SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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GABELLI ASSET MANAGEMENT INC.Rule 14a-11(c) or Rule 14a-12
Gabelli Asset Management Inc.
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(Name of Registrant as Specified In Its Charter)
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GABELLI ASSET MANAGEMENT INC.
ONE CORPORATE CENTER
RYE, NEW YORK 10580
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 200213, 2003
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We cordially invite you to attend the Annual Meeting of Shareholders of
Gabelli Asset Management Inc. at the Bruce Museum, One Museum Drive, Greenwich,
CT 06830, on Tuesday, May 21, 2002,13, 2003, at 10:00 a.m. At the meeting, we will ask
shareholders to:
1. Elect a Board of six directors; 2. Approve our 2002 Stock Award and
Incentive Plan; and
3.2. Vote on any other business which properly comes before the meeting.
At the meeting, we will also review our 20012002 financial results and outlook
for the future. We will be available to answer your questions.
Shareholders of record at the close of business on April 2, 2002,March 31, 2003, are
entitled to vote at the meeting or any adjournments. Please read the attached
proxy statement carefully and vote your shares promptly whether or not you are
able to attend the meeting.
We encourage all shareholders to attend the meeting.
By Order of the Board of Directors
JAMES E. MCKEE
Vice President, General Counsel
and Secretary
April 30, 200217, 2003
GABELLI ASSET MANAGEMENT INC.
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
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MAY 21, 200213, 2003
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INTRODUCTION; PROXY VOTING INFORMATION
We are sending you this proxy statement and the accompanying proxy card in
connection with the solicitation of proxies by the Board of Directors of Gabelli
Asset Management Inc. ("Gabelli" or the "Company") for use at our 20022003 Annual
Meeting of Shareholders and at any adjournments. The purpose of the meeting is
to elect six directors approve our 2002 Stock Award and Incentive Plan and act upon any other matters properly brought to the
meeting. We sent you this proxy statement, the proxy card, and our 20012002 Annual
Report to Shareholderson Form 10-K (containing Gabelli's financial statements and other
financial information for the year ended December 31, 2001)2002) on or about April
30, 2002.17, 2003. The Annual Report, however, is not part of the proxy solicitation
materials.
Shareholders of record at the close of business on April 2, 2002,March 31, 2003, the
record date, are entitled to vote at the annual meeting. On this record date,
Gabelli had outstanding 6,769,941 shares of Class A Common Stock, par value
$.001 per share ("Class A Stock"), and 23,450,00023,150,000 shares of Class B Common
Stock, par value $.001 per share ("Class B Stock").
The presence, in person or by proxy, of a majority of the aggregate voting
power of the shares of Class A Stock and Class B Stock outstanding on April 2,
2002March 31,
2003 shall constitute a quorum for the transaction of business at the annual
meeting. The Class A Stock and Class B Stock vote together as a single class on
all matters. Each share of Class A Stock is entitled to one vote per share and
each share of Class B Stock is entitled to ten votes per share. Directors who
receive a plurality of the votes present or represented at the meeting are
elected to serve until the 20032004 annual meeting or until their successors are
elected and qualify. Any matter other than the election of directors will be
determined by a majority of the votes present or represented at the meeting.
Abstentions and broker non-votes will count for purposes of establishing a
quorum, but will not count as votes cast for the election of directors or on any
other matter and accordingly will have no effect.
Gabelli will pay for the costs of soliciting proxies and preparing the
meeting materials. We ask securities brokers, custodians, nominees, and
fiduciaries to forward meeting materials to our beneficial shareholders as of
the record date, and will reimburse them for the reasonable out-of-pocket
expenses they incur. Directors, officers and employees of Gabelli and its
subsidiaries may solicit proxies personally or by telephone or other means, but
will not receive additional compensation.
The Board of Directors has selected Mario J. Gabelli, Robert S. Zuccaro and
James E. McKee to act as proxies. When you sign and return your proxy card, you
appoint Messrs. Gabelli, Zuccaro and McKee as your representatives at the
meeting. If you wish to change your vote before the meeting, deliver a letter
revoking the proxy to Gabelli's Secretary (James E. McKee, Gabelli Asset
Management Inc., One Corporate Center, Rye, NY 10580-1422) or properly submit
another proxy bearing a later date. Even if you vote your proxy before the
meeting, you may still attend the meeting, file a notice of revocation for the
previously submitted proxy, and then vote again in person. The last proxy
properly submitted by you is the one that will be counted.
Brokerage firms have the authority under New York Stock Exchange rules to
vote their clients' unvoted shares on certain routine matters, one of which is
the election of directors. If you do not vote your proxy, your brokerage firm
may choose to vote for you or leave your shares unvoted. We urge you to respond
to your brokerage firm to ensure that your proxy voting instructions are
followed.
ELECTION OF DIRECTORS
Six directors serve on our Board of Directors. The Board has renominated
all directors to hold office until the next annual meeting of shareholders and
until their respective successors are elected and qualify.
All properly executed proxies received in time to be tabulated for the
meeting will be voted FOR the election of the nominees named in the following
table, unless otherwise specifically instructed. If any nominee becomes unable
or unwilling to serve between now and the meeting, your proxies will be voted
FOR the election of a replacement designated by the Board of Directors.
THE NOMINEES
The following are brief biographical sketches of the six nominees. Unless
otherwise noted, they have been officers of the organizations named below or of
affiliated organizations as their principal occupations for more than five
years.
The Board of Directors recommends that you vote FOR all of the following
nominees:
MARIO J. GABELLI, age 59,60, has served as Chairman, Chief Executive Officer,
Chief Investment Officer and a director of the Company and its predecessors
since November 1976. In connection with those responsibilities, he serves as
director or trustee and/or Presidentofficer of registered investment companies managed by
the Company and its affiliates ("Gabelli Funds"). Mr. Gabelli serves as Vice
Chairman and Chief Executive Officer of Lynch Interactive Corporation, a public
company engaged in multimedia and other services; Vice Chairman of Lynch
Corporation, a public company engaged in manufacturing; and a Director of Morgan
Group Holdings, Inc., a public holding company. In addition, Mr. Gabelli is the
Chairman and Chief Executive Officer of Gabelli Group Capital Partners, Inc., a
private company which owns all of the Company's Class B Stock; and the Chairman
of MJG Associates, Inc., which acts as a general partner or investment manager
of various investment funds and other accounts. Mr. Gabelli also serves as a
Governor of the American Stock Exchange; Overseer of Columbia University
Graduate School of Business; Trustee of Fairfield University, Roger Williams
University, Winston Churchill Foundation and E.L. Wiegand Foundation; Director
of the National Italian American Foundation and the American-Italian Cancer
Foundation; and Chairman, Patron's Committee of Immaculate Conception School.
RAYMOND C. AVANSINO, JR., age 59,60, has been a director of the Company since
February 2000. Mr. Avansino has been the Chairman of the Board and Chief
Executive Officer of the E.L. Wiegand Foundation of Reno, Nevada, a Nevada
private charitable trust, since 1982. He is of Counsel to the Nevada law firm of
Avansino, Melarkey and Knobel, a firm he founded in 1973. He served as President
and Chief 2
Operating Officer of Hilton Hotels Corporation from 1993 to 1996, and
was a member of the Nevada Gaming Commission from 1981 to 1984.
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JOHN C. FERRARA, age 50,51, has been a director of the Company since December
1999. Mr. Ferrara was the President and Chief Executive Officer of Space Holding
Corporation a multimedia company which offers content, news, entertainment,
information and education about space from January 2001 until March 2002, and Chief Financial Officer of
Space Holding Corporation from November 1999 to December 2000. From 1998 to
1999, he was the Executive Vice President and Chief Financial Officer for Golden
Books Family Entertainment, Inc., a public company
which publishes, licenses and markets entertainment products. From 1989 to 1997, Mr. Ferrara was the Vice
President and Chief Financial Officer of Renaissance Communications Corporation, a public company which owned and operated television
stations.Corporation.
From 1973 to 1989, he held various positions at American Express Company,
National Broadcasting Company (NBC) and Deloitte & Touche. Mr. Ferrara is a
director of Lynch Interactive Corporation.
PAUL B. GUENTHER, age 61,62, has been a director of the Company since August
2000. Mr. Guenther has been Chairman of the New York Philharmonic since 1996 and
Chairman of Fordham University since 1998. From 1988 to 1995, he served as
President of PaineWebber Incorporated. From 1994 until 1995, he also served as
President of PaineWebber Group, Inc., the parent company of PaineWebber
Incorporated. From 1966 until 1988, Mr. Guenther held a variety of other
positions at PaineWebber Incorporated. Mr. Guenther is a director of
Consolidated Freightways Corporation, a freight transportation company.company, and The
Guardian Life Insurance Company of America.
EAMON M. KELLY, age 65,66, has been a director of the Company and its
predecessors since 1992. Dr. Kelly is currently serving as a Professor at the
Payson Center for International Development and Technology Transfer as well as
in other departments at Tulane University, New Orleans. From 19821981 through July
1998, he served as President and Chief Executive Officer of Tulane University.
From 1974 to 1979, Dr. Kelly served in numerous positions, including
Officer-in-Charge of Program Related Investments at the Ford Foundation, a
philanthropic organization with initiatives in community and housing
development, communications and public television, resources and environment,
higher and public education, the arts and minority enterprises. Dr. Kelly's
career includes numerous appointments, and most recently, the appointments by
President Clinton in 1995 to the National Science Board (the governing board of
the National Science Foundation) for which he currently servesserved as Chairman from
1998 - 2002 and in 1994 to the National Security Education Board. Dr. Kelly is a
director of Gabelli Group Capital Partners, Inc. and Energy Partners, Ltd., an oil and natural gas company.
KARL OTTO POHL, age 72,73, has been a director of the Company since 1998. Mr.
Pohl is a member of the Shareholder Committee of Sal. Oppenheim jr. & Cie., a
private investment bank; Chairman of InCentive Asset Management AG; and Chairman
of InCentive Capital AG. Mr. Pohl is a director or trustee of all but one of the
Gabelli Funds. Mr. Pohl is a former President of the Deutsche Bundesbank,
Germany's Central Bank, and was Chairman of its Central Bank Council from 1980
to 1991. He also served as German Governor of the International Monetary Fund
from 1980 to 1991 and as a Board Member to the Bank for International
Settlements. Mr. Pohl also served as Chairman to the European Economic Community
Central Bank Governors from 1990 to 1991.
THE BOARD OF DIRECTORS AND COMMITTEES
During 2001,2002, there were fivesix meetings of the Board of Directors. The Board
of Directors of Gabelli has an Audit Committee, a Compensation Committee and a
Nominating Committee.
