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 |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for use of the Commission
|X| Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
GKN HOLDING CORP.
(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.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:*
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
GKN HOLDING CORP.
61 Broadway
New York, New York 10006
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
June 4, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Annual Meeting") of GKN Holding Corp., 61 Broadway, New York, New York 10006
("Company") will be held at The Penn Club, 30 West 44th Street, New York, New
York 10036, on June 4, 1997, at 10:00 a.m., for the following purposes, all as
more fully described in the attached Proxy Statement:
1. To elect three directors to serve for the ensuing
three-year period and until their successors are
elected and qualified; and
2. To transact such other business as may properly come
before the meeting and any and all adjournments
thereof.
The Board of Directors has fixed the close of business on
April 10, 1997, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
You are earnestly requested to date, sign and return the
accompanying form of proxy in the envelope enclosed for that purpose (to which
no postage need be affixed if mailed in the United States) whether or not you
expect to attend the meeting in person. The proxy is revocable by you at any
time prior to its exercise and will not affect your right to vote in person in
the event you attend the meeting or any adjournment thereof. The prompt return
of the proxy will be of assistance in preparing for the meeting and your
cooperation in this respect will be appreciated.
By Order of the Board of Directors
Katherine Nathan, Secretary
New York, New York
May 2, 1997
<PAGE>
GKN HOLDING CORP.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1997
This Proxy Statement and the accompanying form of proxy is
furnished to stockholders of GKN Holding Corp. ("Company") in connection with
the solicitation of proxies, in the accompanying form, by the Board of Directors
of the Company for use in voting at the Annual Meeting of Stockholders to be
held at The Penn Club, 30 West 44th Street, New York, New York 10036, on June 4,
1997, at 10:00 a.m., and at any and all adjournments thereof. Any proxy given
pursuant to this solicitation may be revoked by the person giving it by giving
notice to the Secretary of the Company in person, or by written notification
actually received by the Secretary, at any time prior to its being exercised.
Unless otherwise specified in the proxy, shares represented by proxies will be
voted for the election of the nominees listed herein.
The Company provides securities brokerage, investment banking,
and trading services to emerging growth and small capitalization corporate
clients and investors through its principal operating subsidiaries. In the
fiscal year ended January 31, 1997, these subsidiaries consisted of GKN
Securities Corp ("GKN Securities"), Shochet Securities, Inc ("Shochet"), which
the Company acquired in November 1995, and GKN Securities AG ("GKN AG"), which
the Company established in February 1996. In March 1997 the Company acquired
Southeast Research Partners, Inc. ("Southeast"), a research and institutional
brokerage boutique which maintains research coverage on small and
mid-capitalization companies. The Company also has operations in the money
management business, through its GKN Fund Management, Inc. ("GKN Fund")
subsidiary, which began operations in March 1995 as the general partner of
Kaleidoscope Partners, L.P., a private investment partnership, and in merchant
banking, through its Dalewood Associates, Inc. ("Dalewood") subsidiary, which it
acquired in December 1996 and which is the general partner of Dalewood
Associates, L.P.
The Company's executive offices are located at 61 Broadway,
New York, New York 10006. On or about May 2, 1997, this Proxy Statement and the
accompanying form of proxy, together with a copy of the Annual Report of the
Company for the fiscal year ended January 31, 1997 (sometimes referred to as
"Fiscal 1997"), are being mailed to each stockholder of record at the close of
business on April 10, 1997.
1
<PAGE>
VOTING SECURITIES
The Board of Directors has fixed the close of business on
April 10, 1997, as the record date for the determination of security holders
entitled to notice of, and to vote at, the Annual Meeting. Only security holders
of record at the close of business on that date will be entitled to vote at the
Annual Meeting or any and all adjournments thereof.
As of April 10, 1997, the Company had issued and outstanding
8,303,899 shares of Common Stock and 1,200,000 shares of Series A Preferred
Stock ("Preferred Shares"), the Company's only classes of voting securities
outstanding, which will vote as one class at the Annual Meeting except as
otherwise may be required by law. Each stockholder of the Company will be
entitled to one vote for each share of Common Stock registered in his or her
name on the record date. Each Preferred Share has voting power equivalent to the
number of shares of Common Stock into which it may be converted on the record
date. As of the record date, each Preferred Share was convertible into 0.16
shares of Common Stock. Accordingly, the Preferred Shares in the aggregate have
voting power equivalent to 192,000 shares of Common Stock. As of the record
date, the outstanding Common Stock and Preferred Shares collectively had voting
power equivalent to 8,495,899 shares of Common Stock.
The presence, in person or by proxy, of Common Stock and
Preferred Shares possessing a majority of the voting power of all of the
outstanding voting securities of the Company constitutes a quorum at the Annual
Meeting. Proxies relating to "street name" shares that are returned to the
Company but marked by brokers as "not voted" will be treated as shares present
for purposes of determining the presence of a quorum on all matters but will not
be treated as shares entitled to vote on the matter as to which authority to
vote is withheld by the broker ("broker non-votes"). The election of directors
requires a plurality vote of the voting securities voted at the Annual Meeting
with respect to the election of directors. "Plurality" means that the
individuals who receive the largest number of votes cast "FOR" are elected as
directors. Consequently, any securities not voted "FOR" a particular nominee
(whether as a result of a direction to withhold authority or a broker non-vote)
will not be counted in such nominee's favor. All other matters to be voted on
will be decided by the affirmative vote of Common Stock and Preferred Shares
possessing voting power equivalent to a majority of the voting securities of the
Company present or represented at the Annual Meeting and entitled to vote. On
any such matter, an abstention will have the same effect as a negative vote, but
because shares held by brokers will not be considered entitled to vote on
matters as to which the brokers withhold authority, a broker non-vote will have
no effect on the vote.
