~BALT01A:43427:1:|02/28/95
4807-400024
SCHEDULE 14A
(Rule 14a-101)PRELIMINARY COPY -- FOR THE INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2 )
Filed by the registrant |X |
Filed by a party other than the registrant | |
Check the appropriate box:
| | Preliminary proxy statement
| X| Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
T. ROWE PRICE ASSOCIATES,
INC.
(Name of Registrant as Specified in Charter)
Alvin M. Younger, Jr.,
Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X | $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(2).
| | $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
| | Fee computed on the 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:
(4) Proposed maximum aggregate value of transaction:
| | 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:OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
YOUR VOTE IS IMPORTANT-Please execute and return the enclosed proxy promptly,
whether or not you plan to attend the T. Rowe Price Annual Meeting of
Stockholders.
T. ROWE PRICE
[CORPORATE LOGO]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
Notice Of Annual Meeting Of StockholdersNOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 199512, 1996
Notice is hereby given that the Annual Meeting of Stockholders of T. Rowe
Price Associates, Inc. (the "Company") will be held at 100 East Pratt Street,
12th Floor, Baltimore, Maryland, on April 6, 1995,12, 1996, at 10:00 a.m. for the
following purposes:
(1) To elect elevenfourteen directors of the Company;
(2) To consider and act upon a proposed charter amendment to effect a
two-for- one stock split and a proportional increase in the authorized
Common Stock of the Company;common stock;
(3) To consider and act upon athe proposed charter amendment
to authorize a class of undesignated Preferred Stock;
(4) To consider and act upon a proposed performance-linked
Executive1996 Stock Incentive Compensation Plan;
(5) To consider and act upon a proposed 1995 Director Stock
Option Plan; and
(6)(4) To consider and act upon such other business as may properly come
before the meeting.
February 6, 199512, 1996 was fixed by the Board of Directors as the record
date for determination of stockholders entitled to notice of and to vote at the
meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Alvin M. Younger, Jr.
Secretary
Baltimore, Maryland
March 1, 1995___________, 1996
PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy are furnished to
stockholders of T. Rowe Price Associates, Inc. (the "Company") in connection
with the solicitation of proxies by the Company's Board of Directors to be used
at the annual meeting of stockholders described in the accompanying notice and
at any adjournments thereof. The purpose of the meeting is to elect directors of
the Company, to consider and act upon amendmentsa proposed charter amendment to effect a
two-for-one stock split and to effect a proportional increase in the Company's charter to increase the authorized Common Stockoutstanding
common stock of the Company, and to authorize an undesignated class of Preferred
Stock, to consider and act upon athe proposed performance-linked
Executive1996 Stock
Incentive Compensation Plan, to consider and act upon a
proposed 1995 Director Stock Option Plan, and to consider and act upon such other business as may properly
come before the meeting. This proxy statement and the accompanying proxy are
first being sent to stockholders on or about March 1, 1995.___________ , 1996.
The record of stockholders entitled to notice of and to vote at the annual
meeting was taken as of the close of business on February 6, 1995.12, 1996. At that date
there were outstanding and entitled to vote 28,620,239________________ shares of Common
Stock, par value $.20 per share.share, held by approximately 2,400 stockholders of
record. In the election of directors, each share is entitled to cast one vote
for each director to be elected; cumulative voting is not permitted. For all
matters except the election of directors, each share is entitled to one vote.
Directors are elected by a plurality of the votes cast by the holders of shares
of Common Stock at a meeting at which a quorum is present. For purposes of the
election of directors, abstentions and broker non-votes are not considered to be
votes cast and do not affect the plurality vote required for directors. TheApproval
of the proposed charter amendments requireamendment requires the affirmative vote of a majority of
the total number of shares of Common Stock outstanding, and approval of the proposed compensation plans require1996
Stock Incentive Plan requires the affirmative vote of athe majority of the votes
cast.cast at the meeting. In the discussion of each of thesethe proposals included in this proxy
statement, the effect of abstentions and broker non-votes is discussed. Article
EIGHTH, Section 3 of the charter of the Company limits the voting rights of
certain persons and groups owning in excess of 15% of the Company's Common
Stock. The Company does not believe that such provision will be applicable to
any stockholders at the 19951996 annual meeting, but will apply such provision if
circumstances require.
The cost of soliciting proxies and preparing the proxy materials will be
borne by the Company. In order to ensure that sufficient shares of Common Stock
are represented at the meeting, the Company has retained the services of
Georgeson & Company, Inc. to assist it in soliciting proxies for a fee of $8,000$7,000
plus reimbursement for out-of-pocket expenses. In addition, theThe Company also will request
securities brokers, custodians, nominees, and fiduciaries to forward
solicitation material to the beneficial owners of stock held of record and will
reimburse them for their reasonable out-of-pocket expenses in forwarding such
solicitation material. In addition to solicitation of proxies by Georgeson &
Company, Inc., proxies may be solicited personally or by telephone or telegram
by directors, officers, and employees of the Company or its subsidiaries without
additional compensation to them.
The Board of Directors has selected George J. Collins and George A. Roche
to act as proxies with full power of substitution. Any stockholder executing a
proxy has the power to revoke the proxy at any time before it is voted. This
right of revocation is not limited or subject to compliance with any formal
procedure. Any stockholder may attend the meeting and vote in person whether or
not the stockholder has previously given a proxy.
Stockholder proposals intended to be presented at the 1996
annual meeting must be received by the Company for inclusion in
the Company's proxy statement and proxy relating to that meeting
by November 2, 1995.
ELECTION OF DIRECTORS
TheEffective at the time of the annual meeting, the number of directors will
be increased to fourteen persons, and the entire Board of Directors of the Company will be
elected to hold office until the next annual meeting of stockholders and until
their respective successors are elected and have qualified. All elevenEleven of the
fourteen nominees currently serve as directors of the Company. The three
nominees who are not directors currently serve as managing directors of the
Company.
Thomas H. Broadus, a director of the Company since 1979 and an employee
since 1966, and Carter O. Hoffman, a director of the Company since 1973 and an
employee since 1961, are not standing for re-election to the Board of Directors.
The Board of Directors, on behalf of the Company, wishes to express its
appreciation for their many contributions to the Company during their years of
service as directors and as employees and for their continued advice and
counsel.
It is intended that all proxies received, unless otherwise indicated, will
be voted for the election of the persons named in the following table, to serve
until the next annual meeting of stockholders and until their respective
successors are duly elected and have qualified. If any nominee should become
unable or unwilling to serve, the proxies will be voted for the election of such
person as may be designated by the Board of Directors to replace such nominee.
Information Concerning Nominees
The following table presents information concerning persons nominated by
the Board of Directors for election as directors of the Company. Except as
indicated, the nominees have been officers of the organizations named below as
their principal occupations or of affiliated organizations for more than five
years. Positions of the nominees as trustees, directors, or principal officers
of the T. Rowe Price Mutual Funds (including those Funds organized as trusts and
referred to herein as the "Price Funds") and of certain other affiliated
registered investment companies are also indicated. Stock ownership information
is reported as of the record date.
2
Age, principal occupation, directorships with public
companies, Name of Nominee and beneficial ownership of Common Stock
Name of Nominee (percent of class)
Thomas H. Broadus, Jr. Mr. Broadus is 57 years old and has
been a director of the Company since 1979, a managing director
since 1989, a vice president between 1971 and 1989, and an
employee since 1966. He is president and a director of the Blue
Chip Growth Fund and a trustee of the Equity Income Fund.
341,702 shares (1.17%) (6)- --------------- ------------------------------------------------------
George J. Collins Mr. Collins is 5455 years old and has been a director of
the Company since 1980, president and chief executive
officer since 1984, a managing director since 1989, a
vice president between 1975 and 1984, and an employee
since 1971. He is a director or trustee of 1920 equity
and fixed income funds within the Price Funds. Of
these, he is chairman of 14 funds and president of one
fund. (1)(2)(5)
905,460____ shares (3.09%(____%) (7)(6)
James E. Halbkat, Jr. Mr. Halbkat is 6061 years old and has been a director of
the Company since 1979. He is President of U.S. Monitor
Corporation, a provider of public response systems.
(3)(4)(5)
12,000_____ shares * Carter O. Hoffman Mr. Hoffman is 67 years old and has been
a director of the Company since 1973, a managing director since
1989, a senior vice president between 1980 and 1989, a vice
president between 1966 and 1980, and an employee since 1961. He
is chairman of the Prime Reserve Fund and a director of two other
Price Funds.
213,600 shares * (8)(7)
Henry H. Hopkins Mr. Hopkins is 5253 years old and has been a director of
the Company since 1987, a managing director since 1989,
a vice president between 1976 and 1989, and an employee
since 1972.
310,884_____ shares (1.06%(_____%) (8)
James A.C. Kennedy Mr. Kennedy is 42 years old, is a nominee for director,
and has been director of the Corporate Equity Research
Division of the Company since 1987, a managing director
of the Company since 1990, a vice president between
1981 and 1990, and an employee since 1972. He is a
director of the Mid-Cap Growth Fund.
_____ shares (_____%) (9)
John H. Laporte Mr. Laporte is 50 years old, is a nominee for director,
and has been a managing director of the Company since
1989, a vice president between 1978 and 1989, and an
employee since 1976. He is a director of nine equity
funds within the Price Funds. Of these, he is chairman
of three funds and president of four funds.
_____ shares (_____%) (10)
(see notesfootnotes on page 4)page____ )
3
Richard L. Menschel Mr. Menschel is 62 years old and has been a director of
the Company since 1995. He is a limited partner of The
Goldman Sachs Group, L.P., an investment banking firm.
_____ shares * (11)
William T. Reynolds Mr. Reynolds is 47 years old, is a nominee for
director, and has been director of the Corporate Fixed
Income Division since 1994, a managing director of the
Company since 1990, a vice president between 1983 and
1990, and an employee since 1981. He is a director or
trustee of ten fixed income funds within the Price
Funds. Of these, he is chairman of three funds and
president of six funds.
_____ shares (_____%) (12)
James S. Riepe Mr. Riepe is 5152 years old and has been a director of
the Company since 1981, a managing director since 1989,
a vice-president between 1981 and 1989, and director of
the investment services division and an employee since
1981. He is chairman of four of the 3739 Price Funds on
which he serves as a director or trustee and is
chairman of New Age Media Fund, Inc., and
is president and a director of CUNA Mutual Funds, Inc. He is also a
director of Rhone-Poulenc Rorer, Inc., a
pharmaceuticals company. (1)(2)
684,139_____ shares (2.34%(_____%) (10)(13)
George A. Roche Mr. Roche is 5354 years old and has been a director of
the Company since 1980, chief financial officer since
1984, a managing director since 1989, a vice president
between 1973 and 1989, and an employee since 1968. He
is president and a director of the New Era Fund and
serves as a director of two other Price funds. (1)(2)
702,396_____ shares (2.40%(_____%) (11)(14)
John W. Rosenblum Mr. Rosenblum is 5152 years old and has been a director
of the Company since 1991. He is the Tayloe Murphy
Professor at the Darden Graduate School of Business
Administration ("the Darden(the "Darden School"), University of
Virginia, and was Dean of the Darden School from 1983
to 1993. He is also a director of Chesapeake
Corporation, a manufacturer of paper products; Cadmus
Communications Corp., a provider of printing and
communication services; Comdial Corp., a manufacturer
of telephone systems for businesses; and Cone Mills
Corporation, a textiles producer.producer; and Providence
Journal Company, an owner and operator of cable
television systems. (3)(4)
1,000_____ shares * (15)
4
Robert L. Strickland Mr. Strickland is 6364 years old and has been a director
of the Company since 1991. He is Chairman of Lowe's
Companies, Inc., a retailer of specialty home supplies,
and is a director of Hannaford Bros. Co., a food
retailer. (1)(3)(4)
2,000_____ shares * (16)
M. David Testa Mr. Testa is 5051 years old and has been a director of
the Company since 1981, a managing director since 1989,
a vice president between 1976 and 1989, and an employee
since 1972. Mr. Testa has also served as chairman of
Rowe Price-Fleming International, Inc. since 1979. He
is president and a director of the Equity Series and is
a director or trustee of 1314 other Price Funds. He
serves as chairman of five of these Funds. (1)(2)(5)
369,697_____ shares (1.26%(_____%) (12)(17)
Philip C. Walsh Mr. Walsh is 7374 years old and has been a director of
the Company since 1987. He is a consultant to Cyprus
Amax Minerals Company, the successor by merger to
Cyprus Minerals Company. (3)(4)(5)
2,000_____ shares * (18)
Anne Marie Whittemore Mrs. Whittemore is 49 years old and has been a director
of the Company since 1995. She is a partner in the law
firm of McGuire, Woods, Battle & Boothe, L.L.P. and
serves as a director of Owens & Minor, Inc., a
distributor of medical and surgical supplies; USF&G
Corporation, an insurance company; the James River
Corporation of Virginia, a manufacturer of paper
products; and Albemarle Corporation, a manufacturer of
specialty chemicals.
