YOUR VOTE IS IMPORTANT - Please execute and return the
enclosed proxy promptly, whether or not you plan to attend
the T. Rowe Price Associates, Inc. Annual Meeting of Stockholders.
T. ROWE PRICE
[CORPORATE LOGO]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 17, 1997
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of T. Rowe Price Associates, Inc. (the "Company") will be held at the
Renaissance Harborplace Hotel, 202 East Pratt Street, Baltimore, Maryland,
21202, on Thursday, April 17, 1997, at 10:00 a.m. for the following purposes:
(1) To elect fifteen directors of the Company; and
(2) To consider and act upon such other business as may properly come
before the Meeting or any adjournments or postponements thereof.
February 14, 1997 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 or postponements thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Alvin M. Younger, Jr.
Secretary
Baltimore, Maryland
March 7, 1997
<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 (the "Meeting") described in the
accompanying notice and at any adjournments or postponements thereof. The
purpose of the Meeting is to elect directors of the Company and to consider and
act upon such other business as may properly come before the Meeting or any
adjournments or postponements thereof. This proxy statement and the accompanying
notice of annual meeting and proxy and the Company's annual report to
stockholders containing the Company's financial statements for the year ended
December 31, 1996 are first being sent to stockholders on or about March 7,
1997.
The record of stockholders entitled to notice of and to vote at the Meeting
was taken as of the close of business on February 14, 1997. At that date there
were outstanding and entitled to vote 57,752,569 shares of Common Stock, par
value $.20 per share, held by approximately 2,600 stockholders of record. 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
April 30, 1996. In the election of directors, each share is entitled to cast one
vote for each director to be elected; cumulative voting is not permitted.
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. For any
matter that may come before the meeting other than the election of directors,
each share is entitled to one vote. The foregoing notwithstanding, 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 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 $5,000
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.
<PAGE>
The Board of Directors has selected James S. Riepe, George A. Roche and M.
David Testa 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 by delivering to the Secretary of the Company a notice of revocation or a
duly executed proxy bearing a later date. 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, as long as the stockholder has filed a written notice
of revocation with the Secretary. All notices of revocation should be sent to
the attention of the Company Secretary: Alvin M. Younger, Jr., T. Rowe Price
Associates, Inc., 100 East Pratt Street, Baltimore, MD 21202.
ELECTION OF DIRECTORS
Effective at the time of the Meeting, the number of directors will be
increased to 15 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. All of the nominees except
Brian C. Rogers currently serve as directors of the Company. Mr. Rogers now
serves as a managing director of the Company.
It is intended that all properly executed proxies received in time to be
duly presented at the Meeting, 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 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. Unless
otherwise 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.
2
<PAGE>
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 56 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 10 funds. (2)(4)(5)
1,872,520 shares (3.16%)(6)
James E. Halbkat, Jr. Mr. Halbkat is 62 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.
(1)(3)(5)
26,000 shares * (7)
Henry H. Hopkins Mr. Hopkins is 54 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.
643,768 shares (1.09%) (8)
James A.C. Kennedy Mr. Kennedy is 43 years old, has been a director of the
Company since 1996, 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 and president of New Age Media
Fund, Inc.
671,160 shares (1.13%) (9)
John H. Laporte Mr. Laporte is 51 years old, has been a director of the
Company since 1996, 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.
1,019,732 shares (1.72%) (10)
Richard L. Menschel Mr. Menschel is 63 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. (3)
4,000 shares * (11)
(see footnotes on page 6-7)
3
<PAGE>
William T. Reynolds Mr. Reynolds is 48 years old, has been a director of the
Company since 1996, 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. He serves as
chairman of four of these funds. He also is president of
the High Yield Fund.
488,044 shares * (12)
James S. Riepe Mr. Riepe is 53 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 42 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.
(2)(4)
1,380,978 shares (2.33%) (13)
George A. Roche Mr. Roche is 55 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. Mr. Roche is
the chief executive officer-designate of the Company. He
is president and a director of the New Era Fund and serves
as a director of two other Price funds. (2)(4)
1,483,192 shares (2.50%) (14)
Brian C. Rogers Mr. Rogers is 41 years old, is a nominee for director, and
has been a managing director of the Company since 1991, a
vice president between 1985 and 1991, and an employee
since 1982. He is president of the Equity Income Fund and
Value Fund.
