YOUR VOTE IS IMPORTANT--Please execute and return the enclosed proxy
promptly, whether or not you plan to attend the
T. Rowe Price Annual Meeting of Stockholders.
[LOGO OF T.ROWE PRICE]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 12, 1996
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 12, 1996 at 10:00 a.m. for the
following purposes:
(1) To elect 14 directors of the Company;
(2) To consider and act upon a proposed charter amendment to effect a
two-for-one stock split and a proportional increase in the authorized
Common Stock;
(3) To consider and act upon the proposed 1996 Stock Incentive Plan; and
(4) To consider and act upon such other business as may properly come
before the meeting.
February 12, 1996 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
March 4, 1996
<PAGE>
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 a proposed charter amendment to effect a
two-for-one stock split and to effect a proportional increase in the authorized
Common Stock of the Company, to consider and act upon the proposed 1996 Stock
Incentive Plan, and to consider and act upon 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 March 4, 1996.
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 12, 1996. At that date
there were outstanding and entitled to vote 28,519,079 shares of Common Stock,
par value $.20 per share, held by approximately 2,400 stockholders of record. 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. Approval of the
proposed charter amendment requires the affirmative vote of a majority of the
total number of shares of Common Stock outstanding, and approval of the 1996
Stock Incentive Plan requires the affirmative vote of the majority of the votes
cast at the meeting. In the discussion of the proposals included in this proxy
statement, the effect of abstentions and broker non-votes is discussed. 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 1996 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 $7,000
plus reimbursement for out-of-pocket expenses. The Company also 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.
ELECTION OF DIRECTORS
Effective at the time of the annual meeting, the number of directors will
be increased to 14 persons, and the entire Board of Directors will be elected to
hold office until the next annual meeting of stockholders and until their
respective successors are elected and have qualified. Eleven of the 14 nominees
currently serve as directors of the Company. The three nominees who are not
directors currently serve as managing directors of the Company.
Carter O. Hoffman, a director of the Company since 1973 and an employee
since 1961, and Thomas H. Broadus, Jr., a director of the Company since 1979 and
an employee since 1966, are retiring as directors at the time of the annual
<PAGE>
meeting. Mr. Hoffman has been an equity and fixed income portfolio manager and
has had a long and significant impact on the Company's corporate policies and
financial management functions. Mr. Broadus has been a significant contributor
as an equity portfolio manager to the firm's growth in both our private account
and mutual fund businesses. The Board of Directors, on behalf of the Company,
wishes to express its appreciation for their many contributions to the Company
during their years of service as directors and as employees and for their
continued advice and counsel.
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 respective
successors are duly elected and have 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 and
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 ownership of Common Stock
Name of Nominee (percent of class)
- --------------------------------------------------------------------------------
George J. Collins Mr.Collins is 55 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 20 equity
and fixed income funds within the Price Funds. Of
these, he is chairman of 14 funds and president of one
fund. (1)(2)(5)
924,460 shares (3.13%)(6
- --------------------------------------------------------------------------------
James E. Halbkat, Jr. Mr.Halbkat is 61 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* (7)
- --------------------------------------------------------------------------------
Henry H. Hopkins Mr.Hopkins is 53 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.
317,484 shares (1.08%) (8)
- --------------------------------------------------------------------------------
James A.C. Kennedy Mr. Kennedy is 42 years old, is a nominee for director,
and has been director of the Equity Research Division
of the Company since 1987, a managing director of the
Company since 1990, a vice president between 1981 and
1990, and an employee since 1978. He is a director of
the Mid-Cap Growth Fund.
317,081 shares (1.07%) (9)
- --------------------------------------------------------------------------------
(see notes on pages 4-5)
<PAGE>
John H. Laporte Mr. Laporte is 50 years old, is a nominee for director,
and has been a managing director of the Company since
1989, a vice president between 1978 and 1989, and an
employee since 1976. He is a director of nine equity
funds within the Price Funds. Of these, he is chairman
of three funds and president of four funds.
486,999 shares (1.65%) (10)
- --------------------------------------------------------------------------------
Richard L. Menschel Mr. Menschel is 62 years old and has been a director of
the Company since 1995. He is a limited partner of The
Goldman Sachs Group, L.P., an investment banking firm.
0 shares (11)
- --------------------------------------------------------------------------------
William T. Reynolds Mr. Reynolds is 47 years old, is a nominee for
director, and has been director of the Fixed Income
Division since 1994, a managing director of the Company
since 1990, a vice president between 1983 and 1990, and
an employee since 1981. He is a director or trustee of
10 fixed income funds within the Price Funds. Of these,
he is chairman of three funds and president of six
funds.
220,986 shares* (12)
- --------------------------------------------------------------------------------
James S. Riepe Mr. Riepe is 52 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 39 Price Funds on
which he serves as a director or trustee and is
chairman of New Age Media Fund, Inc. He is also a
director of Rhone-Poulenc Rorer, Inc., a
pharmaceuticals company. (1)(2)
681,939 shares (2.31%) (13)
- --------------------------------------------------------------------------------
George A. Roche Mr. Roche is 54 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 president and a director of the New Era Fund and
serves as a director of two other Price funds. (1)(2)
726,796 shares (2.46%) (14)
- --------------------------------------------------------------------------------
John W. Rosenblum Mr. Rosenblum is 52 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; Cone Mills
Corporation, a textiles producer; and Providence
Journal Company, a publisher of newspapers and owner of
broadcast television stations. (3)(4)
5,000 shares* (15)
- --------------------------------------------------------------------------------
(see notes on pages 4-5)
<PAGE>
Robert L. Strickland Mr. Strickland is 64 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. (1)(3)(4)
6,000 shares* (16)
- --------------------------------------------------------------------------------
M. David Testa Mr. Testa is 51 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. Mr. Testa has also served as chairman of
Rowe Price-Fleming International, Inc. since 1979. He
is president and a director of the Equity Series and is
a director or trustee of 14 other Price Funds. He
serves as chairman of five of these Funds. (1)(2)(5)
394,442 shares (1.34%) (17)
- --------------------------------------------------------------------------------
Philip C. Walsh Mr. Walsh is 74 years old and has been a director of
the Company since 1987. He is a consultant to Cyprus
Amax Minerals Company, the successor by merger to
Cyprus Minerals Company. (3)(4)(5)
6,000 shares* (18)
- --------------------------------------------------------------------------------
Anne Marie Whittemore Mrs. Whittemore is 49 years old and has been a director
of the Company since 1995. She is a partner in the law
firm of McGuire, Woods, Battle & Boothe, L.L.P. and
serves as a director of Owens & Minor, Inc., a
distributor of medical and surgical supplies; USF&G
Corporation, an insurance company; the James River
Corporation of Virginia, a manufacturer of paper
products; and Albemarle Corporation, a manufacturer of
specialty chemicals.
