1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Salomon Inc
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Salomon Inc
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
2
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
Robert E. Denham
Chairman and
Chief Executive Officer
March 22, 1995April 1, 1996
Dear Stockholder:
Attached are materials related to the annual meeting of stockholders, to be
held in New York on May 3.1.
I encourage you to attend the annual meeting. The annual meeting provides an
opportunity for shareholders to question management about issues of significance
to the Company. By actively participating with thoughtful questions, you can
contribute to the quality of the meeting.
Sincerely,
ROBERT E. DENHAM
----------------LOGO
ROBERT E. DENHAM
3
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
NOTICE OF 19951996 ANNUAL MEETING OF STOCKHOLDERS
March 22, 1995April 1, 1996
To Our Stockholders:
The Annual Meeting of Stockholders of Salomon Inc will be held in the
Salomon Brothers Auditorium, Seven World Trade Center, New York, New York, on
Wednesday, May 3, 1995,1, 1996, at 10:00 a.m. for the following purposes:
1. To elect directors,
2. To act on a proposal to amend the Company's Equity Partnership Plan
for Key Employees, and
2.3. To transact such other business as may properly come before the
meeting.
The record date for the determination of the stockholders entitled to vote
at the meeting or at any adjournment thereof is the close of business on March
15, 1995.18, 1996.
All stockholders are urged to attend the meeting. However, in order to make
sure that your shares are represented at the meeting, you are requested to sign,
date and return the enclosed proxy promptly in the accompanying envelope, which
requires no postage if mailed in the United States. This will not limit your
right to vote in person.
By Order of the Board of Directors
ARNOLD S. OLSHIN
Secretary
4
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
PROXY STATEMENT FOR THE 19951996
ANNUAL MEETING OF STOCKHOLDERS
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy, being mailed to the stockholders on or about March 22,
1995,April 1,
1996, is solicited by the Board of Directors of the Company. If a proxy is duly
received by the Secretary before the meeting, the shares represented by it will
be voted on all matters to be acted upon at the meeting unless the proxy is
revoked by written notice to the Secretary of the Company before the meeting or
by voting by ballot at the meeting.
Holders of the Company's Series A Cumulative Convertible Preferred Stock
(the "Preferred Stock, Series A") and Common Stock as of the close of business
on March 15, 199518, 1996 will be entitled to receive notice of and to vote at the
meeting and any adjournment thereof. On that date, there were outstanding and
entitled to vote 700,000560,000 shares of Preferred Stock, Series A, each of which is
entitled to 26.31579 votes with respect to each matter to be voted on at the
meeting, voting together with the holders of the Common Stock, and 106,083,360106,462,726
shares of Common Stock (exclusive of 49,547,51149,179,744 shares held in the treasury) of
the Company, each of which is entitled to one vote with respect to each matter
to be voted on at the meeting. The presence at the meeting in person or by proxy
of the holders of Preferred Stock, Series A, and Common Stock holding in the
aggregate a majority of the outstanding shares of the Company's stock entitled
to vote shall constitute a quorum for the transaction of business. All matters
to be acted upon at the meeting shall be approved by the affirmative vote of a
majority of the votes cast. Abstentions and broker non-votes will count for
purposes of establishing a quorum but will not count as votes cast.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally or by telephone by employees of the Company. The Company will
reimburse brokers holding stock in their names, or in the names of their
nominees, for their expenses in sending proxy material to the beneficial owners
of such stock.
1. ELECTION OF DIRECTORS
TenThirteen directors are to be elected at the Annual Meeting, each to serve
for one year and until his or her successor is elected and qualifies. All of the
nominees indicated below are presently members of the Board of Directors. In the
event any one or more of the following nominees are unable to serve, it is the
intention of the persons named in the proxy to vote for the election of
substitutes proposed by the Board of Directors or, if no substitute is proposed,
for the remaining nominees. The Board of Directors has no reason to believe that
any of the nominees will be unable to serve.
5
Information follows with regard to the nominees and their principal
occupations during the past five years and board and committee memberships.
- --------------------------------------------------------------------------------
DWAYNE O. ANDREAS
Mr. Andreas, age 77,78, has been Chairman of the Board and Chief Executive of
Archer Daniels Midland Company, a processor of agricultural products, for more
than five years. He is also a director of Hollinger International Inc.
Mr. Andreas has been a director of the Company since 1982 and is currently
Chairman of the Nominating Committee.
- --------------------------------------------------------------------------------
5
- --------------------------------------------------------------------------------
WARREN E. BUFFETT
Mr. Buffett, age 64,65, has been Chairman of the Board and Chief Executive Officer
of Berkshire Hathaway Inc., a holding company, for more than five years.(1) He
also served as interim Chairman and Chief Executive Officer of the Company
between August 18, 1991 and June 3, 1992 and interim Chairman and Chief
Executive Officer of Salomon Brothers Inc between August 18, 1991 and May 27,
1992. Mr. Buffett is also a director of Capital Cities/ABC, Inc., The Coca-Cola Company and The Gillette
Company and USAir Group, Inc.Company.
Mr. Buffett has been a director of the Company since 1987 and is currently
Chairman of the Executive Committee.
- --------------------------------------------------------------------------------
ROBERT E. DENHAM
Mr. Denham, age 49,50, has been Chairman and Chief Executive Officer of the Company
since June 1992, after serving as General Counsel of the Company from September
1991. PriorFor eighteen years prior thereto, he was a partner in the law firm of
Munger, Tolles & Olson, Los Angeles, California for more than three years.California. He rejoined Munger, Tolles &
Olson as a partner in August 1992 and resigned from that firm on December 31,
1993.
Mr. Denham has been a director of the Company since 1992 and is currently a
member of the Executive Committee.
- --------------------------------------------------------------------------------
CLAIRE M. FAGIN
Dr. Fagin, age 68,69, has been Leadership Professor and Dean Emeritus, School of
Nursing, University of Pennsylvania, since 1992. Prior thereto, she was
Professor and Margaret Bond Simon Dean, School of Nursing, University of
Pennsylvania, for more than five years. She also served as Interim President of
the University of Pennsylvania from 1993 to 1994. Dr. Fagin is also a director
of CMAC Investment Corporation and Provident Mutual Life Insurance Company.Company and a director and a member of the
compensation committee of CMAC Corporation.
Dr. Fagin has been a director of the Company since 1994 and is currently a
member of the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
JOHN L. HASELTINE
Mr. Haseltine, age 48, has been a Managing Director of Salomon Brothers Inc for
more than five years and a member of its Operating Committee since 1995.
Mr. Haseltine has been a director of the Company since February 7, 1996.
- --------------------------------------------------------------------------------
GEDALE B. HOROWITZ
Mr. Horowitz, age 62,63, has been an Executive Vice President of the Company for
more than five years.
Mr. Horowitz has been a director of the Company since 1981.
- --------------------------------------------------------------------------------
2
6
DERYCK C. MAUGHAN
Mr. Maughan, age 47,48, has been an Executive Vice President of the Company since
May
1993. Additionally, he has been Chairman and Chief Executive Officer of Salomon
Brothers Inc since May 1992, after having served as its Chief Operating Officer
from August 1991. Prior thereto, he served as a Vice Chairman of Salomon
Brothers Inc from January 1991 and as Chairman of Salomon Brothers Asia Limited
from 1986 to 1991.
Mr. Maughan has been a director of the Company since 1991.
- --------------------------------------------------------------------------------
2
6
- --------------------------------------------------------------------------------
DAVID O. MAXWELL
Mr. Maxwell, age 65, has been retired since 1991 after serving as Chairman of
the Board and Chief Executive Officer of Federal National Mortgage Association.
Mr. Maxwell is also a director and a member of the compensation committees of
Financial Security Assurance Holdings Ltd., Hechinger Company, Potomac
Electric Power Company and SunAmerica Inc.
Mr. Maxwell has been a director of the Company since February 7, 1996 and is
currently a member of the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
WILLIAM F. MAY
Mr. May, age 79,80, has been Chairman and Chief Executive Officer of Statue of
Liberty-Ellis Island Foundation, Inc. for more than five years. Mr. May is also
a director and a member of the compensation committee of U.S. Surgical
Corporation.
Mr. May has been a director of the Company since 1978 and is currently a member
of the Executive Committee, the Compensation and Employee Benefits Committee and
the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
CHARLES T. MUNGER
Mr. Munger, age 71,72, has been Vice Chairman of the Board of Berkshire Hathaway
Inc. for more than five years.(1) He is also Chairman and a director of Daily
Journal Corporation and Chairman and a director of Wesco Financial Corporation and
a director of USAir Group, Inc.Corporation.
Mr. Munger has been a director of the Company since 1987 and is currently a
member of the Audit and Compliance Committee, the Compensation and Employee
Benefits Committee and the Nominating Committee.
- --------------------------------------------------------------------------------
SHIGERU MYOJIN
Mr. Myojin, age 46, has been a Managing Director of Salomon Brothers Inc for
more than five years and its Vice Chairman and a member of its Operating
Committee since 1995.
Mr. Myojin has been a director of the Company since February 7, 1996.
- --------------------------------------------------------------------------------
LOUIS A. SIMPSON
Mr. Simpson, age 58,59, has been President and Chief Executive Officer-Capital
Operations and a director of GEICO Corporation, an insurance organization, since
May
1993 after having served as Vice Chairman of the Board of GEICO Corporation for
more than five years. He is also a director of Potomac Electric Power Company
and Pacific American Income Shares, Inc. and a director and a member of the
compensation committees of Thompson PBE, Inc. and COHR Inc.
Mr. Simpson has been a director of the Company since 1993 and is currently
Chairman of the Audit and Compliance Committee and a member of the Executive
Committee.
- --------------------------------------------------------------------------------
ROBERT G. ZELLER
Mr. Zeller, age 76,77, has been retired since 1979 after serving as Chairman of the
Board and Chief Executive Officer of F. Eberstadt & Co., Inc., investment
bankers. Mr. Zeller is also a director and a member of the compensation
committee of Rykoff-Sexton Corp.
Mr. Zeller has been a director of the Company since 1967 and is currently
Chairman of the Compensation and Employee Benefits Committee and a member of the
Executive Committee and the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
(1)(1. For information with respect to Berkshire Hathaway Inc., see "Information as
to Certain Stockholdings" below at Page 6.
3
7
BOARD OF DIRECTORS' ROLE, MEETINGS, COMMITTEES AND FEES
ROLE. The business of the Company is managed under the supervision of the Board
of Directors. The Company's by-lawsBy-Laws provide that, subject to the direction of
the Board, the Chairman shall have the general and active management of the
Company's business. The Board has adopted a policy pursuant to which the
Chairman should be a business-wise, shareholder-oriented person who does not
have personal dependence on or loyalty to management personnel of any of the
principal subsidiaries of the Company by virtue of long service with any of
those organizations. He is responsible, among other things, for organizing Board
process and information flow so that the Board can effectively perform its
functions.
