<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
THE JOHN NUVEEN COMPANY
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(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.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
THE JOHN NUVEEN COMPANY
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 7, 1998
TO THE SHAREHOLDERS OF THE JOHN NUVEEN COMPANY:
Notice is hereby given that the annual meeting of the shareholders of The
John Nuveen Company, a Delaware corporation (the "Company"), will be held in the
6th floor auditorium of The Northern Trust Company, 50 South LaSalle Street,
Chicago, Illinois, on Thursday, May 7, 1998, at 10:30 a.m. for the following
purposes:
1. To elect five directors by vote of the holders of the Company's
Class A Common Stock and Class B Common Stock, voting together as a single
class, and four directors by vote of the holders of the Company's Class B
Common Stock, voting as a separate class, to serve until the next annual
meeting and until their successors shall have been duly elected and
qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company.
3. To consider and act upon a shareholder proposal, if the proposal is
presented at the meeting.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 19, 1998 are
entitled to notice of and to vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE POSTAGE PAID ENVELOPE ENCLOSED
FOR THAT PURPOSE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED, AND
SHAREHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE
IN PERSON.
March 24, 1998
JOHN P. AMBOIAN
Secretary
<PAGE> 3
THE JOHN NUVEEN COMPANY
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of The John Nuveen Company (the "Company") of proxies to
be voted at the annual meeting of the shareholders of the Company to be held on
May 7, 1998, and at any and all adjournments of such meeting.
At the annual meeting, shareholders will vote on the election of directors,
the ratification of the selection of KPMG Peat Marwick LLP as independent
auditors for the Company, and a shareholder proposal, if presented at the
meeting, requesting the Board of Directors to immediately initiate discussions
with possible purchasers of the Company's business. All duly executed proxies
received by management prior to the meeting will be voted in accordance with the
choices specified by shareholders on their proxies. If no choice is specified by
a shareholder, the shares of such shareholder will be voted FOR the election of
the five nominees for directors listed in this Proxy Statement that are to be
elected by the holders of the Company's Class A Common Stock and Class B Common
Stock, voting together as a single class, FOR ratification of the selection of
the independent auditors of the Company and AGAINST the shareholder proposal.
Holders of the Company's Class B Common Stock are entitled to nominate and elect
at the meeting four additional directors as described in the section entitled
"Election of Directors" below. Shareholders who execute proxies may revoke them
at any time before they are voted by filing with the Company a written notice of
revocation, by delivering a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
As of March 19, 1998, there were issued and outstanding 7,451,813 shares of
Class A Common Stock, 24,441,738 shares of Class B Common Stock and 1,800,000
shares of 5% Cumulative Convertible Preferred Stock. The Class A Common Stock
and the Class B Common Stock are sometimes referred to collectively herein as
the "Common Stock" of the Company. Those persons who were shareholders of record
of each class of Common Stock at the close of business on March 19, 1998 will be
entitled to one vote for each share held. The Company's outstanding 5%
Cumulative Convertible Preferred Stock (the "Preferred Stock") is non-voting.
Under the Company's By-laws, a majority of the outstanding shares of the
class or classes entitled to vote on a particular matter and represented in
person or by proxy will constitute a quorum for consideration of such matter at
the annual meeting. Under the Company's Certificate of Incorporation, in the
event that any person or group becomes the beneficial owner (as defined in the
Certificate of Incorporation) of more than 20% of the outstanding shares of
Class A Common Stock, the shares of Class A Common Stock beneficially owned by
such person or group in excess of 20% of the outstanding shares of such class
shall have no voting rights and shall be deducted from the total number of
shares of Class A Common Stock for purposes of determining the number of shares
of Class A Common Stock, or Common Stock, as the case may be, necessary to
constitute a quorum or required to approve a matter submitted for shareholder
approval. To the knowledge of the Company, on March 19, 1998 no person or group
was the beneficial owner of more than 20% of the outstanding shares of Class A
Common Stock.
This Proxy Statement was initially mailed to shareholders on or about March
25, 1998. The cost of preparing, printing and mailing this Proxy Statement, the
accompanying notice and the enclosed proxy, and all other costs in connection
with the solicitation of proxies, will be paid by the Company. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to
<PAGE> 4
furnish proxy material to the beneficial owners of the Company's Class A Common
Stock of whom they have knowledge and will reimburse them for their expenses for
so doing. Additional solicitation may be made by letter, telephone or telecopier
by officers and employees of the Company and its affiliates.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
PRINCIPAL HOLDERS
The following table sets forth the beneficial ownership as of March 19,
1998, unless otherwise indicated, of the Company's Class A and Class B Common
Stock, of each person known by the Company to own beneficially more than 5% of
either such class:
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT OF PERCENT OF
BENEFICIALLY CLASS OF CLASS TOTAL STOCK
NAME AND ADDRESS OWNED STOCK OUTSTANDING(1) OUTSTANDING(1)
---------------- ------------ -------- -------------- --------------
<S> <C> <C> <C> <C>
The St. Paul Companies, Inc. .......... 24,441,738 B 100.0% 76.6%
385 Washington Street
St. Paul, MN 55102
Richard J. Franke...................... 804,130(2) A 10.5 2.5
400 North Michigan Ave.
Suite 300
Chicago, IL 60611
Donald E. Sveen........................ 775,230(3) A 10.1 2.4
1749 S. Naperville Road
Wheaton, IL 60187
Ryback Management Corporation.......... 677,500(4) A 9.1 2.1
7711 Carondelet Ave.
Suite 700
St. Louis, MO 63105
George W. Connell...................... 500,000(5) A 6.7 1.6
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087
Timothy R. Schwertfeger................ 449,700(6) A 5.9 1.4
333 W. Wacker Drive
Chicago, IL 60606
Anthony T. Dean........................ 430,600(6) A 5.6 1.3
333 W. Wacker Drive
Chicago, IL 60606
Royce & Associates, Inc. .............. 397,900(7) A 5.3 1.3
Charles M. Royce
1414 Avenue of the Americas
New York, NY 10019
</TABLE>
(Footnotes on following page)
2
<PAGE> 5
(Footnotes continued from previous page)
(1) For each of Messrs. Schwertfeger, Dean, Franke and Sveen, the
percentage of outstanding common stock is determined by dividing the total
number of shares beneficially owned, which includes the shares that could be
issued upon exercise of vested options by such persons, by the total number of
outstanding shares plus the additional number of shares that would be
outstanding if such vested options were exercised.
(2) Mr. Franke has sole voting and investment power with respect to all
shares beneficially owned, other than 266,556 shares of Class A Common Stock
held in a charitable trust of which Mr. Franke is a trustee with shared voting
and investment power. Includes 220,000 shares which may be acquired pursuant to
options which are currently exercisable.
