<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE JOHN NUVEEN COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
The John Nuveen Company is filing a revised proxy statement for the sole
purpose of correcting the "Shareholder Return Information" table on page 22 of
the March 31, 2000 filing of the Proxy Statement which included incorrect plot
points. The proxy materials sent to the shareholders of The John Nuveen Company
was correct in its printed form.
<PAGE> 3
THE JOHN NUVEEN COMPANY
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 4, 2000
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 4, 2000, 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 ratify the selection of KPMG LLP as independent auditors for the
Company.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 16, 2000 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 29, 2000
ALAN G. BERKSHIRE
Secretary
<PAGE> 4
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 4, 2000, and at any and all adjournments of such meeting.
At the annual meeting, shareholders will vote on the election of directors,
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, 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 16, 2000, there were issued and outstanding 6,683,828 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 16, 2000 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 16, 2000 no person or group
was the beneficial owner of more than 20% of the outstanding shares of Class A
Common Stock.
<PAGE> 5
This Proxy Statement was initially mailed to shareholders on or about March
29, 2000. 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 16,
2000, 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% 78.5%
385 Washington Street
St. Paul, MN 55102
Timothy R. Schwertfeger................ 794,700(2) A 11.0 2.5
333 W. Wacker Drive
Chicago, IL 60606
George W. Connell...................... 851,300(3) A 12.7 2.7
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087
Anthony T. Dean........................ 770,159(4) A 10.6 2.4
3209 RFD
Long Grove, IL 60047
Richard J. Franke...................... 545,371(5) A 7.9 1.7
400 North Michigan Ave.
Suite 300
Chicago, IL 60611
Donald E. Sveen........................ 544,351(6) A 7.9 1.7
1749 S. Naperville Road
Wheaton, IL 60187
Royce & Associates, Inc. .............. 413,900(7) A 6.2 1.3
Charles M. Royce
1414 Avenue of the Americas
New York, NY 10019
</TABLE>
2
<PAGE> 6
<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>
Richard P. Davis ...................... 891,172(8) A 11.9% 2.8%
235 W. Thurston Blvd.
Dayton, OH 45419
Julie A. Bedford ...................... 445,599(9) A 6.3 1.4
4650 North Washington Blvd.
Arlington, VA 22201
Susan Logan Bedford ................... 445,574(10) A 6.3 1.4
40 West 57th Street
New York, NY 10024
</TABLE>
- -------------------------
(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 16, 2000, 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. For each of Mr. Davis, Ms. J. Bedford
and Ms. S. Bedford, the percentage of outstanding Class A Common Stock
beneficially owned is determined by dividing the total number of shares of Class
A Common Stock beneficially owned, which includes the shares of Class A Common
Stock issuable upon conversion of the 5% Cumulative Convertible Preferred Stock
held by such person, by the total number of outstanding shares of Class A Common
Stock plus the additional number of shares of Class A Common Stock issuable upon
conversion of the 5% Cumulative Convertible Preferred Stock held by such person.
(2) Includes for Mr. Schwertfeger 565,000 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 restricted 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) According to a Schedule 13G filed on February 14, 2000.
(4) According to a Schedule 13G filed on February 14, 2000. Includes for
Mr. Dean 580,059 shares subject to exercisable options.
(5) According to a Schedule 13G filed on February 14, 2000. 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 151,556 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) According to a Schedule 13G filed on February 14, 2000. Includes
220,000 shares which may be acquired pursuant to options which are currently
exercisable. Mr. Sveen has shared voting and investment power with respect to
all shares beneficially owned, including 165,841 shares of Class A Common Stock
held in a charitable trust of which Mr. Sveen is a trustee with shared voting
and investment power and 158,510 shares of Class A Common Stock held by a family
limited partnership.
3
<PAGE> 7
(7) According to a Schedule 13G filed on February 1, 2000, such shares are
owned by a group consisting of the named persons.
(8) Includes a total of 825,000 shares of Class A Common Stock issuable
upon conversion of the shares of 5% Cumulative Convertible Preferred Stock held
by the Davis Family Trust L.P. (57,750 shares), Nautical Trust I (577,500
shares) and Nautical Trust II (189,750), over which Mr. Davis exercises voting
and dispositive power. Also includes a total of 66,172 shares of Class A Common
Stock held by the Davis Family Trust (4,346 shares), Nautical Trust I (46,370
shares) and Nautical Trust II (15,456 shares) over which Mr. Davis exercises
voting and dispositive power.