The table which follows sets forth certain information as of
April 10, 1997, with respect to the stock ownership of (i) those persons or
groups known to the Company to beneficially own more than 5% of the Company's
voting securities, (ii) each director and director nominee, (iii) the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company whose compensation was $100,000 or greater during Fiscal 1997
(collectively "Named Officers"), and (iv) all directors and executive officers
as a group. The information is determined in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934, based upon information
furnished by the persons listed or contained in filings made by them with the
Securities and Exchange Commission. Except as indicated in the footnotes to the
table, the stockholders listed possess sole voting and investment power with
respect to their shares, subject to community property laws where applicable.
2
<PAGE>
Voting Securities and Principal Holders Thereof
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Voting Securities
- ---------------- ---------------------- -----------------
<S> <C> <C>
David M. Nussbaum(1) 1,189,108(2) 14.0
Roger N. Gladstone(1) 1,174,941(3) 13.8
Peter R. Kent 89,531(4) 1.0
Lester Rosenkrantz 24,763(5) *
Robert H. Gladstone(1) 513,831(6) 6.0
James I. Krantz 162,375(7) 1.9
Peter R. McMullin 90,112(8) 1.0
John P. Margaritis 10,000(9) *
Arnold B. Pollard 10,000(9) *
All Executive Officers and 3,264,661(10) 37.8
Directors as a group (9 persons) ===============
- ------------------------------
<FN>
* Less than 1%.
(1) The business address of David M. Nussbaum and Robert H. Gladstone is
c/o GKN Securities Corp., 61 Broadway, New York, New York 10006. The
business address of Roger N. Gladstone is c/o GKN Securities Corp.,
433 Plaza Real, Boca Raton, Florida 33432.
(2) Includes 6,666 shares issuable upon exercise of options at $4.95 per
share which are currently exercisable and 56,331 shares issued to David
Nussbaum in connection with the Company's 1996 Incentive Compensation
Plan ("IC Plan"). The holders of the restricted shares issued pursuant
to the IC Plan ("IC Shares") have the power to vote and the right to
receive dividends with respect to such shares but the IC Shares do not
vest until March 2000 and may not be transferred prior to that date.
Does not include shares issuable upon exercise of options to purchase
13,334 shares at $4.95 per share which become exercisable in two annual
installments commencing December 31, 1997. Does not include 100,000
shares held by The Nussbaum Family Foundation, Inc., one of whose
directors is the spouse of David Nussbaum. David Nussbaum disclaims
beneficial ownership of the shares held by such foundation.
(3) Includes 6,666 shares issuable upon exercise of options at $4.95 per
share which are currently exercisable and 42,164 IC Shares. Does not
include shares issuable upon exercise of options to purchase 13,334
shares at $4.95 per share which become exercisable in two annual
installments commencing December 31, 1997 and does not include 100,000
shares held by The Lisa and Roger Gladstone Foundation, one of whose
directors is the spouse of Roger Gladstone. Roger Gladstone disclaims
beneficial ownership of the shares held by such foundation.
(4) Includes 45,087 IC Shares, and 44,444 shares issuable upon exercise of
options at $4.50 per share which are currently exercisable. Does not
include 25,556 shares issuable upon exercise of options exercisable at
$4.50 per share which become exercisable in two annual installments
beginning in July 1997.
(5) Includes 16,430 IC Shares, and 8,333 shares issuable upon exercise of
options at $6.00 per share which are currently exercisable. Does not
include 16,667 shares issuable upon exercise of options exercisable at
$6.00 per share which become exercisable in two equal annual
installments beginning in January 1998.
(6) Includes (i) 56,331 IC Shares, (ii) 52,500 shares issuable upon
exercise of options exercisable at $2.20 per share which are currently
exercisable and which are held by Robert H. Gladstone's spouse, and
(iii) options to purchase 2,222 shares at $4.50 per share which are
currently exercisable. Does not include 4,444 shares at $4.50 per share
which become exercisable in two annual installments commencing December
31, 1997.
(7) Includes 3,125 shares held by James I. Krantz' spouse and 10,000 shares
issuable upon exercise of options which are currently exercisable,
5,000 of which are exercisable at $2.20 per share and 5,000 of which
are exercisable at $6.00 per share. Does not include shares issuable
upon exercise of options to purchase 1,000 shares at $4.50 per share
which become exercisable February 2000.
(8) Includes 49,152 shares of Common Stock which are issuable upon currently convertible 307,200 Preferred Shares.
(9) Represents 10,000 shares issuable upon exercise of options at $6.00 per share which are currently exercisable.