______ shares *
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(22(27 persons) 5,782,641__________ shares (19.74%(_____%) (13)(19)
* Indicates holdings of less than 1 percent.
(see notes on page 4)5
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Management Committee of the Board of Directors.
(3) Member of the Audit Committee of the Board of Directors.
(4) Member of the Executive Compensation Committee of the Board of Directors.
(5) Member of the Nominating Committee of the Board of Directors.
(6) Includes 20,800 shares which may currently be acquired
by Mr. Broadus upon the exercise of stock options. Also includes
20,000 shares held by a charitable foundation of which Mr.
Broadus is an executive officer, 75,904 shares owned by family
members, and 24,000 shares held in trusts for members of Mr.
Broadus's immediate family. Does not include an aggregate of
140,000 shares held in trusts for family members of two other
directors of the Company of which trusts Mr. Broadus is a
co-trustee. Mr. Broadus disclaims beneficial ownership of all
shares held in trusts.
(7) Includes 39,800_____ shares which may currently be acquired by Mr. Collins upon
the exercise of stock options. Also includes 67,602_____ shares owned by a family
member and as to which Mr. Collins disclaims beneficial ownership.
(7) Includes _____ shares which may currently be acquired by Mr. Halbkat upon
the exercise of stock options.
(8) Includes 14,000 shares owned by a family member and as
to which Mr. Hoffman disclaims beneficial ownership.
(9) Includes 45,400_____ shares which may currently be acquired by Mr. Hopkins upon
the exercise of stock options.
(9) Includes _____ shares which may currently be acquired by Mr. Kennedy upon
the exercise of stock options.
(10) Includes 27,600_____ shares which may currently be acquired by Mr. Laporte upon
the exercise of stock options. Also includes _____ shares owned by a member
of Mr. Laporte's family and _____ shares held in trusts for members of Mr.
Laporte's family, as to which Mr. Laporte disclaims beneficial ownership.
(11) During 1995, Goldman, Sachs & Co. performed services for the Company,
including securities brokerage services. Mr. Menschel did not share in any
payment for these services.
(12) Includes _____ shares which may currently be acquired by Mr. Reynolds upon
the exercise of stock options. Also includes _____ shares owned by a member
of Mr. Reynolds' family, as to which Mr. Reynolds disclaims beneficial
ownership.
(13) Includes ______ shares which may currently be acquired by Mr. Riepe upon
the exercise of stock options. Also includes 20,000_____ shares owned by a member
of Mr. Riepe's family and 70,000______ shares held in trusts for members of Mr.
Riepe's family, as to which Mr. Riepe disclaims beneficial ownership. Also
includes 42,000 shares_____shares held in a charitable foundation of which Mr. Riepe is
a trustee and as to which Mr. Riepe has voting and disposition power.
(11)(14) Includes 19,200_____ shares which may currently be acquired by Mr. Roche upon the
exercise of stock options, and 200,000_____ shares held by or in trusts for
members of Mr. Roche's family and as to which Mr. Roche disclaims
beneficial ownership.
(12)(15) Includes 27,300_____ shares which may currently be acquired by Mr. Rosenblum
upon the exercise of stock options.
(16) Includes _____ shares which may currently be acquired by Mr. Strickland
upon the exercise of stock options.
(17) Includes _____ shares which may currently be acquired by Mr. Testa upon the
exercise of stock options, and 80,000_____ shares held in trusts for members of
Mr. Testa's family and as to which Mr. Testa disclaims beneficial
ownership.
(13)(18) Includes 678,492_____ shares which may currently be acquired by Mr. Walsh upon the
exercise of stock options.
(19) Includes _____ shares which may currently be acquired by all directors and
executive officers as a group upon the exercise of stock options.
6
Unless otherwise indicated in the foregoing notes, the individuals named
above have sole voting and disposition powers over the shares beneficially owned
by them.
Information Regarding the Board of Directors and Certain Committees
During 1994,1995, there were sixseven meetings of the Board of Directors of the
Company. Each director who served for the entire year attended at least 75% of
the combined total number of meetings of the Board and Board committees of which
he was a member. The Board of Directors of the Company has an Audit Committee,
Executive Compensation Committee, and a Nominating Committee.
The Audit Committee meets with the Company's independent accountants to
review whether satisfactory accounting procedures are being followed by the
Company and whether internal accounting controls are adequate, to inform itself
with regard to non-audit services performed by the independent accountants, and
to review fees charged by the independent accountants. The Audit Committee also
recommends to the Board of Directors the selection of independent accountants.
The directors designated in note (3) above are members of the Audit Committee,
which met on four occasions.occasions during 1995.
As described in the report of the Executive Compensation Committee, the
Executive Compensation Committee establishes the compensation for certain
executive officers of the Company and generally reviews benefits and
compensation for all officers and employees. It also administers the Company's
stock optionincentive and stock purchase plans.plans and the Company's Executive Incentive
Compensation Plan. The directors designated in note (4) above are members of
this Committee and met five times.seven times during 1995.
The Nominating Committee advises the Board of Directors with respect to the
selection and nomination of individuals to serve as directors of the Company.
The directors designated in note (5) on the previous page are members of the
Nominating Committee and
met on two occasions.which held one meeting in 1995. Nominations for director
which are presented to the Nominating Committee by stockholders are considered
in light of the needs of the Company, as well as the nominee's individual
knowledge, experience, and background.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth certain
information concerning the compensation for the last three completed fiscal
years of the chief executive officer and the four executive officers of the
Company who, in addition to the chief executive officer, received the highest
compensation during 1994.1995.
7
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation(1) Compensation Awards Compensation (4)
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted(#)(3)
________________ _____ ______ ________ ___________________
George J. Collins 1994 $325,000 $1,250,000 -0- $22,500
President, Chief Exec- 1993 290,008 750,000 35,000 30,000
utive Officer and 1992 265,000 500,000 12,000 30,000
Managing Director
James S. Riepe 1994 275,000 1,250,000 -0- 22,500
Managing Director 1993 248,750 750,000 30,000 30,000
1992 230,000 500,000 24,000 30,000
George A. Roche 1994 275,000 1,250,000 -0- 22,500
Chief Financial Officer 1993 248,750 750,000 30,000 30,000
and Managing Director 1992 230,000 500,000 24,000 30,000
M. David Testa 1994 275,000 1,250,000 300,000 26,625
Managing Director 1993 248,750 750,000 30,000 33,731
1992 230,000 500,000 24,000 33,450
Brian C. Rogers 1994 250,000 810,000 25,000 26,250
Managing Director 1993 220,833 400,000
Long-Term All Other
Annual Compensation (1) Compensation Awards
Compensation(4)
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted (#)(3)
- ------------------ ---- ------ --------- ----------------------
George J. Collins 1995 $325,000 $1,300,000 -0- $24,000
President, Chief Exec- 1994 325,000 1,250,000 -0- 22,500
utive Officer and 1993 290,008 750,000 35,000 30,000
Managing Director
James S. Riepe 1995 275,000 1,300,000 100,000 22,500
Managing Director 1994 275,000 1,250,000 -0- 22,500
1993 248,750 750,000 30,000 30,000
George A. Roche 1995 275,000 1,300,000 100,000 24,000
Chief Financial Offic- 1994 275,000 1,250,000 -0- 22,500
er and Managing 1993 248,750 750,000 30,000 30,000
Director
M. David Testa 1995 275,000 1,300,000 -0- 26,625
Managing Director 1994 275,000 1,250,000 300,000 26,625
1993 248,750 750,000 30,000 33,731
John H. Laporte 1995 250,000 1,300,000 25,000 26,250
Managing Director 1994 250,008 800,000 20,000 26,250
1993 220,833 550,000 24,000 33,312
1992 190,000 350,000 30,000 32,850
(1) No officer named in the Summary Compensation Table received any perquisites
and other personal benefits the aggregate amount of which exceeded the
lesser of either $50,000 or 10% of the total annual salary and bonus
reported for 19941995 in the Summary Compensation Table.
(2) Bonuses are generallyfor 1995 were paid pursuant to the Company's Executive Incentive
Compensation Plan. For 1993 and 1994, bonuses were determined by the
Executive Compensation Committee based upon individual, group and corporate
performance and are allocated and paid at year end.performance. Bonuses are discretionary and vary significantly from year to year and among
eligible employees. In recent years, bonuses have
comprised a significant portion of compensation. Payment of the
portion of the 1994 cash bonus payable to each person named in
the Summary Compensation Table that would not be deductible in
1994 has been deferred until such time as these payments are
fully deductible for federal income tax purposes or the Executive
Compensation Committee otherwise determines to effect these
payments. See "Report of the Executive Compensation Committee."
(3) The number of shares subject to options have been adjusted in accordance
with the terms of the options for the two-for-one stock split effective at
the close of business on November 30, 1993.
(4) Included in other compensation is a $22,500, $30,000$22,500 and $30,000
contribution for 1995, 1994 1993 and 1992,1993, respectively, for each of the named
individuals to the Company's tax-qualified profit sharing plan, which
8
provides retirement benefits based on the investment performance of each
participant's account under the plan. Also includes $1,500 in directors
fees paid by a wholly-owned subsidiary of the Company to each Mr. Collins
and Mr. Roche in 1995 and $4,125, $3,731$4,125 and $3,450$3,731 in employer matching
contributions under the Company's 1986 Employee Stock Purchase Plan for Mr.
Testa for 1995, 1994 1993 and 1992,1993, respectively, and $3,750, $3,312$3,750, and $2,850$3,312
in employer matching contributions under the Company's 1986 Employee Stock
Purchase Plan for Mr. RogersLaporte for 1995, 1994 1993 and 1992,1993, respectively.
Option Grants Table. The following table sets forth certain information
relating to options granted to purchase shares of Common Stock of the Company.
Options generally become exercisable in the first through fifth anniversaries of
the date of grant, with the exception of the 1994 option award to Mr. Testa and
the 1995 option awards to Mr. Riepe and Mr. Roche, which become exercisable in
the third through fifth anniversaries of the date of grant. TheIn December 1995,
the Executive Compensation Committee (the "Committee") adopted amendments to all
existing option agreements under the Company's 1986, 1990 and 1993 Stock
Incentive Plans provideproviding that such options and any options granted in the
rightfuture to exercise options may be acceleratedthe current option holders will become exercisable in full for a
period of one year following certain specified changes in control of the Company
or approval by the Company.
Any decisionBoard of Directors of certain transactions leading to changes
in control, subject to the ability of the Committee to rescind such acceleration
of exercisability for a specified period following any triggering event. In
addition, the Company's stock option plans provide the Committee with broad
discretion to accelerate options held by executive officers
will be made in the sole discretionexercisability of the Executive Compensation
Committee on such terms and conditions as this Committee
determines to be appropriate under the circumstances.options.
9
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Potential Realizable Value at
Securities Percent of Assumed Annual Rates
of Stock Price
Underlying Total Options Exercise or
Appreciation for Option Term (2)
____________________________________
Options Granted in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
George J. Collins 0 0 N/A N/A $0 $ 0 $ 0
James S. Riepe 0 0 N/A N/A 0 0 0
George A. Roche 0 0 N/A N/A 0 0 0
M. David Testa 300,000 24.4 $32.25 11/10/04 0 6,084,600
15,419,400
Brian C. Rogers 25,000 2.0 32.25 11/10/04 0 507,050
1,284,950
Individual Grants
Number of Percent of Potential Realizable Value at As-
Securities Total Options sumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
George J. Collins 0 0% N/A N/A $0 $0 $0
James S. Riepe 100,000 8.2% $52.25 10/31/05 0 3,286,000 8,327,000
George A. Roche 100,000 8.2% 52.25 10/31/05 0 3,286,000 8,327,000
M. David Testa 0 0% N/A N/A 0 0 0
John H. Laporte 25,000 2.0% 52.25 10/31/05 0 821,500 2,081,750
The 5% and 10% assumed rates of stock price appreciation used to calculate
potential gains to optionees are mandated by the rules of the Securities and
Exchange Commission. To put these hypothetical gains into perspective, the
following additional information is being provided.
Number of Potential Realizable Value at
Securities Percent of Assumed Annual Rates of Stock Price
Underlying Total Options Exercise or Appreciation for Option Term (2)
___________________________________
Options Granted in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
All Stockholders(4) N/A N/A N/A N/A 0 $582,319,443
$1,475,695,431
Potential Gain to
Named Executives as a
Percentage of Potential
All Stockholders Gain N/A N/A N/A N/A N/A 1.13% 1.13%
Number of Percent of Potential Realizable Value at As-
Securities Total Options sumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
All Stockholders (4) N/A N/A N/A N/A 0 $940,135,542 $2,382,382,429
Potential Gain to
Named Executives as a
Percentage of Potential
All Stockholders Gain N/A N/A N/A N/A N/A 7.86% 7.86%
(1) Options were granted at 100% of fair market value on the date of grant.
