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 ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SCOTT & STRINGFELLOW FINANCIAL, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) 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:
<PAGE>
Scott & Stringfellow Financial, Inc.
909 East Main Street
Richmond, Virginia 23219
Notice of 1997 Annual Meeting of Shareholders
TO SHAREHOLDERS OF SCOTT & STRINGFELLOW FINANCIAL, INC.:
The 1997 Annual Meeting of Shareholders of Scott & Stringfellow
Financial, Inc. (the "Company") will be held at the Crestar Bank Building, 4th
Floor, 919 East Main Street, Richmond, Virginia, on Tuesday, October 21, 1997,
at 4:30 p.m., Eastern Daylight Time, for the following purposes:
1. To elect four directors for three-year terms.
2. To ratify the selection by the Board of Directors of KPMG Peat
Marwick LLP as independent certified public accountants of the Company for the
fiscal year ending June 26, 1998; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of shares of Common Stock at the close of
business on September 12, 1997, will be entitled to vote at the meeting and any
adjournments thereof. Your attention is directed to the accompanying Proxy
Statement and 1997 Annual Report.
All Shareholders are cordially invited to attend the meeting. Whether
or not you plan to attend the meeting, it is important that your shares be
represented and voted at the meeting. Please promptly vote, date, sign, and
return the enclosed proxy card using the envelope provided.
Thank you.
By Order of the Board of Directors,
DAVID PLAGEMAN
Executive Vice President and Secretary
September 23, 1997
<PAGE>
Scott & Stringfellow Financial, Inc.
909 East Main Street
Richmond, Virginia 23219
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement, mailed to shareholders on or about September 23,
1997, is furnished in connection with the solicitation by Scott & Stringfellow
Financial, Inc. (the "Company") of proxies in the accompanying form for use at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held on October
21, 1997, and at any adjournments thereof. A copy of the Annual Report of the
Company for the fiscal year ended June 27, 1997, has been mailed to you with
this Proxy Statement.
In addition to the solicitation of proxies by mail, the Company's officers
and regular employees, without compensation other than regular compensation, may
solicit proxies by telephone, telegraph, and personal interview.
The Company will bear the cost of all solicitation.
On September 12, 1997, the date for determining shareholders entitled to
vote at the meeting, there were 3,160,349 shares of common stock of the Company
("Common Stock") outstanding and entitled to vote. Each such share of Common
Stock entitles the holder thereof to one vote.
Any shareholder giving a proxy may revoke it at any time before it is
voted. A proxy may be revoked by filing with the Secretary of the Company
written notice of revocation bearing a later date than the proxy, by duly
executing a later dated proxy relating to the same shares, or by attending the
Annual Meeting and voting in person. A proxy, if executed and not revoked, will
be voted for the election of the nominees for director named herein and for the
ratification of KPMG Peat Marwick LLP as independent certified public
accountants of the Company unless such proxy contains specific instructions to
the contrary, in which event it will be voted in accordance with such
instructions.
Except for the election of directors, action on matters submitted to a
vote of the shareholders at the meeting will be approved if a quorum is present
and the votes cast in favor of the matter constitute a majority of the shares
represented at the meeting and entitled to vote. With respect to the election of
directors, the four nominees receiving the greatest number of votes cast for the
election of directors will be deemed elected even though not receiving a
majority, assuming a quorum is present at the meeting. Presence in person or by
proxy of a majority of the outstanding shares of Common Stock entitled to vote
at the meeting will constitute a quorum. Shares for which the holder has elected
to abstain or withhold the proxies' authority to vote (including broker
non-votes) on a matter will count towards a quorum but will have no effect on
the action taken with respect to such matter.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for three classes of
directors with staggered terms of office and provide that upon the expiration of
the term of office for a class of directors, nominees for that class shall be
elected for a term of three years. At this year's Annual Meeting, Frederic Scott
1
<PAGE>
Bocock, R. Bruce Campbell, R.Gordon Smith, and Steven C. DeLaney are nominees
for re-election for three-year terms as directors. Proxies may not be voted for
a greater number of persons than the number of nominees named herein.
Although the Company anticipates that all of the nominees will be able to
serve, if at the time of the meeting any nominees are unable or unwilling to
serve, shares represented by properly executed proxies will be voted at the
discretion of the persons named therein for such other person or persons as the
Board of Directors may designate.