(9) Includes a total of 412,500 shares of Class A Common Stock issuable
upon conversion of the shares of 5% Cumulative Convertible Preferred Stock held
by Julie Ann Bedford (103,125 shares), Julie Ann Bedford 1995 Annuity Trust
(91,988 shares), Julie Ann Bedford 1996 Annuity Trust (11,137 shares) and Julie
Ann Bedford 1995 Trust (206,250 shares), over which Ms. Bedford exercises voting
and dispositive power and, in the case of the trusts, exercises shared voting
and dispositive power with the trustee, Wilmington Trust Company. Also includes
a total of 33,099 shares of Class A Common Stock held by Julie Ann Bedford
(8,280 shares), Julie Ann Bedford 1995 Annuity Trust (7,368 shares), Julie Ann
Bedford 1996 Annuity Trust (892 shares) and Julie Ann Bedford 1995 Trust (16,559
shares), over which Ms. Bedford exercises voting and dispositive power and, in
the case of the trusts, exercises shared voting and dispositive power with the
trustee, Wilmington Trust Company. Does not include any shares owned by Susan
Logan Bedford.
(10) Includes a total of 412,500 shares of Class A Common Stock issuable
upon conversion of the shares of 5% Cumulative Convertible Preferred Stock held
by Susan Logan Bedford (103,125 shares), Susan Logan Bedford 1995 Annuity Trust
(91,988 shares), Susan Logan Bedford 1996 Annuity Trust (11,137 shares)and Susan
Logan Bedford 1995 Trust (206,250 shares) over which Ms. Bedford exercises
voting and dispositive power and, in the case of the trusts, exercises shared
voting and dispositive power with the trustee, Wilmington Trust Company. Also
includes a total of 33,074 shares of Class A Common Stock held by Susan Logan
Bedford (8,280 shares), Susan Logan Bedford 1995 Annuity Trust (7,388 shares),
Susan Logan Bedford 1996 Annuity Trust (892 shares) and Susan Logan Bedford 1995
Trust (16,514 shares), over which Ms. Bedford exercises voting and dispositive
power and, in the case of the trusts, exercises shared voting and dispositive
power with the trustee, Wilmington Trust Company. Does not include any shares
owned by Julie Ann Bedford.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership, as of March 16,
2000, of the Company's Class A Common Stock by each of the directors and
nominees, each of the executive officers named in the Summary Compensation Table
on page 10, and all directors and executive officers as a group (12 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 16, 2000, 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
4
<PAGE> 8
shares of Class B Common Stock or the Preferred Stock are owned by any director,
nominee for director or executive officer of the Company.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS A TOTAL COMMON
BENEFICIALLY COMMON STOCK STOCK
NAME OWNED OUTSTANDING(1) OUTSTANDING(1)
---- ------------ -------------- --------------
<S> <C> <C> <C>
Timothy R. Schwertfeger............................... 794,700(2) 11.0 2.5
John P. Amboian....................................... 213,861(3) 3.1 0.7
Duane R. Kullberg..................................... 1,000 * *
Willard L. Boyd....................................... 1,000 * *
Douglas W. Leatherdale................................ 1,000(4) * *
Paul J. Liska......................................... --(4) * *
W. John Driscoll...................................... 1,000 * *
William Adams IV...................................... 209,270(5) 3.0 0.7
Richard D. Hughes..................................... 3,000 * *
Mark T. McGannon...................................... -- * *
Directors and executive officers as a group (12
persons)............................................ 1,228,274(6) 16.1 3.8
</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 16, 2000, 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) Includes for Mr. Amboian 183,620 shares subject to exercisable options and
excludes 18,000 shares of restricted stock granted 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.
(4) 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.
(5) Includes for Mr. Adams 194,270 shares subject to exercisable options.
(6) Includes 942,890 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 Award
Incentive Plan. Does not include 67,000 shares of restricted stock granted
under the 1996 Equity Incentive Award Plan, with respect to which such
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.
5
<PAGE> 9
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
1999, two Form 4 reports, for purchase transactions, one on behalf of Richard D.