A key function of the Board is the appointment and evaluation of senior
officers who have the direct responsibility for conducting or supervising the
business of the Company and its principal subsidiaries. The Board specifically
articulates objectives for the Chairman and evaluates his performance against
them. In addition, together with the Chairman, it sets objectives for the Chief
Executive Officer of Salomon Brothers Inc and evaluates his performance in light
of these objectives.
The Board believes that its primary responsibility is to see that the
Company is managed in the long-term interests of shareholders. The Board
discharges this responsibility by meeting directly or through its committees
with senior management to discuss, review and, where appropriate, approve
policies and actions relating to significant issues including: (i) maintaining
high standards for compliance and for ethical behavior toward customers and
counterparties, (ii) determining the amount and structure of capital, (iii)
maintaining appropriate risk management systems, (iv) developing and applying
pro-shareholder compensation systems, and (v) providing fair reporting to
shareholders about the Company and its results.
MEETINGS AND COMMITTEES. The Board of Directors of the Company held sevennine
meetings in 1994.1995. The Executive Committee of the Board of Directors held no
meetings during the year. The Company's By-Laws provide that the Executive
Committee may exercise most of the powers of the Board in the general and active
management of the business and affairs of the Company.
In addition to the Executive Committee, the standing committees of the
Board of Directors include the Audit and Compliance Committee, the Compensation
and Employee Benefits Committee and the Nominating Committee.
The Audit and Compliance Committee, which consists entirely of nonemployee
directors, holds regular meetings at which the Company's independent accountants
and its internal auditors report directly to the Committee. The Audit and
Compliance Committee monitors and provides oversight with respect to the
Company's accounting policies, internal accounting controls and the scope and
results of the independent accountants' examination of the financial statements.
Additionally, the Audit and Compliance Committee establishes and reviews
policies and their administration with respect to the compliance of the Company
and its subsidiaries with regulatory and internal procedures and requirements
and the Committee receives regular reports on regulatory and compliance matters
from the Company's General Counsel. While it is inevitable that there will be
instances in which such procedures or requirements are not fully met, the
Committee seeks to minimize the risk that regulations and compliance policies
are not followed. The Audit and Compliance Committee held ninetwelve meetings in
1994.1995.
The Compensation and Employee Benefits Committee establishes corporate
policy on the compensation of officers and key employees of the Company. The
report of the Compensation and Employee Benefits 4
8
Committee regarding the 19941995
compensation policies applicable to the Company's executive officers, including
the specific relationship of corporate performance to executive compensation, is
set forth below at Page 12.10. The Compensation and Employee Benefits Committee
consisted in 19941995 entirely of nonemployee directors and held ninetwelve meetings in
that year.
4
8
The Nominating Committee considers and makes recommendations to the Board
with respect to the size and composition of the Board and candidates for
membership on the Board. The Board has directed the Nominating Committee to
consider for nomination to the Board persons with the following qualities: (1)
Owner-oriented. The director should be overwhelmingly focused on promoting the
interests of owners. Generally this owner-orientation is likeliest to be found
in individuals who have an investment in Salomon's Common Stock that is
significant to them. (2) Business-wise. The director should be highly talented
in thinking about business issues in a creative and cooperative way and should
be able to react quickly and with sound judgment to business ideas. He or she
should be able and willing to express himself/herself effectively (and
forcefully, if needed) on issues discussed by the Board. (3) Time Commitment.
The director should be willing to make a sufficient time commitment to be an
effective director, including likely service on at least one Board Committee.
In considering candidates for Board vacancies, the Committee intends to
make a wide canvass of possible nominees, including women and persons of diverse
racial and cultural backgrounds. The Board believes that its procedure for
seeking board members and the qualifications it has set for Board service should
over time produce a strong and diverse board membership. Although the Committee
has not established procedures for the submission by shareholders of proposed
candidates for its consideration, the Committee will consider a candidate when
accompanied by sufficient, reliable information on the candidate. The Nominating
Committee held two meetings in 1994.1995.
ATTENDANCE. In 1994,1995, all of the directors of the Company attended at least 75%
of the aggregate number of meetings of the Board and meetings of Committees of
the Board on which they served.
FEES. Each nonemployee director is entitled to an annual retainer of $30,000.
In addition, the following directors' fees have been set: a $2,000 attendance
fee for each board meeting and a $1,000 attendance fee for each committee
meeting attended (if a director attends more than two committee meetings on the
same day or if a committee meeting is held on the same day as a board meeting,
only $2,000 is paid); a $3,000 annual retainer for each committee member and a
$2,000 additional annual retainer to each chairman of a committee. AAn unfunded
deferred compensation plan for nonemployee directors permits participants to
elect on or before December 31 of each year to have all or a portion of the
following year's compensation deferred, with such deferred compensation accruing
interest at a rate equal to the prime rate calculated on a quarterly basis and
payable with such interest on a deferral date selected by the participant.
Additionally, on
December 7, 1994, the Board of Directors approved a synthetic equity plan for nonemployee directors. The plandirectors permits such
directors to elect on or before December 31 of each year to have all or a
portion of the following year's compensation deferred, which compensation is
converted at year-end into phantom shares of Common Stock of the Company at the
average of quarter-end prices during the year. The period of deferral is the
earlier of five years or cessation of Board membership. At the end of such
deferral period, participants receive a dollar amount equal to the value of a
share of Common Stock on such day multiplied by the number of phantom shares of
Common Stock credited to their accounts. Directors who are employees of the
Company are not entitled to an annual retainer or to any attendance fees or fees
for service on a committee.
5
9
INFORMATION AS TO CERTAIN STOCKHOLDINGS
The following are the only persons known to the Company who own
beneficially more than five per cent of any class of the Company's voting
securities as of March 1, 1995:1996:
TITLE OF SHARES PER CENT
CLASS BENEFICIALLY OF CLASS
OF STOCK OWNED OF STOCK
------------------- ------------- ---------
Berkshire Hathaway Inc.(1)(2)........... Common 6,633,600 6.36.2
and affiliates Preferred, Series A 700,000560,000 100.0
1440 Kiewit Plaza
Omaha, Nebraska 68131
Dart Financial Corporation.............. Common 7,698,400(3) 7.3
and affiliates
c/o First Interstate Bank of Nevada N.A.
Trust Department
3800 Howard Hughes Parkway
Suite 200
Las Vegas, Nevada 89109
- ---------------
(1)(1. The Company has been informed by Berkshire Hathaway Inc. ("Berkshire"), a
Delaware corporation, and by Warren E. Buffett, as follows: Berkshire is a
holding company, the capital stock of which is beneficially owned
approximately 40.7%40.2% by Warren E. Buffett and a trust of which he is trustee
but in which he has no beneficial economic interest and 3.1% by Mr.
Buffett's wife, Susan T. Buffett. Additionally, approximately 1.6% of such
capital stock is beneficially owned by Charles T. Munger. Mr. Buffett may be
deemed to control Berkshire and thus to own beneficially the Company's stock
owned beneficially by it. As of March 1, 1995,1996, Berkshire owned beneficially
(and, through wholly- or majority-owned subsidiaries, owned of record)
700,000560,000 shares of Preferred Stock, Series A, of the Company, which shares
are entitled to 18,421,05314,736,842 votes, constituting approximately 14.8%12.2% of the
votes entitled to be cast by the outstanding voting securities of the
Company. The Preferred Stock, Series A, is convertible on the basis of
26.31579 shares of Common Stock for each share of Preferred Stock, Series A,
(subject to adjustment), or, in the aggregate, for 18,421,05314,736,842 shares of
Common Stock. Under Berkshire's Stock Purchase Agreement, dated September
27, 1987, with the Company, pursuant to which affiliates of Berkshire
acquired the Preferred Stock, Series A, (the "Purchase Agreement"), the
Company undertook to use its best efforts to nominate and elect Messrs.
Buffett and Munger, or two other Berkshire representatives, to the Company's
Board of Directors. For a description of the other terms of the Purchase
Agreement, see "Compensation Committee Interlocks and Insider Participation"
below at Page 11.
(2)Pages 9-10.
(2. Included are 401,000320,800 shares of Preferred Stock, Series A, constituting
approximately 8.5%6.9% of the votes entitled to be cast by the Company's
outstanding voting securities, owned of record by National Indemnity
Company, a wholly-owned subsidiary of Berkshire. As of March 1, 1995,1996,
National Indemnity Company also owned all of the shares of the Company's
Common Stock which are shown as beneficially owned by Berkshire.
(3) Does not deduct an aggregate of 7,585,400 shares of the Company's Common
Stock, representing 7.2% of outstanding Common Stock, reported by Dart
Financial Corporation as "shares sold short" on March 4 and March 28, 1994.
The following is the ownership, as of March 1, 1995,1996, of shares of Common
Stock and Preferred Stock, Series A, of the Company by all directors, nominees
for director, the Executive Officers named in the table on 6
10
Page 98 and the
ownership as of such date by Executive Officers and directors of the Company as
a group. Common Stock which is referred to as "beneficially owned," and the
number of the Company's shares deemed to be outstanding, include any shares
which may be purchased by any director or Executive Officer of the Company under
the Company's 1984 Non-Qualified Stock Option Plan within sixty days from March
1, 19951996 and any shares which may be acquired by any director or Executive
Officer of the Company upon conversion of the Company's Restricted Convertible
Subordinated Notes within sixty days from March 1, 1995.1996. Common Stock which is
referred to as "beneficially owned" also includes any shares owned by a spouse
or minor child and any shares over which the individual directly or indirectly
holds sole or shared voting or investment power. In addition, included are
shares which have been granted to any director or Executive Officer of the
Company under the Company's Equity Partnership Plans and a proportionate number
of the 1,861,7101,217,147 unallocated shares, as of March 1, 1995,1996, in the trusttrusts under
the Equity Partnership Plans which directors and Executive Officers may direct
the trustee of such trusttrusts to vote at the Annual Meeting ("Unallocated Shares").
The Preferred Stock, Series A, as owned by Berkshire and deemed owned by Mr.
Buffett, comprises 100% of the class outstanding and 14.8%12.2% of the outstanding
voting power of the Company. All directors and Executive Officers as a group (15(17
persons) beneficially own 100% of the Preferred Stock, Series A, 7.5%7.4% of the
Common Stock and 21.2%18.7% of the outstanding voting power of the Company.
6
10
Except for Mr. Buffett, no individual nominee for director beneficially owns as
much as 1.0% of outstanding Common Stock or voting securities having 1.0% of the
outstanding voting power of the Company.
