<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Phoenix Duff & Phelps Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
PHOENIX DUFF & PHELPS CORPORATION
56 Prospect Street
Hartford, Connecticut 06115
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
To the Stockholders of
PHOENIX DUFF & PHELPS CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Phoenix
Duff & Phelps Corporation (the "Company") will be held at the headquarters of
the Company, 56 Prospect Street, Hartford, Connecticut 06115, on Tuesday, May
13, 1997, at 9:00 a.m., for the purpose of considering and acting upon the
following matters:
1. To elect fourteen directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified;
2. To consider and act upon a proposed amendment to the Company's 1992
Long-Term Stock Incentive Plan to increase the number of shares of the
Company's Common Stock available for awards thereunder from 6.4 million
to 9.7 million; and
3. To consider and act upon such other business as may properly come before
the meeting or any adjournments thereof.
Stockholders of record as of the close of business on March 24, 1997 shall
be entitled to notice of and to vote at the meeting. The transfer books will
not be closed. For ten days prior to the meeting, a list of stockholders
entitled to vote at the meeting will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, at the offices of Phoenix Duff & Phelps Corporation, 56 Prospect
Street, Hartford, Connecticut 06115. Stockholders who do not expect to attend
the meeting in person are urged to execute and return the accompanying proxy
in the envelope enclosed.
By order of the Board of Directors
Thomas N. Steenburg,
Secretary
Hartford, Connecticut
March 31, 1997
<PAGE>
PROXY STATEMENT
PHOENIX DUFF & PHELPS CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1997
GENERAL INFORMATION
This proxy statement is being furnished to the stockholders of Phoenix Duff
& Phelps Corporation, a Delaware corporation (the "Company"), 56 Prospect
Street, Hartford, Connecticut 06115, in connection with the solicitation of
proxies by its Board of Directors for use at the annual meeting of
stockholders to be held on Tuesday, May 13, 1997 and at any adjournments
thereof. The approximate date on which this proxy statement and the
accompanying proxy are first being sent to stockholders is March 31, 1997.
The proxy is revocable at any time before it is voted by a subsequently
dated proxy, by written notification to the persons named therein as proxies,
which may be mailed or delivered to the Company at the above address, or by
attendance at the meeting and voting in person. All shares represented by
effective proxies will be voted at the meeting and at any adjournments
thereof.
If the enclosed proxy is properly executed and returned in time for voting
with a choice specified thereon, the shares represented thereby will be voted
as indicated thereon. If no specification is made, the proxy will be voted by
the proxy committee for the election as directors of the nominees named below
(or substitutes therefor, if any nominees are unable or refuse to serve), for
the approval of the proposed amendment to the Company's 1992 Long-Term Stock
Incentive Plan to increase the number of shares of the Company's Common Stock
available for awards thereunder from 6.4 million to 9.7 million, and in its
discretion upon such matters not presently known or determined which may
properly come before the meeting.
The Company has one class of voting stock outstanding, Common Stock, par
value $.01 per share ("Common Stock"). On March 24, 1997, 44,054,016 shares of
Common Stock were outstanding and entitled to one vote each on all matters to
be considered at the meeting. Stockholders of record as of the close of
business on March 24, 1997 are entitled to notice of and to vote at the
meeting. There are no cumulative voting rights with respect to the election of
directors. On March 24, 1997, 3,169,356 shares of the Company's Series A
Convertible Exchangeable Preferred Stock, par value $.01 per share ("Series A
Preferred Stock"), were also outstanding, but are not entitled to vote at the
meeting.
Inspectors of election will be appointed to tabulate the number of shares of
Common Stock represented at the meeting in person or by proxy, to determine
whether or not a quorum is present and to count all votes cast at the meeting.
The inspectors of election will treat abstentions and broker non-votes as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. With respect to the tabulation of votes cast on a
specific proposal presented to the stockholders at the meeting, abstentions
will be considered as present and entitled to vote with respect to that
specific proposal, whereas broker non-votes will not be considered as present
and entitled to vote with respect to that specific proposal.
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
The following table shows with respect to each person who is known to be the
beneficial owner of more than 5% of the Common Stock of the Company: (i) the
total number of shares of Common Stock beneficially owned as of March 24, 1997;
and (ii) the percent of the Common Stock so owned as of that date:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) STOCK
- ------------------------------------ ----------------- ----------
<S> <C> <C>
Phoenix Home Life Mutual Insurance Company......... 30,754,000(2) 63.5%
One American Row
Hartford, Connecticut 06102
Ariel Capital Management, Inc...................... 2,807,860(3) 6.4
307 North Michigan Avenue
Chicago, Illinois 60601
</TABLE>
The following table shows with respect to each director and nominee for
director of the Company, which includes the five executive officers of the
Company named in the Executive Compensation Table, and with respect to all
directors and executive officers as a group, seventeen in number: (i) the total
number of shares of Common Stock and Series A Preferred Stock beneficially
owned as of March 24, 1997; and (ii) the percent of the Common Stock and Series
A Preferred Stock so owned as of that date:
<TABLE>
<CAPTION>
COMMON STOCK SERIES A PREFERRED STOCK
------------------------- -------------------------
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OWNERSHIP(1) PERCENT
- ------------------------ ----------------- ------- ----------------- -------
<S> <C> <C> <C> <C>
Francis E.
Jeffries(4)(5)(6)......... 524,039 1.2% 38,075 1.2%
Philip R. McLoughlin(5).... 43,333 * -- --
Calvin J. Pedersen(5)(6)... 215,072 * 14,752 *
Wayne C. Stevens(5)(6)..... 228,149 * 9,242 *
Michael E. Haylon(5)....... 17,000 * -- --
David R. Pepin(5).......... 8,333 * -- --
Robert W. Fiondella(5)..... 13,750 * -- --
Richard H. Booth(5)........ 6,750 * -- --
Edward P. Lyons(5)......... 6,750 * -- --
Marilyn E. LaMarche(5)..... 3,750 * -- --
James M. Oates(5).......... 18,750 * -- --
Ferdinand Verdonck(5)...... 3,750 * -- --
John T. Anderson(5)........ 4,750 * -- --
Glen D. Churchill(5)(6).... 7,971 * 875 *
Donna F. Tuttle(5)(6)...... 8,003 * 610 *
David A. Williams(5)(6).... 4,916 * 375 *
All directors and executive
officers as a group
(17 persons)(5)(6)........ 1,129,499 2.5% 63,929 2.0%
</TABLE>
- --------
*Less than one percent.
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule
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<PAGE>
13d-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but are not deemed outstanding for the purpose of
calculating the percentage owned by each other person listed.
(2) Based upon the number of shares of Common Stock and Series A Preferred
Stock reported in the most recent Schedule 13D filed by Phoenix Home Life
Mutual Insurance Company with the Securities and Exchange Commission.
Includes 26,400,000 shares of Common Stock beneficially owned by Phoenix
Home Life Mutual Insurance Company and 4,354,000 shares of Common Stock
which could be acquired through the conversion of 1,400,000 shares of
Series A Preferred Stock beneficially owned by Phoenix Home Life Mutual
Insurance Company. Each share of Series A Preferred Stock is convertible at
any time into 3.11 shares of Common Stock.
(3) Number of shares of Common Stock reported in the most recent Schedule 13G
filed by Ariel Capital Management, Inc. with the Securities and Exchange
Commission. All of such shares are beneficially owned by investment
advisory clients of Ariel Capital Management, Inc. Includes 2,700,860
shares as to which Ariel Capital Management, Inc. has sole voting power and
2,807,860 shares as to which Ariel Capital Management, Inc. has sole
dispositive power.
(4) Includes 5,000 shares of Common Stock and 1,000 shares of Series A
Preferred Stock held by Mr. Jeffries as custodian for his grandson. Mr.
Jeffries disclaims beneficial ownership of the shares held by him for his
grandson.
(5) Includes shares of Common Stock and Series A Preferred Stock which could be
acquired through the exercise of stock options as follows: Mr. Jeffries,
200,000 shares of Common Stock, 10,000 shares of Series A Preferred Stock;
Mr. McLoughlin, 33,333 shares of Common Stock; Mr. Pedersen, 90,770 shares
of Common Stock, 7,410 shares of Series A Preferred Stock; Mr. Stevens,
131,982 shares of Common Stock, 2,500 shares of Series A Preferred Stock;
Mr. Haylon, 15,000 shares of Common Stock; Mr. Pepin, 8,333 shares of
Common Stock; Mr. Fiondella, 3,750 shares of Common Stock; Mr. Booth, 3,750
shares of Common Stock; Mr. Lyons, 3,750 shares of Common Stock; Ms.
LaMarche, 3,750 shares of Common Stock; Mr. Oates, 3,750 shares of Common
Stock; Mr. Verdonck, 3,750 shares of Common Stock; Mr. Anderson, 3,750
shares of Common Stock; Mr. Churchill, 3,750 shares of Common Stock, 375
shares of Series A Preferred Stock; Ms. Tuttle, 3,750 shares of Common
Stock, 375 shares of Series A Preferred Stock; Mr. Williams, 3,750 shares
of Common Stock, 375 shares of Series A Preferred Stock; all directors and
executive officers as a group, 530,251 shares of Common Stock, 21,035
shares of Series A Preferred Stock.
(6) Includes shares of Common Stock which could be acquired through the
conversion of shares of Series A Preferred Stock beneficially owned by such
person. Each share of Series A Preferred Stock is convertible at any time
into 3.11 shares of Common Stock.
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
At the meeting, fourteen directors are to be elected to hold office until the
next annual meeting of stockholders and until their successors are duly elected
and qualified. All of the nominees are presently directors of the Company. The
affirmative vote of the holders of a plurality of the shares of Common Stock
represented in person or by proxy at the annual meeting is required to elect
directors. It is intended that, in the absence of contrary specifications,
votes will be cast pursuant to the enclosed proxies for the election of such
nominees.
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<PAGE>
Should any of the nominees become unable or unwilling to accept nomination or
election, it is intended, in the absence of contrary specifications, that the
proxies will be voted for the balance of those named and for a substitute
nominee or nominees. However, the Company now knows of no reason to anticipate
such an occurrence. All of the nominees have consented to be named as nominees
and to serve as directors if elected. Francis E. Jeffries and Wayne C. Stevens
are also presently directors of the Company. Messrs. Jeffries and Stevens have
decided not to stand for election to the Board of Directors.
On November 1, 1995, pursuant to an Agreement and Plan of Merger dated as of
June 14, 1995 (the "Merger Agreement") among the Company, PM Holdings, Inc.
