<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only [as permitted
by Rule 14a-6(e)(2)]
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
UNITED ASSET MANAGEMENT CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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 is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION NORTON H. REAMER
One International Place Chairman of the Board
Boston, Massachusetts 02110 and Chief Executive Officer
March 24, 2000
UAM(R) Dear Stockholder:
I am pleased to invite you to attend United Asset Management
Corporation's 2000 Annual Meeting of Stockholders on Thursday, May 18,
2000. 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 1999 Annual Report.
If you are a stockholder of record, we have enclosed a Proxy Card,
which allows you to vote on these matters. Simply mark, sign, date and
mail your Proxy Card to our transfer agent, BankBoston, N.A. c/o
EquiServe, Limited Partnership, in the enclosed postage-paid envelope.
Alternatively, you may vote electronically using our transfer agent's
Internet and telephone voting systems. Instructions on voting
electronically are printed on your Proxy Card. Of course, you may
attend the Annual Meeting and vote in person, even if you have sent in
a Proxy Card or voted electronically.
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,
/s/ Norton H. Reamer
<PAGE>
<TABLE>
UNITED ASSET MANAGEMENT CORPORATION
One International Place
Boston, Massachusetts 02110
Notice of Annual Meeting of Stockholders
<S> <C>
TIME ....................................... 9:30 a.m. on Thursday, May 18, 2000
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 approve the Company's Second Amended and Restated 1994 Stock
Option Plan.
(3) To ratify the selection of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending December 31,
2000.
(4) 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 20, 2000.
ANNUAL REPORT .............................. We have enclosed UAM's 1999 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, BankBoston, N.A. c/o EquiServe, Limited
Partnership, in the enclosed postage-paid envelope, or vote
electronically by following the instructions printed on your Proxy
Card.
You may revoke your proxy at any time prior to its exercise at the
Annual Meeting.
Joseph R. Ramrath
Secretary
March 24, 2000
UAM(R)
</TABLE>
<PAGE>
TABLE OF CONTENTS
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PAGE
PROXY STATEMENT ........................................................... 1
Stockholders Entitled to Vote ........................................... 1
Proxies ................................................................. 1
Voting at the Annual Meeting ............................................ 1
Voting on Other Matters ................................................. 1
Required Vote ........................................................... 1
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 ..................................................... 3
The Compensation Committee .............................................. 3
The Executive Committee ................................................. 3
Compensation of Directors ............................................... 3
Related Transactions .................................................... 4
Indemnification ......................................................... 4
ITEM 1 -- ELECTION OF DIRECTORS ........................................... 5
ITEM 2 -- APPROVAL OF THE COMPANY'S SECOND AMENDED AND RESTATED
1994 STOCK OPTION PLAN .................................................. 7
ITEM 3 -- SELECTION OF INDEPENDENT ACCOUNTANTS ............................ 13
OWNERSHIP OF UAM'S COMMON STOCK ........................................... 13
Security Ownership of Management ........................................ 13
Security Ownership of Certain Beneficial Owners as of December 31, 1999 . 15
EXECUTIVE OFFICERS ........................................................ 16
EXECUTIVE COMPENSATION .................................................... 17
Summary Compensation Table .............................................. 17
Total Option Exercises in 1999 and Year-End Values ...................... 18
Option Grants in 1999 ................................................... 18
Certain Employment Arrangements ......................................... 19
Employment Contracts .................................................. 19
Compensation on Termination of Employment ............................. 19
Change-in-Control Arrangements ........................................ 20
Compensation Committee Report ........................................... 20
Performance Graph ....................................................... 23
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ............... 25
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS ............ 26
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
One International Place
Boston, Massachusetts 02110
PROXY STATEMENT
- --------------------------------------------------------------------------------
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
18, 2000, 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 24, 2000. In addition, we are enclosing a copy of UAM's 1999
Annual Report.
STOCKHOLDERS ENTITLED TO VOTE
Holders of record of UAM common stock at the close of business on Monday,
March 20, 2000 are entitled to receive this notice and to vote their shares at
the Annual Meeting. As of that date, there were 56,366,106 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 before 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,
BankBoston, N.A. c/o EquiServe, Limited Partnership ("EquiServe"). If you are
a stockholder of record, we have enclosed a postage-paid envelope.
Alternatively, stockholders of record may vote electronically by either:
> accessing EquiServe's website at www.equiserve.com; or
> calling EquiServe's telephone voting system at 1-877-PRX-VOTE
(1-877-779-8683).
If you are a stockholder of record, we have printed a "Voter Control" number
on your Proxy Card, which you will need to access these systems.
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 (including a proxy submitted through EquiServe's
Internet and telephone voting systems) 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
delivers a proxy but 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.
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 approve the Company's Second Amended and Restated 1994 Stock
Option Plan. Abstentions are effectively counted as votes against the approval
of this Plan. Brokers do not have discretionary voting power in approving this
Plan. Broker "nonvotes" are counted as votes against the approval of this
Plan.
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, 2000.
Abstentions are effectively counted as votes against this ratification.
Brokers have discretionary voting power in the ratification of independent
accountants.
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. We
have also engaged Corporate Investor Communications ("CIC") to assist in
soliciting proxies, and we expect to pay CIC approximately $6,000 for this
work. Proxies may be solicited on our behalf by CIC in person or by telephone,
electronic mail, facsimile transmission or by telegram.
STOCKHOLDER ACCOUNT MAINTENANCE
Our transfer agent is EquiServe. 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
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 1999 our Directors and
executive officers met all applicable SEC filings requirements under Section
16(a), with the following exceptions. Jay O. Light, a Director of UAM, failed
to accurately report holdings on his Section 16(a) filings, as a result of
inadvertently reporting six fewer shares sold in a transaction that occurred
in 1996. William H. Park, an Executive Officer of UAM, failed to accurately
report holdings on his Section 16(a) filings, as a result of inadvertently
failing to report one transaction for one share in 1990 on a timely basis.
George D. McClelland, an Executive Officer of UAM, inadvertently failed to
report one transaction in 1999 on a timely basis. These holdings and
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 11
Directors, plus two vacancies. During 1999, the Board met seven times. The
Board has three ongoing committees: an Audit Committee, a Compensation
Committee and an Executive Committee. During 1999, 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 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 1999, 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 1999, Mr. Scaturro did not qualify as a
nonemployee director under Rule 16b-3 because of an engagement of his firm,
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.)
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 1999, 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 1999, the
Committee met nine 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.
UAM pays nonemployee Directors who serve on the Executive Committee an
additional annual fee of $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 pays nonemployee Directors a fee of $5,500 for attending,
either in person or by telephone, 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, except that options granted in June 1999 were immediately
exercisable in full. 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 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 common stock on the grant
date. 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 $16.00 on the date of grant, she will
receive an option to purchase 3,750 shares ($15,000 divided by $4.00) at
$12.00 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 for
any reason other than death.