(3) Mr. Sveen has sole voting and investment power with respect to all
shares beneficially owned, other than 297,656 shares of Class A Common Stock
held in a charitable trust of which Mr. Sveen is a trustee with shared voting
and investment power. Includes 220,000 shares which may be acquired pursuant to
options which are currently exercisable.
(4) According to a letter received on March 19, 1998 for the Lindner Funds,
Lindner Growth Fund owned 66,200 shares of Class A Common Stock and Lindner
Dividend Fund owned 611,300 shares of Class A Common Stock of the Company.
Ryback Management Corporation is the investment adviser for the Linder Funds and
has sole voting and investment power over such share.
(5) According to a Schedule 13G filed on February 23, 1998.
(6) Includes, for each of Mr. Schwertfeger and Mr. Dean, 220,000 shares
subject to exercisable options and excludes, for each of Mr. Schwertfeger and
Mr. Dean, 44,000 shares of restricted stock granted to each such person under
the 1996 Equity Incentive Award Plan, with respect to which shares each such
person does not have voting or investment power because the restrictions thereon
have not yet lapsed and are not scheduled to lapse within the next 60 days.
(7) According to a Schedule 13G filed on February 9, 1998, such shares are
owned by a group consisting of the named persons.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership, as of March 19,
1998, of the Company's Class A Common Stock by each of the directors and
nominees, each of the executive officers named in the Summary Compensation Table
on page 10, and all directors and executive officers as a group (10 persons).
The percentage of outstanding Class A Common Stock owned by each such person and
such group is based on the outstanding shares of Class A Common Stock as of
March 19, 1998, and the percentage of the outstanding total Common Stock owned
by each such person and such group is based on the outstanding shares of Class A
and Class B Common Stock as of such date, plus, in each case, shares subject to
stock options held by each such person and such group that are currently
exercisable or exercisable within 60 days after such date. No
3
<PAGE> 6
shares of Class B Common Stock or the Preferred Stock are owned by any director,
nominee for director or executive officer of the Company.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS A TOTAL COMMON
BENEFICIALLY COMMON STOCK STOCK
NAME OWNED OUTSTANDING(1) OUTSTANDING(1)
---- ------------ -------------- --------------
<S> <C> <C> <C>
Timothy R. Schwertfeger............................... 449,700(2) 5.9 1.4
Anthony T. Dean....................................... 430,600(2) 5.6 1.3
Duane R. Kullberg..................................... 1,000 * *
Willard L. Boyd....................................... 1,000 * *
Douglas W. Leatherdale(3)............................. 1,000 * *
Patrick A. Thiele(3).................................. 500 * *
Paul J. Liska(3)...................................... -- * *
W. John Driscoll...................................... 1,000 * *
John P. Amboian....................................... 57,208(4) * *
Bruce P. Bedford...................................... 2,738 * *
Directors and executive officers as a group (10
persons)............................................ 944,746(5) 11.9 2.9
</TABLE>
- -------------------------
* Less than 1%.
(1) For the directors and executive officers of the Company, the percentage of
outstanding stock is determined by dividing the total number of shares
beneficially owned, which includes the shares that would be issued upon
exercise of their vested options, by the total number of outstanding shares
plus the additional number of shares that would be outstanding if the
options were exercised.
(2) See footnote (5) to the preceding table.
(3) Does not include any shares of Class B Common Stock held by The St. Paul
Companies, Inc., for which Messrs. Leatherdale, Liska and Thiele serve as
senior executive officers.
(4) Includes 2,800 shares with respect to which Mr. Amboian has the right to
acquire beneficial ownership within 60 days through the exercise of options
received under the Company's 1992 Special Incentive Plan. Does not include
6,600 shares of restricted stock granted to Mr. Amboian under the 1992
Incentive Plan and 18,000 shares of restricted stock granted to Mr. Amboian
under the 1996 Equity Incentive Award Plan, with respect to which shares
such person does not have voting or investment power because the
restrictions thereon have not lapsed and are not scheduled to lapse within
the next 60 days.
(5) Includes 473,600 shares which may be acquired by such persons pursuant to
options currently exercisable or exercisable within 60 days received under
the Company's 1992 Special Incentive Plan. Does not include 6,600 shares of
restricted stock granted under the 1992 Incentive Plan and 106,000 shares of
restricted stock granted under the 1996 Equity Incentive Award Plan, with
respect to which shares the executive officers do not have voting or
investment power because the restrictions thereon have not lapsed and are
not scheduled to lapse within 60 days.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)"), as
amended, requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the
4
<PAGE> 7
Company's equity securities, to file reports of securities ownership and changes
in such ownership with the Securities and Exchange Commission (the "SEC").
Officers, directors and greater than ten-percent shareholders also are required
by rules promulgated by the SEC to furnish the Company with copies of all
Section 16(a) forms they file.
During 1997, Paul J. Liska, a Director of the Company, did not file with
the SEC on a timely basis, one required Form 3 declaring his new reporting
status as a Director of the Company, because of an administrative oversight.
This form was filed immediately after the oversight was noted and filed within
28 days of the required reporting date.
ELECTION OF DIRECTORS
Under the provisions of the Company's Certificate of Incorporation, (i) so
long as any shares of Class B Common Stock are outstanding, the number of
directors shall be ten or more and may not be changed without the unanimous
consent of either the Class B directors or the holders of the Class B Common
Stock, and (ii) so long as the holders of the Class B Common Stock hold at least
20% of all outstanding shares of Common Stock, as is currently the case, such
holders shall be entitled to nominate and elect four directors. The Nominating
Committee of the Company's Board of Directors has nominated and the Board of
Directors has recommended to shareholders, a total of five persons for election
as directors of the Company. The holders of the Class B Common Stock has
nominated four persons for election as directors of the Company. This will leave
one vacancy on the Board, which may be filled by action of the Board of
Directors prior to the next meeting of shareholders or by action of shareholders
at that time. Of these nominees, five directors are to be elected by the holders
of the Class A Common Stock and the holders of the Class B Common Stock, voting
together as a single class, and four directors are to be elected by the holders
of the Class B Common Stock, voting as a separate class.
A holder of Class A Common Stock may, with respect to the election of the
five directors to be elected by the Common Stock, (i) vote for the election of
all of such nominees named herein, (ii) withhold authority to vote for all such
nominees, or (iii) vote for the election of all such nominees, other than any
nominee with respect to whom the shareholder withholds authority to vote, by so
indicating in the appropriate space on the enclosed proxy. No holder of Class A
Common Stock may vote for more than five directors. The election of such
directors requires the affirmative vote of a plurality of the shares of the
Common Stock present in person or by proxy at the meeting and entitled to vote
in such election. The election of the four Class B directors requires the
affirmative vote of a plurality of the shares of the Class B Common Stock
present in person or by proxy at the meeting and entitled to vote in such
election.
