value only if the value of the underlying
shares increases.
STOCK OWNERSHIP GUIDELINES
The Committee also maintains UAM common stock ownership guidelines for UAM's
most senior management. These guidelines require each of Messrs. Reamer and
Haldeman to own shares equal in value to at least five times his annual salary,
and each of Messrs. Park and Kettle to own shares equal in value to at least
three times his annual salary. Each of these officers has satisfied the
applicable requirement.
TAX POLICY
Section 162(m) of the Internal Revenue Code limits the tax deduction available
to the Company for compensation paid to the Company's five most highly
compensated officers. However, the limit does not apply to compensation paid
upon Company attainment of performance goals under a program approved by the
stockholders. The Committee believes that the cash flow bonus payments described
in this report and any future gains from stock options described in this report
meet this requirement, and therefore that these amounts will be deductible to
the Company for federal income tax purposes.
14
<PAGE> 19
GLOSSARY
Named Executive Officers UAM's Chief Executive Officer and the four other most
highly compensated executive officers.
New Peer Group This term is defined under "Executive Compensation --
Performance Graph."
Operating Cash Flow In any fiscal year, UAM's net income or loss plus
amortization, depreciation and the reduction in value of intangible assets, net
of taxes.
Option Value The value of an option on a single share of UAM common stock based
on the Black-Scholes model.
BY THE COMPENSATION COMMITTEE
Philip Scaturro, Chairman
Robert J. Greenebaum
Barbara S. Thomas
PERFORMANCE GRAPH
This graph compares over a five-year period beginning December 31, 1993:
* UAM's cumulative total stockholder returns (assuming reinvestment of
dividends);
* the cumulative total stockholder return of companies in Standard & Poor's 500
Composite Stock Index ("S&P 500");
* the cumulative total stockholder return of companies in an industry peer group
index compiled by us that consists of the same companies included in the
industry peer group index shown in last year's proxy statement ("Old Peer
Group"); and
* the cumulative total stockholder return of companies in an industry peer group
index compiled by us that includes all of the public companies that we
currently consider our peers ("New Peer Group").
We developed the New Peer Group this year in response to the numerous changes
occasioned by mergers, acquisitions and initial public offerings that have
occurred in our industry. We believe the New Peer Group includes all publicly-
traded issuers that derive a majority of their revenues from asset management
business. The companies included in the Old Peer Group and the New Peer Group
are:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
OLD PEER GROUP(1) NEW PEER GROUP
- ----------------------------------------------------------------------------------
<S> <C>
Alliance Capital Management L.P. Affiliated Managers Group, Inc. (2)
Atalanta Sosnoff Capital Corp. Alliance Capital Management L.P.
Bull & Bear Group, Inc. AMVESCAP Plc (3)
Eaton Vance Corp. Atalanta Sosnoff Capital Corp.
Franklin Resources, Inc. Bull & Bear Group, Inc.
Nvest L.P. Conning Corp. (4)
PIMCO Advisors Holdings, L.P. Eaton Vance Corp.
Pioneer Group, Inc. Federated Investors, Inc. (5)
T. Rowe Price Associates Franklin Resources, Inc.
John Nuveen & Co.
Liberty Financial Companies (6)
Nvest L.P.
Phoenix Investment Partners, Ltd. (7)
Pilgrim America Capital Corporation
PIMCO Advisors Holdings, L.P.
Pioneer Group, Inc.
SEI Investments Company
T. Rowe Price Associates
Waddell & Reed Financial, Inc. (8)
- ----------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The Old Peer Group also included Colonial Group, Inc. (until its acquisition
by Liberty Financial Companies, Inc. in March 1995); Dreyfus Corp. (until
its acquisition by Mellon Bank Corp. in August 1994); Duff & Phelps Corp.
(through December 1994 and its merger with a unit of Phoenix Home Life
Mutual Insurance Company); and Oppenheimer Capital, L.P. (until its merger
with and into PIMCO Advisors Holdings, L.P. in December 1997).
(2) Included since its initial public offering in November 1997.
15
<PAGE> 20
(3) Included since the merger of INVESCO with AIM in May 1997.
(4) Included since its initial public offering in December 1997.