Special Assignment During 1999, UAM's Board appointed a five-member Search
Committee to assist with the identification and evaluation of candidates to
succeed Norton H. Reamer as Chief Executive Officer. Beverly L. Hamilton and
John A. Shane are members of the Search Committee, and Mr. Shane serves as
Chairman. Through the duration of this assignment, UAM pays each of these
members a fee at an annual rate of $18,000, and UAM pays the chairman an
additional fee at an annual rate of $4,000.
RELATED TRANSACTIONS
During 1999, UAM and its affiliates were parties to certain transactions in
which our Directors had an interest.
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. The
sublease requires payments of base rent plus a fixed utility charge of
approximately $96,000 per year. Base rent is calculated from an initial annual
rate of approximately $780,000, which increases annually on November 1 by
approximately 2% per year. During 1999, payments to Pilgrim Baxter under this
sublease totaled approximately $883,000.
From time to time in 1999, we asked Professor Jay O. Light to provide
consulting services in connection with our strategic planning. We paid him
approximately $77,000 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.
During 1999, 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 $225,000. We are currently continuing this engagement in 2000,
although Mr. Russell's time commitment has been reduced and his annual rate of
compensation has been reduced to $180,000.
Philip Scaturro is an Executive Vice President and a Managing Director of
Allen & Company Incorporated. In 1999, we engaged Allen & Company Incorporated
to provide investment banking services in connection with the possible sale of
certain assets of UAM. We did not incur any fee for this engagement, because
no transaction was completed.
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.
Further, UAM and Norton H. Reamer have agreed in principle on terms of a
retirement and consulting agreement. This proposed arrangement is described
below under "Executive Compensation -- Certain Employment Arrangements --
Employment Contracts."
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 indemnification is required under our By-laws.
ITEM 1 -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
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 fixed
the number of Directors at 13.
Effective December 31, 1999, Charles E. Haldeman, Jr. resigned as a Director,
in connection with his resignation as an officer and employee of UAM. The
vacancy created by his resignation has not been filled.
Effective January 25, 2000, Michael C. Mewhinney resigned as a Director, in
connection with his retirement from Barrow, Hanley, Mewhinney & Strauss, Inc.,
one of our affiliates. The vacancy created by his resignation has not been
filled.
Robert J. Greenebaum is not nominated for re-election as a Director, since he
has reached the age for mandatory retirement under UAM Board policy. He will
cease to serve as a Director effective at the Annual Meeting, and an
additional vacancy will be created.
The persons named in the enclosed Proxy Card intend to vote the proxy for the
election of each of the 10 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.
<TABLE>
<CAPTION>
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Name and Age as of the May 18, 2000 Meeting Date Position, Principal Occupation, Business and Directorships
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Norton H. Reamer .................................... 64 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., UAM
Funds, Inc. II, and UAM Funds Trust, each of which is an 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.
Harold J. Baxter .................................... 54 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.
John P. Clay ........................................ 65 For more than five years, Co-Chairman of Clay Finlay Inc., one of our
affiliates. A director of the Genesis Emerging Markets Fund and Korea
International Investment Fund, both of which are investment companies.
A Director of UAM from May 1997 to May 1998.
Beverly L. Hamilton ................................. 53 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, a Vice President of 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 member
of the Investment Advisory Committee of the University of Michigan's
endowment. A Director of UAM since May 1997, and a member of the Audit
Committee.
George E. Handtmann, III ............................ 47 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 ........................................ 58 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 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.
David I. Russell .................................... 57 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 ..................................... 61 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 ....................................... 67 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 ................................... 53 Since January 2000, Executive Chairman of NET Investor Plc. From 1994
to 1999, Executive Chairman of Whitworth's Group Ltd. From 1993 to
1994, Director, Business and Legal Affairs, for News International plc.
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. Clay 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, Clay and Handtmann are being nominated for these seats. The
seat for which Mr. Clay is being nominated is presently held by Francis
Finlay.
Further, UAM and Norton H. Reamer have agreed in principle on terms of a
retirement and consulting agreement. This proposed arrangement includes a
provision for the nomination of Mr. Reamer as a Director, and is described
below under "Executive Compensation -- Certain Employment Arrangements --
Employment Contracts."
ITEM 2 -- APPROVAL OF THE COMPANY'S SECOND AMENDED AND RESTATED
1994 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
The Board of Directors has adopted and recommends that the stockholders
approve amendments to the Company's existing stock option plan. These
amendments are in the form of the United Asset Management Corporation Second
Amended and Restated 1994 Stock Option Plan (the "Revised Plan").
The Board has adopted this plan to ensure that enough option shares will be
available to provide appropriate incentives to key employees, directors and
others who perform significant services for UAM and its 46 affiliated firms.
UAM's success as an institutional investment management company depends on its
ability to retain and motivate the key professionals and administrative staff
who work for the parent company and the operating firms or perform other
important services for UAM. We have found that an active program of awarding
stock options to these key employees and service providers directly links
their interests with those of our stockholders and is an important component
of their compensation.
As of February 29, 2000, UAM had only 1,983,439 shares available for future
grants of all types of options under its existing plan, the Amended and Restated
1994 Stock Option Plan (the "Existing Plan"). We believe that additional option
shares are needed to give UAM adequate flexibility in providing appropriate
incentives to key personnel and directors. If the stockholders approve the
Revised Plan, this revised plan will continue to be UAM's only stock option plan
and 5,000,000 additional shares of UAM common stock will become available for
future grants of all types of options under this plan. These additional shares
equal 8.9% of UAM common stock outstanding as of February 29, 2000, and, with
the 1,983,439 shares carried forward from the existing plan, equal less than 13%
of common stock outstanding as of that date. As of February 29, 2000, there were
9,920,822 shares covered by outstanding stock options under the Existing Plan
and all prior plans. The closing price of UAM's common stock as reported by the
New York Stock Exchange on February 29, 2000 was $14.9375 per share.
IMPORTANT FEATURES OF THE REVISED PLAN
Types of Options Under the Revised Plan, UAM may grant incentive stock options
("ISOs") to employees and non-incentive stock options to employees and other
key service providers to purchase shares of its common stock. The Revised Plan
also provides for grants of options to employees working in the United Kingdom
("UK Options") and for grants of non-incentive options to our Directors.
Shares Reserved In addition to the 11,903,745 shares reserved for issuance
under the Revised Plan as of February 29, 2000, the Compensation Committee may
continue to reserve, for options under the plan other than ISOs and UK
Options, certain shares of common stock that UAM repurchases on the open
market or in private transactions under its existing stock repurchase program
(the "Repurchased Shares"). However, two conditions must be met. First, UAM
must not have paid more than the market value of the Repurchased Shares.