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The Audit Committee regularly meets with Gabelli's independent accountants
to ensure that satisfactory accounting procedures are being followed and that
internal accounting controls are adequate, review fees charged by the
independent accountants and recommend the selection of independent accountants
to the
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Board of Directors. Messrs. Avansino, Ferrara and Kelly, each of whom is an
independent director, are the members of the Audit Committee. The Audit
Committee met sixeight times during 2001.2002.
As will be further described in the Report of the Compensation Committee,
this committee establishesreviews the compensation foramounts paid to, and the services performed by, the
chief executive officer for compliance with the terms of his employment
agreement and generally reviews benefits and compensation for the other
executive officers. It also administers our Stock Award and Incentive Plan and
the Annual Performance Incentive Plan. Messrs. Avansino, Ferrara and Kelly, each
of whom is an independent director, are the members of the Compensation
Committee. The Compensation Committee met oncetwice during 2001.2002.
The Nominating Committee advises the Board of Directors on the selection
and nomination of individuals to serve as directors of Gabelli. Nominations for
director(s) submitted to the committee by shareholders are evaluated according
to our needs and the nominee's knowledge, experience and background. Messrs.
Gabelli and Pohl are the members of the Nominating Committee. The Nominating
Committee did not meet in 2001.
Each2002.
Also, in connection with Gabelli's offering of mandatory convertible
securities in January 2002, the Board of Directors appointed a Pricing
Committee. Messrs. Avansino, Ferrara, Gabelli and Guenther were the members of
the Pricing Committee. The Pricing Committee met twice in January 2002.
During 2002, each director attended at least 80%100% of the meetings of the Board and
the Board committees of which he was a member (during the period that he served as a
director or committee member).member.
COMPENSATION OF DIRECTORS
Directors who are also officers or employees ofMr. Gabelli receivereceives no compensation for serving as a director of Gabelli. Directors who are not
officers or employees of Gabellithe
Company. The other directors receive annual cash retainers and meeting fees as
follows:
Board Member................................................ $20,000
Committee...................................................Committee Chairman.......................................... $ 5,000
Attendance in person at Board or Committee Meeting.......... $ 1,000
Attendance by telephone at Board or Committee Meeting....... $ 500
Directors are also eligible to receive stock options. In February 1999, Mr.
Pohl was granted an option to purchase 10,000 shares of Class A Stock at an
exercise price of $16.275 per share. In February 2000, Messrs. Avansino and
Ferrara were each granted an option to purchase 10,000 shares of Class A Stock
at an exercise price of $16.00 per share. In August 2000, Mr. Guenther was
granted an option to purchase 10,000 shares of Class A Stock at an exercise
price of $23.0625 per share. In October 2002, Mr. Kelly was granted an option to
purchase 10,000 shares of Class A stock at an exercise price of $30.40. All of
the directors' stock options were granted at 100% of fair market value on the
date of grant and have a ten-year term and become exercisable with respect to
75% of the shares after three years from the date of grant and with respect to
100% of the shares after four years from the date of the grant.
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APPROVAL OF THE 2002 STOCK AWARD AND INCENTIVE PLAN
BACKGROUND
The Board of Directors of the Company has unanimously approved the Gabelli
Asset Management Inc. 2002 Stock Award and Incentive Plan (the "Plan") and
recommended that the Plan be submitted to shareholders for approval at the 2002
annual meeting. The Plan authorizes grants of stock options, stock appreciation
rights, stock awards, performance shares and stock units.
The 2002 Stock Award and Incentive Plan continues, with minor
modifications, the 1999 Stock Award and Incentive Plan. As of April 2, 2002,
281,250 shares remain available for issuance under the 1999 Stock Award and
Incentive Plan out of the 1,500,000 shares originally authorized. The Board of
Directors believes that stock options and other stock-based awards have been,
and will continue to be, a critical factor in the Company's ability to attract,
motivate and retain highly qualified employees and directors. Accordingly, in
the judgment of the Board of Directors, approval of the 2002 Stock Award and
Incentive Plan is in the best interests of the Company and its shareholders. If
the Plan is approved by shareholders, it will be effective as of February 19,
2002, the date it was approved by the Board of Directors.
The following is a summary of the Plan. It is qualified in its entirety by
reference to the full text of the Plan, which is attached as Exhibit A to this
proxy statement. Shareholders are encouraged to review the Plan carefully.
PURPOSE
The purpose of the Plan is to afford an incentive to selected employees,
directors and independent contractors of the Company and its affiliates to
acquire a proprietary interest in the Company, to continue to perform their
roles for the Company, to increase their efforts on behalf of the Company and to
promote the success of the Company's business.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Compensation Committee of the Company's
Board of Directors. In this summary of the Plan, the term "Committee" refers to
the Company's Compensation Committee. The Committee consists of non-employee
directors and is organized in a manner so as to satisfy the provisions of the
federal securities and tax laws applicable to such plans. The Committee has the
authority, subject to the provisions of the Plan, to determine the individuals
to whom awards will be granted, the types of awards to be granted, the number of
shares to be made subject to particular awards and the terms, conditions,
restrictions and performance criteria relating to the awards as well as to
interpret the Plan and prescribe, amend and rescind rules and regulations
relating to the Plan.
ELIGIBILITY
In general, awards may be granted at the discretion of the Committee to
officers, independent contractors, employees and directors of the Company or of
any of its subsidiaries and affiliates at the discretion of the Committee. In
determining the individuals to whom awards are granted and the type of any award
(including the number of shares to be covered by such award), the Committee will
take into account such factors as the Committee considers to be relevant in
connection with accomplishing the purposes of the Plan. Incentive stock
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options may not be granted to independent contractors. An individual may not
receive awards with respect to more than 500,000 shares in any one calendar
year. Currently, approximately 175 individuals are eligible to receive awards
under the Plan.
SHARES AVAILABLE FOR AWARDS.
The Plan provides for an aggregate of not more than 1,500,000 shares of the
Company's Class A Common Stock, par value $.001, to be reserved for issuance
under the Plan, subject to adjustment as described below. The 1,500,000 shares
represent approximately 4.9% of the number of shares of common stock
outstanding. Generally, shares subject to an award that remain unissued upon
expiration or cancellation of awards will be available for other awards under
the Plan. If the Plan is approved by shareholders, the shares remaining
available for awards under the 1999 Stock Award and Incentive Plan will also
continue to be available for awards. The closing price of the Company's Class A
Common Stock on April 2, 2002 was $40.20.
ADJUSTMENT FOR CHANGE IN CAPITALIZATION.
In the event that the Committee determines that any dividend or other
distribution, recapitalization, stock split, reverse split, reorganization,
merger, consolidation, spin-off, combination, share repurchase or exchange, or
other similar corporate transaction or event affects the Class A Stock such that
an adjustment would be appropriate in order to prevent dilution or enlargement
of the rights of participants under the Plan, then the Committee may make such
equitable changes or adjustments as it deems necessary to the number and kind of
shares of Class A Stock or other property which may thereafter be issued in
connection with awards, the number and kind of shares of Class A Stock subject
to each outstanding award, and the exercise price, grant price or purchase price
of each award.
TYPES OF AWARDS
The Plan provides for the grant of stock options (including "incentive
stock options" and "nonqualified stock options"), stock appreciation rights
(either in connection with options granted under the Plan or independently of
options), restricted stock, restricted stock units, dividend equivalents and
other stock- or cash-based awards. These awards are discussed in more detail
below. The Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor is the Plan a qualified plan within
the meaning of Section 401(a) of the Internal Revenue Code of 1986 (the "Code").
Stock Options and Appreciation Rights. Stock options may be either
"incentive stock options," as such term is defined in Section 422 of the Code,
or nonqualified stock options. The exercise price of a nonqualified stock option
may be above, at or below the fair market value per share of Class A Stock on
the date of grant, whereas the exercise price of an incentive stock option may
not be less than the fair market value per share of other shares of Class A
Stock on the date of grant. The exercise price may be paid in cash, by the
surrender of Class A Stock or through a "broker's cashless exercise" procedure
meeting the requirements of applicable securities rules.
The Committee may grant stock appreciation rights alone or in tandem with
stock options. A stock appreciation right is a right to be paid an amount equal
to the excess of the fair market value of a share of Class A Stock on the date
the stock appreciation right is exercised over either the fair market value of a
share of Class A Stock on the date of grant (in the case of a free standing
stock appreciation right) or the exercise
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price of the related stock option (in the case of a tandem stock appreciation
right), with payment to be made in cash, Class A Stock or both, as specified in
the award agreement or determined by the Committee.
Stock options and stock appreciation rights will be exercisable at such
times and upon such conditions as the Committee may determine, as reflected in
the applicable award agreement. In addition, all stock options and stock
appreciation rights will become exercisable in the event of a change in control
of the Company, which the Board of Directors may determine in their discretion.
The exercise period will be determined by the Committee except it may not exceed
ten years from the date of grant of such incentive stock option.
Except to the extent that the applicable award agreement provides
otherwise, the participant's right to exercise stock options and stock
appreciation rights will also cease shortly after the employment of the
participant terminates.
Restricted Stock and Restricted Stock Units. A restricted stock award is
an award of actual shares of Class A Stock ("restricted stock") and a restricted
stock unit award is an award of the right to receive cash or shares of Class A
Stock ("restricted stock unit"). These awards are called "restricted" because
they are subject to such restrictions on transferability, maintenance of
employment and other matters as the Committee may impose at the date of grant,
which restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments or otherwise, as the Committee may
determine. Except to the extent restricted under the award agreement relating to
the restricted stock, a participant granted restricted stock will have all of
the rights of a shareholder, including without limitation the right to vote and
the right to receive dividends thereon. The Committee has the authority to
cancel all or any portion of any outstanding restrictions at any time. In
addition, all restrictions affecting the awarded shares or units will lapse in
the event of a "change in control" of the Company.
Upon termination of the participant's relationship with the Company during
the applicable restriction period, restricted stock, restricted stock units and
any accrued and unpaid dividends or dividend equivalents that are at that time
subject to restrictions will be forfeited unless the Committee determines, as a
general matter or in any individual case, that restrictions or forfeiture
conditions relating to restricted stock will be waived in whole or in part in
the event of terminations resulting from specified causes. The Committee may
also waive in whole or in part the forfeiture of restricted stock in other
circumstances.
Other Awards. The Committee may grant to a participant the right to
receive cash equal to the amount of dividends paid with respect to a specified
number of shares of Class A Stock ("dividend equivalents"). Dividend equivalents
may be awarded on a free-standing basis or in connection with another award, and
may be paid currently or on a deferred basis. The Committee is also authorized
to grant Class A Stock as a bonus or to grant other awards in lieu of Company
commitments to pay cash under other plans or compensatory arrangements, on such
terms as are determined by the Committee.