200 shares*
- --------------------------------------------------------------------------------
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(27 persons) 6,245,632 shares (21.16%) (19)
- --------------------------------------------------------------------------------
*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 58,800 shares which may presently 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.
(7) Includes 4,000 shares which may presently be acquired by Mr. Halbkat
upon the exercise of stock options.
(8) Includes 54,000 shares which may presently be acquired by Mr. Hopkins
upon the exercise of stock options.
(9) Includes 90,756 shares which may presently be acquired by Mr. Kennedy
upon the exercise of stock options.
<PAGE>
(10) Includes 75,800 shares which may presently be acquired by Mr. Laporte
upon the exercise of stock options. Also includes 50,000 shares owned
by a member of Mr. Laporte's family and 38,496 shares held in trusts
for members of Mr. Laporte's family, as to which Mr. Laporte disclaims
beneficial ownership.
(11) During 1995, Goldman, Sachs & Co. performed services for the Company,
including securities brokerage services. Mr. Menschel did not share in
any payment for these services.
(12) Includes 38,412 shares which may presently be acquired by Mr. Reynolds
upon the exercise of stock options. Also includes 4,400 shares owned
by members of Mr. Reynolds' family, as to which Mr. Reynolds disclaims
beneficial ownership.
(13) Includes 42,400 shares which may presently be acquired by Mr. Riepe
upon the exercise of stock options. Also includes 90,000 shares held
by or in trusts for members of Mr. Riepe's family, as to which Mr.
Riepe disclaims beneficial ownership, and 41,000 shares held in a
charitable foundation for which Mr. Riepe has voting and disposition
power.
(14) Includes 32,200 shares which may presently 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.
(15) Includes 4,000 shares which may presently be acquired by Mr. Rosenblum
upon the exercise of stock options.
(16) Includes 4,000 shares which may presently be acquired by Mr.
Strickland upon the exercise of stock options.
(17) Includes 34,000 shares which may presently 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.
(18) Includes 4,000 shares which may presently be acquired by Mr. Walsh
upon the exercise of stock options.
(19) Includes 1,002,784 shares which may presently be acquired by all
directors and 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 1995, there were seven meetings of the Board of Directors of the
Company. Each director who served for the entire year 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,
an Executive Compensation Committee, and a Nominating Committee.
The Audit Committee meets with the Company's independent accountants to
review the Company's audited financial statements, 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) on the previous page are members of the Audit Committee,
which met on four occasions during 1995.
As described in the report beginning on page 8, 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 incentive and stock purchase
plans and the Company's Executive Incentive Compensation Plan. The directors
designated in note (4) on the previous page are members of this Committee and
met seven times during 1995.
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, which held one meeting in 1995. 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.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth certain
information concerning the compensation for the last three 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 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
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 1995 $325,000 $1,300,000 -0- $24,000
President, Chief Exec- 1994 325,000 1,250,000 -0- 22,500
utive Officer and 1993 290,008 750,000 35,000 30,000
Managing Director
- ------------------------------------------------------------------------------------------------------
James S. Riepe 1995 275,000 1,300,000 100,000 22,500
Managing Director 1994 275,000 1,250,000 -0- 22,500
1993 248,750 750,000 30,000 30,000
- ------------------------------------------------------------------------------------------------------
George A. Roche 1995 275,000 1,300,000 100,000 24,000
Chief Financial Officer 1994 275,000 1,250,000 -0- 22,500
and Managing Director 1993 248,750 750,000 30,000 30,000
- ------------------------------------------------------------------------------------------------------
M. David Testa 1995 275,000 1,300,000 -0- 26,625
Managing Director 1994 275,000 1,250,000 300,000 26,625
1993 248,750 750,000 30,000 33,731
- ------------------------------------------------------------------------------------------------------
John H. Laporte 1995 250,000 1,300,000 25,000 26,250
Managing Director 1994 250,008 800,000 20,000 26,250
1993 220,833 550,000 24,000 33,312
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) No officer named in the Summary Compensation Table 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 1995 in the Summary Compensation Table.
(2) Bonuses for 1995 were paid pursuant to the Company's Executive
Incentive Compensation Plan. For 1993 and 1994, bonuses were
determined by the Executive Compensation Committee based upon
individual, group, and corporate performance. Bonuses vary
significantly from year to year and among eligible employees. See
"Report of the Executive Compensation Committee."
(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, $22,500, and $30,000
contribution for 1995, 1994, and 1993, 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 $1,500 in
directors fees paid by a wholly owned subsidiary of the Company to
each of Mr. Collins and Mr. Roche in 1995 and $4,125, $4,125, and
$3,731 in employer matching contributions under the Company's 1986
Employee Stock Purchase Plan for Mr. Testa in 1995, 1994, and 1993,
respectively, and $3,750, $3,750, and $3,312 in employer matching
contributions under the Company's 1986 Employee Stock Purchase Plan
for Mr. Laporte in 1995, 1994, and 1993, 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 on the first through fifth anniversaries of
the date of grant, with the exception of the 1994 option award to Mr. Testa and
the 1995 option awards to Mr. Roche and Mr. Riepe, which become exercisable on
the third through fifth anniversaries of the date of grant. In December 1995,
the Executive Compensation Committee (the "Committee") adopted amendments to all
<PAGE>
existing option agreements under the Company's 1986, 1990, and 1993 Stock
Incentive Plans providing that such options and any options granted in the
future to current option holders will become exercisable in full for a period of
one year following certain specified changes in control of the Company or
approval by the Board of Directors of certain transactions leading to changes in
control, subject to the ability of the Committee to rescind such acceleration of
exercisability for a specified period following any triggering event. In
addition, the Company's stock option plans provide the Committee with broad
discretion to accelerate the exercisability of options.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Percent of Potential Realizable Value at
Securities Total Options Assumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration ---------------------------------------
Name Granted (#) Fiscal Year Per Share(1) Date 0%(3) 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
George J. Collins 0 0% N/A N/A $0 $ 0 $ 0
James S. Riepe 100,000 8.2% $52.25 10/31/05 0 3,286,000 8,327,000
George A. Roche 100,000 8.2% 52.25 10/31/05 0 3,286,000 8,327,000
M. David Testa 0 0% N/A N/A 0 0 0
John H. Laporte 25,000 2.0% 52.25 10/31/05 0 821,500 2,081,750
- --------------------------------------------------------------------------------
</TABLE>
The 5% and 10% assumed rates of stock price appreciation used to calculate
potential gains to optionees are provided pursuant to the rules of the
Securities and Exchange Commission. To put these hypothetical gains into
perspective, the following additional information is being provided.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Percent of Potential Realizable Value at
Securities Total Options Assumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration --------------------------------------------
Name Granted (#) Fiscal Year Per Share(1) Date 0%(3) 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
All Stockholders(4) N/A N/A N/A N/A 0 $940,135,542 $2,382,382,429
- ----------------------------------------------------------------------------------------------------------------------------
Potential Gain to
Named Executives as a
Percentage of
Potential All
Stockholders Gain N/A N/A N/A N/A N/A .79% .79%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 1, 1995 (the date of grant of the 1995 option awards) to
October 31, 2005 (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 October 31, 2005 is
projected to be $52.25, $85.11, and $135.52, 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 1995 option grants
without a stock price appreciation which will benefit all
stockholders.
