<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:
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<PAGE> 2
THE JOHN NUVEEN COMPANY
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 6, 1999
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 6, 1999, at 10:30 a.m. for the following
purposes:
1. To elect four 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 three 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 consider and vote upon the Company's revised incentive
compensation plans:
A. The Amended and Restated 1996 Equity Incentive Award Plan; and
B. The 1999 Executive Officer Performance Plan.
3. To ratify the selection of KPMG LLP as independent auditors for the
Company.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 18, 1999 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 31, 1999
ALAN G. BERKSHIRE
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 6, 1999, and at any and all adjournments of such meeting.
At the annual meeting, shareholders will vote on the election of directors,
approval of the Company's Amended and Restated 1996 Equity Incentive Award Plan
and its 1999 Executive Officer Performance Plan, and the ratification of the
selection of KPMG LLP as independent auditors for the Company. 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 four 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 approval of the Company's
Amended and Restated 1996 Equity Incentive Award Plan, and FOR approval of its
1999 Executive Officer Performance Plan, and FOR ratification of the selection
of the independent auditors of the Company. 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.
The Class B Shareholders have nominated only three directors to stand for
election. 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.
Proxies submitted by brokers for shares beneficially owned by other persons
may indicate that all or a portion of the shares represented by the proxies are
not being voted with respect to a particular matter. Applicable broker rules may
not permit a broker to vote shares held in street name with respect to such
matter in absence of instructions from the beneficial owner of the shares. The
shares represented by broker proxies which are not voted with respect to such
matter will not be considered present and entitled to vote with respect to such
matter, although such shares may be considered present and entitled to vote for
other purposes and will count for purposes of determining the presence of a
quorum. If a quorum is present, these shares will not affect the determination
of whether such matter is approved.
As of March 18, 1999, there were issued and outstanding 6,857,798 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 18, 1999 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 18, 1999 no person or group
was the beneficial owner of more than 20% of the outstanding shares of Class A
Common Stock.
<PAGE> 4
This Proxy Statement was initially mailed to shareholders on or about March
31, 1999. 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 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 18,
1999, 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% 78.1%
385 Washington Street
St. Paul, MN 55102
Timothy R. Schwertfeger................ 669,700(2) A 9.2 2.1
333 W. Wacker Drive
Chicago, IL 60606
Anthony T. Dean........................ 927,159(3) A 12.3 2.9
333 W. Wacker Drive
Chicago, IL 60606
George W. Connell...................... 771,300(4) A 11.2 2.5
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087
Richard J. Franke...................... 629,530(5) A 8.9 2.0
400 North Michigan Ave.
Suite 300
Chicago, IL 60611
Donald E. Sveen........................ 619,881(6) A 8.8 2.0
1749 S. Naperville Road
Wheaton, IL 60187
Royce & Associates, Inc. .............. 390,500(7) A 5.7 1.2
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 by such persons of exercisable options and options that
will become exercisable within 60 days after March 18, 1999, by the total number
of outstanding shares plus the additional number of shares that would be
outstanding if such exercisable options and options that will become exercisable
within such 60 day period were exercised.
(2) Includes for Mr. Schwertfeger 440,000 shares subject to exercisable
options, and excludes 44,000 shares of restricted stock granted under the 1996
Equity Incentive Award Plan, with respect to such shares he does not have voting
or investment power because the restrictions thereon have not yet lapsed and are
not scheduled to lapse within 60 days.
(3) Includes for Mr. Dean 672,559 shares subject to exercisable options or
options that will become exercisable within 60 days and 44,000 shares of
restricted stock, granted under the 1996 Equity Incentive Award Plan, on which
the restrictions will lapse within 60 days.
(4) According to a Schedule 13G filed on March 4, 1999.
(5) Includes 220,000 shares which may be acquired pursuant to options which
are currently exercisable. Mr. Franke has sole voting and investment power with
respect to all shares beneficially owned, other than 201,556 shares of Class A
Common Stock held in a charitable trust of which Mr. Franke is a trustee with
shared voting and investment power.
(6) Includes 220,000 shares which may be acquired pursuant to options which
are currently exercisable. Mr. Sveen has sole voting and investment power with
respect to all shares beneficially owned, other than 209,071 shares of Class A
Common Stock held in a charitable trust of which Mr. Sveen is a trustee with
shared voting and investment power.
(7) According to a Schedule 13G filed on February 9, 1999, 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 18,
1999, 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 9, 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 18, 1999, 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 shares of Class B
Common Stock or the Preferred Stock are owned by any director, nominee for
director or executive officer of the Company. Certain family members of Mr.
Bedford (or trusts for their benefit) own
3
<PAGE> 6
one-half of the outstanding Preferred Stock which is convertible into Class A
Common Stock 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............................... 669,700(2) 9.2 2.1
Anthony T. Dean....................................... 927,159(3) 12.3 2.9
John P. Amboian....................................... 141,443(4) 2.0 0.6
Duane R. Kullberg..................................... 1,000 * *
Willard L. Boyd....................................... 1,000 * *
Douglas W. Leatherdale(5)............................. 1,000 * *
Paul J. Liska(5)...................................... -- * *
W. John Driscoll...................................... 1,000 * *
Bruce P. Bedford...................................... 5,013 * *
Richard D. Hughes..................................... -- * *
Directors and executive officers as a group (10
persons)............................................ 1,747,315(6) 21.6 5.4
</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 exercisable options and options that will become
exercisable within 60 days after March 18, 1999, by the total number of
outstanding shares plus the additional number of shares that would be
outstanding if the options and options that will become exercisable within
such 60 day period were exercised.
(2) See footnote (2) to the preceding table.
(3) See footnote (3) to the preceding table.
(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
2,200 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) Does not include any shares of Class B Common Stock held by The St. Paul
Companies, Inc., for which Messrs. Leatherdale and Liska serve as senior
executive officers.
(6) Includes 1,225,979 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 and the 1996 Equity Incentive
Award Plan. Does not include 2,200 shares of restricted stock granted under
the 1992 Incentive Plan and 62,000 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.
4
<PAGE> 7
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 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
1998, Donald E. Sveen who was, a 10% beneficial shareholder of the Company at
the time, did not file with the SEC on a timely basis, two required Forms 4
reporting two separate transactions in the sale of shares of the Company, due to
an administrative oversight. These forms were filed immediately after the
oversight was noted.
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 for election, a total of seven persons
to the office of directors of the Company. This will leave three vacancies on
the Board, two of 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
and one of which may be filled by action of the holders of the Class B Common at
any time. Of these nominees, four 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 three 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
four 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 four 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 three 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. Withholding authority to vote for a director nominee will not prevent
such director nominee from being elected.
The directors to be elected at the annual meeting will hold office until
the annual meeting in 2000 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
5
<PAGE> 8
by the Board of Directors in the case of any of the four 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.
All of the nominees are currently directors of the Company, who have
heretofore been elected directors by the shareholders. Messrs. Schwertfeger,
Leatherdale, Boyd, Driscoll and Kullberg were initially elected directors of the
Company upon or promptly following its organization in 1992, Mr. Liska was
initially elected director of the Company in 1997 and Mr. Amboian was initially
elected director of the Company in 1998.
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........ 49 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; Chairman and
Director of Rittenhouse Financial Services, Inc. since March
1999; Director of Institutional Capital Corporation since
1996.
John P. Amboian................ 37 Executive Vice President and Chief Financial Officer since
1995 and Secretary from February 1997 until May 1998 of the
Company; Executive Vice President and Chief Financial
Officer of Nuveen & Co. since 1995; Executive Vice President
and Director of Rittenhouse Financial Services, Inc. since
September 1997; 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................ 71 Professor of Law at the University of Iowa Law School since
1954; President Emeritus, Field Museum of Natural History
since 1996; prior thereto President, Field Museum of Natural
History from 1981 to 1996, President Emeritus, University of
Iowa since 1981.
Duane R. Kullberg.............. 66 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......... 62 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.
W. John Driscoll............... 70 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.................. 43 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>
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
Timothy R. Schwertfeger* Willard L. Boyd*
John P. Amboian W. John Driscoll
Douglas W. Leatherdale Duane R. Kullberg
Timothy R. Schwertfeger
AUDIT COMMITTEE BONUS COMMITTEE
Willard L. Boyd Timothy R. Schwertfeger*
W. John Driscoll John P. Amboian
Duane R. Kullberg*
COMPENSATION COMMITTEE
Willard L. Boyd
W. John Driscoll*
Duane R. Kullberg
</TABLE>
7
<PAGE> 10
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 equity-based incentive award plans.
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 four
meetings, the Compensation Committee held six meetings, the Audit Committee held
three meetings, and the Nominating Committee held one meeting. The Executive and
Bonus Committees 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.
8
<PAGE> 11
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 three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
</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(1)
--------- ---- ------ ----- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Timothy R. Schwertfeger... 1998 $500,000 $2,300,000 -- 107,559 $ 17,895
Chief Executive Officer 1997 500,000 2,042,000 -- -- 16,836
and
Chairman 1996 375,000 1,911,000 $1,100,000(2) 345,000 17,513
Anthony T. Dean........... 1998 500,000 2,300,000 -- 107,559 17,895
President and 1997 500,000 2,042,000 -- -- 16,801
Chief Operating Officer 1996 375,000 1,911,000 1,100,000(2) 345,000 17,513
John P. Amboian........... 1998 250,000 2,300,000 -- 107,559 17,314
Executive Vice President 1997 250,000 1,983,000 -- -- 15,835
and Chief Financial 1996 250,000 1,000,000 450,000(2) 133,620 17,513
Officer
Bruce P. Bedford.......... 1998 250,000 700,000 -- -- 187,530
Executive Vice President 1997(3) 250,000 750,000 -- -- 23,993
Richard D. Hughes......... 1998 700,000 271,350 -- 35,000 3,500(6)
President, Rittenhouse -- 120,000(5)
Financial Services, Inc. 1997(4) 233,333 -- -- 40,000 1,108(6)
-- 40,000(5)
</TABLE>
- -------------------------
(1) Represents contributions, except for Mr. Hughes, to the account of each
executive officer, under the Company's tax-qualified Employees' Profit
Sharing Plan (including reallocations of forfeitures under that Plan) and
for 1997 and 1998 matching 401(k) contributions under that Plan. For 1998,
the amounts of such profit sharing contributions (including reallocations)
and 401(k) matching contributions were $13,095 and $4,800 for Messrs.
Schwertfeger and Dean; $13,095 and $4,219 for Mr. Amboian; and $13,095 and
$4,800 for Mr. Bedford. The amounts shown for Mr. Bedford also include
$7,157 and $169,635 in 1997 and 1998, respectively, in relocation expense
reimbursements.
(2) 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 vested in a
single installment on January 1, 1999. The participants receive dividends
with respect to all restricted shares. In each case, as of December 31,
1998, all of the restricted shares remained unvested and had a market value
of $1,633,500 for each of Messrs. Schwertfeger and Dean, and $668,250 for
Mr. Amboian, based on the New York Stock Exchange -- Composite Transaction
closing price of $37.125.
(3) Mr. Bedford commenced his employment with the Company on January 2, 1997.
9
<PAGE> 12
(4) Mr. Hughes commenced his employment with the Company on September 2, 1997 at
the time of the Company's acquisition of Rittenhouse Financial Services,
Inc. ("Rittenhouse").
(5) Options to acquire shares of non-voting Class B Common Stock for
Rittenhouse.
