September 9, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Discount Brokers Group, Inc. - Definitive Proxy Statement for 1998
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Dear Sir/Madam:
Enclosed for filing is the Definitive Proxy Statement for the 1998
Annual Meeting of Stockholders of National Discount Brokers Group, Inc. pursuant
to Rule 14a-6(a) of the Securities Exchange Act of 1934, as amended.
If you have any questions or comments regarding this filing, please
call me at (201) 946-4413 or Frank E. Lawatsch, Jr. at (973) 596-4637.
Very truly yours,
Laura Singer, Esq.
Enclosures
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
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
Preliminary Proxy Statement
oConfidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL DISCOUNT BROKERS GROUP, INC.
- --------------------------------------------------------------------------------
Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
o 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:
N.A.
2) Aggregate number of securities to which transaction applies:
N.A.
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):
N.A.
4) Proposed maximum aggregate value of transaction:
N.A.
5) Total fee paid:
N.A.
Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
o 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>
National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, New Jersey 07302
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Notice Of Annual Meeting Of Stockholders
To Be Held October 20, 1998
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The 1998 Annual Meeting of the Stockholders of National Discount Brokers Group,
Inc. (the "Company") will be held at the Company's offices at 10 Exchange Place
Centre, Jersey City, New Jersey 07302, 15th Floor, on October 20, 1998 at 4:00
p.m., New Jersey time for the following purposes:
(1) To elect three Class 2 directors to hold office for a term
of three years or until their successors have been duly
elected and qualified.
(2) To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending May
31, 1999.
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on August 28, 1998, as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof.
Your attention is directed to the accompanying Proxy Statement for further
information regarding each proposal to be made.
All stockholders are asked to complete, sign and date the enclosed proxy and
return it promptly by mail in the enclosed self-addressed envelope, which does
not require postage if mailed in the United States.
By Order of the Board of Directors
Dennis Marino
Secretary
September 9, 1998
Jersey City, New Jersey
<PAGE>
National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, New Jersey 07302
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Proxy Statement For Annual Meeting
------------------------------------------------------------------
This Proxy Statement is furnished by the Board of Directors (the "Board of
Directors") of National Discount Brokers Group, Inc., a Delaware corporation
(the "Company"), in connection with the solicitation of proxies to be used at
the Annual Meeting of Stockholders (the "Meeting") to be held at the Company's
offices at 10 Exchange Place Centre, Jersey City, New Jersey 07302, 15th Floor,
on October 20, 1998 at 4:00 p.m. New Jersey time, and at any adjournment
thereof. This Proxy Statement and the accompanying Annual Report, Notice and
Proxy are being mailed to stockholders on or about September 9, 1998. The
principal executive offices of the Company are located at the address indicated
above.
Only stockholders of record at the close of business on the record date, August
28, 1998 (the "Record Date"), will be entitled to vote at the Meeting and at all
adjournments thereof.
On August 28, 1998, there were outstanding and entitled to vote 14,024,618
shares of the Company's common stock, $.01 par value per share (the "Common
Stock"). Each outstanding share of Common Stock is entitled to one vote on each
matter to be voted upon. A majority of the shares of Common Stock entitled to
vote at the Meeting will constitute a quorum for the transaction of business.
Holders of Common Stock have no cumulative voting rights.
Voting Of Proxies
If a proxy is properly signed by a stockholder and is not revoked, the shares
represented thereby will be voted at the Meeting in the manner specified on the
proxy, or if no manner is specified with respect to any matter therein, such
shares will be voted by the persons designated therein (with respect to the
matters as to which the stockholder is entitled to vote) (a) "FOR" the election
of each of Arthur Kontos, Richard J. Marino and Ralph N. Del Deo as Class 2
directors of the Company, (b) "FOR" the ratification of the appointment of KPMG
Peat Marwick LLP as the Company's independent auditors for the fiscal year
ending May 31, 1999, and (c) in connection with the transaction of such other
business as may properly be brought before the Meeting, in accordance with the
judgment of the person or persons voting the proxy. If any of the nominees for
director is unable to serve or for good cause will not serve, an event that is
not anticipated by the Company, the shares represented by the accompanying proxy
will be voted for a substitute nominee designated by the Board of Directors or
the Nominating Committee thereof or the Board of Directors may determine to
reduce the size of the Board of Directors.
A proxy may be revoked by the stockholder at any time prior to the voting
thereof by giving notice of revocation in writing to the Secretary of the
Company, by duly executing and delivering to the Secretary of the Company a
proxy bearing a later date or by voting in person at the Meeting.
Directors of the Company will be elected by a plurality of the vote of the
outstanding shares of Common Stock present, in person or by proxy, and entitled
to vote at the Meeting. The affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock present, in person or by
proxy, and entitled to vote at the Meeting is required for the ratification and
approval of any other matter which may be put to a stockholder vote at the
Meeting, unless otherwise required by the Delaware General Corporation Law or
the Company's Restated Certificate of Incorporation, as amended. Except for the
election of directors, as to any particular proposal, abstentions will have the
same effect as a vote against that proposal, and broker non-votes will not be
counted as votes for or against the proposal, and will not be included in
counting the number of votes necessary for approval of the proposal. Votes cast,
either in person or by proxy, will be tabulated by American Stock Transfer &
Trust Company, the Company's transfer agent.
Voting Securities and Principal Holders Thereof
Security Ownership Of Certain Beneficial Owners
The following table sets forth certain information, as of August 28, 1998,
regarding the beneficial ownership of the Common Stock by each person known by
the Company to be the beneficial owner of more than five percent of the
outstanding shares of the Common Stock. The Company has been advised that each
stockholder listed below has sole voting and dispositive power with respect to
such shares unless otherwise noted in the footnotes following the table.
<TABLE>
<CAPTION>
Name and Address Amount
of Beneficial Owner Of Beneficial Ownership Percentage of Class
<S> <C> <C>
S.G.I. Partners, L.P.