The Company was formed in 1984 for the purpose of becoming the holding
company of Scott & Stringfellow, Inc. ("Scott & Stringfellow"). Accordingly, all
service by the Company's officers and directors prior to 1984 refers to service
as an officer or director of Scott & Stringfellow.
The following contains certain information concerning the nominees for
election and those directors whose terms continue beyond the date of the Annual
Meeting.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ALL OF THE
NOMINEES.
Nominees for Election for Three-Year Terms
Frederic Scott Bocock, age 65, Vice Chairman of the Board of Directors, has
served as a director of the Company since 1974 and is a member of the Executive
Committee. He also serves as Chairman of Scott & Stringfellow Capital
Management, an investment advisory subsidiary of the Company. Mr. Bocock, a
first cousin of Mr. Scott (see below), joined Scott & Stringfellow in 1957.
R. Bruce Campbell, age 57, joined Scott & Stringfellow in 1971 and has served as
a director of the Company since 1978. Mr. Campbell is an Investment Broker and
has was named a Senior Vice President in 1987. Mr. Campbell serves as Branch
Manager of the Staunton office and Regional Manager for the Blue Ridge Region.
R. Gordon Smith, age 59, has served as a director of the Company since 1987. He
is a partner in the law firm of McGuire, Woods, Battle & Boothe, LLP, which
serves as General Counsel to the Company, and a director of Trigon Healthcare,
Inc..
Steven C. DeLaney, age 43, has served as a director of the Company since 1995.
Mr. DeLaney serves as Executive Vice President and Director of Capital Markets
with overall responsibility for the research, investment banking, institutional
sales, and trading functions of the Company. Mr. DeLaney served as Chief
Financial Officer of the Company from 1992 to 1995. Prior to joining the Company
in 1992, Mr. DeLaney was a senior financial executive for a diversified
financial services company for fifteen years. Mr. DeLaney is a member of the
Executive Committee.
2
<PAGE>
Directors Continuing in Office
Directors whose terms expire in 1998
William P. Schubmehl, age 65, joined Scott & Stringfellow in 1978 and has served
as a director of the Company since 1981. Mr. Schubmehl served as President and
Chief Executive Officer of the Company from 1992 through 1995. Prior to his term
as President, Mr. Schubmehl served the Company as Executive Vice President from
1990 until April 1992, and as Senior Vice President from 1986 to 1990, during
which periods he had primary responsibility for branch administration and retail
sales. Mr. Schubmehl is currently an Investment Broker and serves as Vice
Chairman of Scott & Stringfellow.
Robert L. Hintz, age 67, has served as a director of the Company since 1989. He
is Chairman of the Board of R. L. Hintz and Associates, a management consulting
firm. He was an Executive Vice President of CSX Corporation from 1984 to 1988,
during which time he held the additional positions of Chief Executive Officer of
CSX Energy and Property Groups, 1985-1988, and Chairman and Chief Executive
Officer of Sea-Land Corporation, 1987-1988. Mr. Hintz is a director of Reynolds
Metals Company, Chesapeake Corporation, and Ashland Coal, Inc.
David Plageman, age 57, has served as a director of the Company since 1976. He
has served as Executive Vice President and Secretary of the Company since 1984.
Mr. Plageman, an Investment Broker, joined Scott & Stringfellow in 1974.
John Sherman, Jr., age 51, has served as a director of the Company since1995.
Mr. Sherman was elected President and Chief Executive Officer of the Company in
January 1996. Prior to that, he served as Executive Vice President and Chief
Operating Officer during 1995 , Senior Vice President for Branch Administration
from 1993 to 1995, and Branch Manager of the Kinston, N.C. office from 1988,
upon joining the Company, until 1993. Mr.
Sherman is a member of the Executive Committee.
Directors whose terms expire in 1999
Sidney Buford Scott, age 64, has served as Chairman of the Board of the Company
since 1974. Mr. Scott, a first cousin of Mr. Bocock (see above), joined Scott &
Stringfellow in 1958. He is a member of the Executive Committee, and serves as a
Director of Ethyl Corporation.
John J. Muldowney, age 58, has served as a director of the Company since 1974.
Mr. Muldowney, an Investment Broker and Chairman of the Credit Committee, joined
Scott & Stringfellow in 1970 and was named Senior Vice President in 1980. Prior
to January 1994, Mr. Muldowney also served as head of the Over-the-Counter
Trading Department.
