SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X |
Filed by a party other than the registrant | |
Check the appropriate box:
| | Preliminary proxy statement
|X | Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
T. ROWE PRICE ASSOCIATES, INC.
------------------------------
(Name of Registrant as Specified in Charter)
Alvin M. Younger, Jr.,Secretary
-------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
| | $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2).
| | $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
| | Fee computed on the table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
--------------------------------------------------
(2) Aggregate number of securities to which
transaction applies:
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(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:
(4) Proposed maximum aggregate value of transaction:
| | Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
______________________________________
(2) Form, schedule or registration statement no.:
______________________________________
(3) Filing party:
______________________________________
(4) Date filed:
______________________________________
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
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 16, 1998
Notice is hereby given that the Annual Meeting of
Stockholders (the "Meeting") of T. Rowe Price Associates, Inc.
(the "Company") will be held at 100 East Pratt Street, 12th
floor, Baltimore, Maryland, 21202, on Thursday, April 16, 1998,
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 an increase in
the authorized Common Stock of the Company;
(3) To consider and act upon the proposed 1998 Director
Stock Option Plan; and
(4) To consider and act upon such other business as may
properly come before the Meeting or any adjournments or
postponements thereof.
February 13, 1998 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 6, 1998
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, to consider and
act upon a proposed charter amendment to effect a two-for-one
stock split and an increase in the authorized Common Stock of the
Company, to consider and act upon the proposed 1998 Director
Stock Option Plan, 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, 1997 are
first being sent to stockholders on or about March 6, 1998.
The record of stockholders entitled to notice of and to vote
at the Meeting was taken as of the close of business on February
13, 1998. At that date there were outstanding and entitled to
vote 59,254,226 shares of Common Stock, par value $.20 per share,
held by approximately 3,100 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. 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
the election of directors. For any matter coming before the
meeting other than the election of directors, each share is
entitled to one vote. Approval of the proposed charter amendment
requires the affirmative vote of a majority of the total number
of shares of Common Stock outstanding; approval of the proposed
1998 Director Stock Option Plan requires the affirmative vote of
a majority of the votes cast. 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 $6,000 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 the 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 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.
This year stockholders of record will be provided the
opportunity to have their votes recorded by telephone. The
telephone voting procedure is designed to authenticate
stockholders' identities and to allow stockholders to authorize
the voting of their shares in accordance with their instructions.
The Company has been advised by counsel that these procedures are
consistent with the requirements of Maryland law. A stockholder
voting by telephone would be asked to use the telephone keypad to
enter an identification number (control number) which will have
been provided with proxy information supplied to record holders
only, and again use the keypad to authorize the proxies to vote
in accordance with the stockholders' instructions. Although a
record holder may vote by telephone, each stockholder may vote by
mail using the enclosed proxy card, or in person at the Meeting.
A stockholder voting by telephone also may revoke the proxy by
giving a later date written proxy, changing a vote by telephone,
or appearing at the Meeting and voting in person.
ELECTION OF DIRECTORS
Effective at the time of the Meeting, the number of directors
will be decreased 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. The 14 nominees currently serve as directors
of the Company.
George J. Collins, a director of the Company since 1980 and
chief executive officer from 1984 to 1997, will retire as a
director at the time of the Meeting. The Board of Directors, on
behalf of the Company, wishes to express its appreciation for his
contributions during his 27 years of service.
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.
Age, principal occupation,
directorships with public companies, and beneficial
ownership of
Name of Nominee Common Stock (percent of class)
__________________________________________________________________________
James E. Halbkat, Jr. Mr. Halbkat is 63 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)
28,000 shares * (6)
__________________________________________________________________________
Henry H. Hopkins Mr. Hopkins is 55 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.
649,168 shares (1.06%) (7)
__________________________________________________________________________
James A.C. Kennedy Mr. Kennedy is 44 years old, has been a director
of the Company since 1996, Director of the Equity
Division of the Company since 1997, a managing
director of the Company since 1990, a vice
president between 1981 and 1990, and an employee
since 1978. He is a director or trustee of 14
equity funds within the Price Funds and is
president of the Media & Telecommunications Fund.
703,139 shares (1.15%) (8)
__________________________________________________________________________
(see notes on pages 4-5)
John H. Laporte Mr. Laporte is 52 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 or trustee of ten equity funds within
the Price Funds. He serves as chairman of four
funds and president of four funds.
1,065,679 shares (1.75%) (9)
__________________________________________________________________________
Richard L. Menschel Mr. Menschel is 64 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)
8,000 shares * (10)
__________________________________________________________________________
William T. Reynolds Mr. Reynolds is 49 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 20 fixed
income funds within the Price Funds. He serves
as chairman of 15 of these funds.
515,643 shares * (11)
__________________________________________________________________________
James S. Riepe Mr. Riepe is 54 years old and has been a director
of the Company since 1981, vice chairman since
1997, 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 six of the 46
Price Funds on which he serves as a director or
trustee and is president of another fund. Mr.
