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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 Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (Sections) 240.14a-11(c) or
(Sections) 240.14a-12
HOENIG GROUP INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):(1)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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HOENIG GROUP INC.
4 INTERNATIONAL DRIVE
RYE BROOK, NEW YORK 10573
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To the Stockholders of
Hoenig Group Inc.
The Annual Meeting of Stockholders of Hoenig Group Inc. (the "Company")
will be held at the Westchester Country Club, 99 Biltmore Avenue, Rye, New York
10580, on Thursday, May 18, 2000, at 11:00 a.m. local time, to consider and vote
upon:
1. The election of three Class III directors, each for a three-year term;
2. Approval of the Company's Amended and Restated 1996 Long-Term Stock
Incentive Plan; and
3. Such other matters as may properly come before the Annual Meeting.
The close of business on March 24, 2000 has been fixed as the record date
for the determination of the stockholders entitled to notice of, and to vote at,
the Annual Meeting and any adjournment thereof. The Company's stock transfer
books will not be closed.
By Order of the Board of Directors,
KATHRYN L. HOENIG
Secretary
Dated: April 17, 2000
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING. IF YOU DO
NOT EXPECT TO ATTEND THE MEETING AND WISH TO HAVE YOUR STOCK REPRESENTED AT THE
MEETING, PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING FORM OF PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
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HOENIG GROUP INC.
4 INTERNATIONAL DRIVE
RYE BROOK, NEW YORK 10573
------------------
PROXY STATEMENT
------------------
April 17, 2000
This Proxy Statement and the accompanying form of proxy are being furnished
beginning on or about April 17, 2000 to the holders of record (the
"Stockholders") of common stock, par value $0.01 per share (the "Common Stock"),
of Hoenig Group Inc., a Delaware corporation (the "Company"), in connection with
the 2000 Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Westchester Country Club, 99 Biltmore Avenue, Rye, New York 10580, on Thursday,
May 18, 2000, at 11:00 a.m. local time and any adjournment thereof.
RECORD DATE
The close of business on March 24, 2000 has been fixed as the record date
for the determination of Stockholders entitled to receive notice of, and to vote
at, the Annual Meeting and any adjournment thereof.
SOLICITATION
The accompanying form of proxy is solicited by the Board of Directors (the
"Board"). The Chief Operating Officer and the Secretary have been designated by
the Board to serve as proxies. All references to proxies herein refer to the
proxies solicited by the Board, unless otherwise specified. All proxies
delivered pursuant to this solicitation are revocable at the option of the
person executing the same at any time prior to the voting of the proxy by
delivering a valid superseding form of proxy or a written notice of revocation
signed in the same manner as the original form of proxy or by attending the
Annual Meeting and voting in person.
EXPENSES
The cost of this solicitation will be borne by the Company. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, who will receive no compensation for their services other than their
regular compensation, may solicit proxies in person or by mail, telephone,
telegram or otherwise. These persons will be reimbursed by the Company for any
expenses they incur. The Company also will reimburse brokers and other nominees
for their expenses.
ANNUAL REPORTS
The Company's Annual Report to Stockholders accompanies this Proxy
Statement. The Annual Report includes the financial statements and related
sections of the Company's Annual Report on Form 10-K (the "Form 10-K") for the
fiscal year ended December 31, 1999, without exhibits, which was filed by the
Company with the Securities and Exchange Commission (the "Commission").
The Company will provide without charge to each Stockholder, upon written
request, a copy of the Form 10-K. Stockholders should address such written
requests to Hoenig Group Inc., 4 International Drive, Rye Brook, New York 10573,
Attention: Stockholder Relations.
VOTING PROCEDURES
This Proxy Statement and the accompanying form of proxy are being mailed
beginning on or about April 17, 2000 to Stockholders as of the record date in
connection with the solicitation of proxies by the Board for the Annual Meeting.
The form of proxy, if returned properly executed and not subsequently revoked,
will be voted in accordance with the choices made by the Stockholder with
respect to the
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proposals listed thereon. If the Stockholder does not specify on the form of
proxy how the Stockholder's shares are to be voted, they will be voted "FOR"
the election of the nominees for director listed thereon and "FOR" approval of
the Company's Amended and Restated 1996 Long-Term Stock Incentive Plan. If any
other matters should be presented at the Annual Meeting, the persons designated
to serve as proxies will vote on such matters in accordance with a
determination by a majority of the Board.
If a Stockholder wishes to give a proxy to someone other than the persons
designated by the Board to serve as proxies, the two names appearing on the
accompanying form of proxy may be crossed out and the name of another person may
be inserted. The signed form of proxy should be presented at the Annual Meeting
by the person representing the Stockholder. Such person should have proof of
identification.
If a Stockholder is a corporation or other entity, the accompanying form of
proxy should be signed in the entity's name by an officer or other authorized
person. If signed as attorney, executor, administrator, trustee or guardian, the
signer's full title should be given and a certificate or other evidence of
appointment should be furnished.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote, as of the record date, present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the Annual Meeting. Stockholders will be entitled to cast one vote, in person
or by proxy, for each share of Common Stock they hold. If a quorum is present,
under Proposal I the three nominees for Class III director receiving the highest
number of votes will be elected. For all other matters to be voted upon at the
Annual Meeting, the affirmative vote of a majority of shares present in person
or represented by proxy and entitled to vote on the matter is necessary for
approval. Shares represented by proxies which are marked "withhold" for Proposal
I will have no effect on the election of directors, and those marked "abstain"
for Proposal II will have the same effect as a negative vote on such matter. In
addition, where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not provided voting instructions (commonly
referred to as "broker non-votes"), those shares will have no effect on the
outcome of any matter.
OUTSTANDING STOCK
As of the March 24, 2000 record date, there were 8,178,805 shares of Common
Stock outstanding. The Common Stock constitutes the only class of voting
securities issued by the Company.
OWNERSHIP OF COMMON STOCK OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of March 24, 2000 by (i) each person
known to the Company to beneficially own more than 5% of the outstanding Common
Stock, (ii) each director of the Company, (iii) the Company's Chief Executive
Officer and the four most highly compensated executive officers (determined
pursuant to the Commission's Regulation S-K Item 402(a)(3)), other than the
Chief Executive Officer, as of the end of 1999 (such persons including the Chief
Executive Officer are referred to herein as the "Named Executive Officers"), and
(iv) all current executive officers and directors of the Company as a group. The
number of shares deemed beneficially owned by a person includes shares of Common
Stock which such person has a right to acquire within sixty days of March 24,
2000. Each person named in the table has sole voting and dispositive power with
respect to the shares, except as otherwise indicated.
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<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENTAGE
TITLE OF CLASS OF BENEFICIAL OWNER(1) OWNERSHIP OF CLASS
- ---------------- ------------------------------------------- -------------------- -----------
<S> <C> <C> <C>
Common Stock Fredric P. Sapirstein(2)(3)(4) ............ 1,477,400(5) 16.0%
The Laura Hoenig Family Trust(2) .......... 1,115,788(6) 13.6%
Alan B. Herzog(2)(3)(4) ................... 1,038,282(7) 12.7%
Max H. Levine(2)(3)(4) .................... 979,767(8) 12.0%
Robert Spiegel(4) ......................... 365,718(9) 4.5%
Kathryn L. Hoenig(3)(4) ................... 147,499(10) 1.8%
Robin A. Green(3) ......................... 106,150(11) 1.3%
Martin F.C. Emmett(4) ..................... 73,000(12) 0.9%
Robert L. Cooney(4) ....................... 15,000(13) 0.2%
All executive officers and directors
as a group (10 people) ................. 4,218,316(14) 45.1%
</TABLE>
- ----------
(1) The address of each person listed above, except the Laura Hoenig Family
Trust (the "Hoenig Trust"), is in care of the Company, 4 International
Drive, Rye Brook, New York 10573. The Hoenig Trust's address is c/o
Swidler Berlin Shereff Friedman, LLP, 405 Lexington Avenue, New York, New
York 10174.
(2) Beneficial owner of more than 5% of the outstanding Common Stock.
(3) Named Executive Officer.
(4) Director.
(5) Includes options to purchase 1,035,000 shares of Common Stock granted
under the Company's 1991 Stock Option Plan (the "1991 Plan"), the 1994
Stock Option Plan (the "1994 Plan") and the 1996 Long-Term Stock
Incentive Plan (the "1996 Incentive Plan").
(6) Kathryn L. Hoenig (a director and executive officer of the Company),
Laura H. Hoenig, Susan C. Hoenig and Robert Spiegel (a director of the
Company) (collectively, the "Trustees") have been appointed the Trustees
of the Hoenig Trust. The Trustees collectively exercise voting and
dispositive power with respect to the shares beneficially owned by the
Hoenig Trust. Kathryn L. Hoenig, Laura H. Hoenig, Susan C. Hoenig and
Ronald H. Hoenig, Jr. are beneficiaries under the Hoenig Trust. Each of
the Trustees individually disclaims beneficial ownership of the shares
owned by the Hoenig Trust.
(7) Includes 121,100 shares of Common Stock that Mr. Herzog may be deemed to
beneficially own, which includes 80,000 shares of Common Stock owned by
Mr. Herzog's wife, 28,500 shares owned by his minor children and 12,600
shares owned by a private foundation of which Mr. Herzog is a director.
(8) Includes options to purchase 16,667 shares of Common Stock granted under
the 1996 Incentive Plan.
(9) Includes non-employee director options to purchase 16,000 shares of
Common Stock granted under the 1994 Plan and the 1996 Incentive Plan.
Does not include any shares owned by the Hoenig Trust, with respect to
which Mr. Spiegel is a Trustee. Mr. Spiegel disclaims beneficial
ownership of the shares owned by the Hoenig Trust.
(10) Includes options to purchase 32,499 shares of Common Stock granted under
the 1991 Plan and the 1996 Incentive Plan. Does not include any shares
owned by the Hoenig Trust, with respect to which Ms. Hoenig is a Trustee.
Ms. Hoenig disclaims beneficial ownership of the shares owned by the
Hoenig Trust.
(11) Includes options to purchase 40,000 shares of Common Stock granted under
the 1991 Plan, the 1994 Plan and the 1996 Incentive Plan.
(12) Includes non-employee director options to purchase 16,000 shares of
Common Stock granted under the 1994 Plan and the 1996 Incentive Plan.
(13) Includes non-employee director options to purchase 10,000 shares of
Common Stock granted under the 1994 Plan.
(14) Includes options to purchase 1,139,166 shares of Common Stock granted to
certain executive officers under the 1991 Plan, the 1994 Plan and the
1996 Incentive Plan, and options to purchase 42,000 shares granted to
non-employee directors under the 1994 Plan and the 1996 Incentive Plan.
Does not include the 1,115,788 shares of Common Stock owned by the Hoenig
Trust.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the directors and executive officers of the
Company:
NAME AGE POSITION
---- --- --------
Fredric P. Sapirstein 57 Chairman of the Board, Chief Executive
Officer, President, and Class III Director,
and Chairman and Chief Executive Officer of
Hoenig & Co., Inc.
Max H. Levine 59 Executive Vice President and Class II
Director, and President of Hoenig & Co., Inc.
Alan B. Herzog 42 Executive Vice President, Chief Operating
Officer, Chief Financial Officer, Treasurer,
and Class I Director, and Chief Operating
Officer and Chief Financial Officer of Hoenig
& Co., Inc.
Kathryn L. Hoenig 38 Vice President, General Counsel, Secretary,
and Class III Director, and Secretary of
Hoenig & Co., Inc.
Robert L. Cooney 66 Class III Director
Martin F.C. Emmett 65 Class I Director
Robert Spiegel 63 Class I Director
Robin A. Green 35 Managing Director of Hoenig (Far East) Limited
Hugh Humfrey 44 Managing Director of Hoenig & Company Limited
Seth M. Lynn, Jr. 51 Chief Executive Officer and President of
Axe-Houghton Associates, Inc.
Information with respect to the business experience and affiliations of
the directors and executive officers is set forth below:
Class I Directors
Alan B. Herzog, has been the Executive Vice President, Chief Operating
Officer, Treasurer and a director of the Company since its formation in 1991. He
also has served as Chief Financial Officer of the Company and of Hoenig & Co.,
Inc. ("Hoenig"), a wholly-owned subsidiary of the Company, since February 1997
and from 1982 until November 1995, and as Chief Operating Officer of Hoenig
since April 1997. Mr. Herzog also has served at Hoenig as Chief Executive
Officer from November 1995 until April 1997, as Treasurer since 1982, and as a
director since 1987. Mr. Herzog has served as a director of Axe-Houghton
Associates, Inc. ("Axe-Houghton"), a wholly-owned subsidiary of the Company,
since April 1993, and as Treasurer of Axe-Houghton since December 1993. He also
is a director of Hoenig & Company Limited ("Limited") and Hoenig (Far East)
Limited ("Far East"), which are wholly-owned subsidiaries of the Company. Mr.