("PM Holdings") and Phoenix Securities Group, Inc., a wholly-owned subsidiary
of PM Holdings ("PSG"), PSG was merged with and into the Company (the
"Merger"). Pursuant to the Merger, the Company was renamed Phoenix Duff &
Phelps Corporation. PM Holdings is a wholly-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("Phoenix Home Life"). PSG, through its
subsidiaries, conducted Phoenix Home Life's investment management operations
other than real estate and mortgages. As a result of the Merger, PSG's
subsidiaries, Phoenix Equity Planning Corporation ("PEPCO"), National
Securities & Research Corporation ("NS&RC") and Phoenix Investment Counsel,
Inc. ("PIC"), are now direct or indirect wholly-owned subsidiaries of the
Company. Pursuant to the Merger Agreement, on November 1, 1995, the capital
stock of PSG was converted into 26.4 million shares of the Company's Common
Stock and the approximately 17.0 million shares of the Company's Common Stock
then issued remained outstanding. Immediately following the Merger, PM
Holdings exchanged $35 million of debt owed to it by PSG for 1.4 million
shares of Series A Preferred Stock. In connection with the Merger, a special
cash dividend of $1.75 per share and a stock dividend of one-tenth of a share
of the Series A Preferred Stock with respect to each share of the Common Stock
were paid on November 8, 1995 by the Company to its stockholders of record on
October 31, 1995, the day preceding the consummation of the Merger.
Additionally, pursuant to the Merger Agreement, the Board of Directors of the
Company was increased by electing nine additional directors designated by PM
Holdings.
The following persons are nominees for election as directors of the Company:
PHILIP R. MCLOUGHLIN Age -- 50 Director since -- November 1, 1995
Mr. McLoughlin has been Vice Chairman of the Board and Chief Executive
Officer of the Company since November 1, 1995. Mr. McLoughlin has also
been a Director of Phoenix Home Life since February 1994 and has been
employed by Phoenix Home Life as Executive Vice President--Investments
since December 1988. In addition, Mr. McLoughlin serves as President of
PEPCO, Chairman of PIC and Chairman and Chief Executive Officer of
NS&RC. He also is a member of the Board of Directors of these
corporations, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. Mr. McLoughlin also serves
as President and as a Director or Trustee of the Phoenix Funds, Phoenix
Duff & Phelps Institutional Mutual Funds and Phoenix-Aberdeen Series
Fund (collectively, the "Phoenix Mutual Funds"). He is a Director of PM
Holdings, Phoenix Charter Oak Trust Company, The World Trust, a
Luxembourg closed-end fund, The Emerging World Trust Fund, a Luxembourg
closed-end fund, and of PXRE Corporation ("PXRE"), a publicly-traded
corporation, and of its wholly-owned subsidiary, PXRE Reinsurance
Company ("PXRE Reinsurance").
CALVIN J. PEDERSEN Age -- 55 Director since -- 1992
Mr. Pedersen has been President of the Company since July 1993. From
January 1992 to July 1993, Mr. Pedersen served as an Executive Vice
President of the Company. Mr. Pedersen was also an
4
<PAGE>
Executive Vice President of Duff & Phelps Inc. ("DPI"), the former
parent of the Company's operating subsidiaries, from 1988 until its
dissolution in 1992. From 1986 to 1988, he served as Senior Vice
President--Marketing and Sales of DPI. Mr. Pedersen joined the Company
in 1986 from First Chicago Investment Advisors, an investment
management company, where he was a Managing Director and head of the
Account Management and Administration Division. Mr. Pedersen is also
President and Chief Executive Officer of Duff & Phelps Utilities Income
Inc., Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. and serves as a Director or
Trustee of the Phoenix Mutual Funds.
MICHAEL E. HAYLON Age -- 39 Director since -- November 1, 1995
Mr. Haylon has been an Executive Vice President of the Company since
November 1, 1995. From February 1993 to November 1, 1995, Mr. Haylon
was Senior Vice President--Securities Investments of Phoenix Home Life.
Mr. Haylon is also President of PIC, Executive Vice President of NS&RC
and Executive Vice President of the Phoenix Mutual Funds. From June
1991 through January 1993, Mr. Haylon was Vice President, Public Fixed
Income and from June 1990 through May 1991, he was Vice President,
Public Bond Investments of Phoenix Home Life. Mr. Haylon was Vice
President of Aetna Capital Management from August 1986 until June 1990
and a Managing Director of Aetna Bond Investors from February 1989
until June 1990. Mr. Haylon also serves as a member of the Boards of
Directors of PIC, PEPCO and NS&RC.
DAVID R. PEPIN Age -- 54 Director since -- January 1, 1997
Mr. Pepin has been an Executive Vice President of the Company since
1996. He also serves as Managing Director, Phoenix-Aberdeen
International Advisers, LLC, as Executive Vice President of the Phoenix
Mutual Funds, Executive Vice President, Mutual Fund Sales and
Operations and a Director of PEPCO, and as a Director of PIC, NS&RC and
Phoenix Charter Oak Trust Company. From 1994 to 1995, Mr. Pepin held
various positions with Phoenix Home Life and from 1980 to 1994 was Vice
President and General Manager, Digital Equipment Corporation.
ROBERT W. FIONDELLA Age -- 54 Director since -- November 1, 1995
Mr. Fiondella has been Chairman of the Board, President and Chief
Executive Officer of Phoenix Home Life since February 1994. From July
1992 until February 1994, Mr. Fiondella served as President and
Principal Operating Officer and from February 1989 until July 1992, as
President and Chief Operating Officer, of Phoenix Home Life. Mr.
Fiondella is the President of PM Holdings and is also a member of the
Board of Directors of several of Phoenix Home Life's subsidiaries,
including PM Holdings and Phoenix Charter Oak Trust Company. Mr.
Fiondella is also a member of the Board of Directors of PIC, PEPCO and
NS&RC. Mr. Fiondella is also a member of the Board of Directors of
PXRE, PXRE Reinsurance, Advest Group, Inc. and Loctite Corporation.
RICHARD H. BOOTH Age -- 50 Director since -- November 1, 1995
Mr. Booth has been Executive Vice President of Phoenix Home Life since
October 1994. Mr. Booth is also an officer and Director of several
subsidiaries of Phoenix Home Life. Prior to joining Phoenix Home Life
in October 1994, Mr. Booth was President and Chief Operating Officer
and a Director of
5
<PAGE>
The Travelers Corporation, where he was employed for 16 years. Mr.
Booth is also a member of the Board of Directors of Hartford Steam
Boiler.
EDWARD P. LYONS Age -- 70 Director since -- November 1, 1995
From 1984 through February 20, 1996, Mr. Lyons was a Director of
Phoenix Home Life. He presently serves on its Directors Advisory Board.
Prior to 1985, Mr. Lyons was Vice Chairman of the Olin Corporation. Mr.
Lyons is also Chairman of the Board of Directors of Carberry Investment
Management Corp. and a member of the Board of Directors of PXRE and
PXRE Reinsurance.
MARILYN E. LAMARCHE Age -- 62 Director since -- November 1, 1995
Ms. LaMarche has been a Director of Phoenix Home Life since 1989. Ms.
LaMarche has been a Limited Managing Director of Lazard Freres & Co.,
L.L.C. (and a general partner of its predecessor), a New York based
investment banking company, since January 1983.
JAMES M. OATES Age -- 50 Director since--November 1, 1995
Mr. Oates has been Chairman of IBEX Capital Markets, LLC since October
1996 and Managing Director of the Wydown Group since April 1994. From
1984 through 1994, he served as President and Chief Executive Officer
of Neworld Bank. Mr. Oates is also a Director or Trustee of the Phoenix
Mutual Funds. In addition, Mr. Oates is a Director of Govett Funds,
Inc., Investors Financial Services Corporation, Investors Bank & Trust
Co., Blue Cross and Blue Shield of New Hampshire, Plymouth Rubber
Company, Massachusetts Housing Partnership, and Stifel Financial.
FERDINAND VERDONCK Age -- 54 Director since -- November 1, 1995
Mr. Verdonck has been Managing Director of Almanij N.V., the holding
company of the Almanij-Kredietbank Group, since 1992. He also serves as
a Director of Kredietbank N.V., Brussels, Belgium, and of various
affiliated companies in the Group. From 1984 to 1992, Mr. Verdonck
served in various senior executive capacities with N.V. Bekaert S.A., a
Belgian steel wire and cord manufacturer, both in Belgium and New York
City. He was a Senior Vice President of Lazard Freres & Co. in New York
from 1977 to 1984, having previously served as an International Banking
Officer of Continental Illinois Bank in Chicago.
JOHN T. ANDERSON Age -- 66 Director since -- March 29, 1996
Mr. Anderson has been of counsel to Lord, Bissell & Brook, a Chicago
law firm, since January 2, 1996. From 1966 to January 2, 1996, Mr.
Anderson was a partner of Lord, Bissell & Brook.
GLEN D. CHURCHILL Age -- 63 Director since -- 1992
Mr. Churchill is presently retired. Prior to May 1, 1992, Mr. Churchill
was President and Chief Executive Officer of West Texas Utilities
Company for more than the preceding five years.
6
<PAGE>
DONNA F. TUTTLE Age -- 49 Director since -- 1992
Ms. Tuttle has been President of Korn Tuttle Capital Group, a Los
Angeles, California investment consulting firm, since March 1992. From
January 1990 to March 1992, Ms. Tuttle was Chairman and Chief Executive
Officer of Ayer Tuttle, a division of an international advertising
agency. From January 1988 to January 1989, Ms. Tuttle served as U.S.
Deputy Secretary of Commerce. Ms. Tuttle is also a member of the Board
of Directors of Hilton Hotels Corp.
DAVID A. WILLIAMS Age -- 55 Director since -- 1993
Mr. Williams is presently retired. Mr. Williams was President and Chief
Executive Officer of Beutel, Goodman & Company Ltd., a Toronto, Canada
investment counseling firm ("BG"), from 1991 to December 1994. From
1971 to 1991, he served as Vice President of BG. Mr. Williams joined BG
in 1969. The Company owns 49% of the outstanding voting capital stock
of BG. Mr. Williams is also a member of the Board of Directors of C S
Resources Ltd., Emtech Technologies Corp., Pinetree Capital Ltd.,
Octagon Industries Ltd. and Radiant Energy Ltd.
THE BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction of
the Board of Directors. The Board has responsibility for establishing broad
corporate policies and for the overall performance of the Company. However, the
Board is not involved in day-to-day operating details. Members of the Board are
kept informed of the Company's business by various reports and documents sent
to them, as well as by reports presented at meetings of the Board and its
committees. During 1996, the Board of Directors met four times. No director
attended fewer than 75% of the aggregate number of meetings of the Board of
Directors and the committees on which he or she served.