(6) Represents matching 401(k) contributions for Mr. Hughes in the 401(k) Plan
for Rittenhouse.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information with respect to grants of stock
options made to the Named Executive Officers in respect of the fiscal year ended
December 31, 1998 pursuant to the Company's 1996 Equity Incentive Award Plan
(the "1996 Plan") and, in the case of Mr. Hughes, the Rittenhouse Financial
Services, Inc. 1997 Equity Incentive Award Plan (the "1997 RFS Plan").
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SHARE) DATE VALUE(1)
---- ---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Timothy R. Schwertfeger................. 84,360(2) 6.6% $35.5625 2/25/08 $750,013
23,199(3) 1.8% 37.5000 1/11/09 217,491
Anthony T. Dean......................... 84,360(2) 6.6% 35.5625 2/25/08 750,013
23,199(3) 1.8% 37.5000 1/11/09 217,491
John P. Amboian......................... 84,360(2) 6.6% 35.5625 2/25/08 750,013
23,199(3) 1.8% 37.5000 1/11/09 217,491
Bruce P. Bedford........................ -- -- -- -- --
Richard D. Hughes....................... 35,000(3) 2.7% 37.50 1/11/09 328,125
40,000(4) 9.4% 81.90 3/15/01 381,200
80,000(5) 18.8% 100.00 3/15/02 45,600
</TABLE>
- -------------------------
(1) For options granted under the 1996 Plan, the value is based on a variation
of the Black-Scholes option pricing model modified specifically for the
valuation of long-term incentive stock awards. The actual value, if any, an
individual may realize will depend on the excess of the market price of the
stock over the exercise or base price on the date the option is exercised.
There is no assurance that the value realized by an executive will be at or
near the value estimated under the Black-Scholes model. The estimated values
under that model are based on subjective assumptions as to interest rates,
stock price volatility and future dividend yield. For options granted under
the 1997 RFS Plan, the value assumes that the value of the underlying shares
increase by 10% per year during the remaining option life. The actual value,
if any, an individual may realize will depend on the excess of the fair
value of the Rittenhouse Class B Common Stock, which is not publicly traded,
over the exercise price on the date the option is exercised.
(2) These options become exercisable with respect to the shares of Class A
Common Stock covered thereby in one installment on February 25, 2001.
(3) These options become exercisable with respect to the shares of Class A
Common Stock covered thereby in one installment on January 11, 2002.
(4) These options are to acquire shares of non-voting Rittenhouse Class B Common
Stock under the 1997 RFS Plan, were granted in January 1999, vest in one
installment on January 1, 2001 and become
10
<PAGE> 13
exercisable with respect to the shares covered thereby on February 1, 2001.
On the date of the grant, the exercise price was approximately 110% of the
fair value of the underlying shares.
(5) These options are to acquire shares of non-voting Rittenhouse Class B Common
Stock under the 1997 RFS Plan, were granted in January 1999, will vest in
one installment on January 1, 2002 and become exercisable with respect to
the shares covered thereby on February 1, 2002. On the date of grant, the
exercise price was approximately 130% of the fair value of the underlying
shares.
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 in the case of Mr. Hughes' options to acquire shares of
Rittenhouse Class B Common Stock granted under the 1997 RFS Plan), and held by
them at December 31, 1998. None of the Named Executive Officers exercised any
stock options during fiscal 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 12/31/98 IN-THE-MONEY OPTIONS
(NUMBER OF SHARES) AT 12/31/98(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Timothy R. Schwertfeger....................... 220,000 429,360 $4,207,500 $2,589,938
Anthony T. Dean............................... 220,000 429,360 4,207,500 2,589,938
John P. Amboian............................... 42,000 225,980 551,250 1,411,956
Bruce P. Bedford.............................. -- -- -- --
Richard D. Hughes............................. -- 40,000 -- 25,000
-- 40,000(2) -- 0(2)
</TABLE>
- -------------------------
(1) Based on the New York Stock Exchange -- Composite Transaction closing price
of $37.125 for the Company's Class A Common Stock on December 31, 1998.
Amounts shown in respect of options to purchase Class A Common Stock reflect
(i) an $18 exercise price for 220,000 exercisable options, a $30 exercise
price for 345,000 unexercisable options and a $35.5625 exercise price for
84,360 unexercisable options for each of Messrs. Schwertfeger and Dean, (ii)
a $24 exercise price for 42,000 exercisable options, a $24 exercise price
for 8,000 unexercisable options, a $25 exercise price for 44,620
unexercisable options, a $30 exercise price for 89,000 unexercisable options
and a $35.5625 exercise price for 84,360 unexercisable options for Mr.
Amboian and (iii) $36.50 for 40,000 unexercisable options for Mr. Hughes.
(2) Options to acquire shares of non-voting Class B Common Stock of Rittenhouse
Financial Services, Inc. The value reflects a fair value of $75.56 per share
at December 31, 1998 and an exercise price of $81.90 per share for such
shares.
11
<PAGE> 14
LONG-TERM INCENTIVE PLAN AWARDS
There were no long-term incentive plan awards (which are defined under
applicable disclosure rules to exclude restricted stock and stock option awards)
made to any of the Named Executive Officers during the fiscal year ended
December 31, 1998.
RETIREMENT PLANS
Each of the Named Executive Officers other than Mr. Hughes 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 (the "Excess
Benefit Plan" described below) 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 $130,000 (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, Dean, Amboian and Bedford
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.
12
<PAGE> 15
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, 1998 were 20, 21, 2 1/2 and 11, respectively. Compensation on which plan
benefits are based includes only base salary and not bonuses, incentive
compensation, or profit-sharing plan contributions. The base salaries for these
four individuals as of December 31, 1998 were $500,000, $500,000, $250,000 and
$250,000, respectively. Mr. Hughes does not qualify to participate in the
Retirement Plan or the Excess Benefit Plan because he is an employee of the
Company's subsidiary, Rittenhouse Financial Services, Inc. Rittenhouse does not
maintain a separate defined benefit retirement plan.
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, 2001, provided 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; 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.
By agreement dated December 27, 1998, the Company and Bedford amended
Bedford's July 16, 1996 employment agreement. The agreement as amended provides
that Bedford will be available to provide consulting services to the Company
effective upon his January 1, 1999 retirement date and continuing through
December 31, 2001. In return for such availability Bedford will receive payments
of $900,000 for 1999, $825,000 for 2000 and $750,000 for 2001. The payments with
respect to 2000 and 2001 are subject to a possible reduction by $250,000 per
year in the event Bedford engages in certain specified business activities. The
amended agreement also sets forth Bedford's participation in various benefit
programs of the Company as a retired employee and provides that the Company make
a one-time payment to Bedford of $50,000 to cover administrative support costs
relating to the consulting agreement and that the Company reimburse Bedford for
certain other transition support services in an amount not to exceed $75,000.
On July 14, 1997 the Company entered into an employment agreement with
Richard Hughes covering his employment by Rittenhouse following its acquisition
by the Company, which occurred on August 31, 1997. The agreement, which was
amended in December 1997 and terminates December 31, 2003, provides for
compensation to Hughes in the form of (i) an annual base salary of $700,000,
(ii) the right to participate in the Company's annual incentive bonus plan for
each year of the contract, (iii) a grant of non-qualified stock
13
<PAGE> 16
options to purchase 40,000 shares of the Company's stock at 120% of the closing
price of the stock with a 10 year term and a 4 year "cliff" vesting schedule
upon consummation of the Rittenhouse acquisition, and (iv) the right to
participate in fringe benefits and other employee benefit plans or arrangements
offered to senior executives of Rittenhouse, as approved by the Company. Under
the terms of the employment agreement, the Company has the right to terminate
Hughes' employment at any time provided that in the event his employment is
terminated by the Company Without Cause, by Hughes for Good Reason, or due to a
Change in Control (each as defined in the agreement), the Company will be
required to pay the present value of Hughes' base salary for the remaining term
of the agreement in a lump sum within ten days of termination and Hughes shall
become fully vested in his accrued benefits under the Rittenhouse profit sharing
and other plans in which he participates.
There are no employment agreements with any of the other Named Executive
Officers.
CERTAIN RELATIONSHIPS
In connection with the August 1997 acquisition by the Company of
Rittenhouse, the Company and Rittenhouse entered into various ongoing agreements
described below with Mr. George W. Connell, the former owner of Rittenhouse, and
with Rittenhouse Trust Company ("RTC"), a trust company and commercial bank
organized under the laws of Pennsylvania, which continues to be owned by Mr.
Connell. Mr. Connell is the owner of 771,300 shares of the Company's Class A
Common Stock, representing 11.3% of the outstanding shares of such class,
according to a Schedule 13G filed by Mr. Connell in March 1999. The terms of all
of the agreements described below were negotiated by the Company at arm's length
in connection with the Rittenhouse acquisition.
The Company entered into an employment agreement with Mr. Connell which
continues until December 31, 2002. The agreement specifies Mr. Connell's
responsibilities with respect to the investment committee of Rittenhouse and
provides for Mr. Connell to receive from Rittenhouse an annual base salary of
$500,000 during the term of the agreement and to participant in such fringe
benefits as are available to senior management employees of Rittenhouse.
The Company and Rittenhouse entered into a Trademark Licensing Agreement
with RTC, pursuant to which Rittenhouse granted to RTC a fully paid up,
non-assignable, exclusive right and license to use certain Rittenhouse
trademarks in connection with RTC's Non-Competing Business in the Covered Area
(in each case as defined in the agreement). The license continues for an
indefinite term, and will terminate upon the earlier of the time at which a
majority of the outstanding capital stock of RTC ceases to be owned by Mr.
Connell or permitted family transferees or the time at which a competitor of the
Company owns any of the outstanding capital stock of RTC, provided that the
agreement may be terminated by Rittenhouse earlier in the event of certain
specified occurrences, including a breach by RTC of its material obligations to
Rittenhouse under the licensing agreement or certain other agreements relating
to the Rittenhouse acquisition. The agreement contains quality standards,
representations and indemnification provisions customary for trademark licensing
agreements. RTC made a one-time payment to Rittenhouse at the time of the
Rittenhouse acquisition in the amount of $500,000 in connection with the
granting of the license.
Rittenhouse and RTC entered into a Support Services Agreement, pursuant to
which Rittenhouse agreed to make various specified services available to RTC, in
accordance with the practices in effect at the time of the Rittenhouse
acquisition, for a period of up to ten years after the acquisition. In
consideration for making
14
<PAGE> 17
such services available, RTC agreed to pay to Rittenhouse a fixed annual fee
equal to $1.25 million during the term of the agreement and to pay to
Rittenhouse an additional fee for the services actually used, at the levels set
forth in the agreement. The fixed fee for the first year was prepaid at the time
of the Rittenhouse acquisition, and the annual fixed fee became payable in
quarterly installments beginning in the Fall of 1998. The Support Services
Agreement contains liability and assignment limitations, indemnification and
confidentiality provisions and termination provisions customary for this type of
agreement. During 1998, RTC paid Rittenhouse a total of approximately $850,000
under the Support Services Agreement.
Rittenhouse and RTC entered into a Sublease Agreement, pursuant to which
Rittenhouse sublet to RTC a portion of its premises in Radnor, Pennsylvania
through November 29, 2002 (subject to any prior termination of the lease for the
premises between Rittenhouse and the landlord thereunder). As rent under the
Sublease, RTC agreed to pay to Rittenhouse its proportionate share (based on the
percentage of the total square footage leased by Rittenhouse that is covered by
the Sublease to RTC) of all rent and related expenses under the lease between
Rittenhouse and the landlord thereunder. The Sublease contains provisions
regarding use and alteration of the sublet space, receipt of services from the
landlord, maintenance of separate insurance, limitations on assignment or
subletting and default and indemnification that are customary for this type of
agreement. During 1998, RTC paid Rittenhouse a total of approximately $180,000
under the Sublease.