(2) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from
November 11, 19941, 1995 (the date of grant of the 19941995 option awards) to November 10, 2004October
31, 2005 (the date of expiration of such options) of 0%, 5%, and 10%, the
latter two assumed rates being required under the rules of the Securities
and Exchange Commission. Based on these assumed annual rates of stock price
appreciation of 0%, 5%, and 10%, respectively, the Company's stock price at
November 10, 2004October 31, 2005 is projected to be $32.25,
$52.532,$52.25, $85.11, and $83.648,$135.52,
10
respectively. These assumptions are not intended to forecast future
appreciation of the Company's stock price. Indeed, the Company's stock
price may increase or decrease in value over the time period set forth
above. The potential realizable value computation does not take into
account federal or state income tax consequences of option exercises or
sales of appreciated stock.
(3) Optionees will not realize value under their 19941995 option grants without a
stock price appreciation which will benefit all stockholders.
(4) The number of shares subject to options granted in 19941995 is not included in
the number of shares outstanding used to calculate potential realizable
value at the assumed annual rates of stock price appreciation of 0%, 5%,
and 10%, respectively.
Aggregated Option Exercises and Fiscal Year-End Option Values Table. The
following table sets forth certain information concerning the exercise of stock
options, the number of unexercised options and the value of unexercised options
at the end of 19941995 for the executive officers whose compensation is reported in
the Summary Compensation Table. Value is considered to be, in the case of
exercised options, the difference between the exercise price and the market
price on the date of exercise, and, in the case of unexercised options, the
difference between the exercise price and market price on December 31, 1994.1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1994 at December 31, 1994
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) Realized Unexercisable) (1)
Unexercisable) (2)
George J. Collins N/A N/A 39,800/47,200
$627,725/$360,150
James S. Riepe 4,800 $110,700 27,600/56,000
275,250/530,000
George A. Roche 8,600 153,525 19,200/56,000
166,050/530,000
M. David Testa 11,100 250,219 27,300/356,000
295,881/530,000
Brian C. Rogers 11,000 222,375 94,800/88,000
1,553,438/709,312
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1995 at December 31, 1995
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) Realized Unexercisable) (1) Unexercisable) (2)
George J. Collins N/A N/A 58,800/28,200 $1,995,200/$667,425
James S. Riepe 9,600 $460,200 42,400/131,600 1,208,700/802,050
George A. Roche 11,400 498,900 32,200/131,600 879,750/802,050
M. David Testa 17,700 636,856 34,000/331,600 937,800/5,902,050
John H. Laporte 20,000 774,375 75,800/68,200 2,459,438/975,000
11
(1) All share and per share figures have been adjusted in accordance with the
terms of the options for the two-for-one stock split effective at the close
of business on November 30, 1993.
(2) An "In-the-Money" option is an option for which the option price of the
underlying stock is less than the market price at December 31, 1994,1995, and
all of the value shown reflects stock price appreciation since the granting
of the option.
Compensation of Directors. Directors who are also officers do not receive
directors' fees. Each independent director who served for the entire year
received a $50,000 retainer for his 19941995 services as a director and memberboard committee
member. The retainer paid to each Mr. Menschel and Mrs. Whittemore, who served
on the Board of Directors for part of the various committees on which he serves.
Executive Compensation Committee Interlocks and Insider
Participationyear, was prorated at $25,000.
During 1994,1995, Philip C. Walsh (Chairman), James E. Halbkat, Jr., John W.
Rosenblum, and Robert L. Strickland served as members of the Executive
Compensation Committee. No director or executive officer of the Company is a
director or executive officer of any other corporation that has a director or
executive officer who is also a director or board committee member of the
Company.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEEReport of the Executive Compensation Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee"), comprised solely of the independent directors named below, is
responsible to the Board and by extension to the stockholders for: (i)
determination of the compensation of the chief executive officer and the other
managing directors who are also members of the Company's Management Committee
(collectively, the "Senior Executive Officers") as well as the other officers; (ii) administration of the
Company who are
also directors; (ii)Company's Executive Incentive Compensation Plan (the "Incentive Plan"); (iii)
administration of the Company's stock incentive plans as required by Rule 16b-3
under the Securities Exchange Act of 1934;1934 as amended; and (iii)(iv) review and
approval of the compensation policies and general levels of compensation for the
Company's remaining managing directors and other key-employees,key employees, for whom
individual compensation decisions are made by a management-level compensation
committee.
The Committee recognizes that the investment management and securities
industries are highly competitive, and that experienced professionals have
significant career mobility. Its members believe that the ability to attract,
retain and provide appropriate incentives for the highest quality professional
personnel is essential to retain the Company's competitive position in the
mutual fund and investment management industry, and thereby seek to provide for
the long-term success of the Company in the interests of its stockholders.
12
The Committee believes that competitive levels of cash compensation,
together with equity incentive programs that are consistent with stockholder
interests, are necessary for the motivation and retention of the Company's
professional personnel. The Company's compensation programs are keyed to
achievement, as determined by the Committee, of short- and long-term performance
goals.
During 1994,1995, base salaries for each of the individuals named in the table
on page 5_____ (the "Named Officers") were unchanged from the annual levels
established during 1993 (which levels, in the case of each of the Senior
Executive Officers, had not previously been changed since the Company's initial
public offering in 1986). Consistent with compensation practices generally
applied in the investment management and other financial services industries
with which the Company competes for talent, base salaries for the Named Officers
are intended to form a relatively low percentage (substantially below 50%) of
total cash compensation. The annual discretionary cash bonus has been the
principal means of rewarding the Named Officers for individual
and group performance and, in recent years, has beencompensation with the major componentportion of cash compensation.
Atcompensation intended to
be derived from payments made under the Incentive Plan provided, of course, that
the performance goals established under the Incentive Plan are met or exceeded.
In 1995, the Committee and the Board of Directors recommended, and the
stockholders approved, the Incentive Plan. The Incentive Plan establishes a pool
(the "Incentive Pool") which relates incentives to the Company's Income before
Income Taxes and Minority Interests for that year ("Adjusted Earnings"), subject
to a requirement that a threshold ratio of net (after-tax) income to average
stockholders' equity (the "Threshold ROE") is attained. The Incentive Pool,
subject to reduction based on the Threshold ROE target, is computed as follows:
(1) for Adjusted Earnings up to $25 million, 5% of Adjusted Earnings; (2) for
Adjusted Earnings above $25 million to $50 million, an additional 7% of Adjusted
Earnings; and (3) for Adjusted Earnings above $50 million, an additional 8% of
Adjusted Earnings. Thus, the Incentive Plan establishes a maximum cumulative
Incentive Pool of $3,000,000 plus 8% of Adjusted Earnings over $50 million. For
purposes of the Incentive Plan, Threshold ROE for the year is the ratio of
annual net income (excluding the effect of extraordinary items under generally
accepted accounting principles) to average stockholders' equity for the year.
The Threshold ROE that must be attained to permit the maximum cumulative
Incentive Pool to be fully payable under the Incentive Plan is 20%. If the
Company's Threshold ROE is less than 20% but at least 10%, for each full
percentage point shortfall the maximum cumulative Incentive Pool is reduced by
five percentage points. If the Company's Threshold ROE falls below 10%, there
shall be no Incentive Pool and no bonus payment will be made from the Incentive
Pool for that fiscal year.
As contemplated by the Incentive Plan, the Committee at the outset of 1994,1995
designated seven executive officers (the chief executive officer, the Company's Boardthree
other Senior Executive Officers, and three other managing directors) as eligible
to participate in the Plan for 1995. The Committee also determined that each
particular participant would be eligible to receive a specified percentage of
Directors13
the available Incentive Pool. In accordance with the Incentive Plan, the
Committee reviewed the requirements established a specific earnings target relative to three years
average growth ratesby the Plan for determining
incentive awards and a corresponding target bonus pool
available foralso determined and certified that each of the Plan's
performance goals had been satisfied before it approved and permitted payment of
bonuses pursuant to a significant numberthe Plan. Hence, the Committee expects that all payments
pursuant to the Incentive Plan will be fully deductible in accordance with
Section 162(m) of the Company's professional staff. AtInternal Revenue Code of 1986, as amended, and all other
compensation payable to the endNamed Executive Officers for 1995 performance will
similarly be fully deductible.
The Committee determined to award each of the year, theSenior Executive Officers
incentive compensation in each case in an amount of the aggregate bonus pool was substantially increased
above the initial target bonus pool to reflect the fact that the
Company's performance during the year substantially exceeded the
initial earnings target.
The Executive Compensation Committee first determined the
portion of the aggregate bonus pool to be made available to the
persons (otherless than the Named Officers) eligible to receive
awards from the aggregate bonus pool. The Committee then
determined individual bonus awards for the Named Officersfull amount that
would be made available frompermitted to be paid under the remainderIncentive Plan. In making its
determinations, the Committee noted that the Company had achieved record
revenues, earnings, and earnings per share and had attained a return on equity
substantially in excess of the aggregate bonus
pool. In making bonus awards to all participants, the Company and
theThreshold ROE. The Committee recognized that market and competitive forces
require compensation levels for a significant percentage of the
Company's investment and other professional staff sufficient to
prevent loss of promising personnel to direct competitors or
other participants in the investment and financial services
markets.
In addition to its primary consideration of the quantitative
factors described above, the Executive Compensation Committeealso gave significant
consideration to a series of specific, qualitative performance factors, that it
believed reflected the NamedSenior Executive Officers' performance but were not
capable of precise measurement. The qualitative factors were considered for purposes
of determining both the aggregate amount of the bonus pool to be
made available as well as individual bonus awards. For 1994, the
principal qualitative factors which the Committee assessed in
determining the incentive compensation of the Senior Executive
Officers includedmeasurement, including: relative investment performance,
marketing effectiveness, management of corporate assets, expense control, and
corporate infrastructure development. These qualitative
factors were not accorded specific weightings, and were applied
by the Executive Compensation Committee as appropriate to take
into account the responsibilities of the Senior Executive
Officers. The Committee determined that the Senior
Executive Officers as a teameach had demonstrated outstandingsuperior long-term management
performance in each of these areas. In the view of the
Committee, this performance could have justified a significant
further increaseHowever, in the bonus pool over and above the amount
previously determined duedetermining executive officer
compensation relative to the strong quantitative performance,
butCompany's compensation policies in general as well
as general industry compensation trends, the Committee determined to make no further upward
adjustments.award the
Senior Executive Officers incentive compensation less than the full amounts
payable under the Plan. In making these determinations, the Committee noted that
the Company may be required to pay out a greater portion or all of the incentive
pool in a year when financial performance might not be so strong in order to
maintain a competitive compensation structure and thus retain key personnel. In
the case of Mr. Rogers,Laporte, the principal factor
weighed was the superior investment performanceNamed Officer who is not one of the portfoliosSenior
Executive Officers, a portion of the incentive compensation reported in the
Summary Compensation Table represents payments other than from the Incentive
Pool (as contemplated by the Incentive Plan) and was based on the Committee's
evaluation of the operating performance and qualitative factors of the business
unit for which Mr. Rogers wasLaporte is responsible.
In light of the decision to recommend for stockholder
approval a performance-based incentive plan for years beginning
in 1995, as described on pages 13 to 15, the Committee determined
to defer payment of the portion of the cash bonus payable to each
of the Named Officers that would be non-deductible in 1994 until
such time as these payments are fully deductible or the Committee
otherwise determines to effect the payments. Assuming stockholder
ratification of this incentive plan, the deferred portion of the
1994 bonus will be paid in 1995. Thus, no portion of compensation
payable to the Named Executive Officers for 1994 performance is
expected to be non-deductible.
In establishing the compensation of the Named Officers, the Committee took
into account the fact that the four Senior Executive Officers constituted the
Company's senior management team during 19941995 and thus had broad Company-wide
management responsibilities as well as line operating responsibilities. Each of
these individuals has been a member of the Company's Management Committee since
1984. A larger base salary for Mr. Collins reflected the additional
responsibilities inherent in his position as chief executive officer. The levels of 1994 bonus
compensation reflected attainment by the Company of record
operating income and earnings per share, in each case
substantially in excess of initial targets, as well as
consistently favorable performance relative to specific
qualitative performance factors discussed above. Subject to
the considerations regarding the long-term contributions of Mr. Testastock option awards described below, the four
Senior Executive Officers were viewed as making generally equivalent
contributions to 19941995 performance. In the case of Mr. Rogers,Laporte, the Executive Compensation Committee
took into consideration the strong investment performance and growth in assets
14
under management of the Company's Equity Income
Fund, ofsmall company equity management operation, for
which Mr. RogersLaporte is the chief portfolio manager,in charge, and the fact that this fund is one of the largest of the Price Funds and
an important contributorfunds under Mr. Laporte's
general supervision are major contributors to Company revenues.