Hughes and one on behalf of George W. Connell, were not filed on a timely basis
with the SEC due to an administrative oversight. Reports on Form 5 for such
transactions 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 2001 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
6
<PAGE> 10
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........ 50 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; Chief Executive
Officer of the Nuveen Funds advised by Nuveen Senior Loan
Asset Management since 1999; Chairman and Director of
Rittenhouse Financial Services, Inc. since March 1999;
Director of Institutional Capital Corporation since 1996.
John P. Amboian................ 38 President since May 1999; prior thereto, Executive Vice
President and Chief Financial Officer since 1995 and
Secretary from February 1997 until May 1998 of the Company;
President of Nuveen & Co. since May 1999; prior thereto,
Executive Vice President and Chief Financial Officer of
Nuveen & Co. since 1995; President and Chief Operating
Officer of the Nuveen Funds advised by Nuveen Senior Loan
Asset Management since 1999; 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................ 72 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.
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATIONS
---- --- ---------------------
<S> <C> <C>
Duane R. Kullberg.............. 67 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.
NOMINEES FOR CLASS B DIRECTORS
Douglas W. Leatherdale......... 63 Chairman 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............... 71 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., Northern States Power Company and Weyerhaeuser
Company.
Paul J. Liska.................. 44 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>
8
<PAGE> 12
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 and Chief Executive Officer 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 five
meetings, the Compensation Committee held seven meetings, the Audit Committee
held four 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.
9
<PAGE> 13
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 four other most highly compensated 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(1) AWARD(S) SHARES) COMPENSATION(2)
--------- ---- ------ -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Timothy R. Schwertfeger... 1999 $500,000 $2,925,000 -- 139,333 $ 15,030
Chairman and 1998 500,000 2,300,000 -- 107,559 17,895
Chief Executive Officer 1997 500,000 2,042,000 -- -- 16,836
John P. Amboian........... 1999 325,000 2,486,000 -- 118,444 14,905
President 1998 250,000 2,300,000 -- 107,559 17,314
1997 250,000 1,983,000 -- -- 15,836
Richard D. Hughes......... 1999 700,000 700,000 -- 40,000 3,500
President, Rittenhouse 175,520(4)
Financial Services, Inc. 1998 700,000 271,350 -- 35,000 3,500
-- 120,000(4)
1997(3) 233,333 -- -- 40,000 1,108
-- 40,000(4)
William Adams IV.......... 1999 192,700 590,000 -- 35,000 15,030
Executive Vice President 1998 145,000 560,000 -- 20,000 11,868
1997 120,000 550,000 -- 10,000 9,065
Mark T. McGannon.......... 1999(5) 187,200 575,000 -- 45,000 --
Executive Vice President
</TABLE>
- -------------------------
(1) The amounts shown were paid pursuant to the Executive Officer Performance
Plan. The amount shown for Mr. McGannon includes a signing bonus paid at the
time he commenced employment with the Company.
(2) 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 matching 401(k) contributions under that Plan. For 1999, the amounts of
such profit sharing contributions (including reallocations) and 401(k)
matching contributions were $10,030 and $5,000 for each of Messrs.
Schwertfeger and Adams, and $10,030 and $4,875 for Mr. Amboian. For 1998,
the amounts of such profit sharing contributions (including reallocations)
and 401(k) matching contributions were $13,095 and $4,800 for Mr.
Schwertfeger, and $13,095 and $4,219 for Mr. Amboian, and for 1997 such
amounts were $12,086 and $4,750 for Mr. Schwertfeger and $12,086 and $3,750
for Mr. Amboian. The amounts shown for 1998 and 1997 for Mr. Adams represent
profit sharing contributions (including reallocations) only. For Mr. Hughes,
the amounts shown represent matching 401(k) contributions under the separate
Section 401(k) plan of Rittenhouse.
10
<PAGE> 14
(3) Mr. Hughes commenced his employment with the Company on September 2, 1997 at
the time of the Company's acquisition of Rittenhouse Financial Services,
Inc. ("Rittenhouse").
(4) Options to acquire shares of non-voting Class B Common Stock of Rittenhouse.
The Company has the right to repurchase any such shares so acquired by
participants in the 1997 RFS Plan for a price equal to the fair market value
thereof.
(5) Mr. McGannon commenced his employment with the Company on January 25, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information relating to grants of stock options
made to the Named Executive Officers in respect of the fiscal year ended
December 31, 1999 pursuant to the Company's Amended and Restated 1996 Equity
Incentive Award Plan (the "1996 Plan").
