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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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UNITED ASSET MANAGEMENT CORPORATION
(NAME OF SUBJECT COMPANY)
UNITED ASSET MANAGEMENT CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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909420101
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JOSEPH R. RAMRATH, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
UNITED ASSET MANAGEMENT CORPORATION
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 330-8900
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
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COPY TO:
ADAM O. EMMERICH, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer
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ITEM 1. SUBJECT COMPANY INFORMATION
The name of the subject company is United Asset Management Corporation, a
Delaware corporation (the 'Company'). The address of the principal executive
offices of the Company is One International Place, Boston, Massachusetts 02110.
The telephone number of the Company at its principal executive offices is
(617) 330-8900. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this 'Statement')
relates is the Common Stock, par value $0.01 per share, of the Company (the
'Common Stock'). As of June 30, 2000, there were 57,177,404 shares of Common
Stock issued and outstanding and 17,020,581 shares issuable upon exercise of
warrants issued in connection with acquisition transactions and options to
acquire shares.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSONS
The filing person is the subject company. The Company's name, business
address and business telephone number are set forth in Item 1 above.
This Statement relates to the tender offer by OM Acquisition Corp. (the
'Purchaser'), a Delaware corporation and a wholly owned subsidiary of Old Mutual
plc, a public limited company incorporated in England and Wales ('Parent'), to
purchase all of the issued and outstanding shares of Common Stock (the
'Shares'), other than Common Shares beneficially owned by Parent or the
Purchaser, at a purchase price of $25.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase, dated July 17, 2000 and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the 'Offer'). The price to be paid in the Offer and the Merger (as
defined herein) is subject to downward adjustment in the event that the
Company's revenues from assets under management, excluding the effects of market
movements, decline below a specified level prior to the consummation of the
Offer. As used herein, 'Offer Price' shall mean $25.00 per Share or such lesser
amount as may be payable pursuant to the Merger Agreement (as defined herein).
The Offer is described in a Tender Offer Statement on Schedule TO (as amended or
supplemented from time to time, the 'Schedule TO'), filed by the Purchaser with
the Securities and Exchange Commission (the 'Commission') on July 17, 2000. The
Offer is made in accordance with the Agreement and Plan of Merger, dated as of
June 16, 2000, by and among Parent, the Purchaser and the Company (the 'Merger
Agreement'). The Merger Agreement provides that, subject to the satisfaction or
waiver of certain conditions, following completion of the Offer, and in
accordance with the Delaware General Corporation Law (the 'DGCL'), the Purchaser
will be merged with and into the Company (the 'Merger'). Following the
consummation of the Merger, the Company will continue as the surviving
corporation (the 'Surviving Corporation') and will be a wholly owned subsidiary
of Parent. As more fully described in Item 3 below, at the effective time of the
Merger (the 'Effective Time'), each issued and outstanding Share (other than
Shares owned by Parent, the Purchaser, any of their respective direct or
indirect, wholly owned subsidiaries, or by any wholly owned subsidiary of the
Company, which shares shall remain outstanding, and Shares held by stockholders
who did not vote in favor of the Merger Agreement and shall be entitled to and
who shall have demanded properly in writing appraisal of such shares in
accordance with Section 262 of the DGCL) will be converted into the right to
receive the Offer Price in cash or any greater amount per Share paid pursuant to
the Offer (the 'Merger Consideration').
The Offer to Purchase states that the principal offices of the Purchaser and
Parent are located at 3rd Floor, Lansdowne House, 57 Berkeley Square, London,
WIX 5DH, United Kingdom.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 under the Securities Exchange Act (the 'Information Statement') that
is attached as Annex B to this Statement and is incorporated herein by
reference. Except as described in this Statement (including in the Exhibits
hereto and in Annex B hereto) or incorporated herein by reference, to the
knowledge of the Company, as of the date of this Statement there exists no
material agreement, arrangement or understanding or any actual or potential
conflict of
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interest between the Company or its affiliates and (1) the Company's executive
officers, directors or affiliates or (2) the Purchaser or the Purchaser's
executive officers, directors or affiliates.
THE CONFIDENTIALITY AGREEMENTS. The summary of the confidentiality
agreements executed and delivered by Parent on August 10, 1999 and March 14,
2000, contained in Section 11 of the Offer to Purchase of Parent and the
Purchaser, dated July 17, 2000 and filed as Exhibit (a)(1)(A) to the Schedule TO
(the 'Offer to Purchase'), which is being mailed to stockholders together with
this Statement, is incorporated herein by reference.
INVESTMENT IN SECURITIES OF OLD MUTUAL. From time to time, various
affiliates of the Company may have, in the ordinary course of their investment
advisory business, managed investments in Parent common stock on behalf of their
clients.
RESTRUCTURING OF REVENUE-SHARING ARRANGEMENTS. Parent has had discussions
with members of the management of certain Company affiliates, including
affiliates certain officers of which are also members of the Company Board.
These discussions have related, in part, to possible termination of the existing
revenue-sharing arrangements between the Company and such affiliates under which
such officers currently receive compensation.
THE MERGER AGREEMENT. The summary of the Merger Agreement and the
description of the conditions of the Offer contained in Sections 11 and 14,
respectively, of the Offer to Purchase are incorporated herein by reference.
Such summary and description are qualified in their entirety by reference to the
Merger Agreement, which has been filed as Exhibit (e)(1) hereto and is
incorporated herein by reference.
NEGOTIATIONS BETWEEN PARENT AND CERTAIN EXECUTIVE OFFICERS OF THE COMPANY.
Parent has had discussions with certain members of the Company's senior
management regarding compensation and other arrangements pursuant to which
certain members of the Company's management would continue to manage a portion
of the Company following the consummation of the Offer. Currently, no agreements
have been reached in such regard. It is currently expected, however, that such
arrangements will involve continued employment for salary and bonus comparable
to that currently in effect, and with incentive plans tied to increasing the
value of the business managed.
EFFECTS OF THE OFFER AND THE MERGER UNDER COMPANY STOCK PLANS AND AGREEMENTS
BETWEEN THE COMPANY AND ITS EXECUTIVE OFFICERS.
Upon approval of the Merger Agreement by the Company's Board of Directors,
all options to purchase Shares granted to employees and directors of the Company
vested. The Merger Agreement provides that, except as otherwise agreed by Parent
and the option holder, all such options that are outstanding immediately before
the Effective Time will be canceled in exchange for a cash payment by the
Company equal to the number of Shares subject to the option times the excess, if
any, of the Offer Price over the exercise price per-Share of the option, less
applicable withholding taxes.
The purchase of Shares pursuant to the Offer will constitute a 'change of
control' for purposes of the change-of-control employment agreements that the
Company has entered into with Juliana M. Coyle, Franklin H. Kettle, George D.
McClelland, Amit M. Nanavati, Kevin P. O'Brien, James F. Orr, III, William H.
Park, Joseph R. Ramrath, and Richard S. Robie, III. The agreements provide
generally that the executive's terms and conditions of employment (including
position, location, compensation and benefits) will not be adversely changed
during the two-year period after the change of control. If the Company
terminates the executive's employment (other than for cause, death or
disability) or the executive terminates for good reason during such two-year
period, or (in the case of Ms. Coyle and Messrs. McClelland, Nanavati, O'Brien,
Ramrath and Robie) the executive terminates his or her employment for any reason
during the 30-day period following the first anniversary of the change of
control, the executive is generally entitled to receive a multiple of the
executive's annual base salary and annual bonus and the Company contributions
made to the executive's defined contribution plan accounts for the most recent
plan year, and continued welfare benefits for a number of years equal to the
same multiple. The multiple is three for Messrs. Kettle, Orr, Park, Ramrath and
Robie, and two for Ms. Coyle and Messrs. McClelland, Nanavati and O'Brien. In
addition, the agreements with Ms. Coyle and Messrs. McClelland, Nanavati,
O'Brien, Ramrath and Robie provide that the executive is entitled to receive a
payment in an amount sufficient to make the executive whole for any excise tax
on excess
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parachute payments imposed under Section 4999 of the Internal Revenue Code of
1986, as amended, provided such parachute payments exceed 110% of the maximum
amount that could be paid without incurring any excise tax on the excess
parachute payment, in which case the parachute payments would be reduced to
prevent the imposition of the excise tax. The agreements with Messrs. Kettle,
Orr and Park provide for a reduction in payments if necessary to prevent
imposition of the excise tax.