In recent years, equity incentive awards in1995, the form ofCommittee determined to make stock option grants have been directed primarily to officers
including certain managing directors other than the Senior
Executive Officers. Individual awards have been based on
evaluation of the same individual and group performance goals
that form the basis of bonus awards. Preliminary option
determinations for key employees other than managing directors
are made by a management-level compensation committee, subject to
review and approval by the Executive Compensation Committee.
In 1994, the Executive Compensation Committee made a stock
option award to Mr. TestaRiepe
and Mr. Roche each covering 300,000100,000 shares of Common Stock at the closing Nasdaq price on the date of grant ($32.25$52.25 per share). Thisshare.
These option award wasawards were significantly greater than prior
option awards that had been
made in the past, with the exception of one 1994 award. These awards were made
in an effort to balance the stock incentives and was made, onstock ownership among the
basis of past performance,Senior Executive Officers and to provide Mr. Testa with a strong incentive to continue to provide
the Company with similar contributions for the foreseeable
future. In making this award, the Executive Compensation
Committee specifically recognizedrecognize the unique contributionlong-term contributions of
Mr. Testa over a long number of years to the creation, growth, and
leadership of the Company's international investment management
business, which was a major contributorRoche to the Company's investmentfinancial management asset and revenue growth in 1994equity portfolio management
functions and a very
significant contributor in recent prior years. The Committee also
consideredof Mr. Testa's significant contributionsRiepe to leadership in
restructuring the Company's equity management function, which has
enjoyed consistently favorable investment performance recently.
Inmutual fund business. Consistent
with this objective and in order to minimize the dilutive effect of option
awards, the Executive Compensation Committee made nodetermined not to make stock option awards during
1994in 1995 to
the other Senior Executive Officers.
In making this option award, the Committee's intention, in
recognizing superior past long-term performance, was to provide
an additional incentive toeither Mr. Testa to continue this performance
for a significant period in the future and to reinforce the
Company's policies to base compensation awards to its executive
officers largely on performance.Collins or Mr. Testa. To solidify the link of the
award to Mr. Testathese considerable
awards to long-term future performance, the option awards to Mr. Testa's
option award,Riepe and Mr.
Roche, which expires in November 2004, becomesexpire on October 31, 2005, become exercisable in three equal
annual installments commencing in November 1997.1998. This three-year delay before initial
vesting commences is longer than the vesting period established for otherin stock option
grants awarded to other key employees in recent years.1995.
In determining option awards,administering the Executive CompensationCompany's compensation programs for executive
officers, the Committee receives the advice of its independent compensation
consultants concerning option award practices of other public companies,
including companies which compete with the Company for talent.
As noted above, the Executive Compensation Committee
determined during 1994 to design a bonus plan for years
commencing January 1, 1995 that is intended to permit full
deductibility of compensation to Named Officers. As a result, the
Company's proposed Executive Incentive Compensation Plan,
included on pages 13 to 15 of this proxy statement, has been
recommended to stockholders for approval at the 1995 annual
meeting.
The Executive Compensation Committee has compared the Company's compensation levels to relevant
publicly available data for the investment management, securities and other
financial service industries and found the Company's compensation levels to be
competitive. Certain of these companies are included in the CRSP Total Return
Index for Nasdaq Financial Stocks shown in the Stock Performance Chart which follows this report.below.
The Company believes it competes for executive talent with a large number of
investment management, securities, and other financial services companies, some
of which are privately owned and others of which have significantly larger
market capitalizations than the Company. The practice of the Company and the
Executive
Compensation Committee is to review available compensation data from a large universe of
financial services companies. The Executive Compensation Committee receives the assistance of an
independent compensation consulting firm in reviewing and
analyzing this datacomparing and determining executive
compensation and policies. TheIn reviewing this data, the Committee's goal is to
maintain compensation programs which are competitive and, where performance justifies,
abovewith averages within the
financial services industry, compensationbut are neither significantly higher nor lower than
these averages.
15
The Executive Compensation Committee believes that 19941995 compensation levels
disclosed in this proxy statement are reasonable and appropriate in light of the
Company's very strong results
relative to the Company's financial and qualitative performance
targets.investment performance.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
John W. Rosenblum
Robert L. Strickland
___________
STOCK PERFORMANCE CHART
As part of the proxy statement disclosure requirements mandated by the
Securities and Exchange Commission, the Company is required to provide a
five-year comparison of the cumulative total stockholder return on its Common
Stock with that of a broad equity market index and either a published industry
index or a Company-constructed peer group index.
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 19941995 with the cumulative total return on the CRSP Total
Return Index for the Nasdaq Stock Market (US Companies), the CRSP Total Return
Index for Nasdaq Financial Stocks, and the S&P 500 Index. The comparison assumes
$100 was invested on December 31, 19891990 in the Company's Common Stock and in each
of the foregoing indices and the reinvestment of dividends.
There can be no assurance as to future trends in the cumulative total
return of the Company's Common Stock or of the following indices. The Company
does not make or endorse any predictions as to future stock performance.
INSERT LINEGRAPH
with TABLE16
GRAPH PLOT POINTS
================================================================================
1990 1991 1992 1993 1994 1995
- --------------------------------------------------------------------------------
T. Rowe Price $100 $191 $197 $256 $270 $450
Associates, Inc.
- --------------------------------------------------------------------------------
CRSP Total Return 100 161 187 215 210 296
Index for the Nasdaq
Stock Market (US
Companies) (1)
CRSP Total Return 100 155 221 257 258 376
Index for Nasdaq
Financial Stocks (1)
S&P 500 Index (2) 100 130 140 155 157 215
================================================================================
(1) The CRSP Total Return Index for the Nasdaq Stock Market (US Companies) is
an index comprising all domestic common shares traded on the Nasdaq
National Market and the Nasdaq Small-Cap Market. The CRSP Total Return
Index for Nasdaq Financial Stocks is an index comprising all financial
company American Depository Receipts, domestic common shares and foreign
common shares traded on the Nasdaq National Market and the Nasdaq Small-Cap
Market, and represents SIC Codes 60 through 67. The Company will provide
the names of companies included in this index upon the written request of
any stockholder. Such request should be directed to the secretary of the
Company. These indices were prepared for Nasdaq by the Center for Research
in Securities Prices ("CRSP") at the University of Chicago and distributed
to Nasdaq-listed companies to assist them in complying with proxy rule
disclosure requirements. The Company has not independently verified the
computation of these total return indices.
(2) Total return performance for the S&P 500 Index provided by Standard &
Poor's.
PROPOSED CHARTER AMENDMENTSAMENDMENT TO EFFECT A TWO-FOR-ONE
STOCK SPLIT AND A PROPORTIONAL INCREASE IN
THE AUTHORIZED COMMON STOCK
AND CREATE A CLASSSHARES OF UNDESIGNATED PREFERREDCOMMON STOCK
The Board of Directors of the Company has adopted resolutions declaring
advisable and recommending to the Company's stockholders for their approval two separate amendmentsan
amendment to the Company's charter. The first amendment provides forcharter effecting a two-for-one split of the
Company's outstanding Common Stock and a proportional increase ofin the authorized
shares of Common Stock from 48,000,000100,000,000 shares to 100,000,000 shares. The second amendment provides for the
creation of a class of 20,000,000 shares of undesignated
Preferred Stock which would be subject to classification and
reclassification by the Board of Directors without stockholder
approval.200,000,000. The text of the
proposed amendmentsamendment is included in the form of Articles of Amendment attached
hereto as Exhibit A. The termsBoard of Directors believes that the stock split will
be beneficial to the trading market for the Company's Common Stock by reducing
the per share trading price and increasing the number of publicly traded shares.
17
If the amendment is adopted, the split will become effective as of the
close of business on April 12, 1996 and stockholders of record as of that date
(the "record date") will receive one share of Common Stock for each share held
as of the record date. Certificates representing such shares will be distributed
on April 30, 1996. Participants in the Company's Employee Stock Purchase Plan
will be entitled to receive additional full and fractional shares for each full
and fractional share owned by them as of the April 12 record date, and options
outstanding under the Company's existing stock option and stock incentive plans
will be proportionally adjusted. Similarly, it is expected that the dividend
payable per share in subsequent quarters will be adjusted to reflect the effect
of the split.
It is likely that the per share trading price of the Common Stock on the
Nasdaq National Market will be reduced to approximately one-half of the trading
price immediately before the stock split and that this will occur on the [April
30 payment date]. The cost basis of pre-split shares shall be allocated pro-rata
among the pre-split shares and the split shares received in respect of those
particular pre-split shares. The new shares will be deemed to have been held for
the same period of time as the pre-split shares to which they relate. The
Company has been advised by counsel that, under current federal tax law, the
distribution of additional shares will not result in taxable income or loss.
Following stockholder adoption of the proposed class of Preferred Stock provides
that the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption thereof (collectively, the
"Limitations and Restrictions") may be determined by the Board of
Directors of the Company prior to the issuance of such stock. As
such, the Board of Directors of the Company will, in the event of
the approval of this proposal by the Company's stockholders, be
entitled to authorize the creation and issuance of 20,000,000
shares of Preferred Stock in one or more series with such
Limitations and Restrictions as may be determined in the Board's
sole discretion, with no further authorization by stockholders
required for the creation and issuance thereof.
The additionalamendment, approximately
_____ shares of Common Stock will be available for issuance in excess of
outstanding Common Stock (approximately _____ shares post-split) and Preferredthe
approximately _____ post-split shares reserved for issuance under the Company's
various employee benefit plans. The proportion of shares available for possible
future issuance to total authorized capital stock will remain exactly the same
before and after the split. At the present time, there are no agreements,
understandings or arrangements for the authorized but unissued capital stock,
other than the existing and proposed (see the proposed 1996 Stock Incentive Plan
described beginning on page ______) employee stock plans.
The amendment does not change the proportion of the authorized Common Stock
to the shares of Common Stock outstanding or reserved for issuance, as described
above. The authorized shares of Common Stock in excess of the outstanding and
reserved shares could be issued, in many cases without stockholder approval, for
a variety of corporate purposes, including the raising of additional capital to
support expansion of the Company's growth, either through internally-generated
growth or through acquisitions, and stock issuances in connection with the
acquisition of other business organizations, employee incentive plans, and stock
splitssplit-ups and recapitalizations of the Company's
capital structure.stock dividends. Management of the Company is cognizant of the
trends toward consolidation in the investment management industry and believes
there may be enhanced prospects for growth through acquisition in the future.
Consistent with these trends, the Company from time to time reviews various
acquisition prospects and periodically engages in discussions regarding such
18
possible acquisitions. Currently, the Company is not a party to any agreements
or understandings regarding any material acquisitions that would require
issuance of any shares authorized by the proposed charter amendments.amendment. In
addition, acquisitions involving stock issuances above certain enumerated
thresholds would require stockholder approval under applicable rules of the
Nasdaq Stock Market and in some circumstances Maryland law.
The Board of Directors is required to make any determination to issue
shares of Common Stock or Preferred Stock based on its judgment as to the best interests of the
stockholders and the Company. Although the Board of Directors has no present
intention of doing so, it could issue shares of Common Stock or Preferred
Stock that could depending on the terms of such series, make
more difficult or discourage an attempt to obtain control of the Company by
means of merger, tender offer, proxy contest or other means. When, in the
judgment of the Board of Directors, this action will be in the best interestinterests of
the stockholders and the Company, such shares could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company. Such shares could be privately placed with purchasers favorable to the
Board of Directors in opposing such action. The Board of Directors could also authorize holders of a
series of Preferred Stock to vote either separately as a class or
with the holders of the Company's Common Stock on any merger,
sale or exchange of assets by the Company or any other
extraordinary corporate transaction. The issuance of new shares could
also be used to dilute the stock ownership of a person or entity seeking to
obtain control of the Company should the Board of Directors consider the action
of such entity or person not to be in the best interests of the stockholders and
the Company.
In
addition, the shares of Preferred Stock could be issued if the
Board of Directors were to adopt a stockholder rights plan in
order to protect stockholders in the event of an unsolicited
attempt to acquire the Company which the Board of Directors does
not believe to be in the best interests of the Company's
stockholders. The Company has no present plans to issue shares of
Preferred Stock or to adopt a stockholder rights plan.
Accordingly, the terms of any Preferred Stock subject to this
proposal cannot be stated or estimated with respect to any or all
of the Preferred Stock authorized.
Recommendation of the Board of Directors; Vote Required
The Board of Directors believes the increase in the
authorized Common Stock and the creation of the Preferred Stock
are in the best interests of the Company and its stockholders and
has declared the amendments advisable. Stockholders are required
under Securitiesadvisable and Exchange Commission rules to consider the
two amendments separately. The Board of Directors recommends a vote "FOR"
thean amendment to the Company's charter to increase
from 48,000,000 to 100,000,000 shareseffecting a two-for-one split of the
authorizedCompany's outstanding Common Stock and "FOR"a proportional increase in the amendment to the Company's charter to authorize
20,000,000authorized
shares of a new class of undesignated Preferred Stock.Common Stock from 100,000,000 to 200,000,000 shares. The affirmative
vote of a majority of the total number of shares of Common Stock outstanding
will be required for adoption of each
of the two amendments. Abstentionsamendment. Accordingly, abstentions and
broker non-votes will have the same effect ofas a vote against each of the amendments. The
proposals are independent such that failure to adopt one proposal
will not affect adoption of the other proposal.