15
<PAGE> 18
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 1998, and the Company continued the policy, which it
began in 1996, of strengthening the alignment of employee interests, especially
those of key executives, with the interests of shareholders through the
application of the 1996 Equity Incentive Award Plan and the Executive Officer
Performance Plan. Under these Plans, a substantial portion of the annual bonus
awards that would have been payable under historical programs in the form of
cash were replaced with long-term equity based awards, which for 1998 included
solely options to purchase shares of the Company's Class A Common Stock at the
market value of the stock on the grant date. These Plans are designed to
capitalize on the demonstrated strengths of the Company's longstanding 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 profitability 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.
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. Rittenhouse has had a longstanding
practice of targeting higher base salaries with less emphasis
on annual cash incentive awards as a means to achieving
market competitive total compensation levels.
- Annual incentive awards for the Company's officer-directors
(including the Chief Executive Officer) and the other
executive officers are made under the Executive Officer
Performance Plan and 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 Company's resources in those
areas in which the longer-term rates of growth and return are
the most attractive. Beginning in
16
<PAGE> 19
1999, the Company intends to institute business unit specific
incentive compensation plans within the Company-wide, fixed
percentage of operating income incentive program. These
business unit specific plans will provide for awards over an
annual or multi-year period, based on attainment of goals
specific to the related business unit. A named executive
officer may participate in a business unit incentive plan,
depending on the nature of such officer's responsibilities.
- For 1998, in determining the size of awards made under the
Executive Officer Performance Plan, the Committee applied a
formula which measured Company performance in terms of growth
in operating income over the prior year and in terms of the
excess of operating income over a return on equity threshold.
The award payable to each officer-director under the Plan for
1998 equaled 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 change in the Company's 1998 after-incentive, pre-tax net
operating income over the same income measure for 1997. The
aggregate award for 1998 to the Company's three
officer-directors (including the Chief Executive Officer) was
paid 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, on the relevant grant dates). No incentive award
made to any executive officer of the Company for 1998 under
the Executive Officer Performance Plan exceeded the maximum
formula award applicable under the Executive Officer
Performance Plan as adopted in 1996.
- For 1999, the Committee has recommended and the Board has
approved, subject to shareholder approval, the adoption of
the 1999 Executive Officer Performance Plan, which provides a
formula for awards to Plan Participants for the three year
period beginning in 1999 based on the measurement of Company
performance in terms of growth in operating income over the
prior year and the excess of operating income over a return
on equity threshold. The award payable to the Chief Executive
Officer (CEO) will equal the sum of (i) 1.95% for 1999 (1.80%
for 2000 and 1.65% for 2001) of the Company's pre-incentive,
pre-tax net operating income in excess of 19% (20% for 2000
and 21% for 2001) of average shareholders' equity for the
year and (ii) 7% of the increase (or decrease, to the extent
of the amount calculated under clause (i)) of that year's
after-incentive, pre-tax net operating income over the same
measure for the prior year. The awards payable for 1999, 2000
and 2001 to the officer-director next most senior to the CEO
will be 85% of the award to the CEO; the awards payable to
other officer-directors will be 75% of the CEO's award and
the maximum award payable to each other participant will be
60% of the CEO's award. The award to each participant other
than an officer-director may be reduced by the Committee in
its discretion. The awards to officer-directors will be
payable 70% in cash and 30% in at-the-money stock options
granted pursuant to the Amended and Restated 1996 Equity
Incentive Award Plan.
The Committee believes that Nuveen's profitability-linked compensation
programs have served the Company well and that the current programs, including
the Amended and Restated 1996 Equity Incentive
17
<PAGE> 20
Award Plan and the 1999 Executive Officer Performance Plan being recommended for
shareholder approval, will continue to 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
1999 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. Options granted under the Company's Amended and
Restated 1996 Equity Incentive Award Plan are also intended to qualify for this
exception. 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.
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, as defined to include growth in earnings
and as reflected in the Company's compensation policies, served the Company well
in 1998, a period of major strategic transition. Moreover, the Committee
believes that the 1999 incentive compensation programs, as described above, will
serve the Company well in 1999 and beyond.
As the Company's business continues to evolve, we will periodically 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 operating environment.
W. John Driscoll, Chairman
Willard L. Boyd
Duane R. Kullberg
18
<PAGE> 21
SHAREHOLDER 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 and an internally calculated Peer Group for the five-year
period commencing December 31, 1993 and ending December 31, 1998. In each case,
the chart assumes a $100 investment on December 31, 1993 and that all dividends
are reinvested. The average annual total shareholder return on the Company's
Class A Common Stock for the 5-year period was 11.3%; and for the most recent
3-year period was 18.0%.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
JNC RUSSELL 2000 PEER GROUP 1998 PEER GROUP 1999
--- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Dec-93 100.00 100.00 100.00 100.00
Dec-94 94.00 98.00 83.00 83.00
Dec-95 104.00 126.00 114.00 113.00
Dec-96 115.00 147.00 155.00 156.00
Dec-97 157.00 180.00 246.00 247.00
Dec-98 171.00 175.00 247.00 249.00
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
| DEC-93 | DEC-94 | DEC-95 | DEC-96 | DEC-97 | DEC-98
<S> | <C> | <C> | <C> | <C> | <C> | <C>
- --------------------------------------------------------------------------------------------------------------
JNC | 100 | 94 | 104 | 115 | 157 | 171
- --------------------------------------------------------------------------------------------------------------
Russell 2000 | 100 | 98 | 126 | 147 | 180 | 175
- --------------------------------------------------------------------------------------------------------------
Peer Group 1998 | 100 | 83 | 114 | 155 | 246 | 247
- --------------------------------------------------------------------------------------------------------------
Peer Group 1999 | 100 | 83 | 113 | 156 | 246 | 247
- --------------------------------------------------------------------------------------------------------------
</TABLE>
In 1998, the Company began presenting the total return information of a
Peer Group of publicly-traded investment management firms with at least 5 years
of publicly-traded performance history. The returns of the 1998 Peer Group are
weighted by the market capitalization of each firm at the beginning of each
year. In 1999, the Peer Group has been adjusted to become more representative by
eliminating firms with a market capitalization below 1% of the aggregate peer
group and including firms with a publicly traded record for fewer than 5 years
for each full year in which they were publicly traded. The Company anticipates
that it will utilize the same criteria in the future.
19
<PAGE> 22
The following companies are included in the Peer Groups:
<TABLE>
<CAPTION>
PEER GROUP 1998
---------------
<S> <C>
Alliance Capital Management AC
Atalanta Sosnoff Capital ATL
Bull & Bear Group BNBGA
Eaton Vance EV
Franklin Resources BEN
HD Vest HDVS
Jordan American Holdings JAHI
New England Investment Companies NEW
Phoenix Duff & Phelps PXP
Pilgrim America Capital PFX
PIMCO Advisers PA
Pioneer Group PIOG
SEI Investments SEIC
T. Rowe Price & Associates TROW
United Asset Management UAM
PEER GROUP 1999
- -------------------------------------------
Affiliated Managers Group AMG
Alliance Capital Management AC
Eaton Vance EV
Franklin Resources BEN
Nvest, LP NEW
Phoenix Investment Counsel PXP
PIMCO Advisers PA
Pioneer Group PIOG
SEI Investments SEIC
T. Rowe Price Associates TROW
United Asset Management UAM
</TABLE>
20
<PAGE> 23
THE NUVEEN INCENTIVE COMPENSATION PLANS
GENERAL.
The Compensation Committee has recommended, and the Board of Directors has
approved, subject to shareholder approval, the Amended and Restated 1996 Equity
Incentive Award Plan (the "Restated Equity Plan") and 1999 Executive Officer
Performance Plan (the "Performance Plan"). The principal purpose of the Restated
Equity Plan is to provide equity based incentive awards to enable the Company to
attract and retain highly qualified employees and to strengthen the mutuality of
interests between plan participants and the Company's shareholders. The
principal purpose of the Performance Plan is to continue and strengthen the link
between incentives payable to the Company's senior officers and the
profitability and the growth in profitability of the Company and its
subsidiaries. The Company has maintained for many years compensation and
incentive programs that establish a direct relationship between employee
compensation and Company results and that provide incentives throughout the
Company by sharing profits with employees and the plans submitted to
shareholders hereunder continue this philosophy.
Under Section 162(m) of the Internal Revenue Code, publicly traded
companies and their consolidated subsidiaries cannot deduct compensation in
excess of $1 million paid in any year to any of the named executive officers,
unless an exception to the limitations of Section 162(m) applies, including the
exception for compensation that is "performance based." To be considered
performance based, a plan must, among other things, be approved by the publicly
traded Company's shareholders. The Restated Equity Plan and the Performance Plan
are being submitted to shareholders for approval pursuant to Section 162(m) in
an effort to ensure that compensation payable by the Company under such plans
are fully deductible by the Company.
Each of the Performance Plan and the Restated Equity Plan will be
administered by a Committee of the Board of Directors consisting of at least two
directors. The Board has designated its Compensation Committee to administer the
Restated Equity Plan and the Performance Plan. Each member of the Compensation
Committee is currently an "outside director" within the meaning of Section
162(m) of the Code and the regulations thereunder. The Compensation Committee is
authorized to establish rules and regulations for administration of the
Performance Plan and the Restated Equity Plan, to make awards under those Plans,
and to make determinations and interpretations under those Plans.
A. APPROVAL OF THE AMENDED AND RESTATED 1996 EQUITY INCENTIVE AWARD PLAN
The following summary of the Restated Equity Plan is qualified by reference
to the copy of the Plan attached as Exhibit A hereto.
PRINCIPAL TERMS OF THE PLAN.
Shares Authorized. The 1996 Equity Incentive Award Plan was originally
approved by shareholders in 1996 with an aggregate of 3,800,000 shares of Class
A Common Stock authorized for awards under the plan, including up to 950,000
shares of Class A Common Stock authorized for issuance as restricted stock under
the plan. To date, awards totalling approximately 3,750,000 shares have been
made, including awards of 255,000 shares of restricted stock. As amended, the
Restated Equity Plan, which became effective March 19, 1999, authorizes the
award under the plan of 3,500,000 additional shares of Class A Common Stock and
broadens the eligibility to include employees generally and non-employee
directors. The Restricted Equity
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<PAGE> 24
Plan does not increase the number of shares authorized for issuance as
restricted stock above the 950,000 shares originally authorized, such that there
remain upto 695,000 shares authorized for awards of restricted stock. The shares
reserved for Awards (which are subject to adjustments for stock dividends, stock
splits, extraordinary distributions of cash or property, and certain changes in
capitalization) are expected to be sufficient for the Company's equity incentive
award needs for three years.
Participants. Employees of the Company and its subsidiaries and
non-employee directors of the Company are eligible to participate in the Equity
Plan upon approval by the Compensation Committee. It is anticipated that
approximately 200 persons will be eligible to participate initially. Subject to
the terms of the Restated Equity Plan, the Compensation Committee has authority
to determine the nature, size, terms and conditions of, and all other matters
relating to awards, to prescribe award agreements, and to interpret the restated
plan. Awards under the Restated Equity Plan may be in the form of grants of
restricted shares of Class A Common Stock and options to purchase Class A Common
Stock. As amended, the plan also broadens eligibility to employees generally and
to non-employee directors of the Company.