Herzog is a Certified Public Accountant and a graduate of The Wharton School,
University of Pennsylvania.
Martin F.C. Emmett, has been a director of the Company since May 1994. From
April 1989 until June 1993, Mr. Emmett served as Chief Executive Officer and
Chairman of the Board of Tambrands, Inc., a manufacturer and marketer of Tampax
tampons. From 1983 until 1989, he was Chairman of Security Pacific Burns Fry, a
New York investment banking firm. Mr. Emmett currently serves on the Board of
Visitors of the Fuqua School of Business at Duke University.
Robert Spiegel, has been a director of the Company since its formation in
1991 and of Axe-Houghton since October 1994. He also has served as a director of
Hoenig from 1987 until May 1995. Mr. Spiegel
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served as Chairman of the Board, Chief Executive Officer and President of RJR
Drug Distributors, Inc., a privately-owned discount drug retailer based in
Louisville, Kentucky, from 1984 until May 1995. He currently serves as a
director of Gunther International, Ltd., (a Nasdaq Bulletin Board listed
company) based in Norwich, Connecticut, which designs, develops, assembles,
markets and services high-tech systems that assemble and bind printed
documents, and as a member of the Advisory Board of Ivy Asset Management, a
registered investment adviser specializing in alternative investments. Mr.
Spiegel graduated from The Wharton School, University of Pennsylvania.
Class II Directors
Max H. Levine, a founder of Hoenig, has been a director and Executive Vice
President of the Company since its formation in 1991, and has served as
President of Hoenig since November 1995 and as a director and Head of Trading at
Hoenig since Hoenig's inception in 1970. He also has served as a director of
Axe-Houghton from September 1994 until May 1997 and from April 1993 until
February 1994, and of Far East from October 1994 until May 1997. He is a member
of the Board of Trustees of Ithaca College, the Executive Committee of Albert
Einstein College of Medicine and the Wall Street Committee for St. Jude's. Mr.
Levine is a graduate of Colgate University.
Class III Directors
Fredric P. Sapirstein, has served as Chairman of the Board, Chief Executive
Officer and President of the Company since September 1996. He also has served as
Chief Executive Officer of Hoenig since April 1997. Mr. Sapirstein has served as
a director of all of the Company's subsidiaries since September 1996. Before
joining the Company, Mr. Sapirstein was employed by Bear Stearns & Co., Inc. as
Managing Director, Head of Asian Investment Banking since 1995, and as Managing
Director, Head of International Equity Capital Markets from 1994 until 1995.
From 1991 until 1994, Mr. Sapirstein was a principal of FPS Management, Inc., a
private investment management and consulting firm which he founded. From 1968
until 1990, he was employed at Schroder Wertheim & Co., Inc. in various
positions, including as Chief Executive Officer of Equities Services. Mr.
Sapirstein is a graduate of Tulane University.
Kathryn L. Hoenig, has been a director of the Company since January 1996
and has served as General Counsel of the Company since November 1995 and of
Hoenig from April 1992 until September 1998. She also has served as Secretary of
the Company and of Hoenig since May 1992. She has been Secretary of Axe-Houghton
since December 1993 and a director of Axe-Houghton since October 1994. Ms.
Hoenig is a graduate of Duke University and New York University School of Law.
Robert L. Cooney, has been a director of the Company since February 1997.
He currently serves as a partner of Cooney, Schroeder & Co., a private
financial consulting firm that he founded in February 1997. From 1977 until
January 1997, Mr. Cooney was Managing Director, Equity Capital Markets at
Credit Suisse First Boston. He serves as a director of Edison Control
Corporation, a Nasdaq National Market company which manufactures and
distributes systems of pipes, couplings, hoses and other equipment used in
pumping concrete. Mr. Cooney also serves as a director of Equity ONE, Inc. a
New York Stock Exchange-listed diversified real estate trust based in Miami,
Florida. Mr. Cooney is a graduate of the College of the Holy Cross and Harvard
Business School.
Non-Director Executive Officers
Robin A. Green, has been Managing Director of Far East since April 1995 and
a director of Far East since February 1995. From July 1988 until April 1995, he
served as Chief Financial Officer and Secretary of Limited, and he has been a
director of Limited since 1990. He also was a Vice President of Hoenig from
February through March 1995. From August 1985 until July 1988, Mr. Green was
employed by Touche Ross & Co., Chartered Accountants. Mr. Green is a member of
the Institute of Chartered Accountants of Scotland and a graduate of the
University of Glasgow.
Hugh Humfrey, has been Managing Director of Limited since January 2000 and
a director of Limited since May 1999. Mr. Humfrey joined Limited in May 1999 as
Managing Director Designate. Prior to
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joining Limited, Mr. Humfrey was employed by Fidelity Investments in London
from 1994 until 1998, as Managing Director of the Investment Adviser Group
(1994-1996) and Managing Director of Global Brokerage Services (1996-1998).
Seth M. Lynn, Jr., has served as Chief Executive Officer, President and a
director of Axe-Houghton since 1984. He also has served as Chairman of the
Board of Directors of Axe-Houghton since October 1996 and from 1984 through
August 1994. Mr. Lynn is a graduate of Yale University and The Wharton School,
University of Pennsylvania.
Pursuant to the By-laws of the Company and its subsidiaries, each
executive officer generally serves until his or her successor is chosen or
until his or her earlier resignation or removal. Pursuant to their employment
or other agreements, each of Messrs. Sapirstein, Levine and Herzog have agreed
that, if their employment with the Company terminates for any reason, he will
no longer serve as a director of the Company. See "Employment Agreements with
Certain Named Executive Officers".
There is no family relationship among any of the directors or executive
officers of the Company. Kathryn L. Hoenig and Robert Spiegel each serves as an
executor of the Estate of Ronald H. Hoenig and as a Trustee of the Hoenig
Trust.
PROPOSAL I
ELECTION OF DIRECTORS
Pursuant to the provisions of the Company's Certificate of Incorporation
and By-laws, the Board has fixed the number of directors at seven.
The directors are divided into three classes, designated Class I, Class II
and Class III. The Class I, Class II and Class III directors have been or will
be elected to serve for a term of three years and until their respective
successors are elected and qualified at the Annual Meeting of Stockholders in
2001, 2002 and 2000, respectively. The Class I directors are Martin F.C. Emmett,
Alan B. Herzog and Robert Spiegel; the Class II director is Max H. Levine; and
the Class III directors are Robert L. Cooney, Kathryn L. Hoenig and Fredric P.
Sapirstein.
Three Class III directors are to be elected at the Annual Meeting, each for
a term of three years and until the election and qualification of a successor.
The Board recommends that the Stockholders elect Robert L. Cooney, Kathryn L.
Hoenig and Fredric P. Sapirstein as Class III directors. Each nominee currently
is a Class III director. Proxies will be voted for Messrs. Cooney and Sapirstein
and Ms. Hoenig as Class III directors, unless otherwise specified on the form of
proxy. Class I and Class II directors will not be elected at the Annual Meeting.
If any nominee should become unavailable to serve at the time of the
Annual Meeting, the shares represented by proxies will be voted for any
substitute nominee designated by the Board. If no substitute is designated, the
size of the Board may be reduced. The Board knows of no reason why any nominee
will be unavailable to serve.
COMPENSATION OF DIRECTORS
During 1999, non-employee directors (i.e., directors who are not employed
by the Company or any of its subsidiaries) received an annual retainer of
$15,000, reimbursement of expenses and $500 for attendance at each meeting of
the Board or any committee thereof. In addition, each non-employee director
serving as Chairman of any committee of the Board received an annual stipend of
$3,000. Each non-employee director has been granted five-year options (each, a
"Director Option") to purchase 10,000 shares of Common Stock at an exercise
price per share equal to the fair market value on the date of grant, which vests
as follows: 4,000 shares on the first anniversary of the date of grant; 3,000
shares on the second anniversary of the date of grant; and 3,000 shares on the
third anniversary of the date of grant. Each non-employee director will be
granted a Director Option upon joining the Board (the "Appointment Date"), and
on the third anniversary of such Appointment Date and every three years
thereafter. Directors who are officers or employees of the Company or any of its
subsidiaries receive no
6
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compensation for their services as directors, other than their regular
compensation for services as such officers or employees; nor are they eligible
to be granted Director Options.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board has responsibility for establishing broad corporate policies and
for the overall performance of the Company, although it is not involved in
day-to-day operating details. The members of the Board who are not senior
officers of the Company are kept informed of the Company's business by reports
and documents given to them from time to time, as well as by operating,
financial and other reports made at Board and committee meetings. The standing
committees established by the Board to assist it in the discharge of its
responsibilities are described below.
Regular meetings of the Board are held four times per year and special
meetings are scheduled when required. The Board held four regular meetings and
five special meetings in 1999.
The Board has an Audit Committee which recommends to the Board the
accounting firm to be selected as independent public accountants of the Company,
reviews recommendations made by the independent public accountants concerning
the Company's accounting methods and systems of internal controls, reviews and
reports to the Board with respect to the annual audit conducted by the Company's
independent public accountants and reviews with the independent public
accountants their relationship with management. The Audit Committee met three
times in 1999. The Audit Committee is composed entirely of independent,
non-employee directors. In 1999, Robert Cooney served as Chairman of the Audit
Committee, the other members of which were Martin F.C. Emmett and Robert
Spiegel.
The Board also has a Compensation and Stock Option Committee which is
responsible for determining and overseeing the policies and plans which relate
to the compensation of the Company's executive officers and certain other
employees. The Compensation and Stock Option Committee also is responsible for
administering the Company's stock purchase plans, stock option plans, the
Section 162(m) Cash Bonus Plan (the "Section 162(m) Plan") and the 1996
Incentive Plan. The Compensation and Stock Option Committee is composed entirely
of non-employee directors. The Compensation and Stock Option Committee held
eight meetings in 1999. The Compensation and Stock Option Committee is composed
of Martin F.C. Emmett (Chairman), Robert Spiegel and Robert L. Cooney.
The Board has a Nominating Committee which is responsible for reviewing
potential director candidates and for recommending qualified candidates for
nomination and election to the Board, including the slate of nominees for
director to be elected by the Stockholders and any directors to be elected by
the Board to fill vacancies. In 1999, the Nominating Committee consisted of
Robert Spiegel (Chairman), Robert Cooney, Martin F.C. Emmett and Fredric P.
Sapirstein. The Nominating Committee met once in 1999. The Nominating Committee
will consider qualified director candidates recommended by Stockholders. In
addition, under the advance notice provision of the Company's By-laws, a
Stockholder who wishes to propose a candidate for election to the Board at an
annual meeting of Stockholders must give written notice of such intention to the
Secretary of the Company not later than ninety (90) days in advance of the date
upon which notice of the prior year's annual meeting of Stockholders was first
given. In the case of a special meeting of Stockholders, such written notice
must be given to the Secretary of the Company not later than the close of
business on the seventh day after the date on which notice of such meeting was
first given. The deadline for such notice with respect to the Company's 2001
Annual Meeting of Stockholders is January 17, 2001. Such notice must contain the
information required by, and follow the procedures contained in, the Company's
By-laws.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
This report is being made by the Compensation and Stock Option Committee
(the "Committee") of the Board, which is composed entirely of non-employee
directors. The Committee is responsible for determining and overseeing the
policies and plans which relate to the compensation of the Company's
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executive officers and certain other employees, including the Named Executive
Officers referred to in this Proxy Statement. In addition, the Committee is
responsible for administering the Company's stock option plans and other
long-term incentive and executive compensation plans and for making awards
under those plans. The Committee also reviews the terms of formal employment
agreements of executive officers and of others where the employment agreements
provide for annual compensation in excess of certain levels. The purpose of
this report is to describe the Company's executive compensation program and to
discuss the factors that the Committee considered in determining the 1999
compensation of the Company's Chief Executive Officer and the other executive
officers, including the Named Executive Officers.
Executive Compensation Program
The Company's executive compensation program is based on the philosophy
that maintaining and motivating a qualified management team are essential for
the growth and prosperity of the Company, which will inure to the benefit of the
Stockholders. To that end, the Company's compensation policies and practices are
designed to attract, retain and reward executive officers who contribute to the
success of the Company's business. From time to time, the Committee consults
with William M. Mercer, Incorporated ("Mercer"), a compensation consultation
firm which advises the Committee, and other compensation specialists regarding
compensation issues.