TITLE OF SHARES
CLASS BENEFICIALLY
OF STOCK OWNED
-------------------- -----------------
Dwayne O. Andreas........................................ Common (1)100,000
Jerome H. Bailey......................................... Common 18,459(5)30,168(4)
Warren E. Buffett........................................ Common 6,633,600(2)6,633,600(1)
Preferred, Series A 700,000(2)560,000(1)
Robert E. Denham......................................... Common 25,166(5)25,932(4)
Claire M. Fagin.......................................... Common 405
Andrew J. Hall...........................................John L. Haseltine........................................ Common 351,128(6)267,940(4)
Gedale B. Horowitz....................................... Common 447,944(3)396,750(2)(3)(4)(5)
John G. Macfarlane....................................... Common 86,181(5)90,078(4)
Deryck C. Maughan........................................ Common 322,075(3)(5)310,864(2)(4)
David O. Maxwell......................................... Common 1,000
William F. May........................................... Common 4,5394,546
Robert H. Mundheim....................................... Common 16,565(5)28,758(4)
Charles T. Munger........................................ Common -- (7)(5)
Shigeru Myojin........................................... Common 0
Louis A. Simpson......................................... Common 25,000
Robert G. Zeller......................................... Common 11,450
1517 Directors and Executive Officers as a Group........... Common 7,944,648(8)(9)7,928,105(6)(7)
Preferred, Series A 700,000560,000
- -------------
(1) Subsequent to March 15, 1995, Mr. Andreas acquired a beneficial interest,
through an investment partnership, in 100,000 shares of Common Stock. These
shares are not reflected in the Table.
(2)(1. With respect to voting securities which may be deemed to be beneficially
owned by Mr. Buffett, see footnotes (1) and (2) to the Table above on Page
6.
(3)(2. Shares beneficially owned include shares subject to options granted under
the Company's 1984 Non-Qualified Stock Option Plan which may be exercised
within sixty days from March 1, 19951996 as follows: Mr. Horowitz 106,70054,500 and
Mr. Maughan 54,600.
7
11
(4)(3. Shares beneficially owned include shares into which the Company's
Restricted Convertible Subordinated Notes (see "Certain Transactions" below
at Page 15)14) may be converted within sixty days from March 1, 19951996 as
follows: Mr. Horowitz 329,429.
(5)(4. Shares beneficially owned include Unallocated Shares as follows: Mr. Bailey
1,395,1,466, Mr. Denham 1,859,1,222, Mr. Haseltine 11,500, Mr. Horowitz 375,229, Mr.
Macfarlane 5,699,3,686, Mr. Maughan 19,46711,241 and Mr. Mundheim 1,339.
(6) Mr. Hall resigned as an Executive Officer of the Company on December 7,
1994 and as a Director of the Company on March 1, 1995. Shares beneficially
owned by Mr. Hall are included in the shares owned by the group.
(7)1,543.
(5. Mr. Munger is Vice Chairman of the Board of Berkshire. With respect to
voting securities beneficially owned by Berkshire, see footnotes (1) and
(2) to the Table above at Page 6.
(8)(6. Includes 161,300109,100 shares of Common Stock subject to options granted under
the Company's 1984 Stock Option Plan which may be exercised by directors
and Executive Officers of the Company within sixty days from March 1, 1995,1996,
329,429 shares of Common Stock into which the Company's Restricted
Convertible Subordinated Notes may be converted by directors and Executive
Officers of the Company within sixty days from March 1, 1995, 1211996, 123 shares
owned by a family member in which shares a person in the group disclaims
any beneficial interest and 30,25630,973 Unallocated Shares.
(9)(7. Participants in the Equity Partnership Plans generally are entitled to
direct voting of a proportional number of unvoted allocated shares held
under the Equity Partnership Plans. While participants are deemed to have
beneficial ownership of such shares, the Table does not reflect such shares
because the number of such shares cannot be determined.
87
1211
EXECUTIVE COMPENSATION
The following table shows the compensation in 1995, 1994 1993 and 19921993 of the
Chief Executive Officer and the four most highly compensated Executive Officers
of the Company who were serving as Executive Officers on December 31, 1994. It
also shows such compensation for Mr. Hall, who resigned as an Executive Officer
on December 7, 1994.1995.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------- --------------------- ----------------
OTHER ANNUAL RESTRICTED OPTIONS/ LTIP(7)OPTION/ LTIP ALL OTHER
BONUS COMPENSATION STOCK AWARD SARS PAYOUTS COMPENSATION(8)COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) ($) ($)(6)(3) (#) ($) ($)(6)
- ------------------------------------------------------------------------- ----- ---------- --------- ------------ ----------- -------- --------- -------------------- ------------
ROBERT E. DENHAM...................DENHAM...................... 1995 1,000,000 0 0 0 0 0 9,963
Chairman and Chief 1994 1,000,000 0 0 0 0 0 9,170
Chairman and ChiefExecutive Officer 1993 956,800 368,700 23,912 720,653 0 0 6,655
Executive Officer 1992 999,434JEROME H. BAILEY...................... 1995 250,000 750,000 0 103,199(1) 196,788343,549 0 0 5,935
JEROME H. BAILEY...................7,867
Chief Financial Officer 1994 250,000 750,000 0 456,821 0 0 6,436
Chief Financial Officer 1993 168,269 558,673 0 150,037 0 0 0
1992 -- -- -- -- -- -- --
ANDREW J. HALL..................... 1994 400,000 600,000JOHN G. MACFARLANE.................... 1995 200,000 788,000 0 300,033 0 0 0 0 9,613,571
President of Phibro Division 1993 400,000 400,000 0 0 0 0 412,818
(Executive Vice President until 1992 400,000 738,000 0 485,532 0 0 74,889
December 7, 1994)
JOHN G. MACFARLANE.................23,156
Treasurer 1994 200,000 800,000 0 456,821 0 0 21,625
Treasurer 1993 150,000 1,238,000 0 802,620 0 19,935 (5) 18,856
1992 150,000 1,038,000 3,485 552,595 0 891,832 16,277
DERYCK C. MAUGHAN..................MAUGHAN..................... 1995 825,000 13,000 0 185,516 0 0 38,624
Executive Vice President 1994 825,000 13,000 0 148,010 0 0 36,966
and Chairman and Chief Executive Vice President 1993 400,000 2,600,000 0 3,934,412 0 79,741 (5) 26,386
and Chairman and Chief Executive 1992 338,269 1,659,423 294,082(2) 2,682,498 0 3,420,220 17,378
Officer of Salomon Brothers Inc
ROBERT H. MUNDHEIM................. 1994 1,048,000(3)MUNDHEIM.................... 1995 1,138,000(1) 0 0 275,920(5)414,549(4) 0 0 8,545
Executive Vice President 1994 1,048,000 0 0 275,920 0 0 6,919
Executive Vice Presidentand General Counsel 1993 958,000 0 65,602(4)65,602(2) 317,376 0 0 6,144
and General Counsel 1992 351,538 0 0 25,380 0 0 0
- ---------------
(1) Includes $96,547 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Denham's relocation from Los Angeles to New York.
(2) Includes $283,854 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Maughan's relocation from Japan to New York.
(3) Pursuant to his employment contract with the Company, Mr. Mundheim received
$250,000 as base salary and $798,000$888,000 as a guaranteed bonus. See "Employment
Contracts and Change of Control Provisions" below at Page 10.
(4)9.
(2) Includes $53,333 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Mundheim's relocation from Philadelphia to New York.
(5) Represents market value on date of grant of shares of restricted stock
awarded to Mr. Mundheim under the Company's Equity Partnership Plan for Key
Employees. Such award was based on the Plan's Award Schedule whereunder Mr.
Mundheim's cash bonus of $1,100,000 for 1994 was reduced by $302,000.
(6)(3) Restricted stock awards are shown at market value on the date of grant. The
number and value of the aggregate restricted stock holdings at December 31,
19941995 for each of the persons named is as follows: Mr. Denham, 21,02221,448 shares
with a value of $788,325;$758,723; Mr. Bailey, 15,77925,725 shares with a value of
$591,713;$910,022; Mr. Macfarlane, 64,45663,463 shares with a value of $2,417,100;$2,245,004; Mr.
Maughan, 220,142197,232 shares with a value of $8,255,325;$6,977,082; and Mr. Mundheim, 15,15227,075
shares with
9
13 a value of $568,200.$957,778. Such restricted stock was awarded to the
persons named under the Company's Equity Partnership Plan for Key Employees
("EPP"). Awards under the EPP represent an unfunded, unsecured promise of
the Company and are generally distributed to participants five years after
the date of grant subject to acceleration in some circumstances and further
deferral or forfeiture in others. The EPP incorporates a dividend
reinvestment structure, pursuant to which the Company contributes an
additional 17.65% of any dividend in order to effect a 15% discount on all
dividend reinvestments. Participants' accounts in the EPP are held in a
grantor trust established by the Company. (7)For a discussion of the EPP, see
"Approval of Amended Equity Partnership Plan For Key Employees" below at
Page 15.
(4) Represents market value on date of grant of shares of restricted stock
awarded to Mr. Mundheim under the Company's Equity Partnership Plan for Key
Employees. Such award was based on the Plan's Award Schedule whereunder Mr.
Mundheim's cash bonus of $1,250,000 for 1995 was reduced by $362,000.
(5) These amounts represent residual payouts in 1993 under the Salomon Brothers
Inc Managing Directors' Compensation Plan and payouts in 1992 of deferred
compensation which vested through December 31, 1991 under the Company's 1986
Special Bonus Plan and the Salomon Brothers Inc Managing Directors'
Compensation Plan.
(8) In 1994, Mr. Hall was awarded deferred compensation of $9.6 million.(6) Amounts reported for 19941995 include 17.65% contribution which the Company made
in order to effect a 15% discount on all dividend reinvestments under the
EPP for the named executives as follows: Mr. Denham $2,349,$2,392, Mr. Bailey
$365,$1,796, Mr. Macfarlane $5,804,$7,335, Mr. Maughan $24,145$25,053 and Mr. Mundheim $848;$1,724;
also includes contributions by the Company under the Salomon Brothers Inc
Retirement Plan to the account of each of the named executives as follows:
Mr. Denham $6,750,$7,500, Mr. Bailey $6,000, Mr. Hall $13,500, Mr. Macfarlane $15,750, Mr. Maughan
$12,750$13,500 and Mr. Mundheim $6,000;$6,750; also includes $71 of term life insurance
premium for each of the named executives which the Company pays.
The amount reported for Mr. Hall in 1993 also includes $400,000 which was
the value on the award date of a deferred compensation plan adopted in 1993
for Mr. Hall's benefit.
The Company made no stock option/SAR grants or awards under long-term
incentive plans in 19941995 to any named Executive Officer or any other person.
8
12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUE(1)VALUE(1.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)
SHARES ---------- --------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
----------- ---------- ---------- --------------------------
JEROME H. BAILEY............................BAILEY............................. -- -- -0-/-0- -0-/-0-
ROBERT E. DENHAM............................ -- -- -0-/-0- -0-/-0-
ANDREW J. HALL..............................DENHAM............................. -- -- -0-/-0- -0-/-0-
JOHN G. MACFARLANE..........................MACFARLANE........................... -- -- -0-/-0- -0-/-0-
DERYCK C. MAUGHAN...........................MAUGHAN............................ -- -- 54,600/-0- $1,029,056/$913,031/-0-
ROBERT H. MUNDHEIM..........................MUNDHEIM........................... -- -- -0-/-0- -0-/-0-
- ---------------
(1)The 1994(1.The 1995 year-end value of the Company's common stockCommon Stock was $37.50.$35.375. The dollar
value shown in the Table is calculated by determining the difference between the
year-end value of the Company's Common Stock and the exercise price of the
options exercisable at year-end.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL PROVISIONS
In 1992, the Company entered into a guaranteed employment contract with Mr.