Stock Options. Options awarded under the Restated Equity Plan will be
granted in the form of "non-qualified stock options." Options entitle a
participant to purchase shares of Class A Common Stock at a price per share
established at the award date, which may not be less than the fair market value
of such stock on the award date, and may be exercised not later than ten (10)
years from the award date. Stock options, whether or not currently exercisable,
may not be sold, transferred, exchanged or encumbered except in limited
circumstances specified in the Restated Equity Plan, unless otherwise provided
by the Compensation Committee. Upon the termination of employment of a
participant because of death, disability or retirement, by the Company without
Cause or, by the participant for Constructive Termination, except as otherwise
specified by the Committee at the time of grant, any outstanding stock options
with respect to the 1998 and prior plan years, that have not yet become
exercisable will become exercisable, and all such outstanding options will, in
the case of options that are In Lieu Awards, as defined below, remain
exercisable for the remainder of their term; provided, however, that such stock
options that are In Lieu Awards awarded pursuant to the Restated Equity Plan
with respect to plan year 1999 and thereafter become exercisable and will remain
exercisable for not more than five years after termination of employment for the
reasons set forth above. In the case of options that are not In Lieu Awards,
such options become exercisable and will remain exercisable for not more than
three years after termination of employment because of death, disability or
retirement and not more than 60 days after the other reasons for termination
described above. Except as otherwise specified by the Committee at the time of
grant, in the event of termination of employment for any other reason, stock
options that have not yet become exercisable shall be forfeited, and all other
outstanding stock options shall remain exercisable for a period of 60 days
following the date of termination (but not after the expiration date of the
option). Notwithstanding any other provision of the Restated Equity Plan, in the
event of a Change in Control of the Company, (as defined in the Restated Equity
Plan), all unexercised options granted thereunder shall become immediately and
fully exercisable and any remaining restrictions on transferability of shares
acquired pursuant to option exercise shall immediately lapse. The maximum number
of shares that may be subject to an option grant to any one individual annually
under the Restated Equity Plan is 600,000. Once granted, options may not be
repriced or replaced by new options with lower exercise prices.
Restricted Stock and Dividend Equivalents. Restricted stock Awards consist
of shares of Class A Common Stock that are awarded to a participant, subject to
forfeiture if the conditions established by the Committee are not met. Such
conditions may include, but are not limited to, continued employment for a
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<PAGE> 25
specified period and/or the achievement of specified performance goals. A
participant may also elect to defer receipt of restricted stock until a time
later than when the Awards vest and would otherwise be deliverable.
Before the vesting of shares of restricted stock that are not deferred, a
participant has voting and dividend rights with respect to his or her restricted
shares, but, unless otherwise specified by the Committee, cannot sell, transfer
(other than by will or by the laws of descent and distribution), exchange or
encumber the restricted shares. Before delivery of shares of restricted stock
that are deferred, a participant has no rights of a shareholder with respect
thereto, but will receive payment of compensation equal to the dividends that
would otherwise be paid thereon ("dividend equivalents") on a current or
deferred basis as elected by the participant. Any unvested restricted shares
will vest if a participant's employment with the Company is terminated because
of death, disability or retirement, by the Company for any reason other than
Cause, by the participant for Constructive Termination, as all those terms are
defined in the Restated Equity Plan. Notwithstanding any other provision of the
Restated Equity Plan, in the event of a Change in Control of the Company (as
defined in the Restated Equity Plan), all shares of restricted stock that have
not yet vested shall become immediately and fully vested and any remaining
restrictions on transferability shall immediately lapse. The maximum number of
shares with respect to which any are Participant may be granted Awards in any
one calendar year shall be 120,000 for Restricted Stock.
Performance Goals. The Committee may make Awards pursuant to, or in lieu of
a cash award of equal "fair value" under, the 1999 Executive Officer Performance
Plan (which is described in detail below) or the Company's annual incentive
award program. Such Awards will be designated "In Lieu Awards." In addition, if
the Committee so determines at the time of grant, Awards may be made subject to
the achievement of one or more performance goals based upon attainment of one or
any combination of the following: specified levels of earnings per share from
continuing operations, operating income, revenues, return on operating assets,
return on equity, shareholder return (measured in terms of stock price
appreciation) and/or total shareholder return (measured in terms of stock price
appreciation and/or dividends), achievement of cost control, or stock price, in
each case of the Company or such subsidiary, division or department of the
Company or subsidiary for or within which the participant is primarily employed.
The performance goals also may be based upon attaining specified levels of
Company performance under one or more of the measures described above relative
to the performance of other corporations.
AWARDS UNDER THE PLAN
As of the date hereof, no Awards have been made under the Restated Equity
Plan. While the Restated Equity Plan authorizes the issuance of both stock
options and shares of restricted stock, the Company's current practice is to use
plan shares to grant stock options.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.
The Company has been advised that, based on the present provisions of the
Internal Revenue Code (the "Code") and regulations promulgated thereunder, the
federal income tax consequences of the grant, vesting and exercise of Awards
under the Restated Equity Plan and the subsequent disposition of stock acquired
thereby will be as described below. The following discussion addresses only the
general federal income tax consequences of Awards. Participants in the Restated
Equity Plan are urged to consult their own tax advisers regarding the impact of
federal, state and local taxes, the federal alternative minimum tax, and
securities laws restrictions, given their individual situations.
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<PAGE> 26
Non-qualified Stock Options. Only non-qualified stock options may be
granted under the Restated Equity Plan. Generally, an optionee will not
recognize any taxable income, and the Company will not be allowed a tax
deduction, upon the granting of a non-qualified stock option. Upon the exercise
of a non-qualified stock option, the optionee realizes ordinary income in an
amount equal to the excess, if any, of the fair market value of the shares
acquired at the time the option is exercised over the exercise price for such
shares. At that time, the Company will be allowed a tax deduction equal to the
amount of ordinary taxable income recognized by the optionee, subject to the
limitations described below.
When an optionee exercises a non-qualified stock option by paying the
exercise price solely in cash, the basis in the shares acquired is equal to the
fair market value of the shares on the date ordinary income is recognized, and
the holding period for such shares begins on the day after the shares are
received. When an optionee exercises a non-qualified stock option by exchanging
previously acquired shares of Class A Common Stock of the Company held as
capital assets in partial or full payment of the exercise price, shares of Class
A Common Stock of the Company received by the optionee equal in number to the
previously acquired shares exchanged therefor will be received free of tax and
will have the same basis and holding period as such previously acquired shares.
The optionee will recognize ordinary taxable income equal to the fair market
value of any additional shares received by the optionee, less the amount of any
cash paid by the optionee. The optionee will have a basis in such additional
shares equal to their fair market value on the date ordinary income is
recognized and the holding period of such shares will commence on the day after
they are transferred to the optionee.
Upon subsequent disposition of shares acquired upon exercise of a
non-qualified stock option, the difference between the amount realized on the
sale and the basis in the shares is treated as long-term or short-term capital
gain or loss, depending on the holding period for the shares. Long-term capital
gain treatment is applicable if the shares are held for more than one year. The
subsequent disposition of shares acquired by exercise of a non-qualified stock
option will not result in any additional tax consequences to the Company.
Restricted Stock. Generally, a participant will not recognize any taxable
income, and the Company will not be allowed a tax deduction, upon the grant of
restricted stock. Upon the lapsing of restrictions on restricted stock, or, if
the restricted stock is deferred pursuant to the provisions of the Restated
Equity Plan, upon the delivery of the restricted stock at the expiration of the
deferral period, the holder will recognize ordinary income equal to the fair
market value of the shares on the date of such lapse or delivery. Alternatively,
if the restricted stock is not deferred, the participant may file an election
with the Internal Revenue Service, within 30 days after the grant of restricted
stock, to recognize ordinary income at the time of the grant, in which event the
amount of such ordinary income will be equal to the fair market value of the
shares on the date of grant without giving effect to the restrictions on
transfer. Any dividends or dividend equivalents paid on shares of restricted
stock prior to the date on which the participant recognizes taxable compensation
with respect to the shares will be taxable to the participant as additional
compensation rather than as ordinary dividends. In any event, at the time the
participant recognizes income with respect to the restricted stock, the Company
is entitled to a deduction in an equal amount, subject to the limitations
described below.
Limitations on Company's Ability to Take Deductions. The Company must
satisfy applicable federal tax reporting requirements with respect to stock
awards under the Restated Equity Plan in order to be entitled to the deductions
described above. In addition, Section 162(m) of the Code provides that
compensation of any individual who is the Chief Executive Officer or any of the
other named executive officers of the Company may not be deducted to the extent
such compensation exceeds $1 million in any taxable year, unless certain
24
<PAGE> 27
exceptions apply, including an exception for compensation which qualifies as
"performance-based" under Section 162(m). Awards granted under the Restated
Equity Plan should be able to qualify as performance-based for purposes of
Section 162(m) if they are either options granted with an exercise price not
less than fair market value on the date of grant, or restricted stock that vests
upon the achievement of objective performance goals of the type described above.
The Restated Equity Plan permits the making of awards that would not qualify as
performance-based compensation.
If Awards under the Restated Equity Plan are accelerated in connection with
a Change in Control of the Company, all or a portion of the value of such Awards
may constitute "excess parachute payments." The Company would not be permitted
to deduct excess parachute payments, and the recipient of such a payment would
be subject to a 20 percent federal excise tax. Furthermore, excess parachute
payments to individuals covered by Section 162(m) of the Code would reduce the
$1 million limitation on deduction of their compensation by an equal amount, and
thus could result in other compensation to such individuals being nondeductible
by the Company.
Amendment. The Restated Equity Plan may be terminated, suspended, amended
or modified by the Board of Directors with the consent of a majority of the
Class B Directors, provided that no termination, suspension, amendment or
modification (i) may be made without shareholder approval to the extent such
approval is required by federal or state law, regulation or rule of any stock
exchange or automated quotation system on which the Class A Common Stock is
listed or quoted, or (ii) may, without the consent of the participant affected,
impair the rights of a participant under the Restated Equity Plan.
VOTE REQUIRED.
Approval of the Restated Equity Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote on the Restated Equity Plan. A
holder of Class A Common Stock may, with respect to the approval of the Restated
Equity Plan, (i) vote "FOR" such approval, (ii) vote "AGAINST" such approval or
(iii) "ABSTAIN" from voting on the Restated Equity Plan. A vote to abstain on
this matter will have the effect of a vote against approval of the Restated
Equity Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND
RESTATED 1996 EQUITY INCENTIVE AWARD PLAN. UNLESS OTHERWISE INSTRUCTED, THE
PROXY HOLDERS WILL VOTE THE PROXIES RECEIVED BY THEM FOR APPROVAL OF THE
RESTATED EQUITY PLAN.
B. APPROVAL OF THE 1999 EXECUTIVE OFFICER PERFORMANCE PLAN
PRINCIPAL TERMS OF THE PLAN.