Riepe is also a director of General Re
Corporation, a holding company for global
reinsurance and related risk management. (2)(4)
1,367,678 shares (2.24%) (12)
__________________________________________________________________________
George A. Roche Mr. Roche is 56 years old and has been a director
of the Company since 1980, chairman and president
since 1997, a managing director since 1989, a
vice president between 1973 and 1989, and an
employee since 1968. (2)(4)(5)
1,504,792 shares (2.47%) (13)
__________________________________________________________________________
Brian C. Rogers Mr. Rogers is 42 years old and has been a
director of the Company since 1997, a managing
director since 1991, a vice president between
1985 and 1991, and an employee since 1982. He is
president of the Equity Income Fund and the Value
Fund.
489,876 shares * (14)
__________________________________________________________________________
John W. Rosenblum Mr. Rosenblum is 54 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,
University of Virginia. He is also a director of
Chesapeake Corporation, a manufacturer of paper
products; Cadmus Communications Corp., a provider
of printing and communication services; Comdial
Corp., a manufacturer of telephone systems for
businesses; and Cone Mills Corporation, a
textiles producer. (1)(3)
12,000 shares * (15)
__________________________________________________________________________
(see notes on pages 4-5)
Robert L. Strickland Mr. Strickland is 66 years old and has been a
director of the Company since 1991. He retired
as chairman of Lowe's Companies, Inc., a retailer
of specialty home supplies, on January 31, 1998,
and continues to serve as a director. Mr.
Strickland also is a director of Hannaford Bros.
Co., a food retailer. (2)(3)
13,000 shares * (16)
__________________________________________________________________________
M. David Testa Mr. Testa is 53 years old and has been a director
of the Company since 1981, a vice chairman and
the chief investment officer since 1997, 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 a director or trustee of 48 equity
or fixed income funds within the Price Funds. He
serves as chairman of seven of these Funds and
president of two. (2)(4)(5)
920,117 shares (1.51%) (17)
__________________________________________________________________________
Philip C. Walsh Mr. Walsh is 76 years old and has been a director
of the Company since 1987. He is a retired
mining industry executive. (3)(5)
16,000 shares * (18)
__________________________________________________________________________
Anne Marie Whittemore Mrs. Whittemore is 51 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 Fort James Corporation, a
manufacturer of paper products; and Albemarle
Corporation, a manufacturer of specialty
chemicals. (1)(3)
8,400 shares * (19)
__________________________________________________________________________
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(20 persons) 10,170,809 shares (16.68%) (20)
* 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 12,000 shares which may be acquired by Mr. Halbkat within
60 days upon the exercise of stock options.
(7) Includes 89,400 shares which may be acquired by Mr. Hopkins within
60 days upon the exercise of stock options.
(8) Includes 209,512 shares which may be acquired by Mr. Kennedy within
60 days upon the exercise of stock options.
(9) Includes 216,300 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.
(10) Includes 8,000 shares which may be acquired by Mr. Menschel within
60 days upon the exercise of stock options.
(11) Includes 141,600 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.
(12) Includes 96,400 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 75,500
shares held in a charitable foundation for which Mr. Riepe has
voting and disposition power.
(13) Includes 94,400 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.
(14) Includes 265,192 shares which may be acquired by Mr. Rogers within
60 days upon the exercise of stock options.
(15) Includes 12,000 shares which may be acquired by Mr. Rosenblum
within 60 days upon the exercise of stock options.
(16) Includes 4,000 shares which may be acquired by Mr. Strickland
within 60 days upon the exercise of stock options.
(17) Includes 306,200 shares which may be acquired by Mr. Testa within
60 days upon the exercise of stock options, and 40,000 shares held
in trusts for members of Mr. Testa's family and as to which Mr.
Testa disclaims beneficial ownership.
(18) Includes 12,000 shares which may be acquired by Mr. Walsh within 60
days upon the exercise of stock options.
(19) Includes 8,000 shares which may be acquired by Mrs. Whittemore
within 60 days upon the exercise of stock options.
(20) Includes 1,727,643 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 1997, there were six meetings of the Board of Directors of the
Company. Each director attended at least 75% of the combined total number of
meetings of the Board and Board committees of which he 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 four times during 1997.
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 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 the previous page are members of the Executive Committee, which
approved one matter by unanimous written consent in lieu of a meeting during
1997.
As described in the report of the Executive Compensation Committee, the
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 the previous page are members of the
Executive Compensation Committee which met seven times during 1997.