All amounts payable to Ms. Coyle and Messrs. Kettle, McClelland, Nanavati,
O'Brien, Orr, Park, Ramrath, and Robie pursuant to the agreements described
above are expected to be paid in full upon the change of control. In addition,
under the Deferred Compensation Plan and Stock Option Deferral Plan, all
benefits became immediately payable upon the approval of the Merger Agreement
by the Company's Board of Directors.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors. The Board of Directors of the
Company (the 'Board' or the 'Board of Directors'), at a meeting held on June 16,
2000, determined that the terms of the Offer and the Merger are fair to,
advisable, and in the best interests of the stockholders of the Company. At this
meeting, the Board unanimously approved the Offer, the Merger Agreement and the
transactions contemplated thereby. THE BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES IN THE OFFER.
(b) (i) Background of the Offer; Contacts with Parent.
Starting in the late spring of 1999 and continuing into early 2000,
representatives of Goldman, Sachs & Co. ('Goldman Sachs'), the Company's
financial advisor, contacted representatives of a large number of domestic and
international entities, including Parent, on behalf of the Company to explore
potential interest on the part of one or more entities in participating in
various strategic alternatives the Company was considering, including a sale of
the entire company. During this period, although the Company held discussions
with various entities, such discussions did not result in any transactions
becoming available to the Company on a basis that the Company believed was in
the best interests of the Company and its shareholders. Among other things,
numerous entities expressed concern regarding the Company's complex structure
and the negative client cash flow the Company has experienced.
Separately, in April 1999, Mr. John Kent, Director of Corporate Development
of Parent, met Mr. Norton H. Reamer, Chairman and Chief Executive Officer of the
Company, at an industry conference, where he advised Mr. Reamer of Parent's
interest in visiting the Company to discuss the asset management business in the
United States.
In June 1999, Mr. Kent, Dr. Kevin Carter, Chief Executive Officer of Old
Mutual Asset Managers (UK) Limited, and Mr. Brian Baskir, President of Old
Mutual Investment Advisors, Inc., met with Mr. Reamer and Mr. Charles E.
Haldeman, Jr., then President and Chief Operating Officer of the Company at the
Company's offices in Boston, Massachusetts. At that meeting, in addition to
discussing the United States asset management business generally, Parent's
representatives conveyed Parent's interest in expanding its global asset
management business and indicated that Parent could be interested in exploring
opportunities that might arise as the Company considered its strategic
alternatives.
To facilitate discussions between Parent and the Company, on August 10,
1999, Parent entered into a confidentiality agreement for the purpose of
receiving certain non-public information relating to the Company. Subsequently,
Parent received non-public information concerning the Company from Goldman
Sachs.
In mid-August 1999, Mr. Kent and other representatives of Parent met in
Boston with Mr. Reamer, Mr. Franklin H. Kettle, Executive Vice President and
Director of Corporate Development, and Mr. Richard S. Robie, III, Senior Vice
President of the Company. The Company's representatives made certain
presentations regarding the Company and its affiliated firms. Parent's
representatives indicated that Parent might consider formulating a proposal to
acquire the Company, in conjunction with a merchant bank or private equity firm.
In October 1999, representatives of Parent contacted representatives of the
Company to reiterate that Parent would be interested in exploring a possible
acquisition of the Company. Representatives of
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the Company responded on behalf of the Company that the Company was not
interested in exploring such a transaction at that time.
On November 4, 1999, Mr. Michael Levett, Chairman and Chief Executive
Officer of Parent, Mr. Eric Anstee, then Group Finance Director (and currently
Chief Executive, Financial Services) of Parent, Mr. Kent and Dr. Carter met with
Mr. Reamer and Mr. Haldeman at Parent's offices in London. At that meeting, Mr.
Kent and Dr. Carter indicated Parent's interest in acquiring a group of the
Company's affiliates having combined assets under management of approximately
$15.5 billion.
Following subsequent discussions among representatives of Parent and the
Company, Mr. Kent sent a letter dated November 19, 1999, to Mr. Reamer and Mr.
Haldeman indicating that Parent's preliminary valuation of these affiliates was
in the range of 'L'160-'L'180 million (assuming no debt or surplus cash), based
on the limited financial information that Parent possessed. In that letter,
Parent proposed that the Company provide certain additional information that
would enable the valuation to be refined, and, if the refined valuation were
acceptable, that the Company permit Parent to proceed with full due diligence,
including meetings with senior executives of the affiliates. The letter stated
that it was non-binding and subject to due diligence and definitive agreements.
Mr. Reamer and Mr. Haldeman reported the letter and the discussions with
Parent to the Company Board at its meeting on November 19, 1999. At that
meeting, the Company Board discussed the relative advantages to the Company in
pursuing the sale of the group of affiliates to Parent. The Company Board
authorized the Company's management to continue exploratory discussions with
Parent, and additional data on the group of affiliates was provided by the
Company.
On November 29, 1999, the Company announced that Mr. Haldeman had decided to
resign from the Company to pursue other interests and that, because Mr. Reamer
was less than a year from a normal retirement date, the Company would begin a
search for a new Chief Executive Officer.
On December 8, 1999, Mr. Kent and other representatives of Parent met with
Mr. Reamer, Mr. William H. Park, Executive Vice President and Chief Financial
Officer of the Company, and representatives of the parties' respective financial
advisors in London to discuss the group of affiliates and Parent's valuation of
them. At that meeting, the Company requested that Parent specify a value for
these affiliates. Parent's representatives indicated that, in addition to
pursuing a transaction involving these affiliates, Parent also wished to explore
the possibility of acquiring the entire Company. Mr. Reamer indicated that the
Company would provide Parent with an update of the information provided in
August.
In a letter dated December 16, 1999 addressed to Mr. Reamer from Mr. Kent,
Parent proposed a 'L'170 million valuation for the group of affiliates. That
letter also noted that Parent needed to see additional information that had been
requested in order to complete its due diligence. In addition, Parent proposed
to commence on-site due diligence with the group of affiliates in early January
2000. This letter also stated that it was non-binding and subject to due
diligence and definitive contracts.
From mid-December 1999 through February 2000, representatives of the Company
held additional meetings and exchanged correspondence with representatives of
Parent concerning the appropriate valuation of the group of affiliates. Parent
and the Company were unable to agree on a valuation and did not proceed to due
diligence with respect to the affiliates. Parent also continued to express
interest in the Company as a whole to senior Company management. Parent's
expressions of continued interest were reported by Mr. Reamer to the Company's
Board of Directors at its meeting on January 25, 2000.
In early January 2000, Parent retained Credit Suisse First Boston
Corporation ('Credit Suisse First Boston') as Parent's financial advisor in
connection with Parent's possible acquisition of the Company. In addition,
Parent received certain updated non-public information concerning the Company.
In a letter dated March 2, 2000, addressed to Mr. Reamer and members of the
Company Board from Mr. Anstee, Parent noted its belief that consideration of an
acquisition of the entire Company merited priority over consideration of an
acquisition of certain affiliates. In that letter, Parent indicated that it
proposed to bring forward a proposal to acquire 100% of the outstanding common
stock of the Company for around $20 per share. Parent indicated, further, that
it intended to act in conjunction with a private equity firm, which would
provide a significant minority equity investment. The proposal was non-binding
and contingent upon, among other things, satisfactory completion of due
diligence and
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discussions with the key personnel at certain Company affiliates, a 45-day
exclusivity period and execution of a mutually acceptable, definitive purchase
agreement.
During the following week, representatives of Goldman Sachs, on behalf of
the Company, and representatives of Credit Suisse First Boston, on behalf of
Parent and the private equity firm, discussed the due diligence process. On
March 14, 2000, Parent and the private equity firm executed separate
confidentiality agreements with the Company. Commencing the following day,
representatives of Parent and the private equity firm conducted limited due
diligence at a data room established by the Company in Boston.
On March 21, 2000, Mr. Kent, Dr. Carter and representatives of the private
equity firm met in New York City with Mr. Reamer, other members of the Company's
senior management and the parties' financial advisors. At that meeting, Parent
and the private equity firm requested access to a number of affiliates to
discuss the proposed transaction. From March 28, 2000 to April 1, 2000,
representatives of Parent and the private equity firm met with senior executives
of certain Company affiliates.
At the regular meeting of the Company Board on March 29, 2000, the status of
discussions with Parent were reviewed with the assistance of the Company's
financial advisor.
In a letter dated April 5, 2000 addressed to Mr. Reamer from Mr. Kent,
Parent revised its valuation of the Company to around $22 per share. Parent
requested that it be given additional access to certain of the affiliates with
which it had already met, as well as access to an additional 12 affiliates and
possibly others.
On April 10, 2000, Mr. Reamer and certain directors and other members of
senior Company management met with Mr. Kent and Dr. Carter, representatives of
the private equity firm and the parties' financial advisors, in New York City.
At that meeting, the Company agreed to provide access to seven additional
affiliated firms. Mr. Reamer stressed the importance of Parent's making a
definitive proposal following Parent's scheduled board of directors meeting on
May 4, 2000, due to the Company's need to appoint a new Chief Executive Officer
on a timely basis. Thereafter, Mr. Kent and Dr. Carter met with senior
management of certain of the affiliated firms to discuss the proposed
transaction and certain aspects of Parent's strategy for the affiliated firms.
