PS95 - 1/27/95
(See notes on pages - )
8
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X |
Filed by a party other than the registrant | |
Check the appropriate box:
|X | Preliminary proxy statement
| | Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
T. ROWE PRICE ASSOCIATES,
INC.
(Name of Registrant as Specified in Charter)
Alvin M. Younger, Jr.,
Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X | $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(2).
| | $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
| | Fee computed on the table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
| | Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
PRELIMINARY COPY -- FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION ONLY
YOUR VOTE IS IMPORTANT--Please execute and return the enclosed p
roxy promptly,
whether or not you plan to attend the T. Rowe Price Annual Meeti
ng of Stockholders.
[LOGO]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 1995
Notice is hereby given that the Annual Meeting of
Stockholders of T. Rowe Price Associates, Inc. (the "Company")
will be held at 100 East Pratt Street, 12th Floor, Baltimore,
Maryland, on April 6, 1995, at 10:00 a.m. for the following
purposes:
(1) To elect eleven directors of the Company;
(2) To consider and act upon a proposed charter
amendment to increase the authorized Common Stock of
the Company;
(3) To consider and act upon a proposed charter
amendment to authorize a class of undesignated
Preferred Stock;
(4) To consider and act upon a proposed performance-
linked Executive Incentive Compensation Plan;
(5) To consider and act upon a proposed 1995 Director
Stock Option Plan; and
(6) To consider and act upon such other business as
may properly come before the meeting.
February 6, 1995, was fixed by the Board of Directors as the
record date for determination of stockholders entitled to notice
of and to vote at the meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Alvin M. Younger, Jr.
Secretary
Baltimore, Maryland
February 27, 1995
PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy are furnished
to stockholders of T. Rowe Price Associates, Inc. (the "Company")
in connection with the solicitation of proxies by the Company's
Board of Directors to be used at the annual meeting of
stockholders described in the accompanying notice and at any
adjournments thereof. The purpose of the meeting is to elect
directors of the Company, to consider and act upon amendments to
the Company's charter to increase the authorized Common Stock of
the Company and to authorize an undesignated class of Preferred
Stock, to consider and act upon a proposed performance-linked
Executive Incentive Compensation Plan, and to transact such other
business as may properly come before the meeting. This proxy
statement and the accompanying proxy are first being sent to
stockholders on or about February 27, 1995.
The record of stockholders entitled to notice of and to vote
at the annual meeting was taken as of the close of business on
February 6, 1995. At that date there were outstanding and
entitled to vote shares of Common Stock, par
value $.20 per share. All share and per-share information
included in this proxy statement has been adjusted for the two-
for-one stock split effective at the close of business on
November 30, 1993. In the election of directors, each share is
entitled to cast one vote for each director to be elected;
cumulative voting is not permitted. For all matters except the
election of directors, each share is entitled to one vote.
Directors are elected by a plurality of the votes cast by the
holders of shares of Common Stock at a meeting at which a quorum
is present. For purposes of the election of directors,
abstentions and broker non-votes are not considered to be votes
cast and do not affect the plurality vote required for directors.
Article EIGHTH, Section 3 of the charter of the Company limits
the voting rights of certain persons and groups owning in excess
of 15% of the Company's Common Stock. The Company does not
believe that such provision will be applicable to any
stockholders at the 1995 annual meeting, but will apply such
provision if circumstances require.
The cost of soliciting proxies and preparing the proxy
materials will be borne by the Company. In order to ensure that
sufficient shares of Common Stock are represented at the meeting,
the Company has retained the services of Georgeson & Company,
Inc. to assist it in soliciting proxies for a fee of $8,000 plus
reimbursement for out-of-pocket expenses. In addition, the
Company will request securities brokers, custodians, nominees,
and fiduciaries to forward solicitation material to the
beneficial owners of stock held of record and will reimburse them
for their reasonable out-of-pocket expenses in forwarding such
solicitation material. In addition to solicitation of proxies by
Georgeson & Company, Inc., proxies may be solicited personally or
by telephone or telegram by directors, officers, and employees of
the Company or its subsidiaries without additional compensation
to them.
The Board of Directors has selected George J. Collins and
George A. Roche to act as proxies with full power of
substitution. Any stockholder executing a proxy has the power to
revoke the proxy at any time before it is voted. This right of
revocation is not limited or subject to compliance with any
formal procedure. Any stockholder may attend the meeting and
vote in person whether or not the stockholder has previously
given a proxy.
Stockholder proposals intended to be presented at the 1995
annual meeting must be received by the Company for inclusion in
the Company's proxy statement and proxy relating to that meeting
by [October 30], 1995.
ELECTION OF DIRECTORS
The entire Board of Directors of the Company will be elected
to hold office until the next annual meeting of stockholders and
until their respective successors are elected and have qualified.
All eleven nominees currently serve as directors of the Company.
It is intended that all proxies received, unless otherwise
indicated, will be voted for the election of the persons named in
the following table, to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified. If any nominee should become unable or unwilling to
serve, the proxies will be voted for the election of such person
as may be designated by the Board of Directors to replace such
nominee.
Information Concerning Nominees
The following table presents information concerning persons
nominated by the Board of Directors for election as directors of
the Company. Except as indicated, the nominees have been
officers of the organizations named below as their principal
occupations or of affiliated organizations for more than five
years. Positions of the nominees as trustees, directors, or
principal officers of the T. Rowe Price Mutual Funds (including
those Funds organized as trusts referred to herein as the "Price
Funds") and of certain other affiliated registered investment
companies are also indicated. Stock ownership information is
reported as of the record date.
Age, principal occupation, directorships
with public companies, and beneficial owner-
Name of Nominee ship of Common Stock (percent of
class)
Thomas H. Broadus, Jr. Mr. Broadus is 57 years old and has
been a director of the Company since 1979,
a managing director since 1989, a vice
president between 1971 and 1989, and an
employee since 1966. He is president and a
director of the Blue Chip Growth Fund and a
trustee of the Equity Income Fund.
shares ( %) (6)
George J. Collins Mr. Collins is 54 years old and has
been a director of the Company since 1980,
president and chief executive officer since
1984, a managing director since 1989, a
vice president between 1975 and 1984, and
an employee since 1971. He is a director
or trustee of 19 equity and fixed income
funds within the Price Funds. Of these, he
is chairman of 14 funds and president of
two funds. (1)(2)(5)
shares ( %) (7)
James E. Halbkat, Jr. Mr. Halbkat is 60 years old and has been a
director of the Company since 1979. He is
President of U.S. Monitor Corporation, a
provider of public response systems.
(3)(4)(5)
14,000 shares *
Carter O. Hoffman Mr. Hoffman is 67 years old and has
been a director of the Company since 1973,
a managing director since 1989, a senior
vice president between 1980 and 1989, a
vice president between 1966 and 1980, and
an employee since 1961. He is chairman of
the Prime Reserve Fund and a director of
two other Price Funds.
shares * (8)
Henry H. Hopkins Mr. Hopkins is 52 years old and has
been a director of the Company since 1987,
a managing director since 1989, a vice
president between 1976 and 1989, and an
employee since 1972.
shares ( %) (9)
James S. Riepe Mr. Riepe is 51 years old and has
been a director of the Company since 1981,
a managing director since 1989, a
vice-president between 1981 and 1989, and
director of the investment services
division and an employee since 1981. He is
chairman of four of the 37 Price Funds on
which he serves as a director or trustee,
is chairman of New Age Media Fund, Inc.,
and is president and a director of CUNA
Mutual Funds, Inc. He is also a director
of Rhone-Poulenc Rorer, Inc., a
pharmaceuticals company. (1)(2)
shares ( %) (10)
George A. Roche Mr. Roche is 53 years old and has
been a director of the Company since 1980,
chief financial officer since 1984, a
managing director since 1989, a vice
president between 1973 and 1989, and an
employee since 1968. He is a director and
the president of the New Era Fund, and
serves as a director of two other Price
funds. (1)(2)
shares ( %) (11)
John W. Rosenblum Mr. Rosenblum is 51 years old and has been
a director of the Company since 1991. He
is the Tayloe Murphy Professor at the
Darden Graduate School of Business
Administration ("the Darden School"),
University of Virginia, and was Dean of the
Darden School from 1983 to 1993. He is
also a director of Chesapeake Corporation,
a manufacturer of paper products; Cadmus
Communications Corp., a provider of
printing and communication services;
Comdial Corp., a manufacturer of telephone
systems for businesses; and Cone Mills
Corporation, a textiles producer. (3)(4)
shares *
Robert L. Strickland Mr. Strickland is 63 years old and has been
a director of the Company since 1991. He
is Chairman of Lowe's Companies, Inc., a
retailer of specialty home supplies, and is
a director of Hannaford Bros. Co., a food
retailer, since 1994. (1)(3)(4)
2,000 shares *
M. David Testa Mr. Testa is 50 years old and has
been a director of the Company since 1981,
a managing director since 1989, a vice
president between 1976 and 1989, and an
employee since 1972. He is a director and
the president of the Equity Series, and is
a director or trustee of 13 other Price
Funds. He serves as chairman of five of
these Funds. (1)(2)(5)
shares ( %) (12)
Philip C. Walsh Mr. Walsh is 73 years old and has
been a director of the Company since 1987.