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 four are members of the
Nominating Committee which met on one occasion in 1997. 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 1997, Robert L. Strickland (Chairman), James E. Halbkat, Jr.,
Richard L. Menschel, John W. Rosenblum, Philip C. Walsh, 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 1997, 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 1997.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation Compen-
Compensation (1) Awards sation (3)
__________________________________________________________________________
Securities
Underlying
Name and Options
Principal PositionYear Salary Bonus (2)Granted (#)
______________________ ______ ________ ___________
George A. Roche 1997$275,000$2,250,000 -0- $24,157
Chairman and 1996 275,000 1,500,000 -0- 24,000
President (4) 1995 275,000 1,300,000 200,000 24,000
James S. Riepe 1997 275,000 2,250,000 -0- 22,657
Vice Chairman 1996 275,000 1,500,000 -0- 22,500
(4) 1995 275,000 1,300,000 200,000 22,500
M. David Testa 1997 275,000 2,250,000 -0- 26,782
Vice Chairman 1996 275,000 1,500,000 -0- 26,625
(4) 1995 275,000 1,300,000 -0- 26,625
James A.C. Kennedy1997250,0001,400,000 30,000 59,332 (5)
Managing Director1996250,000 1,200,000 50,000 26,625
1995 250,000 900,000 50,000 26,625
William T. Reynolds1997250,0001,250,000 30,000 60,457 (5)
Managing Director1996250,000 1,000,000 50,000 27,750
1995 250,000 900,000 50,000 27,750
George J. Collins1997135,417 -0- -0- 12,957
President and 1996 325,000 1,500,000 -0- 24,000
Chief Executive 1995 325,000 1,300,000 -0- 24,000
Officer (4)
__________________________________________________________________________
(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 1997 in the
Summary Compensation Table, except as described in Note 5.
(2) Bonuses for 1997, 1996 and 1995 were paid pursuant to the Company's
Executive Incentive Compensation Plan. Bonuses may vary
significantly from year to year and among eligible employees. See
"Report of the Executive Compensation Committee."
(3) Included in other compensation are $22,657, $22,657, $22,657,
$20,500, $20,500, and $11,457 in Company contributions under its
Basic and 401(k) Plus Retirement Plans in 1997 for each of Messrs.
Roche, Riepe, Testa, Kennedy, Reynolds, and Collins, respectively,
and a $22,500 contribution for each of 1996 and 1995 for each of
these individuals to the Company's Profit Sharing Trust, which was
merged into the 401(k) Plus Retirement Plan on January 1, 1997.
These plans provide retirement benefits based on the investment
performance of each participant's accounts under the plans. Also
includes $1,500 in directors fees paid by a wholly owned subsidiary
of the Company to each of Mr. Collins, Mr. Roche and Mr. Reynolds in
each year; $4,125 in employer matching contributions under the
Company's 1986 Employee Stock Purchase Plan for each of Messrs.
Testa and Kennedy for each of 1997, 1996 and 1995; and $3,750 in
employer matching contributions under the Company's 1986 Employee
Stock Purchase Plan for Mr. Reynolds for 1997, 1996 and 1995.
(4) Mr. Collins retired as President and Chief Executive Officer on
April 17, 1997. At that time, Mr. Roche was elected Chairman and
President and each of Mr. Riepe and Mr. Testa was elected Vice
Chairman.
(5) Includes the appraised fair market value ($32,550) of each
individual's interest in a limited liability company (the "LLC")
formed by the Company to hold certain venture capital fund
investments and distributed on January 22, 1998 as incentive
compensation to certain of the Company's officers and key employees.
The distribution to each of Messrs. Kennedy and Reynolds represented
4% of the aggregate amount distributed. The interests are subject
to repurchase by the LLC over the first five years following
distribution upon the occurrence of certain events. Also includes
additional cash compensation of $2,157 for each of Messrs. Kennedy
and Reynolds.
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 1995 option awards to Mr.
Roche and Mr. Riepe, which become exercisable on the third through fifth
anniversaries of the date of grant. All existing option agreements under the
Company's 1986, 1990 and 1993 Stock Incentive Plans provide 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.
In November 1997, the Committee took various actions with respect to the
Company's option plans, including: (i) making non-qualified stock options
held by Managing Directors transferable to family members, trusts and
partnerships for estate planning purposes; and (ii) adding option
replenishment features to all existing non-qualified stock options as well as
to non-qualified stock options granted in the future. The option
replenishment feature provides for the issuance of additional options upon the
exercise of options by surrender of shares. The number of shares subject to a
replenishment option would be the number of shares surrendered to exercise the
option. See "Report of Executive Compensation Committee."
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Potential Realizable
Value at Assumed
Percent Annual Rates of
of Total Stock Price
Number of Options Appreciation for
SecuritiesGranted toExercise Option Term (2)
Underlying Employeesor Base Expira-_________________
Options in FiscalPrice Per tion
Name Granted (#) Year Share (1) Date 5% 10%
__________________________________________________________________________
George A.
Roche 0 0% N/A N/A $0 $0
James S.
Riepe 0 0% N/A N/A 0 0
M. David
Testa 0 0% N/A N/A 0 0
James A.C.
Kennedy 30,000(3) 2.31% $62.75 11/17/071,183,8003,000,300
William T.
Reynolds30,000(3) 2.31% $62.75 11/17/071,183,8003,000,300
George J.