In a letter dated April 19, 2000 addressed to Mr. Reamer from Mr. Kent,
Parent expressed strong enthusiasm for pursuing its proposal. Parent described
the necessary work plan to enable it to make a definitive proposal by May 4,
2000. Parent indicated that it needed to satisfy itself about the willingness of
certain specified affiliates to work in a more closely-aligned way with Parent,
access to certain affiliates, including six with which it had not yet met, and
the completion of a detailed due diligence questionnaire by all affiliates.
Parent also indicated that the meetings with affiliates and review of data had
not caused Parent to revise the price of $22 per share indicated in its prior
letter.
On April 20, 2000, the Company Board held a special meeting to receive a
report of the Chief Executive Officer Search Committee and an update on
discussions with Parent. Present at this meeting were the Company's financial
advisor. During the meeting, telephone calls were exchanged between the
financial advisors of the Company and Parent in which Parent's financial advisor
indicated that Parent would be willing to consider raising its proposal to $23
per share. The Company's financial advisor stated that, given that the Company
had neared the end of its process for selecting a new Chief Executive Officer,
if a definitive agreement was not signed on May 4, 2000, the Company Board would
meet to vote on the appointment of a new Chief Executive Officer.
A number of meetings were held by Parent and the private equity firm with
additional affiliate firms between April 13 and May 3, 2000.
On April 27, 2000, the Company's outside legal counsel delivered to Parent
and Parent's outside legal counsel a draft merger agreement relating to the
proposed transaction. From May 1 through May 3, 2000, Parent's counsel conveyed
to the Company's counsel Parent's preliminary comments on the proposed
agreement, including Parent's request for a purchase price adjustment related to
a decline in assets under management or revenue run-rate and Parent's request
for additional conditions to the tender offer, including conditions related to
the obtaining of specified percentages of client consents on both an overall and
an individual affiliate basis. Representatives of Parent, the Company and their
financial and legal advisors had a series of telephone conversations concerning
these issues.
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Representatives of the Company reiterated that, in order to be considered by the
Company, Parent had to submit a definitive offer no later than May 4, 2000. In
addition, they advised Parent that the Company would not entertain an offer of
less than $23 per share.
In a letter dated May 4, 2000 addressed to Mr. Reamer from Mr. Kent, Parent
indicated that it had decided not to submit a definitive offer due, in part, to
incomplete due diligence. In that letter, Parent also noted its understanding
that extensions beyond May 4, 2000, were not possible.
Parent's decision to withdraw was reported to the Company Board on May 4,
2000 at a special Company Board meeting. At the Company Board meeting, the
Company Board authorized Mr. John Shane, Chairman of the Chief Executive Officer
Search Committee of the Company Board to extend an offer to Mr. James F. Orr,
III to join the Company as President and Chief Executive Officer. In extending
that offer to Mr. Orr, Mr. Shane was instructed to inform Mr. Orr that there was
still some chance that a transaction with Parent could be completed. Mr. Orr
accepted the Company's offer and began his employment with the Company on May
15, 2000.
On May 5, 2000, Goldman Sachs, on behalf of the Company, informed Parent
that the Company wished to continue to explore a possible acquisition by Parent.
Between May 8 and 11, 2000, Mr. Anstee and Mr. Reamer, both directly and
through Parent's and the Company's financial advisors, discussed the basis on
which Parent and the Company might restart discussions regarding the proposed
transaction.
On May 16, 2000, the Company announced that Mr. James F. Orr, III, had been
appointed as President and Chief Executive Officer, succeeding Mr. Reamer, who
became non-executive Chairman of the Board.
On May 17, 2000, Parent retained Chase Securities Inc. as a financial
advisor in connection with Parent's possible acquisition of the Company.
On May 17, 2000, a meeting was held in New York City among Mr. Kent, Dr.
Carter, Mr. Orr, Mr. Reamer, other members of the Company's senior management
and the parties' financial advisors. At this meeting, the participants discussed
restarting the discussions between the Company and Parent. Parent's
representatives raised the possibility of existing management remaining with the
Company with responsibility for managing a group of the Company's affiliates.
In a letter dated May 19, 2000 addressed to Mr. Orr from Mr. Kent, Parent
confirmed the basis on which it would be willing to restart the process,
including a 45- to 60-day due diligence period in which Parent would have full
access to affiliated firms and during which the Company would not make any
material dispositions without Parent's consent. In addition, Parent requested
that the Company negotiate exclusively with Parent during this period in
relation to the acquisition of the entire Company. Parent also indicated that it
was prepared to consider alternative structures involving the continued
participation of the Company's existing management.
On May 24 and 25, 2000, members of the Company's senior management met with
Mr. Kent, Dr. Carter and other members of Parent's management in London to
discuss how best to proceed toward completing a possible transaction. At that
meeting further due diligence and a timetable to reach definitive agreement by
July 5, 2000 were discussed.
On May 26, 2000, Mr. Levett and Dr. Carter met with Mr. Orr in London and
indicated that Parent was still very interested in a transaction with the
Company. On May 30 and 31, 2000, telephone conference calls were held among
members of the Company's senior management, Dr. Carter, Mr. Kent, and
representatives of the private equity firm to discuss the due diligence program
and timetable.
Also on May 30, 2000, a telephone meeting of the Executive Committee of the
Company Board was held. Mr. Orr updated the Committee on discussions with Parent
and the proposed structure of the transaction.
In early June 2000, senior Company management, Mr. Kent, Dr. Carter, and the
parties' financial advisors met in Boston to further discuss Parent's plan for
the Company going forward if a transaction were to be completed. Dr. Carter
confirmed that Parent had decided to seek to acquire the Company on its own.
Parent proposed possible incentive compensation arrangements under which certain
members of the Company's senior management team would be eligible for financial
incentives tied to specified
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increases in the value of the group of affiliates that Parent proposed that they
manage following the acquisition. A follow-up meeting was held the next day in
Boston among Company senior management and Dr. Carter, at which time a proposed
due diligence program and schedule were discussed.
Following that meeting, members of Company senior management arranged due
diligence meetings with fifteen Company affiliates to be held at the affiliates'
offices from June 12, 2000 through June 23, 2000. Group meetings among certain
Company affiliates and representatives of Parent were also arranged for June 26,
27 and 28, 2000 to discuss strategy should a transaction be completed.
On June 14, 2000, Mr. Orr met with Mr. Levett, Mr. Anstee and other members
of Parent's management to discuss the merits of the transaction. Subsequent to
that meeting, Mr. Orr met with Parent's Board of Directors to discuss the
Company and a possible transaction.
On June 15 and 16, 2000, members of Company senior management met with Mr.
Kent, Dr. Carter and the parties' financial and legal advisors in New York City
to work on the proposed merger agreement and to resolve outstanding issues.
These discussions took place simultaneously with due diligence sessions at the
Company affiliates.
On June 16, 2000, in a telephone conversation, Mr. Anstee and Mr. Orr
negotiated a revised offer by Parent pursuant to which, among other things: (i)
Parent would increase its price to $25 per Share, subject to a possible downward
adjustment in the event of a specified decline in the Company's revenues from
assets under management, a possible downward adjustment (which was incorporated
into the Merger Agreement but was subsequently waived by Parent) related to the
sharing of certain costs, each as described in Section 11 of the Offer to
Purchase, and the client consent conditions described in Section 14 of the Offer
to Purchase, (ii) the Company would have the right to terminate the Merger
Agreement in certain circumstances if a Superior Proposal were made, subject to
the Company's paying a termination fee of $43 million as described in Section 11
of the Offer to Purchase, (iii) in lieu of continued pre-signing due diligence,
Parent would have the right, which would expire on June 30, 2000, to terminate
the Merger Agreement if, as a result of the failure of representations and
warranties made by the Company with respect to certain of the Company's
affiliated firms to be true and correct, there would be a material adverse
effect on that group of affiliated firms taken as a whole (the 'Special
Subsidiary Termination Right'), and (iv) the Company would be permitted to
continue to pay its regular cash dividend.
A meeting of the Company Board had been previously scheduled on June 16,
2000, to update the Company Board with respect to progress on the potential
Parent transaction. That meeting was held in New York City, and Goldman Sachs
gave a presentation on the financial aspects of the transaction. The Company
Board was also advised by their legal advisor as to legal aspects of the
proposed transaction. At that meeting and after the market closed, the Company
Board approved the transaction as presented, and the Merger Agreement was
executed later on the night of June 16, 2000. The transaction was publicly
announced before the opening of trading in London, Johannesburg and New York
City on Monday, June 19, 2000.