BOARD COMMITTEES
The Board of Directors has four standing committees, the Executive Committee,
the Audit Committee, the Compensation Committee and the Stock Option Committee.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the business and affairs of the Company
between meetings of the Board of Directors, except as such authority may be
limited by the provisions of the General Corporation Law of the State of
Delaware. The Executive Committee, which is presently composed of Messrs.
Fiondella (Chairman), Anderson, Booth, Jeffries, Lyons, McLoughlin and
Pedersen, met two times during 1996.
The Audit Committee recommends to the Board of Directors the appointment of
the independent public accountants for the following year. The Audit Committee
also reviews the scope of the annual audit, the annual financial statements of
the Company and the auditor's report thereon and the auditor's comments
relative to the adequacy of the Company's system of internal controls and
accounting systems. The Audit Committee, which is presently composed of Messrs.
Churchill (Chairman), Lyons and Verdonck and Ms. Tuttle, met three times during
1996.
The Compensation Committee reviews management compensation levels and
provides recommendations regarding salaries and other compensation for the
Company's officers, including bonuses and other incentive
7
<PAGE>
programs. The Compensation Committee, which is presently composed of Messrs.
Oates (Chairman), Anderson and Williams and Ms. LaMarche, met three times
during 1996.
The Stock Option Committee administers the Company's stock option plans. The
Stock Option Committee, which is presently composed of Ms. Tuttle (Chairman)
and Messrs. Churchill and Williams, met one time and acted by written consent
two times during 1996.
The Company does not have a standing nominating committee of the Board of
Directors. This function is performed by the Board of Directors. The Company's
By-Laws establish procedures, including advance notice procedures, with regard
to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors. In general, notice must be
received by the Company at its principal executive offices not less than 60
days nor more than 90 days prior to meetings of stockholders of the Company.
Such notice must set forth all information with respect to each such nominee
as required by the federal proxy rules. Such notice must be accompanied by a
signed statement of such nominee consenting to be a nominee and a director, if
elected.
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors is responsible for
establishing, administering and evaluating the Company's policies regarding
the compensation of its executive officers. The Company's compensation
policies are intended to align executive compensation with the business
objectives and performance of the Company. Additionally, the Company's
compensation policies are designed to permit the Company to attract, retain
and motivate executive officers to ensure the long-term success of the
Company.
The compensation of executive officers is composed of three components:
salary, annual incentive compensation and long-term incentive compensation.
The Compensation Committee considers the total compensation of each executive
officer in establishing each element of his compensation. The compensation of
the Company's Chief Executive Officer is subject to the same policies that are
applicable to all executive officers of the Company.
In connection with the Merger of PSG into the Company, it was critical to
Phoenix Home Life that the services of Messrs. Jeffries, Pedersen and Stevens
be retained following the Merger. Accordingly, pursuant to the Merger
Agreement, on November 1, 1995, the Company entered into employment agreements
with each of Messrs. Jeffries, Pedersen and Stevens. These employment
agreements were negotiated between Phoenix Home Life on behalf of the Company
and each executive officer. These employment agreements were intended to
secure for the Company the continued services of the executive officers and to
provide them appropriate incentives for maximum effort on behalf of the
Company. These agreements are described in the section captioned "Employment
Agreements" following this Report.
SALARY
In establishing the annual salaries of each of the Company's executive
officers, including the Chief Executive Officer, and under the employment
agreements with each of Messrs. Jeffries, Pedersen and Stevens,
8
<PAGE>
the responsibilities, abilities and industriousness of the executive officer
and the Company's performance were considered. The salaries of persons holding
similar positions at comparable companies were also reviewed.
ANNUAL INCENTIVE COMPENSATION
The employment agreements entered into by the Company with each of Messrs.
Jeffries, Pedersen and Stevens provide for the payment of annual incentive
compensation. The incentive compensation is intended to be variable and
closely tied to corporate and individual performance in a manner that
encourages a continuous focus on providing top-quality service to clients,
increasing productivity and obtaining new business opportunities in order to
increase profitability and stockholder value. Under the employment agreements,
each executive officer's annual incentive compensation consists of a bonus in
an amount equal to the greater of a guaranteed bonus amount or an amount
awarded to the executive officer as an annual bonus pursuant to the Company's
annual incentive compensation plans.
The Board of Directors has adopted two incentive compensation plans, the
Investment Incentive Plan ("IIP") and the Management Incentive Plan ("MIP").
In 1996, Messrs. McLoughlin, Pedersen and Pepin participated in the MIP and
Messrs. Haylon and Stevens participated in the IIP. Payouts under the IIP are
based 75% on the basis of quantitative portfolio performance results (subject
to a maximum aggregate payout of $9.3 million) and 25% (the "nonquantitative
portion") on factors including corporate earnings and personal performance.
The nonquantitative portion of the IIP (which is capped at $1 million) and the
entire payout under the MIP are funded by a pool equal to 10% of the Company's
pre-tax earnings reduced by the guaranteed bonuses referred to in the
preceding paragraph. Under the IIP, individual incentive compensation can
range from 0% to 200% of salary based upon the nature of a covered
individual's specific job requirements. Under the MIP, eligible officers with
salaries under $100,000 have a payout range of between 0% and 20% of salary,
and officers with salaries of $100,000 or more generally have a payout range
of between 0% and 40% of salary. Target payouts for each group, 10% and 20%,
respectively, are set to correspond to a targeted earnings per share result,
which in 1996 was 53 cents per share.
LONG-TERM INCENTIVE COMPENSATION
Pursuant to the Company's Stock Incentive Plans, key employees of the
Company, including executive officers, are eligible to receive long-term
incentives in a variety of forms including stock options, stock appreciation
rights, restricted stock, phantom stock and other stock based awards. The
purpose of the Stock Incentive Plans is to enable the Company to attract and
retain the best available executive personnel and other key employees, to
provide for the Company's long-term growth and business success and to provide
an incentive for such employees to exert their best efforts on behalf of the
Company and its stockholders. The Compensation Committee believes that the
grant of awards whose value is related to the value of the Company's Common
Stock aligns the interests of stockholders and employees who receive awards.
The Stock Incentive Plans are administered by the Compensation Committee and
the Stock Option Committee.
The Compensation Committee and the Stock Option Committee determine the
individuals to whom awards are granted, the type and amount of awards to be
granted, the time of all such grants and the terms, conditions and provisions
of such awards and the restrictions related thereto. In making awards under
the Stock Incentive Plans, the Compensation Committee and the Stock Option
Committee consider the recommendations of the executive officers of the
Company, the responsibilities of each grantee, his past performance and his
anticipated future contribution to the Company.
9
<PAGE>
During 1996, only stock options were granted under the Stock Incentive Plans.
The Compensation Committee believes that the grant of stock options provides a
strong incentive for employees to increase stockholder value over the long term
because the full benefit of such awards cannot be realized unless the value of
the Company's Common Stock appreciates over a specified number of years. Most
of the officers of the Company received options in 1996. The exercise price of
options granted in 1996 is equal to the fair market value per share of Common
Stock on the date of grant. Generally, one-third of each option grant vests on
the first, second and third anniversaries of the date of grant and such options
expire ten years after the date of grant.
Amendments adopted in 1993 to the Internal Revenue Code limit the
deductibility for federal income tax purposes of certain compensation payable
to top executive officers of publicly held corporations. Certain types of
compensation are excluded from the limitations. The Company believes that the
limitations are not applicable to stock options granted under the Stock
Incentive Plans. With respect to annual incentive compensation, the Company has
not taken any action to exclude annual incentive compensation from the
limitations on deductibility.
The salary, annual incentive compensation and long-term incentive
compensation paid by the Company to the Chief Executive Officer and the other
four most highly compensated executive officers of the Company in 1996 is set
forth in the tables that follow this Report. The Compensation Committee
believes that the executive officers of the Company are dedicated to increasing
profitability and stockholder value and that the compensation policies that the
Compensation Committee has established and administered contribute to this
focus.
THE COMPENSATION COMMITTEE
James M. Oates (Chairman)
John T. Anderson
Marilyn E. LaMarche
David A. Williams
The foregoing Report of the Compensation Committee on Executive Compensation
shall not be deemed to be incorporated by reference into any filing of the
Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates such
information by reference.
10
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer and each of the other four most highly compensated executive
officers of the Company for services rendered in all capacities during each of
the Company's fiscal years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
----------------- -------------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)(1) ($)(2)
--------------------------- ---- -------- -------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Francis E. Jeffries, 1996 $546,700 $493,275 -- $13,820
Chairman of the Board(3) 1995 546,700 496,072 100,000 13,427
1994 497,000 -- 40,000 12,475
Philip R. McLoughlin, 1996 466,154 443,667 85,000 4,886
Vice Chairman of the Board 1995 -- -- 100,000 --
and Chief Executive Officer(4)
Calvin J. Pedersen, 1996 456,500 767,900 55,000 6,980
President 1995 456,500 817,829 100,000 6,653
1994 415,000 429,908 38,000 6,395
Wayne C. Stevens, 1996 400,510 700,900 40,000 6,020
Executive Vice President(5) 1995 364,100 425,750 100,000 5,799
1994 331,000 -- 35,000 5,615
Michael E. Haylon, 1996 273,269 500,333 50,000 5,277
Executive Vice President 1995 247,404 354,302 45,000 4,519
</TABLE>
- --------
(1) Number of shares of Common Stock subject to options granted during the
year indicated under the Company's 1992 Long-Term Stock Incentive Plan.
(2) Consists of matching contributions made by the Company pursuant to the
Company's Savings Plan and life insurance premiums paid by the Company.
For 1996, life insurance premiums in the following amounts were paid by
the Company: Mr. Jeffries, $9,320; Mr. McLoughlin, $132; Mr. Pedersen,
$2,480; and Mr. Stevens, $1,520.
(3) Mr. Jeffries will retire as Chairman of the Board on May 13, 1997.
(4) Mr. McLoughlin has been Chief Executive Officer of the Company since
November 1, 1995. During 1995, Mr. McLoughlin was also employed by Phoenix
Home Life and did not receive a separate salary or bonus from the Company
for his services to the Company.
(5) On or about March 19, 1997, Mr. Stevens resigned as Executive Vice
President effective April 11, 1997.