PROPOSED EXECUTIVE INCENTIVE COMPENSATION PLAN
On February 13, 1995, the Executive Compensation Committee
recommended toamendment.
Proxies solicited by the Board of Directors adoptionwill be voted in favor of the
Executiveamendment unless stockholders specify otherwise.
PROPOSED 1996 STOCK INCENTIVE PLAN
The Company's 1996 Stock Incentive Compensation Plan (the "Incentive Plan"). The Board of
Directors adopted the Incentive Plan on February 13, 1995,
subject to stockholder approval. The following is the text of the
Incentive Plan:
Purpose and Effects of Incentive Plan. The Incentive Plan is
intended to assure that the cash compensation of the chief
executive officer ("CEO""Plan") and the other executive officers whose
compensation is required to be reported in the Company's annual
proxy statement will be fully deductible for federal income tax
purposes, notwithstanding the $1,000,000 annual limitation on
certain types of compensation imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The
Incentive Plan ties directly the incentive compensation payable
to the CEO and certain other executive officers to attainment of
specific financial performance targets. Thus, incentive
compensation payments will be further aligned with the interests
of all stockholders.
Participation. The Participants in the Incentive Plan shall
be the CEO, the members of the Company's Management Committee,
and certain other executive officers of the Company designated at
the outset of the fiscal yearwas recommended by the
Executive Compensation Committee of the Board of Directors (the "Committee"), which
Committee is comprised solely of independent directors. At
February 13, 1995, the Company had 18 managing directors, seven
(7) of whom have been designated by the Executive Compensation
Committee to be Participants. Amounts payable from the Incentive
Pool (computed in accordance with the following paragraph)
established under the Incentive Plan are in addition to, and not
in substitution for, base salaries, which are reviewed by the
Committee annually at approximately mid-year. Unless otherwise
determined by the Executive Compensation Committee in its sole
discretion (which may be made on a case-by-case basis), the CEO
and each member of the Management Committee are eligible to
receive annual bonuses from the Incentive Pool only. Other
Participants will be eligible for other incentive compensation
based upon the operating performance and enumerated qualitative
factors, as evaluated by the Executive Compensation Committee
with the input of management, of the business unit for which such
Participant is responsible, in addition to amounts payable from
the Incentive Pool.
Establishment of Incentive Pool under the Incentive Plan.
The Incentive Plan establishes a maximum Incentive Pool payable
to the Participants under the Incentive Plan in the aggregate for
any fiscal year of the Company. The Incentive Pool is determined
under the formula described below which relates incentives to the
Company's annual Income before Income Taxes and Minority
Interests for that year ("Adjusted Earnings"), subject to a
requirement that a threshold ratio of net income to average
stockholders' equity for the fiscal year (the "Threshold ROE") is
attained. The Incentive Pool, subject to reduction if required by
the next paragraph, will be computed on a cumulative basis as
follows: (1) for Adjusted Earnings up to $25 million, 5% of
Adjusted Earnings will be available under the Incentive Pool,
establishing a maximum Incentive Pool of $1,250,000; (2) for
Adjusted Earnings above $25 million to $50 million, an additional
7% of Adjusted Earnings will be available under the Incentive
Pool, establishing a maximum cumulative Incentive Pool of
$3,000,000; and (3) for Adjusted Earnings above $50 million, an
additional 8% of Adjusted Earnings will be available under the
Incentive Pool, establishing a maximum cumulative Incentive Pool
of $3,000,000 plus 8% of Adjusted Earnings over $50 million.
The ROE is defined under the Incentive Plan as the ratio of
annual net income (excluding the effect of extraordinary items
under generally accepted accounting principles) to average
stockholders' equity for the year. The Threshold ROE that must be
attained to permit the maximum cumulative Incentive Pool to be
fully payable under the Incentive Plan is 20%. If the Company's
ROE for the fiscal year is less than 20% but at least 10%, for
each full percentage point shortfall the maximum cumulative
Incentive Pool is reduced by five percentage points. Thus, if the
ROE is 15%, three-quarters (75%) of the maximum cumulative
Incentive Pool shall be payable, and if the ROE is 10%, one-half
(50%) of the maximum cumulative Incentive Pool shall be payable.
If the Company's ROE falls below 10% for any fiscal year, there
shall be no Incentive Pool and no bonus payment will be made from
the Incentive Pool for that fiscal year.
Payments under the Incentive Plan. The maximum share of the
Incentive Pool payable to any Participant is limited to 40%. The
actual amount paid from the Incentive Pool for any fiscal year
may be less but not greater than the maximum amount available for
payment from the Incentive Pool, based on the formula for that
year, and the Executive Compensation Committee shall have sole
and exclusive discretion to reduce the share or amount payable to
any Participant from the Incentive Pool.
Prior to the payment of any amounts from the Incentive Pool
for any fiscal year, the Executive Compensation Committee shall
certify in writing (to the extent required by, and as defined in,
any applicable IRS Regulations) that the Threshold ROE and
Adjusted Earnings goals and any other material terms used to
determine amounts payable from the Incentive Pool were in fact
satisfied. For this purpose, approved minutes of the Executive
Compensation Committee shall be treated as a written
certification and no other separate written certification shall
be required. All amounts payable from the Incentive Pool shall be
paid in cash as soon as practicable after such certification.
The Incentive Plan permits the Executive Compensation
Committee to make a determination that the Threshold ROE and
Adjusted Earnings have been attained so as to permit payment of
awards under the Incentive Plan, in whole or in part, prior to
the conclusion of the year. For these purposes, the Executive
Compensation Committee is permitted to rely on the Company's most
recently available internal interim financial statements
(containing such adjustments and accruals as are required under
generally accepted accounting principles), which may be adjusted,
if and to the extent permitted by applicable law, regulations and
interpretations, to take into account the Company's projected
results of operations for the remainder of the year based on
available data concerning assets under management in mutual fund
and investment advisory accounts and other appropriate
adjustments.
The actual amounts that will be paid to Participants from
the Incentive Pool for 1995 and future years are not currently
determinable, as such amounts will depend upon the Company's
results of operations and return on average equity and the
Executive Compensation Committee's determination of the share or
amount of the maximum cumulative Incentive Pool to be paid to
each Participant. Similarly, since the Incentive Plan was not in
effect for 1994 or prior years, it is not possible to determine
the amounts under the Incentive Plan which would have been
received by the Participants from a hypothetical Incentive Pool
for 1994 or prior years. For 1994, the maximum amount payable to
any single Participant would have been approximately $3.5 million
and the amount payable to each Participant, assuming equal
incentive awards utilizing the entire Incentive Pool to five
participants, would have been approximately $1.7 million. The
bonus awards for 1994 performance and prior years since the
Company's initial public offering have been considerably less
than the amounts payable had the Incentive Plan been in place for
those years.
Amendments or Termination. The Incentive Plan may be amended
or terminated at any time at the sole discretion of the Board of
Directors. No amendment of the Incentive Plan may increase the
amount available under the Incentive Pool or increase the
allocation of benefits between Participants from the Incentive
Pool without the requirement of a vote of the stockholders. The
Incentive Plan will automatically terminate in the event of the
repeal of Section 162(m) of the Code or other change in the law
that would eliminate the requirement for a written,
performance-based plan to provide full deductibility of incentive
payments for federal income tax purposes.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" approval of
the Incentive Plan. The affirmative vote of a majority of the
votes cast at the meeting will be required to approve the
Incentive Plan. Accordingly, abstentions and broker non-votes
will not be considered to be votes cast and will have no effect
on the outcome of the matter.
PROPOSED 1995 DIRECTOR STOCK OPTION PLAN
The Company's 1995 Director Stock Option Plan (the "Director
Plan") was approved by the Board of
Directors on February 13,
1995, subject to stockholder approval.7, 1996. A copy of the Director Plan is attached hereto as Exhibit
B, and the following summary description is qualified by reference to the Director Plan.
The purpose of the Director Plan is to provide Non-Employee Directors
with an equityincentive to employees and to encourage
capital accumulation and stock ownership by key employees in order to increase
their proprietary interest in the CompanyCompany's success.
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No options or awards have been granted or made under the Plan in order1996. For
information concerning 1995 grants under the Company's 1990 and 1993 Stock
Incentive Plans, which are similar to attractthe proposed Plan, see the Option Grants
Table above. The Committee has not considered what awards will be made under the
Plan, and, retain well-qualified individualsconsequently, the number of shares that will be covered by any such
awards or the persons to servewhom awards will be made cannot be determined.
In addition, there are _______________ and _________________ shares of
Common Stock reserved for issuance under the Company's 1990 Stock Incentive Plan
(the "1990 Plan") and 1993 Stock Incentive Plan (the "1993 Plan"), respectively,
as Non-Employee
Directors and to further alignwhich options or stock appreciation rights have not been granted.
Authority to make awards under the interests of Non-Employee
Directors1990 Plan will be terminated upon shareholder
approval of the Company with those1996 Plan; authority to make awards under the 1993 Plan will
continue in effect following shareholder approval of the stockholders1996 Plan. Information
concerning outstanding grants under these and prior plans is contained in the
Company's Annual Report to Stockholders.
The Plan will be effective as of the
Company.April 12, 1996, subject to stockholder
approval, and will remain in effect until February 6, 2006.
Number of Shares
The Director Plan provides that 70,0004,000,000 shares of the Company's Common Stock,
which number is subject to adjustment to reflect certain subsequent stock
changes such as stock dividends, stock splits, and share exchanges, will be
available for the granting of stock options, stock appreciation rights, and
stock awards, from time to time, to key employees (including officers and
directors who are employees) of the Company and its subsidiaries. If the stock
split is approved at the times contemplated byannual meeting, the Director Plan to Non-Employee Directorswould then cover 8,000,000
shares of the Company.Company's Common Stock. If an option or stock appreciation right
expires before its exercise, a stock appreciation right is exercised for cash,
or a stock award is forfeited, and, in each case, the grantee received no
benefit of ownership of the stock, the shares may again be subject to options.awards.
Administration; Eligibility
The Directorselection of the participants in the Plan shalland the term of awards
granted to each participant will be administereddetermined by the Board of
Directors of the Company; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of optionsCommittee, which may
delegate authority to be granted
under the Director Plan. Onlymake awards to persons who are not subject to Section 16
of the Securities Exchange Act of 1934 (the "1934 Act") to a committee of
officers. Key employees, including those who are officers and directors of the
Company or any ofand its affiliates or subsidiaries,
("Non-Employee Directors") are eligible to participate inbe selected to receive awards
under the Director Plan.
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Stock Options
The Committee may grant either incentive stock options qualified with
respect to be granted underSection 422 of the Director Plan areInternal Revenue Code of 1986, as amended (the
"Code"), or options not qualified under any section of the Code ("non-qualified
options") and will. Incentive stock options may be granted at not less than 100% of the
fair market value of the underlying Common Stock, onand non-qualified stock
options may be granted at not less than 75% of the datefair market value of grant.
Asthe
underlying Common Stock. The Committee's practice has been to each Non-Employee Director in office asaward all options
at not less than 100% of April 6,
1995, the Director Plan provides forfair market value of the grant of an option to
purchase 4,000 shares ofunderlying Common Stock at
the closetime of business on
April 6, 1995 and an option to purchase 2,000 shares of Common
Stock at the close of business on the last Thursday of the month
during each succeeding year in which the annual meeting of
stockholders is held, subject to a maximum individual award of
options to purchase 10,000 shares of Common Stock. All current
directors have been in office for at least three years, and this
initial award recognizes, in part, prior service and
contributions.
As to each subsequently elected Non-Employee Director, the
Director Plan provides for the grant of an option to purchase
2,000 shares of Common Stock as of the close of business on the
date of the first regular meeting of directors held on or after
the Director's initial election, and an option to purchase 2,000
shares of Common Stock at the close of business on the last
Thursday of the month during each succeeding year in which the
annual meeting of stockholders is held, subject to a maximum
individual award of options to purchase 10,000 shares of Common
Stock.
Each option granted under the Plan shall become exercisable
in full one year after the initial grant, but shall not be
exercisable as to any shares prior thereto.issuance. Upon exercise, the option price is to be paid in full in
cash, or, at the discretion of the Committee, in shares of the Company's Common Stock
previously owned by the option holder or acquired upon the option exercisesexercise
having a market value on the date of exercise equal to the aggregate option
price, or in a combination thereof.