Nontransferability. Unless otherwise determined by the Committee and
provided in an agreement evidencing the grant of an award, awards may not be
transferred by the grantee except by will or the laws of descent and
distribution and will be exercisable during the lifetime of the grantee only by
the grantee or his or her guardian or legal representative.
Withholding of Taxes. The Plan provides that the Company or any subsidiary
or affiliate may withhold from any award granted, any payment relating to an
award under the Plan or any other payment to a grantee, amounts of withholding
and other taxes due in connection with any transaction involving an award. The
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Committee may also take whatever action it considers advisable to enable the
Company and grantees to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any award.
No Stockholder Rights. The holder of an award granted under the Plan will
have no rights as a stockholder with respect to any shares of the Company Class
A Stock covered by an award until the date of issuance of a stock certificate to
him or her for such shares related to such award.
EFFECT OF CHANGE IN CONTROL
In the event of a change in control as determined by the Board of
Directors, all outstanding options and stock appreciation rights not then
exercisable will become fully exercisable, and all outstanding restricted stock,
restricted stock unit, dividend equivalent or other stock- or cash-based awards
not then fully vested will become fully vested.
AMENDMENT OR TERMINATION OF THE PLAN
The Plan may be altered, amended, suspended or terminated by the Board of
Directors, in whole or in part, except that no amendment that requires
shareholder approval in order for the Plan to avoid the application of Section
162(m) of the Code for federal income tax purposes, or for the Plan to comply
with state law, stock exchange requirements or other applicable law will be
effective unless the amendment has received the requisite approval of
shareholders. In addition, no amendment may be made which adversely affects any
of the rights of a participant under any award previously granted, without such
participant's consent.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion of certain relevant federal income tax effects
applicable to stock options and other stock-based awards granted under the Plan
is a summary only, and reference is made to the Internal Revenue Code for a
complete statement of all relevant federal tax provisions.
Nonqualified Stock Options. A grantee of an award generally will not be
taxed upon the grant of a Non-Qualified Stock Option (an "NSO"). Rather, at the
time of exercise of such NSO (and in the case of an untimely exercise of an
Incentive Stock Option ( an "ISO")), the grantee will recognize ordinary income
for federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the option price. The Company will
generally be entitled to a tax deduction at such time and in the same amount
that the grantee recognizes ordinary income.
If shares acquired upon exercise of an NSO (or upon untimely exercise of an
ISO) are later sold or exchanged, then the difference between the sales price
and the fair market value of such stock on the date that ordinary income was
recognized with respect thereto will generally be taxable as long-term or
short-term capital gain or loss (if the stock is a capital asset of the grantee)
depending upon the length of time such shares were held by the grantee.
Incentive Stock Options. A grantee will not be in receipt of taxable
income upon the grant of an ISO. Exercise of an ISO will be timely if made
during its term and if the grantee remains an employee of the Company or a
subsidiary at all times during the period beginning on the date of grant of the
ISO and ending on the date three months before the date of exercise (or one year
before the date of exercise in the case of a disabled grantee). Exercise of an
ISO will also be timely if made by the legal representative of a grantee who
dies (i) while in the employ of the Company or a subsidiary or affiliate or (ii)
within three months after
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termination of employment. The tax consequences of an untimely exercise of an
ISO will be determined in accordance with the rules applicable to NSOs. (See
"Certain Federal Income Tax Effects -- Nonqualified Stock Options.")
If stock acquired pursuant to the timely exercise of an ISO is later
disposed of, the grantee will, except as noted below, recognize long-term
capital gain or loss (if the stock is a capital asset of the grantee) equal to
the difference between the amount realized upon such sale and the option price.
The Company, under these circumstances, will not be entitled to any federal
income tax deduction in connection with either the exercise of the ISO or the
sale of such stock by the grantee.
If, however, stock acquired pursuant to the exercise of an ISO is disposed
of by the grantee prior to the expiration of two years from the date of grant of
the ISO or within one year from the date such stock is transferred to the
grantee upon exercise, any gain realized by the grantee generally will be
taxable at the time of such disqualifying disposition as follows: (i) at
ordinary income rates to the extent of the difference between the option price
and the lesser of the fair market value of the stock on the date the ISO is
exercised or the amount realized on such disqualifying disposition and (ii) if
the stock is a capital asset of the grantee, as short-term or long-term capital
gain to the extent of any excess of the amount realized on such disqualifying
disposition over the fair market value of the stock on the date which governs
the determination of the grantee's ordinary income. In such case, the Company
may claim a federal income tax deduction at the time of such disqualifying
disposition for the amount taxable to the grantee as ordinary income. Any
capital gain recognized by the grantee will be long-term or short-term capital
gain, depending on the length of time such shares were held by the grantee.
The amount by which the fair market value of the stock on the exercise date
of an ISO exceeds the option price will be an item of adjustment for purposes of
the "alternative minimum tax" imposed by Section 55 of the Code.
Exercise with Shares. According to a published ruling of the Internal
Revenue Service, a grantee who pays all or part of the option price upon
exercise of an NSO by delivering shares of the Company's Class A Stock already
owned by the grantee will recognize no gain or loss for federal income tax
purposes on the shares surrendered, but otherwise will be taxed according to the
rules described above for NSOs. (See "Certain Federal Income Tax
Effects -- Nonqualified Stock Options.") With respect to shares acquired upon
exercise which are equal in number to the shares surrendered, the basis of such
shares will be equal to the basis of the shares surrendered, and the holding
period of shares acquired will include the holding period of the shares
surrendered. The basis of additional shares received upon exercise will be equal
to the fair market value of such shares on the date which governs the
determination of the grantee's ordinary income, and the holding period for such
additional shares will commence on such date.
Stock Appreciation Rights. A grant of stock appreciation rights has no
federal income tax consequences at the time of the grant. Upon the exercise of
stock appreciation rights, the amount of any cash received is taxable to the
grantee as ordinary income, and the Company generally will be entitled to a
corresponding deduction. Upon the sale of the Class A Stock acquired by the
exercise of stock appreciation rights, grantees will recognize capital gain or
loss (assuming such stock was held as a capital asset) in an amount equal to the
difference between the amount realized upon such sale and the fair market value
of the stock on the date that governs the determination of his or her ordinary
income.
9
Restricted Stock Awards. A grantee generally will not be taxed at the time
of the grant of an award of restricted stock, but rather will recognize ordinary
income in an amount equal to the fair market value of shares of Class A Stock
subject to the award at the time the shares are no longer subject to a
substantial risk of forfeiture (as defined in the Code). The Company will be
entitled to a deduction at the time when, and in the amount that, the grantee
recognizes ordinary income. However, a grantee may elect (not later than 30 days
after acquiring such shares) to recognize ordinary income at the time the
restricted shares are awarded in an amount equal to their fair market value at
that time, notwithstanding the fact that such shares are subject to restrictions
and a substantial risk of forfeiture. If this election is made, no additional
taxable income will be recognized by the grantee at the time the restrictions
lapse. The Company will be entitled to a tax deduction at the time when, and to
the extent that, income is recognized by the grantee. However, if shares in
respect of which such election was made are later forfeited, no tax deduction is
allowable to the grantee for the forfeited shares, and the Company will be
deemed to recognize ordinary income equal to the amount of the deduction allowed
to the Company at the time of the election in respect of such forfeited shares.
Transferred Options: Estate and Gift Taxes. If options are held until
death, federal and any applicable state estate and inheritance taxes would be
imposed on the fair market value of the options at the time of death. Certain
individuals, however, may realize estate and gift tax savings by making lifetime
gifts of non-statutory options to permitted family members, trusts for their
benefit, or other entities. Federal and, if applicable, state gift taxes would
be imposed on the fair market value of the non-statutory options at the time of
the completed gift, subject to applicable federal and state gift tax credits and
exclusions. The IRS has taken the position that a gift of an option is not
complete until the donee's right to exercise the option is no longer conditioned
on the performance of services by the grantee.
NEW PLAN BENEFITS
Future grants under the Plan will be made at the discretion of the
Committee and accordingly are not yet determinable. In addition, benefits under
the Plan will depend on a number of factors, including the fair market value of
our common stock on future dates and the exercise decisions made by the
participants. Consequently, it is not possible to determine the benefits that
might be received by participants receiving discretionary grants under the Plan.
VOTE REQUIRED FOR APPROVAL
Approval of the Plan requires the affirmative vote of the holders of shares
of common stock representing a majority of the votes present or represented at
the annual meeting.
The Board of Directors recommends that you vote FOR approval of the
Company's 2002 Stock Award and Incentive Plan.
10
INFORMATION REGARDING EXECUTIVE OFFICERS
Biographical information for Mr. Gabelli appears above. Brief biographical
sketches of the other executive officers of the Company are set forth below.
BRUCE N. ALPERT, age 50,51, has served as Executive Vice President and Chief
Operating Officer of Gabelli Funds, LLC or its predecessor since June 1988. Mr.
Alpert is an officer of all of the Gabelli Funds. Mr. Alpert is also a director
of Gabelli Advisers, Inc. From 1986 until June 1988, he worked at the
InterCapital Division of Dean Witter as Vice President and Treasurer of the
mutual funds sponsored by Dean Witter. From 1983 through 1986, he worked at
Smith Barney Harris Upham & Co. as Vice President in the Financial Services
Division and as Vice President and Treasurer of the mutual funds sponsored by
Smith Barney. Mr. Alpert also was an Audit Manager and Specialist at Price
Waterhouse in the Investment Company Industry Services Group from 1975 through
1983. Mr. Alpert is a Certified Public Accountant.
DOUGLAS R. JAMIESON, age 47,48, has served as Executive Vice President and
Chief Operating Officer of GAMCO Investors, Inc. (a wholly-owned subsidiary of
the Company) since 1986 and as a director of GAMCO Investors, Inc. since 1991.
Mr. Jamieson was an investment analyst with the Gabelli & Company, Inc. from
1981 to 1986.
JAMES E. MCKEE, age 38,39, has served as Vice President, General Counsel and
Secretary of the Company or its predecessor since August 1995 and as Vice
President, General Counsel and Secretary of GAMCO Investors, Inc. since December
1993. Mr. McKee also serves as Secretary of the Company's subsidiaries and most
of the Gabelli Funds. Prior to joining the Company, he was with the Securities
and Exchange Commission in New York as a Branch Chief from 1992 to 1993 and as a
Staff Attorney from 1989 through 1992, where he worked on matters involving
registered investment advisers and investment companies.
ROBERT S. ZUCCARO, age 45,46, has served as Vice President and Chief Financial
Officer of the Company since June 1998. Mr. Zuccaro also serves as a director of
Gabelli & Company, Inc. Prior to joining the Company, he was Vice President and
Treasurer of Cybex International, Inc., an international, publicly held
manufacturer of medical, rehabilitative and fitness products, from 1992 to 1997,
and served as its Corporate Controller from 1984 to 1997.