11
<PAGE>
EMPLOYEE STOCK OPTIONS
OPTION GRANTS. The following table sets forth certain information regarding
options to purchase shares of Common Stock granted to the executive officers
of the Company named in the Executive Compensation Table during the Company's
1996 fiscal year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED GRANT
UNDERLYING TO DATE
OPTIONS EMPLOYEES EXERCISE PRESENT
GRANTED IN FISCAL PRICE VALUE
NAME (#) YEAR ($/SH)(3) EXPIRATION DATE ($)(4)
- ---- ----------- ---------- --------- ----------------- --------
<S> <C> <C> <C> <C> <C>
Francis E. Jeffries..... -- -- -- -- --
Philip R. McLoughlin.... 85,000(1) 6% $7.13 December 31, 2006 $218,450
Calvin J. Pedersen...... 55,000(1) 4 7.13 December 31, 2006 141,350
Wayne C. Stevens........ 40,000(2) 3 7.13 July 11, 1999(2) 103,799
Michael E. Haylon....... 50,000(1) 3 7.13 December 31, 2006 128,500
</TABLE>
- --------
(1) These options were granted on December 31, 1996 under the Company's 1992
Long-Term Stock Incentive Plan. These options are non-qualified stock
options. Beginning December 31, 1997, annually, upon the anniversary of
the date of grant of the options, one-third of the options granted become
vested and exercisable, until the third anniversary of the date of grant,
whereupon the options granted are fully vested and exercisable.
(2) These options were granted on December 31, 1996 under the Company's 1992
Long-Term Stock Incentive Plan. These options are non-qualified stock
options. Pursuant to the severance provision of Mr. Stevens' employment
agreement, on April 11 in 1997, 1998 and 1999, one-third of the options
granted become vested and are exercisable for three months after the
vesting date, at which time they expire.
(3) The option exercise price is equal to the fair market value per share of
Common Stock on the date of grant.
(4) Calculated pursuant to the Black-Scholes option pricing model. Assumes
with respect to Messrs. McLoughlin, Pedersen and Haylon expected
volatility of 30%, risk-free rate of return of 6.42%, dividend yield of
3.0%, time to expiration of ten years and no risk of forfeiture. Assumes
with respect to Mr. Stevens expected volatility of 30%, risk-free rate of
return of 5.63%, dividend yield of 3.1%, time to expiration of July 11,
1997 for 33,334 options, July 11, 1998 for 33,333 options and July 11,
1999 for 33,333 options and no risk of forfeiture.
12
<PAGE>
OPTION EXERCISES. The following table sets forth certain information
regarding options to purchase shares of Common Stock exercised during the
Company's 1996 fiscal year and the number and value of unexercised options to
purchase shares of Common Stock held at the end of the Company's 1996 fiscal
year by the executive officers of the Company named in the Executive
Compensation Table:
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN-
NUMBER OF SECURITIES THE-MONEY
UNDERLYING UNEXERCISED OPTIONS
OPTIONS AT FISCAL AT FISCAL
YEAR END (#) YEAR END ($)(2)
NUMBER OF VALUE ---------------------- ---------------
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Francis E. Jeffries..... -- $ -- 116,667/83,333 $88,000/93,750
Philip R. McLoughlin.... -- -- 33,333/151,667 8,167/16,333
Calvin J. Pedersen...... -- -- 90,770/151,000 146,013/104,327
Wayne C. Stevens........ -- -- 101,270/135,000 162,268/103,492
Michael E. Haylon....... -- -- 15,000/80,000 3,675/7,350
</TABLE>
- --------
(1) Value realized is equal to the difference between the fair market value
per share of Common Stock on the date of exercise and the option exercise
price per share multiplied by the number of shares acquired upon exercise
of an option.
(2) Value of unexercised in-the-money options is equal to the difference
between the fair market value per share of Common Stock at December 31,
1996 and the option exercise price per share multiplied by the number of
shares subject to options.
The following table sets forth certain information regarding options to
purchase shares of Series A Preferred Stock exercised during the Company's
1996 fiscal year and the number and value of unexercised options to purchase
shares of Series A Preferred Stock held at the end of the Company's 1996
fiscal year by the executive officers of the Company named in the Executive
Compensation Table:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL
YEAR END (#) YEAR END ($)(2)
NUMBER OF VALUE ---------------------- -------------------
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Francis E. Jeffries..... -- $ -- 10,000/-- $ 4,930/--
Philip R. McLoughlin.... -- -- -- --
Calvin J. Pedersen...... -- -- 7,410/1,267 35,081/127
Wayne C. Stevens........ -- -- 8,460/1,167 37,327/117
Michael E. Haylon....... -- -- -- --
</TABLE>
- --------
(1) Value realized is equal to the difference between the fair market value
per share of Series A Preferred Stock on the date of exercise and the
option exercise price per share multiplied by the number of shares
acquired upon exercise of an option.
(2) Value of unexercised in-the-money options is equal to the difference
between the fair market value per share of Series A Preferred Stock at
December 31, 1996 and the option exercise price per share multiplied by
the number of shares subject to options.
13
<PAGE>
EMPLOYMENT AGREEMENTS
FRANCIS E. JEFFRIES. On November 1, 1995, Mr. Jeffries entered into an
employment agreement with the Company pursuant to which he serves as Chairman
of the Board of the Company. The period of his full time employment terminated
on December 31, 1996, and pursuant to the employment agreement, the Company
has retained Mr. Jeffries as a consultant for a period of five years. Pursuant
to the employment agreement, while Mr. Jeffries provides consulting services,
his annual consulting fees will be $218,930. The employment agreement
restricts Mr. Jeffries from diverting any business from the Company for a
period of six years commencing on the date of the employment agreement.
Mr. Jeffries will retire as Chairman of the Board on May 13, 1997. By
agreement dated as of October 31, 1996, Mr. Jeffries and the Company have
agreed to accelerate payment of the amounts due Mr. Jeffries under his
employment agreement. The agreement provides that substantially all amounts
due will be paid on March 31, 1997. The agreement does not shorten the term of
the non-competition restrictions.
CALVIN J. PEDERSEN. On November 1, 1995, Mr. Pedersen entered into an
employment agreement with the Company pursuant to which he serves as President
of the Company and Chairman of the Board of Duff & Phelps Investment
Management Co., a subsidiary of the Company ("Investment Management"). The
employment agreement will terminate on December 31, 1998. Mr. Pedersen's 1997
salary is $502,150, subject to annual increases. Mr. Pedersen will also
receive an annual bonus of at least $767,817. The employment agreement
restricts Mr. Pedersen from diverting any business from the Company for a
period of three years after termination of his employment.
WAYNE C. STEVENS. On November 1, 1995, Mr. Stevens entered into an
employment agreement with the Company pursuant to which he serves as Executive
Vice President of the Company and President and Chief Executive Officer of
Investment Management. The employment agreement terminates on December 31,
1998. Under the employment agreement, Mr. Stevens' 1997 salary is $440,561 and
his 1997 annual bonus is at least $425,250. The employment agreement restricts
Mr. Stevens from diverting any business from the Company for a period of three
years after termination of his employment. On or about March 19, 1997, Mr.
Stevens resigned as Executive Vice President effective April 11, 1997. In
connection with his resignation, Mr. Stevens is entitled to receive the
severance pay described below.
The employment agreements with Messrs. Jeffries, Pedersen and Stevens are
terminable by the Company in the event of the death or incapacity of the
executive officer or if the executive officer commits an act of embezzlement
or fraud or any act of dishonesty against the Company, neglects his assigned
duties, which neglect continues for at least 90 days after written notice has
been delivered to him, or engages in conduct which is demonstrably and
materially injurious to the Company or its employees ("Cause").
The employment agreements with Messrs. Jeffries, Pedersen and Stevens are
terminable by the executive officer in the event of (a) a materially adverse
change in his title or an assignment to him of any duties or responsibilities
inconsistent with his title, (b) a reduction in his base salary or consulting
fees or a failure to pay him any compensation or benefits, (c) requiring him
to be based outside a 30-mile radius from Chicago, (d) a failure to continue
his participation in any material compensation or employee benefit plan, (e) a
material breach of the employment agreement by the Company, (f) a failure to
obtain an agreement from any person acquiring all or substantially all the
assets and business of the Company to assume the employment agreement or (g) a
failure of the executive officer to be elected as a director of the Company to
serve at least until the 1997 annual
14
<PAGE>
meeting of stockholders of the Company ("Good Reason"). In the event that the
executive officer terminates the employment agreement for Good Reason or the
Company terminates the employment agreement other than as a result of the
executive officer's death or incapacity or for Cause, the executive officer
will be entitled to receive severance pay, in a single payment, in an amount
equal to the aggregate base salary, consulting fees and guaranteed bonus he
would have been entitled to receive if his employment or retention had
continued through the term of the employment agreement, and to receive through
the earlier of 12 months after termination or the end of the term of the
employment agreement, the life insurance, disability, medical, dental and
hospitalization benefits he was receiving immediately prior to termination.
Additionally, upon termination, one-third of all unvested stock options and
stock appreciation rights held by him on the date of termination will vest and
become exercisable, one-third of such options and stock appreciation rights
will vest and become exercisable on the first anniversary of the date of
termination and one-third of such options and stock appreciation rights will
vest and become exercisable on the second anniversary of the date of
termination. Notwithstanding the foregoing, to the extent that the payments and
benefits (including the acceleration of options and stock appreciation rights)
would be subject to the excise tax on "excess parachute payments" imposed under
Section 4999 of the Internal Revenue Code, the payments and benefits shall be
reduced to the extent necessary so that no payment to be made or benefit to be
provided to the executive officer shall be subject to such excise tax.
SEVERANCE AGREEMENTS
Messrs. McLoughlin, Haylon and Pepin have entered into severance agreements
with the Company. Each agreement provides for payment in the event Phoenix Home
Life and/or its subsidiaries' ownership percentage of the Company falls below
50% or upon the merger, consolidation, acquisition or other organizational
change or event determined by the Executive Committee of the Company's Board of
Directors (collectively a "Change of Control Event"). The agreements provide
that upon a Change of Control Event, if the employee's employment is terminated
without Cause, as defined in the agreement, or if the employee terminates
employment for Good Reason, as defined (including resignation following
reduction in title, functional responsibilities or base salary) the Company
will pay severance benefits. The benefit is to be made in a single payment in
an amount equal to two times (three times, in the case of Mr. McLoughlin) the
sum of the employee's annualized base salary at the time, the average of the
prior three year's bonus or short-term incentive compensation payments, and the
matching contributions made by the Company to its qualified and non-qualified
savings and investment plans during the calendar year preceding the termination
date. Further, one-third of any unvested stock options granted under the 1992
Long-Term Stock Incentive Plan will vest as of termination, and a further one-
third will vest on each of the first two anniversaries of termination. In
addition, the employee can continue to participate, at his own expense, in any
life, accident and health insurance programs in which he participated at the
time of his termination. Notwithstanding the foregoing, in the event that the
payment and benefits would constitute an excess parachute payment, the total
amount payable will be reduced so that no excess parachute payment results.