(10) Includes the shares issuable upon exercise of options and included in
the table, as described in the above footnotes, and 49,152 shares of
Common Stock issuable upon conversion of Peter R. McMullin's Preferred
Shares, and excludes those shares subject to options as indicated in
the above footnotes as being excluded from the table.
</FN>
</TABLE>
3
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of
which generally serves for a term of three years, with only one class of
directors being elected in each year. The term of the first class of directors,
consisting of Lester Rosenkrantz, James I. Krantz and Arnold B. Pollard, will
expire at the Annual Meeting, the term of office of the second class of
directors, consisting of Peter R. Kent, John P. Margaritis and Peter R. McMullin
will expire in 1998, and the term of office of the third class of directors,
consisting of David M. Nussbaum and Roger N. Gladstone, will expire in 1999. In
each case, each director serves from the date of his election until the end of
his term and until his successor is elected and qualified.
Three persons will be elected at the Annual Meeting to serve
as directors for a term of three years. The Board of Directors has nominated
Lester Rosenkrantz, James I. Krantz and Arnold B. Pollard, incumbent directors,
as the candidates for election. Unless authority is withheld, the proxies
solicited by the Board of Directors will be voted FOR the election of these
nominees. In case any of the nominees become unavailable for election to the
Board of Directors, an event which is not anticipated, the persons named as
proxies, or their substitutes, shall have full discretion and authority to vote
or refrain from voting for any other candidate in accordance with their
judgment.
Information About the Nominees
Lester Rosenkrantz is 56 years old and has been a director and Executive
Vice President of the Company and GKN Securities since February 1994. Mr.
Rosenkrantz has been a director of Southeast since the Company's acquisition of
Southeast in March 1997. Mr. Rosenkrantz was Vice Chairman and Director of
Corporate Finance of Reich & Co., Inc. (formerly Vantage Securities), a member
of the New York Stock Exchange ("NYSE"), from November 1990 until January 1994.
He has also served in various management positions at Rosenkrantz, Lyon and
Ross, Incorporated, a NYSE member firm from 1973 to 1990, serving as Vice
Chairman at the end of his tenure. Mr. Rosenkrantz was employed by Andresen &
Company from 1963 to 1973, lastly as a General Partner and head of institutional
and retail sales. Mr. Rosenkrantz graduated from Pennsylvania State University.
James I. Krantz is 42 years old and has been a director of the Company
since September 1990. Since 1977, Mr. Krantz has served as a Property, Casualty
and Life Insurance Broker and has been engaged in real estate management and
investment. Mr. Krantz was an executive officer and director of the corporate
general partner of River Village Associates ("River Village"), a limited
partnership formed to acquire real estate. River Village filed for protection
under Chapter 11 of the Bankruptcy Code in September 1992. Mr. Krantz is
currently President and Chief Executive Officer of York International Agency,
Inc., a full service insurance agency located in Westchester, New York. Mr.
Krantz graduated from Syracuse University. He received his Chartered Property
Casualty Underwriter (CPCU) designation in 1989.
Arnold B. Pollard is 54 years old and has been a director of the Company
since August 1996. Since June 1993, he has been the President and Chief
Executive Officer of Chief Executive Group, which publishes "Chief Executive"
magazine. For nearly 20 years, he has been President of Decision Associates, a
management consulting firm specializing in organizational strategy and
structure. Mr. Pollard was a founding member of the Strategic Decision Analysis
Group of SRI, a company engaged in management consulting and contract research.
Since October 1996, Mr. Pollard has served as a director and a member of the
compensation committee of Delta Financial Corp., a public company engaged in the
business of mortgage financing, and International Management Education
Foundation, a non-profit educational organization. From 1989 to 1991, Mr.
Pollard served as Chairman and Chief Executive Officer of Biopool International,
a biodiagnostic public company focusing on blood related testing. From 1970 to
1973, Mr. Pollard served as adjunct professor at the Columbia Graduate School of
Business. Mr. Pollard graduated from Cornell University (Tau Beta Pi) and holds
a doctorate in Management Science from Stanford University. Information About
the Other Directors
4
<PAGE>
The Company's other directors are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
David M. Nussbaum 43 Chairman of the Board and Chief Executive
Officer of the Company and GKN Securities
Roger N. Gladstone 43 President and director of the Company and GKN
Securities
Peter R. Kent 44 Chief Operating Officer, Chief Financial
Officer and director of the Company and GKN
Securities
John P. Margaritis 47 Director of the Company
Peter R. McMullin 53 Director of the Company
</TABLE>
David M. Nussbaum has been Chairman of the Board and Chief Executive
Officer of the Company since September 1990, was Executive Vice President of the
Company from January 1987 until September 1990 and has been a director of the
Company since January 1987. He is also Chairman of the Board and Chief Executive
Officer of GKN Securities and is the principal executive officer of GKN
Securities' New York operations. He is a director of Shochet and a director and
executive officer of GKN Fund. He has been a director and executive officer of
Dalewood since the Company's acquisition of Dalewood in December 1996 and
director and executive officer of Southeast since the Company's acquisition of
Southeast in March 1997. Mr. Nussbaum serves on the Board of Arbitrators of the
National Association of Securities Dealers, Inc. He is also a member of the
Young Presidents Organization and a member of the Board of Directors of the Sid
Jacobson Jewish Community Center in Roslyn, New York. From 1984 through 1986,
Mr. Nussbaum was engaged primarily in the acquisition, management, syndication
and operation of real estate projects. In connection with Mr. Nussbaum's real
estate activities, he was an executive officer and a director of the corporate
general partners of River Village and Frontage Realty Limited Partnership
("Frontage"), limited partnerships formed to acquire real estate. River Village
and Frontage filed for protection under Chapter 11 of the Bankruptcy Code in
1992 and 1993, respectively. From 1980 through 1984, Mr. Nussbaum was engaged in
the private practice of law at the firm of Rosenman Colin Freund Lewis & Cohen
in New York. Mr. Nussbaum graduated from the University of Michigan, magna cum
laude. He received his law degree (cum laude; Order of the Coif) from New York
University School of Law.