(4) The number of shares subject to options granted in 1995 is not
included in the number of shares used to calculate potential
realizable value at the assumed annual rates of stock price
appreciation of 0%, 5%, and 10%, respectively.
<PAGE>
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 1995 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 on December 31, 1995.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<S> <C> <C> <C> <C>
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1995 at December 31, 1995
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) Realized Unexercisable)(1) Unexercisable)(2)
- ----------------------------------------------------------------------------------------------------------
George J. Collins N/A N/A 58,800/ 28,200 $1,995,200/$667,425
James S. Riepe 9,600 $460,200 42,400/131,600 1,208,700/ 802,050
George A. Roche 11,400 498,900 32,200/131,600 879,750/ 802,050
M. David Testa 17,700 636,856 34,000/331,600 937,800/5,902,050
John H. Laporte 20,000 774,375 75,800/ 68,200 2,459,438/ 975,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) All 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,
1995, 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 who served for the entire year
received $50,000 for 1995 services as a director and board committee member. The
fee paid to each of Mr. Menschel and Mrs. Whittemore, who served on the Board of
Directors for part of the year, was $25,000.
Pursuant to the 1995 Directors Stock Option Plan approved by stockholders
on April 6, 1995, each of Mr. Halbkat, Mr. Rosenblum, Mr. Strickland, and Mr.
Walsh received options to purchase 4,000 shares of Common Stock at $38.375 per
share (the last reported sale price on April 6, 1995), and each of Mr. Menschel
and Mrs. Whittemore received options to purchase 2,000 shares of Common Stock at
$45.75 per share (the last reported sale price on September 18, 1995).
During 1995, 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"), composed 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"); (ii) administration of the
Company's Executive Incentive Compensation Plan (the "Incentive Plan"); (iii)
administration of the Company's stock incentive plans as required by Rule 16b-3
under the Securities Exchange Act of 1934 as amended; and (iv) review and
<PAGE>
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 seek to provide for
the long-term success of the Company in the interests of its stockholders.
The Committee believes that competitive levels of cash compensation,
together with equity incentive programs that are consistent with stockholder
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 1995, base salaries for each of the individuals named in the table
on page 6 (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 which 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 with the major portion of cash compensation intended to
be derived from payments made under the Incentive Plan, provided, of course,
that the performance goals established under the Incentive Plan are met or
exceeded.
In 1995, the Committee and the Board of Directors recommended, and the
stockholders approved, the Incentive Plan. The Incentive Plan establishes a pool
(the "Incentive Pool") which relates incentives to the Company's Income before
Income Taxes and Minority Interests for that year ("Adjusted Earnings"), subject
to a requirement that a threshold ratio of net income to average stockholders'
equity (the "Threshold ROE") is attained. The Incentive Pool, subject to
reduction based on the Threshold ROE target, is computed as follows:(1) for
Adjusted Earnings up to $25 million, 5% of Adjusted Earnings; (2) for Adjusted
Earnings above $25 million to $50 million, an additional 7% of Adjusted
Earnings; and (3) for Adjusted Earnings above $50 million, an additional 8% of
Adjusted Earnings. Thus, the Incentive Plan establishes a maximum cumulative
Incentive Pool of $3,000,000 plus 8% of Adjusted Earnings over $50 million. For
purposes of the Incentive Plan, Threshold ROE for the year is the ratio of
annual net income (excluding the effect of extraordinary items under generally
accepted accounting principles) to average stockholders' equity for the year.
The Threshold ROE that must be attained to permit the maximum cumulative
Incentive Pool to be fully payable under the Incentive Plan is 20%. If the
Company's Threshold ROE 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. If the Company's Threshold ROE falls below 10%, there
shall be no Incentive Pool, and no bonus payment will be made from the Incentive
Pool for that fiscal year.
As contemplated by the Incentive Plan, the Committee at the outset of 1995
designated seven executive officers (the chief executive officer, the three
other Senior Executive Officers, and three other managing directors) as eligible
to participate in the Plan for 1995. The Committee also determined that each
particular participant would be eligible to receive a specified percentage of
the available Incentive Pool. In accordance with the Incentive Plan, the
Committee reviewed the requirements established by the Plan for determining
incentive awards and also determined and certified that each of the Plan's
performance goals had been satisfied before it approved and permitted payment of
bonuses pursuant to the Plan. Hence, the Committee expects that all payments
pursuant to the Incentive Plan will be fully deductible in accordance with
Section 162(m) of the Internal Revenue Code of 1986, as amended, and all other
compensation payable to the Named Executive Officers for 1995 performance
similarly will be fully deductible.
The Committee determined to award each of the Senior Executive Officers
incentive compensation in each case in an amount less than the full amount that
would be permitted to be paid under the Incentive Plan. In making its
determinations, the Committee noted that the Company had achieved record
<PAGE>
revenues, earnings, and earnings per share and had attained a return on equity
substantially in excess of the Threshold ROE. The Committee also gave
consideration to a series of specific, qualitative performance factors that it
believed reflected the Senior Executive Officers' performance but were not
capable of precise measurement, including relative investment performance,
marketing effectiveness, management of corporate assets, expense control, and
corporate infrastructure development. The Committee determined that the Senior
Executive Officers each had demonstrated superior long-term management
performance in these areas. However, in determining executive officer
compensation relative to the Company's general compensation policies as well as
general industry compensation trends, the Committee determined to award the
Senior Executive Officers incentive compensation less than the full amounts
payable under the Plan. In making these determinations, the Committee noted that
the Company may be required to pay out a greater portion or all of the incentive
pool in a year when financial performance might not be as strong in order to
maintain a competitive compensation structure and thus retain key personnel. In
the case of Mr. Laporte, the Named Officer who is not one of the Senior
Executive Officers, a portion of the incentive compensation reported in the
Summary Compensation Table represents payments other than from the Incentive
Pool (as contemplated by the Incentive Plan) and was based on the Committee's
evaluation of the operating performance and qualitative factors of the domestic
small-cap equity management functions for which Mr. Laporte is responsible.