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SHARE) DATE VALUE(1)
---- ---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Timothy R. Schwertfeger............... 139,333(2) 8.4% $ 36.00 1/12/10 $1,253,997
John P. Amboian....................... 118,444(2) 7.2% 36.00 1/12/10 1,065,996
Richard D. Hughes..................... 40,000(2) 2.4% 36.00 1/12/10 360,000
William Adams IV...................... 10,000(3) 0.6% 42.8125 6/28/09 107,031
25,000(2) 1.5% 36.00 1/12/10 225,000
Mark T. McGannon...................... 25,000(4) 1.5% 35.75 1/25/09 223,438
20,000(2) 1.2% 36.00 1/12/10 180,000
</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.
(2) These options become exercisable with respect to the shares of Class A
Common Stock covered thereby in one installment on January 12, 2003.
(3) These options become exercisable with respect to the shares of Class A
Common Stock covered thereby in one installment on June 28, 2002.
(4) These options become exercisable with respect to the shares of Class A
Common Stock covered thereby in one installment on January 25, 2002.
11
<PAGE> 15
The following table shows information relating to grants of stock options
made to Mr. Hughes in respect of the fiscal year ended December 31, 1999
pursuant to the Rittenhouse Financial Services, Inc. 1997 Equity Incentive Award
Plan (the "1997 RFS Plan"). None of the other Named Executive Officers
participates in the 1997 RFS Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES RFS OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
---------- ------------ ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C>
31,840(2) 4.9% 81.90 3/15/01 $166,968 $369,992
31,840(3) 4.9% 100.00 3/15/02 0 91,457
111,840(4) 17.2% 107.00 3/15/03 0 688,892
</TABLE>
- -------------------------
(1) There is no public market for the Common Stock of Rittenhouse. The potential
realizable values shown assume that the value of the underlying shares
increase from their fair value at the grant date ($80.97 per share,
calculated by a valuation committee pursuant to the terms of the 1997 RFS
Plan) by the specified percentages annually 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 over the
exercise price on the date the option is exercised.
(2) These options are to acquire shares of non-voting Rittenhouse Class B Common
Stock under the 1997 RFS Plan, were granted in June 1999, vest in one
installment on January 1, 2001 and become exercisable with respect to the
shares covered thereby on February 1, 2001. On the date of the grant, the
exercise price was approximately 101% of the fair value of the underlying
shares.
(3) These options are to acquire shares of non-voting Rittenhouse Class B Common
Stock under the 1997 RFS Plan, were granted in June 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 124% of the fair value of the underlying
shares.
(4) These options are to acquire shares of non-voting Rittenhouse Class B Common
Stock under the 1997 RFS Plan, were granted in June 1999, will vest in one
installment on January 1, 2003 and become exercisable with respect to the
shares covered thereby on February 1, 2003. On the date of grant, the
exercise price was approximately 132% of the fair market value of the
underlying shares.
12
<PAGE> 16
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, the 1996 Equity Incentive Award Plan and the Amended and
Restated 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,
1999. None of the Named Executive Officers exercised any stock options during
fiscal 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 12/31/99 IN-THE-MONEY OPTIONS
(NUMBER OF SHARES) AT 12/31/99(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Timothy R. Schwertfeger....................... 565,000 107,559 $6,065,312 $ 42,180
John P. Amboian............................... 183,620 107,559 1,636,296 42,180
Richard D. Hughes............................. -- 75,000 -- --
-- 335,520(2) -- 1,531,090
William Adams IV.............................. 194,270 40,000 2,591,612 25,625
Mark T. McGannon.............................. -- 25,000 -- 7,812
</TABLE>
- -------------------------
(1) Based on the New York Stock Exchange -- Composite Transaction closing price
of $36.0625 for the Company's Class A Common Stock on December 31, 1999.