The directors to be elected at the annual meeting will hold office until
the annual meeting in 1999 or until their successors are duly elected and
qualified. Unless otherwise instructed by the shareholders, it is the intention
of the persons named in the accompanying proxy to vote the proxies held by them
for the election of each of the nominees named in the "Nominees for Directors"
table. However, if any of the nominees shall not be a candidate for election at
the time of the meeting (a contingency which the Board of Directors does not
expect to happen), it is intended that such shares will be voted for such
substitute nominee as may be selected by the Board of Directors in the case of
any of the five directors to be elected by the Common Stock, and as may be
selected by the holder of Class B Common Stock in the case of a Class B
director.
5
<PAGE> 8
All of the nominees, except for John P. Amboian, are currently directors of
the Company. Messrs. Dean, Schwertfeger, Leatherdale, Thiele, Boyd, Driscoll and
Kullberg were initially elected directors of the Company upon or promptly
following its organization in 1992 and Mr. Liska was initially elected director
of the Company in 1997. All nominees who are currently directors of the Company
have heretofore been elected directors of the Company by the shareholders.
In the table below and throughout this Proxy Statement "Nuveen & Co."
refers to John Nuveen & Co. Incorporated, predecessor to the Company and now a
wholly-owned subsidiary. "Nuveen Funds" refers to the mutual funds and
exchange-traded funds sponsored by Nuveen & Co.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS
---- --- ---------------------
<S> <C> <C>
Timothy R. Schwertfeger........ 48 Chairman & Chief Executive Officer since 1996; prior
thereto, Executive Vice President of the Company since
inception; Chairman & Chief Executive Officer of Nuveen &
Co. since 1996; prior thereto, Executive Vice President and
Director of Nuveen & Co. since 1989; prior thereto, Vice
President of Nuveen & Co. since 1980; Chairman since 1996,
and prior thereto President and Director, of the Nuveen
Funds advised by Nuveen Advisory Corp. since 1994; President
and Director of the Nuveen Funds advised by Nuveen
Institutional Advisory Corp. since 1996; Director of
Institutional Capital Corporation since 1996.
Anthony T. Dean................ 52 President and Chief Operating Officer since 1996; prior
thereto Executive Vice President of the Company since
inception; President and Chief Operating Officer of Nuveen &
Co. since 1996; prior thereto Executive Vice President and
Director of Nuveen & Co. since 1989; prior thereto, Vice
President of Nuveen & Co. since 1980; Chairman since 1996,
and prior thereto Director and President, of the Nuveen
Funds advised by Nuveen Institutional Advisory Corp. since
1994, President and Director of the Nuveen Funds advised by
Nuveen Advisory Corp. since 1996.
John P. Amboian................ 36 Executive Vice President and Chief Financial Officer since
1995 and Secretary since 1997 of the Company; Executive Vice
President and Chief Financial Officer of Nuveen & Co. since
1995; prior thereto, Senior Vice President Finance,
Strategic Planning and Systems & Chief Financial Officer for
Miller Brewing Company June 1993 to May 1995.
Willard L. Boyd................ 70 Professor of Law at the University of Iowa Law School since
1996; President Emeritus, Field Museum of Natural History
since 1996; prior thereto President, Field Museum of Natural
History from 1981 to 1996.
Duane R. Kullberg.............. 65 Retired since 1989; prior thereto, Managing Partner-Chief
Executive Officer of Andersen Worldwide since 1980. Director
of the Chicago Board Options Exchange, Inc. and Carlson
Companies, Inc.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS
---- --- ---------------------
<S> <C> <C>
NOMINEES FOR CLASS B DIRECTORS
Douglas W. Leatherdale......... 61 Chairman of the Board of Directors, President and Chief
Executive Officer of The St. Paul Companies, Inc. since
1990; prior thereto, President and Chief Operating Officer
from 1989 to 1990, and Executive Vice President from 1982 to
1989, of The St. Paul Companies, Inc. Director of United
HealthCare Corporation and Northern States Power Company.
Patrick A. Thiele.............. 47 Chief Executive Officer and President Worldwide Insurance
Operations of the St. Paul Companies, Inc. since 1996; prior
thereto Executive Vice President since 1991, Chief Financial
Officer since 1989 and Director since 1993, of The St. Paul
Companies, Inc.; prior thereto, Senior Vice President from
1989 to 1991, and Vice President -- Finance from 1988 to
1989, of The St. Paul Companies, Inc. Director of The Wenger
Corporation.
W. John Driscoll............... 69 Retired since 1994; prior thereto Chairman from May 1993,
formerly President, of Rock Island Company, a private
investment company. Director of The St. Paul Companies,
Inc., Comshare Incorporated, Northern States Power Company
and Weyerhaeuser Company.
Paul J. Liska.................. 42 Executive Vice President and Chief Financial Officer of The
St. Paul Companies, Inc. since 1997; prior thereto President
and Chief Executive Officer of Specialty Foods Corporation
from 1996 to 1997, Chief Operating Officer from 1995 to 1996
and Chief Financial Officer from 1994 to 1995. From 1993 to
1994 Mr. Liska was Vice President -- Finance & Information
Systems of Kraft General Foods.
</TABLE>
7
<PAGE> 10
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has five board committees -- the Executive Committee, the Audit
Committee, the Compensation Committee, the Nominating Committee and the Bonus
Committee. Current members of the committees are named below, with the chairman
of each committee indicated with an asterisk.
<TABLE>
<S> <C>
EXECUTIVE COMMITTEE NOMINATING COMMITTEE
Anthony T. Dean Willard L. Boyd*
Timothy R. Schwertfeger* W. John Driscoll
Douglas W. Leatherdale Duane R. Kullberg
Timothy R. Schwertfeger
AUDIT COMMITTEE BONUS COMMITTEE
Willard L. Boyd Anthony T. Dean
W. John Driscoll Timothy R. Schwertfeger*
Duane R. Kullberg*
COMPENSATION COMMITTEE
Willard L. Boyd
W. John Driscoll*
Duane R. Kullberg
</TABLE>
8
<PAGE> 11
The EXECUTIVE COMMITTEE is charged with exercising the authority of the
Board of Directors in the management of the business of the Company in the
interval between meetings of the Board, except that it may not amend the
Certificate of Incorporation or By-laws of the Company, adopt an agreement of
merger, consolidation, or sale, lease or exchange of substantially all of the
Company's property and assets, or take action with respect to the dissolution of
the Company or the removal or indemnification of directors.