He is currently a consultant to Cyprus Amax
Minerals Company, the successor by merger
to Cyprus Minerals Company, and a director
of Piedmont Mining Company. From 1985 to
1993, he served as a director of Cyprus
Minerals Company. (3)(4)(5)
2,000 shares *
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(22 persons) shares ( %) (13)
* Indicates holdings of less than 1 percent.
(1) Member of the Executive Committee of the Board of
Directors.
(2) Member of the Management Committee of the Board of
Directors.
(3) Member of the Audit Committee of the Board of
Directors.
(4) Member of the Executive Compensation Committee of
the Board of Directors.
(5) Member of the Nominating Committee of the Board of
Directors.
(6) Includes shares which may currently be
acquired by Mr. Broadus upon the exercise of stock options.
Also includes shares held by Mr. Broadus as
custodian for a minor child, shares held by a
charitable foundation of which Mr. Broadus is an executive
officer, and shares owned by family members.
Also includes shares held in trusts for members
of Mr. Broadus's immediate family. Does not include an
aggregate of 140,000 shares held in trusts for family
members of two other directors of the Company of which
trusts Mr. Broadus is a co-trustee. Mr. Broadus disclaims
beneficial ownership of the shares described in the two
immediately preceding sentences.
(7) Includes shares which may currently be
acquired by Mr. Collins upon the exercise of stock options.
Also includes 67,602 shares owned by a family member and as
to which Mr. Collins disclaims beneficial ownership.
(8) Includes 14,000 shares owned by a family member and
as to which Mr. Hoffman disclaims beneficial ownership.
(9) Includes shares which may currently be
acquired by Mr. Hopkins upon the exercise of stock options.
(10) Includes shares which may currently be
acquired by Mr. Riepe upon the exercise of stock options.
Also includes 20,000 shares owned by a member of
Mr. Riepe's family and 70,000 shares held in trusts for
members of Mr. Riepe's family, as to which Mr. Riepe
disclaims beneficial ownership. Also includes 42,000
shares held in a charitable foundation of which Mr. Riepe
is a trustee and as to which Mr. Riepe has voting and
disposition power.
(11) Includes shares which may currently be
acquired by Mr. Roche upon the exercise of stock options,
and 200,000 shares held by or in trusts for members of
Mr. Roche's family and as to which Mr. Roche disclaims
beneficial ownership.
(12) Includes shares which may currently be
acquired by Mr. Testa upon the exercise of stock options,
and 80,000 shares held in trusts for members of Mr. Testa's
family and as to which Mr. Testa disclaims beneficial
ownership.
(13) Includes shares which may currently be
acquired by all executive officers as a group upon the
exercise of stock options.
Unless otherwise indicated in the foregoing notes, the
individuals named above have sole voting and disposition powers
over the shares beneficially owned by them.
Information Regarding the Board of Directors and Certain
Committees
During 1994 there were six meetings of the Board of Directors
of the Company. Each director attended at least 75% of the
combined total number of meetings of the Board and Board
committees of which he was a member. The Board of Directors of
the Company has an Audit Committee, Executive Compensation
Committee, and a Nominating Committee.
The Audit Committee meets with the Company's independent
accountants to review whether satisfactory accounting procedures
are being followed by the Company and whether internal accounting
controls are adequate, to inform itself with regard to non-audit
services performed by the independent accountants, and to review
fees charged by the independent accountants. The Audit Committee
also recommends to the Board of Directors the selection of
independent accountants. The directors designated in note (3)
above are members of the Audit Committee, which met on four
occasions.
As described in the report of the Executive Compensation
Committee, the Executive Compensation Committee establishes the
compensation for certain executive officers of the Company and
generally reviews benefits and compensation for all officers and
employees. It also administers the Company's stock option and
stock purchase plans. The directors designated in note (4) above
are members of this Committee and met [five] times.
The Nominating Committee advises the Board of Directors with
respect to the selection and nomination of individuals to serve
as directors of the Company. The directors designated in note
(5) on the previous page are members of the Nominating Committee
and met on two occasions. Nominations for director which are
presented to the Nominating Committee by stockholders are
considered in light of the needs of the Company, as well as the
nominee's individual knowledge, experience, and background.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth
certain information concerning the compensation for the last
three completed fiscal years of the chief executive officer and
the four executive officers of the Company who, in addition to
the chief executive officer, received the highest compensation
during 1994.
SUMMARY COMPENSATION TABLE
Long-Term
All Other
Annual Compensation (1) Compensation
Awards Compensation (4)
Name and Securities Underlying
Principal Position Year Salary Bonus (2)Options Granted
(#) (3)
George J. Collins 1994 $325,000 $1,250,000 -0-
$22,500
President, Chief Execu-1993 290,008 750,000 35,000
30,000
tive Officer and1992265,000 500,000 12,000 30,000
Managing Director
James S. Riepe 1994 275,000 1,250,000 -0- 22,500
Managing Director 1993 248,750 750,000 30,000
30,000
1992 230,000 500,000 24,000 30,000
George A. Roche1994 275,000 1,250,000 -0- 22,500
Chief Financial Officer1993 248,750 750,000 30,000
30,000
and Managing Director 1992 230,000 500,000 24,000
30,000
M. David Testa 1994 275,000 1,250,000 300,000 26,625
Managing Director 1993 248,750 750,000 30,000
33,731
1992 230,000 500,000 24,000 33,450
Brian C. Rogers1994 250,000 810,000 25,000 26,250
Managing Director 1993 220,833 400,000 24,000
33,312
1992 190,000 350,000 30,000 32,850
(1)No officer named above received any perquisites
and other personal benefits the aggregate amount of which
exceeded the lesser of either $50,000 or 10% of the total
annual salary and bonus reported for 1994 in the Summary
Compensation Table.
(2)Bonuses are generally based upon individual,
group, and corporate performance and are allocated and paid
at year end. Bonuses are discretionary and vary
significantly from year to year and among eligible
employees. In recent years, bonuses have been a
significant portion of compensation. See "Report of the
Executive Compensation Committee." Payment of the portion
of the 1994 Bonus that is not deductible for federal income
tax purposes has been deferred until such time as it will
be deductible.
(3)The number of shares subject to options have
been adjusted in accordance with the terms of the options
for the two-for-one stock split effective at the close of
business on November 30, 1993.
(4)Included in other compensation is a $22,500,
$30,000 and $30,000 contribution for 1994, 1993 and 1992,
respectively, for each of the named individuals to the
Company's tax-qualified profit sharing plan, which provides
retirement benefits based on the investment performance of
each participant's account under the plan. Also includes
$4,125, $3,731 and $3,450 in employer matching
contributions under the Company's 1986 Employee Stock
Purchase Plan for Mr. Testa for 1994, 1993 and 1992,
respectively, and $3,750, $3,312 and $2,850 in employer
matching contributions under the Company's 1986 Employee
Stock Purchase Plan for Mr. Rogers for 1994, 1993 and 1992,
respectively.