Second, as of the date the Compensation Committee reserves these additional
shares, the cumulative amount that UAM has received in cash from option
exercises under the plan since its adoption in 1994 cannot be less than the
total price UAM has paid for the Repurchased Shares.
If an option granted under the Revised Plan expires or terminates before it
has been exercised in full, the shares of common stock reserved for the
unexercised portion of the option will become available for future option
grants under the plan. Also, shares surrendered to UAM or withheld by UAM as
payment for an option or to cover any required tax withholding will become
available for future option grants under the Revised Plan.
Adjustment of Reserved Shares If UAM changes its capital structure (for
example, by a recapitalization, stock split, stock dividend or combination of
shares), the Board will make appropriate adjustments, both to the shares
reserved under the Revised Plan and to existing options under the plan. These
adjustments will include adjustments to:
> the total number and kind of shares reserved under the plan;
> the number of shares that may be purchased upon the exercise of options that
have already been granted under the plan; and
> the option prices per share for existing options.
However, under such circumstances, the Board may not make any adjustment that
would reduce an option's exercise price to less than the par value per share
of common stock. The Board will make these adjustments with the advice of
UAM's auditors and, for shares allocable to outstanding UK Options, with the
consent of the UK Board of Inland Revenue.
Eligible Participants The general purposes of the Revised Plan are:
> to encourage employees who have substantial responsibility for the management
and growth of UAM and its affiliated firms to continue their employment;
> to increase these employees' ownership stake in UAM's success; and
> to motivate others who provide important services to UAM.
To these ends, all executive officers and other key employees of UAM and its
subsidiaries and all non-employees, including Directors, who provide important
services to UAM are eligible to participate in the Revised Plan. Currently, UAM
and its affiliated firms have approximately 2,100 employees who will be eligible
to participate in the Revised Plan.
Administration The Compensation Committee will administer the Revised Plan and
the grant of options under the plan. The plan generally requires that the
Compensation Committee consist entirely of Directors who qualify as "outside"
directors under Internal Revenue Code Section 162(m) and as "nonemployee"
directors under Section 16(b)(3) of the Securities Exchange Act of 1934.
When it grants an option under the plan the Compensation Committee has the
power, within legal limits, to decide:
> to whom it will grant the option;
> whether the option will be an ISO, a non-incentive option or a UK Option;
> the number of shares of common stock covered by the option;
> the term of the option; and
> other terms and conditions applicable to the option.
In selecting the persons to whom options will be granted and in deciding how
many shares will be subject to each option, the Compensation Committee will
consider a variety of factors, including:
> the importance of a person's duties;
> the person's experience with UAM or a subsidiary;
> the person's future value to UAM or a subsidiary; and
> the person's present and potential contribution to the success of UAM and its
affiliated firms.
The Compensation Committee will also interpret the Revised Plan and make rules
and regulations relating to the plan.
Vesting When it grants an option under the plan, the Compensation Committee
may decide to make the option vest (i.e., become exercisable) in installments.
If it does so, the Compensation Committee will decide the rate at which
vesting of these installments will occur and the number of options that will
vest in each installment. In addition, certain situations involving a change
of control of the Company will cause all of a participant's unvested options
to vest. These situations include:
> an outside party's acquisition of 20% or more of UAM's stock from someone
other than UAM or an entity closely affiliated with UAM;
> a change of 50% or more of the members of the Board of Directors if a majority
of the Directors then in office does not approve the change;
> UAM's merger into another entity, if as a result of the merger, (a) the
persons who held UAM's stock before the merger own only 60% or less of the
stock of the resulting entity, (b) any stockholder becomes a 35% or greater
owner of UAM or (c) a change of 50% or more of the members of the Board of
Directors occurs;
> UAM's dissolution; and
> the sale of all or substantially all of UAM's assets, unless after the sale
(a) the persons who held UAM's stock before the sale own more than 60% of the
entity acquiring UAM's assets and (b) no stockholder becomes a 35% owner of
such entity, and (c) at least a majority of the members of the purchaser's
board of directors were members of UAM's Board.
If they choose to, holders of unexercised ISOs that meet the requirements of
Internal Revenue Code Section 422 can waive the right to this accelerated
vesting.
Exercise Price The Compensation Committee will determine an option's exercise
price at the time the option is granted, within certain parameters. For ISOs
and UK Options, the exercise price per share may not be less than the fair
market value of a share of common stock on the date UAM grants the option. For
an ISO granted to an employee who owns over 10% of UAM's common stock at the
time of grant, the exercise price per share may not be less than 110% of this
fair market value. The exercise price per share for non-incentive stock
options may not be less than 50% of the fair market value of a share of common
stock on the date of grant. UAM may not grant options under the Revised Plan
with an exercise price of less than the par value of its common stock.
The form of option grant adopted under the Revised Plan generally provides
several alternative methods for payment of the exercise price (and for
satisfaction of UAM's tax withholding obligations on employee non-incentive
options):
> cash; or
> surrender or deemed surrender of already-owned stock; or
> withholding by UAM of shares from those acquired upon exercise; or
> delivery of irrevocable instructions to a broker to sell shares from the
exercised option and deliver the proceeds to UAM; or
> a combination of any of these methods.
If a participant delivers or offsets shares to pay the exercise price, these
shares must have a fair market value equal to the total exercise price of the
options being exercised. However, the Compensation Committee may decide that
an exercise of an option through the delivery or deemed delivery of shares of
common stock or any other non-cash method is not in UAM's best interest, and
require payment of the purchase price in cash.
Limits on Grants to Participants The Revised Plan limits the number of options
(other than UK Options) that UAM may grant any plan participant in any
calendar year to the number of shares available for future grants of all types
of options under the Existing Plan as of February 29, 2000 plus the total number
of additional shares that will become available for future grants of all types
of options upon stockholder approval of the Revised Plan. UK Options under the
plan are limited to 100,000 per participant per year. In addition, the plan
prohibits UAM from granting a UK Option to a participant if doing so would cause
the participant to hold outstanding UK Options with a total exercise price more
than Brt Pd 30,000. Furthermore, the plan limits the number of a participant's
ISOs that can become exercisable for the first time in any one year to those
with an aggregate exercise price of $100,000.
Incentive and Non-incentive Stock Options ISOs granted under the Revised Plan
must meet the requirements of Internal Revenue Code Section 422. The
Compensation Committee may grant non-incentive stock options that do not meet
these requirements. Under the plan, UAM may issue as a non-incentive stock
option an option that otherwise qualifies as an ISO, if the option grant form
specifies this at the time of the grant. Subject to the terms of the Revised
Plan, the Compensation Committee has complete discretion to establish the
terms and conditions for each non-incentive stock option that it grants.
Option Transfers Any ISO or UK Option granted under the Revised Plan will be
transferable only by will or under laws of inheritance. Under the plan's form
of option grant, participants may generally transfer non-incentive stock
options to family members, either outright or in trust.