No stock option may be exercised afterExercise; Employment
Options granted under the earlier to occur of: (i) the expiration of 10 years after the
date such option was granted; or (ii) five years after a
Non-Employee Director ceases to be a Director for any reason,
during which period any installments of options whichPlan shall first become exercisable may thereafter be exercised. Inat least one
year after grant and shall expire not more than ten years from the case of
death,date the
option is granted. The Committee may in its discretion provide that an option
may not be exercised by a deceased Director's
estate or heirs for such five year period.
Amendments; Term of Plan
This Director Plan may be amended, suspended, terminated or
reinstated, in whole or in part for any period or periods of time
specified and may accelerate the time at which an option may be exercised.
Stock Appreciation Rights
The Committee may grant stock appreciation rights which provide the grantee
the right to receive a payment (in cash, Common Stock, or a combination of both)
equal to the difference between the fair market value of a specific number of
shares of Common Stock on the grant date and the fair market value of such
shares on the date of exercise. Stock appreciation rights may, in the discretion
of the Committee, be granted separately or in tandem with options or other
awards under the Plan.
Stock Awards
Awards of shares of Common Stock may be issued with or without payment of
consideration by the participant. An award of stock may be denominated in shares
of stock, units of stock, or stock equivalent units and may be paid in cash,
Common Stock or a combination thereof. All or part of any stock award may be
subject to conditions and restrictions, which the Committee shall specify.
"Book Value" Shares
Incentive and non-qualified stock options, stock appreciation rights and
stock awards may also relate to "Book Value Shares." Book Value Shares are
21
shares of Common Stock which have voting, dividend and liquidation rights but
are not transferable except to the Company and are subject to valuation and
adjustment in certain circumstances, as described in the Plan.
Amendments
The [Committee], at any time byand from time to time, may alter, amend,
suspend or discontinue the Board of
Directors; provided, however, thatPlan or alter or amend any provisions of this
Director Plan regardingand all options, stock
appreciation rights, and stock awards under the amount and price of options to be
awarded to Non-Employee Directors and the timing of awards, or
thatPlan. In addition, no such
action may be deemed to set forthtaken which adversely affects the rights of a formulaparticipant in any
option, stock, or right that determines the
amount, price, and timing of awards, may not be amended more than
once every six months, other than to comport with any changes in
the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules under such statutes; and, provided further,
however, that no such amendment shall become effective without
the approval of the stockholders of the Company to the extent
stockholder approval is required in order to comply with Rule
16b-3 of the Securities Exchange Act of 1934, as amended. No
option may behas been granted under the Plan after April 30, 2002.without the
participant's consent. Under current rules of the Securities and Exchange
Commission applicable to persons who are subject to Section 16 of the 1934 Act,
no such action may be taken without stockholder approval which materially
increases the benefits to participants under the Plan, materially increases the
number of shares to be issued, materially extends the period for granting of
awards or materially modifies the requirements as to eligibility.
Federal Income Tax Consequences
The following is a general summary of the current Federal income tax treatment of
the stock awards, incentive stock options, non-qualified stock options, stock
appreciation rights, and stock awards to be granted under the Director Plan based upon
the current provisions of the Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the Plan are
intended to meet the requirements of Section 422 of the Code. No tax
consequences result from the grant of the option. If an option holder acquires
stock upon the exercise, no income will be recognized by the option holder for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to option may
result in alternative minimum tax liability to the option holder) and the
Company will be allowed no deduction as a result of such exercise, if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months before
the date of such exercise, the option holder is an employee of the Company or of
a subsidiary; and (b) the option holder makes no disposition of the stock within
two years from the date the option is granted nor within one year after the
stock is transferred to the option holder. In the event of a sale of such stock
by the option holder after compliance with these conditions, any gain realized
over the price paid for stock will ordinarily be treated as long-term capital
gain, and any loss will be treated as long-term capital loss, in the year of the
sale.
If the option holder fails to comply with the employment or holding period
requirements discussed above, the option holder will recognize ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
22
the stock on the date the option was exercised over the exercise price or (ii)
the excess of the amount realized upon such disposition over the exercise price.
If the option holder is treated as having received ordinary income because of
his failure to comply with either condition above, an equivalent deduction will
be allowed to the Company in the same year.
Non-Qualified Stock Options. No tax consequences result from the grant of
the option. An option holder who exercises a non-qualified stock option with
cash will generally realize compensation taxable as ordinary income in an amount
equal to the difference between the option price and the fair market value of
the shares on the date of exercise, and the Company will be entitled to a
deduction from income in the salesame amount. The option holder's basis in such
shares will be the fair market value on the date exercised, and upon dispositionwhen he disposes
of the shares the option holderhe will recognize capital gain or loss, either long-term or
short-term, depending on the holding period of the shares.
Stock Appreciation Rights. The grant of a stock appreciation right will not
result in tax consequences to the Company or to the grantee. A grantee who
exercises a stock appreciation right will realize compensation taxable as
ordinary income in an amount equal to the cash or the fair market value of the
shares received on the date of exercise, and the Company will be entitled to a
deduction in the same amount.
Stock Awards. Stock awards granted under the Plan and paid in Common Stock
will constitute ordinary income to the recipient, and a deductible expense to
the Company, in the year paid if the stock is not subject to forfeiture
restrictions or in the year in which restrictions lapse unless the participant
elects to recognize income in the year the award is made by making a timely
election under Section 83(b) of the Code. Unless such an election is made, the
amount of the taxable income and corresponding deduction will be equal to the
fair market value of the stock on the date the restrictions lapse. The Company
is also allowed a deduction for dividends paid to participants (provided they
have not elected to recognize income at the time of the award) on stock while
the restrictions remain in force. Stock awards structured as stock equivalent
units and payable in cash or in Common Stock will be treated for federal income
tax purposes in substantially the same manner as stock appreciation rights.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" approval of the Director Plan. The affirmative
vote of a majority of the votes cast at the meeting will be required to approve
the
Director Plan. Accordingly, abstentions and broker non-votes will not be considered
to be votes cast and will have no effect on the outcome of the matter. Proxies
solicited by the Board of Directors will be voted in favor of the amendment
unless stockholders specify otherwise.
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CERTAIN OWNERSHIP OF THE COMPANY'S COMMON STOCK
A Schedule 13G dated February 8, 1995 states that Ariel
Capital Management, Inc. ("Ariel"), an investment advisor
registered under the Investment Advisers ActThe Company has no knowledge at this time of 1940,any individual or entity
owning, beneficially owns 1,640,340 sharesor otherwise, 5% or more of the Company's Common Stock,
or approximately 5.74% of the shares outstanding on that date.
The Schedule states that these shares are owned by various
investment advisory clients of Ariel and were acquired in the
ordinary course of business and not for the purpose of changing
or influencing control of the Company. The address of Ariel is
307 North Michigan Avenue, Chicago, Illinois 60601.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Mr. Peter Van Dyke, a Managing Director of the Company,
acquired indirect beneficial ownership of 4,000 shares of Common
Stock on February 4, 1994 as a result of his appointment as
co-trustee of a revocable trust for the benefit of his mother.
Through inadvertence, this event was not reported on a Form 3
until October 11, 1994.Stock.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of its Audit
Committee, has selected Price Waterhouse, independent accountants, to examine
the financial statements of the Company for the year 1995.1996. This firm has served
as independent accountants of the Company since 1985. A partner of the firm will
be present at the annual meeting and available to respond to appropriate
questions, and will have an opportunity to make a statement if he desires to do
so.
In 1994,1995, Price Waterhouse performed various professional services for the
Company, including completion of the examination of financial statements of the
Company for 1993,1994, preliminary work on the examination for 1994,1995, and preparation
of corporate tax returns. Price Waterhouse also examines the financial
statements of approximately 46%47% of the Price Funds as well as other sponsored
investment products.
The Audit Committee of the Board of Directors of the Company approved the
audit services provided by Price Waterhouse and the related fees and took into
consideration the non-audit services provided by Price Waterhouse. The Committee
considered the possible effect of these non-audit services on the independence
of Price Waterhouse and concluded there was no material effect upon their
independence.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and proxy relating to that meeting by November ______ , 1996.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented for action at the meeting other than those mentioned above. However,
24
if any other matters properly come before the meeting, it is intended that the
persons named in the accompanying proxy will vote on such other matters in
accordance with their judgment of the best interests of the Company.
___________25
Exhibit A
T. ROWE PRICE ASSOCIATES, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Associates, Inc., a Maryland corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock (par value
$.20 per share) of the Corporation, which is issued at the close of business on
the effective date of this amendment, into two shares of such Common Stock (par
value $.20 per share) and by transferring from the account designated "capital
in excess of par value" to the extent available and then from the account
designated "retained earnings" to the common stock account $.10 for each share
of Common Stock outstanding immediately after the change and reclassification,
such change and reclassification to be made as a two-for-one split of the issued
and outstanding shares and not as a stock dividend, and in connection therewith
there shall be issued one additional share of Common Stock for each such share
thereof which is issued and outstanding at such effective date.
SECOND: Article SIXTH, Paragraph (a) of the charter of the Corporation is
hereby amended to read in its entirety as follows:
SIXTH: (a) The total number of shares of stock of all classes which the
Corporation has authority to issue is 120,000,000220,000,000 shares of capital stock (par
value $.20 per share), amounting in aggregate par value to $24,000,000,$44,000,000, of which
100,000,000200,000,000 shares (par value $.20 per share), amounting in aggregate par value
to $20,000,000$40,000,000 are classified as "Common Stock" and 20,000,000 shares (par value
$.20 per share) amounting in aggregate par value to $4,000,000 are classified as
"Preferred Stock."
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of the Common Stock and the Preferred
Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to classification
or reclassification by the Board of Directors, and shall have the
rights and terms hereinafter specified, subject to the terms of
any other stock provided in the charter pursuant to
classification or reclassification by the Board of Directors or
otherwise in accordance with law.
(2) Subject to the provisions of Article EIGHTH Section (3)
of the charter of the Corporation, each share of Common Stock
shall have one vote, and, except as otherwise provided in respect
of any Preferred Stock, the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock.
(3) Subject to the provisions of law and any preferences of
any Preferred Stock, dividends, including dividends payable in
shares of another class of the Corporation's stock, may be paid
on the Common Stock of the Corporation at such time and in such
amounts as the Board of Directors may deem advisable.
(4) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the
Corporation and the amount to which the holders of any Preferred
Stock shall be entitled, to share ratably in the remaining net
assets of the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to classify
and reclassify any unissued shares of Preferred Stock by fixing
or altering in any one or more respects from time to time before
issuance the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of such shares of stock;
provided, that the Board of Directors shall not classify or
reclassify any of such shares into shares of the Common Stock, or
into any class or series of stock (i) which is not prior to the
Common Stock either as to dividends or upon liquidation and (ii)
which is not limited in some respect either as to dividends or
upon liquidation. Subject to the foregoing, the power of the
Board of Directors to classify and reclassify any of the shares
of Preferred Stock shall include, without limitation, subject to
the provisions of the charter, authority to classify or
reclassify any unissued shares of such stock into a class or
classes of preferred stock, preference stock, special stock or
other stock, and to divide and classic shares of any class into
one or more series of such class, by determining, fixing, or
altering one or more of the following:
(a) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such or any
other class or series, the number of shares of any class or
series may be decreased by the Board of Directors in connection
with any classification or reclassification of unissued shares
and the number of shares of such class or series may be increased
by the Board of Directors in connection with any such
classification or reclassification, and any shares of any class
or series which have been redeemed, purchased, otherwise acquired
or converted into shares of Common Stock or any other class or
series shall become part of the authorized capital stock and be
subject to classification and reclassification as provided in
this Section.
(b) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of Preferred
Stock, and the status of any such dividends as cumulative,
cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(c) Whether or not shares of such class or series shall
have voting rights, in addition to any voting rights provided by
law and, if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall
have conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as
the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of
such redemption, including the date or dates upon or after which
they shall be redeemable and the amount per share payable in case
of redemption, which amount may vary under different conditions
and at different redemption dates; and whether or not there shall
be any sinking fund or purchase account in respect thereof, and
if so, the terms thereof.
(f) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates, and
whether such rights shall rank senior or junior to or on a parity
with such rights of any other class or series of stock.
(g) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding,
upon the payment of dividends or making of distributions on, or
the acquisition of, or the use of moneys for purchase or
redemption of, any stock of the Corporation, or upon any other
action of the Corporation, including action under this Section,
and, if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of
such class or series, not inconsistent with law and the charter
of the Corporation.
(6) For the purposes hereof and of any articles
supplementary to the charter providing for the classification or
reclassification of any shares of Preferred Stock or of any other
charter document of the Corporation (unless otherwise provided in
any such articles or document), any class or series of stock of
the Corporation shall be deemed to rank:
(a) prior to another class or series either as to dividends
or upon liquidation, if the holders of such class or series shall
be entitled to the receipt of dividends or of amounts
distributable on liquidation, dissolution or winding up, as the
case may be, in preference or priority to holders of such other
class or series;
(b) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per
share thereof be different from those of such others, if the
holders of such class or series
of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective
dividend rates
or redemption or liquidation prices, without preference or
priority over the holders of such other class or series; and
(c) junior to another class or series either as to
dividends or upon liquidation, if the rights of the holders of
such class or series shall be subject or subordinate to the
rights of the holders of such other class or series in respect of
the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
SECOND:THIRD: (a) As of immediately before the amendment the total
number of shares of stock of all classes which the Corporation
has authority to issue is 48,000,000 shares, of which no shares
are Preferred Stock (par value $.20 per share) and 48,000,000
shares are Common Stock (par value $.20 per share).