William W. Berry, age 65, has served as a director of the Company since June of
1993. He is retired from the position of Chairman of the Board of Dominion
Resources, Inc., which he held from May 1990 to December 1992. Prior to May
1990, he served as Chairman of the Board and Chief Executive Officer of Dominion
Resources since July 1986. Mr. Berry is a director of Ethyl Corporation and
Universal Corporation.
3
<PAGE>
William F. Calliott, age 53, has served as a director of the Company since
October 1993. He has been an Executive Vice President and director of Scott &
Stringfellow since the 1989 acquisition of Investment Corporation of Virginia,
which he joined in 1967. Mr. Calliott is an Investment Broker in Scott &
Stringfellow's Norfolk office.
CERTAIN INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
Committees of the Board and Board Meetings
The Board of Directors held 12 meetings during the fiscal year ended June
27, 1997. All directors attended at least 75% of the aggregate of the meetings
of the Board and the meetings of all committees thereof on which they serve.
Messrs. Scott, Bocock, Sherman and DeLaney serve on the Executive
Committee, which held approximately 50 meetings during fiscal 1997. The
Executive Committee is empowered to exercise all of the authority of the Board
of Directors during the interim between Board meetings, subject to the
limitations of the Virginia Stock Corporation Act.
Messrs. Plageman, Sherman, Berry, Hintz, and Smith serve on the Audit
Committee, which held 3 meetings during fiscal 1997. The Audit Committee meets
with the Company's internal auditing staff and reports to the Board with respect
to various auditing and accounting matters, including the selection and fees of
the Company's independent auditors, the scope of audit procedures, the nature of
services to be performed by the independent auditors, and the Company's
accounting practices.
The Board has established two standing committees which administer and
monitor certain executive and management compensation programs. These committees
are the Compensation Committee and the Stock Option Committee, each consisting
of Messrs. Berry, Hintz, and Smith.
For additional information on these two committees and the compensation
programs which they administer, see the section of this Proxy Statement entitled
Committee Report on Executive Compensation.
The Company does not have a standing Nominating Committee.
Compensation of Directors
Directors who are employees of the Company receive no fees for serving as
directors or for serving on any committee of the Board. Any director who is not
an employee of the Company receives an annual directors' fee of $6,000, in the
form of Scott & Stringfellow Financial, Inc. Common Stock, and an additional fee
of $500 for each Board of Directors' meeting which they attend.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL
STOCKHOLDERS
The following table sets forth information regarding shares of Common
Stock beneficially owned as of September 12, 1997 by (I) each person who is
known by the Company to beneficially own more than 5% of the outstanding shares
of Common Stock; (ii) each director and nominee for director of the Company; and
(iii) the directors and executive officers as a group. Unless otherwise noted,
each individual has sole voting power and sole investment power with respect to
the number of shares set forth opposite his name. The address of Mr. Bocock and
Mr. Scott is 909 East Main Street, Richmond, Virginia 23219. The address of Mr.
Kellogg is c/o Spear, Leeds & Kellogg, 120 Broadway, New York, New York 10271.
<TABLE>
<CAPTION>
<S> <C>
Percent of
Name Number of Shares (1) Outstanding Shares
---- ------ -- ------ --- ----------- ------
Peter R. Kellogg (2) 375,000 11.9%
Frederic Scott Bocock (3) 292,860 9.2
Sidney Buford Scott (4) 227,976 7.2
John J. Muldowney 128,916 4.1
David Plageman (5) 65,505 2.1
William F. Calliott 58,709 1.9
John Sherman, Jr. (6) 42,963 1.4
R. Bruce Campbell (7) 42,200 1.3
Steven C. DeLaney (6) 20,887 0.7
William P. Schubmehl 13,170 0.4
Robert L. Hintz 9,325 0.3
R. Gordon Smith 7,525 0.2
William W. Berry 3,925 0.1
All directors and executive officers
as a group (20 persons) (6) 975,075 30.4
</TABLE>
(1) Beneficial ownership shown for the following individuals and group
includes the indicated number of shares of Common Stock that may be
purchased upon the exercise of stock options which are exercisable within
the next sixty days: Mr. Bocock (8,460), Mr. Scott (5,760), Mr. Muldowney
(2,916), Mr. Calliott (8,160), Mr. Plageman (1,680), Mr. Campbell
(5,700), Mr. Sherman (3,162), Mr. DeLaney (2,730), Mr. Schubmehl (1,080)
and all directors and executive officers as a group (47,700).