The Performance Plan provides for annual awards (the "Incentive Awards")
which measure Company performance in terms of both the growth of operating
income over the prior year and the excess of operating income over a return on
average equity threshold. The Performance Plan provides that the Incentive Award
for the Chief Executive Officer ("CEO") for the 1999 Plan Year will equal the
sum of (i) 1.95% of Pre-Bonus, Pre-Tax Net Operating Income in excess of the
amount that represents a 19% return on average equity capital and (ii) 7% of the
increase (or decrease to the extent of the amount calculated under clause (i))
in Pre-Tax, After Bonus Net Operating Income; the CEO's Incentive Award for the
2000 Plan Year will equal
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<PAGE> 28
the sum of (i) 1.80% of Pre-Bonus, Pre-Tax Net Operating Income in excess of the
amount that represents a 20% return on average equity capital and (ii) 7% of the
increase (or decrease to the extent of the amount calculated under clause (i))
in Pre-Tax After Bonus Net Operating Income; and the CEO's Incentive Award for
the 2001 Plan Year will equal the sum of (i) 1.65% of the Pre-Bonus, Pre-Tax Net
Operating Income in excess of the amount that represents a 21% return on average
equity capital and (ii) 7% of the increase (or decrease to the extent of the
amount calculated under clause (i)) in Pre-Tax, After Bonus, Net Operating
Income. The Performance Plan further provides that the Incentive Award for the
Company's next most senior officer-director (after the CEO) shall for each Plan
Year be 85% of the CEO's Incentive Award for such Plan Year. The Incentive Award
for any other officer- director shall for each Plan Year be 75% of the CEO's
Incentive Award for such Plan Year; Incentive Awards for officer-directors under
the Performance Plan are payable 70% in cash and 30% in at-the-money In Lieu
Awards to purchase Class A Common Shares pursuant to the Restated Equity Plan,
subject to the availability of equity awards. The Incentive Award for all other
Plan Participants for each Plan Year shall be a maximum of 60% of the CEO's
Incentive Award for such Plan Year. The Incentive Award for each Participant
other than an officer-director may be reduced in the discretion of the
Compensation Committee. Shortly after the close of each fiscal year, the
Compensation Committee will certify whether the preestablished formula for the
awards been satisfied and, if so, determine the awards payable under the
Performance Plan. The number of persons eligible to participate in the
Performance Plan is expected to initially be 12.
To the extent an award for a Participant other than an officer-director is
reduced as discussed above, the excess will not be available to the other
executives participating in the Performance Plan, but will remain available for
distribution to participants in the Company-wide, annual incentive award plan.
Generally, a participant must be employed by the Company or a subsidiary of the
Company on the last day of the applicable plan year to be entitled to receive an
award under the Performance Plan for the year. However, if a participant's
employment is terminated as a result of death, disability or retirement, by the
Company or a subsidiary without Cause or, by the Participant for Constructive
Termination (as those terms are defined in the Performance Plan), a pro rata
award may in the discretion of the Committee be payable for the year of
termination.
Each participant may have the right to defer receipt of all or a part of
any cash payment due with respect to an award under the Performance Plan, in
accordance with the terms of the Company's Deferred Compensation Plan.
AWARDS UNDER THE PLAN
The annual Incentive Awards under the Performance Plan for services to be
rendered in each of the years 1999 through 2001 are not determinable since they
will be dependent on 1999 through 2001 annual operating results. If the
compensation award formula for each of the Plan Years 1999 through 2001 had
applied to the 1998 and 1997 Plan Years, the Incentive Awards that would have
been paid to Messrs. Schwertfeger, Dean and Amboian for 1997 and 1998 are set
forth in the table below. The table shows for each individual and each "pro
forma" Plan Year, a range of cash incentive compensation and option shares that
would have been awarded under the Performance Plan for each such year. Under the
Performance Plan the formula changes each year from 1999 through 2001, and the
low end of the range represents application of the 2001 formula, and the high
end of the range represents application of the 1999 formula. Option share
amounts are calculated to reflect the 70% cash/30% option award split for awards
to officer-directors under the Performance Plan, and
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<PAGE> 29
are calculated based on the actual value per option share award used by the
Company in granting options pursuant to the 1998 and 1997 annual incentive award
programs.
26.1
<PAGE> 30
PLAN BENEFITS IF 1999 PERFORMANCE PLAN
HAD BEEN IN EFFECT FOR 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
---------------------------- ----------------------------
CASH OPTION CASH OPTION
NAME AWARD($) AWARD (SHARES) AWARD($) AWARD (SHARES)
---- -------- -------------- -------- --------------
<S> <C> <C> <C> <C>
Timothy R. Schwertfeger
Chairman and Chief Executive
Officer............................... 1,957-2,265 89-104 1,245-1,522 64-78
Anthony T. Dean
President and Chief Operating
Officer............................... 1,663-1,925 76-88 1,059-1,294 54-66
John P. Amboian
Executive Vice President and Chief
Financial Officer..................... 1,468-1,699 67-78 934-1,141 48-58
</TABLE>
The awards that would have been made for the years 1998 and 1997 to the
other executive officers who would have participated in the Performance Plan are
not determinable because the amounts of such awards are reduced at the
discretion of the Compensation Committee. Similarly, because of the Compensation
Committee's authority to reduce bonus amounts payable to such other executive
officers, the amount which would have been paid to all executive officers as a
group under the Performance Plan is not determinable.
Amendment. The Performance Plan may be amended or terminated by a majority
vote of the Board of Directors, provided that no amendment or termination may
have the effect of increasing the award that would otherwise be payable to a
participant for any plan year that begins before such amendment or termination
is adopted by the Board of Directors.
VOTE REQUIRED.
Approval of the Performance Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote on the Performance Plan. A
holder of Class A Common Stock may, with respect to the approval of the
Performance Plan, (i) vote "FOR" such approval, (ii) vote "AGAINST" such
approval or (iii) "ABSTAIN" from voting on the Performance Plan. A vote to
abstain on this matter will have the effect of a vote against approval of the
Performance Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 EXECUTIVE
OFFICER PERFORMANCE PLAN. UNLESS OTHERWISE INSTRUCTED, THE PROXY HOLDERS WILL
VOTE THE PROXIES RECEIVED BY THEM FOR APPROVAL OF THE EXECUTIVE OFFICER
PERFORMANCE PLAN.
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SELECTION OF AUDITORS
The independent certified public accounting firm of KPMG 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 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 LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
PROPOSALS BY SHAREHOLDERS FOR 2000 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 2000
annual meeting of shareholders must be received by the Company by November 29,
1999 in order to be considered for inclusion in the Company's 2000 Annual
Meeting Proxy Statement and form of proxy to be mailed in March 2000.
Notice of any proposal to be presented by any shareholder at any meeting of
shareholders, as set forth in the By-laws of the Company, shall be given to the
Secretary of the Company not less than 60 (March 8, 2000) nor more than 90
(February 6, 2000) days prior to the date of the meeting: provided however, that
if the date of the meeting is first publicly announced or disclosed less than 70
days prior to the date of the meeting, such notice shall be given not more than
ten days after such date is first so announced or disclosed. Any shareholder who
gives notice of any such proposal shall deliver therewith the text of the
proposal to be presented and a brief written statement of the reasons why such
shareholder favors the proposal and setting forth shareholder's name and
address, the number and class of all shares beneficially owned and any material
interest of such shareholder in the proposal. The person presiding at the
meeting shall determine whether such notice has been duly given and shall direct
that proposal not to be considered if such notice has not been duly given.
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 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 Alan G. Berkshire,
Corporate Secretary, The John Nuveen Company, 333 West Wacker Drive, Chicago,
Illinois 60606.
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<PAGE> 32
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
judgment 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.
ALAN G. BERKSHIRE
Secretary
29
<PAGE> 33
EXHIBIT A
AMENDED AND RESTATED 1996 EQUITY INCENTIVE AWARD PLAN
The John Nuveen Company hereby establishes the Amended and Restated 1996
Equity Incentive Award Plan for the benefit of its eligible Participants (as
hereinafter defined) for the purposes hereinafter set forth.
I. DEFINITIONS
(a) "Award" shall mean an award of Non-Qualified Stock Options, Restricted
Stock, or any combination thereof.
(b) "Beneficiary" shall mean (i) in the event of the Disability or
incompetence of a Participant, the person or persons who shall have acquired on
behalf of such Participant by legal proceeding or otherwise the right to receive
the benefits specified under this Plan, or (ii) in the event of a Participant's
death, the person, persons, trust or trusts which have been designated by such
Participant in his or her most recent written beneficiary designation filed with
the Committee to receive the benefits specified under this Plan, or, if there is
no designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "Board of Directors" shall mean the Board of Directors of the Company.
(d) "Bonus Committee" shall mean the senior executive officers of the
Company selected by the Board of Directors to administer the Company's Annual
Incentive Award Plan.
(e) "Cause" shall have the meaning specified by the Committee in connection
with the grant of any Award; provided, that if the Committee does not so
specify, "Cause" shall mean (i) the willful engaging by the Participant in
conduct which the Participant knows, or has substantial reason to believe, is
illegal to the extent of a felony violation (or the equivalent seriousness under
laws other than those of the United States) and which has effects on the Company
or the Participant materially injurious to the Company; (ii) any act or acts of
serious dishonesty or gross misconduct which result in material damage to the
Company or its business or reputation or which the Board of Directors reasonably
determines do materially and adversely affect the value, reliability or
performance of the Participant to the Company; (iii) the willful and continued
failure by the Participant to perform his or her duties to the Company (which
may include any sustained and unexcused absence of the Participant from the
performance of such duties, which absence has not been certified in writing as
due to physical or mental illness or Disability), after a written demand for
performance has been delivered to the Participant by the Board of Directors
identifying the manner in which the Participant has failed to substantially
perform his or her duties. For purposes of the proviso of the preceding
sentence: (i) no act or failure to act on the Participant's part shall be
considered "willful" unless done, or omitted to be done, in bad faith and
without reasonable belief that such action or omission was in, or not opposed
to, the best interests of the Company; (ii) any act or failure to act by the
Participant based upon authority given pursuant to a resolution duly adopted by
the Board of Directors of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, in
good faith and in the best interests of the Company; and (iii) notwithstanding
the foregoing, the Participant shall not be deemed to have been terminated with
Cause unless and until there shall have been delivered to the Participant a copy
of a resolution duly adopted by the affirmative vote of a majority of the entire
Board of Directors of the Company
A-1
<PAGE> 34
at a meeting of the Board called and held after such reasonable notice to the
Participant and at which the Participant has had an opportunity, together with
his or her other counsel, to be heard before such Board, finding that in the
good faith opinion of such Board, the Participant was guilty of the conduct set
forth above and specifying the particulars thereof in detail.
(f) "Change in Control" shall mean any of the following:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of the Company where such acquisition causes such Person
to own 20% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not be deemed to result in a Change in Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a transaction
that complies with clauses (A), (B) and (C) of subsection (iii) below; and
provided, further, that if any Person's beneficial ownership of the
Outstanding Company Voting Securities reaches or exceeds 20% as a result of
a transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities
of the Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or more of the Outstanding
Company Voting Securities; or
(ii) individuals who, as of the effective date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) The approval by the shareholders of the Company of (x) a
reorganization, merger or consolidation or sale, or other disposition of
all or substantially all of the assets of the Company or (y) the
acquisition of assets or stock of another corporation in exchange for
voting securities of the Company (each of (x) and (y), a "Business
Combination") or, if consummation of such Business Combination is subject,
at the time of such approval by shareholders, to the consent of any
government or governmental agency, the obtaining of such consent (either
explicitly or implicitly by consummation); excluding, however, such a
Business Combination pursuant to which (A) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation
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that as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, (B) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, (except to the extent that such ownership existed prior to the
Business Combination) an amount of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation representing the greater of (1) 20% thereof
or (2) a percentage thereof equal to or greater than the percentage thereof
held after such transaction by the persons who were the owners of the
Company's Class B stock prior to such transaction; and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, unless a majority of the Incumbent Board
determines otherwise, no Change in Control shall be deemed to have occurred with
respect to a particular Participant if the Change in Control results from
actions or events in which such Participant is a participant in a capacity other
than solely as an officer, employee or director of the Company.