(b) As amended the total number of
shares of stock of all classes which the Corporation has authority to issue is
120,000,000 shares, of which 20,000,000 shares are Preferred Stock (par value
$.20 per share) and 100,000,000 shares are Common Stock (par value $.20 per
share).
B-1
(b) As amended the total number of shares of stock of all classes which the
Corporation has authority to issue is 220,000,000 shares, of which 20,000,000
shares are Preferred Stock (par value $.20 per share) and 200,000,000 shares are
Common Stock (par value $.20 per share).
(c) The aggregate par value of all shares having a par value is
$9,600,000$24,000,000 before the amendment and $24,000,000$44,000,000 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the description, as amended, of each class,
including the preferences, conversion andor other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption is set
forth above in Article FIRST.
___________of each class of capital stock of the Corporation has
not been changed by this Amendment.
B-2
Exhibit B
T. ROWE PRICE ASSOCIATES, INC.
PROPOSED
1995 DIRECTOR1996 STOCK OPTIONINCENTIVE PLAN
1. PURPOSES OF THE DIRECTOR PLAN:
T. Rowe Price Associates, Inc.PURPOSE:
This 1996 Stock Incentive Plan (the "Company""Plan") has adopted
the 1995 Director Stock Option Plan for Non-Employee Directors
(the "Director Plan") to provide for the issuanceis intended as an employment
incentive and an encouragement of options to
purchase sharescapital accumulation and stock ownership by
key employees of the Company and of its Subsidiaries (as defined below) in order
to increase their proprietary interest in the Company's Common Stock, par value $.20 per
sharesuccess. This Plan
authorizes options, stock appreciation rights, and stock awards (each referred
to as an "award"). Options may be either incentive stock options intended to
qualify as such under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Stock""Code"), asor non-qualified stock options not intended to qualify
under any section of the Code. Awards may be granted separately or in tandem
with other awards.
2. ADMINISTRATION:
The Plan shall be administered by a means of long-term compensation for
members ofcommittee appointed by the Board of
Directors of the Company in order to
provide Non-Employee Directors with(the "Committee") comprised of at least two directors
who are disinterested persons within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "1934 Act"), or any successor provisions.
No person who is also an equity interest in the
Company, to attract and retain well-qualified individuals to
serve as Non-Employee Directors, and to further align the
interests of Non-Employee Directorsofficer or employee of the Company with thoseshall be eligible to
serve on the Committee. The Company's Executive Compensation Committee is hereby
initially designated as the Committee. The Committee may delegate to a committee
of the stockholders of the Company. For purposes of this Plan,
Non-Employee Directors are persons who are not employeesofficers of the Company any or all of its duties under the Plan pursuant to
such conditions or limitations as the Committee may establish, except only the
Committee may make any determination regarding employees who are subject to
Section 16 of the 1934 Act.
The interpretation and construction by the Committee of any provisions of
the Plan or any agreements with respect to awards issued under it and any
determination by the Committee pursuant to any provision of its affiliatesthe Plan or subsidiaries.
2. ADMINISTRATION:
The Director Planany such
agreement shall be administered byfinal and conclusive. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good
faith, nor for any matter as to which the Company's charter limits the liability
of directors. Such members shall be entitled to indemnification and
reimbursement in the manner provided in the Company's charter or by-laws, and
under any directors' and officers' liability insurance coverage which may be in
effect from time to time.
B-3
With respect to persons subject to Section 16 of the Company; provided that, in administering1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Director Plan,1934 Act. To the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
hereunder.
3. STOCK SUBJECT TO OPTION:
The Company will reserve 70,000 authorized but unissued
sharesextent any provision of the
Stock for issuancePlan or action by the Committee fails to so comply, it shall be deemed null and
delivery undervoid, to the Director
Plan, subject to adjustment as provided in paragraph 6 hereof. If
any unexercised option terminates for any reason, shares ofextent permitted by law and deemed advisable by the Stock covered thereby shall become available for grant again.
4.Committee.
3. ELIGIBILITY:
The individuals who shall be eligible to participate in the DirectorPlan shall, as
the Committee shall determine from time to time, be such key employees of the
Company, including officers who are also directors, or of any corporation (a
"Subsidiary") in which the Company has a proprietary interest by reason of stock
ownership or otherwise. No individual shall be eligible to receive awards under
the Plan for more than an aggregate of _____ shares of Common Stock over the
term of the Plan.
4. AWARD OF OPTIONS:
The Committee, at any time and from time to time, may authorize the
granting of options under this Plan to any individual eligible to receive the
same. Options shall be granted under this Plan at such times, for such number of
shares, and subject to such conditions as the Committee shall determine.
5. AWARD OF STOCK APPRECIATION RIGHTS:
The Committee, at any time and from time to time, may authorize the
granting of stock appreciation rights under this Plan. Stock appreciation rights
shall be granted under the Plan at such times, for such number of shares of
Common Stock, and subject to such conditions, including limitations as to the
amount which may be received upon exercise, as the Committee shall determine.
The term "stock appreciation right" shall mean the right to receive from the
Company, upon exercise thereof without payment to the Company, an amount up to
the difference between the fair market value on the exercise date of the total
number of Ordinary Shares, or the value (based on Book Value Per Share) on the
exercise date of the total number of Book Value Shares, for which the stock
appreciation right is exercised, less the exercise price of such stock
appreciation right. The amount payable by the Company upon exercise of a stock
appreciation right may be paid in cash, in stock or in any combination of cash
and stock. No fractional shares shall be issued under this section.
6. STOCK AWARDS:
The Committee, at any time and from time to time, may authorize the
issuance of stock at no cash cost, or for such payment as the Committee shall
determine, to any individual eligible to participate in the Plan. An award of
stock may be denominated in shares of stock, units of stock, or stock equivalent
B-4
units, and may be paid in stock, in cash, or in a combination of stock and cash.
All or part of any stock award may be subject to conditions and restrictions
established by the Committee.
7. STOCK:
The stock subject to the options, stock appreciation rights, stock awards,
and other provisions of the Plan shall be all Non-Employee Directorsshares of the Company.
5. TERMS AND CONDITIONS OF OPTIONS:
OptionsCompany's authorized but
unissued Common Stock. The term "Common Stock" may mean either Ordinary Shares
or Book Value Shares (as such terms are defined hereinafter). Subject to
adjustment in accordance with the provisions of Paragraph 8(h) hereof, the total
number of shares of Common Stock on which options or stock appreciation rights
may be granted or stock awards may be made under the Director Plan are intendedshall not exceed
4,000,000 shares of Common Stock (prior to be
non-statutorygiving effect to the stock options not qualifying undersplit
presented for action at the Company's 1996 annual meeting of stockholders);
provided that shares tendered as consideration for the exercise of any sectionoption or
other award (by persons other than persons subject to Section 16 of the Internal Revenue Code1934
Act) shall again be available for grant or award to persons other than persons
subject to Section 16 of 1986, as amended (the "Code"). Allthe 1934 Act; and, provided further that, to the extent
a stock appreciation right is settled in cash, the shares to which such stock
appreciation right related shall again be available for grant or award to
persons other than persons subject to Section of the 1934 Act.
In the event that any outstanding option or stock appreciation right under
the Plan for any reason expires, is canceled, or is terminated prior to the end
of the period during which options or stock appreciation rights may be
exercised, the shares of Common Stock allocable to the unexercised portion of
such option or stock appreciation right may again be subjected to awards under
the Plan. In the event a stock appreciation right or a stock award is exercised
and paid in cash, shares subject to such award shall again be subject to
issuance pursuant to awards granted under the DirectorPlan. In the event that shares
issued under a stock award are forfeited in accordance with the terms of the
related stock agreement, such shares may again be subjected to awards under the
Plan (but, in the case of a person subject to Section 16 of the 1934 Act, only
if the grantee received no benefits of ownership for such stock other than the
exercise of voting rights).
The terms "Ordinary Shares" and "Book Value Shares" shall have the
following meanings: "Ordinary Shares" means shares of the Company's Common Stock
for which there is a generally recognized trading market and which are freely
transferable. "Book Value Shares" means shares of the Company's Common Stock
which shall be authorized for issuance and which shall have the same voting,
dividend, and liquidation rights as Ordinary Shares, except that they shall not
be transferable (whether or not the stock option or stock appreciation rights
agreements are then in effect) except to the Company and except that they shall
be subject to the repurchase provisions set forth in the stock option
agreements.
B-5
8. TERMS AND CONDITIONS OF AGREEMENTS:
All awards granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall, from time to time, approve. The Committee may,
from time to time, modify or amend any such agreement. Such agreements shall
comply with and be subject to the following provisions:terms and conditions, to the extent
applicable:
(a) Option Price. TheMedium of Payment for Option:
Upon exercise of an option, the option price shall be payable either
(i) in United States dollars in cash or by certified check, bank draft or
money order payable to the order of the Company, (ii) in the discretion of
the Committee, through the delivery of shares of Common Stock of the
Company (which may be either Ordinary Shares or Book Value Shares, or a
combination of both) with a value equal to the total option price, (iii) by
a combination of the methods described in (i) and (ii), or (iv) through
such other means, acceptable to the Committee, as may be provided by an
independent third party to facilitate exercise or payment. Shares of Common
Stock delivered in payment of the option exercise price per share with respectmay, in the
discretion of the Committee, be previously acquired shares or shares
acquired upon exercise of the option. To the extent permitted by law, the
Company or a Subsidiary may make or guarantee loans to eachoptionees to assist
in the payment of the exercise price.
(b) Number and Kind of Shares:
The agreement shall state the total number and kind of shares of
Common Stock to which it pertains. The agreement shall provide that Book
Value Shares shall be subject to repurchase by the Company, as described in
such agreement, and that such shares shall not be assignable or
transferable.
(c) Option Price:
The option price for Ordinary Shares covered by an incentive stock
option granted hereunder shall be not less than 100% of the fair market
value, as determined by the Committee, of such Shares on the date of the
granting of the incentive stock option. The option price for Ordinary
Shares covered by non-qualified stock options granted hereunder shall be
not less than 75% of the fair market value, as determined by the Committee,
of such Shares on the date of the granting of the non-qualified stock
option. The "fair market value" for Ordinary Shares for purposes of this
Plan shall be (i) the last reported sales price of the Common Stock on the
Nasdaq National Market System on the date the optionaward is granted. For purposes hereof,
fair market value shall begranted, or, if
none, for the preceding day for which there was a last reported sale price;
or (ii) if the Ordinary Shares are listed on a national securities
exchange, the last quoted sales price inon such exchange on the date on which
B-6
the award is granted, or, if none, for the next preceding day for which
there was a last quoted sales price; or (iii) if the Common Stock is not
quoted on the Nasdaq National Market (or any other recognizedSystem or listed on a national
securities market
on whichexchange, the Stock is traded if not then traded onmean between the Nasdaq
National Market)bid and asked prices in the
over-the-counter market on the date of grant,the award, or, the next succeeding
business day on which the Nasdaq National Market (or such other
market) is open for business and reports an actual transaction in the Company's Stock. Ifabsence of
such quotations or if the Common Stock is not thenpublicly traded, such other
price as shall be determined by the Committee to be the fair market value.
The option price for any Book Value Shares covered by an incentive
stock option shall be not less than the "Book Value Per Share" on any
recognized market,the
"Fiscal Quarter Date" coincident with or immediately preceding the date of
the granting of the option, which the Committee believes in good faith to
be the fair market value of such Shares at the date of grant. The option
price for any Book Value Share covered by a non-qualified stock option
shall be not less than 75% of "Book Value Per Share" on the "Fiscal Quarter
Date" coincident with or immediately preceding the date of the granting of
the option. The term "Book Value Per Share" as of any given date means the
common stockholders' equity, as stated in the consolidated financial
statements of the Company, as at the Fiscal Quarter Date coincident with or
immediately preceding such given date, divided by the sum of the number of
shares of the Company's Common Stock outstanding and the number of common
stock equivalents as of such Fiscal Quarter Date (which calculation shall
be made before giving effect to the sale or repurchase of Book Value Shares
on such Fiscal Quarter Date); provided, however, that the Book Value Per
Share, for the purpose of calculating the repurchase price per share only,
may be adjusted to such an extent as may be determined by the Board of
Directors of the Company to preserve the benefit of the arrangement for the
participants and the Company, if in accordancethe opinion of the Board of Directors,
after consultation with applicable federal
income taxthe Company's independent accountants, changes in
the Company's accounting policies, acquisitions, or other unusual or
extraordinary items have disproportionately and securities regulations.