120 Broadway
New York, NY 10271 4,000,000 28.52%
Carl H. Hewitt
120 Broadway
New York, NY 10271 4,000,000 (1) 28.52%
Arthur Kontos
10 Exchange Place
Centre 2,881,100 (2) 20.26%
Jersey City, NJ 07302
Peter R. Kellogg
120 Broadway
New York, NY 10271 2,665,200 (3) 19.00%
<FN>
(1) Comprised of 4,000,000 shares of Common Stock held by S.G.I. Partners, L.P. ("S.G.I."). See "Certain
Relationships and Related Transactions."
</FN>
<FN>
(2) Comprised of 1,337,854 shares of Common Stock held by Mr. Kontos and
197,387 shares of Common Stock underlying Mr. Kontos' currently
exercisable stock options. Also includes 125,000 shares of Common Stock
held by the Arthur Kontos Foundation, 778,562 shares of Common Stock held
by limited partnerships of which Mr. Kontos is the general partner and Mr.
Kontos' children are sole limited partners, and 442,297 shares over which
he has sole voting power which are subject to a voting trust agreement
with his former wife.
</FN>
<FN>
(3) Comprised of 793,700 shares of Common Stock held by Mr. Kellogg, 1,850,000
shares of Common Stock held by IAT Reinsurance Syndicate Ltd., a
corporation, all of whose voting stock is held by Mr. Kellogg and of which
Mr. Kellogg is president, and 21,500 shares of Common Stock held by the
Cynthia and Peter Kellogg Foundation. Peter R. Kellogg is also a limited
partner of S.G.I and a Senior Managing Director of Spear, Leeds & Kellogg,
L.P. ("SLK"), a New York limited partnership.
</FN>
</TABLE>
Security Ownership of Management
The following table sets forth certain information, as of August 28, 1998,
regarding the beneficial ownership of the Common Stock by each director and
named executive officer (see "Compensation of Directors and Executive Officers")
of the Company and by all directors and executive officers as a group. The
Company has been advised that each stockholder listed below has sole voting and
dispositive power with respect to such shares unless otherwise noted in the
footnotes below. Sherwood Securities Corp. ("Sherwood Securities") is a
wholly-owned subsidiary of the Company specializing in the wholesale market
making of over-the-counter securities. Equitrade Partners ("Equitrade"), a New
York limited partnership, is an affiliate of the Company, which acts as a
specialist on The New York Stock Exchange. The Company and one of its wholly
owned subsidiaries own an aggregate of approximately 73% of the capital of
Equitrade.
<TABLE>
<CAPTION>
Amount
Name and Title Of Beneficial Ownership Percentage of Class
<S> <C> <C>
Arthur Kontos, 2,881,100 (1) 20.26%
Vice Chairman of the Board and Chief
Executive Officer of the Company
James H. Lynch, Jr., Chairman of the 35,000 *
Board and Director
John P. Duffy, Director 53,800 (2) *
Carl H. Hewitt, Director 4,000,000 (3) 28.52%
Dennis Marino, 218,698 (4) 1.56%
Executive Vice President and Chief
Administrative Officer of the Company;
Chairman of the Board and Chief
Executive Officer of National Discount
Brokers
Richard J. Marino, 607,635 (5) 4.33%
Chairman of the Board of Sherwood
Securities
Thomas W. Neumann, 224,810 (6) 1.59%
Executive Vice President of the Company;
President of Sherwood Securities
Ralph N. Del Deo, Director 30,000 (7) *
James Romano, 15,000 (8) *
Senior Vice President and Head of
Capital Markets of Sherwood Securities
Stephen J. DiLascio 1,000 *
Director, Managing General Partner of
Equitrade
All Directors and Executive Officers as 8,077,176 56.22%
a Group (12 persons) (9)
* Less than 1%
<FN>
(1) Consists of 1,337,854 shares of Common Stock held by Mr. Kontos,
197,387 shares of Common Stock underlying Mr. Kontos' currently
exercisable stock options, 125,000 shares of Common Stock held by the
Arthur Kontos Foundation, 778,562 shares of Common Stock held by
limited partnerships of which Mr. Kontos is the general partner and Mr.
Kontos' children are sole limited partners and 442,297 shares over
which he has only sole voting power which are subject to a voting trust
agreement with his former wife.
</FN>
<FN>
(2) Consists of 49,800 shares of Common Stock held by Mr. Duffy and
4,000 shares of Common Stock held in trust for Mr. Duffy's children.
</FN>
<FN>
(3) Consists of 4,000,000 shares of Common Stock held by S.G.I. See "Certain Relationships and Related
Transactions."
</FN>
<FN>
(4) Consists of 180,732 shares of Common Stock held by Mr. D. Marino
and 37,966 shares of Common Stock underlying Mr. D. Marino's currently
exercisable stock options.
</FN>
<FN>
(5) Consists of 597,466 shares of Common Stock held by Mr. R. Marino
and 10,169 shares of Common Stock underlying Mr. R. Marino's currently
exercisable stock options.
</FN>
<FN>
(6) Consists of 144,436 shares of Common Stock held by Mr. Neumann and
80,374 shares of Common Stock underlying Mr. Neumann's currently
exercisable stock options.
</FN>
<FN>
(7) Consists of 20,000 shares of Common Stock held by Mr. Del Deo and 10,000 shares of Common Stock
held by his wife.
</FN>
<FN>
(8) Consists of 5,000 shares of Common Stock held by Mr. Romano and
10,000 shares of Common Stock underlying Mr. Romano's currently
exercisable stock options.
</FN>
<FN>
(9) Includes 343,229 shares of Common Stock underlying stock options
exercisable within 60 days of August 28, 1998.
</FN>
</TABLE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, which became
effective on February 4, 1987, requires that the Board of Directors be divided
into three classes. In accordance with the Company's Restated Certificate of
Incorporation, at the 1987 annual meeting, Class 1 directors were initially
elected for a term that expired as of the 1988 annual meeting of the
stockholders of the Company, Class 2 directors were initially elected for a term
that expired as of the 1989 annual meeting of stockholders and Class 3 directors
were initially elected for a term that expired as of the 1990 annual meeting of
stockholders. At each annual meeting, directors will be elected for a term of
three years so that the term of office of one class of directors shall expire
each year.
Three individuals are being nominated for election at the Meeting to serve as
Class 2 directors for a term of three years or until the election and
qualification of their successors.