Mundheim through December 31, 1995, subject to Mr. Mundheim's earlier
resignation or termination of employment for cause, whereunder Mr. Mundheim
receivesreceived an annual base salary of $250,000 and a bonus of $950,000 in 1993,
$1,100,000 in 1994 and $1,250,000 in 1995.
The contract also providesprovided for Mr. Mundheim's participation in the Company's
Equity Partnership Plan for Key Employees.
In 1988, the Board of Directors approved amendments to certain of the
Company's benefit plans, including the Salomon Inc Profit Sharing Plan, now the
Salomon Brothers Inc Retirement Plan, (the
10
14 "Retirement Plan"), and the 1984
Stock Option Plan. These amendments provide for the vesting and, under most
circumstances, distribution of benefits and credits made under such Plans upon
the occurrence of certain change of control events not approved by the Board of
Directors. Upon such a change of control (as defined in the Plans), employees
will be entitled to receive the immediate cash payment of the excess of the fair
market value (as defined) of a share of Common Stock over the exercise price of
each share covered by an option or a stock appreciation right under the 1984
Stock Option Plan. Similarly, the Company's Equity Partnership Plan for Key
Employees provides for accelerated distributions to participants upon a change
of control. Additionally, upon a change of control, each employee will be
entitled to receive an amount not less than the year-end bonus paid to him in
the year preceding the change of control, prorated for the number of months
elapsed up to the change of control, and all amounts credited to employees'
accounts under the Retirement Plan will vest. If a change of control would have
occurred on March 1, 1995,1996, for example, Messrs. Bailey, Hall, Macfarlane, Maughan and
MaughanMundheim would have been entitled to receive at least the following amounts of
cash compensation with respect to 19941995 year-end bonuses (in addition to benefits
under the Company's other benefit plans described above): $125,000, $1,700,000, $133,333$131,333,
$2,167 and $2,167,$148,000, respectively.
[Under Mr. Mundheim's employment contract, payment of his 1995 bonus in full is
guaranteed, subject only to his earlier resignation or termination of employment
for cause.] Moreover, participants in the Equity Partnership Plans would receive
a distribution of all shares allocated to them under the Equity Partnership
Plans in the event of a change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1994,1995, the Compensation and Employee Benefits Committee consisted of Mr.
Robert G. Zeller, as Chairman, and Messrs. William F. May and Charles T. Munger.
All of the members of the Committee were non-employees of the Company.
Mr. Munger, a nominee for director of the Company, is Vice Chairman of the
Board of Berkshire. Among the Company's transactions, in the ordinary course of
its business in 1994,1995, Salomon Brothers Inc sold to Berkshire and its affiliates
marketable securities having a value of approximately $3,541,696,000$3,338,277,000 and
purchased from Berkshire and its affiliates marketable securities having a value
of approximately $2,127,510,000.$3,145,059,000. Additionally, in 1994,1995, Berkshire and its
affiliates paid commissions, fees, service charges and interest of $6,098,677$1,942,408 to
Salomon Brothers Inc in connection with securities transactions. The Company
9
13
believes that its transactions with Berkshire and its affiliates are upon terms
which are comparable to those the Company applies in transactions with other
similar customers and counterparties.
In addition, Berkshire and its subsidiaries own substantial equity
positions in a number of other corporations, and have equity positions amounting
to 10% or more of the voting power of Capital Cities/ABC, Inc., The Gillette Company, GEICO Corporation,
USAir Group, Inc., PS Group, Inc., The Washington Post Company and Wells Fargo &
Company. From time to time Salomon Brothers Inc engages in the ordinary course
of its business in transactions with some or all of such entities as an
underwriter of securities, as a broker of or dealer in securities, or otherwise.
Additionally, other subsidiaries of the Company may engage in transactions with
such entities from time to time. The Company believes that any such transactions
are on terms comparable to those on which the Company deals with other third
parties.
In 1987, the Company entered into the Purchase Agreement with Berkshire
pursuant to which affiliates of Berkshire acquired 700,000 shares of the
Preferred Stock, Series A, for $700 million. On October 31, 1995, the Company
redeemed 140,000 shares of the Preferred Stock, Series A in accordance with the
terms of such Preferred Stock. In the Purchase Agreement, Berkshire (which for
purposes of the Purchase Agreement includes the affiliates of Berkshire) agreed
that (i) Berkshire will not sell any of the Company securities owned by it to a
third party without first giving the Company or its designee a reasonable
opportunity to purchase such securities at the same price and on the same terms
and conditions proposed with respect to an anticipated sale by Berkshire to a
third party; and (ii) if the Company does not exercise its right of first
refusal and buy Company securities which Berkshire
11
15 proposes to sell, Berkshire
will not knowingly sell to any one entity or group acting in concert Company
securities giving such entity or group securities which amount in the aggregate
to over 5% of the Company voting stock outstanding at the time of the sale. In
the Purchase Agreement, the Company agreed to use its best efforts to nominate
and elect Warren E. Buffett and Charles T. Munger, or two other Berkshire
representatives, to the Company's Board of Directors. In addition, in connection
with the distribution by the Company on February 18, 1988 of Preferred Share
Purchase Rights to its stockholders, the Company issued Preferred Share Purchase
Rights to the holders of the Preferred Stock, Series A, on the basis of one
Right for each share of Common Stock into which a share of Preferred Stock,
Series A, is convertible, and the holders of the Preferred Stock, Series A,
waived the conversion adjustment they would otherwise have been entitled to
under the terms of the Preferred Stock, Series A.
REPORT OF
THE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE
The Board's Compensation and Employee Benefits Committee (the "Committee")
makes compensation decisions with respect to the Company's Chief Executive
Officer and other executive officers including Messrs. Bailey, Hall, Macfarlane,
Maughan, and Mundheim.
In 1993 and previous years, the Committee determined the compensation of
senior executive officers in relation to a review of their performance. The
"Million Dollar Limit" imposed by Section 162(m) of the Internal Revenue Code
has caused the Committee to review its procedures with the objectives that
compensation continue to be based on performance and be deductible by the
Company. As a result of this review, the Committee presently intends to preserve
the Company's deduction for compensation paid to the Company's Chairman and
Chief Executive Officer and its other most highly compensated executive officers
by determining total compensation for such persons (other than Messrs.Mr. Maughan,
and Mundheim, as
explained below) based on a performance evaluation, and providing any
compensation in excess of $1 million in a form that will not be subject to the
Million Dollar Limit by deferring the payment of such compensation. The
Committee has determined not to apply a formula at this time to determine the
compensation of these individuals because it believes its criteria for the
evaluation of the performance of these individuals are such that discretionary,
non-formulaic evaluation is preferable.
In measuring financial performance, the Committee has established a
"compensation year" commencing on October 1 and ending on September 30. Using a
"compensation year", rather than the Company's fiscal year which coincides with
the calendar year, permits the Committee to evaluate results for an entire
12-month period in sufficient time to make final compensation decisions in
December of each calendar year.
10
14
Compensation year results often differ substantially from the results for the
calendar year. For example, Salomon Inc earned $132 million in the compensation
year ended September 30, 1995, while it earned $457 million for the 1995
calendar year.
In October 1994, the Board of Directors of the Company approved a
fundamental change in the way the Salomon Brothers' securities segment
compensates certain managing directors in its Client-Driven Business. This
change iswas intended to enhance the integration of the differentvarious global activities
included in the Client-Driven Business and
to create a partnership like arrangement between managers and owners. While neither Mr. Denham norshareholders.
During 1995, as the other most highly
compensated executive officers referredresult of various factors affecting the securities
segment, including market compensation pressures and the segment's performance,
this approach to compensation was abandoned. As a result, compensation was
awarded to these managing directors in an amount greater than that which would
have been provided by the plan. Payment of a substantial portion of this
report are directly affectedincremental compensation was deferred under the 1995 Salomon Inc Deferred
Compensation Plan. Compensation awarded under this plan vests over a two year
period, 50% on December 15, 1996 and 50% on December 15, 1997. In order to
achieve vesting, the participant must remain in the employ of the Company. The
plan provides for interest to be paid annually and contains provisions relating
to vesting in circumstances such as retirement, death and disability.
In 1995, the Committee approved an approach to compensation of the
securities segment which is designed to further integrate the various components
of the business, to recognize the impact of competitive market conditions on
compensation, and to maintain a focus on performance driven compensation. The
Committee will determine the annual level of compensation for the securities
segment by evaluating both performance and market conditions.
This change is intended to be augmented by modifications to the Equity
Partnership Plan for Key Employees discussed elsewhere. [See "Approval of
Amended Equity Partnership Plan for Key Employees" at Page 15.] In addition, the
Committee anticipates the granting of Salomon Inc Stock options under the
Salomon Inc Stock Incentive plan, as approved by shareholders at the Company's
1994 annual meeting.
The Committee believes that this change,approach has the Board's objectives in implementing a new compensation system
influencednecessary flexibility to
reward good performance, protect key assets and build for the Committee's deliberations with respect to their compensation.future.
In determining compensation for Mr. Denham and the other executive officers
(except for Messrs. Maughan and Mundheim) in December 1994,1995, the Committee
adhered to the approach of linking the interests of management with those of the
owners by causing the individual manager's compensation to depend primarily upon
his performance in relation to the performance, over time, of the business unit
or 12
16
function for which he was responsible. Weight was also given to the overall
results in the compensation year for Salomon Inc and Salomon Brothers Inc.
Except in the case of Mr. Denham, salaries were low in comparison to total
compensation so that the bulk of compensation was paid on a performance basis as
a year-end cash bonus. This approach, which is in accordance with industry
practice, has the effect of limiting compensation to reflect poor business
performance and increasing compensation to recognize significant results. Except
with respect to Messrs.Mr. Denham, and Hall, after the Committee determined the total
compensation for each executive officer, a significant portion of such total
compensation was awarded in Company stock, payable, generally, in five years,
under the Company's Equity Partnership Plan for Key Employees (which generally
applies to highly compensated employees, including Executive Officers). The portion paid in stock
was determined by the Plan's award schedule which can reach 50% or more for
highly compensated employees, except that allAll of
Messrs. Bailey's and Macfarlane's compensation in excess ofabove $1,000,000 was paid in
stock under the
Plan.this plan. The market value of the restricted stock awarded each of
the four most highly compensated Executive Officers in 19941995 (other than Messrs. Denham and
Hall)Mr.
Denham) is set forth in the Summary Compensation Table in the Company's 19951996
Proxy Statement. Dividends paid on the restricted stock are reinvested for all
Plan participants, including Executive Officers, pursuant to the terms of the
Plan.
[See page 9, footnote 6 of this Proxy Statement.]