Expiration and Termination of Options The Compensation Committee will
determine each option's expiration date at the time it grants the option.
However, all ISOs and UK Options granted under the plan must expire within 10
years after they are granted. In addition, an ISO granted to a participant who
owns over 10% of UAM's common stock at the time of grant must expire within
five years after the grant date.
Options granted under the plan will terminate three months after the
employment or other service relationship between UAM and the participant ends
for any reason, other than the participant's death. If a participant dies
while holding an unexpired option granted under the plan, the option will
terminate one year after the participant's death. During the applicable period
after the participant's death, either the executor of the participant's estate
or the person to whom the participant transferred the option may exercise the
option. However, in the case of a UK Option, only the executor may exercise
it. In all events, no option may be exercised after its specified expiration
date.
If UAM dissolves, liquidates, merges, consolidates or reorganizes, the Board
of Directors may decide to terminate each outstanding option as of the date of
such an event. If the Board does so, it will suspend the exercise of all
options outstanding under the plan a reasonable time before the event and give
14 days' advance notice of the suspension to each participant to permit
participants to exercise vested outstanding options before the suspension.
The Revised Plan will expire in 2010, three years after the Existing Plan was
to expire.
Amendment or Revocation of Plan Within certain limits, the Board of Directors
has the right to alter, amend or revoke the Revised Plan. Without the approval
of the stockholders, however, the Board may not alter or amend the plan to
increase the maximum number of shares of common stock that may be issued under
the plan or materially modify the eligibility requirements for participation
in the plan.
UK OPTIONS
Under the Revised Plan, UAM may grant options to employees of UAM or its
affiliated firms who are subject to income tax laws of the United Kingdom. UK
tax laws require that these options be subject to additional terms. UK Options
may be granted only to employees who are normally required to work at least 20
hours per week for UAM or its affiliated firms or, for employees who are also
directors of UAM or its affiliated firms, at least 25 hours per week. Also, as
noted above, UAM may not grant UK Options to any employee if doing so would
cause the employee to hold outstanding UK Options under all UAM option plans
to purchase shares of common stock with a total exercise price more than
Brt Pd 30,000. UAM expects that the UK Board of Inland Revenue will approve the
portions of the Revised Plan under which the UK Options will be granted.
Therefore, UAM expects that the UK Options UAM grants under the plan will
provide significant UK income tax benefits to employees who receive and exercise
these options.
ELIGIBLE DIRECTOR OPTIONS
As part of the proposed Revised Plan, the Board of Directors has also approved
and recommends that the stockholders approve a stock option program for
eligible Directors. An eligible Director is any Director who is not an officer
or employee of UAM or its subsidiaries. Currently there are seven eligible
directors on UAM's Board.
The purpose of the eligible Director stock option program is to attract,
retain and motivate Directors and to promote a strong identity of interests
among UAM, its Directors, and its stockholders. In addition, the goal of the
portion of this program under which eligible Directors may receive discounted
options in lieu of their cash retainer fees is for UAM to reap the benefit of
greater equity investment by its Directors while saving the cash otherwise
payable as retainer fees. UAM believes that this aspect of the eligible
Director stock option program will continue to encourage directors to make a
greater equity investment in UAM and further align the interests of UAM's
Directors and stockholders.
Summary of Provisions The following provisions will apply specifically to
eligible Director options:
> automatic grant of non-incentive options for 14,000 shares of common stock
annually;
> election by any eligible Director to waive his or her annual cash retainer fee
in exchange for a discounted stock option;
> expiration of options after five years;
> an overall ceiling on eligible Director option grants of 1,000,000 shares,
which are included in the 16,903,745 total shares authorized for issuance
under the Revised Plan; and
> payment of these options' exercise price may be made in any combination of the
following (unless the Compensation Committee determines in any instance that
it is in UAM's best interest to require payment only in cash):
- -- cash;
- -- surrender or deemed surrender of already-owned stock;
- -- withholding of shares from those acquired upon exercise; or
- -- delivery of irrevocable instructions to a broker to sell shares from the
exercised option and deliver the proceeds to UAM.
In addition to these specific provisions, the general provisions of the
Revised Plan also apply to eligible Director options.
Automatic Option Grants In each of the years during the term of the Revised
Plan, UAM will automatically grant, on the 30th day after its annual meeting
of stockholders, non-incentive stock options for 14,000 shares of its common
stock to each eligible Director then serving as a Director. On or after six
months after the option grant date, eligible Directors may purchase shares
under these options at the fair market value of UAM's common stock on the
grant date. The total number of shares underlying the options that UAM expects
to grant automatically this year to the eligible Directors as a group will be
84,000 assuming that UAM will have six eligible Directors.
Discounted Options Every six months, eligible Directors may elect to receive
discounted options in lieu of all or part of their annual cash retainer fee.
An eligible director must make this election before he or she receives the
retainer fee. Directors may receive discounted options only in lieu of their
retainer fees and not in lieu of fees paid for attendance at Board or
committee meetings, or in lieu of any expenses for which UAM reimburses them.
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 common stock under
option equals the amount of the annual cash retainer fee foregone divided by
25% of the closing price of our common stock on the grant date. 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 $16.00 on the date of grant, she will receive an option to
purchase 3,750 shares ($15,000 divided by $4.00) at $12.00 per share. These
options are exercisable in full beginning six months after the date of grant.
All eligible Director options terminate five years from the date of grant or,
if sooner, six months after the Director's Board service ends for any reason
other than death.
If an eligible Director dies, the executor of the Director's estate or the
person to whom the Director transferred his or her options may exercise all of
the Director's outstanding options within one year after the Director's death.
However, in no event may any of an eligible Director's options be exercised
more than five years after they were granted.
DEFERRED DELIVERY OF OPTION SHARES
The Compensation Committee may grant non-incentive stock options that give the
participant the right to choose a deferred delivery of shares upon exercise of
the option. Also, all eligible Director options include this right. Any
election to defer delivery of shares must be irrevocable and must be made at
least a specified period of time prior to actual exercise of the option.
Payment for the option must be made by delivery or deemed delivery of already-
owned shares of UAM stock. A participant who elects such a deferred delivery
will postpone his or her federal income tax until the UAM shares are actually
delivered at the end of the deferral period chosen by the participant. (UAM's
tax deduction will also be postponed until such time.) Dividends otherwise
payable on deferred shares following exercise of an option will be credited to
the participant as additional deferred shares.
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. The tax laws and their interpretation
are subject to change and they may apply differently in different individual
circumstances. Also, 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 U.S. income tax laws. The following is a general description of the
federal income tax rules that apply to the Revised Plan.