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 1995 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. Subject to
the considerations regarding the stock option awards described below, the four
Senior Executive Officers were viewed as making generally equivalent
contributions to 1995 performance. In the case of Mr. Laporte, the Committee
took into consideration the strong investment performance and growth in assets
under management of the Company's domestic small-cap equity management
operations, of which Mr. Laporte is in charge, and the fact that the funds under
Mr. Laporte's general supervision are major contributors to Company revenues.
In 1995, the Committee determined to make stock option awards to Mr. Roche
and Mr. Riepe each covering 100,000 shares of Common Stock at $52.25 per share.
These option awards were significantly greater than option awards that had been
made in the past, with the exception of Mr. Testa's 300,000 share option award
in 1994. Each of these awards was based on the strong long-term performance of
the Company during these individuals' service as members of the Company's
Management Committee, as reflected by the nearly nine-fold increase in the value
of a share of the Company's Common Stock purchased at the time of the Company's
initial public offering in April 1986, as well as the total market value of the
Company measured from the Company's initial public offering through the end of
1995. Each of these individuals was viewed by the Committee to have made unique
long-term contributions in addition to their collective contributions as members
of the Company's senior management team-Mr. Roche to the Company's financial
management and equity portfolio management functions, Mr. Riepe to the Company's
mutual fund business, and, as previously stated, Mr. Testa to the Company's
international investment operations. To solidify the link of these considerable
awards to long-term future performance, the option awards to Mr. Roche and Mr.
Riepe, which expire on October 31, 2005, become exercisable in three equal
annual installments commencing in 1998. This three-year delay before initial
vesting commences is longer than the vesting period established in stock option
grants awarded to other key employees in 1995 but is consistent with Mr. Testa's
1994 option grant.
In administering the Company's compensation programs for executive
officers, the Committee receives the advice of its independent compensation
consultants concerning cash compensation and option award practices of other
public companies, including companies which compete with the Company for talent.
The Committee has compared the Company's compensation levels to relevant
publicly available data for the investment management, securities, and other
financial service industries and has found the Company's compensation levels to
be competitive. Certain of these companies are included in the CRSP Total Return
<PAGE>
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 capitalization than the Company. The practice of the Company and the
Committee is to review available compensation data from a large universe of
financial services companies. The Committee receives the assistance of its
independent compensation consulting firm in comparing and determining executive
compensation and policies. In reviewing this data, the Committee's goal is to
maintain compensation programs which are competitive with averages within the
financial services industry but are neither significantly higher nor lower than
these averages.
The Executive Compensation Committee believes that 1995 compensation levels
disclosed in this proxy statement are reasonable and appropriate in light of the
Company's very strong financial and investment performance.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
John W. Rosenblum
Robert L. Strickland
<PAGE>
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 stockholder 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 stockholder return on the Company's Common Stock during the five years
ended December 31, 1995 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 Stock Index. The comparison
assumes $100 was invested on December 31, 1990 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.
LINE CHART WITH TABLE
(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(registered trademark) and the Nasdaq Small Cap
Marketsm. 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(registered trademark) and the Nasdaq Small
Cap Marketsm, and represents SIC Codes 60 through 67. The Company will
provide the names of companies included in this index upon the written
request of any stockholder. Such request should be directed to the
secretary of the Company. 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.
<PAGE>
PROPOSED CHARTER AMENDMENT TO EFFECT A TWO-FOR-ONE STOCK SPLIT AND
A PROPORTIONAL INCREASE IN THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company has adopted resolutions declaring
advisable and recommending to the Company's stockholders for their approval an
amendment to the Company's charter effecting a two-for-one split of the
Company's outstanding Common Stock and a proportional increase in the authorized
shares of Common Stock from 100,000,000 to 200,000,000 shares. The text of the
proposed amendment is included in the form of Articles of Amendment attached
hereto as Exhibit A. The Board of Directors believes that the stock split will
be beneficial to the trading market for the Company's Common Stock by reducing
the per share trading price and increasing the number of publicly traded shares.
If the amendment is adopted, the split will become effective as of the
close of business on April 12, 1996 and stockholders of record as of that date
(the "record date") will receive one share of Common Stock for each share held
as of the record date. Certificates representing such shares will be distributed
on April 30, 1996. Participants in the Company's Employee Stock Purchase Plan
will be entitled to receive additional full and fractional shares for each full
and fractional share owned by them as of the April 12 record date, and options
outstanding under the Company's existing stock option and stock incentive plans
will be proportionally adjusted. Similarly, it is expected that the dividend
payable per share in subsequent quarters will be adjusted to reflect the effect
of the split.
It is likely that the per share trading price of the Common Stock on the
Nasdaq National Market(registered trademark) will be reduced to approximately
one-half of the trading price immediately before the stock split and that this
will occur upon the close of business on the April 30 payment date. The cost
basis of pre-split shares shall be allocated pro rata among the pre-split shares
and the split shares received in respect of those particular pre-split shares.
The new shares will be deemed to have been held for the same period of time as
the pre-split shares to which they relate. The Company has been advised by
counsel that, under current federal tax law, the distribution of additional
shares will not result in taxable income or loss.
Following stockholder adoption of the proposed amendment, approximately
119,610,000 shares of Common Stock will be available for issuance in excess of
outstanding post-split Common Stock approximating 57,040,000 shares and the
approximately 23,350,000 post-split shares reserved for issuance under the
Company's various existing and proposed employee benefit plans. The proportion
of shares available for possible future issuance to total authorized Common
Stock will remain exactly the same before and after the split. At the present
time, there are no agreements, understandings, or arrangements for the
authorized but unissued Common Stock, other than the existing and proposed
employee stock plans (see the proposed 1996 Stock Incentive Plan description
beginning on page 14).
The amendment does not change the proportion of the authorized Common Stock
to the shares of Common Stock outstanding or reserved for issuance, as described
above. The authorized shares of Common Stock in excess of the outstanding and
reserved shares 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 stock issuances in connection with the
acquisition of other business organizations, employee incentive plans, and stock
split-ups and stock dividends. Management of the Company is cognizant of the
trends toward consolidation in the investment management industry and believes
there may be enhanced prospects for growth through acquisition in the future.
Consistent with these trends, the Company from time to time considers possible
acquisitions and periodically engages in discussions regarding possible
acquisitions. Currently, the Company is not a party to any agreements or
understandings regarding any acquisitions. In addition, acquisitions involving
stock issuances above certain enumerated thresholds would require stockholder
approval under applicable rules of the Nasdaq Stock Market and in some
circumstances Maryland law.