The Company's compensation program consists of the following components:
(i) base salary; (ii) performance bonuses generally awarded after the end of the
year or other applicable performance period; (iii) long-term, equity-based
compensation in the form of stock options and other stock-based awards under the
Company's 1996 Incentive Plan; and (iv) contributions to employee benefit plans
(e.g., profit-sharing plans). With respect to certain executives, the Company is
contractually committed under employment agreements to provide specified minimum
salaries, cash bonuses and perquisites and to grant stock options and other
stock-based awards on certain pre-determined terms subject to the Committee's
approval.
Base salaries for executive officers are set at levels which the Committee
believes are generally competitive with salaries of similarly positioned
executives at comparable brokerage and financial services companies.
Recommendations regarding annual performance bonuses are made by management to
the Committee, which is responsible for reviewing and approving annual
performance bonuses for executive officers.
Increasingly, annual performance bonuses and, in some cases equity awards,
for executive officers with execution, sales or other revenue generating
responsibilities are determined based on objective, revenue- or profit-based
formulas. While the Committee believes in the use of objective performance
measures, such as those described in the Company's Section 162(m) Plan, it
recognizes that there are important corporate goals, which are not capable of
objective measurement, that management should be incentivized to achieve.
Accordingly, the Committee may approve the payment of subjective performance
bonuses that are not based on objective formulas to reward the achievement of
non-quantitative goals. For those executive officers serving primarily in
managerial or administrative roles, performance bonuses generally have been
determined on a subjective basis after consideration of the executive's
individual and departmental performance, his or her contribution to the
Company's financial results and business operations for the year and the
executive's importance to the future growth and long-term development of the
Company's business.
The Company's long-term, stock-based compensation to date has consisted of
grants of U.S. incentive stock options, U.K. tax-qualified stock options, U.S.
non-qualified stock options, deferred stock awards and restricted stock grants.
Stock-based awards typically are granted to those executive officers and
employees who have contributed to the growth and profitability of the Company or
have demonstrated outstanding performance, as well as to those who can be
expected to make such contributions in the future. The majority of stock-based
awards approved by the Committee are intended to compensate the recipient for
past performance; however, the Committee also believes in using equity-based
awards to retain key employees and to attract new talent to the Company. The
1996 Incentive Plan affords the Committee flexibility to award a variety of
equity-based incentives to executive officers and other key
8
<PAGE>
employees and consultants. The Committee and the Board have approved, and are
recommending that the Stockholders approve at the Annual Meeting, an increase
of 1,000,000 shares in the number of shares of Common Stock that may be
delivered under the 1996 Incentive Plan. See Proposal II, "Approval of the
Company's Amended and Restated 1996 Long-Term Stock Incentive Plan".
It is the Committee's general policy to grant stock-based awards subject
to time-based or performance-based vesting. As a general rule, stock options
and deferred stock grants are subject to three-year vesting, with one-third of
the award vesting on each anniversary of the grant date. The Committee believes
that stock options, deferred stock and other long-term, stock-based
compensation serve to align the interests of employees with those of
Stockholders and help to retain key employees. These awards serve the interests
of the Company and Stockholders by encouraging recipients to focus on the
long-term growth of Stockholder value.
The Company also maintains voluntary contributory profit-sharing plans
which cover substantially all of its employees in the United States, the United
Kingdom, Hong Kong and Tokyo. The Company generally makes discretionary
contributions to these plans based upon, among other things, the Company's
performance. For the year ended December 31, 1999, the Company contributed a
total of $556,587 to these plans.
The Company also maintains employee stock purchase plans which enable
eligible employees (both U.S.-based and, where permissible, foreign) to purchase
up to $25,000 worth of the Company's Common Stock a year at a 15% discount to
the market price. The Company has reserved 500,000 shares for issuance under
these plans. Employees owning 1% or more of the Company's Common Stock are not
eligible to participate in the plans.
As indicated in previous Committee reports and reflected by the adoption of
the Section 162(m) Plan in 1996, the Company generally intends to take steps
necessary to comply with the deduction limitation of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder. However, there may be circumstances where it may be in the best
interests of the Company and its Stockholders to pay compensation which exceeds
the limitations of Section 162(m) even though such compensation may not be fully
deductible.
1999 Executive Officer Compensation
The 1999 compensation of executive officers consisted of three principal
components: (i) a fixed cash salary, generally determined prior to the beginning
of the year; (ii) a cash performance bonus, generally paid after the end of the
year or other applicable performance period; and (iii) stock-based awards. In
addition, the Company paid life insurance premiums on behalf of employees,
including executive officers, with respect to policies owned by such employees,
made contributions to the Company's profit-sharing plans and, in the case of one
executive officer who was relocated to a foreign subsidiary in 1995, provided a
housing allowance and paid certain personal travel expenses incurred during
trips to the executive's previous home.
In addition to Fredric P. Sapirstein, one other Named Executive Officer was
employed by the Company during 1999 pursuant to an employment agreement which
provided for minimum annual salary, a cash bonus, stock options and other
compensation, such as perquisites. This agreement was entered into at the end of
1998 and took effect on January 1, 1999. The terms of this agreement, including
the provisions requiring the Company to make certain payments to the executive
officer in the event of a termination "other than for cause" or for "good
reason" (as defined in the agreement), are described more fully in "Employment
Agreements with Certain Named Executive Officers" in this Proxy Statement.
In reviewing management's recommendations with respect to 1999 performance
bonuses and stock-based awards for executive officers, the Committee reviewed
the following: (i) the terms of any employment agreement between the executive
and the Company and any applicable bonus formula; (ii) for each executive
officer, information concerning salary, cash bonus, perquisites, life insurance
premiums paid, payments made to the Company's employee benefit plans and
stock-based awards for the last three years; (iii) relevant compensation data;
(iv) the executive officer's individual performance and contribu-
9
<PAGE>
tion to the Company's short- and long-term results; and (v) the Company's
financial results for 1999. In reviewing the Company's 1999 financial
performance, the Committee considered the improvement in the Company's operating
results in 1999, which was consistent across all of the Company's business
lines, as well as the growth in operating income and return on equity.
The Committee used pre-determined formulas based on profitability in
determining 1999 performance bonuses for two Named Executive Officers. With
respect to the other executive officers, the Committee attempted to provide
total compensation which was competitive yet consistent with the executive
officer's individual performance and the Company's financial results in 1999.
With respect to executive officers with managerial responsibility for the
Company's brokerage subsidiaries, the Committee considered the financial
performance of the particular subsidiary, including growth in revenues and
profitability, in determining such executive officer's cash bonus for 1999.
The Committee made long-term stock-based awards (option grants) to two of
the Named Executive Officers, other than the Chief Executive Officer, in
recognition of strong performance in 1999. The Committee also awarded stock
options to one other Named Executive Officer in 1999 as part of a new employment
agreement which took effect in 1999. Based on the recommendation of management,
the Committee approved salary increases for 2000 with respect to two Named
Executive Officers.
1999 Chief Executive Officer Compensation
Mr. Sapirstein's 1999 compensation consisted of salary, a cash bonus, the
payment of life insurance premiums and a contribution to the Company's
profit-sharing plan. All amounts paid to Mr. Sapirstein as salary in 1999 were
based upon the terms of his employment agreement then in effect.
Mr. Sapirstein's cash bonus for 1999 was determined under an incentive plan
that was approved by the Committee and the Board in March 1999 (the "1999 CEO
Incentive Plan"). The 1999 CEO Incentive Plan consists of two components: (i) an
objective, formula-based component under the Section 162(m) Plan based upon the
achievement of pre-determined financial goals, and (ii) a subjective component
based upon the Committee's assessment of non-financial measures. The 1999 CEO
Incentive Plan also provides that Mr. Sapirstein's total cash compensation for
1999 cannot exceed 15% of the Company's 1999 pre-tax income, after total
compensation expenses, and that the subjective component of the 1999 CEO
Incentive Plan cannot exceed approximately $600,000. Based on the Company's
pre-tax income for 1999, Mr. Sapirstein's cash compensation for 1999 could not
exceed $1,438,000.
Mr. Sapirstein received a salary of $400,000 (the same as in 1998) in 1999
and a cash bonus of $787,000 under the 1999 CEO Incentive Plan based upon the
objective component of the 1999 CEO Incentive Plan. The objective component of
the 1999 CEO Incentive Plan consisted of two, pre-determined, objective
financial goals. The Committee did not make a separate cash bonus award under
the subjective component of the 1999 CEO Incentive Plan.
The Committee also awarded Mr. Sapirstein a ten-year non-qualified stock
option to purchase 150,000 shares of Common Stock at the market price of the
Common Stock on the date of grant, which vests one-third on each of the first
three anniversaries of the grant date. The Committee awarded Mr. Sapirstein the
stock option as part of a new employment agreement between the Company and Mr.
Sapirstein which took effect on January 1, 2000. Mr. Sapirstein's new
employment agreement, including the provisions requiring the Company to make
certain payments in the event of a termination "other than for cause" or for
"good reason", is described in "Employment Agreements with Certain Named
Executive Officers". The Committee did not make any additional long-term,
stock-based awards to Mr. Sapirstein with respect to his performance in 1999.
COMPENSATION AND STOCK OPTION COMMITTEE
Martin F.C. Emmett, Chairman
Robert L. Cooney
Robert Spiegel
10
<PAGE>
COMPENSATION TABLES
The following tables contain compensation data for the Named Executive
Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ----------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) ($)
- ----------------------------- ------ ---------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Fredric P. Sapirstein 1999 400,000(2) 787,000 150,000(3) 9,836
Chairman, Chief Executive 1998 400,000(2) 1,100,000 45,000(3) 9,974
Officer and President 1997 400,000(2) 410,000 180,000(3) 7,000
Max H. Levine 1999 400,000(2) 1,803,249 50,000(4) 9,836
Executive Vice President 1998 400,000(2) 792,302 -- 9,974
1997 400,000(2) 732,121 -- 7,000
Robin A. Green 1999 255,000 350,000 50,000(5) 173,041
Managing Director, 1998 230,000 175,000 -- 162,056
Hoenig (Far East) Limited 1997 230,000 230,000 30,000(5) 165,194
Alan B. Herzog 1999 275,000 225,000 -- 9,836
Executive Vice President, 1998 275,000 175,000 -- 9,974
COO, CFO and Treasurer 1997 275,000 135,000 -- 7,000
Kathryn L. Hoenig 1999 250,000 200,000 25,000(6) 9,836
General Counsel 1998 200,000 165,000 25,000(6) 9,974
and Secretary 1997 200,000 115,000 25,000(6) 7,000
</TABLE>
- ----------
(1) For 1999, consists of annual contributions on behalf of the following
Named Executive Officers to the Company's profit-sharing plans as
follows: Fredric P. Sapirstein ($9,836); Max H. Levine ($9,836); Alan B.
Herzog ($9,836); Robin A. Green ($25,500); and Kathryn L. Hoenig
($9,836). For Mr. Green, includes a housing allowance of $133,303 in 1999
and personal travel expenses of $14,238 in 1999 provided in connection
with his assignment in Hong Kong.
(2) The 1999 salaries of Messrs. Sapirstein and Levine were as provided in
their respective employment agreements. See "Employment Agreements with
Certain Named Executive Officers".
(3) On January 25, 2000, Mr. Sapirstein was granted a ten-year non-qualified
option to purchase 150,000 shares of Common Stock at an exercise price of
$9.437 per share, which vests one-third on each of January 25, 2001,
January 25, 2002 and January 25, 2003, pursuant to the terms of Mr.
Sapirstein's new employment agreement with the Company, which took effect
on January 1, 2000. On January 20, 1999, Mr. Sapirstein was granted a
ten-year incentive stock option to purchase 45,000 shares of Common Stock
at an exercise price of $6.50 per share, which vests one-third on each of
January 20, 2000, January 20, 2001 and January 20, 2002, as part of his
1998 compensation. On January 29, 1998, Mr. Sapirstein was granted a
ten-year non-qualified option to purchase 180,000 shares of Common Stock
at an exercise price of $6.1875 per share, which vests one-third on each
of January 29, 1999, January 29, 2000 and January 29, 2001, as part of
his 1997 compensation.
(4) On January 4, 1999, Mr. Levine was granted a ten-year non-qualified
option to purchase 50,000 shares of Common Stock at an exercise price of
$6.375 per share, which vests with respect to 16,667 shares on each of
January 4, 2000 and January 4, 2001 and with respect to 16,666 shares on
January 4, 2002. This option was granted pursuant to the terms of Mr.
Levine's employment agreement with the Company, dated October 8, 1998,
which took effect on January 1, 1999.