Mr. Zuccaro was previously with Shearson Lehman Bros. and Ernst & Young LLP. Mr.
Zuccaro is a Certified Public Accountant.
115
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table summarizes the
compensation of our executive officers who received the highest compensation
during 2001:2002:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------
ALL OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- -------
Mario J. Gabelli................... 2001 --2002 -0-(a) ---0-(b) 47,115,626(c) -- -- --37,728,104(c) -0- -0- -0-
Chairman of the Board, 2000 --2001 -0-(a) ---0-(b) 45,499,198(c) -- -- --47,115,626(c) -0- -0- -0-
Chief Executive Officer and 1999 --2000 -0-(a) ---0-(b) 41,798,552(c) -- -- --45,499,198(c) -0- -0- -0-
Chief Investment Officer
Bruce N. Alpert.................... 2002 300,000 150,000 100,889(e) -0- -0- -0-
Executive Vice President and 2001 300,000 250,000 68,300(e) -- -- --
Executive Vice President and-0- -0- -0-
Chief Operating Officer of 2000 300,000 600,000(d) 11,185(e) -- -- --
Chief Operating Officer of 1999 300,000 450,000 18,358(e) -- 30,000 ---0- -0- -0-
Gabelli Funds, LLC
Douglas R. Jamieson................ 20012002 300,000 -- 1,732,863(g) -- -- --300,000 2,098,739(g) -0- -0- -0-
Executive Vice President and 2001 300,000 -0- 1,732,863(g) -0- -0- -0-
Chief Operating Officer of 2000 300,000 300,000(f) 1,889,030(g) ---0- 3,000 --
Chief Operating Officer of 1999 300,000 300,000 1,181,251(g) -- 30,000 ---0-
GAMCO Investors, Inc.
James E. McKee..................... 20012002 300,000 250,000 50,526(h) -- 5,000 --400,000(h) 598(i) -0- -0- -0-
Vice President, General Counsel 2001 300,000 250,000 50,526(i) -0- 5,000 -0-
and Secretary 2000 300,000 300,000(f) 532(h) -- -- --
and Secretary 1999 300,000 100,000 703(h) -- 25,000 --532(i) -0- -0- -0-
Robert S. Zuccaro.................. 2002 300,000 100,000 598(j) -0- -0- -0-
Vice President and 2001 300,000 100,000 526(i) -- -- --
Vice President and526(j) -0- -0- -0-
Chief Financial Officer 2000 287,500 300,000(f) 532(i) -- -- --
Chief Financial Officer 1999 212,500 275,000 703(i) -- 50,000 --532(j) -0- -0- -0-
- ---------------
(a) Mr. Gabelli received no fixed salary. Refer to footnote (c).
(b) Mr. Gabelli received no bonus.
(c) For 2001,2002, represents: (i) $15,428,158$10,527,712 for conceptualizingcreating and acting as portfolio
manager of several open-end Gabelli Funds; (ii) $3,266,837 for creating and
acting as portfolio manager of the closed-end Gabelli Funds; (iii)
$12,953,829 for acting as portfolio manager and/or attracting and providing
client service to a large number of the Company's separate accounts; (iv)
$1,446,321 for providing other services, including acting as portfolio
manager of partnerships and as a broker; (v) $9,532,807 representing the
incentive-based management fee (10% of the Company's pre-tax profits); and
(vi) $598 representing a contribution made under the Company's profit-
sharing plan. For 2001, represents: (i) $15,428,158 for creating and acting
as portfolio manager of several open-end Gabelli Funds; (ii) $5,200,356 for
conceptualizingcreating and acting as portfolio manager of the closed-end Gabelli Funds;
(iii) $12,933,226 for acting as portfolio manager and/or attracting and
providing client service to a large number of the Company's separate
accounts; (iv) $2,228,628 for providing other services, including acting as
portfolio manager of partnerships and as a broker; (v) $11,324,732
representing the incentive-based management fee (which was 10%(10% of the Company's
pre-tax profits in 2001)profits); and (vi) $526 representing a contribution made under the
Company's profit-sharing plan. For 2000, represents: (i) $15,720,450 for
conceptualizingcreating and acting as portfolio manager of several of the open-end Gabelli Funds;
(ii) $5,786,995 for conceptualizingcreating and acting as portfolio manager of the
closed-end Gabelli Funds; (iii) $11,610,310 for acting as portfolio manager
and/or attracting and providing client service to a large number of the
Company's separate accounts; (iv) $1,085,214 for providing other services,
including acting as portfolio manager of partnerships and as a broker; (v)
$11,295,697 representing the incentive-based management fee (which was 10%(10% of the
Company's pre-tax profits in 2000)profits); and (vi) $532 representing a contribution made
under the Company's profit-sharing plan.
For 1999,
represents (i) $12,976,718 for conceptualizing and acting as portfolio
manager of several of the open-end Gabelli Funds; (ii) $6,223,090 for
conceptualizing and acting as portfolio manager of the closed-end Gabelli
Funds; (iii) $10,035,033 for acting as portfolio manager and/or attracting
and providing client service to a large number of the Company's separate
accounts; (iv) $2,409,943 for providing other services, including acting as
portfolio manager of partnerships and as a broker; (v) $10,153,065
representing the incentive-based management fee (which was 20% of the
Company's pre-tax profits prior to the Company's initial public offering in
February 1999 and 10% after the initial public offering); and (vi) $703
representing a contribution made under the Company's profit-sharing plan.
12
(d) $150,000 of this amount vestsvested on December 31, 2002 and is payable onwas paid in January
15, 2003 if Mr. Alpert remains employed by the Company at that time.2003.
6
(e) For 2001,2002, represents incentive-based variable compensation for attracting
and/or providing client service to separate accounts, shareholders of the
Gabelli Funds or investors in other products sponsored by the Company
("Variable Compensation") in the amount of $100,291 and a contribution made
by the Company under its profit-sharing plan of $598. For 2001, represents
Variable Compensation in the amount of $67,774 and a contribution made by
the Company under its profit-sharing plan of $526. For 2000, represents
Variable Compensation in the amount of $10,653, and a contribution made by
the Company under its profit-sharing plan of $532.
(f) $100,000 of this amount vested on December 31, 2002 and was paid to January
2003.
(g) For 1999,2002, represents Variable Compensation in the amount of $17,655,$2,098,141, and
a contribution made by the Company under its profit-sharing plan in the
amount of $703.
(f) $100,000 of this amount vests on December 31, 2002 and is payable on
January 15, 2003 if the individual remains employed by the Company at that
time.
(g)$598. For 2001, represents Variable Compensation in the amount of
$1,732,337 and a contribution made by the Company under its profit-sharing
plan of $526. For 2000, represents Variable Compensation in the amount of
$1,627,923, interest on deferred compensation equal to the appreciation in
the market value of $250,000 of the Class A Stock during 2000 in the amount
of $260,575, and a contribution made by the Company under its profit-sharing
plan of $532.
(h) $100,000 of this amount was paid as a special interim bonus in June 2002.
(i) For 1999,2002 and 2000, represents Variable Compensation in the amount of $1,180,548, and a
contribution madecontributions by the Company under its
profit-sharing plan in the amount
of $703.
(h)plan. For 2001, represents a payment from a variable
compensation pool of $50,000, and a contribution by the Company under its
profit-sharing plan of $526.
For
1999 and 2000, represents contributions by the Company under its
profit-sharing plan.
(i)(j) Represents contributions made by the Company under its profit-sharing plan.
OPTION GRANTS TABLE. The following table shows the number ofGRANTS. No stock options were granted in 20012002 to the executive
officers named in the Summary Compensation Table and other information regarding their grants. Stock options are granted at
100% of fair market value on the date of grant and are generally exercisable
with respect to 75% of the shares on the third anniversary of the grant and with
respect to 100% of the shares on the fourth anniversary of the grant date.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ------------- -------- ---------- -------- ---------
Mario J. Gabelli.......... None -- -- -- -- --
Bruce N. Alpert........... None -- -- -- -- --
Douglas R. Jamieson....... None -- -- -- -- --
James E. McKee............ 5,000 2.90 31.62 2/20/11 99,445 252,011
Robert S. Zuccaro......... None -- -- -- -- --
13
Table.
FISCAL YEAR-END OPTIONS TABLE. The following table shows the number of
unexercised options for those executive officers named in the Summary
Compensation Table. No options were exercised in 2001. An "in-the-money" option was an option for which the option
price of the underlying stock was less than $43.20,$30.04, the closing market price of
the Class A Stock on December 31, 2001.2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 20012002 DECEMBER 31, 20012002 ($)
---------------------------- ----------------------------ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (3) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Mario J. Gabelli........................... -- None -- --Gabelli....... -0- -0- -0- -0- -0- -0-
Bruce N. Alpert............................ -- 30,000 -- 807,750Alpert........ 22,500 331,313 -0- 7,500 -0- 103,238
Douglas R. Jamieson........................ -- 33,000 -- 889,350Jamieson.... 22,500 526,621 -0- 10,500 -0- 145,358
James E. McKee............................. -- 30,000 -- 731,025McKee......... -0- -0- 18,750 11,250 258,094 86,031
Robert S. Zuccaro.......................... -- 50,000 -- 1,346,250Zuccaro...... 4,500 106,514 33,000 12,500 454,245 172,063
7
EQUITY COMPENSATION PLAN TABLE. The following table shows information
regarding outstanding options and shares reserved for future issuance under our
equity compensations plans as of December 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED WEIGHTED-AVERAGE EQUITY COMPENSATION
UPON EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS THE FIRST COLUMN)
- ------------- -------------------- -------------------- -----------------------
Equity compensation plans approved by
security holders.................... 615,406 $20.21 1,783,750
Equity compensation plans not approved
by security holders................. -0- -0- -0-
Total................................. 615,406 $20.21 1,783,750
REPORT OF THE COMPENSATION COMMITTEE
Messrs. Avansino, Ferrara and Kelly, each of whom is an independent
director, are the members of the Compensation Committee. In this report, the
term "we" refers to members of the Compensation Committee. Our report on
executive compensation for 20012002 follows:
We are responsible to the Board of Directors, and ultimately to the
shareholders of Gabelli, for:
- DeterminingReviewing the compensation ofamounts paid to, and the services performed by, the chief
executive officer;officer pursuant to his employment agreement for compliance
with the terms thereof;
- Administering the Stock Award and Incentive Plan and the Annual
Performance Incentive Plan; and
- Reviewing and approving the compensation policies and general
compensation levels for Gabelli's other executive officers.
We recognize that the investment management and securities industries are
highly competitive and that experienced professionals have significant career
mobility. We believe that the ability to attract, retain and provide appropriate
incentives for the highest quality professional personnel is essential to
maintain Gabelli's competitive position in the investment management and
securities industries, as well as to provide for the long-term success of
Gabelli.