(5) Included since its initial public offering in May 1998.
(6) Included since its acquisition of Colonial Group, Inc. in March 1995.
(7) Included since its acquisition of Duff & Phelps Corp. in November 1995.
(8) Included since its initial public offering in March 1998.
Because of these changes in the industry peer group index, SEC rules require us
to present performance of both the Old Peer Group and the New Peer Group.
The graph assumes $100 invested at the closing price of the common stock on
December 31, 1993 in UAM and each of the comparative indices.
Total return for UAM's common stock is determined on a yearly basis by adding
(a) the cumulative amount of dividends from January 1 to December 31 of the year
in question (assuming dividend reinvestment) and (b) the difference between the
closing price on December 31 of the prior year and on December 31 of the year in
question, and then dividing this sum by (c) by the closing price of UAM's common
stock on December 31 of the year in question.
Total returns for the S&P 500, the Old Peer Group and the New Peer Group are
determined on a yearly basis assuming dividend reinvestment.
The Old Peer Group and the New Peer Group indices were compiled on a
weighted-average basis (market-capitalization basis, adjusted at the beginning
of each year). For a component company that became publicly traded after
December 31, 1993, its inclusion in the New Peer Group index was accomplished by
re-allocating, as of the date the company went public, the total value of the
index to include the new entity on a weighted-average basis.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
UAM S&P 500 OLD PEER GROUP NEW PEER GROUP
--- ------- -------------- --------------
<S> <C> <C> <C> <C>
'1993' 100.00 100.00 100.00 100.00
'1994' 93.38 101.32 84.23 85.15
'1995' 100.04 139.40 130.93 124.84
'1996' 142.94 171.40 176.95 166.40
'1997' 134.78 228.59 295.90 253.47
'1998' 148.05 293.92 285.47 232.85
</TABLE>
16
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- --------------------------------------------------------------------------------
During 1998, the following individuals served on the Compensation Committee:
Philip Scaturro, Robert J. Greenebaum and Barbara S. Thomas. None of these
Directors was, during or before 1998, an officer or employee of UAM or any of
our affiliates.
During 1998, UAM was a party to an agreement in which Mr. Scaturro, a member of
our Compensation Committee, had an indirect interest. This transaction is
described under "Governance of the Company -- Related Transactions."
SEC rules require disclosure of "interlocks," that is, certain circumstances
where an officer of UAM might serve as a director or member of the compensation
committee of another company, while an officer of that other company serves as a
Director of UAM or member of our Compensation Committee. During 1998, UAM had no
interlocks with other companies.
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS
- --------------------------------------------------------------------------------
Proposals for Inclusion in Proxy Statement Under the rules of the SEC,
stockholder proposals intended to be presented at UAM's 2000 Annual Meeting of
Stockholders must be received by us (sent to the attention of Joseph R. Ramrath,
Secretary) at our principal executive offices by November 27, 1999 for inclusion
in the proxy statement and form of proxy relating to that meeting.
Other Proposals (Not for Inclusion in Proxy Statement) Under our By-laws and
the rules of the SEC, a stockholder must follow certain procedures to nominate
one or more individuals for election as a Director or to introduce an item of
business at an annual meeting of stockholders. These procedures provide that any
nomination or proposed item of business must be submitted in writing to the
Secretary of the Company at One International Place, Boston, MA 02110. Usually,
the nomination or proposed item of business must be received:
(i) no later than the close of business on the 90th day, and
(ii) no earlier than the close of business on the 120th day,
before the first anniversary of the preceding year's annual meeting. However, if
the annual meeting is held more than 30 days before, or more than 60 days after,
the first anniversary of the preceding year's annual meeting, then the
nomination or proposed item of business must be received no later than the 10th
day following the day on which UAM first makes a public announcement of the date
of the annual meeting, and:
(i) no later than the close of business on the 90th day, and
(ii) no earlier than the close of business on the 120th day,
before the annual meeting.
A nomination must contain the following information about the nominee:
* name;
* age;
* business and residence address;
* principal occupation or employment;
* the number of shares of UAM's common stock, if any, held by the nominee;
* the information that would be required under SEC rules in a proxy statement
soliciting proxies for the election of such nominee as a Director; and
* a signed consent of the nominee to serve as a Director of UAM, if elected.