(2) Information concerning the shares owned by Mr. Kellogg was derived
from a Form 4 filed with the Securities and Exchange Commission on March
7, 1995. According to this filing, Mr. Kellogg owns 90,000 shares
directly. He also indirectly controls: 142,500 shares owned by IAT
Reinsurance Syndicate Ltd., a Bermuda corporation of which he is the sole
holder of voting stock; 90,000 shares owned by his wife; and 52,500
shares owned by a family trust of which he is a trustee. Mr. Kellogg
disclaims beneficial ownership of the shares owned by the corporation,
his wife, and the trust.
(3) Includes 219,000 shares owned by Mr. Bocock's children and trusts for
his children, as to which shares Mr. Bocock disclaims beneficial
ownership.
5
<PAGE>
(4) Includes 30,316 shares owned by Mr. Scott's wife and children, as to
which shares Mr. Scott disclaims beneficial ownership.
(5) Includes 3,300 shares owned by Mr. Plageman's children as to which
Mr. Plageman shares voting and/or investment power.
(6) Includes shares purchased pursuant to the Management Stock Purchase
Loan Plan for the following individuals: Mr. Sherman -- 17,940 shares;
Mr. DeLaney -- 16,440 shares, and all directors and executive officers as
a group -- 67,320 shares.
(7) Includes 19,500 shares owned by Mr. Campbell's wife, as to which
shares Mr. Campbell disclaims beneficial ownership.
EXECUTIVE COMPENSATION
The following table provides information concerning the compensation and
stock option grants received by the Company's Chief Executive Officer and
each of its four other most highly compensated executive officers for the
fiscal year ended June 27, 1997, and for each of the two previous fiscal
years.
<TABLE>
<CAPTION>
<S> <C>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation All Other
Name and Other Annual Options Compensation
Principal Position Year Salary Bonus (1) Compensation (2) Granted (#) (3)(4)(5)
--------- -------- ---- ------ --------- ---------------- ----------- ---------
John Sherman, Jr. 1997 $184,769 $163,731 $3,889 0 $42,453
President and 1996 149,054 98,678 12,072 2,500 45,866
Chief Executive Officer 1995 110,000 90,000 13,337 2,500 28,073
Frederic Scott Bocock 1997 40,000 207,357 2,810 0 285,205
Vice Chairman 1996 40,000 139,500 1,776 0 249,381
1995 40,000 94,195 2,106 0 222,868
Steven C. DeLaney 1997 139,259 134,640 2,128 0 13,141
Executive Vice President 1996 107,500 106,500 204 2,500 9,046
1995 90,000 73,000 1,581 2,500 7,575
Charles E. Mintz 1997 128,731 114,695 11,560 0 13,189
Senior Vice President 1996 94,382 57,849 9,918 2,500 16,050
1995 10,833 0 22,855 1,200 89,874
William F. Gunter (6) 1997 104,769 158,864 2,650 0 16,643
1996 - - - - -
1995 - - - - -
</TABLE>
6
<PAGE>
(1) The Company pays discretionary cash bonuses to executive and management
personnel based on individual performance and Company financial results. See
Committee Report on Executive Compensation -- Cash Bonuses. Included in the
amounts shown as Bonus for 1997 are the following discretionary cash bonuses:
Mr. Sherman -- $163,731; Mr. Bocock -- $118,321; Mr. DeLaney -- $134,640; and
Mr. Mintz -- $114,695. The 1997 Bonus amounts also include certain bonuses
paid to the following officers based on individual department results: Mr.
Bocock -- $89,036; and Mr. Gunter -- $158,864.
(2) Included in Other Annual Compensation for 1997 are amounts representing
forgivable loan expense for Mr. Sherman in the amount of $1,389 and for Mr.
Mintz in the amount of $8,333. Also included are the following amounts
representing non-cash awards and other miscellaneous perquisites and
benefits: Mr. Sherman -- $2,500; Mr. Bocock -- $2,810; Mr. DeLaney -- $2,128;
Mr. Mintz -- $3,227; and Mr. Gunter -- $2,650.