On June 30, 2000, the Special Subsidiary Termination Right expired without
having been exercised by Parent.
On July 17, 2000, Parent commenced the Offer.
(ii) Reasons for the Recommendation of the Board of Directors.
In reaching its recommendations described above in paragraph (a) of this
Item 4, the Board of Directors considered a number of factors, including the
following:
1. Company Operating and Financial Condition. The current and historical
financial condition and results of operations of the Company, as well as the
prospects and strategic objectives of the Company, including the risks
involved in achieving those prospects and objectives, and the current and
expected conditions in the industry in which the Company's businesses
operate.
2. Transaction Financial Terms/Premium to Market Price. The relationship
of the Offer Price and the Merger Consideration to the historical market
prices of the Shares. The $25.00 Offer Price and Merger Consideration (prior
to any downward adjustment that may be required under the
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Merger Agreement) exceed the highest trading price of the Common Stock
during the twelve-month period preceding the announcement of the Merger
Agreement and represent a 19.0% premium over the $21.00 closing price of the
Shares on the New York Stock Exchange on June 15, 2000 (the last full
trading day prior to the date of the Board meeting at which the Board of
Directors approved the Merger Agreement). The Board also considered the form
of consideration to be paid to holders of Shares in the Offer and the
Merger, and the certainty of value of such cash consideration. The Board was
aware that the consideration received by holders of Shares in the Offer and
Merger would be taxable to such holders for Federal income tax purposes.
3. Strategic Alternatives. The presentation of the Company's financial
advisor and the Board's review with respect to trends in the industry in
which the Company's businesses operate and the strategic alternatives
available to the Company, including the Company's alternative to remain an
independent public company and the possibility of acquisitions or mergers
with other companies in the Company's industry or other industries, a
break-up or leveraged buy-out of the Company and other extraordinary
corporate transactions, as well as the risks and uncertainties associated
with such alternatives. The Board considered the fact that beginning in the
spring of 1999 and continuing into 2000, exploratory efforts by Goldman
Sachs had indicated that no parties other than Parent had emerged that were
prepared to pursue a transaction involving the whole Company, in part due to
the Company's complex structure and the negative client cash flow the
Company has experienced and that no parties other than Parent had invested
or been willing to invest the time and resources necessary to undertake a
comprehensive due diligence of the Company's over 40 subsidiaries.
4. Goldman Sachs Fairness Opinion. Presentations from Goldman Sachs and
the opinion of Goldman Sachs, dated June 16, 2000, that, based upon and
subject to certain considerations and assumptions, the consideration to be
received by holders of Shares pursuant to the Merger Agreement is fair from
a financial point of view to such holders. A copy of the opinion rendered by
Goldman Sachs to the Board of Directors, setting forth the procedures
followed, the matters considered and the assumptions made by Goldman Sachs
in arriving at its opinion, is attached hereto as Annex A and incorporated
herein by reference. Stockholders are urged to read this opinion in its
entirety. The Board was aware that Goldman Sachs becomes entitled to certain
fees described in Item 5 upon the consummation of the Offer.
5. Timing of Completion. The Board considered the anticipated timing of
consummation of the transactions contemplated by the Merger Agreement,
including the structure of the transaction as a tender offer for all of the
Shares, followed by the Merger in which stockholders will receive the same
consideration as received by stockholders who tender their Shares in the
Offer. The Board believes this structure may allow stockholders to receive
the transaction consideration earlier than if the transaction were
structured as a one-step merger requiring a meeting of stockholders.
6. Conditions to Consummation. Parent's obligation to consummate the
Offer and the Merger has no financing condition. The Board also considered
the likelihood of obtaining required regulatory approvals and necessary
client consents, and the terms of the Merger Agreement regarding the
obligations of both companies to pursue such approvals and consents.
7. Alternative Transactions. The Board of Directors considered that
under the terms of the Merger Agreement, while the Company is prohibited
from soliciting acquisition proposals from third parties, the Company may,
prior to the acceptance for payment of Shares pursuant to the Offer, engage
in discussions or negotiations with, and may furnish non-public information
to, a third party who makes a bona fide unsolicited written acquisition
proposal if, among other things, the Board determines in its good faith
judgment (after consultation with its independent financial advisors) that
such action is necessary in order for its directors to comply with their
fiduciary duties under applicable law and prior to taking such action the
Company provides the requisite notice to Parent and enters into a
confidentiality agreement with the third party that is no less stringent
than the Company's confidentiality agreement with Parent. The Board
considered that the terms of the Merger Agreement permit the Company to
terminate the Merger Agreement to enter into such a superior transaction
involving the Company if, among other things, (i) the Company Board has
received a Superior Acquisition Proposal (as defined in the Merger
Agreement), (ii) in light of such
8
<PAGE>
Superior Acquisition Proposal the Company Board has determined in good faith
(after having consulted with outside legal counsel) that it is necessary for
the Company Board to terminate this Agreement in order to comply with its
fiduciary obligations under applicable law, (iii) the Company has notified
Parent in writing of the terms of the Superior Acquisition Proposal, (iv) at
least five business days following receipt by Parent of such notice, and
taking into account any revised proposal made by Parent since receipt of
such notice, such Superior Acquisition Proposal (as the same may have been
modified or amended, but provided that Parent shall have received the
requisite notice of any such modification or amendment) remains a Superior
Acquisition Proposal, (v) the Company is not in breach of the Merger
Agreement, (vi) the Company Board concurrently approves, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of such Superior Acquisition Proposal, and (vii) the Company
pays Parent a termination fee of $43 million (approximately 3% of the total
equity consideration payable pursuant to the Merger Agreement) prior to
terminating the Merger Agreement. The Board considered the possible effect
of these provisions of the Merger Agreement on third parties who might be
interested in exploring an acquisition of the Company. In this regard, the
Board recognized that the provisions of the Merger Agreement relating to the
termination fee and non-solicitation and restrictions on negotiation of
alternative acquisition proposals were insisted upon by Parent as a
condition to entering into the Merger Agreement. The Board of Directors also
took into account the views of management and Goldman Sachs that it was
unlikely that a third party bidder would be prepared to pay a higher price
for the Shares than the consideration offered in the Offer and the Merger in
a transaction that could be completed on a timely basis, given, among other
things, the Company's complex structure and the negative client cash flow
the Company has experienced, and the exploratory efforts by Goldman Sachs in
regards to soliciting interest from a wide varety of third parties.
8. Potential Conflicts of Interest. The Board was aware of the potential
conflicts of interest between the Company or its affiliates on the one hand
and, on the other, certain of the Company's officers, directors or
affiliates arising from discussions between Parent and certain affiliates of
the Company as to possible alterations in current revenue-sharing agreements
applicable to such affiliates and from possible ongoing employment
arrangements for members of the Company's management, each as described in
Item 3 above.
The foregoing includes all material factors considered by the Board of
Directors. The Board did not find it practical to, and did not, quantify or
otherwise assign relative weights to the specific factors considered. In
addition, individual members of the Board may have given different weights to
the various factors considered. After weighing all of these considerations, the
Board unanimously determined to approve the Merger Agreement and recommend that
holders of Shares tender their Shares in the Offer.
(c) Intent to Tender. To the best knowledge of the Company, the executive
officers, directors, affiliates or subsidiaries of the Company who own Shares
presently intend to tender in the Offer all Shares that they own of record or
beneficially, other than Shares, if any, that they may have the right to
purchase by exercising stock options and Shares, if any, that if tendered would
cause them to incur liability under the short-swing profits provisions of the
Securities Exchange Act.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED
Pursuant to a letter agreement dated May 11, 2000, the Company formally
retained Goldman Sachs to act as its financial advisor in connection with the
proposed sale of the Company. The Board of Directors retained Goldman Sachs
based upon Goldman Sachs's qualifications, experience and expertise. Goldman
Sachs is an internationally recognized investment banking and advisory firm.
Goldman Sachs, as part of its investment banking and financial advisory
business, is continuously engaged in the valuation of businesses and securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. In addition,
Goldman Sachs is a full-service securities firm engaged in securities trading,
brokerage and financing activities and as such may from time to time effect
transactions, for its own account or the account of customers, and hold
9
<PAGE>
positions in the securities and options on securities of the Company and Parent.
In the past, Goldman Sachs and its affiliates have provided financial advisory
and financing services for the Company.