We believe that Gabelli must pay competitive levels of cash compensation
and offer appropriate equity and other incentive programs. These programs must
always be consistent with stockholder interests. We think these programs are
necessary to motivate and retain Gabelli's professional personnel. These
compensation programs are keyed to achieve performance goals that our Committee
and the Board determine.
EXECUTIVE OFFICER COMPENSATION
The compensation for Gabelli's executive officers (other than for Mario J.
Gabelli ("Mr. Gabelli") whose compensation is described separately below) is
composed of base salary, annual bonus compensation, stock option awards and
incentive-based variable compensation.
148
BASE SALARY AND ANNUAL BONUS
Mr. Gabelli recommends to the Committee the amounts of the base salaries
and annual bonuses for the Company's executive officers, which amounts are
subject to our review and approval. We reviewed the base salaries proposed by
Mr. Gabelli for the executive officers in light of the responsibilities
associated with the position held, the individual's overall level of experience,
competitive practices and other subjective factors. The base salaries for all of
the executive officers (other than Mr. Gabelli who receives no base salary) were
set at $300,000 for both 20012002 and 2002.2003.
We also reviewed the annual bonuses and special interim bonus proposed by
Mr. Gabelli for the executive officers for their services in 20012002 in light of
their individual and business unit performance and other subjective factors. We
approved the annual bonuses reflected in the Summary Compensation Table.
STOCK OPTIONS
Gabelli's executive compensation programs also include stock option awards,
which we believe provide additional incentives to increase shareholder value and
retain qualified individuals. All 2001No stock options were granted in 2002 to Gabelli's
staff. In prior years, stock option awards were granted with an exercise price
equal to the market price of the Class A Stock at the time of the grant,
and becomebecoming exercisable with respect to 75% of the shares after three years and
with respect to 100% of the shares after four years. Individual award levels are
based upon a subjective evaluation of each individual's overall past and
expected future contribution. There is no specific formula used to determine
option awards for any individual.
VARIABLE COMPENSATION
To the extent that they have the proper regulatory registrations, all of
Gabelli's staff are eligible to receive incentive-based variable compensation
for attracting and/or providing client service to separate accounts,
shareholders of the Gabelli Funds or investors in other products sponsored by
the Company. Mr. Jamieson, who provides client service to a significant number
of separate accounts managed by Gabelli, received the majority of his total 20012002
compensation from variable compensation payments.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Gabelli received no base salary and no annual bonus in 2001,2002, and he has
not been awarded any stock options. All of the compensation paid to Mr. Gabelli
in 20012002 was incentive-based variable compensation that was paid in accordance
with Mr. Gabelli's Employment Agreement.
InPrior to its initial public offering in February 1999, the Company entered
into an Employment Agreement with Mr. Gabelli relating to his service as
Chairman of the Board, Chief Executive Officer, Chief Investment Officer of the
Company, and executive for certain subsidiaries and Portfolio Manager for
certain mutual funds and separate accounts. Under the Employment Agreement, Mr.
Gabelli receives, as compensation for managing or overseeing the management of
investment companies and partnerships, attracting mutual fund accounts,
attracting or managing separate accounts, providing investment banking services,
acting as a broker or otherwise generating revenues for the Company, a
percentage of revenues or net profits relating to or generated by such
activities (which revenues or net profits are substantially derived from assets
under management). Such payments are made in a manner and at rates as agreed to
from time to time by Mr. Gabelli and the Company, which rates have been and generally will be
the same as those received by other professionals in the
9
Company performing similar
15
services. With respect to the Company's institutional
and retail asset management, mutual fund advisory and brokerage business, the
Company generally pays out up to 40% of the revenues or net profits to the
portfolio managers, brokers and marketing staff who introduce, service or
generate such business, with payments involving the separate accounts being
typically based on revenues and payments involving the mutual funds being
typically based on net profits.
Pursuant to the Employment Agreement, in addition to his revenue or net
profit-based compensation, Mr. Gabelli receives an incentive-based management
fee in the amount of 10% of the aggregate pre-tax profits, if any, of the
Company as computed for financial reporting purposes in accordance with
generally accepted accounting principles (before consideration of this fee or
the $50 million deferred payment described below or any employment taxes
thereon) so long as he is an executive of the Company and devoting the
substantial majority of his working time to its business. This incentive-based
management fee is subject to our review at least annually for compliance with
the terms thereof. Mr. Gabelli has agreed that while he is employed by the
Company or until February 17, 2005, whichever is longer, he will not provide
investment management services outside of the Company, except for certain
permitted accounts. Pursuant to the Employment Agreement, an assignee of Mr.
Gabelli received a deferred payment of $50 million plus accrued interest payablepaid on
January 2, 2002. Interest on the deferred payment had been payable quarterly at
an annual rate of 6%. Because these compensation arrangements were in
existence before the completion of the Company's initial public offering,involve variable
incentive-based fees, the $1.0 million deductibility limit of Section 162(m) is
generally not expected to apply to the payments until the first meeting of the Company's shareholders at
which directors will be elected after December 31, 2003. Thereafter, while no
assurance can be given, the Company believes that it will be able to take steps
to allow for the continued deductibility of these payments pursuant to the
Employment Agreement.payments. The Employment Agreement may
not be amended without the approval of this Committee.
COMPENSATION COMMITTEE
Raymond C. Avansino, Jr. (Chairman)
John C. Ferrara
Eamon M. Kelly
1610
STOCK PERFORMANCE CHART
We are required by the Securities and Exchange Commission to provide you
with a comparison of the cumulative total return on our Class A Stock as of
December 31, 20012002 with that of a broad equity market index and either a
published industry index or a peer group index selected by us. The following
chart compares the return on the Class A Stock with the return on the Russell
2000 Index and an index comprised of public companies with the Standard
Industrial Classification (SIC) Code 6282, Investment Advice. The comparison
assumes that $100 was invested in the Class A Stock at the Company's initial
public offering on February 11, 1999, and in each of the named indices, which
include the reinvestment of dividends, on February 11, 1999.
[COMPARISON GRAPH]
Feb. 11, 1999 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 2001 Dec. 31, 2002
------------- ------------- ------------- ------------- -------------
Gabelli Asset
Management Inc. $100 $ 92.86 $189.65 $246.86 $171.43
Russell 2000 Index $100 $118.10 $113.00 $114.16 $ 89.52
Peer Group Index $100 $113.62 $191.07 $164.49 $128.68
1711
CERTAIN OWNERSHIP OF GABELLI'S STOCK
The following table sets forth, as of March 15, 2002,31, 2003, certain information
with respect to all persons known to Gabelli who beneficially own more than 5%
of the Class A Stock or Class B Stock. The table also sets forth information
with respect to stock ownership of the directors, each of the executive officers
named in the Summary Compensation Table, and all directors and executive
officers as a group. The number of shares beneficially owned is determined under
rules of the Securities and Exchange Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares over which a person has the sole
or shared voting or investment power and any shares which the person can acquire
within 60 days (e.g., through the exercise of stock options). Except as
otherwise indicated, the shareholders listed in the table have sole voting and
investment power with respect to the shares set forth in the table.
AMOUNT AND
NATURE OF
TITLE OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER* CLASS OWNERSHIP OF CLASS
- ------------------------- -------- ---------- ----------
Barclays Global Investors, NA............................... Class A 363,125(1) 5.4%
Baron Capital Group, Inc. .................................. Class A 689,700(1) 10.3%688,300(2) 10.2%
Cascade Investment, L.L.C. ................................. Class A 1,886,792(2) 22.0%1,886,792(3) 21.8%
Chilton Investment Company, Inc. ........................... Class A 849,300(3) 12.7%856,300(4) 12.6%
Roger Engemann & Associates, Inc. .......................... Class A 516,362(4) 7.7%463,850(5) 6.9%
Westcap Investors, LLC...................................... Class A 731,049(6) 10.8%
Mario J. Gabelli............................................ Class A 113,265 1.7%
Class B 23,450,000(5)23,150,000(7) 100%
Bruce N. Alpert............................................. Class A 64,500(6)39,500(8) **
Douglas R. Jamieson......................................... Class A 24,500(4)9,500(9) **
James E. McKee.............................................. Class A 21,842(7)28,092(10) **
Robert S. Zuccaro........................................... Class A 42,300(8)47,810(11) **
Raymond C. Avansino, Jr. ...................................Jr..................................... Class A 84,000(9) 1.3%91,500(12) 1.4%
John C. Ferrara............................................. Class A 10,00017,500(13) **
Paul B. Guenther............................................ Class A 10,000 **
Eamon M. Kelly.............................................. Class A 4,650 **
Karl Otto Pohl.............................................. Class A 7,500(10)10,000(14) **
All Directors and Executive Officers as a Group............. Class A 382,557 5.7%371,817 5.4%
Class B 23,450,00023,150,000 100%
- ---------------
(*) The address of each beneficial owner of more than 5% of the Class A Stock
or Class B Stock is as follows: Barclays Global Investors, NA, 45 Fremont
Street, San Francisco, CA 94105; Baron Capital Group, Inc., 767 Fifth
Avenue, New York, NY 10153; Cascade Investment, LLC, 2365 Carillon Point,
Kirkland, WA 98033: Chilton Investment Company, Inc., 65 Locust Avenue,
New Canaan, CT 06840; Roger Engemann & Associates, Inc., 600 North
Rosemead Blvd., Pasadena, CA 91107; Westcap Investors, LLC, 11111 Santa
Monica Blvd., Los Angeles, CA 90025; and Mario J. Gabelli, One Corporate
Center, Rye, NY 10580.
(**) Represents beneficial ownership of less than 1%.
(1) As reported in a Schedule 13G, dated February 10, 2003. According to this
filing, Barclays Global Investors, NA has sole voting and dispositive power
with respect to 322,896 of the reported shares and Barclays Global Fund
Advisors has sole voting and dispositive power with respect to 40,229 of
the reported shares.
(2) As reported in an amendment to Schedule 13G, dated February 7, 2002.10, 2003.
According to this filing, Baron Capital Group, Inc. and Ronald Baron
beneficially own 689,700688,300 shares, BAMCO, Inc. beneficially owns 612,000
shares,625,300,
Baron Capital Management, Inc.
12
beneficially owns 77,70063,000 shares, and Baron Growth Fund and Baron Small Cap
Fund each beneficially own 299,000 shares, and each of the reporting
persons has shared voting and dispositive power with respect to these
shares. These reporting persons disclaim beneficial ownership to the extent
these shares are held by their investment advisory clients and not directly
by the reporting persons.