Option Grants Table. The following table sets forth certain
information relating to options granted to purchase shares of
Common Stock of the Company. Options generally become
exercisable in the first through fifth anniversaries of the date
of grant. The Company's 1990 and 1993 Stock Incentive Plans
provide that the right to exercise options may be accelerated by
the Company. Any decision to accelerate options held by
executive officers will be made in the sole discretion of the
Executive Compensation Committee on such terms and conditions as
this committee determines to be appropriate under the
circumstances.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number ofPercent of Potential Realizable
Value at As-
SecuritiesTotal Options sumed Annual Rates
of Stock Price
UnderlyingGranted to Exercise or Appreciation for
Option Term (2) _
Options Employees inBase Price Expiration
Name Granted (#)Fiscal Year(Per Share)(1) Date 0%(3) 5% 10%
George J. Collins0 0% N/A N/A $0 $0 $0
James S. Riepe 0 0 N/A N/A 0 0 0
George A. Roche 0 0 N/A N/A 0 0 0
M. David Testa300,000 24.4% $32.25 11/10/04 0$6,084,600$15,419,400
Brian C. Rogers25,000 2.0 32.25 11/10/04 0507,0501,284,950
The 5% and 10% assumed rates of stock price appreciation
used to calculate potential gains to optionees are mandated by
the rules of the Securities and Exchange Commission. To put
these hypothetical gains into perspective, the following
additional information is being provided.
Percent of Potential Realizable
Value at As-
Total Options sumed Annual Rates of
Stock Price
Granted to Exercise or Appreciation for
Option Term (2) _
OptionsEmployees inBase Price Expiration
Name GrantedFiscal Year(Per Share)(1) Date 0%(3) 5%
10%
All Stockholders (4) N/A N/A N/A N/A 0 $582,319,4
43$1,475,695,431
Potential Gain to
Named Executives as
a Percentage of Potential
All Stockholders Gain N/A N/A N/A N/A N/A 1.13%
1.13%
(1)Options were granted at 100% of fair market
value on the date of grant.
(2)The dollar amounts set forth under these
columns are the result of calculations of assumed annual
rates of stock price appreciation from November 11, 1994
(the date of grant of the 1994 option awards) to
November 10, 2004 (the date of expiration of such options)
of 0%, 5%, and 10%, the latter two assumed rates being
required under the rules of the Securities and Exchange
Commission. Based on these assumed annual rates of stock
price appreciation of 0%, 5%, and 10%, respectively, the
Company's stock price at November 10, 2004 is projected to
be $32.25, $52.532, and $83.648, respectively. These
assumptions are not intended to forecast future
appreciation of the Company's stock price. Indeed, the
Company's stock price may increase or decrease in value
over the time period set forth above. The potential
realizable value computation does not take into account
federal or state income tax consequences of option
exercises or sales of appreciated stock.
(3)Optionees will not realize value under their
1994 option grants without a stock price appreciation which
will benefit all stockholders.
(4)The number of shares subject to options granted
in 1994 is not included in the number of shares outstanding
used to calculate potential realizable value at the assumed
annual rates of stock price appreciation of 0%, 5%, and
10%, respectively.
Aggregated Option Exercises and Fiscal Year-End Option Values
Table. The following table sets forth certain information
concerning the exercise of stock options, the number of
unexercised options and the value of unexercised options at the
end of 1994 for the executive officers whose compensation is
reported in the Summary Compensation Table. Value is considered
to be, in the case of exercised options, the difference between
the exercise price and the market price on the date of exercise,
and, in the case of unexercised options, the difference between
the exercise price and market price at December 31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Secur-
ities Underlying Value of Un
exercised
Unexercised Options "In-the-Money" Options
at December 31, 1994 at December 31, 1994
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) RealizedUnexercisable) (1) Unexercisable) (2)
George J. Collins N/A N/A39,800/47,200 $627,725/$3
60,150
James S. Riepe 4,800 $110,70027,600/56,000 275,250/530
,000
George A. Roche 8,600 153,52519,200/56,000 166,050/530
,000
M. David Testa 11,100 250,21927,300/356,000 295,881/530
,000
Brian C. Rogers 11,000 222,37594,800/88,000 1,553,438/7
09,312
(1)All share and per share figures have been
adjusted in accordance with the terms of the options for
the two-for-one stock split effective at the close of
business on November 30, 1993.
(2)An "In-the-Money" option is an option for
which the option price of the underlying stock is less than
the market price at December 31, 1994, and all of the value
shown reflects stock price appreciation since the granting
of the option.
Compensation of Directors. Directors who are also officers do
not receive directors' fees. Each independent director received a
$50,000 retainer for his 1994 services as a director and member
of the various committees on which he serves.
Executive Compensation Committee Interlocks and Insider
Participation
During 1994 Philip C. Walsh (Chairman), James E. Halbkat, Jr.,
John W. Rosenblum, and Robert L. Strickland served as members of
the Executive Compensation Committee. No director or executive
officer of the Company is a director or executive officer of any
other corporation that has a director or executive officer who is
also a director or board committee member of the Company.
Report of the Executive Compensation Committee
The Executive Compensation Committee of the Board of
Directors (the "Committee"), comprised solely of the independent
directors named below, is responsible to the Board and by
extension to the stockholders for: (i) determination of the
compensation of the chief executive officer and the other
managing directors who are also members of the Company's
management committee (collectively, the "Senior Executive
Officers") as well as the other officers of the Company who are
also directors; (ii) administration of the Company's stock
incentive plans as required by Rule 16b-3 under the Securities
Exchange Act of 1934; and (iii) review and approval of the
compensation policies and general levels of compensation for the
Company's remaining Managing Directors and other key-employees,
for whom individual compensation decisions are made by a
management-level compensation committee.
The Committee recognizes that the investment management and
securities industries are highly competitive, and that
experienced professionals have significant career mobility. Its
members believe that the ability to attract, retain and provide
appropriate incentives for the highest quality professional
personnel is essential to retain the Company's competitive
position in the mutual fund and investment management industry,
and thereby to provide for the long-term success of the Company
in the interests of its shareholders.
The Committee believes that competitive levels of cash
compensation, together with equity incentive programs that are
consistent with shareholder interests, are necessary for the
motivation and retention of the company's professional personnel.
The Company's compensation programs are keyed to achievement, as
determined by the Committee, of short- and long-term performance
goals.
During 1994, base salaries for each of the individuals named
in the table on page __ (the "Named Officers") were unchanged
from the annual levels established during 1993 (which levels, ,
in the case of each of the Senior Executive Officers had not
previously been changed since the Company's initial public
offering in 1986. Consistent with compensation practices
generally applied in the investment management and other
financial services industries with whom the Company competes for
talent, base salaries for the Named Officers are intended to form
a relatively low percentage (substantially below 50%) of total
cash compensation. The annual discretionary cash bonus has been
the principal means of rewarding the Named Officers for
individual and group performance and, in recent years, has been
the major component of cash compensation. At the outset of 1994,
the Company's Board of Directors established a specific earnings
target relative to three year average growth rates and a
corresponding target bonus pool that is available for the payment
of bonuses to a significant number of the Company's professional
staff. During the course of the year, the amount of the
aggregate bonus pool was substantially increased above the
initial target bonus pool to reflect the fact that the Company's
performance during the year substantially exceeded the initial
earnings target.
The Executive Compensation Committee first determined the
portion of the aggregate bonus pool to be made available to the
other persons (other than the Named Officers) eligible to receive
awards from the aggregate bonus pool. The Executive Compensation
Committee then determined individual bonus awards for the Named
Officers that would be made available from the remainder of the
aggregate bonus pool. In making bonus awards to all
participants, the Company and the Committee recognized that
market and competitive forces require compensation levels for a
significant percentage of the Company's investment and other
professional staff sufficient to prevent loss of promising
personnel to direct competitors or other participants in the
investment and financial services markets.
In addition to its primary consideration of the quantitative
factors described above, the Committee gave significant
consideration to a series of specific, qualitative performance
factors that it believed reflected the Named Officers'
performance but were not capable of precise measurement. The
qualitative factors were considered for purposes of determining
both the aggregate amount of the bonus pool to be made available
as well as individual bonus awards. For 1994, the principal
qualitative factors which the Committee assessed in determining
the incentive compensation of the Senior Executive Officers
included relative investment performance, marketing
effectiveness, management of corporate assets, expense control,
and corporate infrastructure development. These qualitative
factors were not accorded specific weightings, and were applied
by the Executive Compensation Committee as appropriate to take
into account the varied individual responsibilities among the
Senior Executive Officers. The Committee determined that the
Senior Executive Officers as a team had demonstrated outstanding
long-term management performance in these areas. In the view of
the Committee, this performance could have justified a
significant further increase in the bonus pool over and above the
amount previously determined due to the strong financial
performance, but the Committee determined to make no further
upward adjustments. In the case of Mr. Rogers, the principal
qualitative factor weighed was the superior investment
performance of the portfolios for Mr. Rogers was responsible.