439,482 shares * (15)
John W. Rosenblum Mr. Rosenblum is 53 years old and has been a director of
the Company since 1991. He is Dean of the Jepson School
of Leadership Studies at the University of Richmond. From
1993 to 1996, he was the Tayloe Murphy Professor at the
Darden Graduate School of Business Administration (the
"Darden School"), University of Virginia, and was Dean of
(see footnotes on page 6-7)
4
<PAGE>
the Darden School from 1983 to 1993. He is also a
director of 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.
(1)(3) 10,000 shares * (16)
Robert L. Strickland Mr. Strickland is 65 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.
(2)(3)
12,000 shares * (17)
M. David Testa Mr. Testa is 52 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 1982. He is
chairman and president of the Growth Stock Fund and
president and a director of the Institutional Equity Funds
and Equity Series. He is also a director or trustee of
15 other Price Funds and serves as chairman of five of
these Funds. (2)(4)(5)
778,974 shares (1.31%) (18)
Philip C. Walsh Mr. Walsh is 75 years old and has been a director of the
Company since 1987. He is a retired mining industry
executive. (3)(5)
12,000 shares * (19)
Anne Marie Mrs. Whittemore is 50 years old and has been a director
Whittemore 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. (1)(3)
(4,400 shares * (20)
(see footnotes on page 6-7)
5
<PAGE>
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(18 persons) 9,795,346 shares (16.53%) (21)
* Indicates holdings of less than 1 percent.
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Executive Committee of the Board of Directors.
(3) Member of the Executive Compensation Committee of the Board of Directors.
(4) Member of the Management Committee of the Board of Directors.
(5) Member of the Nominating Committee of the Board of Directors.
(6) Includes 141,200 shares which may be acquired by Mr. Collins within 60
days upon the exercise of stock options. Also includes 135,204 shares
owned by a family member and as to which Mr. Collins disclaims
beneficial ownership.
(7) Includes 8,000 shares which may be acquired by Mr. Halbkat within 60 days
upon the exercise of stock options.
(8) Includes 120,800 shares which may be acquired by Mr. Hopkins within 60 days
upon the exercise of stock options.
(9) Includes 201,912 shares which may be acquired by Mr. Kennedy within 60 days
upon the exercise of stock options.
(10) Includes 181,700 shares which may be acquired by Mr. Laporte within 60 days
upon the exercise of stock options. Also includes 100,000 shares owned by a
member of Mr. Laporte's family and 76,992 shares held in trusts for members
of Mr. Laporte's family, as to which Mr. Laporte disclaims beneficial
ownership.
(11) Includes 4,000 shares which may be acquired by Mr. Menschel within 60 days
upon the exercise of stock options.
(12) Includes 103,600 shares which may be acquired by Mr. Reynolds within 60
days upon the exercise of stock options. Also includes 10,550 shares owned
by members of Mr. Reynolds' family, as to which Mr. Reynolds disclaims
beneficial ownership.
(13) Includes 106,400 shares which may be acquired by Mr. Riepe within 60 days
upon the exercise of stock options. Also includes 180,000 shares held by or
in trusts for members of Mr. Riepe's family, as to which Mr. Riepe
disclaims beneficial ownership, and 82,000 shares held in a charitable
foundation for which Mr. Riepe has voting and disposition power.
(14) Includes 82,800 shares which may be acquired by Mr. Roche within 60 days
upon the exercise of stock options, and 400,000 shares held by or in trusts
for members of Mr. Roche's family and as to which Mr. Roche disclaims
beneficial ownership.
6
<PAGE>
(15) Includes 236,768 shares which may be acquired by Mr. Rogers within 60 days
upon the exercise of stock options.
(16) Includes 8,000 shares which may be acquired by Mr. Rosenblum within 60 days
upon the exercise of stock options.
(17) Includes 8,000 shares which may be acquired by Mr. Strickland within 60
days upon the exercise of stock options.
(18) Includes 89,300 shares which may be acquired by Mr. Testa within 60 days
upon the exercise of stock options, and 120,000 shares held in trusts for
members of Mr. Testa's family and as to which Mr. Testa disclaims
beneficial ownership.
(19) Includes 8,000 shares which may be acquired by Mr. Walsh within 60 days
upon the exercise of stock options.
(20) Includes 4,000 shares which may be acquired by Mrs. Whittemore within 60
days upon the exercise of stock options.
(21) Includes 1,516,644 shares which may be acquired by all directors and
executive officers as a group within 60 days 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 Its Committees
During 1996, there were seven 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 or she was a member. The
Board of Directors of the Company has an Audit Committee, Executive 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 (1) on the previous page are members of the
Audit Committee, which met on three occasions during 1996.