(2)(3) As reported in a Schedule 13D, dated August 27, 2001. Cascade Investment,
L.L.C.'s beneficial ownership of these shares assumes the conversion of a
$100 million convertible note purchased by it from the Company. The shares
beneficially owned by Cascade Investment, L.L.C. may be deemed to be
beneficially owned by William H. Gates III, the sole member of Cascade.
(3)Cascade
Investment, L.L.C.
(4) As reported in aan amendment to Schedule 13G, dated February 14, 2003.
According to this filing, Chilton Investment Company, Inc. has sole voting
and dispositive power with respect to all of the reported shares.
(5) As reported in an amendment to Schedule 13G, dated January 4, 2002.
18
(4) As reported in a Schedule 13G, dated February 5, 2002.28, 2003.
According to this filing, Roger Engemann & Associates, Inc. and Pasadena
Capital Corporation have shared voting and dispositive power with respect
to these shares.
(5)(6) As reported in an amendment to Schedule 13G, dated March 18, 2003.
According to this filing, Westcap Investors, LLC has sole voting power with
respect to 550,472 of the reported shares and sole dispositive power with
respect to 180,577 of the reported shares.
(7) Owned by Gabelli Group Capital Partners, Inc. ("GGCP") and two of its
subsidiaries. Mr. Gabelli disclaims beneficial ownership of these shares in
excess of his ownership interest in GGCP.
(6)(8) Includes 22,5007,500 shares that may be acquired through the exercise of stock
options.
(7)(9) Includes 18,7507,500 shares that may be acquired through the exercise of stock
options.
(8)(10) Includes 37,50025,000 shares that may be acquired through the exercise of stock
options.
(9)(11) Includes 45,500 shares that may be acquired through the exercise of stock
options.
(12) Includes 7,500 shares that may be acquired through the exercise of stock
options. 60,000 shares are owned by entities for which Mr. Avansino serves
as a director andor officer. Mr. Avansino disclaims beneficial ownership of
these 60,000 shares.
(10)(13) Includes 7,500 shares that may be acquired through the exercise of stock
options.
(14) Represents shares that may be acquired through the exercise of stock
options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
WeBased solely on a review of filings made under Section 16(a) of the
Securities Exchange Act of 1934, we believe that our directors and executive
officers and other shareholders who may own 10% or more of Gabelli's common
stock have complied with the requirements of Section 16(a) the Securities
Exchange Act of 1934 to report ownership, and transactions which change
ownership, on time.time, except that a Form 5 was filed on behalf of Mr. Kelly in
February 2003 relating to a grant of options in October 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gabelli Group Capital Partners, Inc. ("GGCP"), formerly known as Gabelli
Funds, Inc., and two of its subsidiaries own all of the Company's Class B Stock,
representing approximately 97% of the combined voting power and 78%77% of the
outstanding shares of the Company's outstandingcommon stock.
InPrior to its initial public offering in February 1999, the Company and GGCP
entered into a Management Services Agreement, with a one-year term and renewable
annually, under which the Company will provide certain services for GGCP,
including furnishing office space and equipment, providing insurance coverage,
overseeing the administration of its business and providing personnel to perform
certain administrative services. The Management Services Agreement was renewed
in May 2001.2002. Pursuant to the Management Services Agreement, GGCP paid the
Company $459,245$300,000 for services provided in 2001.2002.
As of December 5, 1997, GGCP entered into a master lease agreement with
M4E, LLC, which is owned by the sons and daughterchildren of Mr. Gabelli, for a 60,000 square
foot building, of which approximately 9,000 square feet are currently subleased
to other tenants. The master lease for the building and property, which is
located at 401 Theodore Fremd Avenue, Rye, New York (the "Building"), expires on
April 30, 2013. From December 5, 1997 through December 31, 2002, GGCP agreed to
pay rent equal to $720,000 per year. From January 1, 2003 through December 31,
2003, the rent will increase to $756,000 per year. From January 1, 2004 through
13
April 30, 2013, the rent will be a minimum of $756,000$765,000 per year, adjusted for
inflation. GGCP agreed to be responsible under the master lease for all
operating expenses, costs of electricity and other utilities and taxes. As of
February 9, 1999, GGCP assigned all of its rights and obligations under the
master lease to the Company.
As of December 5, 1997, GGCP subleased to Lynch Corporation, a company for
which Mr. Gabelli serves as Vice Chairman and is a significant stockholder,
approximately 5,000 square feet in the Building. The sublease hashad a five-year
term. With the assignment of the master lease, the Company became the successor
as landlord to GGCP under this sublease. As of September 1, 1999, Lynch
Corporation assigned all of its rights and obligations under the sublease to
Lynch Interactive Corporation, a company for which Mr. Gabelli serves as Vice
Chairman and is a significant stockholder. Lynch Interactive Corporation pays
rent to the Company at the
19
rate of $18 per square foot, subject to adjustment for increases in taxes and
other operating expenses, plus a minimum payment of $2.75 per square foot for
electricity. Effective May 1, 2001, the parties
agreed to reduce the leased space to 3,400approximately 3,300 square feet. As of March 1, 2000,Effective
December 5, 2002, the Company entered intoand Lynch Interactive Corporation extended the
lease on this space for five years, although the Company has a sublease withright to
terminate it after three years. Pursuant to this lease, Lynch Interactive
Corporation for approximately 1,152 square feet in the Building. The sublease
was for a one-year term and was extended on a month-to-month basis until it was
terminated in May 2001. Lynch Corporation paidpays rent to the Company at the rate of $25$28 per square foot plus $3
per square foot for electricity, subject to adjustment for increases in taxes
and other operating expenses. The total amount paid in 2002 for rent and other
expenses plus a minimum payment of $2.50 per square foot for
electricity.under this lease was $72,858.
GAMCO Investors, Inc. ("GAMCO"), a wholly ownedwholly-owned subsidiary of the Company,
has entered into agreements to provide advisory and administrative services to
MJG Associates, Inc., which is wholly-owned by Mr. Gabelli, and to Gabelli
Securities, Inc. ("GSI"), a majority-owned subsidiary of the Company, with
respect to the private investment funds managed by each of them. Pursuant to
such agreements, GSI and MJG Associates, Inc. each paid GAMCO $50,000 and $10,000,
respectively, (excluding reimbursement of expenses) for 2001.2002.
Gabelli Securities International Limited ("Gabelli Securities
International") was formed in 1994 to provide management and investment advisory
services to offshore funds and accounts. Marc Gabelli, a portfolio manager of
the Company and the son of Mr. Gabelli, owns 55% of Gabelli Securities
International and GSI owns the remaining 45%.
In 1994, Gabelli International Gold Fund Limited ("GIGFL"), an offshore
investment company investing primarily in securities of issuers with
gold-related activities, was formed and Gabelli Securities International entered
into an agreement to provide management services to GIGFL. GSI in turn entered
into an agreement with Gabelli Securities International to provide investment
advisory services to GIGFL in return for receiving all investment management
fees paid by GIGFL. Pursuant to such agreement, GSI received investment
management fees of $3,604$29,162 for 2001.2002.
In April 1999, Gabelli Global Partners, Ltd., an offshore investment fund,
was incorporated. Gabelli Securities International and Gemini Capital
Management, LLC ("Gemini"), an entity owned by Marc Gabelli, were engaged by the
fund as investment advisors as of July 1, 1999. Gabelli Securities International
and Gemini each received half of the incentive fee, approximately $1,456, paid
by the fund to the investment advisors for 2001. The fund paid half of the
management fees for 2001,2002, approximately $131,254,$119,230, to Gabelli Securities
International which amount it in turn paid to GSI.GSI for services provided.
In April 1999, GSI formed Gabelli Global Partners, L.P., an investment
limited partnership for which GSI and Gemini are the general partners. In March
2002, Gabelli Global Partners, L.P. changed its name to Gemini Global Partners,
L.P. Gemini received half of the incentive and management feesfee paid by the partnership to the
general partners in the amount of $123,820$138,077 for 2001.2002.
14
In December 1999, Gabelli European Partners, Ltd., an offshore investment
fund, was incorporated. Gabelli Securities International was engaged as an
investment advisor by the fund as of January 1, 2000. For services rendered by
GSI, Gabelli Securities International paid GSI all of the incentive and
management fees it received for 20012002 from the fund in the amount of $112,939.$129,432.
Effective January 1, 1999, Gabelli Funds, LLC, a subsidiary of the Company,
entered into an agreement to provide advisory and administration services to
Gemini with respect to the funds it manages. Pursuant to this agreement, Gemini
paid Gabelli Funds, LLC $5,000 for services provided in 2001.
20
2002.
For 2001,2002, the Company reimbursed GGCP in the amount of $169,275$86,225 for GGCP's
incremental costs (but not the fixed costs) relating to the Company's use of an
airplane in which GGCP owns a fractional interest.
In February 1999, the Company and Mr. Gabelli entered into an Employment
Agreement which provided, among other things, that Mr. Gabelli or his assignee
would receive a deferred payment of $50 million on January 2, 2002, plus
interest payable quarterly at an annual rate of 6%. Mr. Gabelli's assignee
received interest on the deferred payment in the amount of $3 million in 2001.
The deferred payment was made to an assignee of Mr. Gabelli on January 2, 2002.
In connection with the acquisition of a limited partnership interest in a
private fund managed by the Company, Mr. Jamieson executed a demand note with
respect to a loan of $350,000, which accrued interest at an annual rate of 7%.
In February 2001, Mr. Jamieson repaid this note and all accrued and unpaid
interest. In connection with the purchase of shares of GSI prior to the Company's
initial public offering, Mr. Zuccaro, Marc Gabelli and Matthew R. Gabelli, a
Vice President-TradingPresident -- Trading of the Company and the son of Mr. Gabelli, executed
demand notes with respect to loans of $72,420, $111,080, and $66,409,
respectively, each of which accrueaccrued interest at the rate of 7%. In November
2002, these loans together with all accrued and unpaid interest were repaid in
full.
In 2002, Mr. Gabelli, by virtue of a newly entered into relationship, now
has a spouse who has been at the firm since 1984.
The Company has an agreement with Mr. Karl Otto Pohl to pay him an annual
retainer fee equal to the difference between $250,000 and the amounts received
by Mr. Pohl directly from the Mutual Funds for his service on their boards of
directors. The Mutual Funds did not pay Mr. Pohl any amount in 2001.2002.
As required by the Company's Code of Ethics, the Company's staff members
are required to maintain their brokerage accounts at Gabelli & Company unless
they receive permission to maintain an outside account. Gabelli & Company offers
all of its staff the opportunity to engage in brokerage transactions at
discounted rates. Accordingly, many of the Company's staff members, including
the executive officers or entities controlled by them, have brokerage accounts
at Gabelli & Company and have engaged in securities transactions through it at
discounted rates. From time to time, the Company through its subsidiaries in the
ordinary course of business has also provided brokerage or investment advisory
services to the Company's directors, the substantial shareholders listed in the
table under "Certain Ownership of Gabelli's Stock" or entities controlled by
such persons for customary fees.