The affirmative vote of the holders of a plurality of the shares of Common
Stock voted in person or by proxy at the Meeting is required for the election of
each director. Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of Arthur Kontos, Richard J. Marino
and Ralph N. Del Deo. If Mr. Kontos, Mr. Marino or Mr. Del Deo becomes unable to
serve or for good cause will not serve, an event that is not anticipated by the
Company, (i) the shares represented by the proxies will be voted for a
substitute nominee or substitute nominees designated by the Board of Directors
or the Nominating Committee of the Board of Directors or (ii) the Board of
Directors may determine to reduce the size of the Board of Directors. At this
time, the Board of Directors knows of no reason why Mr. Kontos, Mr. Marino and
Mr. Del Deo may not be able to serve as directors if elected. Pursuant to an
agreement between the Company and S.G.I., S.G.I has the right to appoint two
directors to the Board of Directors. S.G.I. has designated Mr. Hewitt as one of
its directors and has not requested that another person be designated pursuant
to this agreement.
The Board of Directors recommends a vote "FOR" the election of each of the above
nominees.
The name and age of each of the nominees and each of the incumbent directors
whose term will continue following the Meeting, their respective positions with
the Company and the period during which each such individual has served as a
director are set forth below. Additional biographical information concerning
each of the nominees and each of the incumbent directors and executive officers
of the Company follows the table.
<TABLE>
<CAPTION>
Name Age Position with the Company Director Since
<S> <C> <C> <C>
Class 1 Directors
Dennis Marino 52 Director, Executive Vice President, 1981
Secretary and Chief Administrative Officer
James H. Lynch, Jr. 67 Chairman of the Board 1989
Stephen J. DiLascio 43 Director, Managing General Partner of 1995
Equitrade
Class 2 Directors
Arthur Kontos 52 Director, Vice Chairman of the Board, 1988
Chief Executive Officer
Richard J. Marino 54 Director, Senior Vice President, Chairman 1981
of the Board of Sherwood Securities
Ralph N. Del Deo 73 Director 1993
Class 3 Directors
Carl H. Hewitt 46 Director 1991
John. P. Duffy 57 Director 1992
Thomas W. Neumann 34 Director, Executive Vice President 1992
</TABLE>
Certain Biographical Information Concerning
Incumbent Directors and Executive Officers
James H. Lynch, Jr. became Chairman of the Board of Directors in July 1989.
He is also an independent consultant to the securities industry. Mr. Lynch was a
general partner and member of the Executive Committee of SLK for more than five
years prior to his retirement from SLK in June 1985. SLK is a broker dealer and
a member of all major United States stock exchanges and acts as a specialist on
the New York and American Stock Exchanges. Mr. Lynch also served as President of
Spear, Leeds & Kellogg Securities, Inc. and as an officer and director of its
wholly-owned subsidiaries, First Options of Chicago and Troster Singer
Corporation. Mr. Lynch is a director of Consolidated Purchasing Services, Inc.
and Business Link Communications, Inc.
Arthur Kontos became Vice Chairman of the Board and Chief Executive Officer of
the Company in October 1988. Mr. Kontos was a managing director of SLK from June
1988 until October 1988, when he joined the Company. He became a general partner
of SLK in 1982 and President of S.G.I. Capital Holdings, Inc., a general partner
of S.G.I. in 1988, from which positions he resigned in December 1991. From July
1978 until May 1988, Mr. Kontos served as a director and as President and Chief
Executive Officer of Troster Singer Corporation, currently a division of SLK.
Richard J. Marino is a founder of Sherwood Securities, a subsidiary of the
Company, and was Secretary of Sherwood Securities from its inception in 1968
until June 1988. In August 1987, Mr. Marino was elected Chairman of the Board of
Sherwood Securities. In January 1988, he assumed the responsibility of director
of all equity trading. In April 1988, he ceased his individual trading activity
to serve full time as director of all equity trading. In August 1988, Mr. Marino
returned to trading a list of securities. Mr. Richard J. Marino and Mr. Dennis
Marino are brothers.
Dennis Marino has been employed by the Company since February 1969 and has
served as the Company's Chief Administrative Officer since 1986. He was
appointed President of Sherwood Securities in January 1988, a position he held
until December 1997 at which time he became Chairman of National Discount
Brokers ("NDB"), a wholly owned subsidiary of the Company. In February 1998, Mr.
Marino also assumed the positions of President and Chief Executive Officer of
NDB. He has been an Executive Vice President of the Company since 1977. Mr.
Marino served as President of the Securities Traders Association of New York for
a term that expired in 1991, served as Chairman of the Securities Traders
Association ("STA") in 1997 and currently serves as a governor of the STA and as
a member of its executive committee.
Thomas W. Neumann has served as an Executive Vice President of the Company since
1991 and was appointed President of Sherwood Securities in December 1997. Mr.
Neumann joined Sherwood Securities in October 1988 and held various trading
positions with that company prior to being appointed a senior vice president in
1990 and Head of Capital Markets in 1995. From June 1986 until October 1988, Mr.
Neumann was an employee of Troster Singer Corporation.
John P. Duffy retired from his position as a managing director of SLK in 1991, a
position he held from prior to September 1987 until his retirement. As a
managing director of SLK, Mr. Duffy acted as a specialist on The New York Stock
Exchange ("NYSE"). Mr. Duffy is also a director of Kinney Oil Co.
Carl H. Hewitt was appointed a director of the Company at the request of
S.G.I. under the terms of an agreement between the Company and S.G.I. pursuant
to which S.G.I. has the right to designate two directors. Mr. Hewitt became a
member of the Board of Directors in July 1991. Mr. Hewitt is a managing director
and the general counsel of SLK. Mr. Hewitt joined SLK in 1985 as an assistant
general counsel. He became the general counsel in June 1988 and became a
managing director in January 1991. Mr. Hewitt is also the sole shareholder and
director and the president of the corporation which serves as the general
partner of S.G.I.
Ralph N. Del Deo is a senior partner of Gibbons, Del Deo, Dolan, Griffinger &
Vecchione, P.C., a New Jersey law firm that provides legal services to the
Company. His practice areas include corporation law, patent, trademark and
copyright law, litigation and general practice.