(5) On January 25, 2000, Mr. Green was granted a ten-year non-qualified
option to purchase 50,000 shares of Common Stock at an exercise price of
$9.437 per share, which vests with respect to 16,667 shares on each of
January 25, 2001, and January 25, 2002 and with respect to 16,666 shares
on January 25, 2003, as part of his 1999 compensation. On January 29,
1998, Mr. Green was granted a ten-year non-qualified option to purchase
30,000 shares of Common Stock at an exercise price of $6.1875 per share,
which vests one-third on each of January 29, 1999, January 29, 2000 and
January 29, 2001, as part of his 1997 compensation.
(6) On January 25, 2000, Ms. Hoenig was granted a ten-year non-qualified
option to purchase 25,000 shares of Common Stock at an exercise price of
$9.437 per share, which vests with respect to 8,333 shares on each of
January 25, 2001 and January 25, 2002 and with respect to 8,334 shares on
January 25, 2003, as part of her 1999 compensation. On January 20, 1999,
Ms. Hoenig was granted a ten-year incentive stock option to purchase
25,000 shares of Common Stock at an exercise price of $6.50, which vests
with respect to 8,333 shares on each of January 20, 2000 and January 20,
2001 and with respect to 8,334 shares on January 20, 2002, as part of her
1998 compensation. On January 29, 1998, Ms. Hoenig was granted a ten-year
incentive stock option to purchase 25,000 shares of Common Stock at an
exercise price of $6.188, which vests with respect to 8,333 shares on
each of January 29, 1999 and January 29, 2000 and with respect to 8,334
shares on January 29, 2001, as part of her 1997 compensation.
11
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
--------------------------------------------------------------------------- -----------------
NUMBER OF % OF TOTAL MARKET
SECURITIES OPTIONS PRICE ON
UNDERLYING GRANTED TO DATE OF
OPTIONS GRANTED EMPLOYEES EXERCISE PRICE GRANT EXPIRATION
NAME (#) IN FISCAL YEAR ($/SHARE) ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------- ----------------- ---------------- ---------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fredric P. Sapirstein 45,000 12.0% 6.50 6.50 01/19/09 80,812 178,574
Max H. Levine 50,000 13.4% 6.375 6.375 01/03/09 88,065 194,600
Kathryn L. Hoenig 25,000 6.7% 6.50 6.50 01/19/09 44,896 99,208
</TABLE>
- ----------
(1) Does not include options granted in January 2000.
(2) The potential realizable values shown in this table are the result of
calculations at stock price appreciation rates specified by the
Commission and are not intended to forecast actual future appreciation
rates of the price of the Common Stock. The Named Executive Officers will
realize no value from the exercise of the options if the price of the
Common Stock does not appreciate above the exercise price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
----------------------------- ------------------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE ($) UNEXERCISABLE ($)
- ----------------------- ----------------- -------------- ------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Fredric P. Sapirstein 0 0 960,000 165,000 4,558,720 491,190
Max H. Levine 0 0 0 50,000 0 143,750
Robin A. Green 0 0 30,000 20,000 166,618 61,240
Kathryn L. Hoenig 0 0 15,833 41,667 64,891 119,784
</TABLE>
- ----------
(1) Does not include options granted in January 2000.
(2) Based on the last sales price of the Common Stock on December 31, 1999,
less the exercise price.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total stockholder
return (assuming reinvestment of cash dividends, to the extent applicable) of
the Common Stock with the CRSP Total Return Index for the Nasdaq Stock Market
(U.S. Companies) ("Nasdaq Composite") and a "peer group" consisting of ten
publicly-traded brokerage and financial services firms.
FIVE-YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
HOENIG GROUP INC. VS. NASDAQ COMPOSITE AND PEER GROUP
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN FROM DECEMBER 31, 1994 TO
DECEMBER 31, 1999
[GRAPHIC OMITTED]
NOTES: Assumes $100 invested on 12/31/94 in Hoenig Group Inc. Common Stock, in
the Nasdaq Composite, and in the Peer Group. Reflects month-end
dividend reinvestment and annual reweighting of the Peer Group
portfolio.
The companies included in the Peer Group are: Advest Group Inc., Dain
Rauscher Corp., Edwards (AG) Inc., First Albany Companies Inc.,
Jefferies Group Inc., Kinnard Investments Inc., Legg Mason Inc.,
Southwest Securities Group Inc., Stifel Financial Corp., and Ziegler
Co., Inc.
Two companies that formerly were in the Peer Group --
Interstate/Johnson Lane Inc. and Scott & Stringfellow Financial --
ceased to be independent, public companies in 1999.
INDEX DATA Dec94 Dec95 Dec96 Dec97 Dec98 Dec99
Hoenig Group Inc. $ 100 $ 117 $ 156 $ 193 $ 211 $ 269
Nasdaq Composite $ 100 $ 140 $ 172 $ 209 $ 292 $ 541
Peer Group $ 100 $ 143 $ 206 $ 387 $ 365 $ 347
13
<PAGE>
EMPLOYMENT AGREEMENTS WITH CERTAIN NAMED EXECUTIVE OFFICERS
On January 1, 2000, Fredric P. Sapirstein executed a new employment
agreement with the Company (the "Sapirstein Agreement"), which amended certain
terms of his prior agreement that expired on December 31, 1999. The Sapirstein
Agreement has a two-year term, which commenced on January 1, 2000 and ends on
December 31, 2001, unless earlier terminated in accordance with its terms. The
Sapirstein Agreement provides for his continued employment as Chairman of the
Board, Chief Executive Officer and President of the Company at an annual salary
of $400,000, which is unchanged from his prior agreement, and an increased
minimum cash bonus of $600,000. As was the case under his prior employment
agreement, the minimum cash bonus will operate as a draw against amounts due
under an annual incentive plan to be determined by the Committee that includes
performance goals under the Company's Section 162(m) Plan. The Company is
required during the term of his employment to include Mr. Sapirstein in the
management slate for election as a director of the Company and to use its best
efforts to cause him to be elected to the Board.
The Sapirstein Agreement also provides for the grant of a ten-year
non-qualified option to purchase 150,000 shares of Common Stock at an exercise
price equal to the market price of the Common Stock on the date of grant, which
option was granted on January 25, 2000. The option vests one-third on each of
the first three anniversaries of the date of grant. The option will vest
immediately upon a "change of control", and immediately following termination
of Mr. Sapirstein's employment for "good reason" or "other than for cause". All
of the options required to be granted under Mr. Sapirstein's prior employment
agreement, which consisted of options vesting over three years and options
vesting on performance, have vested.
The Sapirstein Agreement further provides that, in the event of a
termination of employment by the Company "other than for cause" or by Mr.
Sapirstein for "good reason", the Company will pay any salary due through the
date of termination, any earned but unpaid bonus and any amount accrued under
the Company's benefit plans (the "Accrued Obligations") and certain termination
payments equal to (i) a pro-rated bonus for the year in which termination
occurs equal to the greater of the prior year's bonus or the minimum bonus of
$600,000; and (ii) the three-year average of salary and bonus paid to Mr.
Sapirstein, multiplied by the number of years (or fraction thereof) remaining
in the employment term or one, whichever is greater. In the event of
termination of employment due to death, the Sapirstein Agreement provides that
Mr. Sapirstein's estate or designated beneficiaries will receive the Accrued
Obligations, plus a lump sum equal to the greater of the minimum bonus of
$600,000 or the amount of the prior year's bonus, which amount, in either case,
would be multiplied by a fraction, the numerator of which is the number of days
elapsed in the year of such termination, and the denominator of which is 365.
The Sapirstein Agreement further provides that, in the event of termination of
employment as a result of "disability", the Company will pay Mr. Sapirstein the
Accrued Obligations and an amount equal to his salary plus the $600,000 minimum
bonus multiplied by the number of years (or fraction thereof) remaining in the
employment term unless and until Mr. Sapirstein obtains full-time employment.
In addition, in the event of a termination of employment as a result of
disability, the Company would be required to make contributions on Mr.
Sapirstein's behalf to all Company-sponsored health and welfare plans on terms
no less favorable than those in effect on the date of termination until the
earliest of (i) one year from the date of termination; (ii) entitlement to
coverage under plans provided by a new employer; (iii) death; or (iv) the end
of the employment term.
On October 8, 1998, Max H. Levine executed a new employment agreement with
the Company (the "Levine Agreement") for a three-year term commencing on
January 1, 1999, unless earlier terminated in accordance with the terms of the
Levine Agreement. The Levine Agreement provides for Mr. Levine's employment as
Executive Vice President of the Company and President of Hoenig at an annual
salary of $400,000 and an annual minimum bonus of $150,000, plus a percentage
of the net pre-tax profits (as defined) of commission business for which Mr.
Levine is responsible. The Levine Agreement also provides for the grant of a
ten-year non-qualified option to purchase 50,000 shares of Common Stock at an
exercise price equal to the market price on the date of grant. This option was
granted on January 4, 1999 with an exercise price of $6.375 and vests one-third
on each of the first three anniversaries of the grant date.
14
<PAGE>
The Levine Agreement provides that, in the event of a termination of
employment by the Company "other than for cause" or by Mr. Levine for "good
reason", the Company will pay Mr. Levine (i) the Accrued Obligations; (ii) an
amount equal to the greater of $500,000 or $500,000 multiplied by the number of
years (or fraction thereof) remaining in the employment term; and (iii) an
amount equal to Mr. Levine's percentage of net pre-tax profits of commission
business for which Mr. Levine is responsible for the year (beginning January 1)
in which the termination of employment occurs.
The Levine Agreement further provides that, in the event of termination of
employment as a result of "disability", the Company will pay him the Accrued
Obligations and an amount equal to his salary plus $150,000, multiplied by the
number of years (or fraction thereof) remaining in the employment term. In
addition, in the event of a termination of employment as a result of
disability, the Company would be required to make contributions on his behalf
to all Company-sponsored health and welfare plans on terms no less favorable
than those in effect on the date of termination until the earliest of (i) one
year from the date of termination; (ii) entitlement to coverage under plans
provided by a new employer; (iii) death; or (iv) the end of the employment
term. In the event of a termination of employment due to Mr. Levine's death,
the Levine Agreement provides that the Company will pay Mr. Levine's estate or
designated beneficiaries (i) the Accrued Obligations; (ii) $150,000; and (iii)
the amount of any bonus paid to Mr. Levine for the immediately preceding fiscal
year, multiplied by a fraction, the numerator of which is the number of days
elapsed in the year of such termination, and the denominator of which is 365.
The Sapirstein and Levine Agreements contain similar provisions regarding
non-competition and non-solicitation. Each agreement includes non-competition
and non-solicitation covenants which preclude the executive from competing with
the Company's business or soliciting the Company's customers or employees
during the "Non-Competition Period". The Non-Competition Period under the
Sapirstein Agreement consists of: (i) the employment term; (ii) the lesser of
one-year or the remaining employment term if employment is terminated by the
Company for "cause" or by Mr. Sapirstein other than for "good reason"; and
(iii) the period during which Mr. Sapirstein is receiving termination payments.
The Non-Competition Period under the Levine Agreement consists of: (i) the
employment term; and (ii) the lesser of one year or the remaining term of the
Agreement if employment is terminated by the Company for "cause" or by Mr.
Levine other than for "good reason".
Each of the Sapirstein and Levine Agreements also provides that, in the
event of termination of employment for any reason, the executive shall no
longer serve as a director of the Company or any of its subsidiaries.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
On March 16, 1999, the Company purchased 9,250 shares of Common Stock from
Nigel Johnson-Hill, who at the time was an executive officer of the Company,
for $8.25 per share, resulting in a total purchase price of $76,312.50. The
purchase was made under the Company's stock repurchase program approved by the
Board. At the time of the repurchase, the opening bid and ask quotations for
the Common Stock were $8.3125 and $8.50 per share, respectively, and the last
sale was at $8.375 per share.
The officers and employees of the Company and its operating subsidiaries
are ordinarily required to execute personal securities transactions through the
Company's broker-dealer subsidiaries. Such orders are executed at a discount
from commission rates offered to unaffiliated customers. Max H. Levine, and his
son, Michael Levine, who also is employed by Hoenig, each maintains a margin
account with Hoenig's U.S. clearing broker. Credit extended to Max Levine and
Michael Levine in these accounts in 1999 was done in the ordinary course of
business, was made on substantially the same terms (including interest rates
and collateral requirements) as those for comparable transactions by others and
did not involve more than the normal risk of collectibility or present other
unfavorable features.