(3) Included in All Other Compensation for fiscal 1997, the following amounts
of commissions and incentives earned from securities brokerage activities:
Mr. Sherman -- $29,319; Mr. Bocock -- $267,526; Mr. Mintz -- $4,604; and Mr.
Gunter -- $2,380.
(4) The Company has a voluntary contributory profit sharing plan that covers
substantially all employees. See Committee Report on Executive Compensation
-- Profit Sharing and Deferred Plans. Company contributions to the plan may
be in the form of either discretionary matching contributions or additional
discretionary contributions. Included in All Other Compensation for fiscal
year 1997 are the following amounts representing Company contributions to the
profit sharing plan: Mr. Sherman -- $8,179; Mr. Bocock -- $8,179; Mr. DeLaney
-- $8,179; Mr. Mintz -- $8,179; and Mr. Gunter -- $8,179.
(5) The Company has established a non-qualified deferred compensation plan
for selected highly-compensated employees. See Committee Report on Executive
Compensation -- Profit Sharing and Deferral Plans. Voluntary deferrals under
the deferred compensation plan during fiscal 1997 are included in the
category of compensation from which such deferrals were elected. Company
contributions under the deferred compensation plan for fiscal 1997 in the
following amounts are included in All Other Compensation: Mr. Sherman --
$4,955; Mr. Bocock -- $9,500; Mr. DeLaney -- $4,962; Mr. Mintz -- $406; and
Mr. Gunter -- $6,084.
(6) Prior to March 1997, Mr. Gunter was not an executive officer of the
Company. Accordingly, compensation information for Mr. Gunter for periods
prior to fiscal 1997 is not presented.
There were no stock options granted to the Company's five most
highly-compensated executive officers during the fiscal year ended June 27,
1997.
The following table provides information concerning any stock options
exercised during the fiscal year ended June 27, 1997 by the Company's five
most highly compensated executive officers and the value of their unexercised
stock options at June 27, 1997.
7
<PAGE>
AGGREGATE OPTION EXERCISES DURING FISCAL 1997
AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
<S> <C>
Number Of Value Of Unexercised
Unexercised Options At In-The-Money Options
Shares Acquired Value June 27, 1997 (#) At June 27, 1997 (1)(2)
Name On Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
John Sherman, Jr. -- -- 3,162 9,378 $30,472 $84,477
Frederic Scott Bocock -- -- 8,460 1,440 96,436 13,875
Steven C. DeLaney -- -- 2,730 9,270 26,512 83,487
Charles E. Mintz -- -- 720 5,730 6,945 49,280
William F. Gunter -- -- 1,590 2,430 15,255 22,270
</TABLE>
(1) The closing price of the Company's Common Stock was $17.50 per share on
June 27, 1997.
(2) The value of unexercised options is determined by the difference between
the fair market value of the option shares ($17.50 per share) and the
exercise prices of the options held at June 27, 1997.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Company has granted authority to three
committees to administer the various forms of compensation paid to executive
officers. These committees include the Compensation Committee, the Stock Option
Committee, and the Executive Committee (collectively, the "Committees"). The
recommendations of each of these Committees are reviewed and approved by the
full Board of Directors.
The Committees
The Compensation Committee consists of the three outside directors: Mr.
Berry, Mr. Hintz, and Mr. Smith. The primary function of this committee is to
recommend to the Board of Directors the amount of any discretionary annual
bonuses paid to each executive officer under the Company's executive and
management bonus plan.
The Stock Option Committee is responsible for the granting of stock option
awards to executive officers and other employees under the Company's Stock
Option Plan. This committee is comprised of the three outside directors: Messrs.
Berry, Hintz and Smith.
The Executive Committee has the responsibility for determining the base
salary to be paid to each executive officer except Mr. Scott, Mr. Bocock, and
Mr. Sherman, whose salaries are set by the Board of Directors. In addition, the
Executive Committee makes a recommendation to the Board of Directors with
respect to the annual discretionary contribution to the Company's profit sharing
plan, and determines which executive officers and other employees are eligible
to participate in the deferred compensation plan.
8
<PAGE>
General Objective
The Company believes that maintaining and motivating a highly qualified
management team is essential for the continued growth and prosperity of the
Company, and will inure to the benefit of the shareholders. The objective of the
Company's compensation programs is to provide its executive officers with both a
short-term incentive for maintaining and improving the profitability of the
Company, and a long-term incentive aligned with the interests of the
shareholders. Accordingly, the Company's compensation program consists of five
principal components: base salary, annual cash bonus, profit sharing
contributions, non-qualified deferred compensation, and stock option awards.