Stephen J. DiLascio is the managing partner of Equitrade. He began his career on
the trading floor in 1973 with Weiss, Peck & Greer's specialist operation, the
predecessor to Equitrade. He became a specialist in 1978, a partner in 1980 and
the managing partner in 1989. As the managing partner, he is responsible for all
aspects of Equitrade's operations. Mr. DiLascio is a director of Securities
Industry Automation Corporation, a governor of the NYSE, a member of the
Alliance of Floor Brokers and a member of the Technology, Planning and Oversight
Committee at the NYSE.
James Romano, age 51, currently serves as Senior Vice President and Head of
Capital Markets of Sherwood Securities. Mr. Romano joined Sherwood Securities in
June 1992 as vice president of trading and as a member of the Management
Committee. In January 1995, he was appointed to serve on the Company's Executive
Committee. From January 1995 to December 1997, Mr. Romano had responsibility
over the trading department and in January 1998 became Head of Capital Markets.
For eleven years prior to joining the Company, Mr. Romano held various trading
positions at Troster Singer Corporation, including vice president of trading.
Laura R. Singer, age 44, has been General Counsel and Senior Vice President
of the Company since January 6, 1997. Prior to that time, she served for six
years as an Assistant Director in the Division of Enforcement of the Securities
and Exchange Commission in Washington, D.C. Previously, Ms. Singer had been
Counsel to Market Surveillance at the National Association of Securities
Dealers. Ms. Singer has been a member of the bar since September, 1978. She has
responsibility for the legal affairs of the Company.
Denise Isaac, age 31, has been Chief Financial Officer of the Company since
October 1995. Prior to her employment with the Company, Ms. Isaac was a Senior
Manager in the financial services practice of KPMG Peat Marwick LLP. Ms. Isaac
was employed by KPMG Peat Marwick LLP since 1986 where she worked on various
assignments and taught courses to the securities industry.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and The New York Stock Exchange. Based solely on a review of
the copies of reports furnished to the Company and written representations from
the Company's executive officers, directors and persons who beneficially own
more than ten percent of the Company's equity securities, the Company believes
that, during the preceding year, all filing requirements applicable to its
officers, directors and ten percent beneficial owners were met, with the
exception that the monthly statement of change in beneficial ownership (Form 4)
was not filed by John Duffy on a timely basis. Appropriate corrective action has
been taken by this individual.
Meetings of the Board and Committees
During fiscal year 1998, the Board of Directors held six meetings. Each of the
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors and the total number of meetings held by all committees of the Board
of Directors of which each respective director was a member during the time he
was serving as such during the fiscal year ended May 31, 1998.
The Board of Directors has created an Executive Committee, a Compensation
Committee, an Audit Committee, and a Nominating Committee. The Executive
Committee is comprised of James H. Lynch, Jr., Arthur Kontos and Dennis Marino.
The Compensation Committee is comprised of James H. Lynch, Jr. and John Duffy.
The Audit Committee is comprised of James H. Lynch, Jr. and John Duffy. The
Nominating Committee is comprised of Arthur Kontos, Carl H. Hewitt and John P.
Duffy.
The Executive Committee, which held two meetings during fiscal year 1998, is
authorized, among other things, to exercise such powers as may lawfully be
delegated to it by the Board of Directors, including the appointment of
officers, the appointment of agents of the Company, and the determination of
general policy with regard to business of the Company. Action by the Executive
Committee is subject to review and revision by the Board of Directors.
The Compensation Committee, which held three meetings during fiscal year 1998,
has jurisdiction on behalf of the Company to approve, disapprove, modify or
amend all plans to compensate employees including bonuses. No member of the
Compensation Committee is eligible for any award or any grant of stock options
under any such plans. The Compensation Committee determines the salaries of
employees of the Company who are directors and also determines the salaries of
all other employees of the Company who are officers or who occupy such other
positions as may be designated by the Compensation Committee.
The Audit Committee, which held one meeting during fiscal year 1998, reviews and
monitors the Company's financial reports and accounting practices and, among
other things, makes recommendations to the Board with respect to audit policies
and procedures and the scope and extent of audits, reviews the Company's
unaudited quarterly financial results, and reviews the annual year end audit
with the Company's independent auditors.
The Nominating Committee was created by the Board of Directors in August 1993
for the purpose of nominating a slate of nominees for election to the Board of
Directors by the stockholders of the Company at each Annual Meeting of
Shareholders commencing with the annual meeting of stockholders held in 1994.
The Nominating Committee is also responsible for nominating candidates to fill
the position of each director, if any, whose term as director terminates prior
to the date of any annual meeting of stockholders and who is to be replaced by
the Board of Directors. The Nominating Committee does not consider nominees
recommended by stockholders in its deliberations. The Nominating Committee held
no meetings in fiscal year 1998.
Compensation Of Directors And Executive Officers
The following table sets forth information concerning the annual and long-term
compensation for services in all capacities to the Company and its subsidiaries
for each of the fiscal years ended May 31, 1998, 1997 and 1996 of those persons
who were, at May 31, 1998, (i) the Chief Executive Officer and (ii) the other
four most highly compensated executive officers of the Company for the fiscal
year ended May 31, 1998 (the "named executive officers"):
<TABLE>
<CAPTION>
Executive Compensation Table
Annual Compensation
----------- ---------------- ----------------- -------------------
Name and Securities
Principal Fiscal All Other Underlying
Position Year Salary($) Bonus($) Compensation($) Options (#)
<S> <C> <C> <C> <C> <C>
Arthur Kontos, Vice 1998 $300,000 $3,479,439 $515,568(2) 126,941
Chairman of the Board and 1997 300,000 3,061,460
Chief Executive Officer of 1996 300,000 6,137,012 7,119,375(2) 219,533
the Company
Dennis Marino 1998 173,077 350,000 175,075(2) 42,966
Executive Vice President 1997 150,000 286,728
and Chief Administrative 1996 150,000 515,000 663,181(2) 45,190
Officer of the Company;
Chairman of the Board and
Chief Executive Officer of
National Discount
Brokers
Thomas Neumann 1998 299,039 802,000(3) 181,886(2) 85,374
Executive Vice President of 1997 250,000 573,455 113,699(2) 88,187
the Company; President of 1996 248,939 1,015,000 1,093,376(2) 94,027
Sherwood Securities
Richard J. Marino 1998 -- 732,816(1) 53,786(2) 10,169
Chairman of the Board of 1997 -- 614,606(1)
Sherwood Securities 1996 -- 486,654(1) 196,875(2) 12,294
James Romano 1998 350,000 250,000(1) 5,000
Senior Vice President and 1997 350,000 235,000(1) 15,000
Head of Capital Markets of 1996 350,000 274,091(1)
Sherwood Securities
No named executive officer received personal benefits or perquisites during the
fiscal year ended May 31, 1998 in excess of the lesser of $50,000 or 10% of his
aggregate salary and bonus.