Roger N. Gladstone has been President and a director of the Company
since January 1987. He is also President and a director of GKN Securities and is
the principal executive officer of GKN Securities' Florida operations. He is
also a director and executive officer of Shochet, Dalewood, and GKN Fund and a
director of GKN AG. Mr. Gladstone serves on the Board of Arbitrators of the
National Association of Securities Dealers, Inc. He is also a member of the
Young Presidents Organization and a member of the Board of Directors of the Sid
Jacobson Jewish Community Center in Roslyn, New York. Mr. Gladstone is a
Director of No Small Affair South, a charitable foundation which provides
positive experiences for disadvantaged children. From 1984 through 1986, Mr.
Gladstone was engaged primarily in the acquisition, management, syndication and
operation of real estate projects. Mr. Gladstone was an executive officer and a
director of the corporate general partners of River Village and Frontage. River
Village and Frontage filed for protection under Chapter 11 of the Bankruptcy
Code in 1992 and 1993, respectively. From 1980 through 1984, Mr. Gladstone was
engaged in the private practice of law in New York. Mr. Gladstone graduated from
Stanford University. He the Benjamin N. Cardozo School of Law, Yeshiva
University.
Peter R. Kent has been Chief Financial Officer of the Company and GKN
Securities since July 1995, Chief Operating Officer of the Company and GKN
Securities since February 1996 and a director of the Company
5
<PAGE>
and GKN Securities since May 1996. He has served as a director of GKN Fund since
July 1996. He has also served as Chief Financial Officer and director of Shochet
since its acquisition by the Company in November 1995, as an executive officer
and director of Dalewood since its acquisition by the Company in December 1996
and as an executive officer and director of Southeast since its acquisition by
the Company in March 1997. From September 1991 through February 1995, Mr. Kent
served initially as Chief Financial Officer, and subsequently as President,
Chairman of the Board, and Chief Executive Officer, of Consolidated Waste
Services of America, Inc., a solid waste management and recycling company. From
1988 until 1991, Mr. Kent was employed by the securities firm of Wessels, Arnold
& Henderson, where he served as a member of the Corporate Finance Department in
charge of its Environmental Services Group. From 1984 to 1988, Mr. Kent was
employed by Henry Ansbacher, Inc., a firm involved in the field of media mergers
and acquisitions, initially as Chief Financial Officer and subsequently as its
President and Chief Operating Officer. Previous to 1984, Mr. Kent had been
employed by Sutro & Co. Incorporated, Wells Fargo Bank, and Arthur Andersen &
Co. Mr. Kent is a Certified Public Accountant. Mr. Kent graduated from the
University of California at Berkeley, where he also received his Masters in
Business Administration.
John P. Margaritis has been a director of the Company since August 1996.
Mr. Margaritis has been the President and Chief Executive Officer of Ogilvy
Adams & Rinehart, a public relations firm, since January 1994, and was the
President and Chief Operating Officer from January 1992 to January 1994. From
July 1988 until January 1992, Mr. Margaritis was Chairman and Chief Executive
Officer of Ogilvy & Mathers, Public Relations. Mr. Margaritis is a director of
the Young Presidents Organization/Metro Chapter, the Arthur Ashe Institution for
Urban Health and Research America, a non-profit organization to promote
government's support of medical research. Mr. Margaritis is a member of the
President's Advisory Counsel for the Museum of Television and Radio. Mr.
Margaritis is also a trustee of Washington and Jefferson College. Mr. Margaritis
graduated from Washington and Jefferson College and received his masters degree
from the New School for Social Research.
Peter R. McMullin has been a director of the Company since May 1997. He has
been Executive Vice President and a director of Southeast since its inception in
June 1990. Mr. McMullin received a Bachelor of Science and a Master of Business
Administration from the University of Toronto. Mr. McMullin is a Chartered
Financial Analyst.
Roger N. Gladstone is the brother of Robert H. Gladstone, Executive Vice
President of the Company and GKN Securities, and the brother-in-law of David M.
Nussbaum. No other family relationships exist between any of the executive
officers or directors of the Company or its subsidiaries.
Board and Committee Information
During Fiscal 1997, the Company's Board of Directors held three
meetings and acted by unanimous written consent on twelve occasions. The
standing committees of the Company's Board of Directors are the Audit Committee,
the Compensation Committee, Employee Incentive Committee and the Executive
Committee. The Company does not have a Nominating Committee. The Audit
Committee, whose current members are Roger N. Gladstone, John P. Margaritis and
Arnold B. Pollard, will review the scope of accounting audits, review with the
independent auditors the corporate accounting practices and policies and
recommend to whom reports should be submitted within the Company, review with
the independent auditors their final report, review with internal and
independent auditors overall accounting and financial controls, and are
available to the independent auditors during the year for consultation purposes.