Notice of a proposed item of business must include:
* a brief description of the substance of, and the reasons for, conducting such
business at the annual meeting;
* the stockholder's name and address;
* the number of shares of UAM's common stock held by the stockholder (with
supporting documentation where appropriate); and
* any material interest of the stockholder in such business.
The Board is not aware of any matters that are expected to come before the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matter should properly come before the Annual Meeting, the persons named
in the accompanying Proxy Card intend to vote the proxies in accordance with
their best judgment.
The chairman of the meeting may refuse to allow the transaction of any business
not presented beforehand, or to acknowledge the nomination of any person not
made, in compliance with the above procedures.
- --------------------------------------------------------------------------------
17
<PAGE> 22
Whether or not you plan to attend the Annual Meeting, please vote by marking,
signing, dating and promptly mailing your Proxy Card to our transfer agent,
Boston EquiServe, L.P., in the enclosed envelope. No postage is required for
mailing in the United States.
By order of the Board of Directors,
Joseph R. Ramrath
Secretary
March 26, 1999
18
<PAGE> 23
SKU 489-PS-99
<PAGE> 24
[0489 - UNITED ASSET MANAGEMENT CORPORATION] [FILE NAME: UAM22B.ELX]
[VERSION - 5] [3/7/99]
UAM22B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
UNITED ASSET MANAGEMENT CORPORATION
THE BOARD OF DIRECTORS OF UNITED ASSET MANAGEMENT CORPORATION
IS SOLICITING THIS PROXY
The undersigned owns shares of Common Stock of United Asset Management
Corporation ("UAM"). UAM's Annual Meeting of Stockholders will be held on
Thursday, May 20, 1999, beginning at 9:30 a.m. at The Boston Harbor Hotel, 70
Rowes Wharf, Boston, Massachusetts. The undersigned appoints each of Norton H.
Reamer, Charles E. Halderman, Jr. and William H. Park, acting singly, with the
power of substitution to each, as attorney, agent and proxy to vote all shares
of Common Stock that the undersigned is entitled to vote, at this Annual
Meeting and at any adjournment or postponement of this Annual Meeting.
The individuals named above will vote these shares as directed by the
undersigned on this proxy.
IF NO PROPER VOTING INSTRUCTIONS ARE GIVEN, THE INDIVIDUALS NAMED ABOVE
WILL VOTE THESE SHARES FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE
SIDE OF THIS PROXY AS DIRECTORS OF UAM, AND FOR ITEM 2.
IF ANY OTHER MATTERS ARE PROPERLY PRESENTED FOR CONSIDERATION AT THIS
ANNUAL MEETING, THE INDIVIDUALS NAMED ABOVE WILL HAVE THE DISCRETION TO VOTE
THESE SHARES ON THOSE MATTERS.
- ----------- -----------
SEE REVERSE (Please sign and date on reverse side) SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 25
UNITED ASSET MANAGEMENT CORPORATION
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
[0489 - UNITED ASSET MANAGEMENT CORPORATION] [FILE NAME: UAM22A.ELX]
[VERSION - 5] [3/7/99]
UAM22A DETACH HERE
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
ITEM 1. TO ELECT THE FOLLOWING NOMINEES AS DIRECTORS OF UAM TO SERVE UNTIL THE
NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE
ELECTED AND QUALIFIED: Norton H. Reamer, Charles E. Haldeman, Jr.,
Harold J. Baxter, Francis Finlay, Robert J. Greenebaum, Beverly L.
Hamilton, George E. Handtmann, III, Jay O. Light, Michael C.
Mewhinney, David I. Russell, Philip Scaturro, John A. Shane and
Barbara S. Thomas
FOR [ ] [ ] WITHHELD
All From All
Nominees Nominees
[ ] ____________________________________________________________________________
FOR all nominees except as written above
ITEM 2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS OF UAM FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name is printed on this proxy. When signing as
attorney-in-fact, executor, administrator, trustee, guardian or custodian, or in
any other representative capacity, please write title.
Owner:___________________ Date:_______ Co-Owner:___________________ Date:_______