<FN>
(1) Cash bonuses for Mr. R. Marino and Mr. Romano include commissions,
representing a percentage of gross commissions on sales/trades, and
discretionary incentive bonuses. Commissions for Mr. R. Marino for the
fiscal year ended May 31, 1998 equaled $732,816 (including $167,297 of
commissions earned in excess of Mr. Marino's guarantee), for the fiscal
year ended May 31, 1997 equaled $614,606 and for the fiscal year ended
May 31, 1996 equaled $477,904. Discretionary incentive bonuses for Mr.
R. Marino for the fiscal year ended May 31, 1998 equaled $0, for the
fiscal year ended May 31, 1997 equaled $0 and for the fiscal year ended
May 31, 1996 equaled $8,750. Commissions for Mr. Romano for the fiscal
year ended May 31, 1996 equaled $91,091 and he was not paid on a
commission basis for the fiscal years ended May 31, 1998 and 1997.
Discretionary incentive bonuses for Mr. Romano for the fiscal year ended
May 31, 1998 equaled $250,000, for the fiscal year ended May 31, 1997
equaled $235,000 and for the fiscal year ended May 31, 1996 equaled
$183,000.
</FN>
<FN>
(2) Represents gain recognized upon exercise of options.
</FN>
<FN>
(3) Includes $107,000 of bonus paid in fiscal year ended May 31, 1998 with
respect to services performed in the fiscal year ended May 31, 1997.
</FN>
</TABLE>
Compensation Arrangements
Through May 31, 1997, Mr. Kontos was compensated by the Company pursuant to an
Employment Agreement (the "Employment Agreement") by and between Mr. Kontos and
the Company dated as of September 12, 1995. Under the terms of the Employment
Agreement, the Company had agreed to pay Mr. Kontos an annual base salary of
$300,000. In addition, Mr. Kontos was entitled to a bonus ("Bonus") based on the
Company's "Income." "Income" is defined in the Employment Agreement to mean the
Company's consolidated pre-tax net income during any fiscal year in which the
Employment Agreement is in effect without any deductions for amounts payable as
a Bonus under the Employment Agreement or any related accruals. For fiscal years
commencing with the fiscal year ended May 31, 1996, Mr. Kontos was entitled to
an annual Bonus based on performance goals, therein defined as 10% of the first
$5,000,000 of Income, 15% of the next $8,000,000 of Income and 18% of the Income
over $13,000,000. In March 1996, Mr. Kontos signed a waiver wherein his Bonus on
any Income over $19,746,019, for the fiscal year ended May 31, 1996, would be
paid at a rate of 15%, rather than 18%.
On May 31, 1997, the Board of Directors approved, and Mr. Kontos signed, a new
employment agreement, (the "New Employment Agreement"). The New Employment
Agreement provides for an initial term of employment from June 1, 1997 to May
31, 2000. The Company has the option to extend the term from June 1, 2000 until
May 31, 2001. Mr. Kontos has the right to extend the term from June 1, 2001 to
May 31, 2002. The New Employment Agreement provides that Mr. Kontos will receive
an annual base salary of $300,000 and an annual cash bonus pursuant to the terms
of The Sherwood Group 1996 CEO Bonus Plan (the "CEO Bonus Plan"). Pursuant to
the CEO Bonus Plan, for fiscal years commencing with the fiscal year ended May
31, 1998, the Chief Executive Officer of the Company is entitled to an annual
cash bonus equal to 10% of the first $10,000,000 of "Income," and 15% of
"Income" over $10,000,000. "Income" means the consolidated pre-tax net income of
the Company without deductions for the payment or accrual of a bonus under the
CEO Bonus Plan. The New Employment Agreement may be terminated (i) by Mr. Kontos
either on thirty (30) days prior written notice or at any time following a
Change in Control, as defined, (ii) by the Company for Cause, as defined, (iii)
automatically upon the death or disability of Mr. Kontos, or (iv) by the Company
without Cause. If the Company terminates the New Employment Agreement without
Cause, or Mr. Kontos terminates his employment for Good Reason (as defined)
within one year after a Change of Control, Mr. Kontos is entitled to receive as
liquidated damages an amount equal to three times his average compensation
(including base salary, bonus and any other compensation) from the Company and
its subsidiaries as reported for federal income tax purposes for the five
previous calendar years less $1.00 subject to the limitation that the amount
shall not constitute an excess parachute payment under Section 280G of the
Internal Revenue Code of 1986, as amended. Generally, a Change in Control will
be deemed to have occurred under the New Employment Agreement (i) if any person
(other than Mr. Kontos or persons under his control) or group acting in concert
acquires beneficial ownership of more than 50% of the voting stock of the
Company and the control so acquired is exercised in any manner, (ii) during a
two year period persons who at the beginning of the period who constitute the
Board of Directors and any new director whose election was approved by at least
2/3 of the directors then still in office, cease for any reason to constitute a
majority of the Board of Directors, or (iii) the Company or a subsidiary of the
Company merges, consolidates or engages in a similar transaction, other than a
transaction where voting securities of the Company outstanding prior to this
Transaction continue to represent 75% of the combined voting power of the voting
securities of the Company or the surviving entity, or the stockholders approve a
plan of complete liquidation or an agreement for the sale or disposition of all
or substantially all of the Company's assets.