Amounts shown in respect of options to purchase Class A Common Stock reflect
(i) an $18.00 exercise price for 220,000 exercisable options, a $30.00
exercise price for 345,000 exercisable options, a $35.5625 exercise price
for 84,360 unexercisable options and a $37.50 exercise price for 23,199
unexercisable options for Mr. Schwertfeger; (ii) a $24.00 exercise price for
50,000 exercisable options, a $25.00 stock price for 44,620 exercisable
options, a $30.00 stock price for 89,000 exercisable options, a $35.5625
exercise price for 84,360 unexercisable options and a $37.50 exercise price
for 23,199 unexercisable options for Mr. Amboian; (iii) a $36.50 exercise
price for 40,000 unexercisable options and a $37.50 exercise price for
35,000 unexercisable options for Mr. Hughes; (iv) an $18.00 exercise price
for 100,000 exercisable options, a $30.00 exercise price for 51,500
exercisable options, a $25.00 exercise price for 42,770 exercisable options,
a $33.50 exercise price for 10,000 unexercisable options, a $37.50 exercise
price for 20,000 unexercisable options, and a $42.8125 exercise price for
10,000 unexercisable options for Mr. Adams; and (v) a $35.75 exercise price
for 25,000 unexercisable options for Mr. McGannon.
(2) Options to acquire shares of non-voting Class B Common Stock of Rittenhouse
Financial Services, Inc. The value reflects a fair value of $95.59 per share
at December 31, 1999 and an exercise price of $81.90 per share for 111,840
shares, an exercise price of $100.00 per share for 111,840 shares and an
exercise price of $107.00 per share for 111,840 shares.
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, 1999.
13
<PAGE> 17
RETIREMENT PLANS
Each of the Named Executive Officers other than Mr. Hughes and Mr. McGannon
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, Amboian and Adams with
additional retirement income in an amount equal to the difference between (i)
the benefits any such employee would have received under the Retirement Plan but
for limitations imposed by the Internal Revenue Code on the amount of annual
benefits payable pursuant to a tax-qualified retirement plan and (ii) the
benefits actually payable to such employee under the Retirement Plan.
The credited years of service under the Retirement Plan and the Excess
Benefit Plan for Messrs. Schwertfeger, Amboian and Adams as of December 31, 1999
were 21, 3 1/2 and 17 1/2, 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 three individuals
as of December 31, 1999 were $500,000, $350,000 and $250,000, respectively. Mr.
McGannon was not entitled to
14
<PAGE> 18
participate in the Retirement Plan during 1999, as he had not completed one year
of service. 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 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 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.
In connection with his joining the Company in January 1999, the Company
agreed to provide Mr. McGannon with certain minimum levels of compensation
through the Year 2000 as specified in his employment offer letter. These levels
included a minimum annual base salary of $200,000 and a minimum annual cash
bonus of $400,000 through the year 2000. In addition, the Company agreed to
provide Mr. McGannon with certain payments in the event the Company terminates
his employment other than for Cause (as defined under the 1996 Plan) or Mr.
McGannon terminates his employment based on Constructive Termination (as defined
in the 1996 Plan), during the period of two years following his employment date.
In that event, the Company will pay to Mr. McGannon his base salary through the
date of termination, a lump sum severance payment of $350,000 and a pro-rata
share of the previous fiscal year's cash bonus based on the number of days in
the current fiscal year preceding the date of termination. The Company also
agreed in the employment offer letter to reimburse Mr. McGannon, in the event he
becomes entitled to payments or benefits in connection with the termination of
his employment in connection with a Change in Control (as defined under the 1996
Plan) or otherwise that subjects Mr. McGannon to the excise tax imposed by
Section 4999 of the Internal Revenue Code, in an amount necessary to fully
offset the costs associated with such tax payment.
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
15
<PAGE> 19
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 851,300 shares
of the Company's Class A Common Stock, representing 12.7% of the outstanding
shares of such class, according to a Schedule 13G filed by Mr. Connell in
February 2000. 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. During
1999, Rittenhouse and Mr. Connell entered into an amendment to his employment
agreement which provides that effective April 1, 1999 Mr. Connell will continue
to serve as a part-time employee of Rittenhouse and adviser to the Rittenhouse
investment committee for a reduced annual salary of $100,000. The amended
agreement continues in effect until December 31, 2002.
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 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. Rittenhouse and RTC agreed to terminate the sublease effective as of
May 17, 1999. RTC moved to separate office space, and Rittenhouse began using
the vacated space for its operations. During 1999, RTC paid Rittenhouse a total
of approximately $80,000 under the Sublease prior to its termination.