The Compensation Committee, whose current members are David M. Nussbaum, John P.
Margaritis and Arnold B. Pollard, will review and make recommendations to the
Board regarding salaries, compensation benefits (other than with respect to the
Company's 1991 Employee Incentive Plan ("1991 Plan") and IC Plan) of executive
officers and key employees of the Company, and will review any related party
transactions on an ongoing basis for potential conflicts of interest. The
Employee Incentive Committee, whose current members are John P. Margaritis and
Arnold B. Pollard, will administer and make all decisions with
6
<PAGE>
respect to the grant of awards under the 1991 Plan and IC Plan. The Executive
Committee, whose current members are David M. Nussbaum, Roger N. Gladstone and
Peter R. Kent, may address all matters handled by the Board of Directors, with
specified limitations. Each of the committees was established in August 1997,
other than the Executive Committee, which was established in September 1997, and
none of the committees held a meeting during Fiscal 1997.
The directors of the Company who are employed by the Company are not
compensated for their services as directors of the Company nor for any committee
participation. Directors who are not employed by the Company are paid $2,500 per
quarter. Each of Messrs. Margaritis and Pollard were paid $5,000 for their
services as directors during Fiscal 1997.
7
<PAGE>
Executive Compensation
The following table shows the cash compensation paid by the Company and
its subsidiaries, as well as certain other compensation paid or accrued, during
the fiscal years ended January 31, 1997, 1996 and 1995, to the Chief Executive
Officer of the Company and to the other four most highly compensated executive
officers of the Company whose compensation was $100,000 or greater during Fiscal
1997 (collectively "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Fiscal
Year Annual Compensation Restricted Securities All
Ended Stock Underlying Other
January Salary Bonus Awards(1) Options/SARS Compensation (2)
Name and Principal Position 31, ($) ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David M. Nussbaum 1997 240,000 252,986 337,986 -0- 1,314,090(3)
Chairman of the Board and Chief 1996 240,000 250,000 -0- 20,000 521,000
Executive Officer of the Company 1995 240,000 50,000 -0- -0- 482,000
and GKN Securities
- ------------------------------------------------------------------------------------------------------------------------------------
Roger N. Gladstone 1997 240,000 252,986 252,986 -0- 1,337,000(3)
President of the Company and GKN 1996 240,000 250,000 -0- 20,000 534,000
Securities 1995 240,000 50,000 -0- -0- 505,000
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Kent(4)
Chief Operating and Financial 1997 200,000 444,210 270,523 -0- -0-
Officer of the Company and GKN 1996 92,000 85,000 -0- 70,000 -0-
Securities 1995 -0- -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
Robert H. Gladstone 1997 240,000 252,986 337,986 6,666 1,301,359(3)
Executive Vice President of the 1996 240,000 250,000 -0- 20,000 549,000
Company and GKN Securities 1995 240,000 50,000 -0- -0- 553,000
- ------------------------------------------------------------------------------------------------------------------------------------
Lester Rosenkrantz 1997 157,500 140,746 98,582 -0- 86,164
Executive Vice President of the 1996 150,000 20,000 -0- -0- 19,000
Company and GKN Securities 1995 150,000 15,000 -0- 25,000 26,000
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Represents dollar values of restricted shares issued pursuant to the IC
Plan based on the closing price of Common Stock on the date of grant.
The IC Shares reported in the Summary Compensation Table vest, in
whole, on the third year anniversary from the date of grant. The
holders of the IC Shares have the right to vote such shares and to
receive dividends paid with respect to such shares. See "Compensation
Arrangements -- 1996 Incentive Compensation Plan."
(2) Primarily commissions paid on the brokerage of securities.
(3) Includes a payment from the proceeds of the sale of options to purchase securities in two companies of
$337,918, $337,918 and $282,709, to David M. Nussbaum, Roger N. Gladstone and Robert H. Gladstone,
respectively.
(4) Mr. Kent began employment with the Company on July 24, 1995.
</FN>
</TABLE>
8
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made by the
Company during Fiscal 1997 to each of the Named Officers.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
Individual Grants
Potential Realizable
Percent of Value at the Assumed
Total Annual Rates of Stock
Options/ Price Appreciation
Number of SARs Indicated Below for the
Securities Granted to Exercise Term of the Option
Underlying Employees Price of
Option/SARs in Fiscal Base Price Expiration 5% 10%
Name Granted (#) Year(%) ($/Sh) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
David M. Nussbaum......... -0- ---- ---- ---- ---- ----
Roger N. Gladstone -0- ---- ---- ---- ---- ----
Peter R. Kent -0- ---- ---- ---- ---- ----
Robert H. Gladstone....... 6,666(1) 1.7% $4.50 01/31/05 $18,931 $47,995
Lester Rosenkrantz -0- ---- ---- ---- ---- ----
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) 2,222 of which are currently exercisable and the remainder of which
become exercisable in two equal annual installments on December 31,
1997 and December 31, 1998.