During the fiscal year ended May 31, 1997, the three highest salaried executives
received cash bonuses pursuant to The Sherwood Group, Inc. 1996 Executive
Incentive Award Plan ("Incentive Plan"). Only three participants (other than the
Chief Executive Officer of the Company) with the highest base salary for an
Award Period were eligible for the receipt of an Incentive Award. Generally, the
Award Period was the Company's fiscal year. The Incentive Plan was administered
by the Compensation Committee. Participating senior executives could not receive
an Incentive Award in excess of 25% of the Compensation Pool (as defined), and
the participating senior executive with the highest base salary could not
receive an Incentive Award in excess of 50% of the Compensation Pool. The
Compensation Pool was 4.25% of "Net Income" for an Award Period where "Net
Income" meant consolidated pre-tax net income of the Company after adjustment to
exclude or include unusual, infrequently occurring or extraordinary items or the
cumulative effects of changes in accounting principles and not taking into
account the payment or accrual of the Incentive Awards under the Incentive Plan.
Messrs. Neumann and Dennis Marino were participants in the Incentive Plan for
the fiscal year ended May 31, 1997. The Incentive Plan was terminated by the
Board of Directors effective June 1, 1997 and was not applicable to bonuses paid
to executives with respect to the fiscal year ended May 31, 1998.
Compensation of Directors
Independent directors are paid at a rate of $18,000 annually plus $1,000 for
each committee meeting attended.
Option Grants in Last Fiscal Year
Shown below is information with respect to the options to purchase Common Stock
granted to the Chief Executive Officer and the named executive officers of the
Company.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option
Term
- ---------------------------------------------------------------------------------------------------- --------------------------
Number of % of Total
Securities Options Granted
Underlying to Employees in Exercise or Base
Options Granted Fiscal Year Price Expiration
Name (#) ($/Sh) Date 5% ($) 10% ($)
---- --- - ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Arthur Kontos(1) 126,941 23.88% $12.1875 10/14/07 $972,959 $2,465,669
Dennis Marino(2) 37,966 7.14 12.6875 12/04/07 302,935 767,696
(3) 5,000 .94 13.5000 12/12/07 42,450 107,578
Thomas W. Neumann(1) 80,374 15.12 12.1875 10/14/07 616,039 1,561,163
(3) 5,000 .94 13.5000 12/12/07 42,450 107,578
Richard J. Marino(4) 10,169 1.91 13.2500 12/10/07 84,737 214,740
James Romano(3) 5,000 .94 13.5000 12/12/07 42,450 107,578
<FN>
(1) All options granted became exercisable on April 14, 1998.
</FN>
<FN>
(2) All options granted became exercisable on June 4, 1998.
</FN>
<FN>
(3) All options granted will become exercisable with respect to one-third
of the shares on each of the first, second and third anniversary of the
date of grant.
</FN>
<FN>
(4) All options granted became exercisable on June 10, 1998.
</FN>
</TABLE>
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to the exercise of options to purchase
Common Stock by the Chief Executive Officer and the named executive officers and
unexercised options to purchase shares of Common Stock granted to the Chief
Executive Officer and such named executive officers.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal Year Ended May 31, 1998
And May 31, 1998 Option Value
Number of Unexercised Value of Unexercised
Options at In-the-money Options
Number of Shares Value Fiscal Year-End at Fiscal Year-End(1)
Name Acquired on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Arthur Kontos, Vice 149,087 $515,568 197,387 0 $158,504 0
Chairman of the Board
and Chief Executive
Officer of the Company
Dennis Marino 45,190 175,075 37,966 5,000 0 0
Executive Vice
President and Chief
Administrative
Officer of the
Company; Chairman of
the Board and Chief
Executive Officer of
National Discount
Brokers
Thomas W. Neumann 88,187 181,886 80,374 5,000 0 0
Executive Vice
President of the
Company, President of
Sherwood Securities
Richard J. Marino 12,294 53,786 0 10,169 0 0
Chairman of the Board
James Romano 0 0 5,000 15,000 0 0
Senior Vice President
and Head of Capital
Securities
<FN>
(1) Based on the difference between the exercise price of the options and
the closing price of the Common Stock on the New York Stock Exchange on
May 31, 1998.
</FN>
</TABLE>
<PAGE>
Compensation Committee Report On Executive Compensation
General
The Compensation Committee of the Board of Directors reviews the Company's
existing and proposed executive compensation plans and makes recommendations to
the Board of Directors regarding such plans and the awards to be made
thereunder.
Set forth below is a discussion of the Company's compensation philosophy,
together with a discussion of the factors considered by the Compensation
Committee in determining the compensation of the Company's Vice Chairman of the
Board and Chief Executive Officer and other named executive officers in this
Proxy Statement for the fiscal year ended May 31, 1998.
Members of the Compensation Committee during the fiscal year ended May 31,
1998 were John P. Duffy and James H. Lynch, Jr.
Each of Sherwood Securities and Equitrade cleared certain of their securities
transactions with SLK. Each of Messrs. Hewitt and Kellogg are managing directors
of SLK. Messrs. Lynch and Duffy were formerly associated with SLK. See "Certain
Biographical Information Concerning Incumbent Directors and Executive Officers."
During the Company's 1998 fiscal year, the Company and its subsidiaries paid
fees in the aggregate amount of $1,884,010 to SLK in connection with clearing
activities performed by SLK. On February 27, 1998, Sherwood Securities sold its
American Stock Exchange specialist business to SLK for $325,000.
Compensation Philosophy
The Company's compensation philosophy focuses on providing executives with
annual compensation that rewards individual performance during the year, and
provides incentives to executives to improve the long-term performance of the
Company. By paying competitive base salaries to executive officers, and making a
significant portion of their compensation contingent on their performance during
the year, the Company seeks to provide executives with significant incentives to
promote the interests of the Company and its stockholders.
Salaries. Consistent with its compensation philosophy, the Company has paid
competitive base salaries to its salaried officers and has supplemented these
salaries with performance-based bonuses. Traders generally receive no base
salaries, and are compensated on a commission basis with a minimum guarantee. In
making decisions with respect to the base salaries of executive officers for the
fiscal year ended May 31, 1998, the committee considered the performance of each
of the individuals in question during the prior year, the Company's results of
operations for the fiscal year ended May 31, 1997 and the responsibilities of
the executive officers. In keeping with its desire to base much of the
compensation of the Company's executives on performance during the year, the
committee generally determined to make only modest changes in the base salaries
of certain executives, and to maintain salaries for most executive officers at
the same level as the prior year.