The Board of Directors is required to make any determination to issue
shares of Common 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 that could 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
<PAGE>
judgment of the Board of Directors, this action will be in the best interests 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 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.
Recommendation of the Board of Directors; Vote Required
The Board of Directors has declared advisable and recommends a vote "FOR"
an amendment to the Company's charter effecting a two-for-one split of the
Company's outstanding Common Stock and a proportional increase in the authorized
shares of Common Stock from 100,000,000 to 200,000,000 shares. The affirmative
vote of a majority of the total number of shares of Common Stock outstanding
will be required for adoption of the amendment. Accordingly, abstentions and
broker non-votes will have the same effect as a vote against the amendment.
Proxies solicited by the Board of Directors will be voted in favor of the
amendment unless stockholders specify otherwise.
PROPOSED 1996 STOCK INCENTIVE PLAN
The Company's 1996 Stock Incentive Plan (the "Plan") was recommended by the
Executive Compensation Committee (the "Committee") and approved by the Board of
Directors on February 7, 1996. A copy of the Plan is attached hereto as Exhibit
B, and the following summary description is qualified by reference to the Plan.
The purpose of the Plan is to provide an incentive to employees and to encourage
capital accumulation and stock ownership by key employees in order to increase
their proprietary interest in the Company's success.
No options or awards have been granted or made under the Plan in 1996. For
information concerning 1995 grants under the Company's 1990 and 1993 Stock
Incentive Plans, which are similar to the proposed Plan, see the Option Grants
Table on page 7. The Committee has not considered what awards will be made under
the Plan, and, consequently, the number of shares that will be covered by any
such awards or the persons to whom awards will be made cannot be determined.
In addition, there are 9,710 and 1,434,600 shares of Common Stock reserved
for issuance under the Company's 1990 Stock Incentive Plan (the "1990 Plan") and
1993 Stock Incentive Plan (the "1993 Plan"), respectively, as to which options
or stock appreciation rights have not been granted. Authority to make awards
under the 1990 Plan will be terminated upon stockholder approval of the 1996
Plan; authority to make awards under the 1993 Plan will continue in effect
following stockholder approval of the 1996 Plan. Information concerning
outstanding grants under these and prior plans is contained in the Company's
Annual Report to Stockholders.
The Plan will be effective as of April 12, 1996, subject to stockholder
approval, and authority to grant options will remain in effect until February 6,
2006.
Number of Shares
The Plan provides that 4,000,000 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 key employees (including officers and
directors who are employees) of the Company and its subsidiaries. If the
two-for-one stock split is approved at the annual meeting, the Plan would then
cover 8,000,000 shares of the Company's Common Stock. If an option or stock
appreciation right expires before its exercise, a stock appreciation right is
exercised for cash, a stock award is forfeited, or shares are tendered as
consideration for the exercise of any option or award, the shares may again be
subject to awards.
<PAGE>
Administration; Eligibility
The selection of the participants in the Plan and the term of awards
granted to each participant will be determined by the Committee, which may
delegate authority to make awards to persons who are not subject to Section 16
of the Securities Exchange Act of 1934 (the "1934 Act") to a committee of
officers. Key employees, including those who are officers and directors of the
Company and its subsidiaries, are eligible to be selected to receive awards
under the Plan.
Stock Options
The Committee may grant either incentive stock options qualified with
respect to Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options not qualified under any section of the Code ("non-qualified
options"). Incentive stock options may be granted at not less than 100% of the
fair market value of the underlying Common Stock, and non-qualified stock
options may be granted at not less than 75% of the fair market value of the
underlying Common Stock. The Committee's practice has been to award all options
at not less than 100% of the fair market value of the underlying Common Stock on
the date of grant. Upon exercise, the option price is to be paid in full in
cash, at the discretion of the Committee, in the Company's Common Stock
previously owned by the option holder or acquired upon the option exercise
having a market value on the date of exercise equal to the aggregate option
price, in a combination thereof, or in any other method that the Committee may
allow.
Options granted under the Plan shall first become exercisable at least one
year after grant and shall expire not more than 10 years from the date the
option is granted. The Committee may in its discretion provide that an option
may not be exercised in whole or in part for any period or periods of time
specified and may accelerate the time at which an option may be exercised.
Stock Appreciation Rights
The Committee may grant stock appreciation rights which provide the grantee
the right to receive a payment (in cash, Common Stock, or a combination of both)
equal to the difference between the fair market value of a specific number of
shares of Common Stock on the grant date and the fair market value of such
shares on the date of exercise. Stock appreciation rights may, in the discretion
of the Committee, be granted separately or in tandem with options or other
awards under the Plan.
Stock Awards
Awards of shares of Common Stock may be issued with or without payment of
consideration by the participant. An award of stock may be denominated in shares
of stock, units of stock, or stock equivalent units and may be paid in cash,
Common Stock, or a combination thereof. All or part of any stock award may be
subject to conditions and restrictions, which the Committee shall specify.
"Book Value" Shares
Incentive and non-qualified stock options, stock appreciation rights, and
stock awards may also relate to "Book Value Shares." Book Value Shares are
shares of Common Stock which have voting, dividend, and liquidation rights but
are not transferable except to the Company and are subject to valuation and
adjustment in certain circumstances, as described in the Plan.
Amendments
The Committee, at any time and from time to time, may alter, amend,
suspend, or discontinue the Plan or alter or amend any and all options, stock
appreciation rights, and stock awards under the Plan. In addition, no such
action may be taken which adversely affects the rights of a participant in any
option, stock, or right that has been granted under the Plan without the
participant's consent. Under current rules of the Securities and Exchange
Commission applicable to persons who are subject to Section 16 of the 1934 Act,
no such action may be taken without stockholder approval which materially
increases the benefits to participants under the Plan, materially increases the
<PAGE>
number of shares to be issued, materially extends the period for granting of
awards or materially modifies the requirements as to eligibility. Likewise,
stockholder approval is required under the Code for amendments increasing the
number of shares which may be issued under the Plan and the category of
individuals eligible for awards to the extent awards are intended to qualify as
incentive stock options.
Federal Income Tax Consequences
The following is a general summary of the federal income tax treatment of
the stock awards, incentive stock options, non-qualified stock options, stock
appreciation rights, and stock awards to be granted under the Plan based upon
the current provisions of the Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the Plan are
intended to meet the requirements of Section 422 of the Code. No tax
consequences result from the grant of the option. If an option holder acquires
stock upon the exercise, no income will be recognized by the option holder for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to option may
result in alternative minimum tax liability to the option holder) and the
Company will be allowed no deduction as a result of such exercise, if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months before
the date of such exercise, the option holder is an employee of the Company or of
a subsidiary; and (b) the option holder makes no disposition of the stock within
two years from the date the option is granted nor within one year after the
stock is transferred to the option holder. In the event of a sale of such stock
by the option holder after compliance with these conditions, any gain realized
over the price paid for stock will ordinarily be treated as long-term capital
gain, and any loss will be treated as long-term capital loss, in the year of the
sale.