SHAREHOLDER'S AGREEMENTS AND CERTAIN TRANSACTIONS RELATING TO INSURANCE
Effective upon the closing of the Company's initial public offering in
1991, the Company and holders of shares of Common Stock outstanding prior to
the initial public offering, including certain directors and executive officers
of the Company, entered into an agreement (each, a "Shareholder's Agreement"
and,
15
<PAGE>
collectively, the "Shareholder's Agreements") which provides that, upon the
death of each such holder, the Stockholder's estate will have an option to sell
shares of Common Stock to the Company, as described below. At the option of the
estate, exercisable within thirty (30) days after the appointment of an
executor or representative of the estate, the Company is obligated to purchase,
at a purchase price equal to 10% below the market value of the shares of Common
Stock, the number of shares of Common Stock which results in an aggregate
purchase price of the greater of the actual amount of insurance proceeds
received by the Company upon the death of the holder, if any, or $1,000,000.
The market value will be determined based on the average of the last twenty
(20) days' closing prices of the Common Stock prior to the death of such
holder. The Company will have the right, but shall not be obligated, to
increase the number of shares of Common Stock to be purchased by it up to the
maximum number of shares the Stockholder's estate desires to sell.
In order to fund its obligations under the Shareholder's Agreements, the
Company maintained in 1999 life insurance policies on certain Stockholders who
hold such options. Some of these Stockholders also serve as directors and
executive officers of the Company. The face value of these policies as of
December 31, 1999 were as follows:
Max H. Levine ................................ $3,587,250
Alan B. Herzog ............................... 2,812,300
Robert Spiegel ............................... 1,000,000
Nigel Johnson-Hill ........................... 1,000,000
----------
Total ........................................ $8,399,550
==========
The Company's aggregate annual premium cost in 1999 for the life insurance
policies was $65,500, and the cash surrender value of these policies was
$645,351 as of December 31, 1999. The Company intends to maintain the life
insurance policies on the Stockholders listed above and continues to evaluate
the benefits of obtaining insurance policies on the other Stockholders who hold
such options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ROBERT L.
COONEY, KATHRYN L. HOENIG AND FREDRIC P. SAPIRSTEIN AS CLASS III DIRECTORS. THE
THREE NOMINEES FOR DIRECTOR RECEIVING THE HIGHEST NUMBER OF VOTES OF SHARES OF
COMMON STOCK PRESENT IN PERSON OR BY PROXY AND ENTITLED TO VOTE ON THE MATTER
WILL BE ELECTED.
PROPOSAL II
APPROVAL OF THE COMPANY'S AMENDED AND
RESTATED 1996 LONG-TERM STOCK INCENTIVE PLAN
On November 14, 1996, the Board adopted the Company's 1996 Long-Term Stock
Incentive Plan (the "1996 Incentive Plan"), subject to approval by the
Company's Stockholders at the 1997 Annual Meeting of Stockholders. The
Stockholders approved the 1996 Incentive Plan on May 15, 1997.
In the Board's judgment, the 1996 Incentive Plan provides a critical
long-term incentive for management, employees, and non-employee directors of
the Company and its subsidiaries, as well as for consultants. The Board
continues to believe that its policy of granting stock options will provide it
with a critical advantage in attracting and retaining qualified candidates. In
addition, the 1996 Incentive Plan is intended to provide the Company with
maximum flexibility to award various types of long-term, equity-based
incentives to Plan participants. It is expected that such flexibility will
continue to be an integral part of the Company's policy to encourage
participants to focus on the long-term growth of Stockholder value. The Board
believes that important advantages to the Company are thus gained by a
comprehensive program, such as the 1996 Incentive Plan, which includes
different types of awards for motivating and rewarding outstanding service,
while at the same time promoting a closer identity of interests between
participants and Stockholders.
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The Compensation and Stock Option Committee (the "Committee") has
recommended, and the Board has approved and is submitting to Stockholders for
their approval, amendments to the 1996 Incentive Plan. The principal amendments
increase the aggregate number of shares reserved for delivery pursuant to
grants of awards under the Plan by 1,000,000 shares, clarify that the size of
the stock options (currently 10,000 shares) automatically granted to
non-employee directors under the Plan is subject to the adjustment provisions
of the Plan and limit the cashless withholding available to participants under
the Plan to the amounts required to be withheld by the Company. The proposed
amendments also include other minor clarifying and conforming changes, included
in the annexed copy of the 1996 Incentive Plan, as proposed to be amended and
restated.
The Company is also seeking to have the Stockholders approve a restatement
of the 1996 Incentive Plan as amended. The purpose of such approval is to
ensure that the Stockholders have reapproved the entire Plan as amended,
including the performance criteria that may be used by the Committee in
granting performance-based awards under the Plan, so that such awards will
qualify for the performance-based exception to the deduction limitations of
Code Section 162(m) until the first meeting of Stockholders that occurs in
2005.
The principal terms of the 1996 Incentive Plan, as proposed to be amended
and restated (the "Amended and Restated Plan"), are summarized below. A copy of
the full text of the Amended and Restated Plan is annexed to this Proxy
Statement. This summary of the Amended and Restated Plan is not intended to be
a complete description and is qualified in its entirety by the actual text of
the Amended and Restated Plan to which reference is made.
SUMMARY DESCRIPTION OF THE AMENDED AND RESTATED PLAN
The purpose of the Amended and Restated Plan is to advance the interests
of the Company and its Stockholders by providing the Company with a means to
attract, retain and reward directors, officers and other key employees and
consultants of the Company and its subsidiaries and to enable such persons to
acquire or increase a proprietary interest in the Company.
The Committee, which administers the Amended and Restated Plan, has
authority, among other things, to:
(i) select the officers and other key employees and consultants entitled
to receive awards under the Amended and Restated Plan;
(ii) determine the form of awards, or combinations thereof, and whether
such awards are to operate on a tandem basis or in conjunction with
other awards;
(iii) determine the number of shares of Common Stock or units or rights
covered by awards;
(iv) determine the other terms and conditions of awards granted under the
Plan, including any restrictions or limitations on transfer, any
vesting schedules or the acceleration thereof and any forfeiture or
termination provisions or waivers thereof; and
(v) in the event of a stock split, recapitalization, reorganization or
similar corporate event that affects the Common Stock, make
appropriate adjustments in the number and kind of shares available
for awards under the Amended and Restated Plan, the number and kind
of shares subject to the annual per-person limitation, the number
and kind of shares and the price of shares subject to outstanding
awards and the number and kind of shares to be granted subject to
non-employee director options.
In addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, awards in recognition or upon the
occurrence of unusual or nonrecurring events.
The Amended and Restated Plan permits the Committee to impose and specify
performance criteria and targets with respect to awards to key employees for
each performance period, thereby requiring forfeiture of all or a part of any
award if performance conditions are not met, or linking the time of
exercisability or settlement of an award to the achievement of performance
conditions. These performance criteria, to the extent designed to meet the
requirements of Code Section 162(m), will be based
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solely upon one or more of the following Company, subsidiary, operating unit or
division financial performance measures: pre-tax or after-tax net income;
operating income; gross revenue; profit margin; stock price; cash flows; or
strategic business criteria consisting of one or more objectives based upon
meeting specified revenue, market penetration or geographic business expansion
goals, cost targets and goals relating to acquisitions or divestitures.
These performance criteria may be expressed on an absolute or relative
basis; based upon internal targets; based upon comparisons with prior
performance; based upon comparisons to capital, stockholders' equity, shares
outstanding, assets or net assets; and/or based upon comparisons to the
performance of other companies. For example, an income-based performance
measure could be expressed in a number of ways, such as earnings per share, or
return on equity, and with reference to meeting or exceeding a specific target,
or with reference to growth above a specific level, such as prior years'
performance, or current or previous peer group performance.
Awards to participants under the Amended and Restated Plan may include:
(i) options to purchase shares of Common Stock, including incentive
stock options ("ISOs") granted to employees of the Company or its
subsidiaries and non-qualified stock options, both of which may
include automatic reload features, as well as options granted to
employees of the Company or a subsidiary who at the time of grant
are resident in the United Kingdom ("U.K. Options"), and options
granted automatically to non-employee directors ("Director
Options");
(ii) stock appreciation rights ("SARs"), whether in conjunction with the
grant of stock options or independent of such grants, or SARs that
are only exercisable in the event of a "change in control" of the
Company (as defined in the Plan);
(iii) restricted stock, in which shares of Common Stock are granted to
participants subject to restrictions on transferability and other
restrictions that lapse over time;
(iv) deferred stock, in which delivery of shares of Common Stock occurs
upon expiration of a deferral period;
(v) bonus stock, consisting of a right to receive shares of Common Stock
in an amount determined with reference to a bonus award;
(vi) dividend equivalents, consisting of a right to receive cash, shares
of Common Stock, other awards or other property equal in value to
dividends paid with respect to a specified number of shares of
Common Stock;
(vii) performance-based equity awards, based on the performance criteria
described above, that are intended to qualify for deductibility
under Section 162(m) of the Code; and
(viii) other stock-based awards not otherwise specifically provided for,
the value of which are based in whole or in part upon the value of
Common Stock.
Director Options consist of non-discretionary, automatic stock option
grants to each individual who becomes a non-employee director of the Company.
For each person who is a non-employee director, the automatic grants will be
made upon initial election or appointment to the Board, and on each three-year
anniversary of the date of such initial election or appointment to the Board.
The number of shares of Common Stock subject to each Director Option grant is
10,000 (or such lesser amount if there are insufficient shares available under
the Plan at such time), subject to adjustment pursuant to the adjustment
provisions of the Plan. The exercise price of each Director Option will be
equal to the fair market value of a share of Common Stock on the date the
option is granted. Each Director Option will expire five years from the date of
grant, and will vest 4,000 shares on the first anniversary of the date of grant
and 3,000 shares on each of the second and third anniversaries thereof.
Other than with respect to the grant of Director Options, ISOs and U.K.
Options, the exercise price at which shares of Common Stock may be purchased as
well as the exercise period of stock options under the Amended and Restated
Plan are determined by the Committee in its discretion at the time of grant.
This discretion includes the ability to set an exercise price that is below the
fair market value of shares of
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Common Stock covered by such grant at the time of grant. With respect to the
grant of Director Options, ISOs and U.K. Options, the exercise price of such
options must be a price not less than the fair market value of shares of Common
Stock on the date of grant.
Awards granted under the Amended and Restated Plan generally are not
assignable or transferable other than by the laws of descent and distribution,
or as may be permitted by the Committee during a participant's lifetime. The
Company and any subsidiary is authorized to withhold from any award granted
under the Plan any shares of stock or payment relating to the award, or from
any payroll or other payment, amounts required to satisfy the Company's
withholding obligations in connection with the award. Unless otherwise provided
by the Committee, all restrictions relating to the continued performance of
services and/or the achievement of performance conditions will immediately
lapse upon a change in control of the Company.
The total number of shares of Common Stock that may be delivered pursuant
to the exercise or settlement of awards under the Amended and Restated Plan may
not exceed 2,000,000 shares of Common Stock, plus the number of shares of
Common Stock that, on the date of original Stockholder approval of the 1996
Incentive Plan, otherwise would have been available under the Company's 1991
Stock Option Plan (the "1991 Plan") and 1994 Stock Option Plan (the "1994
Plan") (i.e., the unused shares), or otherwise become available after such date
(i.e., by reason of termination, expiration or forfeiture of awards granted
under such plans). Under the terms of the Amended and Restated Plan, no
individual may receive awards in any one calendar year relating to more than
750,000 shares of Common Stock.
As of March 31, 2000, the Committee has granted awards with respect to
1,361,812 shares of Common Stock under the 1996 Incentive Plan. As of such
date, 39,516 shares remained under the 1996 Incentive Plan (subject to increase
in the event that any outstanding awards under the 1996 Incentive Plan, the
1991 Plan or the 1994 Plan terminate, expire or are forfeited without the
delivery of shares) for future grants. As noted above, the proposed amendments
would add 1,000,000 shares to the Amended and Restated Plan. The proposed
amendments would not increase the Amended and Restated Plan's 750,000 share
per-person annual limit.
The Amended and Restated Plan may be amended, altered, suspended,
discontinued or terminated by the Board without Stockholder approval unless
such approval is required by law or regulation or under the rules of any stock
exchange or automated interdealer quotation system on which the Common Stock is
then listed or quoted. Thus, Stockholder approval will not necessarily be
required for amendments which might increase the cost of the Amended and
Restated Plan or broaden eligibility.
No awards have been granted under the Amended and Restated Plan that are
subject to Stockholder approval at the Annual Meeting. With respect to the
Company's non-employee directors, there are no non-employee directors who will
be granted Director Options under the Amended and Restated Plan as of the
Annual Meeting. It is not possible at present to predict the number of awards
that will be issuable under the Amended and Restated Plan after the Annual
Meeting.