The Executive Committee functions in the interval between meetings of the
Board of Directors to approve matters requiring formal action by or on behalf of
the Board of Directors, which actions are thereafter reported to the entire
Board for ratification. The Executive Committee also possesses the authority to
7
<PAGE>
exercise all of the powers of the Board of Directors in the interval between
meetings, except as limited by law. The directors designated in note (2) on page
5 are members of the Executive Committee, which approved one matter by unanimous
written consent in lieu of a meeting during 1996.
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 incentive and stock purchase plans and the Company's Executive Incentive
Compensation Plan. The directors designated in note (3) on page 5 are members of
the Executive Compensation Committee which met eight times during 1996.
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 page 5 are members of the Nominating
Committee which met on one occasion in 1996. 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 Committee Interlocks and Insider Participation
During 1996, Philip C. Walsh (Chairman), James E. Halbkat, Jr., Richard L.
Menschel, John W. Rosenblum, Robert L. Strickland, and Anne Marie Whittemore
served as members of the Executive Compensation Committee. None of these
directors are officers or employees of the Company. No 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 of the Company or board
committee member.
Mr. Menschel is a limited partner of The Goldman Sachs Group, L.P., an
investment banking firm. During 1996, Goldman, Sachs & Co. performed services
for the Company, including securities brokerage services. Mr. Menschel did not
share in any payment for these services.
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 1996.
8
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term All Other
Annual Compensation (1) Compensation Awards Compensation(4)
----------------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted (#)(3)
- ------------------ ---- ------ --------- ----------------------
George J. Collins 1996 $325,000 $1,500,000 -0- $24,000
President, Chief Exec- 1995 325,000 1,300,000 -0- 24,000
utive Officer and 1994 325,000 1,250,000 -0- 22,500
Managing Director
James S. Riepe 1996 275,000 1,500,000 -0- 22,500
Managing Director 1995 275,000 1,300,000 200,000 22,500
1994 275,000 1,250,000 -0- 22,500
George A. Roche 1996 275,000 1,500,000 -0- 24,000
Chief Financial Offic- 1995 275,000 1,300,000 200,000 24,000
er and Managing 1994 275,000 1,250,000 -0- 22,500
Director
M. David Testa 1996 275,000 1,500,000 -0- 26,625
Managing Director 1995 275,000 1,300,000 -0- 26,625
1994 275,000 1,250,000 600,000 26,625
James A.C. Kennedy 1996 250,000 1,200,000 50,000 26,625
Managing Director 1995 250,000 900,000 50,000 26,625
1994 237,500 700,000 34,000 26,438
</TABLE>
(1) No officer named in the Summary Compensation Table received any perquisites
and other personal benefits, securities or property, the aggregate amount
of which exceeded the lesser of either $50,000 or 10% of the total annual
salary and bonus reported for 1996 in the Summary Compensation Table.
(2) Bonuses for 1996 and 1995 were paid pursuant to the Company's Executive
Incentive Compensation Plan. For 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 April 30, 1996.
(4) Included in other compensation is a $22,500 contribution for each of 1996,
1995 and 1994 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 1996 and 1995; $4,125
in employer matching contributions under the Company's 1986 Employee Stock
Purchase Plan for Mr. Testa for each of 1996, 1995 and 1994; and $4,125,
$4,125, and $3,938 in employer matching contributions under the Company's
1986 Employee Stock Purchase Plan for Mr. Kennedy for 1996, 1995 and 1994,
respectively.
9
<PAGE>
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
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.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable Value at As-
Securities Total Options sumed 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 5% 10%
- ---- ----------- ----------- -------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
George J. Collins 0 0% N/A N/A $0 $0
James S. Riepe 0 0% N/A N/A 0 0
George A. Roche 0 0% N/A N/A 0 0
M. David Testa 0 0% N/A N/A 0 0
James A.C. Kennedy 50,000 2.65% $36.00 11/17/06 1,132,000 2,868,500
</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 18, 1996 (the date of grant of the 1996 option awards) to November
17, 2006 (the date of expiration of such options) of 5% and 10%, the
assumed rates required under the rules of the Securities and Exchange
Commission. Based on these assumed annual rates of stock price appreciation
of 5% and 10%, the Company's stock price at November 17, 2006 is projected
to be $58.64 and $93.37, 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.
10
<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 1996 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, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1996 at December 31, 1996
Shares Acquired Value (Exercisable/ (Exercisable/
Name Upon Exercise (1) Realized Unexercisable) (1) Unexercisable) (2)
<S> <C> <C> <C> <C>
George J. Collins 0 $0 141,200/32,800 $4,958,825/$988,050
James S. Riepe 8,000 294,000 106,400/233,600 3,490,150/4,509,100
George A. Roche 11,200 352,400 82,800/233,600 2,666,950/4,509,100
M. David Testa 8,300 298,800 89,300/633,600 2,891,650/17,459,100
James A.C. Kennedy 16,000 344,500 201,912/130,000 7,037,898/2,233,550
</TABLE>
(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 April 30, 1996.