If the option holder fails to comply with the employment or holding period
requirements discussed above, the option holder will recognize ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
the stock on the date the option was exercised over the exercise price or (ii)
the excess of the amount realized upon such disposition over the exercise price.
If the option holder is treated as having received ordinary income because of
his failure to comply with either condition above, an equivalent deduction will
be allowed to the Company in the same year.
Non-Qualified Stock Options. 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 same amount. The option holder's basis in such
shares will be the fair market value on the date exercised, and when the shares
are disposed of, capital gain or loss, either long-term or short-term, will be
recognized depending on the holding period of the shares.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends approval of the Plan. The affirmative
vote of a majority of the votes cast at the meeting will be required to approve
the 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. Proxies
solicited by the Board of Directors will be voted in favor of approval of the
Plan unless stockholders specify otherwise.
CERTAIN OWNERSHIP OF THE COMPANY'S COMMON STOCK
The Company has no knowledge at this time of any individual or entity
owning, beneficially or otherwise, 5% or more of the outstanding Common Stock of
the Company.
<PAGE>
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of its Audit
Committee, has selected Price Waterhouse LLP, independent accountants, to
examine the financial statements of the Company for the year 1996. 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 1995, Price Waterhouse performed various professional services for the
Company, including completion of the examination of financial statements of the
Company for 1994, preliminary work on the examination for 1995, and preparation
of corporate tax returns. Price Waterhouse also examines the financial
statements of almost one-half of the Price Funds and 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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and proxy relating to that meeting by November 4, 1996.
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.
<PAGE>
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: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock (par value
$.20 per share) of the Corporation, which is issued at the close of business on
the effective date of this amendment, into two shares of such Common Stock (par
value $.20 per share) and by transferring from the account designated "capital
in excess of par value" to the extent available and then from the account
designated "retained earnings" to the common stock account $.10 for each share
of Common Stock outstanding immediately after the change and reclassification,
such change and reclassification to be made as a two-for-one split of the issued
and outstanding shares and not as a stock dividend, and in connection therewith
there shall be issued one additional share of Common Stock for each such share
thereof which is issued and outstanding at such effective date.
SECOND: Article SIXTH, Paragraph (a) of the charter of the Corporation is
hereby amended to read in its entirety as follows:
SIXTH: (a) The total number of shares of stock of all classes of
capital stock (par value $.20 per share) which the Corporation has
authority to issue is 220,000,000 shares amounting in aggregate par value
to $44,000,000, of which 200,000,000 shares amounting in aggregate par
value to $40,000,000 are classified as "Common Stock" and 20,000,000 shares
amounting in aggregate par value to $4,000,000 are classified as "Preferred
Stock."
THIRD: (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
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).
(b) As amended the total number of shares of stock of all classes which the
Corporation has authority to issue is 220,000,000 shares, of which 20,000,000
shares are Preferred Stock (par value $.20 per share) and 200,000,000 shares are
Common Stock (par value $.20 per share).
(c) The aggregate par value of all shares having a par value is $24,000,000
before the amendment and $44,000,000 as amended.
(d) The preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of each class of capital stock of the Corporation has
not been changed by this Amendment.
<PAGE>
Exhibit B
T. ROWE PRICE ASSOCIATES, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE:
This 1996 Stock Incentive Plan (the "Plan") is intended as an employment
incentive and an encouragement of capital accumulation and stock ownership by
key employees of the Company and of its Subsidiaries (as defined below) in order
to increase their proprietary interest in the Company's success. This Plan
authorizes options, stock appreciation rights, and stock awards (each referred
to as an "award"). Options may be either incentive stock options intended to
qualify as such under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified stock options not intended to qualify
under any section of the Code. Awards may be granted separately or in tandem
with other awards.
2. ADMINISTRATION:
The Plan shall be administered by a committee appointed by the Board of
Directors of the Company (the "Committee") composed of at least two directors
who are disinterested persons within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "1934 Act") or any successor provisions.
The Company's Executive Compensation Committee is hereby initially designated as
the Committee. The Committee may delegate to a committee of officers of the
Company any or all of its duties under the Plan pursuant to such conditions or
limitations as the Committee may establish, except only the Committee may make
any determination regarding employees who are subject to Section 16 of the 1934
Act.
The interpretation and construction by the Committee of any provisions of
the Plan or any agreements with respect to awards issued under it and any
determination by the Committee pursuant to any provision of the Plan or any such
agreement shall be final and conclusive. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good
faith, nor for any matter as to which the Company's charter limits the liability
of directors. Such members shall be entitled to indemnification and
reimbursement in the manner provided in the Company's charter or by-laws and
under any directors' and officers' liability insurance coverage which may be in
effect from time to time.
With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
3. ELIGIBILITY:
The individuals who shall be eligible to participate in the Plan shall, as
the Committee shall determine from time to time, be such key employees of the
Company, including officers who are also directors, or of any corporation (a
"Subsidiary") in which the Company has a proprietary interest by reason of stock
ownership or otherwise. No individual shall be eligible to receive awards under
the Plan for more than an aggregate of 800,000 shares of Common Stock (prior to
giving effect to the stock split presented for action at the Company's 1996
annual meeting of stockholders) over the term of the Plan.
4. AWARD OF OPTIONS:
The Committee, at any time and from time to time, may authorize the
granting of options under this Plan to any individual eligible to receive the
same. Options shall be granted under this Plan at such times, for such number of
shares, and subject to such conditions as the Committee shall determine.
5. AWARD OF STOCK APPRECIATION RIGHTS:
The Committee, at any time and from time to time, may authorize the
granting of stock appreciation rights under this Plan. Stock appreciation rights
shall be granted under the Plan at such times, for such number of shares of
<PAGE>
Common Stock, and subject to such conditions, including limitations as to the
amount which may be received upon exercise, as the Committee shall determine.
The term "stock appreciation right" shall mean the right to receive from the
Company, upon exercise thereof without payment to the Company, an amount up to
the difference between the fair market value on the exercise date of the total
number of Ordinary Shares, or the value (based on Book Value Per Share) on the
exercise date of the total number of Book Value Shares for which the stock
appreciation right is exercised, less the exercise price of such stock
appreciation right. The amount payable by the Company upon exercise of a stock
appreciation right may be paid in cash, in stock, or in any combination of cash
and stock. No fractional shares shall be issued under this section.