(g) "Class A Common Stock" shall mean the Class A Common Stock of the
Company, par value $.01 per share.
(h) "Class B Common Stock" shall mean the Class B Common Stock of the
Company, par value $.01 per share.
(i) "Class B Directors" shall mean those members of the Board of Directors
of the Company that have been nominated and elected by the holders of the Class
B Common Stock in accordance with the provisions of the Company's certificate of
incorporation.
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(k) "Committee" shall mean a committee of the Board of Directors, the
members of which are selected by and serve at the pleasure of the Board of
Directors; provided, however, that the Committee shall at all times consist of
at least two directors. The Committee shall initially be the Compensation
Committee of the Board of Directors.
(l) "Common Stock" shall mean the Class A Common Stock and the Class B
Common Stock.
(m) "Company" shall mean The John Nuveen Company, a Delaware corporation,
and its successors.
(n) "Constructive Termination" shall have the meaning specified by the
Committee in connection with the grant of any Award; provided, that if the
Committee does not so specify, "Constructive Termination" shall mean any of the
following, without the written consent of the Participant: (i) a substantial
adverse change in the Participant's position, authority, responsibilities or
titles; (ii) a requirement that the Participant retire before reaching age 65;
or (iii) a material reduction in the Participant's base salary, incentive
compensation
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opportunities, or other employee benefits; or (iv) in the case of an
officer/director, a requirement that the Participant relocate to an office or
location other than that at which he is based at the grant date of an Award. For
purposes of the proviso of the preceding sentence, a Participant shall not be
deemed to have terminated his or her employment as a result of Constructive
Termination unless he or she gives notice within 90 days after an event
described in such proviso and the Company has not cured the condition within 60
days of its receipt of such notice.
(o) "Deferred Dividend Equivalents" means Dividend Equivalents, the
delivery of which is deferred pursuant to Section 3.3(a), together with the
interest thereon specified in Section 3.3(c).
(p) "Deferred Restricted Stock" means Restricted Stock, the delivery of
which is deferred pursuant to Section 3.3(a).
(q) "Disability" shall mean the inability of a Participant to perform the
services normally rendered to his or her Employer due to a physical or mental
impairment that can be expected to be of either permanent or indefinite
duration, as determined by the Committee, and which results in the Participant's
inability to perform his or her normal duties to the Employer.
(r) "Dividend Equivalent" shall mean a right, provided automatically in
connection with an Award of Deferred Restricted Stock, to receive on the payment
date for any dividend on the Class A Common Stock cash compensation from the
Company equal to the dividend that would have been paid on such shares of
Restricted Stock (or the Fair Market Value of such dividend, if such dividend
would not have been paid in cash), if such shares had been issued and
outstanding, fully vested and held by the Participant on the record date for
payment of such dividend; provided, that if such dividend would not have been
paid in cash, the Dividend Equivalent with respect thereto shall not be paid
unless and until certificates evidencing the Deferred Restricted Stock with
respect to which it is paid are issued to the Participant (at which time such
Dividend Equivalent shall be paid together with interest thereon at the Prime
Rate from the date such dividend would have been payable until the payment date
for such Dividend Equivalent); and provided, further, that such payment of all
Dividend Equivalents may also be deferred pursuant to the deferral election with
respect to such Restricted Stock. Unless specifically provided otherwise, the
term "Dividend Equivalents" includes (but is not limited to) Deferred Dividend
Equivalents.
(s) "Effective Date" of an Award shall mean the date of the grant as
specified by the Committee.
(t) "Employer" shall mean the Company with respect to its employees and
each Nuveen Subsidiary with respect to its employees.
(u) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(v) "Exercise Price" shall mean the price at which each share of Class A
Common Stock covered by a Non-Qualified Stock Option may be purchased.
(w) "Fair Market Value" of a share of Class A Common Stock shall mean the
closing price of the Class A Common Stock on the New York Stock Exchange as
reported on the Composite Tape and published in The Wall Street Journal, or, if
there is no trading of the Class A Common Stock on the date in question, then
the closing price of the Class A Common Stock, as so reported and published, on
the next preceding date on which there was trading in the Class A Common Stock.
"Fair Market Value" of other property shall be determined by the Committee.
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(x) "Non-Qualified Stock Option" or "Option" shall mean a right to purchase
a specified number of shares of Class A Common Stock at a specified price, which
is not intended to comply with the terms and conditions for a tax-qualified
stock option as set forth in Section 422 of the Code, as such section may be in
effect from time to time.
(y) "Nuveen Subsidiary" shall mean any corporation or other entity, of
which 50% or more of the normal voting power for the election of directors or
other managers is owned, directly or indirectly, by the Company.
(z) "Participant" shall mean an employee of the Company or a Nuveen
Subsidiary or a non-employee director of the Company who has been granted an
Award under the Plan.
(aa) "Performance Goals" shall mean performance goals established by the
Committee prior to the grant of an Award based on the attainment of one or any
combination of the following: specified levels of earnings per share from
continuing operations, operating income, revenues, return on operating assets,
return on equity, shareholder return (measured in terms of stock price
appreciation) and/or total shareholder return (measured in terms of stock price
appreciation and dividends), achievement of cost control, or stock price, in
each case of the Company or a Nuveen Subsidiary, or a division or department of
the Company or a Nuveen Subsidiary for or within which the Participant is
primarily employed, and that are intended to qualify under Section 162(m) of the
Internal Revenue Code. Such Performance Goals also may be based upon attaining
specified levels of Company performance under one or more of the measures
described above relative to the performance of other corporations. Such
Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m).
(bb) "Plan" shall mean this Nuveen Amended & Restated 1996 Equity Incentive
Award Plan.
(cc) "Prime Rate" shall mean the prime rate of interest as reported by The
First National Bank of Chicago or any successor thereto, or a comparable bank
selected by the Committee.
(dd) "Restricted Stock" shall mean an award of shares of Class A Common
Stock subject to restrictions on transferability, a risk of forfeiture, and
certain other terms and conditions under the Plan or specified by the Committee.
The restrictions on and risk of forfeiture of Restricted Stock generally will
expire on a specified date, upon the occurrence of an event and/or on an
accelerated basis under certain circumstances specified in the Plan or an
agreement relating to the Restricted Stock. Unless specifically provided
otherwise, the term "Restricted Stock" includes (but is not limited to) Deferred
Restricted Stock.
(ee) "Retirement" shall mean the retirement of a Participant from the
employment of the Company or a Nuveen Subsidiary at (i) such Participant's
normal retirement date upon reaching age 65, or (ii) such Participant's early
retirement either (A) upon having reached that age, which, when added to his or
her years of continuous service (as such term is defined under the Nuveen
Employees' Retirement Plan or any successor thereto) is equal to or greater than
90, or (B) with the approval of the Committee.
(ff) "Section 162(m)" shall mean Section 162(m) of the Code and the
Treasury Regulations thereunder.
(gg) "Termination of Employment" shall mean a cessation of the
employee-employer relationship between a Participant and an Employer (other than
by reason of transfer of the employee to another Employer), or the consummation
of a transaction whereby a Participant's Employer (other than the
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Company) ceases to be a Nuveen Subsidiary (such consummation, a "Disaffiliation
Transaction"). The employment of a Participant who is on an approved leave of
absence in excess of two years shall be considered terminated as of the
commencement of such leave for all purposes of the Plan.
II. THE PLAN
2.1 Purposes.
The purposes of the plan are to enable the Company and Nuveen Subsidiaries
to attract and retain exceptionally qualified employees (and non-employee
directors) upon whom the sustained growth and profitability of the Company and
Nuveen Subsidiaries will depend in large measure, to provide added incentive for
such individuals to enhance the value of the Company for the benefit of its
stockholders, and to strengthen the mutuality of interests between Participants
and the Company's stockholders by providing equity-based incentive awards. The
Plan is intended to achieve these purposes through the award of Non-Qualified
Stock Options and Restricted Stock.
2.2 Administration.
The Plan shall be administered by the Committee. Any action of the
Committee with respect to the administration of the Plan shall be taken pursuant
to a majority vote or the written consent of a majority of its members. The
Committee may (i) delegate to any one or more of the members thereof or to an
officer of the Company any of its authority with respect to the Plan, other than
any such delegation that would cause Awards or other transactions under the Plan
to cease to be exempt from Section 16(b) of the Exchange Act or to cease to
quality as "performance-based compensation" under Section 162(m) of the Code,
and (ii) authorize any one or more of the members thereof or any officer of the
Company to execute and deliver documents on behalf of the Committee.
Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan, to define the terms used herein,
to prescribe, amend and rescind rules and regulations relating to administration
of the Plan and to make all other determinations necessary or advisable for the
administration of the Plan. The determinations of the Committee on the foregoing
matters shall be conclusive. The duties of the Committee shall include, but
shall not be limited to, selecting individuals for participation in the Plan,
determining the types, sizes, terms and provisions of Awards (which need not be
identical), making disbursements and settlements of Awards, creating trusts,
determining whether to defer or accelerate the vesting of, or the lapsing of
restrictions or risk of forfeiture with respect to, Non-Qualified Stock Options,
Restricted Stock, construing the provisions of the Plan, modifying the terms of
any Award, and authorizing the exchange or replacement of Awards; provided,
however, that no such modification, exchange or substitution shall be to the
detriment of a Participant with respect to any Award previously granted, and
provided, further, that in no event shall the Committee be permitted to reduce
the Exercise Price of any outstanding Option or to exchange or replace an
outstanding Option with a new Option with a lower Exercise Price, except
pursuant to Section 4.1. Subject only to compliance with the express provisions
of the Plan, the Committee may act in its sole and absolute discretion in
performing the duties specifically set forth in the preceding sentence and other
duties under the Plan. The Committee shall have the power and authority to
appoint and authorize such of the Company's officers or other persons to perform
such functions in the execution and administration of the Plan (other than the
interpretation of the Plan and the adoption of rules governing its execution and
administration) as the Committee shall determine from time to time. No member of
the Committee shall be
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liable for any action, failure to act, determination or interpretation made in
good faith with respect to the Plan or any transaction hereunder.
Notwithstanding any other provision of the Plan, if the Committee designates an
Award of Restricted Stock as being intended to qualify as "performance-based
compensation" under Section 162(m), neither the Committee nor the Board of
Directors shall have any power to take any action with respect to such Award, if
the result would be to cause it to cease to qualify as "performance-based
compensation" under Section 162(m).
2.3 Participation.
Officers and other employees of the Company or a Nuveen Subsidiary,
including those who also serve as directors of the Company or a Nuveen
Subsidiary, and non-employee directors of the Company shall be eligible to
participate in the Plan upon selection and approval by the Committee. The
Committee may, in its discretion, delegate to the Bonus Committee of the Board
of Directors the authority to select individuals for participation in the Plan
and to whom Awards may be granted, provided that such individuals are not
subject to Section 16(b) of the Exchange Act. Participants shall be selected
because they are in a position to have a significant impact on achieving the
long-term profit and growth objectives of the Company and/or a Nuveen
Subsidiary. An individual who has received Awards may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine. Awards granted
under the Plan may be terminated or forfeited upon the occurrence of such events
or in such circumstances, including at or following a Participant's Termination
of Employment, as the Committee shall specify.