Collins 0 0% N/A N/A 0 0
__________________________________________________________________________
(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, 1997 (the date of grant of the 1997 option
awards) to November 17, 2007 (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, 2007 is projected to be
$102.21 and $162.76, 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) These options contain option replenishment features, which provide
that upon an exercise of a non-qualified stock option by delivery
of stock only, the optionee will receive additional options to
purchase, at the fair market value on the date of exercise and
exercisable until the later of the expiration date of the related
option, a number of shares equal to the number of shares
surrendered. Replenishment options are exercisable immediately.
See "Report of the Executive Compensation Committee" for further
information concerning these option replenishment features.
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 1997 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,
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of
Securities
Underlying
Unexercised
Options atValue of Unexercised
Shares December 31,"In-the-Money" Options
Acquired 1997 at December 31, 1997
on Exer- Value (Exercisable/ (Exercisable/
Name cise (1) Realized Unexercisable)Unexercisable)(1)
__________________________________________________________________________
George A.
Roche 10,000$554,375 94,400/212,000$4,837,425/$7,935,750
James S.
Riepe 31,6001,568,76596,400/212,000 4,939,400/7,935,750
M. David
Testa 4,700 228,788306,200/412,00014,820,075/19,285,750
James A.C.
Kennedy 32,0001,344,250209,512/120,40010,686,268/3,148,975
William T.
Reynolds 20,800 889,900141,600/129,600 6,613,350/3,584,850
George J.
Collins 141,2007,201,142 -0-/-0- -0-/-0-
__________________________________________________________________________
(1) 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, 1997, and all of the value
shown reflects stock price appreciation since the
granting of the option. The closing market price of the
Company's Common Stock was $62.875 per share on December
31, 1997.
Compensation of Directors. Directors who are also officers do not
receive directors' fees. Each independent director received a $50,000
retainer for 1997 services as a director and Board committee member.
Pursuant to the 1995 Director 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 $39.75 per share, the last reported sale price on April 24, 1997. On
December 17, 1997, the Board of Directors, including a majority of the
directors who are not participants in the Director Stock Option Plan, amended
the Plan to provide, on the same terms as are currently applicable to managing
directors under the Company's 1993 and 1996 Stock Incentive Plans: (i) a
replenishment feature with respect to options exercised with stock; (ii) the
ability to transfer options within the family for estate planning purposes;
and (iii) a provision making options exercisable in full upon the occurrence
of a "change-in-control." See "Report of Executive Compensation Committee."
At that time, the Board of Directors also considered the Proposed 1998
Director Stock Option Plan. On February 5, 1998, the Board of Directors,
including a majority of the directors who are not participants in the Director
Stock Option Plan, approved, subject to stockholder approval, the proposed
1998 Director Stock Option Plan. See "Proposed 1998 Director Stock Option
Plan."
Report of the Executive Compensation Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee"), composed during 1997 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
maintain the Company's competitive position in the investment management and
financial services industries, and thereby provide for the long-term success
of the Company.
The Committee believes that competitive levels of cash compensation,
together with equity and other 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 1997, base salaries for each of the individuals named in the table
on page six (the "Named Officers") were unchanged from the prior year.
Consistent with compensation practices generally applied in the investment
management and 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
1997 designated six executive officers (the retiring chief executive officer,
the Chairman and President, the two Vice Chairmen and the two other managing
directors who are Named Officers) as eligible to participate in the Incentive
Plan for 1997. 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
Officers for 1997 performance similarly will be deductible.
The Committee determined to award each of Mr. Roche, Mr. Riepe, and Mr.
Testa incentive compensation in an amount less than the maximum amount that
would be permitted to be paid under the Incentive Plan for 1997. In making
its 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 Officers' performance but were not
capable of precise measurement, including investment performance, marketing
effectiveness, customer service, technology deployment, management of
corporate assets, financial performance, and corporate infrastructure
development. The Committee determined that the Senior Executive 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.
In establishing the compensation of the Named Officers, the Committee
took into account the fact that Mr. Roche, Mr. Riepe and Mr. Testa during 1997
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 and was viewed as making generally
equivalent Company-wide contributions to 1997 performance. In the case of Mr.
Kennedy and Mr. Reynolds, the Committee took into consideration their
respective contributions as heads of the Company's Equity and Fixed Income
Divisions, each of which had very favorable results in 1997. The Committee
noted that many investment professionals, including certain senior portfolio
managers who were not designated as participants in the Plan for 1997 and are
compensated under other incentive compensation programs and arrangements, also
were significant contributors to this performance. Messrs. Kennedy and
Reynolds also were designated as participants in a distribution of interests
in a limited liability company (the "LLC") formed by the Company to hold
certain venture capital investments and distributed to certain of the
Company's officers and key employees, as described in footnote (5) to the
Summary Compensation Table. The Committee believes that the distribution of
interests in the LLC to Messrs. Kennedy and Reynolds is an appropriate means
of incentive compensation not tied to performance of the Company's stock. 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
1997 and recent years in order to maintain a competitive compensation
structure and thus retain key personnel.
In 1997, the Committee determined not to award any options to Messrs.