DIRECTORS' COMPENSATION
Directors who are employees of the Company do not receive any compensation
for serving as directors of the Company. In 1997, other directors receive an
annual retainer of $24,000 and an additional $3,000 payable to any such
director who serves as a chairman of a committee of the Board of Directors,
plus an attendance fee for each such director of $1,000 per regular meeting and
$750 per committee meeting. Under the Company's 1992 Long-Term Stock Incentive
Plan, each non-employee director ("Outside Director") is automatically granted
on the date he is first elected to the Board of Directors an option to purchase
10,000 shares of Common Stock of
15
<PAGE>
the Company at an exercise price per share equal to the fair market value per
share of Common Stock on the date of grant. Such options become exercisable
one year after the date of grant and expire ten years after the date of grant.
Half of each Outside Director's annual retainer is paid in the form of an
option to purchase shares of Common Stock. Each Outside Director may also
elect to receive an option to purchase shares of Common Stock in lieu of being
paid any portion or all of the half of the annual retainer that would
otherwise be paid in cash. The number of shares of Common Stock subject to any
such option is equal to the amount of the director's annual retainer to be
paid in the form of an option divided by 15% of the fair market value of a
share of Common Stock on the date of grant. The option price per share for any
such option is equal to 85% of the fair market value of a share of Common
Stock on the date of grant. Such options become exercisable one year after the
date of grant and expire ten years after the date of grant. On March 29, 1996,
Mr. Anderson was granted an option to purchase 3,750 shares of Common Stock of
the Company at an exercise price equal to $6.25 per share in connection with
his election as a director of the Company. Such option becomes exercisable on
March 29, 1997 and expires on March 29, 2006. On November 13, 1996, Messrs.
Booth and Fiondella were each granted an option to purchase 12,308 shares of
Common Stock of the Company at an exercise price equal to $5.525 per share in
lieu of being paid their annual retainer for 1996. Such options become
exercisable on the date of the 1997 annual meeting of stockholders and expire
on November 13, 2006. Additionally, all Outside Directors are reimbursed for
expenses incurred in attending board meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors maintains a Compensation Committee, which presently
consists of Messrs. Oates (Chairman), Anderson and Williams and Ms. LaMarche.
None of the members of the Compensation Committee is presently or was formerly
an officer or employee of the Company or any of its subsidiaries.
CERTAIN TRANSACTIONS
Mr. Jeffries is a director and Mr. Pedersen is the President and Chief
Executive Officer of Duff & Phelps Utilities Income Inc., a closed-end
investment company ("Utilities Income Fund"). Investment Management serves as
the investment adviser of the Utilities Income Fund. Pursuant to an investment
advisory agreement between Investment Management and the Utilities Income
Fund, Investment Management received $12.3 million in fees from the Utilities
Income Fund in 1996.
Mr. Jeffries is the Chairman and a director, Mr. McLoughlin is a director
and Mr. Pedersen is President and Chief Executive Officer of Duff & Phelps
Utilities Tax-Free Income Inc., a closed-end investment company ("Utilities
Tax-Free Fund"). Investment Management serves as the investment adviser of the
Utilities Tax-Free Fund. Pursuant to an investment advisory agreement between
Investment Management and the Utilities Tax-Free Fund, Investment Management
received $1.0 million in fees from the Utilities Tax-Free Fund in 1996.
Mr. Jeffries is the Chairman and a director, Mr. McLoughlin is a director
and Mr. Pedersen is President and Chief Executive Officer of Duff & Phelps
Utility and Corporate Bond Trust Inc., a closed-end investment company
("Utility and Corporate Bond Trust"). Investment Management serves as the
investment adviser of the Utility and Corporate Bond Trust. Pursuant to an
investment advisory agreement between Investment Management and the Utility
and Corporate Bond Trust, Investment Management received $1.8 million in fees
from the Utility and Corporate Bond Trust in 1996.
16
<PAGE>
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Duff & Phelps Institutional Mutual Funds and Mr. McLoughlin is
President and Messrs. Haylon and Pepin are Executive Vice Presidents of the
Phoenix Duff & Phelps Institutional Mutual Funds, an open-end investment
company. PIC and Investment Management serve as investment advisers of the
Phoenix Duff & Phelps Institutional Mutual Funds. Pursuant to an investment
advisory agreement between PIC and the Phoenix Duff & Phelps Institutional
Mutual Funds, PIC received $1.5 million in fees from the Phoenix Duff & Phelps
Institutional Mutual Funds in 1996. Pursuant to an investment advisory
agreement between Investment Management and Phoenix Duff & Phelps
Institutional Mutual Funds, Investment Management received $146 thousand in
fees from the Phoenix Duff & Phelps Institutional Mutual Funds in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Series Fund and Mr. McLoughlin is President and Messrs. Haylon and
Pepin are Executive Vice Presidents of the Phoenix Series Fund, an open-end
investment company. PIC serves as the investment adviser of the Phoenix Series
Fund. Pursuant to an investment advisory agreement between PIC and the Phoenix
Series Fund, PIC received $35.1 million in fees from the Phoenix Series Fund
in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Multi-Portfolio Fund and Mr. McLoughlin is President and Messrs.
Haylon and Pepin are Executive Vice Presidents of the Phoenix Multi-Portfolio
Fund, an open-end investment company. PIC serves as the investment adviser to
six portfolios of the Phoenix Multi-Portfolio Fund. Pursuant to an investment
advisory agreement between PIC and the Phoenix Multi-Portfolio Fund, PIC
received $5.5 million in fees from the Phoenix Multi-Portfolio Fund in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Strategic Equity Series Fund and Mr. McLoughlin is President and
Messrs. Haylon and Pepin are Executive Vice Presidents of the Phoenix
Strategic Equity Series Fund, an open-end investment company. PIC and NS&RC
serve as the investment advisers of the Phoenix Strategic Equity Series Fund.
Pursuant to investment advisory agreements between PIC and NS&RC and the
Phoenix Strategic Equity Series Fund, PIC and NS&RC received $3.4 million in
fees from the Phoenix Strategic Equity Series Fund in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of The
Phoenix Edge Series Fund and Mr. McLoughlin is President and Messrs. Haylon
and Pepin are Executive Vice Presidents of The Phoenix Edge Series Fund, an
open-end investment company. PIC serves as the investment adviser to seven
funds of The Phoenix Edge Series Fund. Pursuant to an investment advisory
agreement between PIC and The Phoenix Edge Series Fund, PIC received $6.3
million in fees from The Phoenix Edge Series Fund in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Strategic Allocation Fund and Mr. McLoughlin is President and Messrs.
Haylon and Pepin are Executive Vice Presidents of the Phoenix Strategic
Allocation Fund, an open-end investment company. PIC serves as the investment
adviser of the Phoenix Strategic Allocation Fund. Pursuant to an investment
advisory agreement between PIC and the Phoenix Strategic Allocation Fund, PIC
received $2.2 million in fees from the Phoenix Strategic Allocation Fund in
1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix Multi-Sector Short Term Bond Fund and Mr. McLoughlin is President and
Messrs. Haylon and Pepin are Executive Vice Presidents of the Phoenix Multi-
Sector Short Term Bond Fund, an open-end investment company. NS&RC serves as
the investment adviser of the Phoenix Multi-Sector Short Term Bond Fund.
Pursuant to an investment advisory agreement between NS&RC and the Phoenix
Multi-Sector Short Term Bond Fund, NS&RC received $94 thousand in fees from
the Phoenix Multi-Sector Short Term Bond Fund in 1996.
17
<PAGE>
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the Phoenix
Worldwide Opportunities Fund and Mr. McLoughlin is President and Messrs. Haylon
and Pepin are Executive Vice Presidents of the Phoenix Worldwide Opportunities
Fund, an open-end investment company. NS&RC serves as the investment adviser of
the Phoenix Worldwide Opportunities Fund. Pursuant to an investment advisory
agreement between NS&RC and the Phoenix Worldwide Opportunities Fund, NS&RC
received $1.1 million in fees from the Phoenix Worldwide Opportunities Fund in
1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the Phoenix
Income and Growth Fund and Mr. McLoughlin is President and Messrs. Haylon and
Pepin are Executive Vice Presidents of the Phoenix Income and Growth Fund, an
open-end investment company. NS&RC serves as the investment adviser of the
Phoenix Income and Growth Fund. Pursuant to an investment advisory agreement
between NS&RC and the Phoenix Income and Growth Fund, NS&RC received $6.1
million in fees from the Phoenix Income and Growth Fund in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the Phoenix
Multi-Sector Fixed Income Fund and Mr. McLoughlin is President and Messrs.
Haylon and Pepin are Executive Vice Presidents of the Phoenix Multi-Sector
Fixed Income Fund, an open-end investment company. NS&RC serves as the
investment adviser of the Phoenix Multi-Sector Fixed Income Fund. Pursuant to
an investment advisory agreement between NS&RC and the Phoenix Multi-Sector
Fixed Income Fund, NS&RC received $1.7 million in fees from the Phoenix Multi-
Sector Fixed Income Fund in 1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the Phoenix
California Tax-Exempt Fund and Mr. McLoughlin is President and Messrs. Haylon
and Pepin are Executive Vice Presidents of the Phoenix California Tax-Exempt
Fund, an open-end investment company. NS&RC serves as the investment adviser of
the Phoenix California Tax-Exempt Fund. Pursuant to an investment advisory
agreement between NS&RC and the Phoenix California Tax-Exempt Fund, NS&RC
received $534 thousand in fees from the Phoenix California Tax-Exempt Fund in
1996.
Messrs. Jeffries, McLoughlin, Pedersen and Oates are directors of the
Phoenix-Aberdeen Series Fund and Mr. McLoughlin is President and Messrs. Haylon
and Pepin are Executive Vice Presidents of the Phoenix-Aberdeen Series Fund.
The Company serves as the administrator of the Phoenix-Aberdeen Series Fund and
receives a 15 basis point fee. PIC serves as one of two subadvisers to the
Global Small Cap portfolio of the Phoenix-Aberdeen Series Fund. The Company
received $20 thousand and PIC received $11 thousand in fees from the Phoenix-
Aberdeen Series Fund in 1996.
PEPCO is the principal underwriter/distributor for the Phoenix Mutual Funds.
PEPCO received $51.2 million in fees for such services from the Phoenix Mutual
Funds in 1996.