In addition, the Committee reviewed compensation paid in previous years
(adjusted for an estimate of the current year) by various financial services
companies with which the Company competes, including Bankers Trust Company, Bear
Stearns, Merrill Lynch, Morgan Guaranty and Morgan Stanley. The Committee
anticipated that Mr. Denham's 19941995 compensation would be at the lower end of the
competitor
11
15
range. Bear Stearns, Merrill Lynch and Morgan Stanley are included in the S&P Investment
Banking & Brokerage Index referred to in the performance graph set forth in the
Company's 19951996 Proxy Statement.
In setting the 19941995 compensation of Robert E. Denham, the Company's
Chairman and Chief Executive Officer, the Committee took into account the
Board's evaluation of Mr. Denham's performance in relation to the following
factors (in order of importance):
- Management of the Board of Directors process by insuring that the Board
timely received the appropriate level of information to discharge its
decision-making responsibilities;
- Supervision of the senior officers of Salomon Inc and its major
subsidiaries;
- Supervision of the management of the Company's market and credit risks to
insure that various business units were following appropriate risk/reward
criteria;
- Management of the allocation of the Company's capital to the various
business segments as well as the Company's overall level of capital.
In addition to these criteria, the Committee also considered the Board's
evaluation of Mr. Denham's performance in communicating with creditors and
shareholders, maintaining a positive internal control environment, his role in
special situations and otherwise building shareholder value.
The Committee concluded that, based on their subjective judgment, Mr.
Denham had performed well with respect to each of these factors, meeting or
exceeding their expectations.but noted its
concern about the overall performance of Salomon Inc and its subsidiaries over
the last two compensation years. Taking account however, of thethese overall results, of
the Company, the
Committee determined that Mr. Denham's total compensation in 19941995 should be set
at $1,000,000, oran amount equal to his salary. His compensation for 1995 was the
same as he received in 1994 and was 53.3% of his compensation in the prior year1993 when the
Company achieved record net income. Mr. Denham's compensation was paid as
base salary during 1994. He received no year-end cash bonus. No stock was awarded to Mr. Denham in 19941995
under the Equity Partnership Plan.
13
17
Mr. Bailey performed well in his first full year as Chief Financial Officer
of the Company. Mr. Bailey's reorganization of the financial division, his
efforts to resolve pre-existing problems resulting from operational systems
migrations and detailed reviews of databases supporting general ledger balances
and his work on establishing a more efficient and flexible distributed
technology environment, were viewed as extremely important contributions. In
addition, Mr. Bailey had provided timely and accurate information to the Board
of Directors and had improved the presentation of financial disclosure documents
to the public.
Mr. Hall's performance at the Phibro Division was viewed in light of that
Division's major contribution to the Company's earnings in 1994. Mr. Hall, an
extremely able and highly experienced commodities trader, added meaningfully to
shareholder value in a year in which the securities segment experienced
difficulties. In addition to his successful commodities trading performance, Mr.
Hall took steps to enhance the flexibility of Phibro Division by creating new
physical trading groups, thereby positioning the Division to take advantage of
future opportunities across a broad and diverse range of markets.
Mr. Macfarlane's performance was viewed by the Committee in both his role
as Treasurer of the Company, in which he maintained excellent external
relationships with regulatory agencies, rating agencies and banks and in his
role in Salomon Brothers' derivatives business. Mr. Macfarlane's compensation,
which reflected the Committee's positive view of his involvement in Salomon
Brothers derivatives activities and his participation as part of the team effort
to reorganize the financial division, was, nevertheless, impacted by overall
negative results at Salomon Brothers.
With respect to Mr. Maughan, the Chairman and Chief Executive Officer of
Salomon Brothers Inc and an Executive Vice President of the Company, the
Committee determined that linking compensation by formula to the performance of
Salomon Brothers will provideprovides an appropriate link between his total compensation and
Salomon Brothers' performance, while at the same time providing the most
effective response to the issues raised by the Million Dollar Limit. Therefore,
effective as of January 1, 1994, the Committee adopted, subject to approval by
the Company's stockholders, which was obtained at the 1994 Annual Meeting, the
Executive Officer Performance Bonus Plan to provide Mr. Maughan an appropriate
performance incentive in a form intended to constitute "performance-based
incentive compensation" pursuant to Section 162(m)(4)(C) of the Code. The basic
premise of the Performance Bonus Plan is that Mr. Maughan's incentive
compensation should be determined by two factors: the return on equity of
Salomon Brothers, which he manages, and the relationship that Salomon Brothers'
return on equity has to that of certain key competitors. [See the competitors listed above at Page 13.]
The Committee certified
that, under the formula in the Performance Bonus Plan, Mr. Maughan was not entitled to any performance bonus for 1994. Accordingly, Mr.
Maughan's
compensation consistedwould be $1 million, consisting of salary and non-formula based
bonus, payable outside the Performance Bonus Plan, which at all times equals $1 million.Plan. Nothing is payable under the
Performance Bonus Plan.
Mr. Mundheim's compensation for 19941995 was based upon an employment contract
entered into in 1992 to induce him to join the Company as General Counsel. In
approving Mr. Mundheim's employment contract, the Committee had deemed Mr.
Mundheim's prior experience as the Co-Chairman of the law firm of Fried, Frank,
Harris, Shriver & Jacobson, Dean of the University of Pennsylvania Law School
and General Counsel of the U.S. Treasury to be extremely valuable to the
Company.
The Committee concluded that, based on its subjective judgment, Mr. Bailey
performed well as Chief Financial Officer of the Company. The Committee
applauded Mr. Bailey's effective attack on specific historical problems
resulting from past operational systems migrations and his pushing
responsibility for cost of fails and other costs to the business units, thus
achieving real cost savings for the Company. The Committee reviewed Mr.
Macfarlane's performance as Treasurer of the Company in which he maintained
excellent external relationships with regulatory agencies, rating agencies,
banks, investors, and analysts and his important role in managing the Company's
liquidity and funding, as well as his derivatives management role,
12
16
including his part in helping to establish improving industry standards for
managing derivatives activities and in managing the internal Salomon changes
needed to comply with those standards. The Committee concluded that, based on
its subjective judgment, Mr. Macfarlane performed well in these roles. Mr.
Bailey's and Mr. Macfarlane's compensation was adversely affected by the overall
level of Salomon Brothers Inc and Salomon Inc results for the compensation year.
COMPENSATION AND EMPLOYEE
BENEFITS COMMITTEE
Robert G. Zeller, Chairman
William F. May
Charles T. Munger
14
18
PERFORMANCE GRAPH
SALOMON INC VS. S&P 500 VS. S&P INVESTMENT BANKING & BROKERAGE INDEXES
Comparison of Five-Year Cumulative Total Return
1989-1994INDEX
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
1990-1995
Measurement Period S&P Broker-
(Fiscal Year Covered) Salomon IncINVESTMENT
MEASUREMENT PERIOD BANKING & BRO-
(FISCAL YEAR COVERED) KERAGE SALOMON INC S&P 500 age
19891990 100.0 100.0 100.0
1990 107.0 96.9 86.4
1991 137.3 125.9 218.9219.7 128.3 130.0
1992 173.8 135.3 215.1243.7 162.4 139.7
1993 220.0 148.7 289.2338.0 205.5 153.6
1994 176.2 150.7 245.1295.6 164.6 155.5
1995 476.4 158.1 214.0
Note: IncludesNOTE: INCLUDES THE REINVESTMENT OF DIVIDENDS AT THE END OF PERIOD.
In 1995, the reinvestment of dividends.S&P Brokerage Index was discontinued and replaced by the S&P
Investment Banking and Brokerage Index. The companies included in the S&P
Investment Banking and Brokerage Index are Salomon Inc, Dean Witter, Discover &
Co., Merrill Lynch & Co., Inc., Morgan Stanley Group Inc. and Travelers
Incorporated.
13
17
CERTAIN TRANSACTIONS
Among the Company's transactions, in the ordinary course of its business in
1994,1995, Salomon Brothers Inc sold to Archer Daniels Midland Company ("ADM") and
entities in which the Company is informed ADM has a material interest marketable
securities having a value of approximately $1,108,769,000$1,094,006,000 and purchased from ADM
and such entities marketable securities having a value of approximately
$219,266,000.$1,796,008,000. In addition, the Company paid to ADM and such entities net fees
of $242,278$1,338,756 in connection with securities and commodities trading activities.
The Company believes that its transactions with ADM and such entities are upon
terms which are comparable to those the Company applies in transaction with
other similar customers and counterparties. Dwayne O. Andreas, a director and a
nominee for director of the Company, is Chairman of the Board and Chief
Executive of ADM.
15
19
Warren E. Buffett, a director and a nominee for director of the Company, is
Chairman, Chief Executive Officer and the principal shareholder of Berkshire and
a director of The Coca-Cola Company Capital Cities/ABC, Inc.,and The Gillette Company and USAir Group, Inc.Company. For information
regarding the Company's transactions in 19941995 with Berkshire, The Coca-Cola
Company Capital Cities/ABC,
Inc.,and The Gillette Company, and USAir Group, Inc., see "Compensation Committee Interlocks and
Insider Participation" above at Page 11.
Among the Company's transactions, in the ordinary course of its business in
1994, Salomon Brothers Inc sold to Dart Financial Corporation and its affiliates
("Dart") marketable securities having a value of approximately $8,099,576,000
and purchased from Dart marketable securities having a value of approximately
$7,800,091,000. Additionally, in 1994, Dart paid commissions, fees, service
charges and interest of $41,482,407 to Salomon Brothers Inc in connection with
securities transactions. The Company believes that its transactions with Dart
are upon terms which are comparable to those the Company applies in transaction
with other similar customers and counterparties. As of March 1, 1995, Dart
beneficially owned more than five percent of the Company's outstanding Common
Stock, although Dart reported it had sold short an amount of the Company's
Common Stock almost equal to the amount it reported as beneficially owned.Pages 9-10.
In November 1993, the Company loaned Robert H. Mundheim, an Executive
Officer of the Company, the sum of $900,000 to purchase a residence in New York
City in connection with Mr. Mundheim's planned relocation from Philadelphia. The
loan, of which $200,000 has been repaid, is interest-free.
On October 1, 1981, the Company and Salomon Brothers, an investment banking
and securities trading partnership, combined their businesses. Pursuant to such
combination, the Company issued an aggregate of $250,000,000 of 9% Restricted
Convertible Subordinated Notes, due October 1, 1991 (the "Notes"), to Salomon
Brothers, which Notes were subsequently distributed to certain of its partners.
Upon issuance, the Notes were convertible, in accordance with their respective
terms, into an aggregate of 18,000,000 shares of Common Stock (adjusted for the
2 for 1 stock split declared in 1983). The conversion period commenced October
1, 1982. On May 4, 1994, the Board of Directors approved an extension, until
October 1, 1997, of the maturity date of Notes held by then-current employees of
the Company, provided that the annual rate of interest on such Notes be reduced
from and after October 1, 1994 to 5.5%. Gedale B. Horowitz, who was a General
Partner of Salomon Brothers prior to October 1, 1981, was a payee of a Note as
of December 31, 19941995 in the principal amount of $4,575,406. Mr. Horowitz is a
director and a nominee for director of the Company.