The last sales price of the Company's Common Stock on March 31, 2000 was
$8.6875 per share.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax
consequences generally arising with respect to awards that may be granted under
the Amended and Restated Plan (other than with respect to U.K. Options, which
generally have tax implications to non-residents of the United States in the
United Kingdom). This discussion is intended for the information of
Stockholders considering how to vote at the Annual Meeting and not as tax
guidance to individuals who may participate in the Plan.
The grant of an option, SAR or other stock-based award in the nature of a
purchase right will create no tax consequences for the participant or the
Company. A participant will not recognize taxable income upon exercising an ISO
(except that the alternative minimum tax may apply), and the Company will
receive no deduction at that time. Upon exercising an option (other than an
ISO), an SAR or other stock-based award in the nature of a purchase right, the
participant must generally recognize ordinary income equal to the difference
between the exercise price and the fair market value of the freely
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transferable and non-forfeitable shares received. In each case, the Company
will be entitled to a deduction equal to the amount recognized as ordinary
income by the participant.
A participant's disposition of shares acquired upon the exercise of an
option, SAR or other stock-based award in the nature of a purchase right
generally will result in capital gain or loss measured by the difference
between the sale price and the participant's tax basis in such shares (the
exercise price of the option in the case of shares acquired by exercise of an
ISO and held for the applicable ISO holding periods). Generally, there will be
no tax consequences to the Company in connection with a disposition of shares
acquired under an option, SAR or other award, except that the Company will be
entitled to a deduction (and the participant will recognize ordinary income) if
shares acquired upon exercise of an ISO are disposed of before the applicable
ISO holding periods have been satisfied.
With respect to awards granted under the Amended and Restated Plan that
may be settled either in cash or in shares of Common Stock or other property
that is either not restricted as to transferability or not subject to a
substantial risk of forfeiture, the participant must generally recognize
ordinary income equal to the cash or the fair market value of the shares or
other property received. The Company will be entitled to a deduction for the
same amount. With respect to awards involving shares or other property that is
restricted as to transferability and subject to a substantial risk of
forfeiture, the participant must generally recognize ordinary income equal to
the fair market value of the shares or other property received at the time the
shares or other property become transferable or not subject to a substantial
risk of forfeiture, whichever occurs earlier. The Company will be entitled to a
deduction in an amount equal to the ordinary income recognized by the
participant. A participant may elect to be taxed at the time of receipt of such
restricted shares or other property rather than upon the lapse of the
restriction on transferability or the substantial risk of forfeiture, but if
the participant subsequently forfeits the shares or property the participant
would not be entitled to any tax deduction, including a capital loss, for the
value of the shares or property on which the participant previously paid tax.
Such election must be made and filed with the Internal Revenue Service within
thirty (30) days after receipt of the shares or other property.
Section 162(m) of the Code generally disallows a public corporation's tax
deduction for compensation paid to a Named Executive Officer in excess of
$1,000,000. Compensation that qualifies as "performance-based compensation" is
excluded from the $1,000,000 deductibility cap, and therefore remains fully
deductible by the corporation that pays it. The Company intends that options
and SARs granted with an exercise or grant price at or equal to 100% of the
fair market value of the underlying Common Stock at the date of grant, and
other awards the settlement of which is conditioned upon achievement of
performance goals based upon the criteria set forth above, will qualify as
"performance-based compensation," although other awards under the Amended and
Restated Plan may not so qualify.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED
PLAN. THE VOTE REQUIRED FOR APPROVAL OF THE AMENDED AND RESTATED PLAN IS A
FAVORABLE VOTE OF A MAJORITY OF SHARES OF COMMON STOCK PRESENT IN PERSON OR BY
PROXY AND ENTITLED TO VOTE ON THE MATTER.
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has acted as the Company's independent public
accountants since June 1994. Upon the recommendation of the Audit Committee,
the Board has voted to appoint Deloitte & Touche LLP to act as the Company's
independent public accountants responsible for auditing the Company's financial
statements for 2000.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting, will be given an opportunity to make a statement if he or she so
desires and is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any Stockholder proposal submitted to the Company pursuant to Commission
Rule 14a-8 for inclusion in the Company's proxy statement and form of proxy
relating to next year's annual meeting of
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Stockholders must be received at the principal executive offices of the Company
(the address of which is set forth on the cover page of this Proxy Statement),
directed to the attention of the Secretary, no later than DECEMBER 18, 2000 for
consideration at that meeting. Any such proposal must comply in all respects
with the rules and regulations of the Commission.
The Company must receive written notice of any other matter which a
Stockholder may wish to raise for Stockholder vote at next year's annual meeting
of Stockholders, including any non-Rule 14a-8 matter, by March 3, 2001. The
proxies solicited by the Company will confer general discretionary authority
with regard to such matters for which the Company did not receive notice by the
March 3, 2001.
OTHER MATTERS
The Board knows of no other matters which may come before the Annual
Meeting. If any matters other than those referred to above should properly come
before the Annual Meeting, it is the intention of the persons designated by the
Board to serve as proxies to vote the proxies received in accordance with a
determination by a majority of the Board.
By Order of the Board of Directors,
KATHRYN L. HOENIG
Secretary
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ANNEX TO
HOENIG GROUP INC.
PROXY STATEMENT
<PAGE>
ANNEX A
HOENIG GROUP INC.
AMENDED AND RESTATED
1996 LONG-TERM STOCK INCENTIVE PLAN
<PAGE>
HOENIG GROUP INC.
AMENDED AND RESTATED
1996 LONG-TERM STOCK INCENTIVE PLAN
l. Purpose. The purpose of this 1996 Long-Term Stock Incentive Plan, as Amended
and Restated (the "Plan"), of Hoenig Group Inc., a Delaware corporation, is to
advance the interests of the Company and its stockholders by providing a means
to attract, retain, and reward directors, officers, and other key employees and
consultants of the Company and its subsidiaries (including consultants
providing services of substantial value) and to enable such persons to acquire
or increase a proprietary interest in the Company, thereby promoting a closer
identity of interests between such persons and the Company's stockholders.
2. Definitions. The definitions of awards under the Plan, including U.S. Stock
Options, U.K. Stock Options, SARs (including Limited SARs), Restricted Stock,
Deferred Stock, Stock granted as a bonus or in lieu of other awards, Dividend
Equivalents, and Other Stock-Based Awards, are set forth in Section 6 of the
Plan. Such awards, together with any other right or interest granted to a
Participant under the Plan, are termed "Awards." For purposes of the Plan, the
following additional terms shall be defined as set forth below:
"Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
"Beneficiary" means the person, persons, trust, or trusts which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust, or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
"Board" means the Board of Directors of the Company.
A "Change in Control" shall be deemed to have occurred if:
(i) on the date of the acquisition by any "person" (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the Company or any
of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 50% or more of either the then-outstanding shares of
Stock, or the then-outstanding voting securities entitled to vote generally in
the election of directors;
(ii) on the date the individuals who constitute the Board as of the
effective date of the Plan (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any person
becoming a director subsequent to the effective date of the Plan whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be, for purposes of the Plan, considered as though such
person were a member of the Incumbent Board; or
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a reverse
stock split of outstanding voting securities, or the issuance of shares of
stock of the Company in connection with the acquisition of the stock or assets
of another entity, or consummation of any of the foregoing transactions if
stockholder approval is not sought or obtained; provided, however, that a
Change in Control shall not occur under this clause (iii) if consummation of
the transaction would result in at least 75% of the total voting power
represented by the voting securities of the Company (or if the Company does not
survive, of the surviving entity) outstanding immediately after such
transaction being beneficially owned (within the meaning of Rule 13d-3
promulgated pursuant to the Exchange Act) by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
consummation of the transaction, with the voting power of each such continuing
holder relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets (i.e., 85% or
more of the total assets of the Company).
<PAGE>
Notwithstanding the foregoing, for the purposes of clause (i) only, the
definition of "person" shall not include any beneficial holder of more than 5%
of the Common Stock as of September 30, 1996, or any person, trust, or entity
which is a successor by will or by the laws of descent and distribution to any
such holder, or any combination of such holders or group of such holders
(including, without limitation, any such person or persons acting as a
partnership, limited partnership, syndicate, or other group whether formally
organized or not).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include the
regulations thereunder and successor provisions and regulations thereto.
"Committee" means the Compensation and Stock Option Committee of the
Board, or such other Board committee as may be designated by the Board to
administer the Plan. In appointing members of the Committee, the Board shall
consider whether each member will qualify as a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) and as an "outside director" within the meaning
of Treasury Regulation 1.162-27(e)(3) under Code Section 162(m), but such
members are not required to so qualify at the time of appointment or during
their term of service on the Committee.
"Common Stock" means the shares of common stock, $.01 par value per share,
of the Company.
"Company" means Hoenig Group Inc., a corporation organized under the laws
of the State of Delaware, and any successor thereto; provided, however, that
unless otherwise provided in the Plan, all references in the Plan to employment
by or service to the Company shall include employment by or service to any
subsidiary of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time. References to any provision of the Exchange Act shall be deemed
to include the rules thereunder and successor provisions and rules thereto.
"Fair Market Value" means, with respect to Stock, Awards, or other
property, (i) in the case of U.S. Stock Options and the Stock underlying such
U.S. Stock Options, (a) if the Stock is listed on a securities exchange or is
quoted on the Nasdaq National Market, the closing sales price of the Stock at
the end of regular trading on such exchange or in such market on such date or,
in the absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported, or (b) if the Stock is
not listed on a securities exchange or quoted on the Nasdaq National Market,
the mean between the bid and offered prices of the shares as quoted on Nasdaq
for such date; provided, however, that, if the Committee determines that the
fair market value of the Stock is not properly reflected by such Nasdaq
quotations, the "Fair Market Value" of the Stock shall mean the fair market
value as determined by such other method as the Committee determines in good
faith to be reasonable; and (ii) in the case of U.K. Stock Options and the
Stock underlying such U.K. Stock Options, "Fair Market Value" as determined in
accordance with the foregoing clause (i) of this definition, or as agreed from
time to time with the Inland Revenue, if different.
"Inland Revenue" means the Board of the Inland Revenue of the United
Kingdom of Great Britain and Northern Ireland.
"ISO" means any U.S. Stock Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code, and
qualifies as such.
"Non-Employee Director" shall mean a member of the Board who is not
otherwise an employee of the Company or any subsidiary.
"Participant" means a person who, at a time when eligible under Section 5
hereof, has been granted an Award.
"Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
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"Stock" means the Common Stock and such other securities as may be
substituted for Common Stock or such other securities pursuant to Section 4.
"U.K. Stock Option" means a Stock Option granted to a Participant which is
subject to the provisions of Section 6(c) of this Plan.
"U.S. Stock Option" means a Stock Option other than a U.K. Stock Option.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award relates, the terms and conditions of any
Award (including, but not limited to, any exercise price, grant price, or
purchase price, any restriction or condition, any schedule for lapse of
restrictions or conditions relating to transferability or forfeiture,
exercisability, or settlement of an Award, and waivers or accelerations
thereof, and waivers of or modifications to performance conditions relating
to an Award, based in each case on such considerations as the Committee
shall determine), and all other matters to be determined in connection with
an Award;
(iv) to determine whether, to what extent, and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(v) to determine whether, to what extent, and under what circumstances
cash, Stock, other Awards, or other property payable with respect to an
Award may be deferred either automatically, at the election of the
Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument under
the Plan; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board may perform any
function of the Committee under the Plan, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the Committee
herein shall be deemed to refer to the Board.
(b) Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan, the Company's
Certificate of Incorporation or By-laws, or applicable law, the Committee shall
have sole discretion in exercising authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, subsidiaries of the Company, Participants,
any person claiming any rights under the Plan from or through any Participant,
and stockholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. The Committee may delegate to officers
or managers of the Company or of any
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subsidiary of the Company the authority, subject to such terms as the Committee
shall determine, to perform administrative functions and to perform such other
functions under the Plan as the Committee may determine.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or other employee of the Company or of
any subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional
retained by the Company to assist in the administration of the Plan. No member
of the Committee, nor any officer or employee of the Company acting on behalf
of the Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.
