TREMONT ADVISERS, INC.
--------------------------
Notice of 2000 Annual Meeting
and
Proxy Statement
Tuesday, June 6, 2000
at 2:00 p.m.
At the offices of
Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Suite C-206
Rye, New York 10580
<PAGE>
Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue - Suite C-206
Rye, New York 10580
May 4, 2000
Dear Shareholder:
On behalf of the Board of Directors and management, I cordially invite you
to attend the 2000 Annual Meeting of Shareholders to be held on Tuesday, June 6,
2000 at 2:00 p.m. Eastern Daylight Time, at the offices of Tremont Advisers,
Inc. (the "Company") at Corporate Center at Rye, 555 Theodore Fremd Avenue,
Suite C-206, Rye, New York 10580.
The notice of meeting and proxy statement accompanying this letter describe
the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend in person, you are requested to vote, sign, date and
promptly return the enclosed proxy in the self-addressed envelope provided.
Sincerely,
Sandra L. Manzke
Chairman of the Board
<PAGE>
Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue - Suite C-206
Rye, New York 10580
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Tremont Advisers, Inc.:
Notice is hereby given that the 2000 Annual Meeting of Shareholders of
Tremont Advisers, Inc. (the "Company") will be held at the offices of the
Company, located at Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite
C-206, Rye, New York 10580 on Tuesday, June 6, 2000 at 2:00 p.m. Eastern
Daylight Time for the following purposes:
1. To elect eight (8) Directors, the names of whom are set forth on the
accompanying proxy statement, to serve until the 2001 Annual Meeting
of Shareholders.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for 2000.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 28, 2000 are the
only shareholders entitled to notice of and to vote at the 2000 Annual Meeting
of Shareholders and any adjournments thereof.
Whether you expect to attend the meeting or not, please vote, sign, date
and return the enclosed proxy in the self-addressed envelope provided as
promptly as possible. If you attend the meeting, you may vote your shares in
person, even though you have previously signed and returned your proxy.
By order of the Board of Directors
Suzanne S. Hammond
Secretary and Treasurer
May 4, 2000
<PAGE>
Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue - Suite C-206
Rye, New York 10580
May 4, 2000
Proxy Statement
GENERAL INFORMATION
-------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Tremont Advisers, Inc., a Delaware
corporation (the "Company") to be used at the 2000 Annual Meeting of
Shareholders (the "2000 Annual Meeting") to be held at the Company's offices
located at Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite C-206, Rye,
New York 10580 on Tuesday, June 6, 2000 at 2:00 p.m. Eastern Daylight Time, and
all adjournments thereof.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by mail, but
certain officers and regular employees of the Company or its subsidiaries,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company's 1999 Annual Report, including
financial statements, the Proxy Statement and form of proxy/voting instruction
card (the "proxy card" or "proxy") are being mailed to the Company's
shareholders of record at the close of business on April 28, 2000. These
documents shall be mailed on or about May 4, 2000.
A shareholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to such proxy are voted
by notifying the Secretary of the Company in writing. If a shareholder specifies
how the proxy is to be voted with respect to any of the proposals for which a
choice is provided, the proxy will be voted in accordance with such
instructions. If a shareholder fails to so specify with respect to such
proposals, the proxy will be voted FOR Proposals No. 1. and No. 2
Outstanding Voting Securities
Only shareholders of record at the close of business on April 28, 2000 are
entitled to vote at the 2000 Annual Meeting. On that day, there were 1,595,118
shares of Class A Common Stock outstanding (each share being entitled to four
(4) votes or, in the aggregate, 6,380,472 votes) and 4,020,349 shares of Class B
Common Stock outstanding (each share being entitled to one (1) vote or, in the
aggregate, 4,020,349 votes). Thus, a total of 10,400,821 votes may be cast.
1
<PAGE>
If a quorum is present, in person or by proxy, all elections for Directors
shall be decided by plurality of the votes cast in respect thereof. If no voting
direction is indicated on the proxy cards, the shares will be considered votes
for the nominees. In accordance with Delaware law, shareholders entitled to vote
for the election of Directors can withhold authority to vote for all nominees
for Directors or can withhold authority to vote for certain nominees for
Directors.