Pursuant to the Goldman Sachs engagement letter, the Company agreed to pay
Goldman Sachs a fee of 0.75% of the total consideration paid in the Offer and
the Merger, including amounts paid to holders of options, warrants and
convertible securities, plus the principal amount of all indebtedness for
borrowed money as set forth on the most recent consolidated balance sheet of the
Company prior to the consummation of the Merger, and amounts paid into escrow
and contingent payments in connection with the Offer and the Merger, which will
become payable upon consummation of the Offer. The Company has also agreed to
reimburse Goldman Sachs for reasonable expenses as incurred. In addition, the
Company has also agreed to indemnify Goldman Sachs and its affiliates, their
respective directors, officers, agents and employees and each person, if any,
controlling Goldman Sachs or any of its affiliates against certain liabilities
and expenses, including certain liabilities under the Federal securities laws,
arising out of Goldman Sachs's engagement.
Except as described above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf concerning
the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
In the last 60 days, the following transactions have taken place: (1) On
June 13, 2000, Mr. Jay O. Light, Director, surrendered 9,596 Shares for an
option exercise of 10,000 Shares at a strike price of $17.8125 per Share and
2,470 Shares at a strike price of $13.3595 per Share; (2) on May 5, 2000, Mr.
Norton H. Reamer, Chairman of the Board, sold 20,000 Shares in the open market
at $17.50 per Share and sold 5,000 Shares in the open market at $17.5625 per
Share; on June 8, 2000, Mr. Reamer gave 2,553 Shares to a charitable
organization; on July 7, 2000, Mr. Reamer sold 24,896 Shares in the open market
at $23.5625 per Share; (3) on June 9, 2000, Mr. David I. Russell, Director,
surrendered 8,850 Shares for an option exercise of 10,000 Shares at a strike
price of $17.8125 per Share; (4) on June 9, 2000, Mr. Philip Scaturro, Director,
surrendered 9,671 Shares for an option exercise of 10,000 Shares at a strike
price of $17.8125 per Share and 1,236 Shares at a strike price of $13.3595 per
Share; (5) on May 19, 2000, Mr. John A. Shane, Director, exercised an option to
buy 10,000 Shares at a strike price of $17.8125 per Share; (6) on June 1, 2000,
Ms. Barbara S. Thomas, Director, surrendered 10,000 Shares for an option
exercise of 10,000 Shares at a strike price of $17.8125 per Share and 609 Shares
at a strike price of $13.3595 per Share.
On June 16, 2000, pursuant to the terms of the Company's Second Amended and
Restated 1994 Stock Option Plan, which provides for the automatic grant of
options to purchase 14,000 Shares to each nonemployee Director on the 30th day
after the Company's annual meeting of stockholders, each of the seven eligible
Directors was granted options to purchase 14,000 Shares at a strike price of
$20.5625 per Share.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as set forth in this Statement, the Company is not currently
undertaking or engaged in any negotiations in response to the Offer that relate
to (1) a tender offer for or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person; (2) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Company or any subsidiary of the Company; or (3) any material
change in the present dividend rate or policy, or indebtedness or capitalization
of the Company.
The Company has over 40 wholly owned subsidiaries, each of which conducts
its own investment analysis, portfolio selection, marketing and client service
independently and under its own name. From time to time, the Company receives
and/or actively considers proposals with respect to a sale, transfer, or other
similar transaction or a re-equitization transaction involving one or more of
its subsidiaries and the Company may engage in negotiations relating thereto as
it may consider appropriate or desirable and in the best interests of its
stockholders, its affiliates and their clients. (A re-equitization transaction
involves selling and/or granting actual or phantom equity interest in an
affiliate to its principals,
10
<PAGE>
sometimes in extinguishment of some or all of their rights under revenue-sharing
agreements.) Under the Merger Agreement, any such transaction would require
Parent's prior approval. At the Company's request, Parent has consented to the
Company's effecting certain re-equitization transactions that are not,
individually or in the aggregate, material to the Company as a whole.
ITEM 8. ADDITIONAL INFORMATION
(a) Regulatory Approvals.
Office of the Comptroller of the Currency. Pell Rudman Trust Company, N.A.
and Pell Rudman Trust Company (Atlantic), N.A. are national trust companies
organized under the laws of the United States and are wholly owned subsidiaries
of the Company. In order to acquire the foregoing subsidiaries, the Purchaser is
required to make certain filings with the Office of the Comptroller of the
Currency (the 'OCC'). Parent must obtain a statement of non-disapproval from the
OCC.
Maryland State Banking Commissioner. UAM Trust Company, a Maryland trust
company ('UAMTC'), is a wholly owned subsidiary of the Company. Under the
Financial Institutions Article of the Annotated Code of the State of Maryland,
the Purchaser is required to apply to the Commissioner of Financial Regulation
for approval to acquire the Company and UAMTC.
United States Antitrust Compliance. Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the 'HSR Act') and the rules that have
been promulgated thereunder by the Federal Trade Commission (the 'FTC'), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
'Antitrust Division') and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, the Purchaser has advised the
Company that it filed a Notification and Report Form with respect to the Offer
and Merger with the Antitrust Division and the FTC on July 13, 2000. As a
result, the waiting period applicable to the purchase of Shares pursuant to the
Offer is scheduled to expire at 11:59 p.m., New York City time, on July 28,
2000, 15 days after such filing. However, prior to such time, the Antitrust
Division or the FTC may extend the waiting period by requesting additional
information or documentary material relevant to the Offer from the Purchaser and
the Company. If such a request is made, the waiting period will be extended
until 11:59 p.m., New York City time, on the tenth day after substantial
compliance by the Purchaser with such request. Thereafter, such waiting period
can be extended only by court order.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation of
any such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws of the United States as it deems necessary or desirable
in the public interest, including seeking to enjoin the purchase of Shares
pursuant to the Offer or seeking divestiture of the Shares so acquired or
divestiture of substantial assets of Parent or the Company. Private parties
(including individual States) may also bring legal actions under the antitrust
laws of the United States. The Company does not, and Parent has advised the
Company that it does not, believe that the consummation of the Offer will result
in a violation of any applicable antitrust laws. However, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made,
or if such a challenge is made, what the result will be. See the description of
the Merger Agreement in Item 4 of this Statement for a description of the
conditions of the Offer with respect to litigation and certain governmental
actions and of certain termination rights.
Foreign Competition Approvals. The Merger may require clearance or approval
in one or more foreign jurisdictions. The Company and Parent will likely have
one or more filings in Europe, Canada, and possibly other jurisdictions. In some
jurisdictions the filings have mandatory pre-consummation waiting periods (e.g.,
Germany, Austria, Italy, Ireland and Canada), whereas others have voluntary pre-
merger regimes in which no waiting periods need be observed ( e.g., the United
Kingdom and France).
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer. The
Company and the Purchaser are seeking further information
11
<PAGE>
regarding the applicability of any such laws and currently intend to take any
action as may be required or desirable.
(b) Approval by Fund and Non-Fund Clients of the Company. The Merger
Agreement requires that the Merger be approved by funds and non-fund clients of
the Company as follows: (i) approval by funds and non-fund clients representing
75% of the aggregate revenue of UAM; (ii) with respect to a specific group of
affiliates, approval by funds and non-fund clients representing 80% of the
aggregate revenue of that group of affiliates; and (iii) approval by fund
clients of Pilgrim, Baxter & Associates representing 90% of the aggregate fund
revenue of Pilgrim Baxter.
(c) The Purchaser's Designation of Persons to be Elected to the Board Of
Directors. The Information Statement attached as Annex B to this Statement is
being furnished in connection with the possible designation by Parent, pursuant
to the terms of the Merger Agreement, of certain persons to be elected to the
Board of Directors other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
(a)(1) -- Letter to Stockholders of the Company, dated July 17,
2000.*
(a)(2) -- Opinion of Goldman, Sachs & Co., dated June 16, 2000
(included as Annex A to this Statement).*
(a)(3) -- Press Release of Old Mutual plc and United Asset
Management Corporation, dated June 19, 2000 (incorporated
by reference to the press release filed by United Asset
Management Corporation with the Securities and Exchange
Commission under cover of Schedule 14D-9 on June 19,
2000).
(e)(1) -- Agreement and Plan of Merger, dated as of June 16, 2000,
by and among United Asset Management Corporation, OM
Acquisition Corp. and Old Mutual plc (incorporated by
reference to Exhibit 10.1 of the Form 8-K filed by United
Asset Management Corporation with the Securities and
Exchange Commission on June 19, 2000).
</TABLE>
---------
* Included with the Statement mailed to stockholders.