In light of the decision to recommend for stockholder
approval a performance-based incentive plan for years beginning
in 1995, as described elsewhere in this proxy statement, the
Committee determined to defer payment of a portion of the cash
bonuses payable to each of the Named Officers that would be non-
deductible in 1994 until such time as these payments are fully
deductible or the Committee otherwise determines to effect the
payments. Assuming stockholder ratification of the bonus plan
described on pages __ to __, the deferred portion of the 1994
bonus will be paid during 1995. Thus, no portion of the
compensation payable to the Named Executive Officers for 1994
performance is expected to be non-deductible.
In recent years, equity incentive awards in the form of
stock option grants have been directed primarily to officers
including certain managing directors other than the Senior
Executive Officers. Individual awards have been based on
evaluation of the same individual and group performance goals
that form the basis of bonus awards. Preliminary determinations
for key employees other than Managing Directors are made by a
management-level compensation committee, which are then reviewed
and approved by the Executive Compensation Committee.
The Executive Compensation Committee has compared the
Company's compensation levels to relevant publicly available data
for the investment management, securities and other financial
service industries and found the Company's compensation levels to
be competitive. Certain of these companies are included in the
CRSP Total Return Index for NASDAQ Financial Stocks shown in the
Stock Performance Chart below. The Company believes it competes
for executive talent with a large number of investment
management, securities, and other financial services companies,
some of which are privately owned and others of which have
significantly larger market capitalizations than the Company.
The practice of the Company and the Executive Compensation
Committee is to review available compensation data from a large
universe of financial services companies. The Executive
Compensation Committee receives the assistance of an independent
compensation consulting firm in reviewing and analyzing comparing
this data and determining executive compensation and policies.
The Committee's goal is to maintain compensation programs which
are competitive and, where performance justifies, above industry
compensation averages. The Committee determined that actual 1994
compensation packages were consistent with this goal.
In establishing the compensation of the Named Officers, the
Committee took into account the fact that the four Senior
Executive Officers constituted the Company's senior management
team during 1994 and thus had broad Company-wide management
responsibilities as well as line operating responsibilities.
Each of these individuals has been a member of the Company's
Management Committee since 1984. A larger base salary for Mr.
Collins reflected the additional responsibilities inherent in his
position as Chief Executive Officer. The levels of 1994 bonus
compensation reflected attainment by the Company of record
operating income and earnings per share, in each case
substantially in excess of initial targets, as well as the
consistently favorable performance relative to specific
qualitative performance factors discussed above. Subject to the
considerations regarding the long-term contributions of Mr. Testa
described below, the four Senior Executive Officers were viewed
as making generally equivalent contributions to 1994 performance.
In the case of Mr. Rogers, the Executive Compensation Committee
took into consideration the strong investment performance and
growth in assets under management of the Company's Equity Income
Fund, of which Mr. Rogers is the chief portfolio manager, and the
fact that this fund is one of the largest of the T. Rowe Price
mutual funds and an important contributor to Company revenues.
In 1994, the Executive Compensation Committee determined to
make a stock option award to M. David Testa covering 300,000
shares of common stock at the closing NASDAQ price on the date of
grant ($__ per share). This option award was significantly
greater than option awards that had been made in the past and was
made in recognition of past performance as well as to provide Mr.
Testa strong incentives to continue to provide the Corporation
with similar contributions for the foreseeable future. In making
this award, the Executive Compensation Committee specifically
recognized the unique contribution of Mr. Testa over a long
number of years to the creation, growth, and leadership of the
Company's international investment management business which was
a major contributor to the Company's investment management asset
and revenue growth in 1994 and a very significant contributor in
prior recent years. The Committee also considered Mr. Testa's
significant contributions to leadership and restructuring of the
Company's equity management function, which has enjoyed
consistently favorable relative investment performance in recent
years, and his broad Company-wide management functions. In order
to minimize the dilutive effect of option awards, the Executive
Compensation Committee determined to make no option awards during
1994 to the other Senior Executive Officers.
In determining option awards, the Executive Compensation
Committee received the advice of its independent compensation
consultants concerning option award practices of other public
companies, including companies which compete with the
Corporation for talent.
In making this option award, the Committee's intention was
to recognize superior past long-term performance, to provide an
additional incentive to continue this performance for a
significant period in the future, and to reinforce the Company's
policies to base compensation awards to its executive officers
largely on performance. To solidify the link of the award to Mr.
Testa to long-term future performance, Mr. Testa's option award
becomes first exercisable in three equal annual installments
commencing in November, 1997 and expires in November, 2004, which
is longer than the vesting period established in other stock
option grants awarded by the Company in recent years.
During 1994, the Executive Compensation Committee determined
to implement a bonus plan for years commencing January 1, 1995
that would permit full deductibility of bonus payment. The
Company's Executive Incentive Compensation Plan, included on
pages __ to __ of this proxy statement, has been recommended to
stockholders for approval at the 1995 annual meeting.
The Executive Compensation Committee believes that 1994
compensation levels disclosed in this proxy statement are
reasonable and appropriate in light of the very strong results
relative to the Corporation's financial and qualitative
performance targets.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
John W. Rosenblum
Robert L. Strickland
STOCK PERFORMANCE CHART
As part of the proxy statement disclosure requirements
mandated by the Securities and Exchange Commission, the Company
is required to provide a five-year comparison of the cumulative
total shareholder return on its Common Stock with that of a broad
equity market index and either a published industry index or a
Company-constructed peer group index.
The following chart compares the yearly percentage change in
the cumulative total shareholder return on the Company's Common
Stock during the five years ended December 31, 1994 with the
cumulative total return on the CRSP Total Return Index for the
NASDAQ Stock Market (US Companies), the CRSP Total Return Index
for NASDAQ Financial Stocks, and the S&P 500 Index. The
comparison assumes $100 was invested on December 31, 1989 in the
Company's Common Stock and in each of the foregoing indices and
the reinvestment of dividends.
There can be no assurance as to future trends in the
cumulative total return of the Company's Common Stock or of the
following indices. The Company does not make or endorse any
predictions as to future stock performance.
PERFORMANCE GRAPH
GRAPH PLOT POINTS
1989 1991 1992 1994
1990 1993
T. Rowe Price $100 $161 $166 $227
Associates, $84 $215
Inc.
CRSP Total 100 136 159 177
Return Index 85 181
for the
NASDAQ Stock
Market (US
Companies)
(1)
CRSP Total 100 119 170 198
Return Index 77 197
for NASDAQ
Financial
Stocks (1)
S&P 500 Index 100 126 136 152
(2) 97 150
(1)The CRSP Total Return Index for the NASDAQ Stock
Market (US Companies) is an index comprising all domestic
common shares traded on the NASDAQ National Market and the
NASDAQ Small-Cap Market. The CRSP Total Return Index for
NASDAQ Financial Stocks is an index comprising all
financial company American Depository Receipts, domestic
common shares and foreign common shares traded on the
NASDAQ National Market and the NASDAQ Small-Cap Market.
This index represents SIC Codes 60 through 67. The Company
will provide the names of companies included in this index
upon the written request of the stockholder. These indices
were prepared for NASDAQ by the Center for Research in
Securities Prices ("CRSP") at the University of Chicago and
distributed to NASDAQ-listed companies to assist them in
complying with proxy rule disclosure requirements. The
Company has not independently verified the computation of
these total return indices.
(2)Total return performance for the S&P 500 Index
provided by Standard & Poor's.
PROPOSALS TO INCREASE AUTHORIZED COMMON STOCK
AND TO CREATE A CLASS OF UNDESIGNATED PREFERRED STOCK
The Board of Directors of the Company has adopted resolutions
declaring advisable and recommending to the Company's
stockholders for their approval, two separate amendments to the
Company's charter. The first amendment provides for the increase
of the authorized shares of Common Stock from 48,000,000 shares
to 100,000,000 shares. The second amendment provides for the
creation of a class of 20,000,000 shares of undesignated
Preferred Stock, which would be subject to classification and
reclassification by the Board of Directors without stockholder
approval. The text of the proposed amendments is included in the
form of Articles of Amendment attached hereto as Exhibit A.