Roche, Riepe, and Testa so that the full amount of the 1997 option grants
could be made to other officers who do not have as substantial ownership or
potential interest in the Company's Common Stock. Messrs. Kennedy and
Reynolds each received options to purchase 30,000 shares of Common Stock at an
exercise price of $62.75 per share. In addition, during 1997, the Committee
took various actions with respect to its stock option programs. These
actions, in the Committee's view, further align the interests of the option
holders and the stockholders by, among other things, promoting more rapid
option exercise and greater certainty of holding the stock after exercise and
providing more incentive to reduce the shares subject to options through early
exercise. These actions include: (i) making non-qualified stock options held
by Managing Directors transferable to family members, trusts and partnerships
for estate planning purposes; and (ii) providing an option replenishment
feature providing for the grant of a new option upon exercise of existing
non-qualified stock options by the surrender of the Company's Common Stock.
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 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 investment management and financial services industries.
The Executive Compensation Committee believes that 1997 compensation
levels disclosed in this proxy statement are reasonable and appropriate in
light of the Company's strong performance.
Robert L. Strickland, Chairman
James E. Halbkat, Jr.
Richard L. Menschel
John W. Rosenblum
Philip C. Walsh
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, 1997 with the cumulative total return on the
CRSP Total Return Index for the Nasdaq Stock Marketsm (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, 1992
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.
Line chart showing:
CRSP Total
Return Index
for the CRSP Total
Nasdaq StockReturn Index
T. Rowe Price Market for Nasdaq S&P
Associates, (US Companies) Financial S&P 500 Mid-Cap
Inc. (1) Stocks (1) Index (2)Index (3)
1992 $100 $100 $100 $100 $100
1993 130 115 116 110 114
1994 137 112 117 112 110
1995 228 159 170 153 144
1996 408 195 217 189 172
1997 596 240 334 252 227
(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(registered trademark) National Market 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 and the Nasdaq SmallCap
Market, 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. The Company's Common
Stock, which trades on The Nasdaq Stock Market under the symbol
"TROW," is included in these 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. The Company's Common Stock is included in this
index.
PROPOSED CHARTER AMENDMENT TO EFFECT A
TWO-FOR-ONE STOCK SPLIT AND AN 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 an increase in the authorized shares of
Common Stock from 200,000,000 to 500,000,000 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 16, 1998 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, 1998. 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 16
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 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.
If the stockholders approve of the proposed amendment, the Company would
have issued and outstanding approximately 118,500,000 shares of Common Stock
and there would be in addition approximately 41,150,000 shares of Common Stock
reserved for issuance under the Company's various existing and proposed stock
incentive and stock purchase plans. The remaining 340,350,000 shares of
Common Stock would be available for issuance on terms approved by the Board of
Directors, as described in the following paragraph. At the present time,
there are no agreements, understandings, or arrangements providing for any
additional stock issuances, other than existing and proposed stock incentive
and stock purchase plans (including the 1998 Director Stock Option Plan
presented for action in this proxy statement).
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; but it is not currently a party
to any agreements or understandings regarding any material acquisitions. In
addition, acquisitions involving stock issuances above certain enumerated
thresholds would require stockholder approval under applicable rules of the
Nasdaq National Market(registered trademark) 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
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 an increase in the authorized shares of
Common Stock from 200,000,000 to 500,000,000 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 1998 DIRECTOR STOCK OPTION PLAN
The Company's 1998 Director Stock Option Plan (the "Director Plan") was
approved by the Board of Directors on February 5, 1998, subject to stockholder
approval. A copy of the Director Plan is attached hereto as Exhibit B, and the
following summary description is qualified by reference to the Director Plan.
The purpose of the Director Plan is to provide Non-Employee Directors with an
equity interest in the Company in order to attract and retain well-qualified
individuals to serve as Non-Employee Directors and to further align the
interests of Non-Employee Directors of the Company with those of the
stockholders of the Company.
Number of Shares
The Director Plan provides that 200,000 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 (including the stock split
provided for herein), and share exchanges, will be available for the granting
of stock options at the times contemplated by the Director Plan to
Non-Employee Directors of the Company. If an option expires before its
exercise, the shares may again be subject to options. Shares tendered as
consideration for the exercise of any option and shares subject to the
unexercised portion of any outstanding option which expires, is canceled, or
is terminated for any reason may again be subject to awards under the Director
Plan.
Administration; Eligibility
The Director Plan shall be administered by the Board of Directors of the
Company, provided that any decision regarding the price, timing, or amount of
options to be granted hereunder shall require the affirmative vote of a
majority of the members of the Board of Directors who are not participants in
the Director Plan. Such disinterested majority shall also have the right to
make discretionary awards of options in addition to the grants specified in
Section 5(b).
Stock Options
The stock options to be granted under the Director Plan are not qualified
under any section of the Code ("non-qualified options") and will be granted
at 100% of the fair market value of the underlying Common Stock on the date of
grant.