12
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
UNITED ASSET MANAGEMENT CORPORATION
By: /s/ JOSEPH R. RAMRATH
-----------------------------------
JOSEPH R. RAMRATH, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Dated: July 17, 2000
13
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ANNEX A
[LETTERHEAD OF GOLDMAN SACHS]
PERSONAL AND CONFIDENTIAL
-------------------------
June 16, 2000
Board of Directors
United Asset Management Corporation
One International Place
Boston, MA 02110
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $0.01
per share (the 'Shares'), of United Asset Management Corporation (the 'Company')
of the Offer Price (as defined below) proposed to be paid by Old Mutual plc
('Buyer') in the Tender Offer and the Merger (as defined below) pursuant to the
Agreement and Plan of Merger (the 'Agreement'), dated as of June 16, 2000, by
and among Buyer, OM Acquisition Corporation, a wholly owned subsidiary of Buyer
('Acquisition Sub'), and the Company. The Agreement provides for a tender offer
for all of the Shares (the 'Tender Offer'), pursuant to which Acquisition Sub
will pay the Offer Price in cash for each Share accepted. The Agreement further
provides that following completion of the Tender Offer, Acquisition Sub will be
merged into the Company (the 'Merger') and each outstanding Share (other than
Shares already owned by Buyer, Acquisition Sub, or any wholly owned subsidiary
of Buyer or Acquisition Sub) will be converted into the right to receive the
Offer Price in cash. As used herein, 'Offer Price' shall mean $25.00 per Share,
or such lesser amount as may be payable pursuant to the Agreement.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company, having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. Goldman, Sachs & Co. provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or Buyer for its own account and for the accounts of
customers. Goldman, Sachs & Co. may provide investment banking services to Buyer
and its subsidiaries in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the five years ended December 31, 1999; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by the management of
the Company. We also have held discussions with members of the senior management
of the Company regarding its past and current business operations, financial
condition and future prospects, including the importance of recent trends in the
Company's historical financial performance and in the level of assets under
A-1
<PAGE>
management. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the asset management industry specifically and
in other industries generally and performed such other studies and analyses as
we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries and we have not been
furnished with any such evaluation or appraisal. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transactions contemplated by the Agreement, and such opinion does not constitute
a recommendation as to whether or not any holder of Shares should tender such
Shares in connection with, or, if applicable, how any holder of Shares should
vote with respect to, such transactions.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Offer
Price to be received by the holders of Shares in the Tender Offer and the Merger
is fair from a financial point of view to such holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
--------------------------------------
(GOLDMAN, SACHS & CO.)
A-2
<PAGE>
ANNEX B
UNITED ASSET MANAGEMENT CORP.
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about July 17, 2000 as part
of the Solicitation/Recommendation Statement on Schedule 14D-9 (the 'Statement')
of United Asset Management ('UAM' or the 'Company'). You are receiving this
Information Statement in connection with the possible election of persons
designated by Old Mutual plc ('Old Mutual') to a majority of seats on the Board
of Directors (the 'Board of Directors' or the 'Board') of the Company. On June
16, 2000, the Company entered into an Agreement and Plan of Merger (the 'Merger
Agreement') with Old Mutual and OM Acquisition Corp. (the 'Purchaser'), a
Delaware corporation and a wholly owned subsidiary of Old Mutual, pursuant to
which the Purchaser is required to commence a tender offer to purchase all
outstanding shares of Common Stock, par value $0.01 per share, of the Company
(the 'Common Stock') at a price per Share of $25.00, net to the seller in cash,
upon the terms and conditions set forth in the Purchaser's Offer to Purchase,
dated July 17, 2000 (the 'Offer to Purchase'), and in the related Letter of
Transmittal (which, together with any amendments and supplements thereto,
collectively constitute the 'Offer'). The price to be paid in the Offer and the
Merger (as defined herein) is subject to downward adjustment in the event that
the Company's revenues from assets under management, excluding the effects of
market movements, decline below a specified level prior to the consummation of
the Offer. As used herein, 'Offer Price' shall mean $25.00 or such lesser amount
as may be payable pursuant to the Merger Agreement. Copies of the Offer to
Purchase and the Letter of Transmittal have been mailed to stockholders of the
Company and are filed as Exhibits (a)(1)(A) and (a)(1)(B) respectively, to the
Tender Offer Statement on Schedule TO (as amended from time to time, the
'Schedule TO') filed by the Purchaser with the Securities and Exchange
Commission (the 'Commission') on July 17, 2000. The Merger Agreement provides
that, subject to the satisfaction or waiver of certain conditions, following
completion of the Offer, and in accordance with the Delaware General Corporation
Law (the 'DGCL'), the Purchaser will be merged with and into the Company (the
'Merger'). Following consummation of the Merger, the Company will continue as
the surviving corporation and will be a wholly owned subsidiary of Old Mutual.
At the effective time of the Merger (the 'Effective Time'), each issued and
outstanding Share (other than Shares that are owned by Old Mutual, the
Purchaser, any of their respective subsidiaries, the Company or any of its
subsidiaries, and Shares held by stockholders of the Company who did not vote in
favor of the Merger Agreement and who comply with all of the relevant provisions
of Section 262 of the DGCL) will be converted into the right to receive the
Offer Price in cash or any greater amount per Share paid pursuant to the Offer.
The Offer, the Merger, and the Merger Agreement are more fully described in
the Statement to which this Information Statement forms Annex B, which was filed
by the Company with the Commission on July 17, 2000 and which is being mailed to
stockholders of the Company along with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act and Rule 14f-1 promulgated thereunder. The
information set forth herein supplements certain information set forth in the
Statement. Information set forth herein related to Old Mutual, the Purchaser or
the OM Designees (as defined herein) has been provided by Old Mutual. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action in connection with the matters set forth herein.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on July
17, 2000. The Offer is currently scheduled to expire at 12:00 midnight, New York
City time, on Friday, August 11, 2000, unless the Offer is extended.
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<PAGE>
GENERAL
The Common Stock is the only class of equity securities of the Company
outstanding which is entitled to vote at a meeting of the stockholders of the
Company. As of the close of business on June 30, 2000, there were 57,177,404
outstanding shares of Common Stock, of which Old Mutual and the Purchaser own no
shares as of the date hereof.
RIGHTS TO DESIGNATE DIRECTORS AND PURCHASER'S DESIGNEES
The Merger Agreement provides that promptly upon the acceptance for payment
of, payment by Purchaser for, Shares pursuant to the Offer, Purchaser shall be
entitled to designate, for election by the Company Board, enough directors to
the Company Board as will give Purchaser, subject to compliance with Section
14(f) of the Exchange Act and the DGCL, majority representation on the Company
Board (the 'OM Designees').
Following the election or appointment of the OM Designees, and until the
Effective Time, the Company Board shall have at least three directors who are
directors on the date of the Merger Agreement (the 'Continuing Directors'). If
the number of Continuing Directors is reduced below three for any reason
whatsoever, any remaining Continuing Directors (or Continuing Director, if there
is only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Continuing Directors for purposes of the
Merger Agreement or, if no Continuing Directors then remain, the other directors
shall designate three persons to fill such vacancies who are not officers,
shareholders or affiliates of Old Mutual or Purchaser, and such persons shall be
deemed to be Continuing Directors for purposes of the Merger Agreement.
Subject to applicable law, the Company shall take all action requested by
Old Mutual necessary to effect any such election, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company shall make such mailing with the mailing of the Schedule 14D-9 (provided
that Purchaser shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
the OM Designees). In connection with the foregoing, the Company shall promptly,
at the option of the Purchaser, either increase the size of the Company Board or
obtain the resignation of such of its current directors as is necessary to
enable the OM Designees to be elected or appointed to the Company Board as
provided above.
The OM Designees will be selected by Old Mutual from among the individuals
listed below. Each of the following individuals has consented to serve as a
director of the Company if appointed or elected. None of the OM Designees
currently is a director of, or holds any positions with, the Company. The
Purchaser has advised the Company that, to the best of Old Mutual's and the
Purchaser's knowledge, none of the OM Designees or any of their affiliates
beneficially owns any equity securities or rights to acquire any such securities
of the Company, nor has any such person been involved in any transaction with
the Company or any of its directors, executive officers or affiliates that is
required to be disclosed pursuant to the rules and regulations of the Commission
other than with respect to transactions between Old Mutual and the Company that
have been described in the Schedule TO or the Statement.
The name, age, citizenship, present principal occupation or employment and
five-year employment history of each of the individuals who may be selected as
OM Designees are set forth below. Unless otherwise indicated, each such
individual has held his present position as set forth below for the past five
years and each occupation refers to employment with Old Mutual. Unless otherwise
noted, each such person is a citizen of the United States, and the business
address of each person listed below is 3rd Floor, Lansdowne House, 57 Berkeley
Square, London W1X 5DH, United Kingdom.
NAME, AGE, CITIZENSHIP, PRINCIPAL OCCUPATION AND EMPLOYMENT HISTORY
The OM Designees are Mr. Eric Anstee, age 49, Mr. Brian Baskir, age 41,
Dr. Kevin Carter, age 47, Mr. John Kent, age 45, Mr. Michael Levett, age 61, Mr.
Martin Murray, age 45, Mr. Robert Stewart, age 62, and Mr. James Sutcliffe,
age 44.