Abstentions may be specified on all proposals submitted to a shareholder
vote other than the election of Directors. Abstentions will be counted as
present for purposes of determining the existence of a quorum regarding the
proposal on which the abstention is noted. Abstentions on the Company's proposal
to ratify the appointment of the independent auditors will not have any effect
for or against such proposal.
Brokers holding shares of the Company's Class A Common Stock and/or Class B
Common Stock (collectively, the "Common Stock") in street name who do not
receive instructions are entitled to vote on the election of Directors and the
ratification of the appointment of the independent auditors. Under applicable
Delaware law, "broker non-votes" on any other non-routine proposal (where a
broker submits a proxy but does not have authority to vote a customer's shares
on such proposal) would not be considered entitled to vote on that proposal and
would not be counted in determining whether such proposal receives a majority of
the shares entitled to vote at the 2000 Annual Meeting.
Shareholders' Proposals for Next Annual Meeting
Shareholders' proposals intended to be presented at the 2001 Annual Meeting
of Shareholders (the "2001 Annual Meeting") must be received by the Company no
later than January 19, 2001, for inclusion in the Company's proxy statement and
form of proxy for that meeting.
Execution of the accompanying proxy card will not affect a shareholder's
right to attend the meeting and vote in person. Any shareholder giving a proxy
has the right to revoke it by giving written notice of revocation to the
Secretary of the Company at any time before the proxy is voted.
Proposal No. 1.
Election of Directors
Eight (8) directors will be elected at the 2000 Annual Meeting to serve for
a term of one year, until the 2001 Annual Meeting and until their successors
have been duly elected and have qualified. If any nominee is unable to serve,
which the Board of Directors has no reason to expect, the persons named in the
accompanying proxy intend to vote for the balance of those named and, if they
deem it advisable, for a substitute nominee. The names of the nominees for
directors of the Company whose terms of office will continue after the 2000
Annual Meeting are listed below.
Sandra L. Manzke, 52, is the Company's Chairman of the Board and Chief
Executive Officer. Ms. Manzke was one of the principal founders of Tremont
Partners, Inc. ("TPI") in 1984 and has been its Chairman and President since its
inception. When the Company acquired TPI in 1987, Ms. Manzke also became a
director of the Company and, prior to becoming its Chief Executive Officer in
May 1994, was
2
<PAGE>
its President. Ms. Manzke has served as a director of the Company since 1987 and
also serves as a director of Tremont (Bermuda) Limited ("TBL"). Ms. Manzke has
and continues to be principally responsible for the operations and client
relationships of the Company.
Robert I. Schulman, 54, became the Company's President and Chief Operating
Officer as of May 31, 1994. He has been a Director of the Company since October
1993. As of June 1994, Mr. Schulman also became President, Chief Executive
Officer and a Director of Tremont Securities, Inc. In July 1998, Mr. Schulman
became President of both Tremont Investment Management, Inc. and Tremont
Futures, Inc. Prior to May 31, 1994, he was Executive Vice President, Director
of Products & Services at Smith Barney Shearson. Mr. Schulman began his career
in 1969 as an Account Executive trainee with E.F. Hutton & Co., Inc., becoming
the assistant branch manager of its Columbus Circle, New York City branch.
Subsequently, Mr. Schulman served as Vice President and Regional Options and
Futures Director of the Atlantic Region, Senior Vice President and National
Director of Leveraged Products, and as Executive Vice President of all product
sales at E.F. Hutton & Co., Inc. He has served on the NYSE Derivative Product
Committee, CBOE Retail Advisory Council, NASD Options and Derivative Product
Committee, Board of the New York Futures Exchange, and the NYSE Option
Specialist Allocation Committee. Mr. Schulman is a member of the Company's Audit
Committee and the committee which administers the Company's 1998 Stock Option
Plan. He also serves on the boards of directors of two non-public companies
which are parties to agreements with the Company, the Lockwood Financial Group,
Ltd. and M-Power, Inc. (formerly known as 401(k) Forum, Inc.).
John L. Keeley, Jr., 59, became a Director of the Company in January 1994.
Mr. Keeley is President, Treasurer and a Director of Keeley Investment
Corporation, a registered broker-dealer. He has held these positions since 1977.