To the extent shares are not available under the 1995 Director Stock
Option Plan (the "1995 Director Plan"), each Non-Employee Director in office
on December 1, 1997 shall continue to be granted the option to purchase up to
4,000 shares of Common Stock per year at the time provided for under that plan
for award of options in 1998 (subject to the annual plan limit of 20,000
shares per director) and in any subsequent year in which a grant of options is
provided for under the 1995 Director Plan. Once the grants provided by the
1995 Director Plan have been satisfied, a director shall receive options to
purchase 1,500 shares of Common Stock at the close of business on the last
Thursday in April in each of the next five years.
Any Non-Employee Director initially elected as a director after December
1, 1997, shall be granted an option to purchase 3,000 shares of Common Stock
as of the close of business on the date of the first regular meeting of
directors held on or after the date the participant's initial election as a
director, and an option to purchase 1,500 shares of Common Stock at the close
of business on the last Thursday in April during each of the next four
succeeding calendar years, subject to a maximum individual award of options to
purchase 9,000 shares of Common Stock.
Each option granted under the Director Plan shall become exercisable in
full one year after the initial grant, but shall not be exercisable as to any
shares prior thereto. Upon exercise, the option price is to be paid in full in
cash, in shares of the Company's Common Stock previously owned by the option
holder or acquired upon option exercises having a market value on the date of
exercise equal to the aggregate option price, or in a combination thereof. No
stock option may be exercised after the earlier to occur of: (i) the
expiration of 10 years after the date such option was granted; or (ii) five
years after a Non-Employee Director ceases to be a director for any reason,
during which period any installments of options which first become exercisable
may thereafter be exercised. In the case of death, the option may be exercised
by a deceased director's estate or heirs for such five year period.
In the event that a Non-Employee Director exercises all or any part of a
stock option granted under the Director Plan (or under the 1995 Director Plan)
through the surrender of shares of Common Stock in full or partial payment of
the exercise price hereunder, the director automatically will receive an
option (a "replenishment option") to purchase a number of shares equal to the
number of shares surrendered priced at the closing price of the Company's
Common Stock on the date of exercise and exercisable in full until the date of
termination of the related option. Upon the exercise of a replenishment
option with stock, the director will not become entitled to receive an
additional replenishment option. Options are transferable within the family
for estate planning purposes and, upon certain events involving an actual or
potential change of control of the Company, shall be exercisable in full.
Amendments; Term of Plan
This Director Plan may be amended, suspended, terminated or reinstated,
in whole or in part, at any time by the Board of Directors; provided, however,
that any provisions of this Director Plan regarding the amount and price of
options to be awarded to Non-Employee Directors and the timing of awards, or
that may be deemed to set forth a formula that determines the amount, price,
and timing of awards, may not be amended more than once every six months,
other than to comport with any changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules under such statutes;
and, provided further, however, that no such amendment shall become effective
without the approval of the stockholders of the Company to the extent
stockholder approval is required in order to comply with Rule 16b-3 of the
Securities Exchange Act of 1934, as amended. No option may be granted under
the Director Plan after December 31, 2007.
Federal Income Tax Consequences
The following is a general summary of the current Federal income tax
treatment of the non-qualified stock options to be granted under the Director
Plan based upon the current provisions of the Code and regulations promulgated
thereunder. No tax consequences result from the grant of the option. An option
holder who exercises a non-qualified stock option with cash will generally
realize compensation taxable as ordinary income in an amount equal to the
difference between the option price and the fair market value of the shares on
the date of exercise, and the Company will be entitled to a deduction from
income in the sale amount. The option holder's basis in such shares will be
the fair market value on the date exercised and, upon disposition of the
shares, the option holder will recognize capital gain or loss, either
long-term or short-term, depending on the holding period of the shares.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote FOR approval of the Director
Plan. The affirmative vote of a majority of the votes cast at the meeting
will be required to approve the Director 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.
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.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Under Federal securities laws, the Company's directors, executive
officers, and persons holding more than 10% of any class of the Company's
Common Stock are required to report, within certain periods, their ownership
of and any transactions in any shares of any class of the Company's equity
securities. To the Company's knowledge, all such individuals have satisfied
such filing requirements in full, except for Mr. Laporte, a director and
officer of the Company, who inadvertently filed one monthly report relating to
one transaction shortly after the due date.
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 1998 fiscal year.
This firm has served as independent accountants of the Company since 1985. A
partner of the firm will be present at the Meeting and available to respond to
appropriate questions, and will have an opportunity to make a statement if he
desires to do so.
In 1997, Price Waterhouse performed various professional services for the
Company, including completion of the examination of financial statements of
the Company for 1996, preliminary work on the examination for 1997, and
preparation of corporate tax returns. Price Waterhouse also examines the
financial statements of approximately 51% 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 1999 annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and proxy relating to that meeting by November 6, 1998.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented for action at the Meeting other than those mentioned above.
However, if any other matters properly come before the Meeting, it is intended
that the persons named in the accompanying proxy will vote on such other
matters in accordance with their judgment of the best interests of the
Company.