B-2
<PAGE>
The citizenship, present principal occupation and five-year employment
history of each OM Designee (other than Dr. Carter) are set forth on Schedule I
to the Offer to Purchase and are incorporated herein by reference.
Dr. Carter, a citizen of the United Kingdom, currently is, and has been for
the past five years, the Chief Executive Officer of Old Mutual Asset Managers
(UK) Limited and a director and Chairman of Old Mutual Investment Advisors, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
COMMON STOCK OWNERSHIP BY 5% STOCKHOLDERS
The following table shows the Common Stock ownership for each person or
group known by the Company to beneficially own more than 5% of the Common Stock
as of June 30, 2000. Unless otherwise indicated in the footnotes, each named
person and member of the group has sole voting and investment power with respect
to the shares shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (AGGREGATE AMOUNT) OUTSTANDING
------------------------------------ ------------------------------- ----------------
<S> <C> <C>
BENEFICIAL OWNERS OF MORE THAN 5%(1)
Franklin Mutual Advisers, LLC .................... 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
</TABLE>
---------
(1) This table is based on reported ownership by 13F institutions of United
Asset Management Securities filed with the SEC.
(2) This includes shares owned by Tiger Performance L.L.C., an entity under the
control of 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 February 14, 2000.
(3) This entity, an investment adviser, reported having shared voting power and
shared dispositive power over all such shares as of February 9, 2000.
B-3
<PAGE>
COMMON STOCK OWNERSHIP BY OFFICERS AND DIRECTORS
The following table shows the Common Stock ownership for each director of
the Company, the executive officers named in the Executive Compensation Tables
below, and all of the directors and executive officers of the Company as a group
as of June 30, 2000. Unless otherwise noted, these individuals have sole voting
and investment power over all shares listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF NUMBER OF SHARES PERCENT OF CLASS
NAME BENEFICIAL OWNERSHIP ISSUABLE(1) TOTAL OUTSTANDING
---- -------------------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Harold J. Baxter(2)............. -- 1,246,274 1,246,274 2.1%
John P. Clay(2)................. 632,200 -- 632,200 1.1%
Beverly L. Hamilton............. 1,000 64,899 65,899 *
Jay O. Light.................... 15,474 87,309 102,783 *
James F. Orr, III............... -- 1,000,000 1,000,000 1.7%
Norton H. Reamer................ 2,128,283 764,537 2,892,820 5.0%
David I. Russell(3)............. 28,150 66,000 94,150 *
Philip Scaturro(4).............. 52,065 76,654 128,719 *
John A. Shane(5)................ 45,474 66,000 111,474 *
Barbara S. Thomas............... 12,609 85,053 97,662 *
William H. Park................. 176,372 582,389 758,761 1.3%
Franklin H. Kettle.............. 67,080 575,162 642,242 1.1%
George D. McClelland............ -- 186,400 186,400 *
All directors and executive
officers as a group (18
individuals).................. 3,186,816 5,798,566 8,985,382 14.3%
</TABLE>
---------
* Less than 1%
(1) 'Number of Shares Issuable' lists (a) shares issuable upon the exercise of
warrants or stock options; (b) amounts allocated as notional shares in this
individual's account in the Company's Deferred Compensation Plan; and (c)
shares subject to delivery under the Company's Stock Option Deferral Plan.
(2) This individual is a former owner of a Company affiliate. When the Company
acquired this affiliate, this individual received (directly or indirectly)
a portion of the purchase price in Company common stock or warrants to
purchase shares of Company common stock. This individual had no connection
with the Company before such acquisition.
(3) Includes 5,000 shares held in trust. Mr. Russell has shared voting and
investment power over these shares.
(4) Does not include 664,174 shares of Common Stock owned by entities
affiliated with Allen & Company Incorporated. Mr. Scaturro is an Executive
Vice President and Managing Director of this company. Mr. Scaturro
disclaims beneficial ownership of the shares described in this footnote.
(5) Includes 2,264 shares of common stock owned by Palmer Service Corporation.
Mr. Shane is President of this company.
B-4
<PAGE>
TERMS OF DIRECTORS
Directors serve one-year terms.
<TABLE>
<CAPTION>
NAME AND AGE AS OF THE MAY 18, POSITION, PRINCIPAL OCCUPATION,
2000, ANNUAL MEETING BUSINESS AND DIRECTORSHIPS
-------------------- --------------------------
<S> <C>
JAMES F. ORR, III......................... 57. President, Chief Executive Officer, and Director of
UAM since May of 2000. From 1988-1999, Chairman and
Chief Executive Officer and from 1986-1988, President
and Chief Executive Officer of UNUM Corporation; prior
to that, Executive Vice President of Connecticut Bank &
Trust Company. Past Chairman of the American Council of
Life Insurers. A trustee of Bates College and the
Committee for Economic Development. Chairman-elect of
the Board of Trustees of the Rockefeller Foundation. A
member of The Business Roundtable, the Harvard Center
for Society, and the Health Advisory Council at the
Harvard School of Public Health. A director of the
Nashua Corporation. A director of the National Alliance
of Business, and past Chair.
NORTON H. REAMER.......................... 64. The founder of UAM and Chief Executive Officer from
UAM's incorporation in 1980 until May of 2000. 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 UAM's 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 UAM's 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 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.
</TABLE>
B-5
<PAGE>
<TABLE>
<S> <C>
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>
DIRECTOR COMPENSATION
The Company does not pay additional compensation to Directors who are
employed by the Company or one of its affiliates. The Company does have an
overall compensation program for nonemployee Directors, which is reviewed
annually in July.
CASH COMPENSATION. The Company pays nonemployee Directors an annual cash
retainer fee of $30,000. The Company pays nonemployee Directors who serve on the
Audit or Compensation Committee an additional annual fee of $9,000 per
committee. The Company pays nonemployee Directors who serve on the Executive
Committee an additional annual fee of $12,000. In addition, the Company pays the
chairman of each of the Audit Committee and the Compensation Committee an
additional annual fee of $2,000. The Company pays nonemployee Directors a fee of
$5,500 for attending, either in person or by telephone, each regular Board
meeting and the Board's annual Planning Meeting. The Company does not pay any
fees for attendance at committee meetings.
B-6
<PAGE>
During 1999, the Company'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 were
members of the Search Committee, and Mr. Shane served as Chairman. Through the
duration of this assignment, the Company paid each of these members a fee at an
annual rate of $18,000, and the Company paid the Chairman an additional fee at
an annual rate of $4,000.
STOCK COMPENSATION. Under the Company's Second Amended and Restated 1994
Stock Option Plan (the 'Revised Plan'), on the 30th day after each annual
meeting of stockholders, all of the Company's 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 the Company's
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.
The Revised Plan entitles all of the Company's 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 the Company's 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 the
Company's 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 the Company's 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.
DIRECTOR RETIREMENT AT AGE 72
The Board's policy is that the retirement age of Directors is 72.
1999 BOARD MEETINGS
The Board met seven times during 1999. 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.
BOARD COMMITTEES IN 1999
The Board has Audit, Compensation and Executive Committees.
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 the Company's 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, and
reviews with the independent accountants any questions, comments or suggestions
they may have relating to the Company's internal controls, accounting practices
or procedures or those of the Company's affiliates. The Committee also reviews
with management and the independent accountants the Company's annual and
quarterly financial statements and any material changes in accounting principles
or practices used in preparing the statements, reviews the programs of the
Company's 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
B-7
<PAGE>
be material to the Company. During 1999, the Committee met four times. The
current composition of the Committee is John A. Shane, Chairman, Beverly L.
Hamilton, and Barbara S. Thomas.
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. Under the charter adopted by the Board, the
Committee is responsible for establishing annual and long-term performance goals
for the Company's 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 the Company's stock option plans and deferred compensation
plans, administers the Company's stock option plans and deferred compensation
plans, monitors compliance by certain executive officers with the Company's
program of required Company 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, and Barbara S. Thomas.
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, James F. Orr, III, Philip
Scaturro, and John A. Shane.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the following individuals served on the Compensation Committee:
Robert J. Greenebaum, Philip Scaturro and Barbara S. Thomas. None of these
individuals was, during or before 1999, an officer of employee of the Company or
any of the Company's affiliates.
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 the Company to provide investment banking services in
connection with the possible sale of Company assets. The Company did not incur
any fee for this engagement, because no transaction was completed. Because of
this transaction, Mr. Scaturro 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.