Messrs. McLoughlin, Fiondella and Pepin are directors of Phoenix Charter Oak
Trust Company. PIC serves as the investment adviser of Phoenix Charter Oak
Trust Company, but no fees were earned from Phoenix Charter Oak Trust Company
in 1996.
On November 15, 1993, the Company (i) purchased 43,333 Class 3 Common Shares
of Beutel, Goodman & Company Ltd. ("BG"), representing 40% of the outstanding
voting capital stock of BG, for a purchase price of $7.8 million paid in cash
and (ii) loaned to BG the sum of $3,875,000 evidenced by a 8.5% Redeemable
Unsecured Debenture of BG payable periodically from the net earnings of BG and
maturing as to any unpaid
18
<PAGE>
principal on November 14, 2003. On April 1, 1994, the Company purchased an
additional 19,118 Class 3 Common Shares of BG for a purchase price of $7.2
million. As a result of the purchase of the 19,118 shares, the Company owns
49% of the outstanding voting capital stock of BG. Also on November 15, 1993,
the Company's wholly-owned subsidiary, DP Holdings Ltd., a New Brunswick
corporation, purchased from Crownx Inc. a 8.5% Redeemable Unsecured Debenture
of BG in the principal amount of $19,374,456 for a purchase price of
$19,685,522 paid in cash. Said Debenture was to be paid periodically from the
net earnings of BG and to mature on November 14, 2003. Both Debentures were
redeemed in 1996. Mr. Williams was President and Chief Executive Officer of BG
until December 1994 and is a director of BG.
Lord, Bissell & Brook, a Chicago law firm, provided legal services to the
Company during 1996 and has been retained to provide legal services to the
Company during 1997. Mr. Anderson is presently of counsel to, and until
January 2, 1996 was a partner of, Lord, Bissell & Brook.
As a result of the Merger of PSG into the Company, Phoenix Home Life and the
Company maintain certain relationships which are described below.
LICENSE AGREEMENT. On November 1, 1995, the Company and Phoenix Home Life
entered into a license agreement (the "License Agreement") pursuant to which
Phoenix Home Life has granted the Company an exclusive license (subject to the
limited non-exclusive license granted to Merrill Lynch Phoenix Fund, Inc.) to
use the name "Phoenix" and the related design (collectively, the "Trademarks")
in the United States and all other jurisdictions where Phoenix Home Life has
rights to such Trademarks in connection with the provision of investment
advisory services to public mutual funds and other institutional investors
with respect to equity and fixed income securities other than securities of
entities primarily engaged in the ownership and/or operation of real estate or
real estate mortgages or other interests in real estate (the "Licensed
Services"). The Company has also been granted the right to sublicense the
Trademarks for use as the name or as a component of the name of any mutual
fund of which the Company is the investment adviser. The exclusive license
will remain in force as long as Phoenix Home Life, PM Holdings and other
subsidiaries of Phoenix Home Life collectively continue to beneficially own
shares of capital stock of the Company representing at least a majority of the
voting power of the Company and for a period of five years from the date that
Phoenix Home Life, PM Holdings and other subsidiaries of Phoenix Home Life
collectively no longer beneficially own shares of capital stock of the Company
representing at least a majority of the voting power of the Company (the
"Term"). The License Agreement also prohibits Phoenix Home Life and its
subsidiaries from competing with the Company by conducting the Licensed
Services during the Term. The License Agreement does not, however, preclude
Phoenix Home Life and its subsidiaries from conducting business in, and
rendering investment advisory services in connection with, life insurance,
variable products, pension products, short-term debt investment management,
management of their general accounts and separate accounts, underwriting and
distribution activities, real estate and securities of entities primarily
engaged in the ownership and/or operation of real estate or real estate
mortgages or other interests in real estate and any other activities (other
than the Licensed Services) currently engaged in by Phoenix Home Life and its
subsidiaries. In the event Phoenix Home Life or any of its subsidiaries
acquires a company conducting the business of the Licensed Services, Phoenix
Home Life, through the acquired company, will have the right to continue to
engage in such business and to use the Trademarks in connection with the
Licensed Services for a period of three years.
REGISTRATION RIGHTS AGREEMENT. On November 1, 1995, the Company and PM
Holdings entered into a registration rights agreement (the "Registration
Rights Agreement") pursuant to which the Company has granted
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<PAGE>
PM Holdings and its transferees the right to require the Company to effect the
registration under the Securities Act of 1933 of all or any part of the shares
of Common Stock and Series A Preferred Stock issued to PM Holdings. As long as
the Company is eligible to use a Form S-3 registration statement (or any
successor form), the number of registrations that the Company will be required
to effect will be unlimited; provided, however, that the Company will not be
required to effect more than three registrations on a registration statement
other than Form S-3 (or any successor form). Additionally, subject to certain
conditions, PM Holdings will also be entitled to piggyback registration rights.
Pursuant to the Registration Rights Agreement, the Company will be required to
pay all expenses in connection with any registration, except underwriting
discounts and selling commissions.
MANAGEMENT OF PHOENIX HOME LIFE GENERAL ACCOUNT AND SEPARATE ACCOUNT ASSETS.
PIC manages substantially all of the investment assets of Phoenix Home Life's
General Account, other than investments in real estate and mortgages, under an
agreement with Phoenix Home Life effective January 1, 1995. The agreement
provides, however, that either party thereto may terminate the agreement by
giving 30 days' prior written notice of termination. As of December 31, 1996,
Phoenix Home Life's General Account assets under management by PIC totaled $6.9
billion. Fees paid to PIC by Phoenix Home Life for the management of its
General Account assets totaled $8.2 million in 1996.
Separate Accounts are separate investment accounts of Phoenix Home Life (or
an insurance company subsidiary of Phoenix Home Life), the assets of which
constitute assets of Phoenix Home Life (or such subsidiary). Such assets are by
law segregated from Phoenix Home Life's General Account assets and are invested
directly by PIC. On March 1, 1996, the separate accounts were reorganized into
a new mutual fund, the Phoenix Duff & Phelps Institutional Mutual Funds. Fees
paid to PIC by Phoenix Home Life for the management of its separate accounts up
to the reorganization totaled $561 thousand in 1996.
SERVICES AND OFFICE SPACE. Phoenix Home Life provides various support
services to the Company pursuant to an Administrative Agreement dated as of
October 1, 1995 (the "Administrative Agreement"). Currently, these services are
legal, human resources, tax accounting, communications/creative services, mail
and other miscellaneous services. Phoenix Home Life also provides various
computer hardware, software and support services to the Company under a
Computer Services Agreement dated as of October 1, 1995 (the "Computer Services
Agreement"). Either party may terminate (i) the Administrative Agreement at the
end of any calendar year upon 90 days' prior notice and (ii) the Computer
Services Agreement after December 31, 1996 upon 180 days' prior notice. Phoenix
Home Life charged the Company and its subsidiaries $5.9 million for these
services (exclusive of rent and direct costs of employee benefits) in 1996. All
such services are provided at rates established from time to time by
negotiation between Phoenix Home Life and the Company. Changes in such rates
are subject to the approval of those disinterested directors of the Company who
are neither employees nor directors of Phoenix Home Life or its other
subsidiaries.
Phoenix Home Life also leases office space to the Company in Hartford,
Connecticut, Enfield, Connecticut, and Greenfield, Massachusetts. Phoenix Home
Life charged the Company and its subsidiaries $3.0 million for office space
rentals in 1996. Phoenix Home Life currently leases an aggregate of
approximately 121,000 square feet of office space to the Company at an average
effective cost per annum of approximately $18.00 per square foot. The leases
for the Enfield, Connecticut, and Greenfield, Massachusetts office space
commenced as of January 1, 1995 and expire on December 31, 1997 and the lease
for the office space in Hartford, Connecticut, commenced as of June 1, 1995,
and expires on May 31, 2000, with an option to renew for an additional five
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<PAGE>
years. Management of the Company believes that the rental rates under these
leases are generally at current market rates. With respect to the lease for
office space in Hartford, Connecticut, Phoenix Home Life sublet from the
Company an aggregate of approximately 1,300 square feet at an average
effective cost per annum of approximately $18.00 per square foot. Changes in
the rates under such leases are subject to the approval of those disinterested
directors of the Company who are neither employees nor directors of Phoenix
Home Life or its other subsidiaries.
RETAIL DISTRIBUTION. WS Griffith & Co., Inc. ("Griffith"), a registered
broker-dealer subsidiary of Phoenix Home Life, is currently the largest retail
distributor of Phoenix investment products, distributing shares of the Phoenix
funds managed by PIC and NS&RC and the variable contracts whose assets are
invested in The Phoenix Edge Series Fund. Griffith's retail sales force
consists of over 1,250 registered representatives, most of whom are also
members of Phoenix Home Life's insurance agent and broker field force. Mutual
fund sales by Griffith accounted for approximately 12% of PIC and NS&RC's
total mutual fund sales other than with respect to money market funds in 1996.
Sales of variable products by Griffith accounted for 77% of PIC and NS&RC's
total variable product sales in 1996.
Griffith distributes Phoenix investment products under a sales agreement
with PEPCO pursuant to which Griffith receives commissions for shares of
mutual funds sold by it ranging from 2.0% to 4.75% of the per share offering
price. Griffith also receives commissions under the sales agreement for
variable products offered by Phoenix Home Life sold by it ranging from 3.0% to
6.0% of purchase or premium payments under such products. The commissions
payable to Griffith under its sales agreement with PEPCO are payable on the
same basis as those commissions paid to unaffiliated brokers for these types
of products. Commissions paid to Griffith by PEPCO totaled $23.5 million in
1996.
PARTICIPATION IN PHOENIX HOME LIFE'S EMPLOYEE BENEFIT PLANS. Through
December 31, 1996, employees of PIC and PEPCO and certain employees of the
Company participated in various retirement, profit-sharing, supplemental
insurance and health care and welfare benefit plans sponsored by Phoenix Home
Life. Phoenix Home Life charged the Company the cost of employees'
participation in the plans. Fees paid to Phoenix Home Life relating to
participation of employees of PIC and PEPCO and certain employees of the
Company in plans sponsored by Phoenix Home Life were $3.3 million in 1996.
CERTAIN OTHER MATTERS. Transactions between Phoenix Home Life and the
Company entered into in the future, including changes to investment management
fees with respect to the General Account or Separate Accounts, service fees,
leases for office space and sales commissions to be paid to Griffith, will be
determined by negotiation, will be fair, equitable and reasonable, and will be
subject to the approval by a majority of the directors of the Company who are
disinterested for purposes of Delaware corporate law (consisting in these
circumstances of directors who are neither employees nor directors of Phoenix
Home Life or its other subsidiaries). The Company believes that the financial
aspects of these relationships will be no less favorable to the Company than
those available through unaffiliated third parties.