Exhibit A
T. ROWE PRICE ASSOCIATES, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Associates, Inc., a Maryland corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: 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 which
the Corporation has authority to issue is 520,000,000 shares of capital
stock (par value $.20 per share) amounting in aggregate par value to
$104,000,000, of which 500,000,000 shares (par value $.20 per share)
amounting in aggregate par value to $100,000,000 are classified as
"Common Stock" and 20,000,000 shares (par value $.20 per share) amounting
in aggregate par value to $4,000,000 are classified as "Preferred Stock."
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
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).
(b) As amended the total number of shares of stock of all classes which
the Corporation has authority to issue is 520,000,000 shares, of which
20,000,000 shares are Preferred Stock (par value $.20 per share) and
500,000,000 shares are Common Stock (par value $.20 per share).
(c) The aggregate par value of all shares having a par value is
$44,000,000 before the amendment and $104,000,000 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.
Exhibit B
T. ROWE PRICE ASSOCIATES, INC.
PROPOSED
1998 DIRECTOR STOCK OPTION PLAN
1. PURPOSES OF THE DIRECTOR PLAN:
T. Rowe Price Associates, Inc. (the "Company") has adopted the 1998
Director Stock Option Plan for Non-Employee Directors (the "Director Plan") to
provide for the issuance of options to purchase shares of the Company's Common
Stock, par value $.20 per share (the "Stock") as a means of long-term
compensation for members of the Board of Directors of the Company in order to
provide Non-Employee Directors with an equity interest in the Company in order
to attract and retain well-qualified individuals to serve as Non-Employee
Directors and to further align the interests of Non-Employee Directors of the
Company with those of the Stockholders of the Company. For purposes of this
Plan, Non-Employee Directors are persons who are not employees of the Company
or any of its affiliates or subsidiaries.
2. ADMINISTRATION:
The Director Plan shall be administered by the Board of Directors of the
Company; provided that any decision regarding the price, timing, or amount of
options to be granted hereunder shall require the affirmative vote of a
majority of the members of the Board of Directors who are not participants in
the Director Plan. Such disinterested majority shall also have the right to
make discretionary awards of options in addition to the grants specified in
Section 5(b).
3. STOCK SUBJECT TO OPTION:
The Company will reserve 200,000 authorized but unissued shares of Stock
for issuance and delivery under the Director Plan, subject to adjustment as
provided in paragraph 6 hereof and to increase to the extent that shares
remain available for grant upon the expiration of the 1995 Director Stock
Option Plan (the "1995 Director Plan"); provided that, shares tendered as
consideration for the exercise of any option and shares subject to the
unexercised portion of any outstanding option which expires, is canceled, or
is terminated for any reason may again be subject to awards under the Director
Plan.
4. ELIGIBILITY:
The individuals who shall be eligible to participate in the Director Plan
shall be all Non-Employee Directors of the Company.
5. TERMS AND CONDITIONS OF OPTIONS:
Options under the Director Plan are intended to be non-statutory stock
options not qualifying under any section of the Internal Revenue Code of 1986,
as amended (the "Code"). All stock options granted under the Director Plan
shall be subject to the following provisions:
(a) Option Price. The exercise price per share with respect to
each option shall be 100% of the fair market value of the Stock on the
date the option is granted. For purposes hereof, fair market value shall
be the last reported sale price in the Nasdaq National Market (or any
other recognized securities market on which the stock is traded if not
then traded on the Nasdaq National Market) on the date of grant, or the
next succeeding business day on which the Nasdaq National Market (or such
other market) is open for business and reports an actual transaction in
the Company's Common Stock. If the Stock is not then traded on any
recognized market, fair market value shall be as determined by the Board
of Directors in accordance with applicable Federal income tax and
securities regulations.
(b) Option Grants.
(i) Each Non-Employee Director in office on December 1, 1997
shall continue to be granted the option to purchase, to the extent
shares are not available under the 1995 Director Plan, 4,000 shares
of Common Stock at the time provided for under that plan for award
of options in 1998 and in any applicable year thereafter, and
thereafter 1,500 shares of Common Stock at the close of business on
the last Thursday in April in each of the next five years
succeeding the last grant originally made under the 1995 Director
Plan.
(ii) Each Non-Employee Director initially elected as a
director after December 1, 1997, shall be granted an option to
purchase 3,000 shares of Common Stock as of the close of business
on the date of the first regular meeting of directors held on or
after the date of the participant's initial election as a director
and an option to purchase 1,500 shares of Common Stock at the close
of business on the last Thursday in April during each of the next
four succeeding calendar years, subject to a maximum individual
award of options to purchase 9,000 shares of Common Stock. Such
Non-Employee Director will have no rights under the 1995 Director
Stock Option Plan.
(c) Exercise of Options.
(i) Each option granted under this Director Plan shall
become exercisable in full one year after the initial grant, but
shall not be exercisable as to any shares prior thereto. Except as
provided in paragraph (ii) below, full payment for shares acquired
shall be made in cash or by certified check at or prior to the time
that an option, or any part thereof, is exercised. The participant
will have no rights as a stockholder until the certificate for
those shares as to which the option has been exercised is issued by
the Company.