B-8
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge based on review of copies of such forms furnished
to the Company and written representations, all Forms 3, 4, and 5 required by
Section 16(a) of the Securities Exchange Act of 1934 have been timely filed with
respect to the most recently concluded fiscal year.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table sets forth the compensation for both
long-term and short-term, for services in all capacities earned by those
individuals who were as of December 31, 1999, (i) the Chief Executive Officer
and (ii) the other four most highly compensated Executive Officers of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ ----------------------------
OTHER ANNUAL SECURITIES
NAME AND COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS# COMPENSATION($)
------------------ ---- --------- -------- ------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Norton H. Reamer ................ 1999 850,000 571,200 60,400 127,000 --
Chief Executive Officer and 1998 850,000 621,600 58,800 185,000 --
Chairman of the Board 1997 850,000 772,000 58,800 126,000 --
Charles E. Haldeman, Jr.(2) ..... 1999 800,000 514,100 66,000 119,000 203,100
President, Chief Operating 1998 791,700 466,200 82,900 285,000
Officer and Director
William H. Park ................. 1999 570,000 571,200 52,800 97,000 --
Executive Vice President and 1998 570,000 475,000 52,800 139,000 --
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 and 1998 490,000 500,000 51,300 138,000 --
Director of Corporate 1997 450,000 482,000 51,300 62,000 --
Development
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 --
</TABLE>
---------
(1) This amount includes Company-paid life insurance premiums, Company
contributions to the individual's profit-sharing retirement plan account and
Company contributions to the individual's account in the Company'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 the
Company's executive offices in Boston of $13,100 in 1999 and $30,000 in
1998.
(2) Mr. Haldeman became an executive officer of the Company in March 1998.
Before that time, Mr. Haldeman was a principal of Cooke & Bieler, Inc., one
of the Company's affiliates. The Salary listed in the table for 1998
includes amounts paid by Cooke & Bieler for Mr. Haldeman's full-time
services before he joined the Company. The All Other Compensation listed in
the table for 1998 was paid by Cooke & Bieler to Mr. Haldeman after he
joined the Company in connection with the termination of his employment and
the transition of his responsibilities for Cooke & Bieler's clients.
Effective December 31, 1999, Mr. Haldeman resigned as a director, officer
and employee of UAM.
B-9
<PAGE>
OPTION GRANTS DURING 1999
This table shows all options to purchase the Company's common stock granted
in 1999 to the Company's Chief Executive Officer and each of the Company's four
other most highly compensated executive officers, and the potential value of
such grants based on the Black-Scholes option pricing model. This method of
valuation is required to be disclosed by SEC rules, and is not meant to forecast
possible future appreciation in the Company's stock price.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE OR GRANT
UNDERLYING GRANTED TO BASE PRICE DATE
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION PRESENT
NAME GRANTED(#)(1) 1999 ($/SHARE)(2) 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
</TABLE>
---------
(1) All options are exercisable in cumulative 25% installments on each of the
first four anniversaries of the date of the grant.
(2) The exercise or base price for all stock option grants shown in this column
is the closing price of the Company's common stock on the date of the grant.
(3) The actual value of these options, if any, will depend on the market price
of the Company's 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>
<S> <C>
Stock Price Volatility...................................... 24.222%
Dividend Yield.............................................. 3.743%
Risk-free Rate of Return.................................... 4.910%
Option Term................................................. 5 years
</TABLE>
TOTAL OPTION EXERCISES IN 1999 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES 12/31/1999 (#) 12/31/1999(1)($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <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 --
</TABLE>
---------
(1) An 'in the money' option is an option for which the exercise price of the
underlying stock in less than the closing price ($18.5625) of the Company's
common stock on December 31, 1999; the value shown reflects stock price
appreciation since the option's date of grant.
B-10
<PAGE>
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 the Company. 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 the Company
with enhanced retirement security through tax-deferred benefits payable upon
retirement, death or other termination of employment. The Plan contemplates
annual contributions by the Company, which are then deemed invested in shares of
Company 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 the Company'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 Company
common stock.
CHANGE OF CONTROL AGREEMENTS
The Company has entered into agreements with each executive officer that
provide the officer with compensation and benefits arrangements upon a change of
control. Under these agreements, a change of control includes any of the
following events: (i) any 'person,' as defined in the Securities Exchange Act of
1934, as amended, acquires 30% or more of the Company's voting securities; (ii)
a majority of the Company's Directors are replaced; (iii) the Company's
stockholders approve certain mergers, or a liquidation or sale of substantially
all of the Company's assets; or (iv) a liquidation of the Company.
Upon a change of control, these agreements obligate the Company to continue
to employ the officer for two years at the same rate of compensation and with
substantially similar responsibilities. Further, the Company would be required
to pay the officer a two or three times multiple of the officer's total annual
compensation rate if the officer: (i) is terminated by the Company (or its
successor) without cause; (ii) in the officer's judgment, is constructively
terminated by the Company; or (iii) 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 the Company's compensation plans contain provisions
that are triggered by a change of control of the Company. If a change of 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 of control includes any of the following events: (i) any 'person,' as
defined in the Securities Exchange Act of 1934, as amended, acquires 20% or more
of the Company's voting securities; (ii) a majority of the Company's Directors
are replaced; (iii) the Company's stockholders approve certain mergers, or a
liquidation or sale of substantially all of the Company's assets; or (iv) a
liquidation of the Company.
Based on account balances at December 31, 1999, upon a change of control the
following aggregate benefits would become immediately payable to the Company'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.
B-11
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists entirely of Directors who are not
officers or employees of the Company or its affiliates. The Committee
establishes the salaries and other compensation of the Company's executive
officers, including its Chief Executive Officer and the other Named Executive
Officers. The Committee also administers the Company'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. It is also designed to
link a substantial part of each executive officer's compensation to the
performance of both the Company and the individual executive officer as well as
encourage ownership of Company common stock by executive officers, to further
tie the interests of management to the interests of Company stockholders. The
Committee applies these principles to determine annual compensation
opportunities and payments for the Named Executive Officers and the Company'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 (as defined herein),
and the total annual compensation paid by competitors in the asset management
industry to their senior management.
We believe that the Company'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 B-15. 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
the Company'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
the Company's stockholders in allocating compensation opportunities among these
elements. Therefore, bonuses are tied to 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 ultimate value of stock option grants is
intrinsically tied to increases in the price of the Company's common stock.
For the Company'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
B-12
<PAGE>
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 the
Company to its stockholders. However, the Committee also considers the Company's
total stockholder return compared to that of the New Peer Group, changes in the
Company's earnings per share, net client cash flow at the Company'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 B-9 were approximately 40%
below the bonus targets calculated by the formula. This adjustment reflects the
Committee's overall assessment of the Company'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 B-9 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 the Company'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 the Company's Stock Option Plan.
To determine the size of the grants to the Company'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 Company common stock ownership guidelines for
the Company'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.
COMPENSATION COMMITTEE
Philip Scaturro, Chairman
Barbara S. Thomas
The report of the Compensation Committee and the following stock performance
graph are not deemed to be 'soliciting material' or to be 'filed' with the
Commission or subject to Regulation 14A
B-13
<PAGE>
or 14C or to the liabilities of Section 18 of the Securities Exchange Act of
1934, as amended (the 'Exchange Act') except to the extent the Company
specifically requests that such information be treated as soliciting material or
specifically incorporates it by reference into any filing under the Securities
Act of 1933, as amended, or the Exchange Act.
PERFORMANCE GRAPH
This graph compares over a five-year period beginning December 31, 1994: (i)
the Company's cumulative total stockholder returns (assuming reinvestment of
dividends); (ii) the cumulative total stockholder return of companies in
Standard & Poor's 500 Composite Stock Index (the 'S&P 500'); (iii) the
cumulative total stockholder return of companies in an industry peer group index
compiled by the Company that consists of the same companies included in the
industry peer group index shown in last year's proxy statement (the 'Old Peer
Group'); and the cumulative total stockholder return of companies in an industry
peer group index compiled by the Company that includes all of the public
companies that the Company currently considers its peers (the 'New Peer Group').
The Company often updates its Peer Group in response to changes occasioned
by mergers, acquisitions and initial public offerings that occur in its
industry. The Company believes 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.
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)
</TABLE>
---------
(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.
(footnotes continued on next page)
B-14
<PAGE>
(footnotes continued from previous page)
(12) Included since its initial public offering in February 1999.
(13) Included since its initial public offering in October 1999.
-------------------
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 the Company and each of the comparative indices.
Total return for the Company'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 the
Company'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.
TOTAL CUMULATIVE SHAREHOLDER RETURN
for Five-Year Period Ending December 31, 1999
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
UAM................................... $100.00 $107.12 $153.07 $144.32 $158.53 $117.51
Standard & Poor's 500 Index........... 100.00 137.58 169.17 225.61 290.09 351.13
Old Peer Group........................ 100.00 135.79 185.62 285.80 257.60 317.70
New Peer Group........................ 100.00 135.79 185.62 285.80 257.60 307.68
</TABLE>
B-15
STATEMENT OF DIFFERENCES
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