He is also President and a Director of Keeley Asset Management Corporation, a
registered investment advisor and of Keeley Small Cap Value Fund, Inc., an
open-end mutual fund. He is the general partner of various investment
partnerships and an officer of the John L. Keeley, Jr. Foundation. Mr. Keeley
became a Director of the Marquette National Corporation in 1994. Mr. Keeley is a
member of the Company's Audit Committee and the committee which administers the
Company's 1998 Stock Option Plan.
Jimmy L. Thomas, 58, became a Director of the Company in November 1994.
Prior to retiring in 1998, Mr. Thomas was Senior Vice President - Financial
Services and Treasurer of Gannett Co., Inc., a position he held since December
1991. Mr. Thomas also serves on the Regional Advisory Board of HSBC (formerly
known as Marine Midland Bank). Mr. Thomas is a member of the Company's Audit
Committee and the committee which administers the Company's 1998 Stock Option
Plan.
Alan A. Rhein, 57, became a Director of the Company in June 1997. In 1995,
he was a founding principal of Lockwood Financial Group Ltd., an investment
management consulting firm, and is President and Chief Executive Officer of
Lockwood Financial Services, its broker-dealer division. He started his
financial services career as an account executive in 1965 with E.F. Hutton & Co.
He spent the next 23 years with that firm in a variety of positions from Account
Executive, Branch Manager to Executive Vice President in charge of the Atlantic
Region. In 1986, Mr. Rhein was elected to the Board of Directors of E.F. Hutton
& Co. After the Shearson Lehman takeover of E.F. Hutton, Mr. Rhein was promoted
to Group President. In 1993, Mr. Rhein was recruited by Prudential Securities to
serve as Executive Vice President in charge of their entire Retail Branch
System. Mr. Rhein is a member of the Company's Audit Committee and the committee
which administers the Company's 1998 Stock Option Plan.
3
<PAGE>
Richard E. O'Brien, 42, became a Director of the Company in June 1998. He
has been the Vice President, Secretary and General Counsel of Mutual Risk
Management Ltd., the indirect holder of Class B Common Stock equal to
approximately 20% of the aggregate of the Company's outstanding Class A Common
Stock and Class B Common Stock, since March 1995. From 1990 until 1995 Mr.
O'Brien was a partner in Dunnington, Bartholow & Miller, a law firm located in
New York City. Mr. O'Brien has been a member of the Company's Audit Committee
since 1998 and is on the committee which administers the Company's 1998 Stock
Option Plan.
Nicola Meaden, 40, is Managing Director of Tremont Advisers, Inc. and is
the founder and Chief Executive Officer of TASS Investment Research Limited
("TASS"). TASS, established in 1990, is the Company's newest subsidiary. Prior
to establishing TASS, Ms. Meaden worked for the London based commodity and
futures brokerage company Gourlay Wolff where she was responsible for developing
and managing its managed futures department, including launching and managing
multi-manager offshore funds.
Bruce D. Ruehl, 39, joined the Company in 1993. He is Managing Director and
Chief Investment Strategist, and is responsible for all manager research
activities. Prior to joining Tremont, Mr. Ruehl was a vice president and
principal of Reliance Properties, Inc. where he advised private real estate
partnerships investing in bank and RTC-owned properties. Previously, he was with
Shearson Lehman's Consulting Services Department as Vice President and National
Product Manager overseeing proprietary manager investment activities and new
products and, before that, was with Brown Brothers Harriman & Co.
The Board of Directors of the Corporation recommends a vote FOR the slate
of director nominees. The vote of a plurality of shares, present in person or
represented by proxy at the Annual Meeting and entitled to vote, is required to
elect each of the Directors.
The Board of Directors
The Board of Directors is responsible for the management and direction of
the Company and for establishing broad corporate policies. Regular meetings of
the Board of Directors were held each quarter during 1999. Members of the Board
of Directors are kept informed of the Company's business through various
documents and reports provided by the Chairman and other corporate officers, and
by participating in Board of Directors and committee meetings. Each Director has
access to all books, records and reports of the Company, and members of
management are available at all times to answer their questions.
The Board of Directors held four meetings in 1999. The Company's Audit
Committee consists of five Directors, Messrs. Schulman, Keeley, Rhein, O'Brien
and Thomas, four of whom are outside Directors. Each Director attended all of
the meetings of the Board of Directors (except three Directors who each missed a
meeting), and all of the meetings of the Audit Committee, respectively, that
were scheduled during 1999.