The terms of the proposed class of Preferred Stock provides
that the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption thereof (collectively, the
"Limitations and Restrictions") may be determined by the Board of
Directors of the Company prior to the issuance of such stock. As
such, the Board of Directors of the Company will in the event of
the approval of this proposal by the Company's stockholders be
entitled to authorize the creation and issuance of 20,000,000
shares of Preferred Stock in one or more series with such
Limitations and Restrictions as may be determined in the Board's
sole discretion, with no further authorization by stockholders
required for the creation and issuance thereof.
The additional shares of Common Stock and Preferred Stock
could be issued, in many cases without stockholder approval, for
a variety of corporate purposes including the raising of
additional capital to support expansion of the Company's growth,
either through internally-generated growth or through
acquisitions, and issuances in connection with the acquisition of
other business organizations, employee incentive plans, stock
splits and recapitalizations of the Company's capital structure.
The Company regularly reviews various acquisition prospects and
periodically engages in discussions regarding such possible
acquisitions. Currently, the Company is not a party to any
agreements or understandings regarding any material acquisitions.
The Board of Directors is required to make any determination
to issue shares of Common Stock or Preferred Stock based on its
judgment as to the best interests of the stockholders and the
Company. Although the Board of Directors has no present
intention of doing so, it could issue shares of Common Stock or
Preferred Stock that could, depending on the terms of such
series, make more difficult or discourage an attempt to obtain
control of the Company by means of merger, tender offer, proxy
contest or other means. When, in the judgment of the Board of
Directors, this action will be in the best interest of the
stockholders and the Company, such shares could be used to create
voting or other impediments or to discourage persons seeking to
gain control of the Company. Such shares could be privately
placed with purchasers favorable to the Board of Directors in
opposing such action. The Board of Directors could also
authorize holders of a series of Preferred Stock to vote either
separately as a class or with the holders of the Company's Common
Stock, on any merger, sale or exchange of assets by the Company
or any other extraordinary corporate transaction. The issuance
of new shares could also be used to dilute the stock ownership of
a person or entity seeking to obtain control of the Company
should the Board of Directors consider the action of such entity
or person not to be in the best interests of the stockholders and
the Company. In addition, the shares of Preferred Stock could be
issued in the event the Board of Directors were to adopt a
stockholder rights plan in order to protect stockholders in the
event of an unsolicited attempt to acquire the Company which the
Board of Directors does not believe to be in the best interests
of the Company's stockholders. The Company has no present
intention of issuing shares of Preferred Stock or to adopt a
stockholder rights plan. Accordingly, the terms of any Preferred
Stock subject to this proposal cannot be stated or estimated with
respect to any or all of the Preferred Stock authorized.
The Board of Directors believes the increase in the authorized
Common Stock and the creation of the Preferred Stock are in the
best interests of the Company and its stockholders and has
declared the amendment advisable. Stockholders are required
under SEC rules to consider the two amendments separately. The
Board of Directors recommends a vote "FOR" the amendment to the
Company's charter to increase from 48,000,000 to 100,000,000
shares the authorized Common Stock and "FOR" the amendment to the
Company's charter to authorize 20,000,000 shares of a new class
of undesignated Preferred Stock. The affirmative vote of a
majority of the total number of shares of Common Stock
outstanding will be required for adoption of each of the two
amendments. Abstentions and broker non-votes will have the
effect of a vote against each of the amendments. The proposals
are independent such that failure to adopt one proposal will not
affect adoption of the other proposal.
Proposal to Approve Executive Incentive Compensation Plan
On February 2, 1995, the Executive Compensation Committee
recommended to the Board of Directors adoption of the Executive
Compensation Plan (the "Incentive Plan"). The Board of Directors
adopted the Incentive Plan on February 2, 1995, subject to
stockholder approval. The following description constitutes the
Incentive Plan:
Purpose and Effects of Incentive Plan. The purpose of the
Incentive Plan is to assure that the cash compensation of the
Chief Executive Officer ("CEO") and the other executive officers
whose compensation is required to be reported in the
Corporation's annual proxy statement would be fully deductible
for federal income tax purposes, notwithstanding the $1,000,000
annual limitation on certain types of compensation imposed by
Section 162(m) of the Internal Revenue Code of 1986, as amended.
The effect of adoption of the Incentive Plan is to establish
maximum amounts of incentive compensation payable of the chief
executive officer and certain other executive officers tied
directly to attainment of specific financial performance targets.
Thus, incentive compensation payments would be further aligned
with the interests of all stockholders.
Participation. The Participants in the Incentive Plan shall
be the CEO, the members of the Company's management committee,
and certain other executive officers of the Corporation
designated at the outset of the fiscal year by the Executive
Compensation Committee of the Board of Directors (the
"Committee"), which Committee is comprised solely of independent
directors. At February 2, 1995, the Corporation had __ managing
directors, ___ of whom were designated by the Executive
Compensation Committee to be Participants. Amounts payable from
the Incentive Pool (computed in accordance with the following
paragraph) established under the Incentive Plan are in addition
to, and not in substitution for, base salaries, which have
generally been reviewed by the Committee annually at
approximately mid-year. Unless otherwise determined by the
Executive Compensation Committee in its sole discretion, the CEO
and the other members of the Management Committee are only
eligible to receive annual bonuses from the Incentive Pool only.
Other Participants will be eligible for other incentive
compensation based upon the operating performance, as evaluated
by the Executive Compensation Committee with the input of
management, of the business unit for which such Participant is
responsible, in addition to amounts payable from the Incentive
Pool.
Establishment of Incentive Pool under the Incentive Plan.
The Incentive Plan establishes and Incentive Pool payable to the
Participants under the Incentive Plan in the aggregate for any
fiscal year of the Corporation The Incentive Pool is determined
under the formula described below which relates incentives to the
Company's annual Income before Income Taxes and Minority
Interests for that year, net of extraordinary items as determined
under generally accepted accounting principles ("Adjusted
Earnings"), subject to a requirement that a threshold ratio of
net income (excluding the effect of extraordinary items) to
average stockholders' equity for the fiscal year ( the "Threshold
ROE") is attained. The Incentive Pool will be computed on a
cumulative basis as follows: (1) for Adjusted Earnings up to $25
million, 5% of Adjusted Earnings will be available under the
Incentive Pool, establishing a maximum Incentive Pool of
$1,250,000; (2) for Adjusted Earnings above $25 million to $50
million, an additional 7% of Adjusted Earnings will be available
under the Incentive Pool, establishing a maximum cumulative
Incentive Pool of $3,000,000; and (3) for Adjusted Earnings above
$50 million, an additional 8% of Adjusted Earnings will be
available under the Incentive Pool, establishing a maximum
cumulative Incentive Pool of $3,000,000 plus 8% of Adjusted
Earnings over $50 million.
The Threshold ROE is defined under the Incentive Plan as the
ratio of annual net income (excluding the effect of
extraordinary items) to average stockholders' equity. The
Threshold ROE that must be attained to permit payment of the
maximum cumulative Incentive Pool to be fully payable under the
Incentive Plan is 20%. If the Company's ROE for the fiscal year
is less than 20% but at least 10%, for each full percentage point
shortfall the maximum cumulative Incentive Pool is reduced by
five percentage points. Thus, if the ROE is 15%, three-quarters
(75%) of the maximum cumulative Incentive Pool shall be payable,
and if the ROE is 10%, one-half (50%) of the maximum cumulative
Incentive Pool shall be payable. If the Threshold ROE falls
below 10% for any fiscal year, there shall be no Incentive Pool
and no bonus payment will be made under this Incentive Plan for
that fiscal year.
Payments under the Incentive Plan. The maximum share of the
Incentive Pool payable to any Participant is limited to 40%. The
actual amount paid from the Incentive Pool for any fiscal year
may be less but not greater than the maximum cumulative amount
available for payment from the Incentive Pool, based on the
formula for that year, and the Executive Compensation Committee
shall have sole and exclusive discretion to reduce the share or
amount payable to any Participant from the Incentive Pool.
Prior to the payment of any amounts under from the Incentive
Pool for any fiscal year, the Executive Compensation Committee
shall certify in writing that the Threshold ROE, Adjusted
Earnings goals and any other material terms used to determine
amounts payable from the Incentive Pool were in fact satisfied.
For this purpose, approved minutes of the Executive Compensation
Committee shall be treated as a written certification. All
amounts payable from the Incentive Pool shall be paid in cash as
soon as practicable after such certification. Amounts payable
from the Incentive Pool may be approved and certified by the
Executive Compensation Committee in December of each year based
on preliminary financial information available at that time.