(b)materially affected the
number of shares of the Company's Common Stock outstanding or the Company's
common stockholders' equity. The term "Fiscal Quarter Date" means March 31,
June 30, September 30 or December 31 of any year or such other dates as the
Company may, from time to time, elect as the end dates of the fiscal
quarters of the Company.
(d) Term of Options and Stock Appreciation Rights:
No option or stock appreciation right may be exercised before the
first anniversary of the date on which it was granted. Each option and
stock appreciation right granted under the Plan shall expire not more than
10 years from the date it is granted.
B-7
(e) Limitation on Incentive Stock Options:
To the extent that the aggregate fair market value (determined at the
time the option is granted) of the Ordinary Shares or the Book Value Shares
with respect to which incentive stock options are exercisable for the first
time by an option holder during any calendar year (under this Plan, and to
the extent required by Section 422(d) of the Code, under all other plans of
the Company and its subsidiary corporations as defined in Section 424(f) of
the Code, including without limitation the 1981 Incentive Stock Option
Grants.
(i) Each Non-Employee Director in office on April 6, 1995Plan, the 1986 Stock Incentive Plan, the 1990 Stock Incentive Plan, and the
1993 Stock Incentive Plan), exceeds $100,000 (or such other limiation as
may be specified by the Code), such option shall be granted antreated as a
non-qualified stock options.
(f) Replenishment of Options:
The terms of a stock option grant may provide, or may be amended by
the Committee to purchase 4,000 shares of Stock atprovide, for the close of business on April 6, 1995 and an option to purchase
2,000 shares of Stock at the close of business on the last
Thursday of the month during each succeeding year in which the
annual meeting of stockholders is held, subject to a maximum
individual award of options to purchase 10,000 shares of Common
Stock.
(ii) Each Non-Employee Director initially elected as a director after April 6, 1995 shall be granted annew option to
purchase 2,000when the exercise
price has been paid by tendering shares of Common Stock asto the Company,
provided that such replenishment feature shall be limited to any extent
required by rules, regulations, or interpretations under the 1934 Act with
respect to any particular grant in the case of an option holder who is or
becomes subject to Section 16 of the close1934 Act. Any new option grant, which
would automatically occur without any further corporate action, would cover
not more than the number of business
onshares tendered with the dateexercise price set at
the then fair market value of such shares.
(g) Acceleration or Waiver:
In the first regular meetingcase of directors held on or
after the date of the participant's initial election
as a director and an option to purchase 2,000 shares of
Stock as of the close of business on the last Thursday of the
month during each succeeding year in which the annual meeting of
stockholders is held, subject to a maximum individual award of
options to purchase 10,000 shares of Stock.
(c) Exercise of Options.
(i) Each option granted under this Plan shall becomeor stock appreciation right not immediately
exercisable in full one year after the initial grant, but shall
not be exercisable asor any stock award subject to any shares prior thereto. Except as
providedrestriction, the
Committee may in paragraph (ii) below, full payment for shares
acquired shall be made in cash or by certified check at or prior
toits discretion accelerate the time that an option, or any part thereof, is exercised.
The participant will have no rights as a stockholder until the
shares as toat which the option has been exercised are issued by
the Company.
(ii) Shares of the Company's Stock with a value equal to the
exercise price or
a combination of cash and Stock with a value
equal to the exercise price may be used as payment for shares
acquired.
(d) Term of Option. No stock optionappreciation right granted hereunder may be exercised after
the earlier to occur of: (i) the expiration of 10 years after the
date such option was granted; or (ii) five years after the
Non-Employee Director ceases to be a director forwaive, in
whole or in part, any reason,
during which period any installments which first become
exercisable may thereafter be exercised.
(e) Options Nonassignable and Nontransferable. Each option
and all rights thereunder shall not be assignablerestriction or transferable
during the Director's life, but may be transferred by will or
pursuantcondition with respect to the laws of descent and distribution to the extent
permitted under applicable federal securities and tax laws.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:award.
(h) Recapitalization:
The aggregate number of shares of stockOrdinary Shares and Book Value Shares on which
option
awards under the Director Plan may be granted to persons participating under the Director
Plan, the number of shares thereof covered by each award, the price per
share thereof in each award, and any numerical limitations contained herein
relating to awards shall all be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock of the Company
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or
decrease in such shares, effected without receipt of consideration by the
Company; provided, however, that any fractional shares resulting from any
B-8
such adjustment shall be eliminated. In the case of other changes in the
Company's capitalization, adjustments shall be made to the extent
determined by the Board of DirectorsCommittee as necessary or appropriate to reflect the
transaction and as permitted under
applicable securities and tax laws.transaction.
If the Company shall be the surviving or resulting corporation in any
merger or consolidation, any award granted hereunder shall pertain to and
apply to the securities to which a holder of the number of shares of Common
Stock subject to the award would have been entitled; but a dissolution or
liquidation of the Company, or a merger or consolidation in which the
Company is not the surviving or resulting corporation shall cause every
award outstanding hereunder to terminate, except that the surviving or
resulting corporation may, in its absolute and uncontrolled discretion,
tender awards with respect to its shares on terms and conditions, both as
to the number of shares and otherwise, which shall substantially preserve
the rights and benefits of any award then outstanding hereunder.
7. EFFECTIVE DATEIn the event of a change in the Company's Common Stock which is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par
value to no par value, without increase in the number of issued shares, the
shares resulting from any such change shall be deemed to be Common Stock
within the meaning of the Plan.
(i) Assignability:
No award granted under this Plan shall be assignable or transferable
except by will or by the laws of descent and distribution or as otherwise
permitted under Rule 16b-3 under the 1934 Act. Notwithstanding this
limitation, if approved by the Committee, any award may be transferred to
one or more members of a participant's immediate family or a trust
primarily for the benefit of such person.
9. AWARDS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS:
Awards may be granted under the Plan from time to time in substitution for
awards held by employees of corporations who become or are about to become key
employees of the Company or a Subsidiary as the result of a merger or
consolidation of the employing corporation with the Company or a Subsidiary, or
the acquisition by the Company or a Subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a Subsidiary of stock of the
employing corporation as the result of which it becomes a Subsidiary. The terms
and conditions of the substitute awards so granted may vary from the terms and
B-9
conditions set forth in this Plan to such extent as the Committee at the time of
grant may deem appropriate to conform, in whole or in part, to the provisions of
the awards in substitution for which they are granted.
10. TERM AND EFFECTIVENESS OF THE DIRECTOR PLAN:
The Director Plan shall become effective upon its adoptionon the date it receives approval by the
Boardaffirmative votes of Directors and subsequent approval bythe holders of a majority of the votes cast in personsecurities of the Company
present, or by proxyrepresented, and entitled to vote at a meeting duly held in
accordance with applicable law. No award shall be granted pursuant to this Plan
after February 6, 2006.
11. AMENDMENTS:
The Board of Directors, from time to time, may alter, amend, suspend, or
discontinue this Plan or alter or amend any and all awards granted or made
hereunder except as required under the Code wtih respect to incentive stock
options or under the Rules and Regulations of the stockholdersSecurities and Exchange
Commission with respect to persons subject to Section 16 under the 1934 Act; and
provided further that no action may be taken, without the consent of a
participant under the Plan who holds an award under this Plan, which adversely
affects the rights of such person in such award.
12. APPLICATION OF FUNDS:
The proceeds received by the Company held within 12 monthsfrom the sale of Common Stock pursuant
to awards under the actionPlan will be used for general corporate purposes.
13. CERTAIN TAX MATTERS:
Whenever under the Plan shares of Common Stock are to be delivered or becme
subject to tax, the Company may require as a condition of delivery or otherwise
that the grantee remit an amount sufficient to satisfy all federal, state, and
other governmental withholding tax requirements related thereto. The Company
may, to the extent specified by the Committee in the applicable agreement or
otherwise, withhold shares of Common Stock to be delivered with respect to a
stock award or upon exercise of an option or stock appreciation right to satisfy
such withholding tax requirements. In the event a disqualifying disposition is
made, the person making such disposition shall remit to the Company an amount
sufficient to satisfy all federal, state, and other withholding taxes thereby
incurred. In lieu of or in addition to the foregoing, the Company shall have the
right to withhold such sums from compensation otherwise due to the grantee.
B-10
PRELIMINARY COPY -- FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
T. ROWE PRICE ASSOCIATES INC.
-----------------------------
Revocable Proxy Solicited on Behalf of the Board of Directors
described above.
8. TERMINATION DATE:
No options may be granted under-------------------------------------------------------------
THE UNDERSIGNED STOCKHOLDER of T. Rowe Price Associates, Inc. hereby
appoints George J. Collins and George A. Roche the Director Plan after
April 30, 2002. Subjectlawful attorneys and proxies
of the undersigned with full power of substitution to paragraph 5(d), options granted before
April 30, 2002 undervote, as designated on the
Director Plan may be exercised after
that date in accordance with their terms.
9. AMENDMENT:
This Director Plan may be amended, suspended, terminated or
restated, in whole or in part,reverse side, all shares of Common Stock of the Corporation which the
undersigned is entitled to vote at any time by the BoardAnnual Meeting of Directors; provided, however, that any provisions of this Plan
regarding the amount and price of optionsStockholders to be awarded to
Non-Employee Directorsheld
on Friday, April 12, 1996, at 10:00 a.m., at 100 East Pratt Street, Baltimore,
Maryland 21202, and the timing of awards, or that which
may be deemed to set forth a formula that determines the amount,
price, and timing of awards may not
be amended more than once every six months, other than to
comport with any changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules under such
statutes; and, provided further, however, that no such amendment
shall become effective without the approval of the stockholders
of the Company to the extent stockholder approval is required in
order to comply with Rule 16b-3 of the Securities Exchange Act of
1934.
10. COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the
Director Plan shall be subject toat any and all requirementsadjournments thereof with respect to the
matters set forth on the reverse side and restrictions that may,described in the opinionNotice of Annual
Meeting and Proxy Statement dated March ______ , 1996, receipt of which is
hereby acknowledged.
This Proxy, when properly completed and returned, will be voted in the
Board,manner directed herein by the undersigned stockholder, IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE ITEMS LISTED ON THE REVERSE SIDE.
(Continued and to be necessarydated and signed on the reverse side)
T. ROWE PRICE ASSOCIATES, INC.
P.O. BOX 11370
NEW YORK, NY 10203-0370
- --------------------------------------------------------------------------------
(Reverse side of proxy card)
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
[ ] WITHHOLD authority to vote for all nominees listed
*EXCEPTIONS
George J. Collins, James E. Halbkat, Jr., Henry H. Hopkins, James A.C. Kennedy,
John H. Laporte, Richard L. Menschel, William T. Reynolds, James S. Riepe,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M. David Testa, Philip
C. Walsh and Anne Marie Whittemore.
(INSTRUCTION: To withhold authority for any individual nominee, mark the
"Exceptions" box and strike a line through that nominee's name.)
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO EFFECT A
TWO-FOR-ONE STOCK SPLIT AND EFFECT A PROPORTIONAL INCREASE IN THE
AUTHORIZED COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(3) TO APPROVE THE PROPOSED 1996 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(4) IN THEIR DISCRETION, the proxies are authorized to vote upon such
other business as may properly come before the meeting or advisable for the purposes of complying withat any
statute, rule
or regulation of any governmental authority, or any agreement,
policy or rule of any stock exchange or other regulatory
organization governing any market on which the Stock is traded.
11. MISCELLANEOUS:
(a) Expenses. The Company shall bear all expensesadjournment thereof.
Please date and costs
in connection with the administration of the Director Plan.
(b) Applicable Law. The validity, interpretation and
administration of this Plan and any rules, regulations,
determinations or decisions made hereunder, and the rights of any
and all persons having or claiming to have any interest herein or
hereunder, shall be determined exclusively in accordance with the
laws of the State of Maryland, without regardsign exactly as your name
appears to the choice of
laws provisions thereof.
(c) Headings. The headings herein are for reference
purposes onlyleft. When signing as a
fiduciary, representative or corporate officer,
give full title as such. If you receive more
than one proxy card, please sign and shall not affect the meaningreturn all
cards received.
Dated:_________________________________________
_______________________________________________
Signature
_______________________________________________
Signature if held jointly
Votes MUST be indicated (x) in Black or
interpretation
of the Director Plan.
(d) Notices. All notices or other communications made or
given pursuant to this Director Plan shall be in writing and
shall be sufficiently made or given if hand-delivered or mailed
by certified mail, addressed to any Non-Employee Director at the
address contained in the records of the Company or to the Company
at its principal office.
(e) Federal Securities Law Requirement. Awards granted
hereunder shall be subject to all conditions required under Rule
16b-3 to qualify the award for any exception from the provisions
of Section 16(b) of the Securities Exchange Act of 1934 available
under that Rule.
___________Blue ink.
PLEASE SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.