(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, 1996,
and all of the value shown reflects stock price appreciation since the
granting of the option. The closing market price of the Common Stock
was $43.50 per share on December 31, 1996.
11
<PAGE>
Compensation of Directors. Directors who are also officers do not receive
directors' fees. Each independent director received a $50,000 retainer for 1996
services as a director and board committee member.
Pursuant to the 1995 Directors Stock Option Plan approved by stockholders
on April 6, 1995, each of Messrs. Halbkat, Menschel, Rosenblum, Strickland and
Walsh and Mrs. Whittemore received options to purchase 4,000 shares of Common
Stock at $28.50 per share (the last reported sale price on April 25, 1996; the
number of options and price has been adjusted to reflect the two-for-one stock
split effective at the close of business on April 30, 1996).
Report of the Executive Compensation Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee"), composed during 1996 of all of the Company's independent
directors, 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 any other
officers who are also members of the Company's Board of Directors; (ii)
administration of the Company's Executive Incentive Compensation Plan (the
"Incentive Plan"); (iii) administration of the Company's stock incentive plans;
and (iv) 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 has acknowledged since its inception 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
provide for the long-term success of the Company.
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 1996, base salaries for each of the individuals named in the table
on page __ (the "Named Officers") were unchanged from the prior year. Consistent
with compensation practices generally applied in the investment management and
12
<PAGE>
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.
The Incentive Plan, recommended by the Board of Directors and approved by
stockholders in 1995, 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 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 1996
designated six executive officers (the chief executive officer, the three other
Senior Executive Officers, and two other managing directors) as eligible to
participate in the Plan for 1996. The Committee also determined that each
particular participant would be eligible to receive a specified maximum
percentage of the available Incentive Pool, which percentages varied among the
participants. 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 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 1996 performance similarly will be deductible.
The Committee determined to award each of the Senior Executive Officers
incentive compensation in an amount less than the maximum amount that would be
permitted to be paid under the Incentive Plan for 1996. In making its
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<PAGE>
determinations, the Committee noted that the Company had achieved record
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 and Named 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 and Named Officers each had demonstrated superior long-term management
performance in these areas. In making its decision to award payments under the
Incentive Plan that are less than the maximum amounts permitted, the Committee
took into consideration the Company's historical compensation policies as well
as financial industry compensation trends. The Committee also noted, as it has
done in the past, that it could determine to award payment of a greater portion
or all of the incentive pool in a year when the Company's financial performance
might not be as strong as it has been in 1996 and recent years in order to
maintain a competitive compensation structure and thus retain key personnel.
In establishing the compensation of the Named Officers, the Committee took
into account the fact that the four Senior Executive Officers during 1996 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 four Senior Executive Officers were viewed as making generally
equivalent Company-wide contributions to 1996 performance. In the case of Mr.
Kennedy, the Committee took into consideration Mr. Kennedy's contribution as
head of the Company's Equity Research Division to the Company's strong domestic
equity investment performance and growth in assets under management during 1996.
The Committee noted that many investment professionals, including certain senior
portfolio managers who were not designated as participants in the Plan for 1996
and are compensated under other incentive compensation programs and
arrangements, also were significant contributors to this performance.
In 1996, the Committee determined not to make stock option awards to any of
the Senior Executive Officers, in part so that the 1996 stock option awards
could be directed to a broad number of officers and employees as a means of
further aligning their interests with those of the Company's stockholders and
increasing the potential ownership of active employees and managers. Consistent
with this objective, Mr. Kennedy received an option to purchase 50,000 shares of
Common Stock at an exercise price of $36.00 per share.
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
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<PAGE>
Index for Nasdaq Financial Stocks shown in the Stock Performance Chart which
follows. 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 an independent compensation consulting firm in comparing executive
compensation and policies of the Company with those of other public companies,
including companies which compete with the Company for talent. The Committee's
goal is to maintain compensation programs which are competitive within the
financial services industry.
The Executive Compensation Committee believes that 1996 compensation levels
disclosed in this proxy statement are reasonable and appropriate in light of the
Company's strong performance.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
Richard L. Menschel
John W. Rosenblum
Robert L. Strickland
Anne Marie Whittemore
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, 1996 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, the S&P 500 Index, and the S&P Mid-Cap Index.