6. STOCK AWARDS:
The Committee, at any time and from time to time, may authorize the
issuance of stock at no cash cost, or for such payment as the Committee shall
determine, to any individual eligible to participate in the Plan. An award of
stock may be denominated in shares of stock, units of stock, convertible
debentures, or stock equivalent units, and may be paid in stock, in cash, or in
a combination of stock and cash. All or part of any stock award may be subject
to conditions and restrictions established by the Committee.
7. STOCK:
The stock subject to the options, stock appreciation rights, stock awards,
and other provisions of the Plan shall be shares of the Company's authorized but
unissued Common Stock. The term "Common Stock" may mean either Ordinary Shares
or Book Value Shares (as such terms are defined hereinafter). Subject to
adjustment in accordance with the provisions of Paragraph 8(h) hereof, the total
number of shares of Common Stock on which options or stock appreciation rights
may be granted or stock awards may be made under the Plan shall not exceed
4,000,000 shares of Common Stock (prior to giving effect to the stock split
presented for action at the Company's 1996 annual meeting of stockholders);
provided that, except for purposes of determining the number of shares which may
be issued pursuant to incentive stock options, shares tendered as consideration
for the exercise of any option or other award, shares subject to any stock
appreciation right or award settled in cash, shares subject to the unexercised
portion of any outstanding option or stock appreciation right which expires, is
canceled, or is terminated for any reason, and shares issued under a stock award
which subsequently are forfeited in accordance with the terms of the related
stock agreement may again be subject to awards under the Plan.
The terms "Ordinary Shares" and "Book Value Shares" shall have the
following meanings. "Ordinary Shares" means shares of the Company's Common Stock
for which there is a generally recognized trading market and which are freely
transferable. "Book Value Shares" means shares of the Company's Common Stock
which shall be authorized for issuance and which shall have the same voting,
dividend, and liquidation rights as Ordinary Shares, except that they shall not
be transferable (whether or not the stock option or stock appreciation rights
agreements are then in effect) except to the Company and except that they shall
be subject to the repurchase provisions set forth in the stock option
agreements.
8. TERMS AND CONDITIONS OF AGREEMENTS:
All awards granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall, from time to time, approve. The Committee may,
from time to time, modify or amend any such agreement. Such agreements shall
comply with and be subject to the following terms and conditions, to the extent
applicable:
(a) Medium of Payment for Option: Upon exercise of an option, the
option price shall be payable (i) in United States dollars in cash or by
certified check, bank draft, or money order payable to the order of the
Company; (ii) through the delivery or withholding of shares of Common Stock
of the Company (which may be either Ordinary Shares or Book Value Shares,
or a combination of both) with a value equal to the total option price;
(iii) by a combination of the methods described in (i) and (ii); or (iv)
through such other means as the Committee may allow. Shares of Common Stock
<PAGE>
delivered in payment of the option exercise price may, in the discretion of
the Committee, be previously acquired shares or shares acquired upon
exercise of the option. To the extent permitted by law, the Company or a
Subsidiary may make or guarantee loans to optionees to assist in the
payment of the exercise price.
(b) Number and Kind of Shares: The agreement shall state the total
number and kind of shares of Common Stock to which it pertains. The
agreement shall provide that Book Value Shares shall be subject to
repurchase by the Company, as described in such agreement, and that such
shares shall not be assignable or transferable.
(c) Option Price: The option price for Ordinary Shares covered by an
incentive stock option granted hereunder shall be not less than 100% of the
fair market value, as determined by the Committee, of such Shares on the
date of the granting of the incentive stock option. The option price for
Ordinary Shares covered by non-qualified stock options granted hereunder
shall be not less than 75% of the fair market value, as determined by the
Committee, of such Shares on the date of the granting of the non-qualified
stock option. The "fair market value" for Ordinary Shares for purposes of
this Plan shall be (i) the last reported sale price of the Common Stock on
the Nasdaq National Market(registered trademark) on the date the award is
granted or, if none, for the preceding day for which there was a last
reported sale price; or (ii) if the Ordinary Shares are listed on a
national securities exchange, the last quoted sale price on such exchange
on the date on which the award is granted or, if none, for the next
preceding day for which there was a last quoted sale price; or (iii) if the
Common Stock is not quoted on the Nasdaq National Market(registered
trademark) or listed on a national securities exchange, the mean between
the bid and asked prices in the over-the-counter market on the date of the
award or, in the absence of such quotations or if the Common Stock is not
publicly traded, such other price as shall be determined by the Committee
to be the fair market value.
The option price for any Book Value Shares covered by an incentive
stock option shall be not less than the "Book Value Per Share" on the
"Fiscal Quarter Date" coincident with or immediately preceding the date of
the granting of the option, which the Committee believes in good faith to
be the fair market value of such Shares on the date of grant. The option
price for any Book Value Share covered by a non-qualified stock option
shall be not less than 75% of "Book Value Per Share" on the "Fiscal Quarter
Date" coincident with or immediately preceding the date of the granting of
the option. The term "Book Value Per Share" as of any given date means the
common stockholders' equity, as stated in the consolidated financial
statements of the Company, as at the Fiscal Quarter Date coincident with or
immediately preceding such given date, divided by the sum of the number of
shares of the Company's Common Stock outstanding and the number of common
stock equivalents as of such Fiscal Quarter Date (which calculation shall
be made before giving effect to the sale or repurchase of Book Value Shares
on such Fiscal Quarter Date); provided, however, that the Book Value Per
Share, for the purpose of calculating the repurchase price per share only,
may be adjusted to such an extent as may be determined by the Board of
Directors of the Company to preserve the benefit of the arrangement for the
participants and the Company, if in the opinion of the Board of Directors,
after consultation with the Company's independent accountants, changes in
the Company's accounting policies, acquisitions, or other unusual or
extraordinary items have disproportionately and materially affected the
number of shares of the Company's Common Stock outstanding or the Company's
common stockholders' equity. The term "Fiscal Quarter Date" means March 31,
June 30, September 30, or December 31 of any year or such other dates as
the Company may, from time to time, elect as the end dates of the fiscal
quarters of the Company.
(d) Term of Options and Stock Appreciation Rights: No option or stock
appreciation right may be exercised before the first anniversary of the
date on which it was granted. Each option and stock appreciation right
granted under the Plan shall expire not more than 10 years from the date it
is granted.