Among the Company's transactions in the ordinary course of its business in
1994,1995, Salomon Brothers Inc sold to GEICO Corporation ("GEICO") and entities in
which the Company is informed GEICO has a material interest marketable
securities having a value of approximately $73,229,000$130,684,000 and purchased from GEICO
and such entities marketable securities having a value of approximately
$10,773,000.$36,228,000. In addition, Salomon Brothers Inc earned net commissions and fees
of $190,931$602,840 in connection with securities trading activities on behalf of GEICO.
The Company believes that its transactions with GEICO are upon terms which are
comparable to those the Company applies in transactions with other similar
customers and counterparties. Louis A. Simpson, a director and a nominee for
director of the Company, is President and Chief Executive Officer--Capital
Operations of GEICO Corporation. The Company has been informed by Berkshire
that, on January 2, 1996, GEICO became an indirect wholly-owned Berkshire
subsidiary as a result of a merger of GEICO with an indirect wholly-owned
subsidiary of Berkshire.
Since January 1, 1994,1995, Salomon Brothers Inc, as agent or principal, has
handled purchases and sales of securities (including different forms of
repurchase transactions) from time to time for various of the directors and
employees of the Company. The Company believes that such transactions were in
the ordinary course of business, were at substantially the same terms, including
interest rates and collateral, as those prevailing at the 16
20
time for comparable
transactions with other customers and did not involve more than normal risk of
collectibility or present other features unfavorable to the Company.
14
18
2. APPROVAL OF AMENDED EQUITY PARTNERSHIP PLAN FOR KEY EMPLOYEES
Effective as of June 6, 1990, the Company adopted the Equity Partnership
Plan for Key Employees (the "Key Employee Plan") and the Equity Partnership Plan
for Professional and Other Highly Compensated Employees (the "Professional
Employee Plan") (together, the "Equity Partnership Plans"). Under the Equity
Partnership Plans as currently in effect, up to 40,000,000 shares of Company
Common Stock may be allocated to participants' accounts and distributed under
the Equity Partnership Plans. The amount of shares available under the Equity
Partnership Plans may be adjusted in the event of a stock dividend or split,
recapitalization, extraordinary dividend, merger, consolidation, combination or
exchange of shares or similar corporate change. The Equity Partnership Plans
initially were approved by the Company's stockholders at the meeting of the
Company's stockholders in May 1991, and they were subsequently approved by the
Company's stockholders at the meetings of stockholders in May 1992 and May 1994,
respectively.
On February 7, 1996, the Board of Directors adopted several amendments to
the Key Employee Plan (the "Amendments"), subject to the approval of the
Company's stockholders, that significantly modify the Key Employee Plan with
respect to awards granted in 1996 and thereafter. The Board also has adopted a
number of amendments that are designed to ease the administration of the Equity
Partnership Plans.
On October 25, 1995, the Board of Directors amended the Professional
Employee Plan to provide that, effective as of January 1, 1996, unless the
Committee determines otherwise in its sole discretion, no further awards will be
granted under the Professional Employee Plan. Awards granted prior to January 1,
1996 will be distributed in accordance with the terms of the Professional
Employee Plan as currently in effect.
The following table shows the awards that would be granted to individuals
named in the Summary Compensation Table on Page 8 and other specified
individuals under the Key Employee Plan in 1996 based on 1995 compensation and
the 1995 average cost per share of $36.6632. The actual amounts of 1996 awards
under the Key Employee Plan are not yet determinable.
AMENDED PLAN BENEFITS
DOLLAR NUMBER OF UNITS
NAME AND POSITION VALUES($)(1) (SHARES)
--------------------------------------------------------- ------------ ---------------
Robert E. Denham(2)...................................... 0 0
Chairman and Chief Executive Officer
Jerome H. Bailey......................................... 365,012 10,228
Chief Financial Officer
John G. Macfarlane(3).................................... 304,200 8,524
Treasurer
Deryck C. Maughan........................................ 182,506 5,114
Executive Vice President and Chairman and
Chief Executive Officer of Salomon Brothers Inc
Robert H. Mundheim....................................... 608,365 17,047
Executive Vice President and General Counsel
All Executive Officers as a Group........................ 2,038,006 57,107
Non-Executive Director Group............................. 0 0
Non-Executive Officer Employee Group..................... 84,397,476 2,364,903
- ---------------
(1) Market value as of December 6, 1995.
(2) In 1995, Mr. Denham did not receive an award under the Key Employee Plan.
His compensation consisted only of salary of $1,000,000.
(3) Mr. Macfarlane resigned as Treasurer effective March 6, 1996.
15
19
In 1995, approximately 843 employees received awards under the Key Employee
Plan. As of December 31, 1995, a total of 906 employees had accounts maintained
under the Key Employee Plan. In 1995, all employees as a group received
allocations of 2,835,067 shares under the Key Employee Plan. A total of
2,427,037 shares were granted as awards under the Key Employee Plan in 1995 and
408,030 shares were allocated to participants in the Key Employee Plan as a
result of the reinvestment of dividends (including, where applicable, the 17.65%
contribution to effect a 15% discount on dividend reinvestment). The fair market
value per-share of Company Common Stock as of March 1, 1996 is $38.375. In 1995,
awards were based on an "average cost per share" of $36.6632.
The following is a summary of the material features of the Key Employee
Plan and the effect thereon of the Amendments. The following summary is
qualified in its entirety by reference to the complete text of the Key Employee
Plan, as restated to incorporate the Amendments, which is attached to this Proxy
Statement as Exhibit A.
DESCRIPTION OF KEY EMPLOYEE PLAN
A. GENERAL
Participation in the Key Employee Plan generally is mandatory. Awards under
the Key Employee Plan generally are based on a percentage of each participant's
total compensation and result in a reduction of each participant's end-of-year
cash bonus that would have been paid to the participant in the absence of the
Key Employee Plan. Awards under the Key Employee Plan are made in the form of
Company Common Stock based on a price equal to 85% of the "average cost per
share" of shares purchased (or in some cases, deemed to have been purchased) for
awards under the Equity Partnership Plans, resulting in an allocation to
participants of 17.65% more shares than if allocations were based on 100% of the
"average cost per share." The Key Employee Plan also includes an automatic
dividend reinvestment feature pursuant to which participants receive a 15%
discount on the price of Company Common Stock, generally through an additional
Company contribution of 17.65% of the dividends paid on shares credited to a
participant's account. The Key Employee Plan provides that the Committee may
grant an award to any individual whose year-end bonus constitutes
performance-based compensation, and thus is exempt from the operation of Section
162(m) by reason of Section 162(m)(4)(C) of the Internal Revenue Code, based
solely on the amount of such year-end bonus (instead of the participant's total
compensation). As a result, awards granted to such individuals should themselves
constitute performance-based compensation, and thus should be exempt from the
operation of Section 162(m). The Key Employee Plan also provides that certain
individuals who may be "covered employees" under Section 162(m) (generally the
Chief Executive Officer and the four most highly compensated executive officers
of Salomon Inc other than the CEO) may be entitled to make limited elective
contributions to the Key Employee Plan if and to the extent their compensation
otherwise would exceed $1 million ("Voluntary Awards").
Awards generally are distributed to participants within thirty business
days after the expiration of five years after the date as of which the awards
are granted, although earlier distributions may be made upon a participant's
death or termination of employment as a result of disability, upon the
participant's "permissive retirement" (as defined in the Key Employee Plan) if
the participant makes a permissive retirement election within forty-five days
after the award is granted, in the event of certain "changes in control" of the
Company or in the event of certain terminations of the Key Employee Plan. In the
event that a participant's employment is or is deemed to have been terminated
for "cause," the participant will forfeit all shares allocated to him under the
Equity Partnership Plans.
Participants in the Key Employee Plan generally are entitled to make up to
two "long-term investment elections" with respect to each award under the Key
Employee Plan. Generally, the effect of a "long-term investment election" is to
defer the participant's receipt of the award with respect to which the
"long-term investment election" is made until the expiration of an additional
3-year period after such award would have been distributed in the absence of
such an election. Participants who desire to make a "long-term investment
16
20
election" must do so no later than a date two years prior to any date on which
the participant otherwise would have received a distribution in respect of such
award.
The Key Employee Plan permits the Committee to defer a distribution
thereunder to any "covered employee" (within the meaning of Section 162(m) of
the Internal Revenue Code) if the Company or an affiliate might not be permitted
to receive a deduction in respect of such payment as a result of the deduction
limit under Section 162(m). The amount so deferred will be converted to cash
based on the value of Company Common Stock on the date the distribution
otherwise would have been made and will be credited with interest at LIBOR (or
another return selected by the Committee) from the date the distribution
otherwise would have been made until the last day of the month immediately
preceding the month in which such amount is paid to the participant. Any amount
so deferred will be paid to a participant if and to the extent the Committee
determines that the Company's or affiliate's deduction in respect of such amount
is not limited by Section 162(m) and, in any case, within 30 business days after
the earlier of (i) the date the participant no longer is a "covered employee"
and (ii) the occurrence of a change in control of the Company.
B. ADMINISTRATION
The Key Employee Plan is administered by a committee appointed by the Board
of Directors, which must consist of three or more persons, each of whom is a
"disinterested person" within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Board of Directors
has appointed the Compensation and Employee Benefits Committee of the Board of
Directors (the "Committee") to administer the Equity Partnership Plans. Each
member of the Committee serves for a term determined by the Board of Directors.
All determinations of the Committee with respect to the Key Employee Plan are
binding. The expenses of administering the Key Employee Plan are borne by the
Company.
C. ELIGIBILITY
Generally, the persons who are eligible to participate in the Key Employee
Plan with respect to a calendar year are the employees or classes of employees
of the Company and its subsidiaries and affiliates that participate in the
Equity Partnership Plans (the "Participating Companies") (a)(i) whose principal
work location during such calendar year is within the United States of America
or (ii) who are citizens of the United States of America, whose principal work
location during such calendar year is outside of the United States of America
and who do not participate in a plan maintained by their employer during such
calendar year that the Committee determines to be comparable to the Key Employee
Plan, (b) whose annualized compensation with respect to such calendar year is at
least equal to $300,000 (indexed for inflation beginning in 1991) ($360,000 in
1995) and (c) who are designated as eligible to participate in the Key Employee
Plan by the Committee. The Committee may from time to time add or exclude from
participation one or more individuals or classes of individuals. The Key
Employee Plan also has been extended to Participating Companies in Australia,
Canada, Germany, Hong Kong, Japan, Singapore, Switzerland and the United
Kingdom.
D. MECHANICS OF OPERATION
Awards under the Key Employee Plan represent unsecured unfunded obligations
of the Company. However, in order to assist the Company in meeting its
obligations under the Equity Partnership Plans, the Company has established
certain grantor trusts (the "Trusts"), the assets of which remain subject to the
Company's bankruptcy and judgment creditors, if any. The trustee of the Trusts
(the "Trustee") is State Street Bank and Trust Company. Under the Equity
Partnership Plans and the Trusts, the Trustee must make purchases throughout
each year for which awards are granted under the Equity Partnership Plans of
amounts at least equal to expected awards under the Equity Partnership Plans
(taking into account shares already held in the Trusts). In addition, the
Trustee generally reinvests all dividends paid on shares held in the Trusts in
Company Common Stock (although in certain circumstances such reinvestment is not
required). Shares purchased in respect of awards are allocated to participants'
accounts as soon as practicable after the date as of which such awards are
granted to participants (generally in December). Shares credited to
participants'
17
21
accounts may be adjusted in the event of a stock dividend or split,
recapitalization, extraordinary dividend, merger, consolidation, combination or
exchange of shares or similar corporate change.