However, stock option awards were generally discontinued with the expiration of
the Company's Stock Option Plan on October 31, 1996, with the exception of a
limited number of non-qualified stock options granted in connection with the
recruitment of new employees.
Base Salary
The Company strives to maintain base salaries for full-time management at
levels which are generally competitive with the marketplace. Annual increases in
base salary are determined largely by individual performance. Given the
relatively cyclical nature of the securities industry, the Company attempts to
limit its exposure to fixed salary expense by providing its executives with the
opportunity for additional cash bonus payments when the Company's performance
dictates.
Annual Cash Bonus
The Company has traditionally established a calendar year cash bonus pool
based largely on Company financial performance. Individual awards made from this
bonus pool are determined by the Compensation Committee with input from
executive management and are based on factors such as individual and
departmental performance and length of service. In the year ended June 27, 1997,
total cash bonus awards of $991,570 were paid to a total of 19 individuals. This
total bonus amount was equivalent to 12% of operating income before
discretionary compensation and income taxes for calendar year 1996.
Profit Sharing and Deferral Plans
The Company maintains a voluntary contributory profit sharing plan which
covers substantially all of its employees. At its discretion, the Company may
make both matching contributions on employee contributions and additional
contributions based on Company performance. Employee participants may contribute
up to 15% of their earnings to the plan per year, subject to a maximum Internal
Revenue Code limitation. For the year ended June 27, 1997, the Company's
contributions to the profit sharing plan included matching contributions of
approximately $351,000, and an additional discretionary contribution of
approximately $1,479,000. The additional discretionary contribution was
equivalent to approximately 18% of operating income before discretionary
compensation and income taxes for calendar 1996.
In addition, the Company has established the Scott & Stringfellow, Inc.
Deferral Plan for selected highly compensated employees. This non-qualified and
unfunded deferred compensation plan allows participants to defer compensation
and to receive discretionary profit sharing contributions beyond the Internal
Revenue Code limitations governing the Company's profit sharing plan. For the
year ended June 27, 1997, the Company's expense pursuant to the deferral plan,
which covers 68 employees, was approximately $807,000.
9
<PAGE>
Stock Option Plan
The Stock Option Committee generally awards stock option grants on an
annual basis to those officers and employees of the firm who have contributed to
the growth and profitability of the Company and who can be expected to continue
to make such contributions in the future. Under the terms of the Company's Stock
Option Plan, the option price may not be less than the fair market value of the
stock on the date of grant. Options are generally granted with ten-year terms
and are subject to vesting over a six-year period. In the year ended June 27,
1997, options to acquire a total of 206,250 shares of common stock at a weighted
average exercise price of $11.74 per share were granted to a total of 42
officers and employees. The Company's Stock Option Plan expired on October 31,
1996. Accordingly, no additional grants of stock options under the Stock Option
Plan are expected.
SUBMITTED BY THE FOLLOWING COMMITTEES
OF THE COMPANY'S BOARD OF DIRECTORS:
Compensation Committee Stock Option Committee
William W. Berry William W. Berry
Robert L. Hintz Robert L. Hintz
R. Gordon Smith R. Gordon Smith
Executive Committee
Sidney Buford Scott
Frederic Scott Bocock
John Sherman, Jr.
Steven C. DeLaney
STOCK PERFORMANCE GRAPH
The following graph and table compare the cumulative total shareholder
return on the Company's Common Stock for the last five fiscal years with the
cumulative total return of the NASDAQ Market Value Index and the cumulative
total return of a Peer Group Index consisting of eleven (11) publicly-held,
regional investment companies, which management believes are relatively
comparable to the Company. The peer group index, which is weighted by market
value, consists of the Common Stock of the following companies:
A.G. Edwards, Inc. Morgan Keegan, Inc.
Alex. Brown Inc. Piper Jaffray Companies
First Albany Companies Inc. Raymond James Financial, Inc.
Interstate/Johnson Lane, Inc. Scott and Stringfellow Financial, Inc.
Legg Mason, Inc. The Ziegler Company, Inc.
McDonald & Company Investments, Inc.