(ii) Shares of the Company's Common Stock with a value equal
to the exercise price or a combination of cash and Stock with a
value equal to the exercise price may be used as payment for shares
acquired.
(iii) Until further action by the Board of Directors
suspending or limiting the issuance of replenishment options (as
herein referred to), in the event that Director exercises all or
any part of a stock option granted hereunder or under the 1995
Director Stock Option Plan through the surrender of shares of
Common Stock in full or partial payment of the exercise price
hereunder, the Director automatically will receive an option (a
"replenishment option") to purchase a number of shares equal to the
number of shares surrendered priced at the closing price of the
Company's Common Stock on the date of exercise and exercisable in
full until the date of termination provided for herein. Upon the
exercise of a replenishment option with stock, the Director will
not become entitled to receive an additional replenishment option.
(d) Term of Option. No stock option may be exercised after the
earlier to occur of: (i) the expiration of ten (10) years after the date
such option was granted; or, (ii) five (5) years after the Non-Employee
Director ceases to be a director for any reason, during which period any
installments which first become exercisable may thereafter be exercised.
(e) Options Nonassignable and Nontransferable. Options granted
under the Director Plan are not transferable by the Director otherwise
than by will or the laws of descent and distribution and are exercisable
during the Director's lifetime only by the Director; except that with the
consent of the Board of Directors, this Option may be transferred to a
family member or a trust, partnership or the like for the benefit of the
Director or such family members. No assignment or transfer of this
option, or of the rights represented thereby, whether voluntary or
involuntary, by operation of law or otherwise, except by will or the laws
of descent and distribution, shall vest in the assignee or transferee any
interest or right herein whatsoever, but immediately upon any attempt to
assign or transfer this option, the same shall terminate and be of no
force or effect.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION: (1)
The aggregate number of shares of stock on which option awards under the
Director Plan may be granted to persons participating under the Director 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 be proportionately adjusted for any increase or decrease in
the number of issued shares of 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 Board of Directors
as necessary or appropriate to reflect the transaction and as permitted under
applicable securities and tax laws.
If the Company shall be a party to any merger or consolidation (whether
or not the Company is the surviving or resulting entity), then automatically
following the transaction and without further action on the part of the
company or the successor, any award granted shall pertain to and apply soley
to the securities or other form of consideration to which a holder of the
number of shares of Stock subject to the award would have been entitled in the
transaction.
7. EFFECTIVE DATE OF THE DIRECTOR PLAN:
The Director Plan shall become effective upon its adoption by the Board
of Directors and subsequent approval by a majority of the votes cast in person
or by proxy at a meeting of the stockholders of the Company held within 12
months of the action of the Board of Directors described above.
8. TERMINATION DATE:
No options may be granted under the Director Plan after December 31,
2007. Subject to paragraph 5(d), options granted before December 31, 2007
under the Director Plan may be exercised after that date in accordance with
their terms.
9. AMENDMENT:
This Director Plan may be amended, suspended, terminated or restated, in
whole or in part, at any time by the Board of Directors; provided, however,
that any provisions of this Plan regarding the amount and price of options to
be awarded to Non-Employee Directors and the timing of awards, or that which
may be deemed to set forth a formula that determines the amount, price, and
timing of awards may not be amended more than once every six months, other
than to comport with any changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules under such statutes; and,
provided further, however, that no such amendment shall become effective
without the approval of the stockholders of the Company to the extent
stockholder approval is required in order to comply with Rule 16b-3 of the
Securities Exchange Act of 1934.
10.COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the Director Plan
shall be subject to any and all requirements and restrictions that may, in the
opinion of the Board, be necessary or advisable for the purposes of complying
with any statute, rule or regulation of any governmental authority, or any
agreement, policy or rule of any stock exchange or other regulatory
organization governing any market on which the Stock is traded.
(1) All share amounts under this Director Plan will be proportionately
adjusted if the 2 for 1 stock split recommended in this proxy
statement is approved.
11.MISCELLANEOUS:
(a) Expenses. The Company shall bear all expenses and costs in
connection with the administration of the Director Plan.
(b) Applicable Law. The validity, interpretation and
administration of this Plan and any rules, regulations, determinations or
decisions made hereunder, and the rights of any and all persons having or
claiming to have any interest herein or hereunder, shall be determined
exclusively in accordance with the laws of the State of Maryland, without
regard to the choice of the laws' provisions thereof.
(c) Headings. The headings herein are for reference purposes only
and shall not affect the meaning or interpretation of the Director Plan.
(d) Notices. All notices or other communications made or given
pursuant to this Director Plan shall be in writing and shall be
sufficiently made or given if hand-delivered or mailed by certified mail,
addressed to any Non-Employee Director at the address contained in the
records of the Company or to the Company at its principal office.
(e) Federal Securities Law Requirement. Awards granted hereunder
shall be subject to all conditions required under Rule 16b-3 to qualify
the award for any exception from the provisions of Section 16(b) of the
Securities Exchange Act of 1934 available under that Rule.