UAM intends for ISOs it grants under the Revised Plan to qualify as "Incentive
Stock Options" under Internal Revenue Code Section 422. A participant will not
owe ordinary income taxes on the grant or exercise of these options if the
participant holds the shares acquired upon exercise of the options for at
least one year after exercising the options and receiving the shares and for
at least two years after the date the options were granted. Any gain or loss a
participant receives when he or she disposes of these shares will be treated
as a long-term capital gain or loss. Currently, long-term capital gains on
stock are generally taxed at a rate of 20%. UAM will not be entitled to a
federal income tax deduction for either granting these incentive options or
transferring shares upon the options' exercise.
If, within two years after the grant of an ISO or one year after exercising
the ISO, a participant disposes of shares acquired by exercising the ISO, the
participant will receive ordinary income and owe tax on that income in the
year in which he or she disposes of the shares. The amount of this taxable
income generally will be the lesser of:
> the amount by which the market value of the shares acquired on the exercise
date exceeds the ISO's exercise price, or
> any gain the participant receives on the disposition of the shares.
UAM will generally be able to deduct a corresponding amount in the same year.
Under these circumstances, if a participant disposes of the shares and
receives an amount that is more than the fair market value of the shares on
the exercise date, that amount will be treated as a capital gain.
Although participants are not subject to ordinary federal income tax upon the
grant or exercise of an ISO, any spread between the value of ISO stock upon
exercise of the option and the purchase price of the stock is treated as an
item of income for federal alternative minimum tax purposes.
A participant who acquires shares by exercising a non-incentive stock option
will generally receive, at the time of exercise, taxable ordinary income equal
to the difference between the exercise price and the fair market value of the
shares on the exercise date. The current maximum federal tax rate on such
income is 39.6%. UAM will ordinarily be able to deduct a corresponding amount
in the year the participant is taxed on this income.
Because UAM is a public company, Internal Revenue Code section 162(m)
prohibits it from deducting as compensation for specific executives more than
$1,000,000 per year per executive, unless the compensation is performance-
based. These executives are UAM's Chief Executive Officer as of the end of any
tax year and those executives employed by UAM at the end of any tax year whose
compensation UAM must report in the Summary Compensation Table of each year's
Proxy Statement. For options to be performance-based, the plan under which
they are granted must specify the maximum number of options that may be
granted to any participant during a particular period of time. The Revised
Plan states that the maximum number of options that may be granted to any
participant in any calendar year is the number of shares available for future
grants of all types of options under the Existing Plan as of February 29, 2000
plus the total number of additional shares that will become available for
future grants of all types of options upon stockholder approval of the Revised
Plan. UAM believes that the plan otherwise satisfies all requirements for
options granted under the plan to qualify as performance-based compensation,
provided that they are granted at no less than the fair market value of the
UAM stock on the date of grant of the options.
BENEFITS UNDER THE PLAN
Because of the Revised Plan's discretionary nature, UAM cannot determine at
this time who will participate in the plan, or the number of options or other
awards any person or group of people will receive under the plan.
The following table shows information about options granted in 1999 under the
Existing Plan. The executive officers listed by name are those executive
officers named in the Summary Compensation Table included later in this Proxy
Statement.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SHARES UNDERLYING IN-THE-MONEY OPTIONS
NAME AND PRINCIPAL POSITION OPTIONS GRANTED (#) AT 2/29/2000 ($) (1)
- --------------------------- --------------------------- --------------------
<S> <C> <C>
Norton H. Reamer ................................................ 127,000 --
Chairman of the Board, Chief Executive Officer and Director
Charles E. Haldeman, Jr. (2) .................................... 119,000 --
President, Chief Operating Officer and Director
William H. Park ................................................. 97,000 --
Executive Vice President and Chief Financial Officer
Franklin H. Kettle .............................................. 103,000 --
Executive Vice President and Director of Corporate Development
George D. McClelland ............................................ 24,000 --
Senior Vice President
All current executive officers as a group (9 individuals) 433,000 --
All non-executive Directors as a group (13 individuals) (3) 243,134 10,800
All employees (excluding executive officers) as a group 1,606,505 4,000
- ----------
(1) An "in-the-money" option is an option for which the exercise price of the underlying stock is less than the closing price
($14.9375) of our common stock on February 29, 2000; the value shown reflects stock price appreciation since the option's
date of grant. No options granted to UAM's executive officers in 1999 are in-the-money. One quarter of the total options
granted to each person listed in the table were exerciseable on February 29, 2000.
(2) Effective December 31, 1999, Mr. Haldeman resigned as a Director, officer and employee of UAM.
(3) Options were granted in 1999 to three Directors who are not executive officers of UAM, but each of whom is a principal of
one of UAM's affiliated firms. These options are included in this line of the table.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANY'S SECOND AMENDED AND RESTATED 1994 STOCK OPTION PLAN.
</TABLE>
ITEM 3 -- SELECTION OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
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, 2000, subject to ratification by our stockholders.
This firm served as our independent accountants in 1999.
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, 2000.
OWNERSHIP OF UAM'S COMMON STOCK
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
On February 29, 2000, UAM had 56,397,935 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 29, 2000;
(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 (but not
those of any other person) as outstanding.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME ISSUED SHARES SHARES ISSUABLE TOTAL PERCENT
- ---- ------------- --------------- ----- -------
<S> <C> <C> <C> <C>
Harold J. Baxter(1) .................... -- 974,385 974,385 1.7%
John P. Clay(1) ........................ 632,200 -- 632,200 1.1%
Francis Finlay(1) ...................... 1,398,605 -- 1,398,605 2.5%
Robert J. Greenebaum(2)(3) ............. 47,959 52,667 100,626 *
Charles E. Haldeman, Jr.(4) ............ 180,000 73,721 253,721 *
Beverly L. Hamilton .................... 1,000 36,899 37,899 *
George E. Handtmann, III(1) ............ 213,860 201,741 415,601 *
Jay O. Light ........................... 12,600 71,779 84,379 *
Norton H. Reamer ....................... 2,180,836 299,926 2,480,762 4.4%
David I. Russell(5) .................... 27,000 48,000 75,000 *
Philip Scaturro(6) ..................... 50,500 59,890 110,390 *
John A. Shane(7) ....................... 35,474 48,000 83,474 *
Barbara S. Thomas ...................... 12,000 69,523 81,523 *
William H. Park ........................ 176,372 188,778 365,150 *
Franklin H. Kettle ..................... 67,080 179,649 246,729 *
George D. McClelland ................... -- 61,400 61,400 *
All UAM Executive Officers and Directors
as a Group (21 individuals) .......... 5,063,595 2,538,511 7,602,106 12.9%
- ----------
* 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 who is not standing for re-election.
(4) Effective December 31, 1999, this individual resigned as a Director, officer and employee of UAM.
(5) Includes 5,000 shares held in trust. Mr. Russell has shared voting and investment power over these
shares.