The AUDIT COMMITTEE is charged with exercising the power and authority of
the Board of Directors in the administration and review of the Company's
internal accounting policies and controls.
The COMPENSATION COMMITTEE is responsible for determining the compensation
of the Chairman of the Board and the other executive officers of the Company and
the determination of awards under the Executive Officer Performance Plan. The
Committee is also charged with the administration and interpretation of the
Company's 1992 Special Incentive Plan and of the 1996 Equity Incentive Award
Plan and any other plan designed to meet the requirements of Rule 16b-3 under
the Securities Exchange Act of 1934 and Section 162(m) of the Internal Revenue
Code, including the selection of individuals for participation in the plans, the
determination, grant, disbursement and settlement of awards thereunder, and the
modification or acceleration of awards thereunder.
The NOMINATING COMMITTEE is charged with exercising the power and authority
of the Board of Directors to consider and nominate candidates for election as
directors of the Company, except Class B directors.
The BONUS COMMITTEE is charged with administering and interpreting the
Company's Annual Incentive Award Plan, including determination of the awards to
be made under those Plans, except as such matters have been delegated by the
Board of Directors to the Compensation Committee or expressly reserved to the
Board of Directors.
During the last fiscal year, the Company's Board of Directors held five
meetings, the Compensation Committee held four meetings, and the Executive
Committee, the Audit Committee and the Nominating Committee each held one
meeting. The Bonus Committee did not hold any formal meetings during the last
fiscal year.
COMPENSATION OF DIRECTORS
Except for directors employed either by the Company or The St. Paul
Companies, Inc., or their subsidiaries, directors receive an annual fee of
$22,500, and a fee of $1,000 for every board or board committee meeting attended
(not to exceed $2,000 for meetings in any one day). The chairmen of the Audit,
Nominating and Compensation Committees each receive an additional annual fee of
$2,000.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table shows information concerning the annual compensation
for services to the Company in all capacities of the chief executive officer and
the other executive officers of the Company (collectively the "Named Executive
Officers") during the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
NAME AND ANNUAL COMPENSATION RESTRICTED OPTIONS
PRINCIPAL ------------------------------ STOCK (NUMBER OF ALL OTHER
POSITION YEAR SALARY BONUS AWARD(S) SHARES) COMPENSATION(2)
--------- ---- ------ ----- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Timothy R. Schwertfeger... 1997 $500,000 $2,042,000 -- -- $ 16,836
Chief Executive Officer 1996 375,000 1,911,000 $1,100,000(1) 345,000 17,513
and Chairman 1995 250,000 3,160,525 -- -- 21,053
Anthony T. Dean........... 1997 500,000 2,042,000 -- -- 16,801
President and Chief 1996 375,000 1,911,000 1,100,000(1) 345,000 17,513
Operating Officer 1995 250,000 3,160,525 -- -- 21,053
John P. Amboian........... 1997 250,000 1,983,000 -- -- 15,835
Executive Vice President 1996(3) 250,000 1,000,000 450,000(1) 133,620 17,513
and Chief Financial 1995 144,071 500,000 720,000(4) 50,000 250,000
Officer
Bruce P. Bedford.......... 1997(5) 250,000 750,000 -- -- 23,993
Executive Vice President
</TABLE>
(footnotes on following page)
- -------------------------
(1) Represents the value of 44,000 shares of restricted stock for each of
Messrs. Schwertfeger and Dean, and 18,000 shares of restricted stock for Mr.
Amboian, all awarded under the 1996 Equity Incentive Award Plan with a
market value of $25 per share on the award date. These shares will vest in
one installment on January 1, 1999. The participants will receive dividends
with respect to all restricted shares. In each case, as of December 31,
1997, all of the restricted shares remained unvested and had a market value
of $1,540,000 for each of Messrs. Schwertfeger and Dean, and $630,000 for
Mr. Amboian, based on the New York Stock Exchange -- Composite Transaction
closing price of $35.00.
(2) Represents contributions to the account of each executive officer, other
than Mr. Amboian in 1995, under the Company's tax-qualified Employees'
Profit Sharing Plan and reallocations of forfeitures under that Plan and for
1997 matching 401(k) contributions. Additionally the amount shown in 1995
for Mr. Amboian represents a relocation allowance, and $7,157 of the amount
shown for Mr. Bedford represents relocation expense reimbursement.
(3) Mr. Amboian commenced his employment with the Company on June 5, 1995.
(4) Represents the value of 30,000 shares of restricted stock awarded under the
Company's 1992 Special Incentive Plan with a market value of $24.00 per
share on the Award Date of June 5, 1995. These shares vest as follows: (a)
20,000 shares vest in 18 quarterly installments commencing on July 1, 1995
and thereafter on the first day of each successive fiscal quarter, the first
installment equal to 1,300 shares, and
10
<PAGE> 13
each subsequent installment equal to 1,100 shares; and (b) 10,000 shares
vest in two installments: 6,700 shares on July 1, 1996 and 3,300 shares on
July 1, 1997. The participant receives dividends with respect to all
restricted shares. As of December 31, 1997, 21,200 shares had vested; the
remaining 8,800 shares of restricted stock had a market value of $308,000
based on the New York Stock Exchange -- Composite Transaction closing of
$35.00 on December 31, 1997.
(5) Mr. Bedford commenced his employment with the Company on January 2, 1997.
OPTION GRANTS
There were no option grants made to any of the Named Executive Officers
during the fiscal year ended December 31, 1997.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows information regarding the unexercised options to
purchase shares of the Company's Class A Common Stock granted under the 1992
Incentive Plan and the 1996 Equity Incentive Award Plan to the Named Executive
Officers, and held by them at December 31, 1997. None of the Named Executive
Officers exercised any stock options during fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 12/31/97 IN-THE-MONEY OPTIONS
(NUMBER OF SHARES) AT 12/31/97(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Timothy R. Schwertfeger....................... 220,000 345,000 $3,740,000 $1,725,000
Anthony T. Dean............................... 220,000 345,000 3,740,000 1,725,000
John P. Amboian............................... 28,000 155,620 308,000 1,133,200
Bruce P. Bedford.............................. -- -- -- --
</TABLE>
- -------------------------
(1) Based on the New York Stock Exchange -- Composite Transaction closing
price of $35.00 on December 31, 1997, the $18 exercise price for 220,000
exercisable options and $30 exercise price for 345,000 unexercisable options for
each of Messrs. Schwertfeger and Dean, and the $24 exercise price for 28,000
exercisable options, and $24 exercise price for 22,000 unexercisable options,
$25 exercise price for 44,620 unexercisable options and $30 exercise price for
89,000 unexercisable options for Mr. Amboian.