</FN>
</TABLE>
9
<PAGE>
Option Exercises and Holdings
The following table sets forth information concerning the number and
value of unexercised options held by each of the Named Officers as of January
31, 1997.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs at In-The-Money Options/SARs
Acquired Value Fiscal Year-End (#)(1) at Fiscal Year-End ($)(2)
on Exercise Realized ---------------------- -------------------------
Name (#)(3) ($)(3) Exercisable Unexercisable Exercisable Unexercisable
------- ------ ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David M. Nussbaum 250,000 905,000 6,666 13,334 7,416 14,834
Roger N. Gladstone 250,000 905,000 6,666 13,334 7,416 14,834
Peter R. Kent -0- -0- 44,444 25,556 69,444 39,931
Lester Rosenkrantz -0- -0- -0- 25,000 -0- 1,563
Robert H. Gladstone 125,000 462,500 2,222 4,444 3,472 6,944
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Represents shares issuable upon exercise of options granted under the 1991 Plan.
(2) Based on the difference between the closing sale price of the Common
Stock on January 31, 1997 ($6 1/16) and the exercise price of the
option multiplied by the number of shares of Common Stock subject to
the option.
(3) In May 1996, David M. Nussbaum, Roger N. Gladstone and Robert H.
Gladstone exercised options to purchase 250,000, 250,000 and 125,000
shares of Common Stock, respectively, at an exercise price of $0.88 per
share for David M. Nussbaum and Roger N. Gladstone, and $0.80 per share
for Robert H. Gladstone. The purchase prices were paid by delivery to
the Company of shares of the Company's Common Stock owned by such
option holders, valued for this purpose of $4.50 per share.
</FN>
</TABLE>
10
<PAGE>
Stock Price Performance Graph
The Stock Price Performance Graph below compares cumulative
total return of the Company, the Nasdaq Stock Market - U.S. Index and a peer
group index selected by the Company.* The graph plots the growth in value of an
initial $100 investment over the indicated time periods, with dividends
reinvested. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
[Graph comparing cumulative total return of the Company with that of the Nasdaq
Stock Market- U.S. Index and a peer group selected by the Company]
* The peer group index is selected by the Company and is comprised of the
following companies engaged in the same business as the Company, each with
a market capitalization within $50,000,000 of the Company's market
capitalization: Advest Group, Inc., First Albany Companies Inc., Hoenig
Group Inc., Interstate/Johnson Lane, Inc., JW Charles Financial Services,
Inc., Kinnard Investments, Inc., Ryan Beck & Company, Inc., Scott &
Stringfellow Financial, Inc., Stifel Financial Corp., and Ziegler
Companies, Inc.
Compensation Arrangements
Employment Agreements Regarding Named Officers
The Company has employment agreements with each of David M.
Nussbaum, Roger N. Gladstone and Robert H. Gladstone which expire on April 30,
1999. Each agreement provides for an annual salary of $240,000 and the issuance
of up to 15% of any underwriter warrants issuable to the Company in connection
with its corporate finance and investment banking activities. Messrs. Nussbaum,
Gladstone and Gladstone each receive payments of 20% of the gross brokerage
commissions generated under any of his or each other's customer accounts (an
aggregate 60% pay-out) and they are also entitled to bonuses under the IC Plan
discussed below. The Company also has an employment agreement with Peter R. Kent
which expires on April 30, 1999 and provides for an annual salary of $200,000.
Mr. Kent is also entitled to bonuses under the IC Plan. The agreements with
David M. Nussbaum, Roger N. Gladstone, Robert H. Gladstone and Peter R. Kent
contain non-compete provisions, expiring one year after termination of
employment, which prohibit these persons from competing with the Company without
the prior written
11
<PAGE>
consent of the Company. The Board of Directors approved the annual salary of
Lester Rosenkrantz as $157,500 for Fiscal 1997. Mr. Rosenkrantz is also entitled
to commissions on his brokerage business and bonuses under the IC Plan.
1991 Employee Incentive Plan
In June 1991, the Company adopted and its stockholders
approved the 1991 Plan which, as amended, provides for the issuance of stock,
stock options and other stock purchase rights to executive officers and other
key employees and consultants who render significant services to the Company and
its subsidiaries. The 1991 Plan was adopted to provide the Board of Directors
with sufficient flexibility regarding the forms of incentive compensation which
the Company will have at its disposal to reward these persons. Under the 1991
Plan, both options intended to qualify as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended, and non-qualified options
may be granted. The Board of Directors has designated the Employee Incentive
Committee to administer and determine the distribution and terms of awards
granted under the 1991 Plan, pursuant to guidelines set forth in the 1991 Plan.
As of January 31, 1997, a total of 4,218,613 shares of Common Stock are reserved
for issuance pursuant to the 1991 Plan.