Bonuses. The discretionary bonuses paid to the Company's officers with respect
to the fiscal year ended May 31, 1998 were determined primarily by reference to
the Company's financial performance for the fiscal year and by reference to the
volume of business generated by them or under their direction during the fiscal
year. The performance of the Company's Vice Chairman of the Board and Chief
Executive Officer is measured primarily by reference to the Company's financial
performance for the fiscal year and is measured by a formula contained in his
New Employment Agreement.
Chief Executive Officer Compensation
The compensation arrangements for Mr. Kontos with respect to the fiscal year
ended May 31, 1998 were based on the Company's compensation philosophy. The
Compensation Committee determined not to make any adjustments to Mr. Kontos'
base salary for the year, in an effort to provide Mr. Kontos with additional
incentives to continue to improve the Company's performance. Mr. Kontos' bonus
with respect to the fiscal year ended May 31, 1998 was determined in accordance
with the provisions of the New Employment Agreement.
THE COMPENSATION COMMITTEE
James H. Lynch, Jr.
John P. Duffy
Indemnification of Directors and Executive Officers
The Company has entered into indemnification agreements with its directors and
executive officers which obligate the Company to indemnify the directors or
officers for all expenses (including attorney fees) and costs, judgments, fines
and settlement amounts paid or incurred by them in connection with claims,
actions and proceedings in which they are parties, witnesses and subjects as a
result of their activities on behalf of the Company, including, but not limited
to, their activities as directors and officers of the Company and its
subsidiaries. Pursuant to the agreements, the directors will be indemnified to
the extent permitted under Delaware law. The agreements cover all indemnified
claims and proceedings brought within ten years after the resignation of the
director or executive officer from all positions held as a director, officer or
otherwise on behalf of the Company. The agreements may provide indemnity to or
limit liability of directors or executive officers for events that occurred
prior to the date of the agreement. However, the enforceability of these
retroactive provisions has not been determined under Delaware law.
Stock Option Plan
In August 1995, the Board of Directors adopted The Sherwood Group, Inc. 1995
Stock Option Plan (the "1995 Stock Option Plan") which plan was approved by the
stockholders at the 1995 Annual Meeting of Stockholders. Under the 1995 Stock
Option Plan, 767,200 shares of Common Stock were authorized for issuance for the
granting of options and stock appreciation rights. In August 1997, the Board of
Directors amended the 1995 Stock Option Plan to allow for an additional 420,000
shares of Common Stock to be authorized for issuance for the granting of options
and stock appreciation rights. This amendment was approved by the stockholders
at the 1997 Annual Meeting of Stockholders. The maximum number of shares subject
to stock options that may be granted to any one optionee during any calendar
year under the 1995 Stock Option Plan may not exceed 300,000 shares. The 1995
Stock Option Plan provides for the granting of both incentive and non-incentive
stock options and stock appreciation rights which may be issued in connection
with a stock option. At May 31, 1998, 163,930 shares were available for future
grant under the 1995 Stock Option Plan. Options covering 531,600 shares of
Common Stock were granted by the Company under the 1995 Stock Option Plan during
the fiscal year ended May 31, 1998.
401(k) Plan
In April 1992, the Company formed the Sherwood Securities Corp. 401(k) Plan (the
"401(k) Plan") which is a profit sharing plan qualified under Section 401(k) of
the Code. Under the terms of the 401(k) Plan, all employees of the Company and
its subsidiaries (except Equitrade) employed on February 1, 1992 were
immediately eligible to participate. All other employees are eligible to
participate in the 401(k) Plan after completing six months of service and
attaining age 21. Employees may elect to have deductions made from their
salaries and contributed to the 401(k) Plan. In addition, the Company may make
matching contributions to the 401(k) Plan in such amounts as may be determined
in the discretion of the Board of Directors. During the fiscal year ended May
31, 1998, there was a discretionary Company contribution to the 401(k) Plan of
$82,013. Voting rights with respect to shares of Common Stock held in the 401(k)
Plan are voted at the direction of the Compensation Committee of the Board of
Directors.
Equitrade sponsors, for its eligible employees, the Equitrade Partners 401(k)
Savings Plan, which is a profit sharing plan, qualified under Section 401(k) of
the Code. Equitrade contributes a matching contribution equal to one-half of the
first 4% of an employee's compensation. In July 1997, Equitrade formed a second
plan, the Equitrade Discretionary Contribution Plan wherein Equitrade
contributes an additional 3% of the employee's compensation for all eligible
employees regardless of whether the employee participates in the Equitrade
Partners 401(k) Plan. For the fiscal year ended May 31, 1998, Equitrade
contributed a total of $165,780 to the two plans.
Certain Relationships And Related Transactions
S.G.I. Partners, L.P. On October 18, 1988, the Company closed a transaction
pursuant to a stock purchase agreement whereby the Company issued and sold to
S.G.I. Partners, L.P. ("S.G.I."), a Delaware limited partnership, 2,193,600
shares of Common Stock. In addition, the Company appointed Arthur Kontos, then
the president of the corporate general partner of S.G.I., as director, Vice
Chairman of the Board and Chief Executive Officer of the Company effective as of
October 18, 1988. Mr. Kontos resigned as President of S.G.I. as of December 31,
1991. The Company also agreed to use its best efforts to appoint up to two
individuals designated by S.G.I. as directors of the Company subsequent to
October 18, 1988, provided that S.G.I. continued to own in excess of one million
shares of the Company's issued and outstanding Common Stock. S.G.I. has
designated Mr. Hewitt pursuant to such agreement. Mr. Hewitt is the President
and sole shareholder and director of SHD Capital, Inc., the sole general partner
of S.G.I.