LONG-TERM INCENTIVE PLAN AWARDS
There were no long-term incentive plan awards made to any of the Named
Executive Officers during the fiscal year ended December 31, 1997.
11
<PAGE> 14
RETIREMENT PLANS
Each of the Named Executive Officers participates in the Company's
non-contributory Retirement Plan, in which all employees who have completed one
year of service and attained age 21 are eligible to participate. The table below
sets forth with respect to the Retirement Plan and Excess Benefit Plan the
estimated annual straight life annuity benefits calculated upon retirement at
normal retirement age for employees with the remuneration and years of service
indicated.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
AVERAGE YEARS OF SERVICE
FINAL BASE -------------------------
SALARY 15 20 25 30 35
- ---------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
$150,000 $ 33,750 $ 45,000 $ 56,250 $ 67,500 $ 78,750
$175,000 $ 39,375 $ 52,500 $ 65,625 $ 78,750 $ 91,875
$200,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $105,000
$300,000 $ 67,500 $ 90,000 $112,500 $135,000 $157,500
$400,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$500,000 $112,500 $150,000 $187,500 $225,000 $262,500
$600,000 $135,000 $180,000 $225,000 $270,000 $315,000
</TABLE>
Each participant's benefits are determined under a formula which takes into
account years of credited service and the participant's average monthly
compensation during the five consecutive calendar years of highest annual
compensation in the ten consecutive calendar years prior to retirement, less a
portion of primary Social Security benefits. The maximum annual benefit payable
under the plan is not to exceed the lesser of $125,000 (subject to future
adjustments for inflation) and 100% of a participant's average aggregate
compensation for the three consecutive years in which he received the highest
aggregate compensation from the Company or such lower limit as may be imposed by
the Internal Revenue Code. Participants vest after five years of service to the
Company and its subsidiaries. The plan generally provides for payments to or on
behalf of each vested employee upon such employee's retirement at the normal
retirement age provided under the plan or later, although provision is made for
payment of early retirement benefits on a graduated reduced basis according to
provisions of the plan. Normal retirement age under the plan is 65. An employee
whose age and years of service add up to 90 is entitled to an unreduced pension
despite not having attained normal retirement age.
The Company has adopted an Excess Benefit Retirement Plan, which provides
certain highly compensated employees who participate in the Retirement Plan,
including, but not limited to, Messrs. Schwertfeger and Dean, with additional
retirement income in an amount equal to the difference between (i) the benefits
any such employee would have received under the Retirement Plan but for
limitations imposed by the Internal Revenue Code on the amount of annual
benefits payable pursuant to a tax-qualified retirement plan and (ii) the
benefits actually payable to such employee under the Retirement Plan.
The credited years of service under the Retirement Plan and the Excess
Benefit Plan for Messrs. Schwertfeger, Dean, Amboian and Bedford as of December
31, 1997 were 19 1/2, 20, 1 1/2 and 1, respectively. Compensation on which plan
benefits are based includes only base salary and not bonuses, incentive
compensation, or profit-sharing plan contributions. Such compensation for these
four individuals therefore is currently $500,000, $500,000, $250,000 and
$250,000, respectively.
12
<PAGE> 15
EMPLOYMENT AGREEMENTS
On July 16, 1996 the Company entered into an employment agreement with
Bruce Bedford whose employment with the Company commenced on January 2, 1997.
The agreement, which terminates December 31, 2002, provides for compensation to
Bedford in the form of (i) an annual base salary of $250,000 (which may be
increased, but not reduced, during the employment period), (ii) an annual
minimum bonus award of $750,000 for the first three years of the agreement with
amounts in excess of the minimum and amounts for the fourth and fifth years of
the agreement payable at the sole discretion of the Compensation Committee; and
(iii) such health, life, disability, pension, profit sharing and other benefits
as are payable to other senior managers. In addition, the agreement provides
that Bedford could be entitled to up to an additional 12 years of service credit
for purposes of eligibility, vesting and benefit accrual under the Company's
defined benefit plans. These additional years of service credit, which reflect
Bedford's service with Flagship Resources prior to its acquisition by the
Company, phase in over the term of the Employment Agreement.
Under the terms of the employment agreement, the Company has the right to
terminate Bedford's employment at any time, provided that in the event his
employment is terminated by the Company Without Cause, by Bedford for Good
Reason, or due to a Change in Control (each as defined in the agreement), the
Company will be required to pay Bedford's base salary, and required minimum
bonus payments, if any, for the remainder of the term of the agreement and
Bedford shall become fully vested in his accrued benefits under the Company's
pension and profit sharing plans in which he participates.
There are no employment agreements with any of the other Named Executive
Officers.
The Company entered into an Employment Agreement with George Connell, who
serves as Chief Investment Officer of the Company's wholly owned subsidiary,
Rittenhouse Financial Services, Inc., in connection with the acquisition of the
stock of Rittenhouse from Mr. Connell. The term of the Employment Agreement
continues until December 31, 2002, and the Agreement provides for Mr. Connell to
receive from Rittenhouse an annual base salary of $500,000 during the term of
the Agreement and to participate in such insurance programs and other fringe
benefits as are available to senior management employees of Rittenhouse. Mr.
Connell is the owner of 500,000 shares of the Company's Class A Common Stock,
representing 6.8% of the outstanding shares of such class, according to a
Schedule 13G filed by Mr. Connell in February 1998, which shares were acquired
in open market transactions.
13
<PAGE> 16
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report:
The Company has for many years offered compensation and incentive programs
that maintain a direct relationship between total compensation levels and
Company financial results. These programs are designed to provide incentives
throughout the Company by sharing profits with all employees. This longstanding
philosophy continued into 1997, and the alignment of employee interests
(especially those of key executives) with the interests of shareholders was
strengthened even further through the introduction of the 1996 Equity Incentive
Award Plan and the Executive Officer Performance Plan. Under these Plans, in
1996 and 1997 a portion of the annual bonus awards that would have been payable
under historical programs in the form of cash were replaced with long-term
awards of restricted stock and stock options. These Plans are designed to
capitalize on the demonstrated strengths of the Company's long-standing
incentive practices and to provide for increasing employee ownership of Company
stock.
The total amount available for incentive awards to all employees (including
cash and equity awards) has historically been a fixed percentage of the
Company's pre-incentive, pre-tax net operating income. This provides a strong
incentive for profitable growth and control of costs as the compensation of
executives and all other employees is directly related to Company earnings.