The graph and table assume that $100 was invested on June 26, 1992, in the
Company's Common Stock, the NASDAQ Market Index and the peer group index, and
that all dividends were reinvested over the ensuing 5-year period.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Fiscal Year Ended June,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Scott and Stringfellow Financial $100 $122 $118 $131 $182 $296
NASDAQ Market Index $100 $123 $135 $158 $199 $239
Selected Peer Group Index $100 $135 $133 $187 $226 $392
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS
Certain directors and executive officers maintain margin accounts with
Scott & Stringfellow. Such extensions of credit are made in the ordinary course
of business, on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and
do not involve more than the normal risk of collectability or present other
unfavorable features.
McGuire, Woods, Battle & Boothe, L.L.P., of which R. Gordon Smith is a
partner, serves as General Counsel to the Company and its subsidiaries. R.
Gordon Smith is a Director of the Company.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
designated KPMG Peat Marwick LLP to serve as the independent certified public
accountants of the Company for its fiscal year ending June 26, 1998, and has
directed a vote of shareholders to be taken to ascertain their approval or
disapproval of that designation. In the event the shareholders do not ratify the
appointment of KPMG Peat Marwick LLP, the election of other independent
certified public accountants will be considered by the Board of Directors.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 26, 1998.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting. He will have an opportunity to make a statement if he so desires
and will be available to answer appropriate questions from shareholders.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
If any other matters should properly come before the meeting, and any
adjournment thereof, it is the intention of the persons named in the
accompanying Proxy to vote such Proxy in the manner they deem best.
PROPOSALS FOR THE 1998 ANNUAL MEETING
Any shareholder desiring to make a proposal to be acted upon at the 1998 Annual
Meeting of Shareholders must present such proposal to the Company at its
principal office in Richmond, Virginia, no later than May 26, 1998, in order for
the proposal to be considered for inclusion in the Company's Proxy Statement.
SIDNEY BUFORD SCOTT
Chairman of the Board
12
<PAGE>
SCOTT & STRINGFELLOW FINANCIAL, INC.
PROXY MATERIAL SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 21, 1997
The undersigned hereby appoints David Plageman and John J. Muldowney (each
with power to act alone and with power of substitution) as Proxies, and hereby
authorizes them to represent and vote, as directed herein, all of the shares of
Common Stock of Scott & Stringfellow Financial, Inc. held of record by the
undersigned on September 12, 1997, at the Annual Meeting of Shareholders to be
held on October 21, 1997, and any adjournment thereof.
This proxy when properly executed will be voted in the manner described
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR each of the nominees named in proposal 1 and FOR proposal 2.
(Continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
SCOTT & STRINGFELLOW FINANCIAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 21, 1997
The undersigned hereby instructs the Trustee to vote all shares of Common
Stock of Scott & Stringfellow Financial, Inc. held of record by the undersigned
on September 12, 1997, and credited to my account under the Employee Stock
Purchase Plan, at the Annual Meeting of Shareholders to be held on October 21,
1997, and any adjournment thereof.
This proxy when properly executed will be voted as you specify, provided
written instructions are received by the Trustee by October 17, 1997. If no
direction is made, this proxy will be voted FOR each of the nominees named in
proposal 1 and FOR proposal 2.
YOUR VOTING INSTRUCTIONS WILL BE KEPT CONFIDENTIAL
(Continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
Please mark
your vote as [ X ]
indicated in
this example
1. ELECTION OF DIRECTORS for the terms set forth in the Proxy Statement.
Frederic Scott Bocock, R. Bruce Campbell, R. Gordon Smith, Steven C. DeLaney
FOR all WITHHOLD (INSTRUCTIONS: to withhold authority
nominees listed AUTHORITY to vote for any individual nominee,
(except as marked to vote for all write that nominee's name on the
to the contrary) nominees listed line provided below.)
[ ] [ ] ------------------------------------
2. To ratify the election of KPMG Peat Marwick LLP as independent certified
public accountants for the fiscal year ending June 26, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears to the left. Executors, trustees, etc.
should so indicate when signing. If a corporation, sign in full corporate name
by authorized officer. If a partnership, sign in partnership name by authorized
person.
- - ---------------------------------------------
(Signature)
- - ---------------------------------------------
(Signature)
Dated: _________________________________ 1997
Please date, sign and return this Proxy in the enclose envelope.
FOLD AND DETACH HERE