The Audit Committee recommends engagement of independent auditors,
considers the fee arrangement and scope of the audit, reviews the financial
statements and the independent auditors' report, considers comments made by the
independent auditors with respect to the Company's internal control structure,
and reviews internal accounting procedures and controls with the Company's
financial and accounting staff. The Board of Directors does not currently have
any other committees.
4
<PAGE>
Directors who are not employees of the Company received $2,500 for each
Board meeting attended and $1,250 for each telephonic Board meeting attended.
Subsequent to June 30, 1999, each non-employee director received $5,000 for each
Board of Directors meeting attended and $2,500 for each telephonic Board Meeting
attended. Each Director is reimbursed for out-of-pocket expenses.
OWNERSHIP OF SHARES
The following table contains information relating to the beneficial
ownership of Common Stock by members of the Board of Directors, and by such
members and by the Company's officers as a group, as well as certain other
beneficial owners as of April 28, 2000. Information as to the number of shares
of Common Stock owned and the nature of ownership has been provided by these
individuals and is not within the direct knowledge of the Company. Unless
otherwise indicated, the named individuals possess sole voting and investment
power with respect to the shares listed. The following information has been
furnished to the Company or is based on Schedules 13D, or any amendments
thereto, received by the Company as filed with the Commission.
5
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of % of
Beneficial Owner Shares Owned ----
- ---------------- Class A ------------ Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sandra L. Manzke (1) 215,500 482,470 14 12
555 Theodore Fremd Avenue
Rye, New York
Robert I. Schulman(2) 2,455 464,689 * 11
555 Theodore Fremd Avenue
Rye, New York
John L. Keeley, Jr. (3) 101,987 444,532 6 11
401 South LaSalle Street
Chicago, Illinois
Alan A. Rhein (4) -- 41,875 -- 1
405 Park Avenue
New York, New York
Jimmy L. Thomas (5) -- 63,750 -- 2
25 Fox Meadow Drive
Orchard Park, New York
Suzanne S. Hammond (6) -- 31,790 -- 1
555 Theodore Fremd Avenue
Rye, New York
Nicola Meaden (7) -- 286,473 * 5
Charter House
13-15 Carteret Street
London, SW1H9DJ
United Kingdom
Stephen T. Clayton (8) 948 45,559 * 1
555 Theodore Fremd Avenue
Rye, New York
Bruce D. Ruehl (9) 251 136,713 * 3
555 Theodore Fremd Avenue
Rye, New York
Mario J. Gabelli (10) 670,776 245,868 42 6
Gabelli Asset Management, Inc.
555 Theodore Fremd Avenue
Rye, New York
Brighton Communications -- 142,611 -- 3
Corporation(11)
401 Theodore Fremd Avenue
Rye, New York
MGL Investments Ltd. (12) -- 1,081,230 -- 27
One Logan Square
Suite 1400
Philadelphia, PA
Directors and Officers 321,141 1,997,851 21 47
as a group:
* Less than one percent.
</TABLE>
6
<PAGE>
(1) Includes 12,500 shares of Class A Common Stock held by the Tremont Advisers,
Inc., 401(k) Savings Plan for the benefit of Ms. Manzke. The 482,470 shares of
Class B Common Stock include 54,281 shares held by the Tremont Advisers, Inc.
401(k) Savings Plan for the benefit of Ms. Manzke and 46,500 shares represent
certain stock options granted to Ms. Manzke by the Company that have vested.
(2) The 2,455 shares of Class A Common Stock are held by the Tremont Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Schulman. Of the 464,689 shares
of Class B Common Stock, 221,250 shares represent certain stock options granted
to Mr. Schulman by the Company that have vested and 10,568 shares are held by
the Tremont Advisers, inc. 401(k) Savings Plan for the benefit of Mr. Schulman.
(3) The 101,987 shares of Class A Common Stock are beneficially owned by Mr.
Keeley. Of the 444,532 shares of Class B Common Stock reported, 206,250 shares
reported are beneficially owned by Mr. Keeley and include 25,000 shares held in
the name of his wife, 11,250 shares held by the John L. Keeley Jr. Foundation,
43,750 shares held by the KIC Profit Sharing Plan & Trust for the benefit of Mr.