The actual amounts that will be paid to Participants from
the Incentive Pool for 1995 and future years are not currently
determinable, as such amounts will depend on the Company's
results of operations and return on average equity, the
Participant's performance relative to other qualitative and
quantitative performance standards, and the Executive
Compensation Committee's determination of the share or amount of
the maximum cumulative Incentive Pool to be paid to each
Participant. Similarly, since the Incentive Plan was not in
effect for 1994 or prior years, it is not possible to determine
the amounts under the Incentive Plan which would have been
received by the Participants from a hypothetical Incentive Pool
for 1994 or prior years, except that the maximum amount payable
to any single Participant would have been approximately $3.5
million and the average amount payable to all Participants had
they received equal incentive awards would have been
approximately $1.7 million. The bonus awards for 1994
performance and prior years since the Company's initial public
offering have been considerably less than the amounts payable had
the Incentive Plan been in place for those years and the
Incentive Pool computed with respect to the Company's operating
results for the years in question.
Amendments or Termination. The Incentive Plan may be
amended or terminated at any time at the sole discretion of the
Board of Directors. No amendment of the Incentive Plan may
increase the amount available under the Incentive Pool or
increase the allocation of benefits between Participants from the
Incentive Pool without the requirement of a vote of the
stockholders.
The Board of Directors recommends a vote "FOR" approval of
the Incentive Plan. The affirmative vote of a majority of the
votes cast at the meeting will be required to approve the
Incentive Plan. Accordingly, abstentions and broker non-votes
will not be considered to be votes cast and will have no effect
on the outcome of the matter.
Proposed 1995 Director Stock Option Plan
The Company's 1995 Director Stock Option Plan (the "Director
Plan") was approved by the Board of Directors on February __,
1995, subject to stockholder approval. A copy of the Director
Plan is attached hereto as Exhibit B, and the following summary
description is qualified by reference to the Director Plan. The
purpose of the Director Plan is to provide Non-Employee Directors
with a larger equity interest in the Company in order to attract
and retain well-qualified individuals to serve as Non-Employee
Directors and to further align the interests of Non-Employee
Directors of the Company with those of the stockholders of the
Company.
Number of Shares
The Director Plan provides that _______ shares of the
Company's Common Stock, which number is subject to adjustment to
reflect certain subsequent stock changes such as stock dividends,
stock splits, and share exchanges, will be available for the
granting of stock options, stock appreciation rights, and stock
awards, from time to time, to Non-Employee Directors of the
Company. If an option expires before its exercise, the shares
may again be subject to options.
Administration; Eligibility
The Director Plan shall be administered by the Board of
Directors of the Corporation; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
under the Director Plan. Only persons who are not employees of
the Company or any of its affiliates or subsidiaries ("Non-
Employee Directors") are eligible to participate in the Director
Plan.
Stock Options
The stock options to be granted under the Director Plan are
not qualified under any section of the Internal Revenue Code of
1986, as amended (the "Code") ("non-qualified options") and must
be granted at 100% of the fair market value of the underlying
Common Stock on the date of grant. The Director Plan provides
for the grant of option to purchase _____ shares of Common Stock
to each existing Non-Employee Director who has been a director
for at least ___ one year[s] on the first ______ in _____,1995
and, with respect to any current or future Non-Employee Director
who does not receive such a grant, a grant of an option to
purchase _____ shares of Common Stock at the close of business on
the date of the first regular meeting of the Board of Directors
after the ____ anniversary of the director's election to the
Board. The Plan also provides for annual grants to each
director, after the initial ____share option grant, of an option
to purchase _____ shares on each succeeding Annual Grant Date.
[The Plan limits the amount of options to be granted to any Non-
Employee Director to options to purchase _____ shares. -- under
consideration.] Upon exercise, the option price is to be paid in
full in cash, in shares of the Company's Common Stock previously
owned by the option holder or acquired upon option exercises
having a market value on the date of exercise equal to the
aggregate option price, or in a combination thereof.
Exercise; Expiration
Options granted under the Director Plan shall become
exercisable as follows: [to be determined and included in
definitive proxy statement] and shall expire ten years from the
date the option is granted. No stock option may be exercised
after the earlier to occur of: (i) the expiration of [10 years]
after the date such option was granted; and (ii) ___ after a Non-
Employee Director ceases to be a Director for any reason, during
which period any installments of options which first become
exercisable may be exercised by the Director.
Amendments
This Director Plan may be amended, suspended, terminated or
reinstated, in whole or in part, at any time by the Board of
Directors; provided, however, that any provisions of this
Director Plan regarding the amount and price of options to be
awarded to Non-Employee Directors and the timing of awards, or
that may be deemed to set forth a formula that determines the
amount, price, and timing of awards, may not be amended more than
once every six months, other than to comport with any changes in
the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules under such statutes; and, provided further,
however, that no such amendment shall become effective without
the approval of the stockholders of the Company to the extent
stockholder approval is required in order to comply with Rule 16b-
3 of the Securities Exchange Act of 1934.
Federal Income Tax Consequences
The following is a general summary of the current Federal
income tax treatment of the non-qualified stock options, to be
granted under the Director Plan based upon the current provisions
of the Code and regulations promulgated thereunder. No tax
consequences result from the grant of the option. An option
holder who exercises a non-qualified stock option with cash will
generally realize compensation taxable as ordinary income in an
amount equal to the difference between the option price and the
fair market value of the shares on the date of exercise, and the
Company will be entitled to a deduction from income in the sale
amount. The option holder's basis in such shares will be the
fair market value on the date exercised, and when he disposes of
the shares he will recognize capital gain or loss, either long-
term or short-term, depending on the holding period of the
shares.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" the Director
Plan. Approval requires a majority of the votes cast at the
meeting. Accordingly, abstentions and broker non-votes will not
be considered to be votes cast and will have no effect on the
outcome of the matter.
CERTAIN OWNERSHIP OF THE COMPANY'S COMMON STOCK
A Schedule 13G dated , 1995, states that
Ariel Capital Management, Inc. ("Ariel"), an investment advisor
registered under the Investment Advisers Act of 1940,
beneficially owns 1,640,340 shares of the Company's Common Stock,
or approximately 5.74% of the shares outstanding on that date.
The Schedule states that these shares are owned by various
investment advisory clients of Ariel and were acquired in the
ordinary course of business and not for the purpose of changing
or influencing control of the Company. The address of Ariel is
307 North Michigan Avenue, Chicago, Illinois 60601.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Mr. Peter Van Dyke, a Managing Director of the Company,
acquired indirect beneficial ownership of 4,000 of Common Stock
on February 4, 1994, as a result of his appointment as Co-Trustee
of the Beatrice Sommer Van Dyke Revocable Trust. This event was
reported on a Form 3 on October 11, 1994.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of its
Audit Committee, has selected Price Waterhouse, independent
accountants, to examine the financial statements of the Company
for the year 1995. This firm has served as independent
accountants of the Company since 1985. A partner of the firm
will be present at the annual meeting and available to respond to
appropriate questions, and will have an opportunity to make a
statement if he desires to do so.
In 1994 Price Waterhouse performed various professional
services for the Company, including completion of the examination
of financial statements of the Company for 1993, preliminary work
on the examination for 1994, and preparation of corporate tax
returns. Price Waterhouse also examines the financial statements
of approximately 46% of the Price Funds as well as other
sponsored investment products.
The Audit Committee of the Board of Directors of the Company
approved the audit services provided by Price Waterhouse and the
related fees and took into consideration the non-audit services
provided by Price Waterhouse. The Committee considered the
possible effect of these non-audit services on the independence
of Price Waterhouse and concluded there was no material effect
upon their independence.
OTHER MATTERS
The Board of Directors of the Company knows of no other
matters to be presented for action at the meeting other than
those mentioned above. However, if any other matters properly
come before the meeting, it is intended that the persons named in
the accompanying proxy will vote on such other matters in
accordance with their judgment of the best interests of the
Company.