(6) Does not include 739,858 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.
(7) Includes 2,264 shares of common stock owned by Palmer Service Corporation. Mr. Shane is President of
this company.
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AS OF DECEMBER 31, 1999
The following table lists certain information, to the best of our knowledge,
about the beneficial ownership of UAM stock as of December 31, 1999 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.
NUMBER OF SHARES OF
NAME AND ADDRESS UAM COMMON STOCK PERCENT
- ---------------- ------------------- -------
Franklin Mutual Advisers, LLC (1) .............. 9,613,431 16.8%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Tiger Management L.L.C. (2) .................... 8,330,262 14.6%
101 Park Avenue
New York, NY 10178
Oak Value Capital Management, Inc. (3) ......... 4,706,196 8.2%
3100 Tower Boulevard, Suite 700
Durham, NC 27707
- ----------
(1) This entity, an investment adviser, reported having sole voting power and
sole dispositive power over all such shares as of December 31, 1999. This
entity was formerly known as Franklin Mutual Advisers, Inc.
(2) This includes shares owned by Tiger Performance L.L.C., an entity under
common control with Tiger Management L.L.C. These entities, both investment
advisers, reported having shared voting power and shared dispositive power
over all such shares as of December 31, 1999.
(3) This entity, an investment adviser, reported having shared voting power and
shared dispositive power over all such shares as of December 31, 1999.
<PAGE>
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. Certain information about Mr. Reamer 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 18, 2000 Meeting Date Position with UAM and Business Experience
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
William H. Park ..................................... 52 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., UAM Funds, Inc. II, and UAM Funds Trust,
each of which is an investment company.
Franklin H. Kettle .................................. 42 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 ................................... 43 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 ................................ 40 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 ................................ 53 Senior Vice President since joining UAM in 1994, in our Operations
Group.
Amit M. Nanavati .................................... 54 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.
Juliana M. Coyle .................................... 44 Senior Vice President since September 1998, and Treasurer since 1994.
Joined UAM as Assistant Treasurer in 1993, and named Vice President in
1997.
Kevin P. O'Brien .................................... 42 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>
<PAGE>
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 ALL OTHER
COMPENSATION ($) OPTIONS GRANTED COMPENSATION
NAME AND POSITION PRINCIPAL YEAR SALARY ($) BONUS ($) (1) (#) ($)
- --------------------------- ---- ---------- --------- ---------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Norton H. Reamer ....................... 1999 850,000 571,200 60,400 127,000 --
Chairman of the Board, 1998 850,000 621,600 58,800 185,000 --
Chief Executive Officer and Director 1997 850,000 772,000 58,800 126,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
Charles E. Haldeman, Jr. (2) ........... 1999 800,000 514,100 66,000 119,000
President, Chief Operating 1998 791,700 466,200 82,900 285,000 203,100
Officer and Director
- ------------------------------------------------------------------------------------------------------------------------------------
William H. Park ........................ 1999 570,000 571,200 52,800 97,000 --
Executive Vice President 1998 570,000 475,000 52,800 139,000 --
and Chief Financial Officer 1997 550,000 463,200 52,800 70,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin H. Kettle ..................... 1999 490,000 614,000 52,000 103,000 --
Executive Vice President 1998 490,000 500,000 51,300 138,000 --
and Director of Corporate Development 1997 450,000 482,000 51,300 62,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
George D. McClelland ................... 1999 380,000 309,400 54,400 24,000 --
Senior Vice President 1998 360,000 235,000 52,800 44,000 --
1997 330,000 231,600 52,800 20,000 --
- ------------
(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 1999, the respective
portions of these benefits were: Mr. Reamer, $10,400, $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, $2,000, $24,000 and $26,000; and Mr. McClelland, $4,400, $24,000 and $26,000. The
amount for Mr. Haldeman also includes rent paid by UAM for temporary housing near our executive offices in Boston of $13,100 in
1999 and $30,000 in 1998.
(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 for 1998 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 for 1998 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. Effective December 31, 1999, Mr. Haldeman resigned as a director, officer and employee of UAM.
</TABLE>
<PAGE>
TOTAL OPTION EXERCISES IN 1999 AND YEAR-END VALUES
This table gives information for options exercised in 1999 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
($18.5625) of our common stock on December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS HELD AT 12/31/1999 AT 12/31/1999 (1)
ACQUIRED VALUE ------------------------------ ------------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Norton H. Reamer ....................... 58,400 231,800 233,500 347,500 38,300 --
Charles E. Haldeman, Jr ................ -- -- 71,250 332,750 -- --
William H. Park ........................ -- -- 141,750 248,250 20,300 --
Franklin H. Kettle ..................... 26,200 119,500 140,700 250,300 20,700 --
George D. McClelland ................... 10,000 53,800 48,850 72,850 5,800 --
- ------------
(1) An "in-the-money" option is an option for which the exercise price of the underlying stock is less than the closing price
($18.5625) of our common stock on December 31, 1999; the value shown reflects stock price appreciation since the option's date
of grant.
</TABLE>
OPTION GRANTS IN 1999
This table shows all options to purchase our common stock granted in 1999 to
our Chief Executive Officer and each of our four other most highly compensated
executive officers, and the potential value of such grants based on the Black-
Scholes option pricing model. This method of valuation is required to be
disclosed by SEC rules, and is not meant to forecast possible future
appreciation in our stock price.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF TOTAL
UNDERLYING OPTIONS OPTIONS GRANTED TO EXERCISE OR BASE GRANT DATE PRESENT
NAME GRANTED (#)(1) EMPLOYEES IN 1999 PRICE ($/SH)(2) EXPIRATION DATE VALUE ($)(3)
- ---- -------------------- -------------------- ------------------ ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Norton H. Reamer ........... 127,000 6.23 21.375 2/17/2004 534,700
Charles E. Haldeman, Jr .... 119,000 5.83 21.375 2/17/2004 501,000
William H. Park ............ 97,000 4.76 21.375 2/17/2004 408,400
Franklin H. Kettle ......... 103,000 5.05 21.375 2/17/2004 433,600
George D. McClelland ....... 24,000 1.18 21.375 2/17/2004 101,000
- ------------
(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 actual value of these options, if any, will depend on the market price of our common stock on the date of exercise. This
table shows the potential value of these options based on the Black-Scholes option pricing model, which is used typically to
price exchange-traded options. However, we believe that the model may overstate the value of the options UAM awards for many
reasons. First, the model assumes a liquid market for options, although the options awarded under UAM's stock option plan
generally may not be transferred. Second, exchange-traded options may be exercised immediately; however, UAM's options are
subject to certain vesting rules. Additionally, the following assumptions, which may prove to be inaccurate in the future, were
used in this model:
</TABLE>
Stock Price Volatility ......................................... 24.222%
Dividend Yield ................................................. 3.743%
Risk-free Rate of Return ....................................... 4.910%
Option Term .................................................... 5 years
CERTAIN EMPLOYMENT ARRANGEMENTS
EMPLOYMENT CONTRACTS
Proposed Retirement and Consulting Agreement with CEO UAM and Norton H. Reamer
have agreed in principle on terms of a retirement and consulting agreement.