Keeley for which Mr. Keeley is Trustee, and 43,750 shares held by the KIC
Pension Plan & Trust for the benefit of Ms. Keeley and for which Mr. Keeley is
Trustee and 7,500 shares represent certain stock options granted to Mr. Keeley
by the Company that have vested. Of the remaining 106,782 shares of Class B
Common Stock, 82,140 shares are owned by Kamco Limited Partnership No. 1 ("KLP")
and 24,642 shares held by JGJ Partnership of which Mr. Keeley is a partner. Mr.
Keeley is the sole general partner of KLP, an investment partnership organized
under the laws of Illinois. Mr. Keeley is deemed to have a beneficial ownership
of securities owned beneficially by each of the foregoing entities.
(4) Of the 41,875 shares of Class B Common Stock beneficially owned by Mr.
Rhein, 16,875 shares represent certain stock options granted to Mr. Rhein that
have vested.
(5) Of the 63,750 shares of Class B Common Stock beneficially owned by Mr.
Thomas, 1,250 shares represent certain stock options granted to Mr. Thomas that
have vested.
(6) Of the 31,790 shares of Class B Common Stock beneficially owned by Ms.
Hammond, 1,875 shares are held by the Tremont Advisers, Inc. 401(k) Savings Plan
for the benefit of Ms. Hammond and 1,875 shares represent certain stock options
granted to Ms. Hammond that have vested.
(7) Of the 286,473 shares of Class B Common Stock beneficially owned by Ms.
Meaden, 206,261 shares represent certain stock options granted to Ms. Meaden
that have vested.
(8) The 948 shares of Class A Common Stock are held by the Tremont Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Clayton. Of the 45,559 shares of
Class B Common Stock, 15,812 shares represent certain stock options granted to
Mr. Clayton by the Company that have vested, 4,582 shares are held by the
Tremont Advisers, Inc. 401(k) Savings Plan for the benefit of Mr. Clayton, 4,500
shares are held in the name of his wife, for which Mr. Clayton specifically
disclaims beneficial ownership and 250 shares are held in the name of his minor
children, for which Mr. Clayton is deemed to have beneficial ownership.
(9) The 251 shares of Class A Common Stock are held by the Tremont Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Ruehl. Of the 136,713 shares of
Class B Common Stock, 1,712 shares are held by the Tremont Advisers, Inc. 401(k)
Savings Plan for the benefit of Mr. Ruehl and 10,000 shares represent certain
stock options granted to Mr. Ruehl by the Company that have vested.
7
<PAGE>
(10) Includes 406,000 shares of Class A Common Stock and 2,833 shares of Class B
Common Stock owned by family trusts or partnerships over which Mr. Gabelli has
sole voting power and investment power. Does not include shares listed elsewhere
in this table which are held by Brighton Communications Corporation, of which
Mr. Gabelli specifically disclaims beneficial ownership. Mr. Gabelli is the
principal shareholder, as well as the Chairman of the Board and Chief Executive
Officer, of Gabelli Asset Management Inc. ("GAMI"), the ultimate parent company
for a variety of operating companies engaged in various aspects of the
securities business, including Gabelli Funds, LLC, a wholly-owned subsidiary of
GAMI and a registered investment adviser; GAMCO Investors, Inc. ("GAMCO"), a
wholly-owned subsidiary of GAMI and a registered investment adviser; Gabelli
Securities, Inc. ("GSI"), a majority-owned subsidiary of GAMI; and Gabelli &
Company, Inc. ("Gabelli & Company"), a wholly-owned subsidiary of GSI and a
registered broker-dealer. Mr. Gabelli is also Chairman of the Board and Chief
Executive Officer of Gabelli Group Capital Partners, Inc. ("GGCP"), which owns
approximately 80% of the common stock of GAMI. GGCP, GAMI, GAMCO, GSI and
Gabelli & Company are herein referred to as "affiliates" of Mr. Gabelli. Acting
in these capacities, Mr. Gabelli has the authority for making voting and
investment decisions on behalf of the affiliates and, therefore, may be deemed
to be the beneficial owner of shares of the Company owned by or held in accounts
of such affiliates. Of the remaining 264,776 shares of Class A Common Stock
owned by Mr. Gabelli and affiliates of Gabelli, 52,500 shares are held by GSI
and 281 shares are held by GGCP.