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the Standard & Poor's 500
Stock Index and the common stock of a peer group selected by the Company
("Peer Group Index") for the period beginning on March 12, 1992 (the date of
the Company's initial public offering) through December 31, 1996.
LOGO
Assumes $100 invested on March 12, 1992 in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and the common stock of the Peer Group Index
members, and all indices assume dividend reinvestment. Peer Group Index
members are Eaton Vance Corp., Franklin Resources Inc., United Asset
Management Corp. and T. Rowe Price Associates. The Peer Group Index is
capitalization-weighted. The cumulative total return on the Company's Common
Stock has been adjusted to give effect to (i) the distribution of the stock of
the Company's credit rating business to the Company's stockholders in October
1994 and (ii) the Merger of PSG into the Company and the related cash and
stock dividends in November 1995.
The foregoing table shall not be deemed to be incorporated by reference into
any filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates such information by reference.
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<PAGE>
PROPOSED AMENDMENT TO THE COMPANY'S 1992
LONG-TERM STOCK INCENTIVE PLAN
This proposal is to amend the Company's 1992 Long-Term Stock Incentive Plan
(the "Plan") to increase the number of shares of Common Stock available for
awards thereunder from 6.4 million to 9.7 million.
THE AMENDMENT
The Company's Board of Directors has approved and recommends to the
stockholders of the Company for their approval and adoption an amendment to
the Plan to increase the number of shares of Common Stock available for awards
thereunder from 6.4 million to 9.7 million.
If the proposed amendment is approved, Section 3.1(a) of the Plan would be
amended to read as follows:
"3.1 Number of Shares. Subject to the provisions of Section 3.3:
(a) the number of shares of Common Stock which may be issued or sold
or for which Options or Stock Appreciation Rights may be granted under
the Plan may not exceed 9,700,000 shares;"
REASONS FOR AMENDING THE PLAN
The Plan authorizes the grant of awards for up to 6.4 million shares of
Common Stock, of which options for 5,109,616 shares have been granted. After
giving effect to the cancellation of options for 907,000 shares (thereby
becoming available again for grant), only 2,197,384 shares are currently
available for awards under the Plan.
The Company's Board of Directors believes that the Plan has accomplished its
purpose in the past and that the Plan will continue to be instrumental in
attracting, retaining and motivating the Company's executive personnel and
other key employees. Accordingly, the Company's Board of Directors has
approved and recommends to the stockholders of the Company for their approval
and adoption an amendment to the Plan to increase the number of shares of
Common Stock available for awards thereunder from 6.4 million to 9.7 million.
DESCRIPTION OF THE PLAN
PURPOSE AND ELIGIBILITY. The purpose of the Plan is to provide the Company
with greater flexibility in the type of incentives that may be awarded to key
employees of the Company so that the Company may continue to attract and
retain the best available executive personnel and other key employees, to
provide for the Company's long-term growth and business success, and to
provide an incentive for such employees to exert their best efforts on behalf
of the Company and its stockholders. The Plan was originally approved by the
stockholders of the Company on January 16, 1992.
Participants in the Plan are those key employees selected by the Stock
Option Committee administering the Plan to participate in the Plan who hold
positions of responsibility and whose participation in the Plan is determined
by the Committee or management of the Company to be in the best interests of
the Company. Members of the Company's Board of Directors who are not employees
of the Company ("Outside Directors") are also eligible to participate in the
Plan. As of March 24, 1997, 144 current employees and directors have been
granted Options under the Plan. On March 24, 1997, the last sale price of the
Common Stock as reported by the New York Stock Exchange was $7.625 per share.
23
<PAGE>
ADMINISTRATION OF THE PLAN. The Plan provides that it shall be administered
by the Stock Option Committee (the "Committee") that is appointed by the Board
of Directors and that consists of three or more members of the Board, each of
whom is disinterested, as defined under Rule 16b-3 of the Securities Exchange
Act of 1934 and an "outside director" as defined under Section 162(m) of the
Internal Revenue Code of 1986 (the "Code"). Subject to the provisions of the
Plan, the Committee has sole and complete authority to determine the
individuals to whom awards are granted, the type and amounts of awards to be
granted, the time of all such grants and the terms, conditions and provisions
of such awards and the restrictions related thereto. The Committee has adopted
resolutions automatically granting to each Outside Director on the date he is
first elected to the Board of Directors an option to purchase 10,000 shares of
Common Stock of the Company at an exercise price per share equal to the Fair
Market Value (as defined below) per share of Common Stock on the date of grant.
Such options become exercisable one year after the date of grant and expire ten
years after the date of grant. Half of each Outside Director's annual retainer
is paid in the form of an option to purchase shares of Common Stock. Each
Outside Director may also elect to receive an option to purchase shares of
Common Stock in lieu of being paid any portion or all of the half of the annual
retainer that would otherwise be paid in cash. The number of shares of Common
Stock subject to any such option is equal to the amount of the director's
annual retainer to be paid in the form of an option divided by 15% of the Fair
Market Value of a share of Common Stock on the date of grant. The option price
per share for any such option is equal to 85% of the Fair Market Value of a
share of Common Stock on the date of grant. Such options become exercisable one
year after the date of grant and expire ten years after the date of grant.
DESCRIPTION OF PLAN AWARDS
The Plan provides that the Committee may grant awards to participants in the
form of (i) non-qualified stock options ("Options"), (ii) rights to receive a
payment from the Company in cash, Common Stock, or a combination thereof, equal
to the excess of the Fair Market Value of a share of Common Stock on the date
of exercise over a specified price fixed by the Committee ("Stock Appreciation
Rights" or "SARs"), (iii) shares of Common Stock subject to restrictions on
transferability ("Restricted Stock"), (iv) rights to receive payment from the
Company in cash, stock or a combination thereof, in an amount determined by the
Fair Market Value of Common Stock ("Phantom Stock"), or (v) other stock based
awards ("Other Stock Based Awards") and other benefits. A description of each
of these awards follows.
OPTIONS. The per share option price will be not less than 85% of the Fair
Market Value of the Common Stock at the time the Option is granted. The Fair
Market Value of the Common Stock on a particular day will be the closing price
of the Common Stock on the New York Stock Exchange, or any other national stock
exchange on which the Common Stock is traded, on the last preceding trading day
on which such Common Stock was traded. Options awarded under the Plan may be
exercised at such times and shall be subject to such restrictions and
conditions, including the performance of a minimum period of service after the
grant, as the Committee may impose. No Option will be exercisable for more than
ten years after the date on which it is granted. The per share option price
must be paid in full at the time of exercise. The Committee may, in its
discretion, permit a participant to make payments in cash, or in shares of
Common Stock already owned by the participant, valued at the Fair Market Value
thereof.
SARS. SARs granted pursuant to the Plan may be exercised at such times and
subject to such conditions, including the performance of a minimum period of
service, as the Committee may impose. SARs which are granted in tandem with an
Option may only be exercised upon the surrender of the right to exercise an
equivalent number of shares of Common Stock under the related Option and may be
exercised only with respect to the
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<PAGE>
shares for which the related Option is then exercisable. The Committee may
limit the time of exercise of an SAR to specified periods, as may be required
to satisfy the applicable provisions of Rule 16b-3 of the Securities Exchange
Act of 1934. Upon exercise of an SAR, the participant will be entitled to
receive payment of an amount determined by multiplying (a) any increase in the
Fair Market Value of a share of Common Stock at the date of exercise over the
Fair Market Value of a share at the date of grant, by (b) the number of shares
of Common Stock with respect to which the SAR is exercised. However,
notwithstanding the foregoing, at the time of grant the Committee may establish
a maximum amount per share which will be payable upon exercise of an SAR.
Subject to the discretion of the Committee, payment of an SAR may be made in
cash, shares of Common Stock, or any combination thereof.
RESTRICTED STOCK. Restricted Stock awarded to a participant by the Committee
may not be sold, transferred, pledged, assigned or otherwise alienated until
such time, or until the satisfaction of such conditions, as shall be determined
by the Committee (including, without limitation, satisfaction of performance
goals or the occurrence of certain events). When the period of restriction on
Restricted Stock terminates, the participant will receive unrestricted shares
of Common Stock. Unless the Committee otherwise determines at the time of
grant, participants holding Restricted Stock may exercise full voting rights
and other rights as a stockholder with respect to those shares during the
period of restriction, and will be entitled to receive dividends or other
distributions paid with respect to those shares. If the dividends or
distributions are paid in shares of Common Stock, such shares will be subject
to the same forfeiture restrictions and restrictions on transferability as the
Restricted Stock with respect to which they were paid.
PHANTOM STOCK. Phantom Stock rights granted pursuant to the Plan cannot be
sold, transferred, pledged, assigned, or otherwise alienated until such time,
or until the satisfaction of such conditions, as shall be determined by the
Committee (including, without limitation, satisfaction of performance goals or
the occurrence of certain events). Holders of Phantom Stock rights will not be
deemed stockholders and, except to the extent provided in accordance with the
Plan, will have no rights related to any shares. Unless the Committee otherwise
determines at the time of grant, holders of Phantom Stock rights will not be
entitled to receive cash payments equal to any cash dividends or other
distributions paid with respect to a corresponding number of shares. At the
time of the grant, the Committee may provide for payment in respect of Phantom
Stock rights in cash, shares of Common Stock, partially in cash and partially
in shares, or in any other manner not inconsistent with the Plan.
OTHER STOCK BASED AWARDS AND OTHER BENEFITS. The Plan provides that the
Committee may also grant Other Stock Based Awards, including the grant of
shares of Common Stock based on certain conditions, the payment of cash based
on the performance of the Common Stock, and the payment of shares of Common
Stock in lieu of cash under other Company incentive bonus programs. The
Committee also has the authority to provide types of awards under the Plan in
addition to those specifically listed utilizing shares of Common Stock or cash,
or a combination thereof, if the Committee believes that such awards would
further the purposes for which the Plan was established. Payment under or
settlement of such awards will be made in the manner and at the times
determined by the Committee.
TERMINATION OF EMPLOYMENT OR SERVICE. Unless the Committee otherwise
determines at the time of grant, Options and SARs terminate three months
following the holder's termination of employment or service, except that this
period is extended to three years if the holder's termination of employment or
service is due to retirement after age 65, death or disability. In addition,
unless the Committee otherwise determines at the time of grant, all Restricted
Stock, Phantom Stock or other Awards become nonforfeitable in the event of the
holder's termination of employment or service due to death or disability.