Employee incentive awards are based on individual performance. They recognize
each employee's contribution to the Company's success, both during the year in
which they are awarded and during prior years; they also take into account
management's expectations for each employee's future development. This process
permits management to compensate employees for their longer-term performance, to
encourage and reward employee growth and productivity, and to develop strong
relationships between the Company and its employees at all levels.
The long-term equity incentive awards made under the 1996 Equity Incentive
Award Plan do not vest until the end of a specified period (generally three
years) and, in the case of awards made to executive officers for 1996 and 1997,
a portion of the awards are in the form of stock options with exercise prices
that exceed (generally by 20%) the fair market value of the underlying common
stock at the time of grant. This plan is designed to lead to substantial and
broad-based employee ownership of Company common stock and to directly align the
interests of employees with those of shareholders over the longer term.
Total compensation for executives is comprised of base salaries and
benefits, annual incentive awards and long-term equity incentives which reflect
the following executive compensation policies:
- Base salaries are generally set at the lower end of the
range for our industry, as the Company emphasizes annual
cash incentive awards and long-term equity incentive awards
to provide total compensation sufficient to attract and
retain talented and productive executives and to reward
employees at every level of the organization for their
contributions to the Company's operations.
- Annual incentive awards for the Company's officer/directors
(including the Chief Executive Officer) and the other
executive officers are directly related to the Company's
financial performance. This direct linkage between
profitability and incentive awards provides senior
management special incentive to focus the
14
<PAGE> 17
Company's resources in those areas in which the longer-term
rates of growth and return are the most attractive. In
addition, a policy of equal annual cash incentive awards
for the officer/directors encourages teamwork and
partnership among these key executive officers. This
structure has worked well for the Company since its
inception and was carried forward into the Executive
Officer Performance Plan adopted in 1996.
- For each of 1996 and 1997, the maximum award payable to any
participant under the Executive Officer Performance Plan
was 2 1/2% of the amount by which the Company's
pre-incentive, pre-tax net operating income exceeded 12% of
the Company's shareholders' equity at the beginning of the
year. The officer/directors received the maximum award for
1996 and 1997, which was paid approximately 70% in the form
of cash and approximately 30% in the form of equity grants
(all made in 1996, all subject to earning sufficient awards
for the relevant year), which included restricted stock and
stock options with an exercise price equal to 120% of the
market value of the underlying stock at the time of grant.
- For 1998, in determining the size of awards to be made
under the Executive Officer Performance Plan, the Committee
will apply a formula which measures Company performance
both in terms of growth in operating income over the prior
year and in terms of the excess of operating income over an
increased return on equity threshold. The maximum award
payable to any participant under the Plan for 1998 will
equal the sum of (i) 2.1% of the Company's pre-incentive,
pre-tax net operating income in excess of 18% of average
shareholders' equity for the year and (ii) 6.2% of the
excess of the Company's 1998 after-incentive, pre-tax net
operating income over the same income measure for 1997. The
aggregate award payable for 1998 to the Company's three
officer/directors is expected to be awarded 70% in the form
of cash and 30% in the form of at-the-money stock options
(based on an estimated fair value of the options at the
date of grant). In no event will the incentive award made
to any executive officer of the Company for 1998 under the
Executive Officer Performance Plan exceed the maximum
formula award applicable under the Executive Officer
Performance Plan as adopted in 1996.
The Committee believes that Nuveen's profitability-linked compensation
programs have served the Company well and that the current programs will
continue do so in the future while increasing the component of compensation that
is tied to long-term shareholder returns. The Committee is aware that the
Internal Revenue Code provides a $1 million limit on the deductibility for
federal tax law purposes of compensation paid to top executives of publicly
traded corporations, subject to certain exceptions. The exceptions include one
for compensation based on attainment of objective performance standards that
have been approved by shareholders. The Company's Executive Officer Performance
Plan is designed to qualify for this exception and to permit the continued full
deductibility of compensation paid to executive officers thereunder. The
Committee intends to continue to pursue compensation strategies and programs
designed to permit the Company to retain maximum federal tax advantage while
providing appropriate performance incentives.
15
<PAGE> 18
We believe that the caliber and motivation of the Company's executive
officers, and its other employees, and the quality of their leadership are
particularly important factors affecting the Company's long-term performance. We
further believe that the direct relationship between executive officer
compensation and Company performance reflected in the Company's compensation
policies served the Company well in 1997, during a period of major strategic
transition, and that the 1998 incentive compensation programs, as described
above, will serve the Company well in 1998.
As the Company's business evolves, we will continuously review the
Company's compensation programs and make appropriate changes to ensure that the
specific programs and performance objectives in effect best fit the Company's
changing operations.
W. John Driscoll, Chairman
Willard L. Boyd
Duane R. Kullberg
16
<PAGE> 19
STOCKHOLDER RETURN INFORMATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Class A Common Stock to
the Russell 2000 Index, the S&P Investment Banking/ Brokerage Index, and an
internally calculated Peer Group for the period commencing December 31, 1992 and
ending December 31, 1997. In each case the chart assumes a $100 investment on
December 31, 1992 and that all dividends are reinvested.
Prior to 1996, JNC stock performance was presented using the S&P
Composite-Brokerage Firm Index as the published industry comparative index.
During 1995, S&P discontinued this index and initiated computing the S&P
Investment Banking/Brokerage Index. Total returns assuming reinvestment of
dividends for 1996 and 1997 are presented for the S&P Investment
Banking/Brokerage Index. Beginning in 1998, the Company is presenting the total
return information of a Peer Group of publicly-traded asset management firms.
This group comprises all such firms whose principal business is asset management
which have been publicly traded throughout the five-year period. The change
reflects the ongoing evolution of the Company's core business from investment
banking to asset management. Peer Group returns are weighted by the market
capitalization of each firm at the beginning of each year included in the chart.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
ASSET
S&P MANAGEMENT
MEASUREMENT PERIOD INVESTMENT PEER GROUP
(FISCAL YEAR COVERED) JNC RUSSELL 2000 BANKING/BROKERAGE (1)
<S> <C> <C> <C> <C>
DEC-92 100 100 100 100
DEC-93 99 119 134 141
DEC-94 92 117 113 117
DEC-95 103 150 160 160
DEC-96 113 175 227 216
DEC-97 153 214 416 341
</TABLE>
(1) The following companies are included in the Peer Group: Alliance Capital
Management L.P.; Atalanta/ Sosnoff Capital Corporation; Bull & Bear Group, Inc.;
Eaton Vance Corp.; Franklin Resources, Inc.; H.D. Vest Inc.; Jordan American
Holdings, Inc.; New England Investment Companies, L.P.; Phoenix Duff & Phelps
Corporation; Pilgrim America Capital Corporation; PIMCO Advisers L.P.; The
Pioneer Group, Inc.; SEI Investments Company; T. Rowe Price Associates Inc.; and
United Asset Management Corporation.