(11) Mr. Gabelli is Chairman of the Board and Chief Executive Officer of
Brighton, and he and his affiliates and their clients are principal shareholders
of Lynch. Mr. Gabelli may be deemed to be a beneficial owner of the shares of
the Company owned by Brighton by virtue of his and certain affiliated parties'
significant beneficial ownership of the common stock of Lynch. Mr. Gabelli,
however, specifically disclaims beneficial ownership of all of the shares of the
Company's Common Stock held by Lynch.
(12) In July 1997, Mutual Risk Management ("MRM"), an international risk
management company, indirectly acquired an equity interest in the Company. In
July 1997, MGL Investments Ltd. ("MGL"), a wholly-owned subsidiary of MRM,
purchased 768,750 shares of outstanding Class B Common Stock at a price of $3.00
per share pursuant to a tender offer. In addition, the Company simultaneously
sold MGL 252,956 shares of Class B Common Stock at a price of $3.00 per share.
As a result of these transactions, MRM then indirectly owned, through MGL, Class
B Common Stock equal to 20% of the aggregate of the Company's outstanding Class
A Common Stock and Class B Common Stock. Pursuant to the 1997 Stock Purchase
Agreement MGL has the right to acquire an amount of stock to keep their pro rata
ownership at the same purchase price and terms offered to prospective
purchasers. In connection with the shares issued in the TASS acquisition, MGL
exercised its right and purchased 59,524 shares of Class B Common Stock at $6.00
per share.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for the
Company's Chief Executive Officer and other officers whose total cash
compensation exceeded $100,000 for services rendered to the Company and its
subsidiaries for the fiscal year ended December 31, 1999 (the "Named Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
- ----------------------------------------------------------------------------------------------------------------
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All other
Name and Principal Salary Bonus Compensation Award(s) Options/ Payout Compensation
Position Year ($)(a) ($)(b) ($) (c) ($) SARs (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 380,000 372,000 58,275 - 11,000 - -
---------------------------------------------------------------------------------------
Sandra L. Manzke, 1998 373,000 310,000 - - - - -
---------------------------------------------------------------------------------------
Chief Executive Officer 1997 362,000 135,000 - - 43,750 - -
- ----------------------------------------------------------------------------------------------------------------
1999 342,000 334,800 58,275 - 10,000 - -
---------------------------------------------------------------------------------------
Robert I. Schulman, 1998 335,700 279,000 - - - - 295,000
---------------------------------------------------------------------------------------
Chief Operating Officer 1997 326,250 121,500 - - 31,250 - -
- ----------------------------------------------------------------------------------------------------------------
1999 155,000 125,000 33,300 - 5,000 - 9,050
---------------------------------------------------------------------------------------
Bruce D. Ruehl, 1998 150,000 150,000 - - 5,000 - -
---------------------------------------------------------------------------------------
Chief Investment 1997 140,000 100,000 - - 12,500 - -
Strategist
- ----------------------------------------------------------------------------------------------------------------
1999 140,000 110,000 49,950 - 7,000 - 53,125
---------------------------------------------------------------------------------------
Stephen T. Clayton, 1998 130,000 65,000 - - 3,125 - 12,650
---------------------------------------------------------------------------------------
Chief Financial Officer 1997 120,000 50,000 - - 12,500 - -
- ----------------------------------------------------------------------------------------------------------------
1999 120,000 35,000 19,980 - 2,500 - -
---------------------------------------------------------------------------------------
Suzanne S. Hammond, 1998 107,000 20,000 - - 2,500 - -
---------------------------------------------------------------------------------------
Secretary and Treasurer 1997 100,417 14,000 - - - - -
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(a) On December 9, 1999, the Company entered into an amendment to Ms. Manzke's
employment agreement dated September 15, 1995. Under the terms of the amended
agreement which expires on December 31, 2000, Ms. Manzke is entitled to receive
a minimum annual base salary of $391,400. In addition, Ms. Manzke may receive
incentive compensation to be determined by the Board of Directors. On December
9, 1999, the Company entered into an amendment to Mr. Schulman's employment
agreement dated April 22, 1994. Under the terms of the amended agreement which
expires on December 31, 2000, Mr. Schulman is entitled to receive minimum annual
base compensation of $352,300. In addition, Mr. Schulman must receive incentive
compensation not less than 90% of the incentive compensation paid to Ms. Manzke
in any year.