<PAGE>
(e) Limitation on Incentive Stock Options: To the extent that the
aggregate fair market value (determined at the time the option is granted)
of the Ordinary Shares or the Book Value Shares with respect to which
incentive stock options are exercisable for the first time by an option
holder during any calendar year (under this Plan, and to the extent
required by Section 422(d) of the Code, under all other plans of the
Company and its subsidiary corporations as defined in Section 424(f) of the
Code, including without limitation the 1986 Stock Incentive Plan, the 1990
Stock Incentive Plan, and the 1993 Stock Incentive Plan) exceeds $100,000
(or such other limitation as may be specified by the Code), such options
shall be treated as non-qualified stock options.
(f) Replenishment of Options: The terms of a stock option grant may
provide, or may be amended by the Committee to provide, for the award of a
new option when the exercise price has been paid by delivery or withholding
of shares of Common Stock to the Company, provided that such replenishment
feature shall be limited to any extent required by rules, regulations, or
interpretations under the 1934 Act with respect to any particular grant in
the case of an option holder who is or becomes subject to Section 16 of the
1934 Act. Any new option grant, which would automatically occur without any
further corporate action, would cover not more than the number of shares
tendered with the exercise price set at the then fair market value of such
shares.
(g) Acceleration or Waiver: In the case of an option or stock
appreciation right not immediately exercisable in full or any stock award
subject to any restriction or condition, the Committee may in its
discretion accelerate the time at which the option or stock appreciation
right granted hereunder may be exercised or waive, in whole or in part, any
restriction or condition with respect to the award.
(h) Recapitalization: The aggregate number of Ordinary Shares and Book
Value Shares on which awards under the Plan may be granted to persons
participating under the Plan, the number of shares thereof covered by each
award, the price per share thereof in each award, and any numerical
limitations contained herein relating to awards shall all be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or other capital adjustment, or the payment of a
stock dividend or other increase or decrease in such shares, effected
without receipt of consideration by the Company; provided, however, that
any fractional shares resulting from any such adjustment shall be
eliminated. In the case of other changes in the Company's capitalization,
adjustments shall be made to the extent determined by the Committee as
necessary or appropriate to reflect the transaction.
If the Company shall be the surviving or resulting corporation in any
merger or consolidation, any award granted hereunder shall pertain to and
apply to the securities to which a holder of the number of shares of Common
Stock subject to the award would have been entitled; but a dissolution or
liquidation of the Company, or a merger or consolidation in which the
Company is not the surviving or resulting corporation, shall cause every
award outstanding hereunder to terminate, except that the surviving or
resulting corporation may, in its absolute and uncontrolled discretion,
tender awards with respect to its shares on terms and conditions, both as
to the number of shares and otherwise, which shall substantially preserve
the rights and benefits of any award then outstanding hereunder.
In the event of a change in the Company's Common Stock which is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par
value to no par value, without increase in the number of issued shares, the
shares resulting from any such change shall be deemed to be Common Stock
within the meaning of the Plan.
<PAGE>
(i) Assignability: No award granted under this Plan shall be
assignable or transferable except by will or by the laws of descent and
distribution or as otherwise permitted under Rule 16b-3 under the 1934 Act.
Notwithstanding this limitation, the Committee may expressly provide in an
agreement (or in any amendment to any agreement) that an award may be
transferred to one or more members of a participant's immediate family or a
trust or partnership primarily for the benefit of such person, provided
there is no consideration paid for such transfer.
9. AWARDS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS:
Awards may be granted under the Plan from time to time in substitution
for awards held by employees of corporations who become or are about to
become key employees of the Company or a Subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
Subsidiary, or the acquisition by the Company or a Subsidiary of the assets
of the employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation as the result of which it
becomes a Subsidiary. The terms and conditions of the substitute awards so
granted may vary from the terms and conditions set forth in this Plan to
such extent as the Committee at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
10. TERM AND EFFECTIVENESS OF PLAN:
The Plan shall become effective on the date it receives approval by
the affirmative votes of the holders of a majority of the Common Stock of
the Company present, or represented, and entitled to vote at a meeting duly
held in accordance with applicable law. No award shall be granted pursuant
to this Plan after February 6, 2006.
11. AMENDMENTS:
The Board of Directors, from time to time, may alter, amend, suspend,
or discontinue this Plan or alter or amend any and all awards granted or
made hereunder except as required under the Code with respect to incentive
stock options or under the Rules and Regulations of the Securities and
Exchange Commission with respect to persons subject to Section 16 under the
1934 Act; and provided further that no action may be taken, without the
consent of a participant under the Plan who holds an award under this Plan,
which adversely affects the rights of such person in such award.
12. APPLICATION OF FUNDS:
The proceeds received by the Company from the issuance of Common Stock
pursuant to awards under the Plan will be used for general corporate
purposes.
13. CERTAIN TAX MATTERS:
Whenever under the Plan shares of Common Stock are to be delivered or
become subject to tax, the Company may require as a condition of delivery
or otherwise that the grantee remit an amount sufficient to satisfy all
federal, state, and other governmental withholding tax requirements related
thereto. The Company may, to the extent specified by the Committee in the
applicable agreement or otherwise, withhold shares of Common Stock to be
delivered with respect to a stock award or upon exercise of an option or
stock appreciation right to satisfy such withholding tax requirements. In
the event a disqualifying disposition is made, the person making such
disposition shall remit to the Company an amount sufficient to satisfy all
federal, state, and other withholding taxes thereby incurred. In lieu of or
in addition to the foregoing, the Company shall have the right to withhold
such sums from compensation otherwise due to the grantee.
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 on the
reverse side, 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 Friday, April 12, 1996, 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 on the reverse side and described in the Notice of Annual
Meeting and Proxy Statement dated March 4 , 1996, 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)
T. ROWE PRICE ASSOCIATES, INC.
P.O. BOX 11370
NEW YORK, NY 10203-0370
- --------------------------------------------------------------------------------
(Reverse side of proxy card)
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
[ ] WITHHOLD authority to vote for all nominees listed
*EXCEPTIONS
George J. Collins, James E. Halbkat, Jr., Henry H. Hopkins, James A.C. Kennedy,
John H. Laporte, Richard L. Menschel, William T. Reynolds, James S. Riepe,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M. David Testa, Philip
C. Walsh and Anne Marie Whittemore.
<PAGE>
(INSTRUCTION: To withhold authority for any individual nominee, mark the
"Exceptions" box and strike a line through that nominee's name.)
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO EFFECT A
TWO-FOR-ONE STOCK SPLIT AND EFFECT A PROPORTIONAL INCREASE IN THE
AUTHORIZED COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(3) TO APPROVE THE PROPOSED 1996 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(4) 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.
Please date and sign exactly as your name
appears to the left. When signing as a
fiduciary, representative or corporate officer,
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 SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE>