REPORT OF THE AUDIT COMMITTEE
Messrs. Avansino, Ferrara and Kelly, each of whom is an independent
director, are the members of the Audit Committee. In this report, the term "we"
refers to the members of the Audit Committee.
The Board of Directors has adopted a written charter for the Audit
Committee. A copy of that charter was included as Appendix A to last year'sour 2001 proxy
statement. There have been no material changes to the charter since then. Our
job is one of oversight as set forth in our charter. Gabelli's management is
responsible for preparing Gabelli's financial statements and for maintaining
internal controls. The independent auditors are responsible for auditing the
financial statements and expressing an opinion as to whether those audited
financial statements fairly represent the financial position, results of
operations and cash flows of Gabelli in conformity with generally accepted
accounting principles.
We have reviewed and discussed Gabelli's audited 20012002 financial statements
with management and with Ernst & Young LLP, Gabelli's independent auditors.
We have discussed with Ernst & Young LLP the matters required by Statement
on Auditing Standards No. 61, Communication with Audit Committees.
2115
We have received from Ernst & Young LLP the written statements required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and have discussed with Ernst & Young LLP its independence.
Based on the review and discussions referred to above, we have recommended
to the Board of Directors that the audited financial statements be included in
Gabelli's Annual Report on Form 10-K for the year ended December 31, 20012002 for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Eamon M. Kelly (Chairman)
Raymond C. Avansino, Jr.
John C. Ferrara
INDEPENDENT ACCOUNTANTS
SELECTION OF ERNST & YOUNG LLP
In November 2001,2002, the Audit Committee considered and recommended, and
Gabelli's Board of Directors approved, the selection of Ernst & Young LLP to be
our independent accountants for the year ending December 31, 2001.2002. Gabelli has
not selected auditors for the current year, since its normal practice is for the
Audit Committee and the Board to make the selection later in the year. Ernst &
Young LLP has been Gabelli's independent auditors since its inception in 1998.
Representatives of this firm will be present at the meeting. They will have the
opportunity to make a statement and respond to appropriate questions from
shareholders.
ERNST & YOUNG LLP FEES FOR 20012002
Audit Fees. Fees billed to Gabelli by Ernst & Young LLP with respect to
the audit of the 20012002 financial statements and interim reviews of quarterly
financial statements for 20012002 were $272,000.$379,000.
Financial Information Systems Design and Implementation Fees. No services
were performed and no fees were billed to Gabelli by Ernst & Young LLP in
connection with financial information systems design and implementation projects
for 2001.2002.
All Other Fees. All other fees billed to Gabelli by Ernst & Young LLP with
respect to 20012002 were $115,000,$103,060, which fees were for tax consulting, tax return preparation and
review of registration statements.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining Ernst & Young's
independence.
22
SHAREHOLDER PROPOSALS FOR THE 20032004 ANNUAL MEETING
Qualified shareholders who want to have proposals presented at our 20032004
annual meeting must deliver them to Gabelli by December 31, 2002,18, 2003, in order to be
considered for inclusion in next year's proxy statement and proxy.
16
OTHER MATTERS
We know of no other matters to be presented to you at the meeting other
than the election of directors. As stated in an earlier section, ifIf other matters are considered at the meeting,
the proxies will vote on these matters in accordance with their judgment of the
best interests of Gabelli.
We will provide a free copy of Gabelli's Annual Report on Form 10-K for the
year ended December 31, 2001.2002. Requests should be in writing and addressed to
Gabelli's Chief Financial Officer (Robert S. Zuccaro, Gabelli Asset Management
Inc., One Corporate Center, Rye, NY 10580-1422).
2317
EXHIBIT A
GABELLI ASSET MANAGEMENT INC.
2002 STOCK AWARD AND INCENTIVE PLAN
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the 2002 Stock Award and Incentive Plan of Gabelli Asset
Management Inc. (the "Plan") is to afford an incentive to selected employees,
directors and independent contractors of Gabelli Asset Management Inc. (the
"Company"), or any Subsidiary or Affiliate which now exists or hereafter is
organized or acquired, to acquire a proprietary interest in the Company, to
continue as employees or independent contractors, as the case may be, to
increase their efforts on behalf of the Company and to promote the success of
the Company's business. Pursuant to Section 6 of the Plan, there may be granted
stock options (including "incentive stock options" and "nonqualified stock
options"), stock appreciation rights (either in connection with stock options
granted under the Plan or independently of options), restricted stock,
restricted stock units, dividend equivalents and other stock- or cash-based
awards. Awards made under the Plan are intended to satisfy the requirements of
Rule 16b-3 promulgated under Section 16 of the Exchange Act and the Plan shall
be interpreted in a manner consistent therewith.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity if, at the time of granting of an
Award, (i) the Company, directly or indirectly, owns at least 20% of the
combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity or (ii) such entity, directly
or indirectly, owns at least 20% of the combined voting power of all
classes of stock of the Company.
(b) "Award" means any Option, SAR, Restricted Stock, Restricted Stock
Unit, Dividend Equivalent or Other Stock-Based Award or Other Cash-Based
Award granted under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Grantee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits
specified under the Plan upon his or her death, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the
person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) A "Change in Control" shall be deemed to have occurred in the
event that the Board of Directors of the Company in its sole and absolute
discretion determines that a change in control has occurred for the
purposes of the Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(h) "Committee" means the committee established by the Board to
administer the Plan, the composition of which shall at all times satisfy
the provisions of Rule 16b-3.
24
(i) "Company" means Gabelli Asset Management Inc., a corporation
organized under the laws of the State of New York, or any successor
corporation.
(j) "Dividend Equivalent" means a right, granted to a Grantee under
Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock.
Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award, and may be paid currently or on a deferred
basis.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted
and applied by regulations, rulings and cases.
(l) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined
by such methods or procedures as shall be established from time to time by
the Committee. Unless otherwise determined by the Committee in good faith,
the per share Fair Market Value of Stock as of a particular date shall mean
(i) the closing sales price per share of Stock on the national securities
exchange on which the Stock is principally traded, for the last preceding
date on which there was a sale of such Stock on such exchange, or (ii) if
the shares of Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Stock in such
over-the-counter market for the last preceding date on which there was a
sale of such Stock in such market, or (iii) if the shares of Stock are not
then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole
discretion, shall determine.
(m) "Grantee" means a person who, as an employee or independent
contractor of the Company, a Subsidiary or an Affiliate, has been granted
an Award under the Plan.
(n) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(o) "NQSO" means any Option that is designated as a nonqualified stock
option.
(p) "Option" means a right, granted to a Grantee under Section 6(b),
to purchase shares of Stock. An Option may be either an ISO or an NQSO,
provided that ISO's may not be granted to independent contractors.
(q) "Other Cash-Based Award" means cash awarded under Section 6(h),
including cash awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the Plan.
(r) "Other Stock-Based Award" means a right or other interest granted
to a Grantee under Section 6(h) that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or
related to, Stock, including, but not limited to (1) unrestricted Stock
awarded as a bonus or upon the attainment of specified performance criteria
or otherwise as permitted under the Plan, and (2) a right granted to a
Grantee to acquire Stock from the Company for cash and/or a promissory note
containing terms and conditions prescribed by the Committee.
(s) "Plan" means this Gabelli Asset Management Inc. 2002 Stock Award
and Incentive Plan, as amended from time to time.
(t) "Restricted Stock" means an Award of shares of Stock to a Grantee
under Section 6(d) that may be subject to certain restrictions and to a
risk of forfeiture.
25
(u) "Restricted Stock Unit" means a right granted to a Grantee under
Section 6(e) to receive Stock or cash at the end of a specified deferral
period, which right may be conditioned on the satisfaction of specified
performance or other criteria.
(v) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act, including any successor to such Rule.
(w) "Stock" means shares of the Class A common stock, par value $.001
per share, of the Company.
(x) "SAR" or "Stock Appreciation Right" means the right, granted to a
Grantee under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to
the date of exercise of the right, with payment to be made in cash, Stock,
or property as specified in the Award or determined by the Committee.
(y) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Award, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
the chain.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have
the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the type and
number of Awards to be granted, the number of shares of Stock to which an Award
may relate and the terms, conditions, restrictions and performance criteria
relating to any Award; and to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, exchanged, or
surrendered; to make adjustments in the terms and conditions of, and the
criteria and performance objectives (if any) included in, Awards in recognition
of unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations, or
accounting principles; to designate Affiliates; to construe and interpret the
Plan and any Award; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Award
Agreements (which need not be identical for each Grantee); and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may appoint a chairperson and a secretary and may make such
rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Grantee (or any person
claiming any rights under the Plan from or through any Grantee) and any
stockholder.
26
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
made hereunder.
4. ELIGIBILITY.
Awards may be granted to selected employees, independent contractors and
directors of the Company and its present or future Subsidiaries and Affiliates,
in the discretion of the Committee. In determining the persons to whom Awards
shall be granted and the type of any Award (including the number of shares to be
covered by such Award), the Committee shall take into account such factors as
the Committee shall deem relevant in connection with accomplishing the purposes
of the Plan. In no event will an employee, independent contractor or director be
granted an Award where the number of shares to be covered by such Award together
with all other shares covered by any other Awards to such individual in the same
calendar year exceeds 500,000 shares.
5. STOCK SUBJECT TO THE PLAN.
The number of shares of Stock reserved for the grant of Awards under the
Plan shall be 1,500,000, subject to adjustment as provided herein. Such shares
may, in whole or in part, be authorized but unissued shares or shares that shall
have been or may be reacquired by the Company in the open market, in private
transactions or otherwise. If any shares subject to an Award are forfeited,
cancelled, exchanged or surrendered or if an Award otherwise terminates or
expires without a distribution of shares to the Grantee, the shares of stock
with respect to such Award shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, termination or expiration, again be available
for Awards under the Plan. Upon the exercise of any Award granted in tandem with
any other Awards or awards, such related Awards or awards shall be cancelled to
the extent of the number of shares of Stock as to which the Award is exercised
and, notwithstanding the foregoing, such number of shares shall no longer be
available for Awards under the Plan.
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock so that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
Grantees under the Plan, then the Committee shall make such equitable changes or
adjustments as it deems necessary or appropriate to any or all of (i) the number
and kind of shares of Stock which may thereafter be issued in connection with
Awards, (ii) the number and kind of shares of Stock or other property issued or
issuable in respect of outstanding Awards, and (iii) the exercise price, grant
price, or purchase price relating to any Award; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code.