(b) A portion of the bonuses for Ms. Manzke, Mr. Schulman, Mr. Ruehl, Mr.
Clayton and Ms. Hammond, which accrued in 1998 were actually paid in 1999. These
amounts were $105,000, $94,500, $30,000,
9
<PAGE>
$15,000 and $7,500, respectively. A portion of the bonuses for Ms. Manzke, Mr.
Ruehl, Mr. Clayton and Ms. Hammond, which accrued in 1997 were actually paid in
1998. These amounts were $150,000, $20,000, $12,000 and $6,000, respectively. In
addition, a portion of the bonuses for Ms. Manzke and Mr. Schulman which accrued
in 1996 were actually paid in 1997. These amounts were $75,000 and $67,500,
respectively.
(c) Represents compensation charged to each employee as a result of a
distribution to them of FITX Group Limited Common Stock.
- ----------
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Presented below is information with respect to unexercised stock options to
purchase the Company's Class B Common Stock held by each Named Officer as of
December 31, 1999.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
1999 1999
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sandra L. Manzke - $ - 46,500/8,250 $ 154,750/$ -
Robert I. Schulman - $ - 221,250/7,500 $ 1,831,250/$ -
Bruce D. Ruehl 5,000 $ 9,050 10,000/6,250 $52,750/$9,000
Stephen T. Clayton 6,250 $53,125 15,812/6,813 $93,100/$5,600
Suzanne S. Hammond - $ - 1,875/3,125 $4,500/$4,500
</TABLE>
Directors' Compensation
Directors of the Company who are salaried employees of the Company do not
receive any additional compensation for serving as a director. Non-employee
directors of the Company received $2,500 for each Board of Directors meeting
attended and $1,250 for each telephonic Board Meeting attended. Subsequent to
June 30, 1999, each non-employee director received $5,000 for each Board of
Directors meeting attended and $2,500 for each telephonic Board Meeting
attended.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Company and Sandra L. Manzke, the Company's Chairman of the Board and
Chief Executive Officer, are parties to an amended employment agreement pursuant
to which Ms. Manzke is entitled to a minimum base salary of $391,400 per annum.
She is also entitled to a bonus as determined by the Board of Directors. Ms.
Manzke's employment may be terminated due to illness, disability or other
incapacity such that she is unable to perform her duties for a period of ninety
(90) consecutive days. If her employment is so terminated, she will be entitled
to receive her base salary and accrued bonus until December 31, 2000. In the
event of her death, her right to compensation will cease. In the event of the
termination of Ms. Manzke's employment for any reason, including death, the
Company shall have the option, provided it is exercised within ninety (90) days,
to reacquire all of Ms. Manzke's shares of capital stock of the Company for a
price per share equal to the market value on the date of such termination. Ms.
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Manzke agreed that she will not sell or dispose of her stock in the Company
without first offering to sell the stock to the Company at a price per share
equal to the market value.
Robert I. Schulman, the President and Chief Operating Officer of the
Company, entered into an amendment to his employment agreement with the Company
as of December 9, 1999. The employment agreement, as amended, expires on
December 31, 2000, but provides for automatic renewals from year to year unless
either party terminates it in a timely manner. Mr. Schulman is entitled to a
minimum base salary of $352,000 plus a bonus determined by the Board of
Directors; provided, however, that in no event will Mr. Schulman's base salary
in any year be less than 90% of the base salary payable to Ms. Manzke for such
year and in no event will Mr. Schulman's bonus be less than 90% of the incentive
compensation payable to Ms. Manzke in such year. If Mr. Schulman is disabled or
his employment is terminated by the Company without cause or by him with cause,
then he will be entitled to receive his base salary and accrued bonus until
December 31, 2000. In the event of the termination of his employment by the
Company with cause or by him without cause or in the event of his death, his
right to compensation will cease upon the date of termination or death.