17
<PAGE> 20
SELECTION OF AUDITORS
The independent certified public accounting firm of KPMG Peat Marwick LLP,
a member of the international accounting firm Klynveld Peat Marwick Goerdeler,
has been selected by the Board of Directors upon recommendation of its Audit
Committee to act as the auditors for the Company and its subsidiaries for the
current fiscal year. At the annual meeting, the shareholders will be asked to
ratify the Board of Directors' selection. A holder of Common Stock may, with
respect to the selection of independent auditors, (i) vote "FOR" such selection,
(ii) vote "AGAINST" such selection or (iii) "ABSTAIN" from voting on the
selection. A vote to abstain from voting on this matter will have the effect of
a vote against such selection.
KPMG Peat Marwick LLP, which has served as independent auditors of the
Company and its subsidiaries since the Company's inception in March 1992, is
expected to have a representative present at the annual meeting to respond to
appropriate questions of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
SHAREHOLDER PROPOSAL
Mario Cibelli, a holder of 240 shares of Class A Common Stock whose address
is c/o Robotti & Company, 52 Vanderbilt Avenue, 5th Floor, New York, New York,
10017-3808, has given notice of his intention to propose the following
resolution for consideration at the annual meeting:
"RESOLVED: That the stockholders of The John Nuveen Company ("Nuveen")
hereby request that the Board of Directors immediately initiate discussions
with possible purchasers relating to an acquisition of Nuveen by merger or
tender offer."
"PROPONENT'S SUPPORTING STATEMENT: The proponent, a holder of 240 shares of
the common stock of Nuveen, believes that in order to maximize shareholder
value Nuveen should be sold."
"Nuveen has not been able to make the changes necessary to remain
competitive in today's mutual fund industry and accordingly has seen new
fund sales diminish. Nuveen's revenues have increased at an average annual
rate of approximately 1.2% over the last 4 years. Assets under management
have increased at average annual rate of 4.9% over the same time period.
These results are staggeringly low considering that the mutual fund
industry has experienced remarkably high growth rates and an unprecedented
acceptance by investors."
"In late 1996 Nuveen entered the equity mutual fund business. A special
offer was made to existing Nuveen fund holders. Approximately 1.4% of the
total value of existing Nuveen funds was captured by the new equity fund.
Furthermore if Nuveen funds represent 5.5% of Nuveen clients' total assets
(as stated on page 9 of the company's 1996 annual report) then the average
client only put .06% of his or her portfolio into the new equity fund. This
represents an extremely low penetration rate from individuals that are
already familiar with the Nuveen name. Furthermore, Nuveen waived the load
on the new fund and resorted to directly compensating brokers for their
sales effort. This differs from standard industry practice where the
commission resulting from a new fund sale is paid out by the fund investor
or reimbursed to the company."
18
<PAGE> 21
"Nuveen's operating costs per employee (underwriting and distribution costs
are excluded from all calculations) are among the highest in the mutual
fund industry. In 1996 Nuveen had approximately $227,000 in operating costs
per employee compared with $154,000 for T. Rowe Price and $114,000 for
Franklin Resources."
"The proponent believes that Nuveen's costs per employee are higher than
that which might otherwise occur because Nuveen supports a number of low
return, high expense business such as investment banking, research and unit
investment trusts. Additionally, the current annual bonus plan allows the
company to allocate 25% of shareholders' pre-bonus, pre-tax net operating
income as a bonus for employees without regard to levels of profitability
or returns to shareholders."
"Although this proponent is not aware at this time of another company that
may be interested in acquiring Nuveen, the proponent believes that another
company that could alter or eliminate the annual bonus plan and eliminate
less profitable operations by acquiring Nuveen, may be willing to pay a
price considerably above the current market price of Nuveen."
"While the adoption of this proposal will not legally bind the Board of
Directors, the proponent trusts that given the fiduciary responsibilities
of the directors, the directors will honor their stockholders request."
STATEMENT OF NUVEEN IN OPPOSITION TO THE SHAREHOLDER PROPOSAL
Your Board of Directors is fully committed to maximizing shareholder value
for all shareholders over the long term and does not believe the proposal serves
this goal.
Your Board of Directors is pleased to report that the Company's financial
performance remained very strong in 1997, despite weakness in sales of municipal
bond products -- the Company's historical base. The Company also made
substantial long-term investments during the year in furtherance of its
strategic business plan, including the well-received introduction of a new line
of equity mutual funds and the acquisitions of Flagship Resources and
Rittenhouse Financial Services. These actions have significantly strengthened
the Company's mutual fund and equity managed account businesses. The Company's
stock has reflected these positive results, providing a total return of 35%
during 1997. The Board believes these results reinforce the merit of the
Company's strategic business plan and bode well for the Company's future.
Notwithstanding these encouraging results, the proposal is intended to
force the Board to begin the process of selling the Company to a third party as
soon as possible and abandon its efforts to create shareholder value over the
long term. This approach is not consistent with the Company's long-term focus on
building its business.
The proponent's statement criticizes the Company for low growth rates in
revenues and assets under management during the four years ending 1996 in light
of mutual fund industry growth during the period. However, during this period
the municipal segment of the mutual fund industry, the segment to which Nuveen
had been solely dedicated, endured a major downturn caused by a significant rise
in interest rates in 1994 and concerns over flat-tax proposals. As the proponent
himself notes in the subsequent paragraph of his statement, the Company did not
even enter the growing equity mutual fund business until late 1996, the very end
of the period he cites. If the operating measurements referenced by the
proponent in his statement were updated to cover the four-year period ending
1997 (instead of 1996), the Company's average annual growth rates for
19
<PAGE> 22
revenues and assets under management for this more recent four-year period would
have approximately doubled over the rates cited by the proponent.
The Company's first equity mutual funds, which were launched through an
effort involving a special, limited-time offer criticized by the proponent, have
raised over $1 billion in net assets in only one year, a remarkable achievement
for a new line of funds in a very competitive market. This reflects the
continuing vitality of the Nuveen brand and Nuveen's strong distribution
relationships. It has contributed to growth in investment product sales by the
Company to an average weekly level that is currently three times the early-1996
sales level.