The comparison assumes $100 was invested on December 31, 1991 in the Company's
Common Stock and in each of the foregoing indices and that all dividends were
reinvested.
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.
15
<PAGE>
INSERT LINEGRAPH - GRAPH PLOT POINTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price
Associates, Inc. $100 $103 $134 $141 $235 $421
CRSP Total Return Index
for the Nasdaq Stock 100 116 134 131 185 227
Market (US Companies) (1)
CRSP Total Return Index
for Nasdaq Financial 100 143 166 167 243 311
Stocks (1)
S&P 500 Index (2) 100 108 118 120 165 203
S&P Mid-Cap Index (3) 100 112 128 123 161 192
</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(R) and the Nasdaq SmallCap 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(R) and the Nasdaq
SmallCap 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.
(3) Total return performance for the S&P Mid-Cap Index provided by Standard &
Poor's.
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.
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 1997 fiscal year. This
firm has served as independent accountants of the Company since 1985. A partner
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<PAGE>
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 1996, Price Waterhouse performed various professional services for the
Company, including completion of the examination of financial statements of the
Company for 1995, preliminary work on the examination for 1996, 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 that there was no material effect upon the
firm's independence.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and proxy relating to that meeting by November 7, 1997.
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.
17
<PAGE>
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 James S. Riepe, George A. Roche and M. David Testa 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 Thursday, April 17, 1997, at 10:00 a.m., at the Renaissance
Harborplace Hotel, 202 East Pratt Street, Baltimore, Maryland 21202, and at any
and all adjournments and postponements 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 7, 1997, 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 NOMINEES LISTED ON THE REVERSE SIDE AND, IN
THE DISCRETION OF THE PROXY HOLDER, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING AND AT ANY ADJOURNMENTS AND POSTPONEMENTS THEREOF.
(continued and to be dated and signed on the reverse side)
18
<PAGE>
(continued from reverse side)
(1) ELECTION OF DIRECTORS
[ ] FOR the election of all nominees listed below
[ ] WITHHOLD authority to vote for all nominees listed below
[ ] EXCEPTIONS (To withhold authority for any individual nominee
listed below, mark the "Exceptions" box and strike a line
through that nominee's name.)
Nominees: 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, Brian C. Rogers, John W. Rosenblum, Robert L.
Strickland, M. David Testa, Philip C. Walsh and Anne Marie
Whittemore
(2) IN THEIR DISCRETION, the proxies are authorized to vote upon such
other business as may properly come before the meeting and at any
adjournments and postponements 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
PLEASE PROMPTLY SIGN, DATE, AND RETURN THE
PROXY CARD IN THE ENCLOSED ENVELOPE.
19
<PAGE>
LOGO
T. ROWE PRICE ASSOCIATES, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 17, 1997
Renaissance Harborplace Hotel
202 E. Pratt Street
Baltimore, Maryland 21202
100 E. PRATT STREET IS LOCATED ACROSS FROM BALTIMORE'S INNER
HARBOR. IT IS BOUNDED ON THE NORTH BY LOMBARD STREET, ON THE
WEST BY LIGHT STREET, AND ON THE EAST BY CALVERT STREET.
PARKING IS AVAILABLE IN THE HOTEL'S UNDERGROUND GARAGE. (The
Corporation will provide a voucher for one hour of free
parking for non-employee stockholders who attend the annual
meeting.)
DIRECTIONS
- ----------
From the south: Take I-95 north to I-395 (downtown) directly into Baltimore
City. Turn right on Pratt Street and then left on Calvert Street. The hotel
parking garage entrance is on the right side of Calvert Street approximately 50
feet before the next traffic light at Lombard Street.
From the north: Take I-83 (Jones Falls Expressway) directly into Baltimore City.
Turn right on Lombard Street. Proceed for approximately 2/3 mile and then turn
left on South Street and right into the hotel's parking garage.
From the west: Take Route 40 (Baltimore National Pike) east directly into
Baltimore City (Edmondson Avenue to Mulberry Street). Turn right on Martin
Luther King Boulevard. Proceed south for approximately 1/2 mile and then turn
left (east) on Pratt Street. Proceed east on Pratt Street for approximately 7/8
mile and then left on Calvert Street. Refer to "From the south" directions for
the location of the hotel's parking garage.
From the east: Take I-95 south through the Inner Harbor Tunnel. Exit at I-395
(downtown) directly into Baltimore City. Turn right on Pratt Street and then
left on Calvert Street. Refer to "From the south" directions for the location of
the hotel's parking garage.