E. VOTING AND TENDER OF SHARES
Participants in the Key Employee Plan generally are entitled to direct the
Trustee as to the voting and tender of shares allocated to their accounts. In
addition, the Trustee must make voting and tender decisions with respect to any
unallocated shares held in the Trusts (and voting decisions with respect to
allocated shares for which the Trustee does not receive participant
instructions) in proportion to the voting and tender instructions the Trustee
receives from participants in the Equity Partnership Plans.
F. CERTAIN DIVESTITURES
In the event of any transaction immediately after which any Participating
Company both ceases to be at least a 50% subsidiary or affiliate of the Company
and either has stock that is publicly traded or is a member of a "controlled
group of corporations" (as that term is defined in Section 414(b) of the
Internal Revenue Code), with any trades or businesses, one or more members of
which have publicly traded stock as a result of the transaction, the Common
Stock credited to the accounts of (a) participants who are employed by such
Participating Company immediately after the transaction and (b) terminated
participants who are not so employed, but who were employed by such
Participating Company on the date that their employment with the Company and its
subsidiaries and affiliates terminated, will be converted to equivalent amounts
of such publicly traded stock based on the relative values of such publicly
traded stock and Common Stock immediately after the transaction. Thereafter,
each such participant's accounts will be maintained in such publicly traded
stock, the Board of Directors of the affected company will succeed to the powers
of the Committee and the Board of Directors under the Key Employee Plan with
respect to the affected participants and a separate trust containing the
accounts of such affected participants will be created to hold the stock
credited to the affected participants' accounts. In the event that a public
market develops for the stock of any Participating Company and, immediately
after such public market develops, such company remains at least a 50%
subsidiary or affiliate of the Company, the Common Stock credited to the
accounts of the participants described above will be converted to equivalent
amounts of the publicly traded stock of such company as described above or its
economic equivalent, as the Committee deems appropriate, unless the Committee
and the Participating Company determine that such a conversion would be
financially detrimental to any subsidiary or affiliate of the Company or such
participants. Thereafter, each such participant's accounts will be maintained in
such publicly traded stock or its economic equivalent, as the case may be.
G. POWER TO AMEND
The Key Employee Plan may be amended by the Board of Directors from time to
time in any respect except that, if and to the extent required by Rule 16b-3
promulgated under Section 16(b) of the Exchange Act or by any comparable or
successor exemption under which the Board of Directors believes it is
appropriate for the Key Employee Plan to qualify, no amendment shall be
effective without the approval of the stockholders of the Company that (a)
materially increases the number of shares of Common Stock that may be
distributed under the Key Employee Plan, (b) materially increases the benefits
accruing to individuals under the Key Employee Plan or (c) materially modifies
the requirements as to eligibility for participation in a Key Employee Plan.
H. MODIFICATION FOR NON-UNITED STATES SUBSIDIARIES AND AFFILIATES
The Key Employee Plan represented by Exhibit A has been modified in some
respects for participation by Participating Companies in Australia, Canada,
Germany, Hong Kong, Japan, Singapore, Switzerland and the United Kingdom. These
modifications generally affect employees of those subsidiaries and affiliates
who work in the applicable locale. The German, Swiss and United Kingdom
modifications are local currency based. In 1995, the minimum compensation
necessary to participate in these portions of the Key Employee Plan was
DM647,000, Sfr547,000 and L201,000, respectively. These participation minimums
are indexed for
18
22
inflation based on local cost-of-living indices. The non-United States
modifications provide specified methods of calculating conversions of U.S.
dollars to the appropriate local currency.
The Company currently is considering substantially amending, modifying, or
terminating altogether, some or all of these non-United States modifications. In
the event any non-U.S. modification is terminated, the Company might adopt a new
local plan that would provide a similar economic benefit to employees. In
particular, the Company may amend the U.K. portion of the Key Employee Plan to
permit the Committee to elect to accelerate distributions thereunder to certain
participants selected by the Committee subject to certain restrictions on
transferability and subject to certain other restrictions.
The following describes the principal modifications to the operation of the
Key Employee Plan for the non-United States Participating Companies as currently
in effect:
1. Voting and Tender Rights
The Key Employee Plan, as modified for participation by the Company's
subsidiaries and affiliates in Australia, Germany and Japan, does not
permit participants in those plans to direct the voting of shares allocated
to them. The German and Japanese modifications also do not permit
participants to make tender decisions with respect to shares allocated to
them.
2. Timing of Distributions
The Canadian modification generally provides that distributions will
be made upon the expiration of three years after an award is granted, while
the Australian and German modifications of the Key Employee Plan generally
provide for distributions upon the expiration of eight years after an award
is granted (subject to the participant's ability to make a "short-term
investment election" as a result of which awards will be distributed upon
the expiration of five years). In addition, the non-United States
modifications permit distributions to a participant who makes a "permissive
retirement election" upon the participant's "retirement" pursuant to the
custom generally applicable to the employees of each non-U.S. subsidiary
and affiliate. As a result, "permissive retirement" under certain of the
non-United States modifications may occur earlier than under the Key
Employee Plan generally.
3. Currency Protection Feature
The German, Swiss and United Kingdom modifications permit local
currency paid participants to elect to make "currency protection elections"
with respect to an award granted thereunder within 45 days after the award
is granted. As a result of a currency protection election, participants
will be protected from losses and will give up gains resulting from changes
in the U.S. dollar to local currency exchange rate.
I. SHARES AVAILABLE UNDER THE EQUITY PARTNERSHIP PLANS
Of the 40,000,000 shares currently approved under the Equity Partnership
Plans, as of December 31, 1995, 8,996,722 shares remained available for future
allocation.
AMENDMENTS TO THE KEY EMPLOYEE PLAN
On February 7, 1996, the Board of Directors adopted the Amendments. The
following discussion summarizes the material effect of the Amendments. This
summary is qualified in its entirety by reference to the complete text of the
Key Employee Plan, as restated to incorporate the Amendments, attached to this
Proxy Statement as Exhibit A.
1. CHANGE IN TIMING OF DISTRIBUTIONS
Awards granted under the Key Employee Plan in 1996 and thereafter generally
will be distributed to participants within thirty business days after the
expiration of three (rather than five) years after the date as of which the
awards are granted, although earlier distributions still may be made upon a
participant's death or termination of employment as a result of disability, upon
the participant's "permissive retirement" (as defined
19
23
in the Equity Partnership Plans), in the event of certain "changes in control"
of the Company or in the event of certain terminations of an Equity Partnership
Plan as described above.
2. MODIFICATION OF DISCOUNT
Awards granted in 1996 and thereafter under the Equity Partnership Plans
will be made in the form of Company Common Stock based on a price equal to 80%
(rather than 85%) of the "average cost per share" of shares purchased for awards
under the Equity Partnership Plans. This means that participants will receive
25% (rather than 17.65%) more shares than if allocations were not based on a
discount from the "average cost per share." Shares allocated to participants as
a result of the reinvestment of dividends with respect to awards granted in 1996
and thereafter will be based on the actual fair market value of Company Common
Stock on the reinvestment date; participants no longer will receive the benefit
of any discount with respect to such reinvested dividends. Participants will
continue to receive a 15% discount with respect to reinvested dividends paid
with respect to awards granted prior to 1996.
3. ADOPTION OF NEW VESTING SCHEDULE
In general, under the Key Employee Plan as currently in effect,
participants are always vested in their awards, subject to forfeiture only if
their employment is terminated (or is deemed to have been terminated) for
"cause." The Amendments added new additional vesting provisions applicable to
awards made in 1996 and thereafter, as a result of which participants may
forfeit part or all of their awards and/or the portion of their awards
attributable to the 20% discount from the "average cost per share" on which
their awards were based, in each case, except for Voluntary Awards which remain
forfeitable only if a participant is terminated (or deemed to have been
terminated) for "cause." In general, these vesting provisions operate as
described below. Except as described below, participants' awards generally will
not be subject to forfeiture.
(a) Participants will forfeit 100% of their awards that have not yet been
distributed if they are terminated (or deemed to have been terminated) for
"cause." Termination (or deemed termination) for "cause" will result in
forfeiture of 100% of participant's awards notwithstanding any other vesting
condition.
(b) Participants whose employment terminates voluntarily (as determined by
the Company) and who join a competitor of the Company or its affiliates (as
determined by the Committee) prior to a "change in control" and prior to the
expiration of the three years after an award is granted will forfeit: (i) 100%
of the award if the termination occurs prior to the expiration of one year after
the award was granted, (ii) 66 2/3% of such award (without reference to the
portion of the award attributable to the 20% discount), plus all of the portion
of the award attributable to the 20% discount if the termination occurs after
the expiration of one year but prior to the expiration of two years after the
award was granted and (iii) 33 1/3% of such award (without reference to the
portion of the award attributable to the 20% discount), plus all of the portion
of the award attributable to the 20% discount if the termination occurs after
the expiration of two years but prior to the expiration of three years after the
award was granted.
(c) Participants whose employment terminates voluntarily or involuntarily
(other than (i) involuntary terminations resulting from a downsizing or general
reduction in work-force, (ii) voluntary terminations where a participant joins a
competitor of the Company or its affiliates, (iii) terminations resulting from
death or disability, and (iv) a participant's "permissive retirement" under the
Key Employee Plan after having made a "permissive retirement election") prior to
a "change in control" and prior to the expiration of three years after an award
is granted will forfeit only the portion of their award attributable to the 20%
discount.
(d) Participants whose employment is terminated involuntarily as a result
of a downsizing or general reduction in work-force prior to a "change in
control" and prior to the expiration of three years after an award is granted,
will forfeit: (i) 100% of the shares resulting from the 20% discount if the
termination occurs prior to the expiration of one year after the award was
granted, (ii) 66 2/3% of such shares if the termination occurs after the
expiration of one year but prior to the expiration of two years after the award
was granted and (iii) 33 1/3% of such shares if the termination occurs after the
expiration of two years but prior to the expiration of three years after the
award was granted.
20
24
4. GRANT OF AWARDS TO CERTAIN TERMINATING EMPLOYEES
Currently, the Key Employee Plan provides that, unless the Committee
otherwise determines, in its sole discretion, no award will be granted for a
year to any employee who voluntarily terminates employment or who notifies the
Company that the employee intends to terminate employment, prior to December 31
of the year. The Amendments provide that such individuals will receive an award
for such year (subject to the foregoing vesting provisions) unless otherwise
determined by the Committee, in its sole discretion.