2.4 Shares Reserved for Plan.
(a) The total number of shares of Common Stock reserved and available for
issuance in connection with Awards under the Plan shall be 7,300,000 (including
the 3,800,000 shares approved in February 1996 and the additional 3,500,000
shares approved in March 1999), all of which shall be Class A Common Stock;
provided however that the total number of shares of Class A Common Stock that
may be issued in connection with the awards of Restricted Stock under the
Restated Equity Plan shall not exceed 950,000. The maximum number of shares of
Class A Common Stock with respect to which any one Participant may be granted
Awards in any one calendar year shall be 600,000 for Options and 120,000 for
Restricted Stock. Except as contemplated by the provisions of Section 4.1(a)
hereof, the Committee shall not increase the number of shares available for
issuance in connection with Awards under the Plan or to any one individual as
set forth above. In no event shall Awards be outstanding at any one time that
have resulted or could result in the issuance of a number of shares of Class A
Common Stock in excess of the number then remaining reserved and available for
issuance under the Plan. If any shares of Class A Common Stock subject to an
Award are forfeited or such Award otherwise terminates without a distribution of
shares to the Participant, or if shares of Class A Common Stock are tendered to
the Company in satisfaction of the exercise price of, or in payment of any
required income tax withholding for, an option awarded hereunder, any shares
counted against the number of shares reserved and available under the Plan with
respect to such Award shall, to the extent of any such forfeiture, termination
or tender, again be available for Awards under the Plan.
(b) Notwithstanding the foregoing, Awards granted through the assumption
of, or in substitution or exchange for, similar awards in connection with the
acquisition of another corporation or business entity shall not be counted for
purposes of applying the above limitations on numbers of shares available for
Awards generally or any particular kind of Award under the Plan.
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(c) Any shares of Class A Common Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
III. AWARDS UNDER THE PLAN
3.1 In General; "In Lieu Awards".
(a) Non-Qualified Stock Options and Restricted Stock may be awarded in
accordance with the provisions of the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the Plan.
Awards granted under the Plan may be granted either alone or in addition to, in
tandem with, or in substitution for, any other Award granted under the Plan or
any award granted under any other plan of the Company or any Nuveen Subsidiary
or any other right of a Participant to receive payment from the Company or any
Nuveen Subsidiary.
(b) Without limiting the generality of the foregoing, the Committee may
from time to time make an Award hereunder in lieu of (and the vesting of which
may be contingent upon the recipient's having earned at some future period) a
specified cash award under the Nuveen 1999 Executive Officer Performance Plan or
the Nuveen Annual Incentive Award Plan (the "Incentive Plans"). In this event,
the Committee shall establish at the time of the grant of such an "In Lieu
Award" the "Fair Value" of such award, which shall be the amount by which the
cash award otherwise payable to the recipient under the Incentive Plans for one
or more specified Plan Years will be reduced (and the vesting of the In Lieu
Award may be dependent upon having earned an award under the Incentive Plans at
least equal to the Fair Value of the In Lieu Award). In determining "Fair
Value," the Committee may take into account such factors as it deems
appropriate, including but not limited to the Fair Market Value of the shares
represented by any award, any restrictions on vesting and transferability of an
award, and values calculated by option pricing models.
(c) After the Committee has approved the grant of an Award to a Participant
and established the applicable terms and conditions of the Award applicable to
such Participant, such Participant shall be given written confirmation of such
Award.
3.2 Non-Qualified Stock Options.
All Non-Qualified Stock Options granted pursuant to the Plan shall be in
such form as the Committee shall from time to time determine and shall be
subject to such terms, conditions, restrictions and limitations as deemed
appropriate by the Committee and, in addition, to the following terms and
conditions:
(a) All Non-Qualified Stock Options awarded under the Plan shall represent
the right to purchase shares of Class A Common Stock.
(b) The Exercise Price for each share of Class A Common Stock covered by a
Non-Qualified Stock Option shall be determined and fixed by the Committee and
shall be set forth in such Option; provided, however, that the Exercise Price
shall in no event be less than the Fair Market Value of the Class A Common Stock
on the Effective Date of the Award, and provided, further, that in no event
shall the Exercise Price be less than the par value of the Class A Common Stock.
(c) Each Non-Qualified Stock Option awarded under the Plan shall be
evidenced by a Stock Option Agreement in a form approved by the Committee, to be
executed between the Company and the person to whom such Option is granted.
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(d) The term of each Non-Qualified Stock Option shall be not more than ten
years from the date of grant, as the Committee shall determine, subject to
earlier termination as provided in Section 3.2(i).
(e) Except as otherwise provided in Section 3.2(i) or Section 4.1(b),
Non-Qualified Stock Options awarded to a Participant shall become exercisable on
such date or dates, and subject to such conditions, as specified by the
Committee in connection with the grant thereof. Any shares covered by an
exercisable Option that are not purchased on an applicable installment date may
be purchased at any time thereafter prior to the final expiration of the Option.
(f) Subject to the terms and conditions of the Option, during its term an
Option may be exercised only by the optionee, by a legal representative upon the
incapacity of the optionee or by the Beneficiary upon the death of the optionee,
by giving written notice of exercise to the Company prior to expiration of the
Option, specifying the number of shares to be purchased and accompanied by the
payment of the aggregate Exercise Price therefor.
(g) No partial exercise of any Option may be for less than 100 shares or
the number of shares remaining subject to such Option, whichever is less.
(h) The aggregate Exercise Price for all shares purchased pursuant to
exercise of an Option shall be paid for at the time of such purchase and prior
to the delivery of said shares either (i) in cash or by check, bank draft or
money order payable to the order of the Company, or (ii) subject to the
discretion of the Committee, through the delivery (actual or constructive) of
previously acquired shares of Class A Common Stock owned by the optionee, to the
extent that such payment does not require the delivery of a fractional share of
such previously acquired Class A Common Stock, and provided that such previously
acquired shares have been held by the optionee for at least six months, (iii)
subject to the discretion of the Committee, through the authorization of a third
party broker-dealer acceptable to the Company to sell shares of Class A Common
Stock acquired upon exercise of the Option (or a portion thereof) and remit to
the Company a portion of the proceeds sufficient to pay the aggregate Exercise
Price of, and any required income tax withholding payments relating to, such
exercise, or (iv) a combination of, (ii) and (iii). For purposes of the
immediately preceding sentence, previously acquired shares of Class A Common
Stock shall be valued at the average of the high and low sales prices of the
Class A Common Stock on the New York Stock Exchange Composite Tape as of the
date of exercise.
(i) (1) Except as otherwise specified by the Committee at the time of
grant, in the case of Options that are not In Lieu Awards, in the event of
Termination of Employment of an optionee who is an employee of the Company or a
Nuveen Subsidiary other than by reason of the optionee's death, Disability or
Retirement, by the Employer without Cause, by the optionee as a result of
Constructive Termination or as a result of a Disaffiliation Transaction, any
Options previously awarded to such optionee that have not become exercisable as
of the date of Termination of Employment shall be forfeited, and all other
Options that are exercisable but have not been exercised as of the date of
Termination of Employment shall be exercisable for a period of 60 days following
the date of Termination of Employment (but not after the expiration date of the
Option) and shall, if not theretofore exercised, terminate upon the expiration
of such 60-day period. If Termination of Employment is by reason of the death,
Disability or Retirement of the optionee, any Options not exercised as of the
date of Termination of Employment (including Options that are otherwise not yet
exercisable) may be exercised by the optionee or the optionee's Beneficiary at
any time within three (3) years after the date of Termination of Employment (but
not after the expiration date of the Option) to the extent of the total number
of shares subject to Option. If Termination of Employment is by the Employer
without Cause, by the optionee
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as a result of Constructive Termination or as a result of a Disaffiliation
Transaction, any Options not exercised as of the date of Termination of
Employment (including Options that are otherwise not yet exercisable) may be
exercised by the optionee or the optionee's Beneficiary at any time within sixty
(60) days after the date of Termination of Employment (but not after the
expiration date of the Option) to the extent of the total number of shares
subject to Option.
(2) Except as otherwise specified by the Committee at the time of grant, in
the case of Options that are In Lieu Awards, in the event of Termination of
Employment of an optionee who is an employee of the Company or a Nuveen
Subsidiary other than by reason of the optionee's death, Disability or
Retirement, by the Employer without Cause, by the optionee as a result of
Constructive Termination or as a result of a Disaffiliation Transaction, any
Options previously awarded to such optionee that have not become exercisable as
of the date of Termination of Employment shall be forfeited, and all other
Options that are exercisable but have not been exercised as of the date of
Termination of Employment shall be exercisable for a period of 60 days following
the date of Termination of Employment (but not after the expiration date of the
Option) and shall, if not theretofore exercised, terminate upon the expiration
of such 60-day period. If Termination of Employment is by reason of the death,
Disability or Retirement of the optionee, by the Employer without Cause, by the
optionee as a result of Constructive Termination or as a result of a
Disaffiliation Transaction, any Options not exercised as of the date of
Termination of Employment (including Options that are otherwise not yet
exercisable) may be exercised by the optionee or the optionee's Beneficiary at
any time until the expiration date of the Option to the extent of the total
number of shares subject to Option; provided, however, that any such Options
awarded after March 1999 shall in no event remain exercisable for more than five
years following any such Termination of Employment.
(j) The grant and exercise of Options hereunder shall be subject to all
applicable rules and regulations of governmental authorities. Each Option shall
be subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification of
the shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the purchase of shares thereunder, the Company's obligation to
deliver shares upon exercise shall be conditioned upon such listing,
registration, qualification, consent or approval, which shall have been effected
or obtained free of any conditions not acceptable to the Committee.
(k) The holder of an Option granted under this Plan shall have no rights as
a stockholder with respect to any shares of Class A Common Stock covered by such
Option until the date of issuance of a stock certificate for such shares.
(l) Unless an optionee could otherwise transfer shares issued upon exercise
of an Option without incurring liability under Section 16(b) of the Exchange
Act, at least six months must elapse from the date of grant of an Option to the
date of disposition of shares issued upon exercise of the Option.
(m) The Committee may, in its discretion, from time to time establish
procedures whereby optionees may elect to defer receipt of shares of Class A
Common Stock purchased by exercise of Options.
3.3 Restricted Stock.
(a) The Committee may grant Awards of Restricted Stock to Participants,
subject to such restrictions on transferability and such other restrictions as
the Committee may impose in its discretion, including without
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limitation the achievement of Performance Goals. If a Participant so elects in
accordance with such procedures as the Committee may from time to time specify,
the delivery of such Restricted Stock and, if the deferral election so
specifies, of the Dividend Equivalents with respect thereto, shall be deferred
until the date or dates specified in such election.
(b) Restricted Stock other than Deferred Restricted Stock granted under the
Plan shall be evidenced by one or more certificates registered in the name of
the Participant and bearing an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock. The Company
shall retain physical possession of such certificate, and each Participant
awarded such Restricted Stock shall deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock, during the period when the
Restricted Stock is nontransferable and/or subject to a risk of forfeiture, at
the end of which period certificates evidencing such Restricted Stock shall be
delivered to the Participant (unless such Restricted Stock has previously been
forfeited pursuant to Section 3.3(e)). From the Effective Date of the Award of
such Restricted Stock through the earlier of (i) the date such Restricted Stock
is forfeited pursuant to Section 3.3(e) and (ii) the date certificates
evidencing such Restricted Stock are delivered to the Participant, the
Participant shall have all rights of a stockholder with respect to such shares,
including but not limited to the right to receive all dividends and other
distributions paid with respect thereto and to vote (in person or by proxy) such
shares at any meeting of the stockholders of the Company; provided, that any
dividend or distribution that is not payable in cash shall be subject to the
same restrictions on transferability and other restrictions as the Restricted
Stock with respect to which it is paid and shall be treated for all purposes of
the Plan as if it were part of the Award of such Restricted Stock.