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 such services available, RTC agreed to pay to
Rittenhouse a fixed annual fee equal to $1.25 million during the
16
<PAGE> 20
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. In connection with the
termination of the Sublease Agreement and the move by RTC to separate office
space, Rittenhouse and RTC agreed to amend the Support Services Agreement. As
amended, Rittenhouse remains obligated to make a reduced level of administrative
services available to RTC through December 31, 2000, and RTC agreed to pay to
RFS the discounted present value of the remaining annual fixed fee payments in
quarterly installments over the life of the amended Support Services Agreement.
RTC has the right to extend the amended Support Services Agreement for one year
under certain circumstances for a nominal payment to Rittenhouse. During 1999,
RTC paid Rittenhouse a total of approximately $35,000 under the Support Services
Agreement.
Also in connection with the termination of the Sublease Agreement and the
move by RTC to separate office space and the amendment of Mr. Connell's
Employment Agreement with Rittenhouse, and in consideration of the various
payments to be made thereunder, Rittenhouse agreed to assist RTC as reasonably
requested in the transfer of certain accounts from Rittenhouse to RTC.
In connection with the January 1997 acquisition of Flagship Resources, Inc.
the Company entered into employment contracts with two senior executive officers
of Flagship Resources, Bruce P. Bedford and Richard P. Davis. These agreements
commenced January 2, 1997, with a scheduled termination date of December 31,
2001, and provided for compensation to each of Bedford and Davis during the term
of the agreement in the form of (i) an annual base salary of $250,000 (subject
to possible increase, but not to decrease); (ii) participation in the annual
cash incentive award program during the term of the agreement, with an annual
minimum annual bonus award of $750,000 for each of 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 executives. In addition, the
agreements provided that each of Bedford and Davis 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, reflecting the executives' service with Flagship
Resources prior to its acquisition by the Company, phase in over the term of the
agreements.
Under the agreements, the Company could terminate the executives'
employment at any time, provided that in the event of a termination by the
Company Without Cause, by the executive for Good Reason, or due to a Change in
Control (each as defined in the agreements), the Company would be required to
pay the executive's base salary, and required minimum bonus payments for the
remainder of the term of the agreement and the executive would become fully
vested in his accrued benefits under the Company's pension and profit sharing
plans in which he participates.
By agreement dated February 18, 1998, the Company and Davis amended Davis'
employment agreement. The agreement as amended provides that Davis will be
available to provide consulting services to the Company effective upon the date
of the amended agreement and continuing through December 31, 2001. In return for
such availability Davis is entitled to continue to receive a base salary of
$250,000 per year and an annual bonus of $750,000 through 2001. The amended
agreement also provides that the Company will make office space available to
Davis in Dayton, Ohio for so long as the Company maintains a Dayton office and,
thereafter, will provide Davis with a monthly stipend of $2,750 to cover
administrative support costs. The
17
<PAGE> 21
Company also agreed to reimburse Davis for legal fees in an amount not to exceed
$15,000. Under certain circumstances the Company has the right to extend the
consulting contract for up to five additional years.
By agreement dated December 27, 1998, the Company and Bedford amended
Bedford's 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 is entitled to 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 in an amount not to exceed $75,000. Under certain
circumstances the Company has the right to extend the consulting contract for up
to five additional years.
18
<PAGE> 22
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 1999, 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 Amended and Restated 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
1999 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 Amended and Restated 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 or below the median level
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 productive executives and to reward employees
throughout the organization for their contributions to the
Company's operations. Historically, the Rittenhouse business
maintained a 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
19
<PAGE> 23
which the longer-term rates of growth and return are the most
attractive. 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.
- During 1999, the Board and shareholders approved a revised
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) for 1999 under the plan equaled the sum of (i)
1.95% of the Company's pre-incentive, pre-tax net operating
income in excess of 19% of average shareholder's equity for
the year and (ii) 7% of the increase in 1999's
after-incentive, pre-tax net operating income over the same
measure for the prior year. As provided in the plan, the
award payable for 1999 to the officer-director next most
senior to the CEO was 85% of the award to the CEO. For all
other EOPP participants, the formula maximum of 60% of the
CEO's award was reduced by the Committee in its discretion.
The awards to officer-directors were paid 70% in cash and 30%
in at-the money stock options granted pursuant to the Amended
and Restated 1996 Equity Incentive Award Plan.
- The bonus awards for 1999 for Mr. Schwertfeger and Mr.