Exhibit A
T. ROWE PRICE ASSOCIATES, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Associates, Inc., a Maryland corporation, having
its principal office in Baltimore City, Maryland (which is
hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Article SIXTH of the charter of the Corporation is
hereby amended to read as follows:
SIXTH: (a) The total number of shares of stock of all classes
which the Corporation has authority to issue is 120,000,000
shares of capital stock (par value $.20 per share), amounting in
aggregate par value to $24,000,000, of which 100,000,000 shares
(par value $.20 per share), amounting in aggregate par value to
$20,000,000 are classified as "Common Stock" and 20,000,000
shares (par value $.20 per share) amounting in aggregate par
value to $4,000,000 are classified as "Preferred Stock."
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of the Common Stock and the Preferred
Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to
classification or reclassification by the Board of
Directors, and shall have the rights and terms hereinafter
specified, subject to the terms of any other stock provided
in the charter pursuant to classification or
reclassification by the Board of Directors or otherwise in
accordance with law.
(2) Subject to the provisions of Article EIGHTH Section
(3) of the charter of the Corporation, each share of Common
Stock shall have one vote, and, except as otherwise
provided in respect of any Preferred Stock, the exclusive
voting power for all purposes shall be vested in the
holders of the Common Stock.
(3) Subject to the provisions of law and any
preferences of any Preferred Stock, dividends, including
dividends payable in shares of another class of the
Corporation's stock, may be paid on the Common Stock of the
Corporation at such time and in such amounts as the Board
of Directors may deem advisable.
(4) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, the holders of the Common Stock shall be
entitled, after payment or provision for payment of the
debts and other liabilities of the Corporation and the
amount to which the holders of any Preferred Stock shall be
entitled, to share ratably in the remaining net assets of
the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to
classify and reclassify any unissued shares of Preferred
Stock by fixing or altering in any one or more respects
from time to time before issuance the preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or
conditions of redemption of such shares of stock; provided,
that the Board of Directors shall not classify or
reclassify any of such shares into shares of the Common
Stock, or into any class or series of stock (i) which is
not prior to the Common Stock either as to dividends or
upon liquidation and (ii) which is not limited in some
respect either as to dividends or upon liquidation.
Subject to the foregoing, the power of the Board of
Directors to classify and reclassify any of the shares of
Preferred Stock shall include, without limitation, subject
to the provisions of the charter, authority to classify or
reclassify any unissued shares of such stock into a class
or classes of preferred stock, preference stock, special
stock or other stock, and to divide and classic shares of
any class into one or more series of such class, by
determining, fixing, or altering one or more of the
following:
(a) The distinctive designation of such class or
series and the number of shares to constitute such
class or series; provided that, unless otherwise
prohibited by the terms of such or any other class or
series, the number of shares of any class or series
may be decreased by the Board of Directors in
connection with any classification or
reclassification of unissued shares and the number of
shares of such class or series may be increased by
the Board of Directors in connection with any such
classification or reclassification, and any shares of
any class or series which have been redeemed,
purchased, otherwise acquired or converted into
shares of Common Stock or any other class or series
shall become part of the authorized capital stock and
be subject to classification and reclassification as
provided in this Section.
(b) Whether or not and, if so, the rates,
amounts and times at which, and the conditions under
which, dividends shall be payable on shares of such
class or series, whether any such dividends shall
rank senior or junior to or on a parity with the
dividends payable on any other class or series of
Preferred Stock, and the status of any such dividends
as cumulative, cumulative to a limited extent or non-
cumulative and as participating or non-participating.
(c) Whether or not shares of such class or
series shall have voting rights, in addition to any
voting rights provided by law and, if so, the terms
of such voting rights.
(d) Whether or not shares of such class or
series shall have conversion or exchange privileges
and, if so, the terms and conditions thereof,
including provision for adjustment of the conversion
or exchange rate in such events or at such times as
the Board of Directors shall determine.
(e) Whether or not shares of such class or
series shall be subject to redemption and, if so, the
terms and conditions of such redemption, including
the date or dates upon or after which they shall be
redeemable and the amount per share payable in case
of redemption, which amount may vary under different
conditions and at different redemption dates; and
whether or not there shall be any sinking fund or
purchase account in respect thereof, and if so, the
terms thereof.
(f) The rights of the holders of shares of such
class or series upon the liquidation, dissolution or
winding up of the affairs of, or upon any
distribution of the assets of, the Corporation, which
rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary
or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank
senior or junior to or on a parity with such rights
of any other class or series of stock.
(g) Whether or not there shall be any
limitations applicable, while shares of such class or
series are outstanding, upon the payment of dividends
or making of distributions on, or the acquisition of,
or the use of moneys for purchase or redemption of,
any stock of the Corporation, or upon any other
action of the Corporation, including action under
this Section, and, if so, the terms and conditions
thereof.
(h) Any other preferences, rights, restrictions,
including restrictions on transferability, and
qualifications of shares of such class or series, not
inconsistent with law and the charter of the
Corporation.
(6) For the purposes hereof and of any articles
supplementary to the charter providing for the
classification or reclassification of any shares of
Preferred Stock or of any other charter document of the
Corporation (unless otherwise provided in any such articles
or document), any class or series of stock of the
Corporation shall be deemed to rank:
(a) prior to another class or series either as
to dividends or upon liquidation, if the holders of
such class or series shall be entitled to the receipt
of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case
may be, in preference or priority to holders of such
other class or series;
(b) on a parity with another class or series
either as to dividends or upon liquidation, whether
or not the dividend rates, dividend payment dates or
redemption or liquidation price per share thereof be
different from those of such others, if the holders
of such class or series of stock shall be entitled to
receipt of dividends or amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend
rates or redemption or liquidation prices, without
preference or priority over the holders of such other
class or series; and
(c) junior to another class or series either as
to dividends or upon liquidation, if the rights of
the holders of such class or series shall be subject
or subordinate to the rights of the holders of such
other class or series in respect of the receipt of
dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case
may be.
SECOND: (a) As of immediately before the amendment the total
number of shares of stock of all classes which the Corporation
has authority to issue is 48,000,000 shares, of which no shares
are Preferred Stock (par value $.20 per share) and 48,000,000
shares are Common Stock (par value $.20 per share).
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is
120,000,000 shares, of which 20,000,000 shares are Preferred
Stock (par value $.20 per share) and 100,000,000 shares are
Common Stock (par value $.20 per share).
(c) The aggregate par value of all shares having a par value
is $9,600,000 before the amendment and $24,000,000 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the description, as amended, of each class,
including the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption is set
forth above in Article FIRST.
EXHIBIT B
T.ROWE PRICE ASSOCIATES, INC.
PROPOSED 1995 DIRECTOR STOCK OPTION PLAN
1. PURPOSES OF THE DIRECTOR PLAN:
T. Rowe Price Associates, Inc. (the "Company") has adopted
the 1995 Director Stock Option Plan for Non-Employee Directors
(the "Director Plan") to provide for the issuance of options to
purchase shares of the Company's Common Stock, par value $.01 per
share (the "Stock") as a means of long-term compensation for
members of the Board of Directors of the Company who are not
employees of the Company or any of its affiliates or subsidiaries
("Non-Employee Directors"). The Director Plan is intended to
provide Non-Employee Directors with a larger equity interest in
the Company in order to attract and retain well-qualified
individuals to serve as Non-Employee Directors and to further
align the interests of Non-Employee Directors of the Company with
those of the stockholders of the Company.
2. ADMINISTRATION:
The Director Plan shall be administered by the Board of
Directors of the Corporation; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
hereunder.
3. STOCK SUBJECT TO OPTION:
The Company will reserve authorized but unissued
shares of Stock for issuance and delivery under the Director
Plan, subject to adjustment as provided in paragraph 6 hereof.
If any unexercised option terminates for any reason, the shares
of the Stock covered thereby shall become available for grant
again.
4. ELIGIBILITY:
The individuals who shall be eligible to participate in the
Director Plan shall be all Non-Employee Directors of the Company.
5. TERMS AND CONDITIONS OF OPTIONS:
Options under the Director Plan are intended to be non-
statutory stock options not qualifying under any section of the
Internal Revenue Code of 1986, as amended (the "Code") and
accounted for as non-compensatory options under generally
accepted accounting principles as in effect at the time of
adoption of the Director Plan. All stock options granted under
the Director Plan shall be subject to the following provisions:
(a) Option Price. The exercise price per share
with respect to each option shall be 100% of the fair
market value of the Stock on the date the option is
granted. For purposes hereof, fair market value shall
be the last reported sale price in the NASDAQ National
Market on the date of grant, or the next succeeding
business day on which the NASDAQ National Market is
open for business and reports an actual transaction in
the Company's common stock.