This proposed arrangement includes the following provisions:
> Mr. Reamer's retirement as Chief Executive Officer of UAM, and as an officer,
director or trustee of any of UAM's affiliates and employee benefit trusts
becomes effective when a new chief executive officer of UAM is hired or
September 21, 2000, whichever occurs earlier;
> Mr. Reamer will be nominated as a Director for election at the 2000 Annual
Meeting of Stockholders and, subject to his re-election, will remain Chairman
of the Board and a member of the Executive Committee of the Board, until
September 21, 2000;
> after September 21, 2000, Mr. Reamer will become Founder and Chairman
Emeritus;
> Mr. Reamer's present compensation arrangements will continue until his
retirement as Chief Executive Officer of UAM is effective;
> following his retirement, UAM will pay Mr. Reamer approximately $2,300,000;
> following his retirement as Chief Executive Officer and until September 21,
2007, UAM will engage Mr. Reamer as a consultant to perform assignments that
may be reasonably requested by the Company from time to time;
> through September 21, 2007, Mr. Reamer agrees not to engage in activities that
are competitive with the business of UAM or its affiliates;
> UAM will pay Mr. Reamer a consulting fee at the annual rate of $400,000, plus
expenses, and will provide Mr. Reamer with appropriate office space in Boston
and a full-time secretary; and
> while consulting for UAM, Mr. Reamer will be entitled to accelerate the
payment of consulting fees (less a penalty of approximately 6%) and other
related benefits at their discounted present value.
The final agreement may also address the vesting schedule and expiration of
options to purchase UAM's common stock already granted to Mr. Reamer.
Employment Agreement with Former President UAM had entered into an employment
agreement with Charles E. Haldeman, Jr., its then President and Chief
Operating Officer. This agreement originally included the following
provisions:
> a term of three years, commencing March 1, 1998;
> an annual salary of not less than $800,000;
> an annual bonus equal to (a) UAM's Cash Earnings (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.
In connection with Mr. Haldeman's resignation as a Director, officer and
employee of UAM, UAM and Mr. Haldeman amended this employment agreement so
that the term ended on December 31, 1999.
COMPENSATION ON TERMINATION OF EMPLOYMENT
Salary Continuation Plan The Plan generally provides salary continuation pay
and continuation of certain benefits for up to 30 months to employees who may
be subject to any involuntary termination by UAM. However, the Plan does not
provide benefits to any employee who may be terminated for reasons related to
job performance.
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
UAM has entered into agreements with each executive officer that provide the
officer with compensation and benefits arrangements upon a change-in-control.
Under these agreements, a change-in-control includes any of the following
events:
> any "person," as defined in the Securities Exchange Act of 1934, as amended,
acquires 30 percent or more of our voting securities;
> a majority of UAM's Directors are replaced;
> UAM's stockholders approve certain mergers, or a liquidation or sale of
substantially all of our assets; or
> a liquidation of UAM.
Upon a change-in-control, these agreements obligate UAM to continue to employ
the officer for two years at the same rate of compensation and with
substantially similar responsibilities. Further, UAM would be required to pay
the officer a two or three times multiple of the officer's total annual
compensation rate if the officer:
> dies;
> becomes disabled;
> is terminated by UAM (or its successor) without cause;
> in the officer's judgment, is constructively terminated by UAM; or
> terminates his or her employment for any reason within 30 days of the first
anniversary of the triggering event (applicable only to certain officers).
For certain officers in certain circumstances, this payment would include an
additional amount equal to the federal excise tax imposed on this payment
(including the additional "gross-up" amount).
In addition, 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;
> UAM's stockholders approve certain mergers, or a liquidation or sale of
substantially all of our assets; or
> a liquidation of UAM.
Based on account balances at December 31, 1999, upon a change-in-control the
following aggregate benefits would become immediately payable to UAM's current
officers participating in these compensation plans:
> approximately 28,800 shares of UAM common stock (based on notional share
account balances) and approximately $702,700 (based on mutual fund account
balances) under the Deferred Compensation Plan; and
> 9,148 shares of UAM common stock under the Stock Option Deferral Plan.
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 job performance, experience and compensation history of the executive
officer;
> the Company's performance as measured by Cash Earnings 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 23. Based on available public data, the Committee believes that the 1999
annual compensation for each of the Named Executive Officers was in the second
quartile 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
Cash Earnings 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 and other executive officers on its
Management Committee, it is the intention of the Compensation Committee that
the combination of an individual's bonus and the aggregate Option Value of
stock option grants equals approximately twice the individual's salary. Thus,
target bonuses for 1999 were set at levels roughly corresponding to these
officers' salaries, and stock options were granted with an aggregate Option
Value on the date of grant that approximated their 1998 bonus awards. For Mr.
McClelland, a Senior Vice President, the target bonus for 1999 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 1999 and bonus for 1998 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;
> 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 The Committee and the Board of Directors continue to consider Cash
Earnings per share to be the most important basis for measuring the value of
UAM to its stockholders. However, the Committee also 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 Earnings 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 Earnings bonuses earned by the Chief Executive Officer and President
for 1999 and reported in the table on page 17 were approximately 40% below the
bonus targets calculated by the formula. This adjustment reflects the
Committee's overall assessment of UAM's performance in 1999, based on the
criteria described above.
The Cash Earnings bonuses earned by the other Named Executive Officers for
1999 and reported in the table on page 17 were equal to the bonuses calculated
by the formula. The Committee did not modify the amount of Cash Earnings
bonuses payable to these officers under the strictly formulaic approach. This
reflects both the Committee's overall assessment of UAM's performance in 1999,
based on the criteria described above, and the Committee's assessment of the
performance in 1999 of these executive officers in their respective functional
areas.
Stock Option Awards In February 1999, the Committee granted stock options to
each of the Named Executive Officers under UAM's Stock Option Plan. To
determine the size of the grants to UAM's Chief Executive Officer and other
executive officers on its Management Committee, the Committee divided the
officer's bonus for 1998 by the Option Value on the date of grant. 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 1999 and bonus for 1998 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.
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
Chief Executive Officer and Executive Vice Presidents. These guidelines
require Mr. Reamer 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 Earnings 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.
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."
Cash Earnings In any fiscal year, UAM's net income or loss plus amortization,
depreciation and the reduction in value of intangible assets, net of taxes.
(Cash Earnings were formerly referred to as "Operating Cash Flow.")