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<PAGE>
PLAN AWARDS DURING 1996
Although there are not currently any specific plans for awards under the
Plan in 1997 (except Options to be granted to Outside Directors as part of
their annual retainer), it is anticipated that Options will be granted
pursuant to the Plan in 1997. The actual number and identity of persons to be
granted awards has not yet been determined. The following table sets forth
certain information regarding Options to purchase shares of Common Stock
granted to the executive officers of the Company named in the Executive
Compensation Table, each nominee for election as a director who was granted an
Option and the indicated groups under the Plan during the Company's 1996
fiscal year:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
NAME OPTIONS GRANTED PER SHARE
- ---- --------------- --------------
<S> <C> <C>
Francis E. Jeffries......................... -- --
Chairman of the Board
Philip R. McLoughlin........................ 85,000(1) $7.13(2)
Vice Chairman of the Board and Chief
Executive Officer
Calvin J. Pedersen.......................... 55,000(1) 7.13(2)
President
Wayne C. Stevens............................ 40,000(3) 7.13(2)
Executive Vice President
Michael E. Haylon........................... 50,000(1) 7.13(2)
Executive Vice President
David R. Pepin.............................. 50,000(1) 7.13(2)
Executive Vice President
Robert W. Fiondella......................... 12,308(4) 5.525
Director
Richard H. Booth............................ 12,308(4) 5.525
Director
John T. Anderson............................ 3,750(5) 6.25
Director
All current executive officers as a group (7
persons)................................... 320,000(1) 7.13(2)
All current directors who are not executive
officers as a group (10 persons)........... 28,366(4)(5) 5.62
All employees, including all current
officers who are not executive officers, as
a group (123 persons)...................... 1,075,000(1) 7.13(2)
</TABLE>
- --------
(1) Such Options were granted on December 31, 1996 and expire on December 31,
2006. Beginning December 31, 1997, annually, upon the anniversary of the
date of grant of the Options, one-third of the Options granted become
vested and exercisable, until the third anniversary of the date of grant,
whereupon all of the Options granted are vested and exercisable.
(2) The option exercise price is equal to the Fair Market Value per share of
Common Stock on the date of grant.
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<PAGE>
(3) Such Options were granted on December 31, 1996. Pursuant to the severance
provision of Mr. Stevens' employment agreement, on April 11 in 1997, 1998
and 1999, one-third of the Options granted become vested and are
exercisable for three months after the vesting date, at which time they
expire.
(4) In lieu of being paid their annual retainer for 1996, Messrs. Fiondella and
Booth each elected to receive an Option to purchase 12,308 shares of Common
Stock at an exercise price equal to $5.525 per share. Such Options become
exercisable on the date of the 1997 annual meeting of stockholders and
expire on November 13, 2006.
(5) In connection with the election of Mr. Anderson as a director of the
Company, on March 29, 1996, he was granted an Option to purchase 3,750
shares of Common Stock at an exercise price equal to $6.25 per share. Such
Option becomes exercisable on March 29, 1997 and expires on March 29, 2006.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board of Directors at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan. Such amendments or
modifications may increase the cost of the Plan to the Company or alter the
allocation of benefits under the Plan with respect to the participants therein.
The Plan will remain in effect until it is terminated by the Board. No
amendment, modification, or termination of the Plan will in any manner
adversely affect any award theretofore granted under the Plan without the
consent of the participant.
FEDERAL TAX TREATMENT
The Plan is not a qualified pension, profit-sharing or stock bonus plan under
Section 401(a) of the Code. The Plan is not subject to any provisions of the
Employee Retirement Income Security Act of 1974.
NONQUALIFIED STOCK OPTIONS. The grant of a nonqualified stock option
generally is not a taxable event for the optionee. Upon exercise of the option,
the optionee generally will recognize ordinary income in an amount equal to the
excess of the fair market value of the stock acquired upon exercise (determined
as of the date of exercise) over the exercise price of such option. The Company
will be entitled to a deduction equal to the amount of ordinary income
recognized by the optionee in the year in which such taxable income is
recognized and the Company is required to withhold income taxes with respect to
any amounts included in an employee's taxable income.
STOCK APPRECIATION RIGHTS. The grant of an SAR generally is not a taxable
event for the grantee. However, upon exercise of the SAR, the grantee generally
will recognize ordinary income equal to the amount of any cash received or the
fair market value of any Common Stock received. The Company will be entitled to
a deduction equal to the amount of ordinary income recognized by the grantee in
the year in which such taxable income is recognized and the Company is required
to withhold income taxes with respect to any amounts included in an employee's
taxable income.
RESTRICTED STOCK AWARDS. A grant of restricted stock generally is not a
taxable event for the grantee. However, when the applicable restrictions lapse,
the grantee generally will recognize ordinary income equal to the excess of the
fair market value of such stock on the date of lapse over the amount, if any,
paid for such stock. Alternatively, the grantee may file an election under
Section 83(b) of the Code, in which case the grantee will recognize ordinary
income on the date of grant equal to the excess of the fair market value of
such stock on the date of grant over the amount, if any, paid for such stock.
The Company will be entitled to a deduction equal
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<PAGE>
to the amount of ordinary income recognized by the grantee in the year in which
such taxable income is recognized and the Company is required to withhold
income taxes with respect to any amounts included in an employee's taxable
income.
PHANTOM STOCK RIGHTS. A grant of phantom stock rights generally is not a
taxable event for the grantee. However, when the applicable restrictions lapse,
the grantee generally will recognize ordinary income equal to the amount of any
cash received or the fair market value of any Common Stock received. The
Company will be entitled to a deduction equal to the amount of ordinary income
recognized by the grantee in the year in which such taxable income is
recognized and the Company is required to withhold income taxes with respect to
any amounts included in an employee's taxable income.
CASH AWARDS. Generally, an employee will recognize ordinary income and the
Company will be entitled to a deduction (and will be required to withhold
federal income taxes) with respect to such cash awards at the earliest time at
which the employee has an unrestricted right to receive the amount of such cash
payment. The timing of such income recognition will depend upon the specific
terms and conditions of the cash award.
OTHER STOCK BASED AWARDS. Awards may be granted under the Plan that do not
fall clearly into the categories described above. The federal income tax
treatment of these awards will depend upon the specific terms of such awards.
Generally, the Company will be entitled to a deduction and will be required to
withhold applicable taxes with respect to any ordinary income recognized by an
employee in connection with awards made under the Plan.
VOTE REQUIRED
If approved by the stockholders, the proposed amendment to the Plan would
become effective immediately.
Adoption of the amendment to the Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock represented in person or by
proxy at the annual meeting of stockholders.
The Board of Directors recommends a vote FOR the approval and adoption of the
amendment to the Plan as described above. Proxies solicited by the Board of
Directors will be voted in favor of this proposed amendment unless stockholders
specify to the contrary in their proxies.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company's consolidated financial statements for the year ended December
31, 1996 were audited by Price Waterhouse LLP ("Price Waterhouse"), independent
accountants. Price Waterhouse has been engaged as the Company's independent
accountants for fiscal year 1997. Representatives of Price Waterhouse are
expected to attend the annual meeting to respond to appropriate questions and
to make an appropriate statement if they desire to do so.
On November 7, 1995, the Company's Board of Directors, on the recommendation
of the Audit Committee, dismissed Arthur Andersen LLP ("Arthur Andersen") as
the Company's independent accountant. During the Company's two fiscal years and
the subsequent interim period preceding such dismissal, Arthur Andersen did not
issue any report on the Company's financial statements that contained an
adverse opinion or a disclaimer of
28
<PAGE>
opinion or that was qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's two fiscal years and the subsequent
interim period preceding such dismissal, the Company did not have any
disagreements with Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure nor
did any event reportable under Item 304(a)(1)(v) of Regulation S-K occur.
On November 7, 1995, the Company's Board of Directors, on the recommendation
of the Audit Committee, appointed Price Waterhouse as the Company's independent
accountant for 1995. Price Waterhouse is the independent accountant for Phoenix
Home Life. The Company had not previously consulted Price Waterhouse regarding
the application of accounting principles to a specified transaction or the type
of audit opinion that might be rendered on the Company's financial statements.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be presented at the next annual meeting
must be received by the Company for inclusion in its proxy statement and form
of proxy relating to such meeting no later than December 1, 1997.
OTHER MATTERS
The Company is not aware of any matters, other than those referred to herein,
which will be presented at the meeting. If any other appropriate business
should properly be presented at the meeting, the proxies named in the
accompanying form of proxy will vote the proxies in accordance with their best
judgment.
EXPENSES OF SOLICITATION
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. In addition to solicitation by mail, arrangements have
been made with brokerage houses and other custodians, nominees, and fiduciaries
to send the proxy material to their principals, and the Company will reimburse
them for their reasonable out-of-pocket expenses in doing so. Proxies may also
be solicited personally or by telephone or telegraph by regular employees of
the Company.
Hartford, Connecticut
March 31, 1997
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PROXY PROXY
PHOENIX DUFF & PHELPS CORPORATION
56 Prospect Street, Hartford, Connecticut 06115
This Proxy is Solicited on Behalf of The Board of Directors
for The Annual Meeting of Stockholders to be held on May 13, 1997
The undersigned hereby appoints Philip R. McLoughlin and Thomas N.
Steenburg, or either of them, as attorneys and proxies, each with the power to
appoint a substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of Phoenix Duff & Phelps
Corporation (the "Company") held of record by the undersigned on March 24, 1997,
at the annual meeting of stockholders to be held on May 13, 1997 or any
adjournment thereof.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
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<PAGE>
PHOENIX DUFF & PHELPS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors-- For Withhold For All
Nominees: John T. Anderson, Richard H. Booth, All All Except
Glen D. Churchill, Robert W. Fiondella, [_] [_] [_]
Michael E. Haylon, Marilyn E. LaMarche,
Edward P. Lyons, Philip R. McLoughlin,
James M. Oates, Calvin J. Pedersen,
David R. Pepin, Donna F. Tuttle, Ferdinand
Verdonck and David A. Williams
------------------------------------------
(Except nominee(s) written above)
2. To amend the Company's 1992 Long-Term Stock
Incentive Plan to increase the number of For Against Abstain
shares of Common Stock available for awards [_] [_] [_]
thereunder from 6.4 million to 9.7 million.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2. This proxy is revocable at any time.
Dated: 1997
------------------------,
Signature(s)
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- --------------------------------------------------------------------------------
(IMPORTANT: Please sign your name exactly as it appears hereon. In the case of
joint holders, all should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