Similarly, the criticism of allegedly high per employee operating expenses
fails to acknowledge that the Company has always maintained a very lean
organization. This has been made possible by the Company's seasoned and very
stable work force and its outsourcing of repetitive, low-value adding
activities. We view profitability (and not per employee operating costs) as the
most important performance measure influencing shareholder value, and, as a
percentage of revenue, the Company's profitability is in the top 20% of the
asset management industry. The proponent's criticism of Nuveen's compensation
levels fails to note that total firm-wide compensation expense as a percentage
of revenue is at the industry average. Moreover, the Company's current equity
incentive program, which was introduced in 1996, shifts approximately 20% of
annual incentive awards from cash to equity-based awards.
As the Company approaches the 100th anniversary of its founding, your Board
will continue to monitor the appropriateness of its strategic business plan and
the roles of the Company's various business units within that plan. The Board
welcomes viable suggestions from all of the Company's shareholders to further
enhance shareholder value. However, the ultimate responsibility rests with the
Board to oversee the development and execution of the Company's business
strategies.
The Board believes that shareholder value will be maximized by continuing
to follow the Company's strategic business plan and that the previously noted
accomplishments have resulted in enhanced shareholder value. The Board does not
believe that the proposal's short term focus is in the best interests of the
Company or its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL.
The affirmative vote of the holders of a majority of the shares of the
Common Stock present in person or by proxy at the Annual Meeting of
Shareholders, and entitled to vote on the shareholder proposal, is required to
approve it. Shareholders may vote "FOR," "AGAINST" or "ABSTAIN" on the proposal;
a vote to abstain will be treated as a vote against the proposal. While broker
non-votes will be included in the number of votes present for purposes of
determining a quorum, they will not be counted as votes cast.
PROPOSALS BY SHAREHOLDERS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 1999
annual meeting of shareholders must be received by the Company by November 22,
1998 in order to be considered for inclusion in the Company's 1999 Annual
Meeting Proxy Statement and form of proxy to be mailed in March 1999.
The Nominating Committee will consider persons recommended by shareholders
as candidates for election to the Board of Directors at the annual meeting of
shareholders. The By-laws of the Company provide
20
<PAGE> 23
that a shareholder wishing to nominate a candidate for election to the Board is
required to give notice to the Secretary of the Company of such nomination. The
notice of nomination must be received by the Company not less than 60 days nor
more than 90 days prior to the shareholders' meeting, or if less than 70 days'
notice or prior disclosure of the meeting date is given or made, the notice of
nomination must be received within ten days after the meeting date is announced.
The notice of nomination is required to contain certain information as set forth
in the By-laws about both the nominee and the shareholder making the nomination.
The Company may require that the proposed nominee furnish other information to
determine that person's eligibility to serve as director. A nomination which
does not comply with the above requirements will not be considered.
Such proposals or nominations should be addressed to the Corporate
Secretary, The John Nuveen Company, 333 West Wacker Drive, Chicago, Illinois
60606.
GENERAL
Management does not intend to present and does not have reason to believe
that others will present any other items of business at the meeting. However, if
other matters are properly presented at the meeting for a vote, the persons
named in the proxies will have discretion to vote in accordance with their own
judgement on such matters.
A list of shareholders entitled to be present and to vote at the meeting
will be available at the offices of the Company, 333 West Wacker Drive, Chicago,
Illinois, for inspection by any shareholder during regular business hours for
ten days prior to the date of the meeting.
Failure of a quorum to be present at the meeting will necessitate
adjournment. The persons named in the enclosed proxy may also move for an
adjournment of the meeting to permit further solicitation of proxies with
respect to any of the proposals if they determine that adjournment and further
solicitation is reasonable and in the best interests of the shareholders. Under
the Company's By-laws, an adjournment of a meeting requires the affirmative vote
of a majority of the shares present in person or represented by proxy at the
meeting.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
JOHN P. AMBOIAN
Secretary
21
<PAGE> 24
NUVEEN LOGO
<PAGE> 25
- --------------------------------------------------------------------------------
THE BOARD RECOMMENDS A VOTE "FOR" ALL DIRECTORS.
1. Election of five directors - to be elected for a one-year term:
FOR all nominees listed below /x/
WITHHOLD AUTHORITY to vote
for all nominees listed below /x/
*EXCEPTIONS /x/
Nominees: Timothy R. Schwertfeger, Anthony T. Dean, John P. Amboian, Duane R.
Kullberg and Willard L. Boyd.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEES NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions ____________________________________________________________________
THE BOARD RECOMMENDS A VOTE "FOR" KPMG PEAT MARWICK AS AUDITORS.
2. Ratification of the selection of KPMG Peat Marwick as independent auditors
for 1996.
FOR /x/ AGAINST /x/ ABSTAIN /x/
The Board recommends a vote "AGAINST" the shareholder proposal.
3. Shareholder Proposal.
FOR /x/ AGAINST /x/ ABSTAIN /x/
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT.
Change of Address
Mark Here /x/
Note: Please sign exactly as your
name appears on this proxy. If
signing for estates, trusts or
corporations, title or capacity
should be stated. If shares are
held jointly, each holder should
sign.
Dated:__________________ , 1998
________________________________
Signature
________________________________
Signature
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE INDICATE YOUR CHOICE BY MARKING
AN "X" IN EITHER BLACK OR BLUE INK. / /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE JOHN NUVEEN COMPANY
PROXY
PROXY FOR ANNUAL MEETING
to be held at 10:30 a.m. Chicago time
in the 6th floor auditorium of the Northern Trust Company,
50 South LaSalle St., Chicago, Illinois on MAY 7, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Timothy R. Schwertfeger, Anthony T. Dean
and John P. Amboian, and any of them, with full power of substitution,
proxies for the undersigned to represent and vote as specified in this Proxy
all shares of Class A Common Stock which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of The John Nuveen Company to be held on
May 7, 1998, and at any adjournment or adjournments thereof, including
authority to vote on (1) the election of directors; and (2) for the selection
of independent auditors in the manner specified on the reverse side; and (3)
a shareholder proposal.
UNLESS OTHERWISE INSTRUCTED ON THE REVERSE SIDE, ALL SHARES WILL BE VOTED
(1) FOR THE ELECTION OF DIRECTORS; (2) FOR THE SELECTION OF KPMG PEAT MARWICK
AS INDEPENDENT AUDITORS; AND (3) AGAINST THE SHAREHOLDER PROPOSAL.
(THIS PROXY CONTINUES AND MUST BE VOTED AND SIGNED ON THE REVERSE SIDE)
Change of Address THE JOHN NUVEEN COMPANY
____________________ P.O. BOX 11116
____________________ NEW YORK, N.Y. 10203-0116
____________________
____________________
- --------------------------------------------------------------------------------