Upon executing his employment agreement in 1994, Mr. Schulman was granted
options to purchase 275,000 shares of the Company's Class B Common Stock at an
exercise price of $1.75 per share, the then current fair market value of the
Class B Common Stock. The options are fully vested and will expire on the
anniversary of the grant date in 2001. In the event Mr. Schulman's employment is
terminated for any reason, including the expiration of the employment agreement,
any unvested options will lapse; vested but unexercised options will remain
outstanding and exercisable under the original terms and conditions, subject to
an option in favor of TPI to purchase all of Mr. Schulman's stock no later than
seven days after the date of termination for a per share price equal to the best
bid price on the date of termination and the purchase price for each option
shall be the greater of (i) $1.75 or (ii) the amount of the best bid price for a
share of Common Stock on the date of termination less $1.75. Mr. Schulman has
agreed that he will not dispose of the Class B Common Stock he acquires pursuant
to the options or the unexercised options without first offering them to TPI for
the per share price applicable in the case of the termination of his employment.
On March 11, 1999, the Company entered into a two-year employment agreement
with Nicola Meaden, the Chief Executive Officer of TASS. She is entitled to a
minimum base salary of $150,000 per year, a guaranteed bonus of $50,000 per year
and such other bonus as may be determined by the Board of Directors. Ms.
Meaden's employment may be terminated by consent, for cause, or as a result of
death or disability, and the Company is expressly permitted to terminate without
cause. If her employment is terminated for cause, she will be entitled to
receive accrued salary, guaranteed bonus, and the value of accrued but unused
vacation time through the date of termination. If her employment is terminated
for any reason other than for cause, she will be entitled to the same amounts
through the end of the term of the employment agreement; however, the Company
may offset against payments due to her any compensation received by her through
any affiliation with a competing business prior to the end of the term.
During 1999 certain directors and officers exercised options to purchase an
aggregate of 25,000 and 12,500 shares, respectively, of the Company's Class B
Common.
As of December 31, 1999, options to purchase 187,500 shares, 123,957
shares, 183,082 shares, 22,025 shares, 2,750 shares and 20,813 shares of Class B
Common Stock for $1.40, $3.00, $6.40, $10.00, $11.00 and $12.00 , respectively,
were exercisable by the Company's directors and executives.
The foregoing has been adjusted to give effect to the impact of the
five-for-four split distributed on August 16, 1999.
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Indemnification for Certain Liabilities
The By-Laws of the Company provide that the Company may indemnify its
directors and officers to the fullest extent permitted by the laws of the
Delaware General Corporation Law against all expenses, liability and loss
(including attorneys' fees, judgment, fines and amounts paid in settlement)
incurred by them in any action, suit or proceeding arising out of certain of
their actions or omissions in their capacities as directors or officers. Article
Seven of the Company's Restated Certificate of Incorporation provides that, with
certain exceptions, no director of the Company may be liable to the Company for
monetary damages as a result of a breach of his fiduciary duties as a director.
The Company has acquired directors' and officers' liability insurance for its
directors and officers.
The Delaware Supreme Court has held the directors' duty of care to a
corporation and its shareholders requires the exercise of an informed business
judgment. Having become informed of all material information reasonably
available to them, directors must act with requisite care in the discharge of
their duties. The Delaware General Corporation Law permits a corporation through
its certificate of incorporation to exonerate its directors from personal
liability to the corporation or its shareholders for monetary damages for a
breach of their fiduciary duty of care as a director, with certain exceptions.
The exceptions include a breach of the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, improper declaration of dividends and transactions from which
the director derived an improper personal benefit. As noted above, the Company's
Restated Certificate of Incorporation exonerates its directors, acting in such
capacity, from monetary liability to the extent permitted by this statutory
provision. This limitation of liability provision does not eliminate a
shareholder's right to seek non-monetary, equitable remedies such as an
injunction or rescission in order to redress an action taken by directors.
However, as a practical matter, equitable remedies may not be available in all
situations, and there may be instances in which no effective remedy is
available.
Proposal No. 2.
Ratification of Appointment of Independent Auditors
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent accountants to audit the financial
statements of the Company for the current fiscal year.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the 2000 Annual Meeting and will have an opportunity to make a statement, if
they so desire, and will be available to respond to appropriate questions.
The Board of Directors unanimously recommends that the shareholders vote
FOR approval of this proposal. The affirmative vote of the majority of the votes
cast at the 2000 Annual Meeting is required for the ratification of this
selection.
Other Matters
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. The persons named in the enclosed form of proxy or their
substitutes will vote with respect to any such matters in accordance with their
best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN
AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By order of the Board of Directors,
Suzanne S. Hammond
Secretary and Treasurer
Dated: May 4, 2000
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