(c) Deferred Restricted Stock shall not be issued until the date or dates
that it is to be delivered to the Participant in accordance with his or her
deferral election pursuant to Section 3.3(a), at which time certificates
evidencing such Deferred Restricted Stock shall be delivered to the Participant
(unless such Deferred Restricted Stock has previously been forfeited pursuant to
Section 3.3(e)). From the Effective Date of an Award of Deferred Restricted
Stock through the earlier of (A) the date such Deferred Restricted Stock is
forfeited pursuant to Section 3.3(e) and (B) the date certificates evidencing
such Deferred Restricted Stock are delivered to the Participant, the Participant
shall be entitled to receive as compensation from the Company Dividend
Equivalents with respect thereto, but shall have none of the rights of a
stockholder with respect to such shares; provided, that if the deferral election
made with respect to such Deferred Restricted Stock specifies that the Dividend
Equivalents will be deferred, the Dividend Equivalents shall not be paid until
the date or dates specified in such deferral election, at which time they shall
be paid together with interest thereon at the Prime Rate from the date such
Dividend Equivalents would otherwise have been paid until the actual payment
date.
(d) Neither Awards of Restricted Stock under the Plan which have not fully
vested under the vesting provisions applicable thereto, nor the right to vote
and receive dividends on unvested Restricted Stock which is not Deferred
Restricted Stock, nor the right to receive Dividend Equivalents on Deferred
Restricted Stock, may be sold, assigned, transferred, exchanged, pledged,
hypothecated or otherwise encumbered, and no such sale, assignment, transfer,
exchange, pledge, hypothecation or encumbrance, whether made or created by
voluntary act of the Participant or of any agent of such Participant or by
operation of law, shall be recognized by, or be binding upon, or shall in any
manner affect the rights of, the Company or any of its subsidiaries, or any
agent or any custodian holding certificates for such stock pursuant to the
provisions of the Plan.
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<PAGE> 44
(e) Unless otherwise provided by the Committee, in the event of Termination
of Employment of a Participant other than by reason of the Participant's death,
Disability or Retirement, by the Employer without Cause, by the Participant as a
result of Constructive Termination, or as a result of a Disaffiliation
Transaction, all shares of Restricted Stock awarded to such Participant that
have not fully vested on the date of Termination of Employment shall be
forfeited by such Participant and neither the Participant nor any successors,
heirs, assigns or personal representatives of such Participant shall have any
rights or interest in such shares, and the Participant's name shall be deleted
from the list of the Company's stockholders with respect to such shares. If
Termination of Employment is by reason of the death, Disability or Retirement of
the Participant, by the Employer without Cause, by the Participant as a result
of Constructive Termination, or as a result of a Disaffiliation Transaction, all
restrictions and risk of forfeiture with respect to Restricted Stock that have
not fully vested on the date of Termination of Employment shall lapse and all
such shares of Restricted Stock shall become fully and irrevocably vested, all
Deferred Restricted Stock shall be immediately delivered and all Deferred
Dividend Equivalents shall be immediately paid in full to the Participant.
IV. OTHER PROVISIONS
4.1 Adjustments Upon Corporate Changes.
(a) Without limiting the provisions of subsection (b) of this Section 4.1,
in the event that (i) the outstanding shares of Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company upon a reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise, or (ii) the Company makes any extraordinary
distribution of cash or property on the Common Stock, the Committee shall make
an appropriate and proportionate adjustment in the number and kind of shares
reserved and available for issuance under the Plan, in the Restricted Stock
theretofore awarded (if necessary to avoid an adverse effect on the value of
such Restricted Stock), and in the number and kind of shares subject to
outstanding Non-Qualified Stock Options and the exercise price thereof.
(b) Notwithstanding any other provision of the Plan, in the event of a
Change in Control, unless the right to accelerated vesting, the lapse of
restrictions or risk of forfeiture, or accelerated delivery or receipt of cash
provided for herein is waived or deferred by a Participant by written notice to
the Company delivered prior to the Change in Control, all restrictions and risks
of forfeiture on Awards (other than those imposed by law or regulation) shall
lapse, all deferral or vesting periods relating to Awards shall immediately
expire, and (i) all unexercised Options shall become immediately and fully
exercisable; (ii) all shares of Restricted Stock not previously vested shall
vest immediately and be delivered to the Participant entitled thereto; (iii) all
Deferred Restricted Stock shall be immediately delivered to the Participant
entitled thereto; and (iv) all Deferred Dividend Equivalents not previously paid
shall be immediately paid over to the Participant entitled thereto.
(c) The Committee shall be authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards, restriction periods and
deferral periods in recognition of unusual or nonrecurring events affecting the
Company or any Nuveen Subsidiary or the financial statements of the Company or
any Nuveen Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles; provided, however, that no such
modification shall be made to the detriment of a Participant with respect to any
Award previously granted; and provided, further, that no such modification may
be made if the result
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<PAGE> 45
would be to cause an Award that was previously qualified as "performance-based
compensation" under Section 162(m) of the Code to cease to so qualify.
4.2 Rights of Participants and Beneficiaries.
(a) Nothing contained in the Plan (or in any documents evidencing an Award)
shall confer upon any Participant any right to continue in the employ of his or
her Employer or constitute any contract or agreement of employment or interfere
in any way with the right of such Employer to reduce such Participant's
compensation from the rate in effect at the time of an Award or to terminate
such Participant's employment with or without cause, but nothing contained
herein or in any document evidencing an Award shall affect any other contractual
rights of a Participant. No Participant or other person shall have any claim to
be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Participants.
(b) All settlements of Awards shall be made hereunder only to the
Participant or his or her Beneficiary entitled thereto pursuant to the Plan.
Neither the Company nor any Nuveen Subsidiary shall be liable for the debts,
contracts, or engagements of any Participant or his or her Beneficiary, and
rights relating to Awards under this Plan may not be taken in execution by
attachment or garnishment, or by any other legal or equitable proceeding while
in the hands of an Employer; nor shall any Participant or his or her Beneficiary
have any right to assign, pledge or hypothecate any benefits or rights
hereunder.
(c) Except as provided in Section 3.3(d) with respect to Restricted Stock
that is not Deferred Restricted Stock, no Award shall confer on any Participant
any of the rights of a shareholder of the Company (including any right to
receive dividends) unless and until shares of Common Stock are registered in the
name of and delivered to such person in connection with such Award.
(d) No fractional shares shall be issued or delivered pursuant to the Plan
or any Award. The Committee shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
4.3 Governing Law.
This Plan and documents evidencing Awards or rights relating to Awards
shall be construed, administered and governed in all respects under and by the
laws of the State of Delaware. If any provision of this Plan shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
4.4 Withholding.
The Company shall have the right to deduct any sums that federal, state,
local or foreign tax laws may require to be withheld with respect to Awards,
settlement of Awards, and the payment of dividends, Dividend Equivalents and
interest with respect to Awards. Subject to the rules and regulations of the
Committee, this authority shall permit (but shall not obligate) the Company to
withhold and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, including tax obligations in excess of mandatory
withholding requirements (but not in excess of the maximum marginal tax rate).
The Company may require, as a condition to issuing or delivering shares of Class
A Common Stock or cash in settlement of Awards or as payment of dividends,
Dividend Equivalents or interest with respect to Awards, that the Participant
pay to the Company any sums that may be required to satisfy any applicable
withholding tax, and unless otherwise determined by the Committee, withholding
obligations may be settled with shares of Class A Common Stock,
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<PAGE> 46
including Class A Common Stock that is part of the Award that gives rise to the
withholding requirement, in accordance with procedures established by the
Committee. Except as contemplated by the preceding sentence, the Company shall
have no obligation to advise any Participant of the existence of any tax or the
amount which the Company will be required to withhold.
4.5 Amendment and Termination of Plan and Awards.
Notwithstanding anything herein to the contrary other than the last
sentence of Section 2.2, the Board of Directors may, with the consent of a
majority of the Class B Directors, at any time and from time to time, terminate
or suspend the Plan or amend or modify any of its provisions and the terms and
provisions of any Awards theretofore made to Participants which have not been
settled; provided, however, that any such termination, suspension, amendment, or
modification of the Plan shall be subject to the approval of the Company's
stockholders within one year after such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Common Stock may
be listed or quoted, and provided, further, that, without the consent of an
affected Participant, no termination, suspension, amendment, or modification of
the Plan or any outstanding Award may impair the rights of such Participant
under any Award theretofore granted; and provided, further, that no such
modification may be made if the result would be to cause an Award that was
previously qualified as "performance-based compensation" under Section 162(m) of
the Code to cease to so qualify; and provided, further, that the provisions of
Section 4.1(b) of the Plan shall not be amended in any respect following a
Change in Control.
4.6 Unfunded Status of Awards.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
shall give any such Participant any rights that are greater than those of a
general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, shares of Common Stock,
other Awards, or other property pursuant to any Award or to provide other
benefits, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of any trust established under
the Plan may be authorized to dispose of trust assets and reinvest proceeds in
alternative investments, subject to such terms and conditions as the Committee
may specify and in accordance with applicable law.
4.7 Restrictions on Transferability.
Except as otherwise provided by the Committee, awards under the Plan are
not transferable other than to a Beneficiary designated by the Participant in
the event of a Participant's death, or by will or the laws of descent and
distribution.
4.8 Effective Date.
This Plan was initially effective as of February 23, 1996, and, as amended
and restated, shall be effective as of March 19, 1999, subject to approval by
the Company's stockholders, and shall remain in effect until such time as action
may be taken to terminate or suspend the Plan pursuant to Section 4.5, or until
such time as no shares remain reserved and available for issuance and the
Company has no further obligation with respect to any Award granted under the
Plan.
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<PAGE> 47
[NUVEEN LOGO]
The John Nuveen Company
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE> 48
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1. Election of four 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, 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 ____________________________________________________________________
2. Ratification for the Amended and Restated 1996 Equity Incentive Award Plan.
FOR /x/ AGAINST /x/ ABSTAIN /x/
3. Ratification of the 1999 Executive Officer Performance Plan.
FOR /x/ AGAINST /x/ ABSTAIN /x/
4. Ratification of the selection of KPMG Peat Marwick as independent auditors
for 1996.
FOR /x/ AGAINST /x/ ABSTAIN /x/
5. 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:__________________ , 1999
________________________________
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. / /
- --------------------------------------------------------------------------------
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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 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Timothy R. Schwertfeger, 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 6, 1999, and at any
adjournment or adjournments thereof, including authority to vote on (1) the
election of directors; and (2) ratification of the Amended and Restated 1996
Equity Incentive Award Plan; and (3) ratification of the 1999 Executive Officer
Performance Plan; and (4) for the selection of independent auditors in the
manner specified on the reverse side.
UNLESS OTHERWISE INSTRUCTED ON THE REVERSE SIDE, ALL SHARES WILL BE VOTED
(1) FOR THE ELECTION OF DIRECTORS; (2) FOR THE AMENDED AND RESTATED 1996 EQUITY
INCENTIVE AWARD PLAN; (3) FOR THE 1999 EXECUTIVE OFFICER PERFORMANCE PLAN;
AND (4) FOR THE SELECTION OF KPMG PEAT MARWICK AS INDEPENDENT AUDITORS.
(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
____________________
____________________
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