1996 Incentive Compensation Plan
In July 1996, the Company adopted and its stockholders
approved the IC Plan which, as amended, establishes an incentive compensation
pool equal to 25% of all pre-tax, pre-incentive compensation profits, once a 10%
pre-tax, pre-incentive return on beginning equity has been achieved. If the
Company's pre-tax, pre-incentive compensation profits are sufficient to
establish a bonus pool, such bonus pool would then be distributed to management
and business unit managers, in majority part, based upon a pre-fixed percentage
determined in the beginning of the fiscal year in question and, to a lesser
extent, based upon the discretion of the Employee Incentive Committee after such
fiscal year has ended. In the discretion of the Employee Incentive Committee, up
to 50% of the value of any award may be paid in restricted shares of Common
Stock, and up to 100% may be paid in restricted shares with the consent of the
recipient. The "restricted" shares will not vest, except in limited
circumstances, until three years after the date of grant. A total of 711,056
shares of Common Stock is currently reserved for issuance under the IC Plan. For
a further description of the IC Plan, see "Committee Report on Executive
Compensation -- Report."
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Background
The Board of Directors has established a Compensation
Committee which is charged with the responsibilities of establishing and
administering the policies and plans which govern compensation for executive
officers, including the Named Officers, reviewing and recommending to the Board
of Directors the level of compensation of the executive officers and key
employees of the Company (other than with respect to the 1991 Plan and IC Plan)
and reviewing related party transactions on an ongoing basis for potential
conflicts of interest. The Board of Directors has established an Employee
Incentive Committee which is responsible for administering and making all
decisions with respect to the grant of awards under the 1991 Plan and IC Plan.
Prior to the establishment of the Compensation Committee and
Employee Incentive Committee in August 1996, the Company entered into employment
agreements, dated as of May 1, 1996, with each of David M. Nussbaum, Roger N.
Gladstone, Robert H. Gladstone and Peter R. Kent, expiring in April 30, 1999,
which fixes the salaries of such persons and provides that they may receive
bonuses pursuant to the Company's IC Plan. In addition, the Board of Directors
authorized for Mr. Rosenkrantz an annual salary of $157,500 for Fiscal 1997 and
determined that he was eligible to receive bonuses under the IC Plan.
Accordingly, the Compensation Committee was not involved in establishing the
compensation for the Named Officers in Fiscal 1997. However, the Employee
Incentive Committee, as the administrator of the Company's IC Plan, did
determine, to a minor extent, the participation of each of the Named Officers in
the IC Plan for Fiscal 1997. Set forth below is the report of the Employee
Incentive Committee.
12
<PAGE>
Employee Incentive Committee Interlocks and Insider Participation.
For Fiscal 1997 the Employee Incentive Committee consisted of John P.
Margaritis and Arnold B. Pollard, each a non-employee director of the Company.
Report
Bonuses for executive management, including the Named
Officers, are established in accordance with the terms of the IC Plan. Pursuant
to the IC Plan, a bonus pool is determined annually equal to 25% of all pre-tax,
pre-incentive compensation profits of the Company once a 10% pre-tax,
pre-incentive compensation return on beginning equity has been achieved.
Accordingly, unless the Company has a specified minimum of pre-tax, pre-
incentive compensation profits, no bonuses are awarded under the IC Plan. This
reflects the policy of the Company to have the bonuses of executive management,
including the Named Officers, directly related to the performance of the
Company. If the Company's pre-tax, pre-incentive compensation profits are
sufficient to establish a bonus pool, such bonus pool would then be distributed
to executive management, including the Named Officers, in majority part, based
upon a pre-fixed percentage determined in the beginning of the fiscal year in
question and, to a lesser extent, based upon the discretion of the Employee
Incentive Committee after such fiscal year has ended. In the discretion of the
Employee Incentive Committee, up to 50% of the value of any award may be paid in
"restricted" shares of Common Stock, and up to 100% may be paid in "restricted"
shares with the consent of the recipient. The "restricted" shares will not vest,
except in limited circumstances, until three years after the date of grant. For
Fiscal 1997, the majority portion of the bonus pool (which the Board determined
would be 74% in Fiscal 1997) was awarded to executive management (including the
Named Officers) based upon percentages which were determined by the Board of
Directors in July 1996 (immediately upon inception of the IC Plan and prior to
the establishment of the Employee Incentive Committee). The remaining 26%
portion was awarded in accordance with the discretion of the Employee Incentive
Committee based upon a recommendation made to the committee by management of the
Company utilizing the following criteria: (a) the performance of the business
unit or units in which the employee participates or the accomplishments of the
office of the participant, and (b) the individual performance of the employee in
question from the viewpoints of (1) management responsibilities, (2) direct
production of revenues, (3) development of the Company's business, and (4)
promoting cooperation within and between business units. For Fiscal 1997, a
minimum of 50% of the value of the discretionary bonuses awarded to the Named
Officers was paid in restricted shares of the Company's Common Stock. Each of
Messrs. Nussbaum, Roger Gladstone, Robert Gladstone and Kent consented to
receiving his entire discretionary bonus in restricted shares.
The discretionary bonus awarded by the Employee Incentive
Committee under the IC Plan in Fiscal 1997 to David Nussbaum, the Chief
Executive Officer of the Company, was similarly based upon the recommendation of
management of the Company utilizing the criteria set forth above and considering
the following factors: Mr. Nussbaum's overall contribution to the performance of
the Company as a whole, his leadership of the Company, and his performance in
connection with the Company's growth, including growth resulting from the
integration of the operations of Shochet and GKN AG, the acquisition of Dalewood
and the acquisition of Southeast subsequent to the fiscal year end, as well as
the successful completion of the Company's initial public offering. The
recommendation and determination recognized that the Company achieved record
revenues, net income and net income per share in Fiscal 1997 and ended Fiscal
1997 with record stockholders' equity. The recommendation and determination was
not specifically linked in a quantitative manner to any quantitative measures
and no specific weight was assigned to any of these criteria or factors.