Thomas Neumann. On March 24, 1993, the Company loaned to Thomas Neumann and his
wife the sum of $600,000 pursuant to the terms of a Secured Note, a Mortgage and
Security Agreement and a Construction Loan Agreement. The loan bears interest at
the rate of 5% per annum. Interest accrued through August 15, 1993 was paid. On
or before August 15, 1994 and on each August 15 thereafter during the term of
the loan, Mr. Neumann is obliged to make annual payments of principal and
interest in the aggregate amount of $40,000. Such payments have been made as
scheduled. On July 23, 1997, the foregoing loan was converted into a loan of
$378,544 secured by shares of Common Stock owned by Mr. Neumann and bearing a
rate of 5% per annum and containing the same amortization requirement.
Spear, Leeds & Kellogg. Each of Sherwood Securities and Equitrade cleared
certain of their securities transactions with SLK. During the Company's 1998
fiscal year, the Company and its subsidiaries paid fees in the aggregate amount
of $1,884,010 to SLK in connection with clearing activities performed by SLK. In
addition, the Company has, from time to time, entered into short-term borrowing
facilities with SLK for the purpose of financing trading positions. Certain
officers and directors of SLK are partners of S.G.I. As of May 31, 1998, no such
borrowings were outstanding. On February 27, 1998, Sherwood Securities sold its
American Stock Exchange specialist business to SLK for $325,000.
Ralph N. Del Deo. Mr. Del Deo is a senior partner in the law firm of
Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P.C., which performs legal
services for the Company, and certain of its subsidiaries.
I.A.T. Reinsurance Syndicate Ltd. On December 8, 1997, the Company sold
1,500,000 shares of its treasury common stock to I.A.T. Reinsurance Syndicate
Ltd., an affiliate of Peter R. Kellogg. As of August 28, 1998, Mr. Kellogg
beneficially owned 2,665,200 shares of the Company's common stock. Mr. Kellogg
is a limited partner of S.G.I. and a Senior Managing Director of SLK.
Company Performance
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Common Stock against the cumulative
total return of the S&P Composite-500 Stock Index and the Dow Jones Securities
Brokers Index ("D J Brokers Index"). The graph assumes that the value of the
investment in the Common Stock and each index was $100 at May 31, 1993 and that
all dividends, if any, were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE SHERWOOD GROUP, INC. THE S & P 500 INDEX
AND THE DOW JONES SECURITIES BROKERS INDEX
Cumulative Total Return
5/93 5/94 5/95 5/96 5/97 5/98
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Discount Brokers Group, Inc. 100 178 172 269 309 281
S & P Composite 500 100 104 125 161 208 272
Dow Jones Securities Brokers 100 108 127 163 249 415
<FN>
* $100 invested on 5/31/93 in stock or index including reinvestment of
dividends.
</FN>
Fiscal year ending May 31.
</TABLE>
<PAGE>
PROPOSAL 2. RATIFICATION AND APPROVAL OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Company, subject to stockholder ratification, has selected KPMG Peat Marwick
LLP to serve as its independent auditors for the fiscal year ending May 31,
1999. If the stockholders do not ratify the appointment of KPMG Peat Marwick LLP
the Company may reconsider its selection.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Meeting to respond to appropriate questions and will be given the opportunity to
make a statement if he or she desires to do so.
The affirmative vote of the holders of a majority of the shares of Common Stock
of the Company present, in person or by proxy, and entitled to vote at the
Meeting is required for the ratification and approval of the appointment of
auditors.
The Board of Directors recommends a vote "FOR" ratification and approval of the
appointment of KPMG Peat Marwick LLP as independent auditors.
Stockholder Proposals For Next Annual Meeting
Any stockholder proposals intended to be presented at the Company's next annual
meeting of stockholders must be received by the Company at its offices at 10
Exchange Place Centre, Jersey City, New Jersey 07302, on or before May 20, 1999,
for consideration for inclusion in the proxy material for such annual meeting of
stockholders.
Expenses Of Solicitation
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by regular employees
of the Company, either personally or by telephone or telegraph. The Company does
not expect to pay any compensation for the solicitation of proxies, but may
reimburse brokers and other persons holding shares in their names or in the
names of nominees for expenses in sending proxy material to beneficial owners
and obtaining proxies of such owners.
Other Matters
The Board of Directors does not intend to bring any matters before the Meeting
other than as stated in this Proxy Statement, and is not aware that any other
matters will be presented for action at the Meeting. If any other matters come
before the Meeting, the persons named in the enclosed form of proxy will vote
the proxy with respect thereto in accordance with their best judgment, pursuant
to the discretionary authority granted by the proxy. Whether or not you plan to
attend the Meeting in person, please complete, sign, date and return the
enclosed proxy card promptly.
By Order of the Board of Directors
Dennis Marino
Secretary
Dated: September 9, 1998
<PAGE>
2
National Discount Brokers Group, Inc.
The undersigned hereby appoints Arthur Kontos, Richard J. Marino and Ralph N.
Del Deo and each of them, with full power of substitution, as proxies for the
undersigned, to attend the annual meeting of stockholders of National Discount
Brokers Group, Inc. (the "Company"), to be held at the Company's offices at 10
Exchange Place Centre, Jersey City, New Jersey 07302, 15th Floor on October 20,
1998, at 4:00 p.m., New Jersey time, or any adjournment thereof, and to vote the
number of shares of common stock of the Company that the undersigned would be
entitled to vote, and with all the power the undersigned would possess, if
personally present, as follows:
1. / / For or / / Withhold Authority to vote for the following nominees
--- ---
for election as Class 2 directors:
Arthur Kontos
Richard J. Marino
Ralph N. Del Deo
(Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name on the line provided below.)
- ---------------------------------
2. Approval of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending May 31, 1999.
/ / For or / / Against or / / Abstain
3. In their discretion, on such other business as may properly come before
the meeting or any adjournment thereof.
<PAGE>
The Proxies will vote as specified herein or, if a choice is not
specified, they will vote For the nominees listed in Item 1, For the proposal
set forth in Item 2, and in their discretion with respect to the matters
referred to in Item 3.
This Proxy is solicited by the Board of Directors of the Company.
Receipt of the Notice of Annual Meeting of
Stockholders, Proxy Statement dated September 9,
1998 and Annual Report to Stockholders is hereby
acknowledged:
Date:___________________________________, 1998
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
(Signatures)
(Please sign exactly as your names appear hereon,
indicating, where proper, official position or
representative capacity.)