(b) Option Grants. On the first _______ in
_______] of each year (the "Annual Grant Date")
commencing in 1995, options to purchase Common Stock
shall be granted under this Plan. Each Non-Employee
Director who has been a director of the Corporation for
at least ______ year[s] as of _______, 1995 shall
receive options to purchase _____shares of Common
Stock. Each Non-Employee Director who has not received
options under the preceding sentence shall receive
options to purchase _____ shares of Common Stock at the
close of business on the date of the first regular
meeting of the Board of Directors occurring after the
____ anniversary of the director's first becoming a
director. On each Annual Grant Date commencing in
1996, each Non-Employee Director shall receive options
to purchase ______ shares of Common Stock. No Non-
Employee Director shall receive options to purchase
more than _____ shares of Common Stock under this
plan.
(c) Exercise of Options.
(i) Except as provided in paragraph (ii) below,
full payment for shares acquired shall be made in cash
or by certified check at or prior to the time that an
option, or any part thereof, is exercised. The
participant will have no rights as a stockholder until
the certificate for those shares as to which the option
has been exercised is issued by the Company. Each
option granted under this Plan shall become exercisable
in cumulative installments as follows (unless a longer
period is prescribed by statute or in the regulations
promulgated by the Securities and Exchange Commission):
[to be determined and included in definitive proxy
statement].
(ii) Shares of the Corporation's Common Stock with
a value equal to the exercise price or a combination of
cash and Stock with a value equal to the exercise price
may be used as payment for shares acquired.
(d) Term of Option. No stock option may be
exercised after the earlier to occur of: (i) the
expiration of 10 years after the date such option was
granted; or (ii) ___ years after the Non-Employee
Director ceases to be a Director for any reason. [The
fact that a Non-Employee Director has ceased to be a
Director shall not affect the right to exercise options
that thereafter become exercisable. -- under
consideration]
Options Nonassignable and Nontransferable.
Each option and all rights thereunder shall be
assignable or transferable to members of the option
holder's immediate family and trusts for the benefit of
such immediate family members or pursuant to the laws
of descent and distribution only to the extent
permitted under applicable federal securities and tax
laws.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:
If the shares of the Stock outstanding are increased,
decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Company, without receipt of
consideration by the Company, through reorganization, merger,
recapitalization, reclassification, stock split-up, stock
dividend, stock consolidation, or otherwise, an appropriate and
proportionate adjustment shall be made in the number or kind of
shares as to which options have been or may be granted. Any such
adjustment in an outstanding option shall be made without change
in the aggregate purchase price to be paid upon the exercise
thereof. Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of Stock shall be issued under
the Director Plan on account of any such adjustment.
In the event of a reorganization, merger, consolidation,
sale of substantially all of the assets, or any other form of
corporate reorganization in which the Company is not the
surviving entity or a statutory share exchange in which the
Company is not the issuer, all options then outstanding under the
Director Plan will terminate as of the effective date of the
transaction. The surviving entity in its absolute and
uncontrolled discretion may tender an option or options to
purchase shares on its terms and conditions, both as to the
number of shares or otherwise, as shall substantially preserve
the rights and benefits of any option then outstanding under the
Director Plan. [Need to check for conformance with existing
plans.]
7. EFFECTIVE DATE OF THE DIRECTOR PLAN:
The Director Plan shall become effective upon its adoption
by the Board of Directors and subsequent approval by a majority
of the votes cast in person or by proxy at a meeting of the
stockholders of the Company held within 12 months of the action
of the Board of Directors described above.
8. TERMINATION DATE:
No options may be granted under the Director Plan after
April 30, 2005. Subject to paragraph 5(d), options granted
before April 30, 2005 under the Director Plan may be exercised
after that date in accordance with their terms.
9. AMENDMENT:
This Director Plan may be amended, suspended,
terminated or restated, in whole or in part, at any time by the
Board of Directors; provided, however, that any provisions of
this Plan regarding the amount and price of options to be awarded
to Non-Employee Directors and the timing of awards, or that may
be deemed to set forth a formula that determines the amount,
price, and timing of awards may not be amended more than once
every six months, other than to comport with any changes in the
Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules under such statutes; and, provided further,
however, that no such amendment shall become effective without
the approval of the stockholders of the Company to the extent
stockholder approval is required in order to comply with Rule 16b-
3 of the Securities Exchange Act of 1934.
10. COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the
Director Plan shall be subject to any and all requirements and
restrictions that may, in the opinion of the Board, be necessary
or advisable for the purposes of complying with any statute, rule
or regulation of any governmental authority, or any agreement,
policy or rule of any stock exchange or other regulatory
organization governing any market on which the Stock is traded.
11. MISCELLANEOUS:
(1) Expenses. The Company shall bear all expenses and
costs in connection with the administration of the Director Plan.
(2) Applicable Law. The validity, interpretation and
administration of this Plan and any rules, regulations,
determinations or decisions made hereunder, and the rights of any
and all persons having or claiming to have any interest herein or
hereunder, shall be determined exclusively in accordance with the
laws of the State of Maryland, without regard to the choice of
laws provisions thereof.
(3) Headings. The headings herein are for reference
purposes only and shall not affect the meaning or interpretation
of the Director Plan.
(4) Notices. All notices or other communications made or
given pursuant to this Director Plan shall be in writing and
shall be sufficiently made or given if hand-delivered or mailed
by certified mail, addressed to any Non-Employee Director at the
address contained in the records of the Company or to the Company
at its principal office.
(5) Federal Securities Law Requirement. Awards granted
hereunder shall be subject to all conditions required under Rule
16b-3 to qualify the award for any exception from the provisions
of Section 16(b) of the Securities Exchange Act of 1934 available
under that Rule.
PRELIMINARY COPY -- FOR THE INFORMATION OF THE
SECURITIES AND EXCHANGE COMMISSION ONLY
T. ROWE PRICE ASSOCIATES, INC.
Revocable Proxy Solicited on Behalf of the Board of Directors
THE UNDERSIGNED STOCKHOLDER of T. Rowe Price Associates, Inc.
hereby appoints George J. Collins and George A. Roche the lawful
attorneys and proxies of the undersigned with full power of
substitution to vote, as designated below, all shares of Common
Stock of the Corporation which the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held on Thursday, April
6, 1995, at 10:00 a.m., at 100 East Pratt Street, Baltimore,
Maryland 21202, and at any and all adjournments thereof with
respect to the matters set forth below and described in the Notice
of Annual Meeting and Proxy Statement dated March 2, 1994, receipt
of which is hereby acknowledged.
This Proxy, when properly completed and returned, will be voted
in the manner directed herein by the undersigned stockholder. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ITEMS
LISTED ON THE REVERSE SIDE.
(Continued and to be
dated and signed on
the reverse side.)
P.O. BOX 11358
NEW YORK, NY 10203-
0358
(1)ELECTION OF
DIRECTORS FOR
WITHHELD E
XCEPTIONS*
Nominees: Thomas H. Broadus, Jr., George J. Collins, James E.
Halbkat, Jr., Carter O. Hoffman, Henry H. Hopkins, James S. Riepe,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M. David
Testa and Philip C. Walsh.
*Exceptions:
(INSTRUCTIONS: To withhold authority for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the
space provided.)
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO
INCREASE THE AUTHORIZED COMMON STOCK.
FOR AGAINST
ABSTAIN
(3) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO
AUTHORIZE A CLASS OF UNDESIGNATED PREFERRED STOCK.
FOR AGAINST
ABSTAIN
(4) TO APPROVE A PERFORMANCE-LINKED EXECUTIVE INCENTIVE
COMPENSATION PLAN.
FOR AGAINST
ABSTAIN
(5) TO APPROVE THE 1995 DIRECTOR STOCK OPTION PLAN
FOR AGAINST
ABSTAIN
(6) IN THEIR DISCRETION, the proxies are authorized to vote
upon such other business as may properly come before the
meeting or at any adjournment thereof.
Change of
Address and/or Comments Mark Here
Please date and
sign exactly as your name appears to the left.
All joint owners should sign. When signing as
a fiduciary, representative or corporate
office, give full title as such. If you
receive more than one proxy card, please sign
and return all cards received.
Dated:
(Signature)
(Signature if held jointly)
Votes must be indicated (x) in
black or blue ink.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