4. Stock Subject to Plan.
(a) Amount of Stock Reserved. The total number of shares of Stock that may
be delivered pursuant to the exercise or settlement of an Award shall not in
the aggregate exceed (i) 2,000,000 shares of Stock plus (ii) the number of
shares of Stock that, on the date of approval of the Plan by the Company's
stockholders, would otherwise have been available under the Company's 1991
Stock Option Plan and 1994 Stock Option Plan (i.e., unused shares), or
otherwise become available after such date (i.e., by reason of the termination,
expiration, or forfeiture of stock options outstanding under such plans);
provided, however, that shares of Stock subject to Awards shall not be deemed
delivered if such Awards are forfeited, expire, or otherwise terminate without
delivery of shares of Stock to the Participant. If an Award valued by reference
to Stock may only be settled in cash, the number of shares to which such Award
relates shall be deemed to be shares of Stock subject to such Award for
purposes of this Section 4(a). Any shares of Stock delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
(b) Annual Per-Participant Limitations. During any calendar year, no
Participant may be granted Stock Options and other Awards that may be settled
by delivery of more than 750,000 shares of Stock, subject to adjustment as
provided in Section 4(c). In addition, with respect to Awards that may be
settled in cash (in whole or in part), no Participant may be paid during any
calendar year cash amounts relating to such Awards that exceed the greater of
the Fair Market Value of the number of shares of Stock set forth in the
preceding sentence at the date of grant or the date of settlement of the
Awards. This provision sets forth two separate limitations, so that Awards that
may be settled solely by delivery of shares of Stock shall not operate to
reduce the amount of cash-only Awards, and vice versa; nevertheless, Awards
that may be settled either in shares of Stock or cash must not exceed either
limitation.
(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Stock, or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange, or other
similar corporate transaction or event affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan (such event, upon the Committee's
determination, a "Material Change"), then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of
shares of Stock reserved and available for Awards under Section 4(a), (ii) the
number and kind of shares of outstanding Restricted Stock or other outstanding
Awards in connection with which shares of Stock have been issued, (iii) the
number and kind of shares of Stock that may be issued in respect of other
outstanding Awards, (iv) the exercise price, grant price, or purchase price
relating to any Award (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award), and (v)
the number of shares of Stock with respect to which Awards may be granted or
measured in any calendar year or other period, including, without limitation,
as set forth in Section 4(b) and Section 6(j). In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including, without limitation, cancellation of outstanding
Awards after advance notice thereof or
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substitution of Awards using stock of a successor or other entity or exchange
of outstanding vested Awards for cash equal to the intrinsic value thereof) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence and events constituting a Change in
Control) affecting the Company or of any subsidiary or the financial statements
of the Company or any subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles. With respect to U.K. Stock Options, in
the event that a Material Change occurs and a surviving corporation does not
assume all outstanding U.K. Stock Options, all such outstanding U.K. Stock
Options shall continue to be exercisable for a period of 6 months after the
date the Material Change occurs, as determined by the Committee.
5. Eligibility. Executive officers and other key employees of the Company and
its subsidiaries, including any director or officer who is also such an
employee, and persons who provide consulting or other services to the Company
or its subsidiaries deemed by the Committee to be of substantial value to the
Company, are eligible to be granted Awards. In addition, a person who has been
offered employment by the Company or its subsidiaries is eligible to be granted
an Award.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring
forfeiture of Awards in the event of termination of employment or other service
of the Participant. Except as provided in the Plan, or to the extent required
to comply with requirements of the Delaware General Corporation Law that lawful
consideration be paid for Stock, only services may be required as consideration
for the grant (but not the exercise) of any Award.
(b) U.S. Stock Options. The Committee is authorized to grant U.S. Stock
Options to Participants (including "reload" options automatically granted to
offset specified exercises of options) on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under a U.S. Stock Option shall be determined by the Committee.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which a U.S. Stock Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to be
paid, the form of such payment, including, without limitation, cash, Stock,
other Awards, or awards granted under other Company plans, or other
property (including, without limitation, notes or other contractual
obligations of Participants to make payment on a deferred basis, and
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which shares of Stock will be delivered or deemed
to be delivered to Participants.
(iii) ISOs. The terms of any Option granted under the Plan that is
intended to be an ISO shall contain such terms and conditions as may be
necessary for the Option to qualify as such under the provisions of Section
422 of the Code, including but not limited to the requirement that an ISO
shall be granted with an exercise price of at least 100% (110% for an
individual described in Section 422(b)(6) of the Code) of the Fair Market
Value of a share of Stock on the date of grant. If Stock acquired by
exercise of an ISO is sold or otherwise disposed of within two years after
the date of grant of the ISO or within one year after the transfer of such
Stock to the Participant, the holder of the Stock immediately prior to the
disposition shall promptly notify the Company in writing of the date and
terms of the disposition and shall provide such other information regarding
the disposition as the Company may reasonably require in order to secure
any deduction then available against the Company's or any other
corporation's taxable income. The Company may impose such procedures as it
determines may be necessary to ensure that such notification is made.
(iv) Termination of Employment or Other Service. Unless otherwise
determined by the Committee, upon termination of a Participant's employment
or other service with the Company and its subsidiaries, such Participant
may exercise any U.S. Stock Options during, and such Options shall
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terminate at the end of, the three-month period (or if such termination is
by reason of disability, as determined by the Committee, or death, the
one-year period) following such termination of employment or other service,
or if shorter, during the remaining term of the U.S. Stock Option;
provided, however, that unless otherwise determined by the Committee,
during any such period following termination of employment or other
service, the Option shall be exercisable only to the extent such Option was
exercisable immediately prior to such termination. Notwithstanding the
foregoing, if the Committee determines that such termination is for cause,
all U.S. Stock Options held by the Participant shall immediately terminate.
(c) U.K. Stock Options. A U.K. Stock Option may only be granted to a
person who is a natural person employed by the Company or a subsidiary thereof
(including employees who are also directors and including persons expected to
become employees, in which case such U.K. Stock Option shall be effective as of
the date such person is first treated as an employee for payroll purposes) and
who at the time of grant of the U.K. Stock Option is resident and ordinarily
resident in the United Kingdom for the purposes of the tax laws of the United
Kingdom and, in the case of a person who is a director, is required to devote
not less than 25 hours per week to duties to the Company and its subsidiaries.
No person who is, or will be, precluded from being an eligible employee or
director with respect to the Company and its subsidiaries by paragraph 8 of
Schedule 9 Taxes Act 1988 shall be eligible to receive a U.K. Stock Option. The
U.K. Stock Option shall be granted on the following terms and conditions:
(i) Award Agreement. Each U.K. Stock Option shall be clearly designated
as a U.K. Stock Option and shall be evidenced by an Award Agreement in such
form as the Committee may determine from time to time, which Agreement
shall not require consideration, but shall be under seal.
(ii) Shares. Shares of Stock purchased pursuant to the exercise of U.K.
Stock Options shall not be redeemable, shall be fully paid upon their
issuance, and shall not be subject to any restriction other than those
applicable to all other shares of Stock.
(iii) Exercise Price. The exercise price of U.K. Stock Options shall be
fixed by the Committee, but no U.K. Stock Option shall be granted with an
exercise price which is less than 100% of the Fair Market Value of the
underlying Stock at the time such U.K. Stock Option is granted.
(iv) Exercise Period. No U.K. Stock Option shall be exercisable more
than 10 years after it is granted.
(v) Termination of Employment. Unless otherwise determined by the
Committee, upon termination of a Participant's employment with the Company
and its subsidiaries, such Participant may exercise any U.K. Stock Options
during the three-month period (or if such termination is by reason of
disability, as determined by the Committee, or death, the one-year period)
following such termination of employment; provided, however, that such
period does not exceed the remaining term of the U.K. Stock Option and only
to the extent such U.K. Stock Option was exercisable immediately prior to
such termination of employment. Notwithstanding the foregoing, if the
Committee determines that such termination is for cause, all U.K. Stock
Options held by the Participant shall immediately terminate.
(vi) Allotment. Within 30 days of the date of exercise of any U.K.
Stock Option, shares of Stock shall be allotted to the Participant or
shares of Stock shall be delivered to the Participant, as the case may be.
The allotment or delivery of the shares of Stock shall be evidenced by the
issuance of a stock certificate within 30 days of the date of exercise of
such U.K. Stock Option. If a Participant exercises a U.K. Stock Option but
does not elect to purchase Stock equal to the full number of shares
evidenced by such U.K. Stock Option, the Company shall automatically issue
to such Participant, within 30 days of the date of such exercise, a further
Award Agreement entitling the Participant to acquire shares of Stock on
terms equivalent to the U.K. Stock Option so exercised but subject to the
limitation that the remaining U.K. Stock Option shall only be for a number
of shares of Stock which, when aggregated with the shares purchased
pursuant to such prior exercises, does not exceed the number of shares of
Stock covered by the partially exercised U.K. Stock Option.
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(vii) Payments. For the avoidance of doubt, a payment with respect to
the exercise of a U.K. Stock Option in the form of a bank draft drawn on a
bank acceptable to the Committee for the full amounts due in the lawful
currency of the United States of America and including any charges for the
collection of the said bank draft shall be considered, at the sole
discretion of the Committee, to be cash.
(viii) Certain Acquisitions. If any person (which shall include another
company) obtains more than 50% of the issued share capital of the Company
as a result of making:
(x) a general offer to acquire the whole of the issued share capital
of the Company which is made on a condition such that if it is
satisfied the person making the offer will have more than 50% of the
issued share capital of the Company; or
(y) a general offer to acquire all of the shares in the Company,
then any U.K. Stock Options granted will be subject to the terms of Section
4(c) of this Plan.
(ix) Disqualifying Dispositions. If shares of Stock acquired by
exercise of a U.K. Stock Option are sold or otherwise disposed of within
two years after the date of grant of the U.K. Stock Option or within one
year after the transfer of such Stock to the Participant, the holder of the
Stock immediately prior to the disposition shall promptly notify the
Company in writing of the date and terms of the disposition and shall
provide such other information regarding the disposition as the Company may
reasonable require in order to secure any deduction then available against
the Company's or any other corporation's taxable income.
Any U.K. Stock Option granted to eligible employees shall be limited
and take effect so that the aggregate Fair Market Value of the Stock
subject to such U.K. Stock Option, when aggregated with the Fair Market
Value of the Stock subject to stock options previously granted (and which
have not been exercised, canceled, or lapsed) to that employee, shall not
exceed (pounds sterling)30,000.
(x) Fair Market Value. In the event that the Fair Market Value of any
Stock with respect to which a U.K. Stock Option is granted cannot be
determined pursuant to the definition of "Fair Market Value" as set forth
in the Plan, then the proviso in clause (i) of such definition shall not
apply unless such Fair Market Value is agreed to by the Inland Revenue.
(xi) Amendments. All amendments to the Plan with respect to U.K. Stock
Options, which shall include, without limitation, any variations made by
the Company as provided for in Section 4(c) shall be notified to the Inland
Revenue within 30 days of the amendments being made and no amendments shall
have effect until approved by the Inland Revenue.
(d) Stock Appreciation Rights. The Committee is authorized to grant SARs
to Participants on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise (or, if the
Committee shall so determine in the case of any such right other than one
related to an ISO, the Fair Market Value of one share at any time during a
specified period before or after the date of exercise), over (B) the grant
price of the SAR as determined by the Committee as of the date of grant of
the SAR, which, except as provided in Section 7(a), shall be not less than
the Fair Market Value of one share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method
by which shares of Stock shall be delivered or deemed to be delivered to
Participants, whether or not an SAR shall be in tandem with any other
Award, and any other terms and conditions of any SAR. Limited SARs that may
only be exercised upon the occurrence of a Change in Control may be granted
on such terms, not inconsistent with this Section 6(d), as the Committee
may determine. Limited SARs may be either freestanding or in tandem with
other Awards.
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(e) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such installments,
or otherwise, as the Committee may determine. Except to the extent
restricted under the terms of the Plan and any Award Agreement relating to
the Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder, including, without limitation, the right to
vote Restricted Stock and the right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or other service (as determined under criteria
established by the Committee) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in whole or in part
in the event of termination resulting from specified causes.
(iii) Certificates for Restricted Stock. Restricted Stock may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the
Participant, such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted
Stock, the Company shall retain physical possession of the certificate, and
the Participant shall have delivered a stock power to the Company, endorsed
in blank, relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either paid
at the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or value
thereof automatically reinvested in additional shares of Restricted Stock,
other Awards, or other investment vehicles, as the Committee shall
determine or permit the Participant to elect. Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock in respect of which
such Stock or other property has been distributed.
(f) Deferred Stock. The Committee is authorized to grant Deferred Stock to
Participants on the following terms and conditions:
(i) Awards and Restrictions. Delivery of shares of Stock shall occur
upon expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times separately or in combination, in installments, or otherwise, as the
Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or other service (as determined under criteria
established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred Stock that is
at that time subject to such forfeiture conditions shall be forfeited;
provided, however, that the Committee may provide, by rule or regulation or
in any Award Agreement, or may determine in any individual case, that
forfeiture conditions relating to Deferred Stock shall be waived in whole
or in part in the event of termination resulting from specified causes.