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
<PAGE>
PERFORMANCE GRAPH
This graph compares over a five-year period beginning December 31, 1994:
> 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 often update our Peer Group in response to changes occasioned by mergers,
acquisitions and initial public offerings that occur 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 NEW PEER GROUP
-------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Affiliated Managers Group, Inc.(1) Affiliated Managers Group, Inc. (1)
Alliance Capital Management L.P. Alliance Capital Management L.P.
AMVESCAP Plc (2) AMVESCAP Plc (2)
Atalanta Sosnoff Capital Corp. Atalanta Sosnoff Capital Corp.
Conning Corp. (3) Blackrock Inc. (11)
Eaton Vance Corp. Conning Corp. (3)
Federated Investors, Inc. (4) Eaton Vance Corp.
Franklin Resources, Inc. Federated Investors, Inc. (4)
John Nuveen & Co. Franklin Resources, Inc.
Liberty Financial Companies (5) Gabelli Asset Management, Inc. (12)
Nvest L.P. John Nuveen & Co.
Phoenix Investment Partners, Ltd. (6) Liberty Financial Companies (5)
Pilgrim America Capital Corporation (7) Neuberger Berman Inc. (13)
PIMCO Advisors Holdings, L.P. (8) Nvest L.P.
Pioneer Group, Inc. Phoenix Investment Partners, Ltd. (6)
SEI Investments Company Pilgrim America Capital Corporation (7)
T. Rowe Price Associates PIMCO Advisors Holdings, L.P. (8)
Waddell & Reed Financial, Inc. (9) Pioneer Group, Inc.
Winmill & Co. Incorporated (10) SEI Investments Company
T. Rowe Price Associates
Waddell & Reed Financial, Inc. (9)
Winmill & Co. Incorporated (10)
-------------------------------------------------------------------------------------------------------------------------------
- ------------
(1) Included since its initial public offering in November 1997.
(2) Included since the merger of INVESCO with AIM in May 1997.
(3) Included since its initial public offering in December 1997.
(4) Included since its initial public offering in May 1998.
(5) Included since its acquisition of Colonial Group, Inc. in March 1995.
(6) Included since its acquisition of Duff & Phelps Corp. in November 1995.
(7) Included until its acquisition by Reliastar Financial Corp. in November 1999.
(8) Included since February 1, 1998 (following its merger with Oppenheimer Capital, L.P. in December 1997).
(9) Included since its initial public offering in March 1998.
(10) Changed its name from Bull & Bear Group, Inc. in April 1999.
(11) Included since its initial public offering in September 1999.
(12) Included since its initial public offering in February 1999.
(13) Included since its initial public offering in October 1999.
</TABLE>
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, 1994 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) 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,
1994, 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.
[Graphic Omitted]
- --------------------------------------------------------------------------------
December 31, 1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------
UAM 100.0 107.12 153.07 144.32 158.53 117.51
- --------------------------------------------------------------------------------
S&P 500 100.0 137.58 169.17 225.61 290.09 351.13
- --------------------------------------------------------------------------------
Old Peer Group 100.0 135.79 185.62 285.80 257.60 317.70
- --------------------------------------------------------------------------------
New Peer Group 100.0 135.79 185.62 285.80 257.60 307.68
- --------------------------------------------------------------------------------
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- --------------------------------------------------------------------------------
During 1999, 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 1999, an officer or employee of UAM or any of
our affiliates.
During 1999, 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 1999, UAM had no interlocks with other companies.
<PAGE>
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 2001 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 26, 2000
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.
- --------------------------------------------------------------------------------
Whether or not you plan to attend the Annual Meeting, please vote. You may
vote electronically by using the Internet and telephone voting systems of our
transfer agent, Equiserve. Instructions on voting electronically are printed
on your Proxy Card. Or, you may vote by marking, signing, dating and promptly
mailing your Proxy Card to EquiServe 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 24, 2000
<PAGE>
SKU 489-PS-00
<PAGE>
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 18, 2000, beginning at 9:30 a.m. at The Boston Harbor Hotel, 70
Rowes Wharf, Boston, Massachusetts. The undersigned appoints each of Norton H.
Reamer, William H. Park and Franklin H. Kettle, 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, FOR ITEM 2 AND FOR ITEM 3.
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 SEE REVERSE
SIDE (PLEASE SIGN AND DATE ON REVERSE SIDE) SIDE
- ------------- -------------
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
- ----------------- ----------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- ----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND PROXY STATEMENT/PROSPECTUS AND PROXY
CARD. CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). HTTP://WWW.EPROXYVOTE.COM/UAM
FOR SHAREHOLDERS RESIDING OUTSIDE
THE UNITED STATES CALL COLLECT ON 3. ENTER YOUR 14-DIGIT VOTER CONTROL
A TOUCH-TONE PHONE 1-201-536-8073. NUMBER LOCATED ON YOUR PROXY CARD
ABOVE YOUR NAME.
3. ENTER YOUR 14-DIGIT VOTER CONTROL
NUMBER LOCATED ON YOUR PROXY CARD 4. FOLLOW THE INSTRUCTIONS PROVIDED.
ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/uam
anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[0489 - UNITED ASSET MANAGEMENT CORP.] [FILE NAME: UAM06A.ELX]
[VERSION - 3] [02/28/00] [orig. 02/17/00]
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<PAGE>
<TABLE>
<S> <C>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
ITEM 1. TO ELECT THE FOLLOWING NOMINEES AS DIRECTORS FOR AGAINST ABSTAIN
OF UAM TO SERVE UNTIL THE NEXT ANNUAL MEETING ITEM 2. TO APPROVE UAM'S SECOND AMENDED AND [ ] [ ] [ ]
OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS RESTATED 1994 STOCK OPTION PLAN.
ARE ELECTED AND QUALIFIED:
ITEM 3. TO RATIFY THE SELECTION OF [ ] [ ] [ ]
(01) Norton H. Reamer, (02) Harold J. Baxter, PRICEWATERHOUSECOOPERS LLP AS
(03) John P. Clay, (04) Beverly L. Hamilton, INDEPENDENT ACCOUNTANTS OF UAM
(05) George E. Handtmann, III, (06) Jay O. Light, FOR THE FISCAL YEAR ENDING
(07) David I. Russell, (08) Phillip Scaturro, DECEMBER 31, 2000.
(09) John A. Shane and (10) Barbara S. Thomas
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
FOR WITHHELD
ALL [ ] [ ] FROM ALL MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
NOMINEES NOMINEES
[ ] _________________________________________ Please sign exactly as your name is printed on the proxy.
FOR all nominees except as written above 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:_________________
</TABLE>
<PAGE>
[0489 - UNITED ASSET MANAGEMENT CORP.] [FILE NAME: UAM06B.ELX]
[VERSION - 1] [02/17/00] [orig. 02/17/00]
UAM06B DETACH HERE