EMPLOYEE INCENTIVE COMMITTEE
John P. Margaritis
Arnold B. Pollard
Section 16(a) Beneficial Ownership Reporting Compliance
13
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers, directors and persons who beneficially
own more than ten percent of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
These reporting persons also are required to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely on
its review of the copies of such forms furnished to it and representations that
no other reports were required, all Section 16(a) reporting requirements were
complied with during Fiscal 1997, except that two monthly reports, each
reporting one acquisition of the Company's Common Stock, were filed late by
James Krantz.
CERTAIN TRANSACTIONS
In connection with its corporate finance and investment
banking activities, GKN Securities is often issued warrants to purchase
securities of the issuer for whom its services are rendered ("Underwriter
Warrants"). Less than half of the aggregate number of Underwriter Warrants
issuable to GKN Securities are issued to its executive officers and other
personnel involved in the transaction (collectively the "Individual Holders").
GKN Securities has, in the past, and may, in the future, purchase Underwriter
Warrants from the Individual Holders at a price equal to the market price of the
underlying securities less the exercise price of the Underwriter Warrants.
Additionally, GKN Securities has, in the past, and may, in the future, lend to
the Individual Holders funds to pay the exercise price of the Underwriter
Warrants, which loans are repaid, without interest, within a period of no more
than two weeks.
The Company obtains public relations services, including
investor relations and counseling services, from Ogilvy Adams & Rinehart, a
public relations firm of which Mr. Margaritis, a director of the Company, is the
President and Chief Executive Officer. In Fiscal 1997, the Company paid $96,903
to Ogilvy Adams & Rinehart for public relations services.
The Company has purchased and continues to purchase insurance
using York International Agency, Inc. ("York") as its agent. James I. Krantz, a
director of the Company, is President and Chief Executive Officer, a director
and a stockholder of York. In Fiscal 1997, the Company paid York premiums of
$364,490 for insurance policies purchased through York (a portion of which
amounts are paid by the insurer to York).
In the fiscal year ended January 31, 1995, the Company loaned
Mr. Lester Rosenkrantz, Executive Vice President and a Director of the Company,
an aggregate of $99,000. An additional $25,000 loan was made in the fiscal year
ended January 31, 1996. Mr. Rosenkrantz repaid $10,000 in December 1995 and
$20,000 in March 1996, leaving an aggregate outstanding principal balance as of
January 31, 1997 of $94,000. These loans are payable without interest and are
collateralized through the pledge by Mr. Rosenkrantz of his interest in certain
underwriter warrants.
INDEPENDENT ACCOUNTANTS
The Company has selected the independent accounting firm of
KPMG Peat Marwick LLP as the auditors of the Company for the fiscal year ending
January 31, 1998. A representative of KPMG Peat Marwick LLP is expected to be
present at the Annual Meeting. The representative will have the opportunity to
make a statement and will be available to respond to appropriate questions from
stockholders.
14
<PAGE>
FISCAL 1998 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1998 Annual Meeting
of Stockholders to be eligible for inclusion in the Company's Proxy Statement,
they must be received by the Company at its principal office in New York, New
York not later than January 3, 1998.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on
behalf of the Company and the cost of this solicitation is being paid by the
Company. In addition to the use of the mails, proxies may be solicited
personally or by telephone or telephone using the services of directors,
officers and regular employees of the Company at nominal cost. Banks, brokerage
firms and other custodians, nominees and fiduciaries will be reimbursed by the
Company for expenses incurred in sending proxy material to beneficial owners of
the Company's stock.
OTHER MATTERS
The Board of Directors knows of no matter which will be
presented for consideration at the Annual Meeting other than the matters
referred to in this Proxy Statement. Should any other matter properly come
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their best judgment.
Katherine Nathan, Secretary
New York, New York
May 2, 1997
15
<PAGE>
GKN HOLDING CORP. - PROXY
Solicited By The Board Of Directors
for Annual Meeting To Be Held on June 4, 1997
The undersigned Stockholder(s) of GKN HOLDING CORP., a Delaware
P corporation ("Company"), hereby appoints David M. Nussbaum, Roger N.
Gladstone and Peter R. Kent, or any one of them, with full power of
R substitution and to act without the others, as the agents, attorneys
and proxies of the undersigned, to vote the shares standing in the name
O of the undersigned at the Annual Meeting of Stockholders of the Company
to be held on June 4, 1997 and at all adjournments thereof. This proxy
X will be voted in accordance with the instructions given below. If no
instructions are given, this proxy will be voted FOR all of the
Y following proposals.
1. Election of the following Directors:
FOR all nominees listed below except WITHHOLD AUTHORITY to vote
as marked to the contrary below |_| for all nominees listed below |_|
Lester Rosenkrantz, James I. Krantz and Arnold B. Pollard
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
-----------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such
other business as may come before the meeting or any adjournment
thereof.
Date_______________________, 1997
---------------------------------
Signature
---------------------------------
Signature if held jointly
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