Amboian set forth in the Summary Compensation Table, which
were calculated under the Executive Officer Performance Plan
as described above, reflect the significant growth in the
Company's after-incentive, pre-tax net operating income of
16.9% from 1998 to 1999 and the strong return on average
shareholders' equity for 1999 of 54% represented by the
Company's pre-incentive, pre-tax net operating income.
- For 2000 and 2001, the formula set forth in the Executive
Officer Performance Plan will continue to operate, with the
threshold return on average shareholders' equity increasing
to 20% for 2000 and 21% for 2001. In addition, the return on
shareholders' equity component of the formula will decrease
to 1.8% of the excess over the threshold for 2000 and to
1.65% of the excess over the threshold for 2001.
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 Award Plan and the Executive
Officer Performance Plan, will continue to do so in the future while also
continuing to tie a significant component of total compensation to long-term
shareholder returns. The Committee is aware that the Internal Revenue Code
provides a $1 million limit on the deductibility for federal tax law purposes of
compensation paid to top executives of publicly traded corporations, subject to
certain exceptions. The exceptions include one for compensation based on
attainment of objective performance standards that have been approved by
shareholders. The Company's Executive Officer Performance Plan is designed to
qualify for this exception and to permit the continued full deductibility of
compensation paid to
20
<PAGE> 24
executive officers thereunder. Options granted to executive officers under the
Company's equity based plans are also generally 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 1999, a period of major strategic transition for the Company and the
industry, and will continue to serve the Company well in the future.
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
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<PAGE> 25
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, 1994 and ending December 31, 1999. In each case,
the chart assumes a $100 investment on December 31, 1994 and that all dividends
are reinvested. The Average Annual Return on the Company's Class A Common Stock
for the 5-year period was 12.6%; and for the most recent 3-year period was
13.8%.
COMPARISON OF CUMULATIVE TOTAL RETURN
[CHART]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JNC 100 111 123 167 182 181
Russell 2000 100 128 150 183 178 216
Peer Group 100 137 189 298 299 334
</TABLE>
22
<PAGE> 26
The Company's Peer Group includes all domestic publicly traded investment
management firms with a market capitalization of at least 1% of the Peer Group.
The results are included for each full year in which the firm was publicly
traded and met the minimum capitalization requirements. The return of the Peer
Group is weighted by the market capitalization of each firm at the beginning of
each year such firms are included in the Peer Group. The following are included
in the Peer Group for all years, unless otherwise noted:
<TABLE>
<S> <C>
Affiliated Managers Group................................... AMG
Alliance Capital Management................................. AC
Eaton Vance................................................. EV
Federated Investors (1999 only)............................. FII
Franklin Resources.......................................... BEN
Nvest, LP (1995-1998 only).................................. NEW
Phoenix Investment Counsel.................................. PXP
PIMCO Advisers.............................................. PA
Pioneer Group............................................... PIOG
SEI Investments............................................. SEIC
T. Rowe Price Associates.................................... TROW
United Asset Management..................................... UAM
Waddell & Reed (1999 only).................................. WDR
</TABLE>
23
<PAGE> 27
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 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 2001
annual meeting of shareholders must be received by the Company by November 24,
2001 in order to be considered for inclusion in the Company's 2001 Annual
Meeting Proxy Statement and form of proxy to be mailed in March 2001.
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 2, 2001) nor more than 90
(January 31, 2001) 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,
Secretary, The John Nuveen Company, 333 West Wacker Drive, Chicago, Illinois
60606.
24
<PAGE> 28
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
25
<PAGE> 29
[NUVEEN LOGO]
The John Nuveen Company
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE> 30
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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 NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions ____________________________________________________________________
2. Ratification of the selection of KPMG LLP as independent auditors for 2000.
FOR /x/ AGAINST /x/ ABSTAIN /x/
3. 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:__________________ , 2000
________________________________
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. /x/
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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 4, 2000
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 4, 2000, and at any
adjournment or adjournments thereof, including authority to vote on (1) the
election of directors and (2) for the selection of independent auditors in the
manner specified on the reverse side.
UNLESS OTHERWISE INSTRUCTED ON THE REVERSE SIDE, ALL SHARES WILL BE VOTED (1)
FOR THE ELECTION OF DIRECTORS AND (2) FOR THE SELECTION OF KPMG LLP 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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