(g) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements (including the Company's Section 162(m) Cash Bonus Plan), to a
Participant. Stock or Awards granted hereunder shall be subject to such other
terms and conditions as shall be determined by the Committee.
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(h) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid in respect of
a specified number of shares of Stock. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may determine.
(i) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock and factors that may influence
the value of Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Stock, purchase rights for Stock, Awards with value and payment contingent upon
performance of the Company or any other factors designated by the Committee,
and Awards valued by reference to the book value of Stock or the value of
securities of or the performance of specified subsidiaries. The Committee shall
determine the terms and conditions of such Awards. Stock issued pursuant to an
Award in the nature of a purchase right granted under this Section 6(i) shall
be purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards, or
other property, as the Committee shall determine. Cash awards, as an element of
or supplement to any other Award under the Plan, may be granted pursuant to
this Section 6(i).
(j) Non-Employee Directors Options. Upon initial appointment to the Board
and in three-year intervals thereafter, each person who is a Non-Employee
Director shall receive, without the exercise of the discretion of any person, a
non-qualified U.S. Stock Option relating to the purchase of 10,000 shares of
Stock. In the event that there are not sufficient shares of Stock available
under the Plan to allow for the grant to each Non-Employee Director of a U.S.
Stock Option for the number of shares provided herein, each Non-Employee
Director shall receive a U.S. Stock Option for his pro rata share of the total
number of shares of Stock then available under the Plan. The purchase price of
each share of Stock subject to such U.S. Stock Option granted to a Non-Employee
Director shall equal the Fair Market Value of a share of Stock on the date such
Option is granted. Each such U.S. Stock Option shall have a term of five years
from its grant and shall become exercisable as to 4,000 shares on the first
anniversary of the date the U.S. Stock Option is granted, and as to 3,000
shares on each of the second and third anniversaries thereof. Upon a
Non-Employee Director's cessation of service as a Non-Employee Director, no
further U.S. Stock Options shall be granted, and each U.S. Stock Option then
outstanding, to the extent it was exercisable upon such cessation, shall remain
exercisable for a period of three months, unless otherwise determined by the
Board.
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards may, in
the discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for, any other Award or any award granted under
any other plan of the Company, any subsidiary, or any business entity acquired
or to be acquired by the Company or a subsidiary, or any other right of a
Participant to receive payment from the Company or any subsidiary. Awards
granted in addition to or in tandem with other Awards or awards may be granted
either as of the same time as or a different time from the grant of such other
Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided, however, that in no event shall the
term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms and conditions of
the Plan and any applicable Award Agreement, payments to be made by the Company
or a subsidiary upon the grant or exercise of an Award may be made in such
forms as the Committee shall determine, including, without
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limitation, cash, Stock, other Awards, or other property, and may be made in a
single payment or transfer, in installments, or on a deferred basis. Such
payments may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents in respect of installment or
deferred payments denominated in Stock.
(d) Rule 16b-3 Compliance.
With respect to a Participant who is then subject to Section 16(b) of the
Exchange Act in respect of the Company, the Committee shall
implement transactions under the Plan and administer the Plan in a
manner that shall ensure that each transaction by such a Participant
is exempt from Section 16(b) liability pursuant to Rule 16b-3,
except that such a Participant may be permitted to engage in a
non-exempt transaction under the Plan if written notice has been
given to the Participant regarding the non-exempt nature of such
transaction. The Committee may authorize the Company to repurchase,
cancel, or otherwise reverse or invalidate any Award or shares of
Stock resulting from any Award in order to prevent a Participant who
is subject to Section 16(b) from incurring liability under such
Section.
(e) Loan Provisions. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee, or arrange for a
loan or loans to a Participant with respect to the exercise of any Award or any
other payment in connection with any Award, including, without limitation, the
payment by a Participant of any or all federal, state, or local income or other
taxes due in connection with any Award. Subject to such limitations, the
Committee shall have full authority to decide whether to make a loan or loans
hereunder and to determine the amount, terms, and provisions of any such loan or
loans, including, without limitation, the interest rate to be charged in respect
of any such loan or loans, whether the loan or loans are to be with or without
recourse against the Participant, the terms on which the loan is to be repaid,
and the conditions, if any, under which the loan or loans may be forgiven.
(f) Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
the regulations thereunder. The performance objectives for an Award subject to
this Section 7(f) shall consist of one or more business criteria and a targeted
level or levels of performance with respect to such criteria, as specified by
the Committee but subject to this Section 7(f). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code and the regulations thereunder. Business criteria used by the
Committee in establishing performance objectives for Awards subject to this
Section 7(f) shall be based on the criteria set forth in the Company's Section
162(m) Cash Bonus Plan. Performance objectives may differ for such Awards to
different Participants. The Committee shall specify the weighting to be given
to each performance objective for purposes of determining the final amount
payable with respect to any such Award. The Committee may, in its discretion,
reduce the amount of a payout otherwise to be made in connection with an Award
subject to this Section 7(f), but may not exercise discretion to increase such
amount, and the Committee may consider other performance criteria in exercising
such discretion. All determinations by the Committee as to the achievement of
performance objectives shall be in writing. For purposes of this Section 7(f),
the Committee shall consist of the individuals who serve on the "Plan
Committee" under the Company's Section 162(m) Cash Bonus Plan.
(g) Acceleration upon a Change of Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating
to the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall immediately lapse upon a Change in Control; provided, however, that such
lapse shall not occur if (i) it is intended that the transaction constituting
such Change in Control be accounted for as a pooling of interests under
Accounting Principles Board Option No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c) thereof,
or (ii) the Committee, in its
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discretion, determines that such lapse shall not occur, provided, further, that
the Committee shall not have the discretion granted in clause (ii) if it is
intended that the transaction constituting such Change in Control be accounted
for as a pooling of interests under Accounting Principles Board Option No. 16
(or any successor thereto), and such discretion would otherwise violate
Paragraph 47(c) thereof.
8. General Provisions.
(a) Compliance with Laws and Obligations. The Company shall not be
obligated to issue or deliver shares of Stock in connection with any Award or
take any other action under the Plan in a transaction subject to the
registration requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any national securities exchange or automated
interdealer quotation system, or any other law, regulation, or contractual
obligation of the Company, until the Company is satisfied that such laws,
regulations, and other obligations of the Company have been complied with in
full. Certificates representing shares of Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be
applicable under such laws, regulations, and other obligations of the Company,
including, without limitation, any requirement that a legend or legends be
placed thereon.
(b) Limitations on Transferability.
(i) Awards Other Than U.K. Stock Options. Awards and other rights under
the Plan (other than U.K. Stock Options governed by the provisions of
Section 8(b)(ii)) shall not be transferable by a Participant except by will
or the laws of descent and distribution or to a Beneficiary in the event of
the Participant's death, shall not be pledged, mortgaged, hypothecated, or
otherwise encumbered, or otherwise subject to the claims of creditors, and,
in the case of ISOs and SARs in tandem therewith, shall be exercisable
during the lifetime of a Participant only by such Participant or his
guardian or legal representative; provided, however, that such Awards and
other rights (other than ISOs and SARs in tandem therewith and U.K. Stock
Options) may be transferred to one or more transferees during the lifetime
of the Participant to the extent and on such terms and conditions as then
may be permitted by the Committee.
(ii) U.K. Stock Options. U.K. Stock Options shall not be transferable
by a Participant except to a Beneficiary in the event of the Participant's
death, shall not be pledged, mortgaged, hypothecated, or otherwise
encumbered, or otherwise subject to the claims of creditors, and, in the
case of SARs in tandem therewith, shall be exercisable during the lifetime
of a Participant only by such Participant or his guardian or legal
representative. In the event of the Participant's death, U.K. Stock Options
shall be exercisable by the legal representative of such deceased
Participant during the one-year period following the Participant's date of
death.
(c) No Right to Continued Employment or Other Service. Neither the Plan
nor any action taken hereunder shall be construed as giving any employee or
other person the right to be retained in the employ or other service of the
Company or any of its subsidiaries, nor shall it interfere in any way with the
right of the Company or any of its subsidiaries to terminate any Participant's
employment or other service at any time.
(d) Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted or to be settled, any delivery of shares of Stock in
connection with an Award, any other payment relating to an Award, or any
payroll or other payment to a Participant amounts of withholding and other
taxes due or potentially payable in connection with any transaction involving
an Award, and to take such other action as the Committee may deem advisable to
enable the Company and Participants to satisfy obligations for the required
payment of withholding taxes. This authority shall include authority to
withhold or receive shares of Stock or other property and to make cash payments
in respect thereof in satisfaction of tax withholding obligations; in such
case, the shares of Stock withheld shall be deemed to have been delivered for
purposes of Section 4(a).
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
without the consent of stockholders or Participants, except that any such
action shall be subject to the approval of the Company's stockholders
11
<PAGE>
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated interdealer quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided, however,
that, without the consent of an affected Participant, no such action may
materially impair the rights of such Participant under any Award theretofore
granted to him or her. The Committee may waive any conditions or rights under,
or amend, alter, suspend, discontinue, or terminate, any Award theretofore
granted and any Award Agreement relating thereto; provided, however, that,
subject to Section 4(c), without the consent of an affected Participant, no
such action may materially impair the rights of such Participant under such
Award.
(f) No Rights to Awards; No Stockholder Rights. No Participant, employee,
or other person shall have any claim to be granted any Award,, and there is no
obligation for uniformity of treatment of Participants, employees, and other
persons. No Award shall confer on any Participant any of the rights of a
stockholder of the Company unless and until shares of Stock are duly issued or
transferred and delivered to the Participant in accordance with the terms and
conditions of the Award or, in the case of a Stock Option, the Stock Option is
duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give any such
Participant any rights that are greater than those of a general creditor of the
Company; provided, however, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company's obligations under the
Plan to deliver cash, Stock, other Awards, or other property pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with
the consent of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other compensatory arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be applicable either generally or only in
specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the Company
that U.S. Stock Options granted with an exercise price per share at least equal
to the Fair Market Value of the Stock on the date the U.S. Stock Option is
granted, SARs, and other Awards designated as Awards subject to Section 7(f)
shall constitute "qualified performance-based compensation" within the meaning
of Code Section 162(m) and regulations thereunder. Accordingly, if any
provision of the Plan or any Award Agreement relating to such an Award does not
comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements, and no provision shall be
deemed to confer upon the Committee or any other person discretion to increase
the amount of compensation otherwise payable in connection with any such Award
upon attainment of the performance objectives.
(k) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the Delaware General Corporation Law, without
giving effect to principles of conflicts of laws, and applicable federal law.
(l) Effective Date; Plan Termination. The Plan shall become effective as
of the date of its adoption by the Board and shall continue in effect until
terminated by the Board.
12
<PAGE>
HOENING GROUP INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 18, 2000
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan B. Herzog and Kathryn L. Hoenig, and
each of them, to serve as proxies, with full power of substitution, to vote all
shares of Common Stock of Hoenig Group Inc. (the "Company") owned by the
undersigned at the Annual Meeting of Stockholders of the Company to be held on
May 18, 2000, and any adjournment thereof, hereby revoking any proxy heretofore
given. The undersigned instructs such proxies to vote:
I. ELECTION OF DIRECTORS.
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL NOMINEES
CONTRARY BELOW) LISTED BELOW
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Robert L. Cooney Kathryn L. Hoenig Fredric P. Sapirstein
II. APPROVAL OF THE COMPANY'S AMENDED AND RESTATED
1996 LONG-TERM STOCK INCENTIVE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued and to be signed on the reserve side)
<PAGE>
and to vote upon such other matters as may properly come before the Annual
Meeting, and any adjournment thereof, all as described in the Proxy Statement
dated April 17, 2000. By signing below, the undersigned hereby acknowledges
receipt of the Proxy Statement and the 1999 Annual Report.
Either of the proxies or their respective substitutes, who shall be present and
acting, shall have and may exercise all of the powers hereby granted.
UNLESS OTHERWISE INSTRUCTED HEREIN, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR PROPOSALS I AND II. SAID PROXIES WILL VOTE THE PROXIES RECEIVED IN
ACCORDANCE WITH A DETERMINATION BY A MAJORITY OF THE BOARD OF DIRECTORS WITH
RESPECT TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Signed:
------------------------------------
------------------------------------
Dated:
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(Please sign exactly as name(s)
appears below. For joint accounts,
each joint owner should sign. Persons
signing as executors, administrators,
trustees, etc. should so indicate
when signing.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE.