6. SPECIFIC TERMS OF AWARDS.
(a) General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. The Committee may
make rules relating to installment or deferred payments with respect to Awards,
including the rate of interest to be credited with respect to such payments. In
addition to the foregoing, the Committee may
27
impose on any Award or the exercise thereof, at the date of grant or thereafter,
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grant Options to Grantees on
the following terms and conditions:
(i) Type of Award. The Award Agreement evidencing the grant of an
Option under the Plan shall designate the Option as an ISO or an NQSO.
(ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee; provided
that, in the case of an ISO, such exercise price shall be not less than the
Fair Market Value of a share on the date of grant of such Option, and in no
event shall the exercise price for the purchase of shares be less than par
value. The exercise price for Stock subject to an Option may be paid (i) in
cash, or (ii) at the discretion of the Committee, by an exchange of Stock
previously owned by the Grantee, by the withholding of Stock otherwise
issuable upon exercise or (iii) a combination of thereof, in an amount
having a combined value equal to such exercise price. A Grantee may also
elect to pay all or a portion of the aggregate exercise price by having
shares of Stock with a Fair Market Value on the date of exercise equal to
the aggregate exercise price sold by a broker-dealer under circumstances
meeting the requirements of 12 C.F.R. ss.220 or any successor thereof.
(iii) Term and Exercisability of Options. The date on which the
Committee adopts a resolution expressly granting an Option shall be
considered the day on which such Option is granted. Options shall be
exercisable over the exercise period (which shall not exceed ten years from
the date of grant), at such times and upon such conditions as the Committee
may determine, as reflected in the Award Agreement; provided that the
Committee shall have the authority to accelerate the exercisability of any
outstanding Option at such time and under such circumstances as it, in its
sole discretion, deems appropriate (subject to the provisions of Section 7
hereof). An Option may be exercised to the extent of any or all full shares
of Stock as to which the Option has become exercisable, by giving written
notice of such exercise to the Committee or its designated agent.
(iv) Termination of Employment, Etc. Unless otherwise determined by
the Committee, an Option may not be exercised unless the Grantee is then in
the employ of, or then maintains an independent contractor relationship
with, the Company or a Subsidiary or an Affiliate (or a company or a parent
or subsidiary company of such company issuing or assuming the Option in a
transaction to which Section 424(a) of the Code applies), and unless the
Grantee has remained continuously so employed, or continuously maintained
such relationship, since the date of grant of the Option; provided that the
Award Agreement may contain provisions extending the exercisability of
Options, in the event of specified terminations, to a date not later than
the expiration date of such Option.
(v) Other Provisions. Options may be subject to such other conditions
including, but not limited to, restrictions on transferability of the
shares acquired upon exercise of such Options, as the Committee may
prescribe in its discretion.
(c) SARs. The Committee is authorized to grant SARs to Grantees on the
following terms and conditions:
(i) In General. Unless the Committee determines otherwise, an SAR (1)
granted in tandem with an NQSO may be granted at the time of grant of the
related NQSO or at any time thereafter or
28
(2) granted in tandem with an ISO may only be granted at the time of grant
of the related ISO. An SAR granted in tandem with an Option shall be
exercisable only to the extent the underlying Option is exercisable.
(ii) SARs. An SAR shall confer on the Grantee a right to receive with
respect to each share subject thereto, upon exercise thereof, the excess of
(1) the Fair Market Value of one share of Stock on the date of exercise
over (2) the grant price of the SAR (which in the case of an SAR granted in
tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such
price as the Committee may determine).
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Grantees on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant or thereafter, which restrictions
may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee may
determine (subject to the provisions of Section 7 hereof). Except to the
extent restricted under the Award Agreement relating to the Restricted
Stock, a Grantee granted Restricted Stock shall have all of the rights of a
stockholder including, without limitation, the right to vote Restricted
Stock and the right to receive dividends thereon.
(ii) Forfeiture. Upon termination of employment or termination of the
independent contractor relationship during the applicable restriction
period, Restricted Stock and any accrued but unpaid dividends or Dividend
Equivalents that are at that time subject to restrictions shall be
forfeited; provided that the Committee may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Grantee, such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted
Stock, and the Company shall retain physical possession of the certificate.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date, or deferred for payment to such date as
determined by the Committee, in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends. Stock
distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.
(e) Restricted Stock Units. The Committee is authorized to grant
Restricted Stock Units to Grantees, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Stock or cash, as determined
by the Committee, will occur upon expiration of the deferral period
specified for Restricted Stock Units by the Committee. In addition,
Restricted Stock Units shall be subject to such restrictions as the
Committee may impose, at the date of
29
grant or thereafter, which restrictions may lapse at the expiration of the
deferral period or at earlier or later specified times, separately or in
combination, in installments or otherwise, as the Committee may determine.
(ii) Forfeiture. Upon termination of employment or termination of the
independent contractor relationship during the applicable deferral period
or portion thereof to which forfeiture conditions apply, or upon failure to
satisfy any other conditions precedent to the delivery of Stock or cash to
which such Restricted Stock Units relate, all Restricted Stock Units that
are then subject to deferral or restriction shall be forfeited; provided
that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock Units will be waived in
whole or in part in the event of termination resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock Units.
(f) Stock Awards in Lieu of Cash Awards. The Committee is authorized to
grant Stock as a bonus, or to grant other Awards, in lieu of Company commitments
to pay cash under other plans or compensatory arrangements. Stock or Awards
granted hereunder shall have such other terms as shall be determined by the
Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Grantees. The Committee may provide, at the date of grant or
thereafter, that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Stock, or other
investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which they relate.
(h) Other Stock- or Cash-Based Awards. The Committee is authorized to
grant to Grantees Other Stock-Based Awards or Other Cash-Based Awards as an
element of or supplement to any other Award under the Plan, as deemed by the
Committee to be consistent with the purposes of the Plan. Such Awards may be
granted with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, or valued by reference to the
performance of specified Subsidiaries or Affiliates. The Committee shall
determine the terms and conditions of such Awards at the date of grant or
thereafter.
7. CHANGE IN CONTROL.
In the event of a Change in Control, all outstanding Options and SARs not
then exercisable shall become fully exercisable, and all outstanding Restricted
Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award or
Other Cash-Based Award Awards not then fully vested shall become fully vested.
8. GENERAL PROVISIONS.
(a) Compliance with Local and Exchange Requirements. The Plan, the
granting and exercising of Awards thereunder, and the other obligations of the
Company under the Plan and any Award Agreement or other agreement shall be
subject to all applicable federal and state laws, rules and regulations, and to
such approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Stock under
any Award until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any state, federal or
foreign law, rule or regulation as the Company may consider appropriate, and may
require any Grantee to make such
30
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock in compliance with applicable
laws, rules and regulations.
(b) Nontransferability. Unless otherwise determined by the Committee and
set forth in the applicable Award Agreement, Awards shall not be transferable by
a Grantee except by will or the laws of descent and distribution or, if then
permitted under Rule 16b-3, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, and shall be exercisable during
the lifetime of a Grantee only by such Grantee or his guardian or legal
representative.
(c) No Right to Continued Employment, etc. Nothing in the Plan or in any
Award granted or any Award Agreement or other agreement entered into pursuant
hereto shall confer upon any Grantee the right to continue in the employ of or
to continue as an independent contractor of the Company, any subsidiary or any
Affiliate or to be entitled to any remuneration or benefits not set forth in the
Plan or such Award Agreement or other agreement or to interfere with or limit in
any way the right of the Company or any such Subsidiary or Affiliate to
terminate such Grantee's employment or independent contractor relationship.
(d) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Grantee's tax obligations.
(e) Amendment and Termination of the Plan. The Board may at any time and
from time to time alter, amend, suspend, or terminate the Plan in whole or in
part; provided that no amendment which requires stockholder approval in order
for the Plan to continue to comply with applicable law or stock exchange
requirements shall be effective unless the same shall be approved by the
requisite vote of the stockholders of the Company entitled to vote thereon.
Notwithstanding the foregoing, no amendment shall affect adversely any of the
rights of any Grantee, without such Grantee's consent, under any Award
theretofore granted under the Plan.
(f) No Rights to Awards; No Stockholder Rights. No Grantee shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Grantees. Except as provided specifically herein, a
Grantee or a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by the Award until the date of the issuance of a
stock certificate to him for such shares.
(g) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Grantee pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Grantee any rights that are greater
than those of a general creditor of the Company.
(h) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
31
(i) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of New York without
giving effect to the conflict of laws principles thereof.
(j) Effective Date. The Plan shall take effect upon its approval by the
Board, but the Plan (and any grants of Awards made prior to shareholder approval
mentioned herein) shall be subject to the approval of the holders of shares of
common stock of the Company representing a majority of the votes present or
represented at a meeting of the Company's shareholders, which approval must
occur within twelve months of the date the Plan is adopted by the Board. In the
absence of such approval, such Awards shall be null and void.
32
DETACH HERE
PROXY
GABELLI ASSET MANAGEMENT INC.
Proxy Solicited by the Board of Directors
for the Annual Meeting of Shareholders, May 21, 200213, 2003
(see Proxy Statement for discussion of items)
The undersigned hereby appoints Mario J. Gabelli, James E. McKee and
Robert S. Zuccaro, and each of them, jointly and severally, as proxies, with
power of substitution, to vote all shares of Gabelli Asset Management Inc. Class
A Common Stock which the undersigned is entitled to vote on all matters which
may properly come before the 20022003 Annual Meeting of Shareholders of Gabelli
Asset Management Inc., or any adjournment thereof.
- --------------- ---------------
| SEE REVERSE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE
|
| SIDE | | SIDE
|
- --------------- ---------------
DETACH HERE[ X ] Please mark
[X]
votes as in this
example
- --------------------------------------------------------------------------------
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 AND 2 |1.
- --------------------------------------------------------------------------------
1. Election of six directors, each for a one-year term.
Nominees: (01) Raymond C. Avansino, Jr., (02) John C. Ferrara, (03) Mario J.
Gabelli, (04) Paul B. Guenther, (05) Eamon M. Kelly and (06) Karl Otto Pohl
FOR [ ] WITHHOLD [ ] WITHHOLD
ALL FROM ALL
NOMINEES NOMINEES
[ ] ---------------------------------------------------------------------------------
For all nominees except as noted above
2. Proposal to Approve the Company's 2002 FOR AGAINST ABSTAIN
Stock Award and Incentive Plan. [ ] [ ] [ ]
The shares represented by this Proxy Card will be voted as specified, but if no
specification is made they will be voted FOR ItemsItem 1 and 2 and at the discretion of the
proxies on any other matter that may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE CHANGES AT LEFT [ ]
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full name and title as such.
Please sign, date and return promptly in the accompanying envelope.
Signature: Date:
--------------------------------- ------------------
Signature: Date:
--------------------------------- ------------------
Signature: Date: Signature: Date:
--------------------------------- ------------ -------------------------------- -------------------