STOCKHOLDER APPROVAL REQUIRED
The Amendments were adopted subject to the approval of the Company's
Stockholders by the affirmative vote of a majority of the voting power of the
Company's outstanding voting securities represented at the meeting in person or
by proxy. If the Amendments are not so approved, they will be of no force or
effect. The Key Employee Plan, as in effect prior to the Amendments, would
continue in force.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENTS.
3. OTHER MATTERS
The By-Laws of the Company provide that stockholders are required to give
written notice, not less than 30 days nor more than 60 days in advance of an
Annual Meeting of Stockholders, in order to bring business before the meeting or
nominate a person for election to the Board of Directors.
Arthur Andersen LLP served as the Company's independent public accountants
for 1994.1995. Representatives from that Firm will be at the meeting of stockholders,
will be given the opportunity to make a statement if they so desire, and will be
available to take appropriate questions. The Company has not selected auditors
for the current year since going forward, its normal practice will beis for the Board of Directors to make
such selection after mid-year.
At the date of this Proxy Statement, the management has no knowledge of any
business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is properly
presented at the meeting, it is intended that the persons named in the enclosed
proxy will have authority to vote such proxy in accordance with their judgment
on such business.
Stockholders desiring to have any proposal considered for inclusion in
proxy material for the 19961997 Annual Meeting of Stockholders should submit such
proposal to the Company not later than November 24, 1995.December 2, 1996.
By Order of the Board of Directors,
ARNOLD S. OLSHIN
Secretary
March 22, 1995
17April 1, 1996
21
2125
EXHIBIT A
SALOMON INC
PROXY SOLICITED ON BEHALFEQUITY PARTNERSHIP PLAN
FOR KEY EMPLOYEES
1. PURPOSE OF THE BOARD OF DIRECTORSPLAN
This Equity Partnership Plan for Key Employees is designed to provide
participants, as compensation in respect of past services rendered, with a
continuing long-term investment in common stock of Salomon Inc, the realization
of which will be deferred to a future date. By placing participants in the
position of long-term shareholders of Salomon Inc, participants are expected to
have the same motivations and interests as other shareholders of Salomon Inc,
such as controlling costs (including compensation costs) and seeking to maximize
the return on equity of Salomon Inc and its subsidiaries and affiliates, and are
expected to analyze the activities in which they personally are involved in
terms of the overall benefit of such activities to Salomon Inc and its
affiliates and subsidiaries, as well as the effect that such activities will
have on the participants' individual departments or direct compensation. This
plan is intended to be an unfunded "bonus program" (within the meaning of 29 CFR
Part 2510.3-2(c)) designed primarily to provide deferred bonuses to a select
group of highly compensated or management employees.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "Accounts" shall mean a Participant's Cash Account, Rollover
Account and Stock Account.
(b) "Affiliate" shall mean any corporation (other than a Company)
which is a member of a "controlled group of corporations" (as that term is
defined in Section 414(b) of the Code) of which a Company is a member and
any trade or business (whether or not incorporated) under "common control"
(as that term is defined in Section 414(c) of the Code) with a Company.
(c) "Average Cost Per Share" shall mean a cost per share of Salomon
Stock calculated as follows:
(i) After each purchase (or deemed purchase) of shares made in
connection with or in anticipation of an award under an Equity
Partnership Plan, the Average Cost Per Share shall be recalculated and
shall equal (A) the Total Cost of Net Shares immediately after such
purchase, divided by (B) the total number of Net Shares immediately
after such purchase.
(ii) After each allocation of shares from the Suspense Account in
respect of Salomon Inc's 17.65% contribution obligation with respect to
dividends (or deemed dividends) as provided in Section 8 or under
another Equity Partnership Plan, the Average Cost Per Share shall be
recalculated and shall equal (A) the Total Cost of Net Shares
immediately after such allocation, divided by (B) the total number of
Net Shares held immediately after such allocation.
(iii) Contributions of Salomon Stock to the trusts under the Equity
Partnership Plans by Salomon Inc shall be treated as purchases in
anticipation of awards under the Equity Partnership Plans at the Daily
Value as of the date of the contribution.
(iv) Forfeitures under the Equity Partnership Plans (other than
forfeitures with respect to Rollovers from the Partnership Pool Plan
that are described in Section 7(c)(ii)) shall be treated as purchases
for the Equity Partnership Plans at the Daily Value as of the date of
forfeiture of the number of shares forfeited.
(v) If, on any date that shares of Salomon Stock are purchased for
the Equity Partnership Plans, any Awards, Rollovers or dividends paid on
Salomon Stock allocated to Participants' Accounts are awaiting
investment, such purchases shall be deemed to be purchases to satisfy
such Awards, Rollovers and dividends, pro rata based on the dollar
amounts of such Awards, Rollovers and dividends. Any shares that are
purchased in excess of the shares necessary to satisfy such
A-1
26
uninvested Awards, Rollovers and dividends shall be held in the Suspense
Account and shall be deemed to be purchased in anticipation of awards
under the Equity Partnership Plans.
(vi) Effective as of June 6, 1990, in the event that there are any
shares of Salomon Stock remaining in the Suspense Account on January 1
of any calendar year that were purchased or deemed to have been
purchased in a prior calendar year, the Average Cost Per Share of such
shares shall be deemed to be the Daily Value on the last trading day
immediately preceding such January 1.
(vii) Shares of Salomon Stock withheld in accordance with Section
17(c) hereof that Salomon Inc directs the Trustee to continue to hold in
the Suspense Account pursuant to Section 17(c) shall be treated as
purchases in anticipation of awards under the Equity Partnership Plans
at the Daily Value on the distribution date with respect to which such
shares were withheld.
(d) "Award" shall mean, with respect to each Participant, an award
granted to such Participant with respect to a calendar year by the
Committee pursuant to Section 7. An Award shall be deemed to have been made
with respect to the calendar year within which ends the compensation year
by reference to which the year-end bonus related to the Award is calculated
and in which a Company would, in the absence of the Plan, have accrued a
compensation expense for accounting purposes for the cash value of the
Award.
(e) "Beneficiary" shall mean the person or entity determined to be a
Participant's beneficiary pursuant to Section 19 hereof.
(f) "Board of Directors" shall mean the Board of Directors of Salomon
Inc.
(g) "Cash Account" shall mean (i) a book account maintained by Salomon
Inc reflecting, (A) with respect to tendered shares of Salomon Stock
credited to a Participant's Accounts and (B) with respect to amounts
described in Section 11(d) of the Plan, the cash amount to be distributed
to a Participant upon a Realization Event, (ii) an account in the Trust
reflecting (A) the consideration received as a result of tendering shares
of Salomon Stock credited to a Participant's Accounts, adjusted to reflect
gains and losses resulting from the Trustee's investment of such amount and
(B) the amount described in Section 11(d) of the Plan.
(h) "Cause" shall mean, when used in connection with the termination
of a Participant's employment, the termination of the Participant's
employment by a Company or an Affiliate on account of (i) the willful
violation by the Participant of (A) any federal or state law, (B) any rule
of any Company or Affiliate or (C) any rule or regulation of any regulatory
body to which any Company or Affiliate is subject, including, without
limitation, the New York Stock Exchange or any other exchange or contract
market of which any Company or Affiliate is a member and the National
Association of Securities Dealers, Inc., which violation would materially
reflect on the Participant's character, competence or integrity, (ii) a
breach by a Participant of the Participant's duty of loyalty to the
Companies and Affiliates in contemplation of the Participant's termination
of the Participant's employment, such as the Participant's pre-termination
of employment solicitation of customers or employees of any Company or
Affiliate or (iii) the Participant's unauthorized removal from the premises
of any Company or Affiliate of any document (in any medium or form)
relating to any Company or Affiliate or the customers of any Company or
Affiliate. Any rights a Company or an Affiliate may have hereunder in
respect of the events giving rise to Cause shall be in addition to the
rights the Company or Affiliate may have under any other agreement with the
employee or at law or in equity. If, subsequent to a Participant's
voluntary termination of employment or involuntary termination of
employment without Cause, it is discovered that the Participant's
employment could have been terminated for Cause, such Participant's
employment shall, at the election of the Committee in its sole discretion,
be deemed to have been terminated for Cause.
(i) "Change in Control" shall mean:
(i) The acquisition by any person (including a group, within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than
Salomon Inc or any of its subsidiaries or Berkshire
A-2
27
Hathaway Inc. or any of its subsidiaries or affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), without the prior
written approval of the Board of Directors, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either the then outstanding shares of Salomon Stock or
the combined voting power of Salomon Inc's then outstanding voting
securities in a transaction or series of transactions not approved by a
vote of at least a majority of the Continuing Directors (as hereinafter
defined); or
(ii) A change in the composition of the Board of Directors of
Salomon Inc such that individuals who, as of January 1, 1988, constitute
the Board of Directors of Salomon Inc (generally the "Directors" and as
of January 1, 1988 the "Continuing Directors") cease for any reason to
constitute at least a majority thereof, provided that any person
becoming a Director subsequent to January 1, 1988 whose nomination for
election was approved by a vote of at least a majority of the Continuing
Directors (other than a nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Salomon
Inc, as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) shall be deemed to be a Continuing Director.
(j) "Code" shall mean the Internal Revenue Code of 1986.
(k) "Committee" shall mean such committee as the Board of Directors
shall appoint from time to time to administer the Plan. The Committee shall
consist of three or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated under Section 16 of
the Exchange Act.
(l) "Companies" shall mean Salomon Inc and its subsidiaries and
affiliates that have adopted the Plan pursuant to Section 3(a) hereof,
while such companies remain subsidiaries or affiliates of Salomon Inc.
(m) "Company" shall mean Salomon Inc or any of its subsidiaries or
affiliates that have adopted the Plan pursuant to Section 3(a) hereof,
while any such company remains a subsidiary or affiliate of Salomon Inc.
(n) "Compensation" shall mean, with respect to a calendar year, the
sum of the dollar amounts of an employee's (i) base salary, (ii) night
differential, (iii) overtime, (iv) year-end bonus and (v) Award, resulting
from services rendered to the Companies, before giving effect to (A) any
"compensation reduction election" under the Retirement Plan (as that term
is defined in the Retirement Plan) or to any similar compensation reduction
election made in connection with a plan within the meaning of Code Section
401(k), (B) any compensation reduction election made in connection with a
"cafeteria plan" within the meaning of Code Section 125 and (C) any
compensation reduction election made in connection with an "employee stock
purchase plan" within the meaning of Code Section 423. Compensation shall
not include the amount of any 17.65% contribution made pursuant to Section
8 hereof or the amount of any up front or "sign-on" bonus paid to any
individual.
(o) "Daily Value" shall mean, with respect to a share of Salomon
Stock, the average of the high and low reported sales price regular way per
share of Salomon Stock on the New York Stock Exchange Composite Tape, or if
Salomon Stock is not traded on such stock exchange, the principal national
securities exchange on which Salomon Stock is traded, or if not so traded,
the mean between the highest bid and lowest asked quotation on the
over-the-counter market as reported by the National Quotations Bureau, or
any similar organization, on any relevant date, or if not so reported, as
determined by the Committee in a manner consistently applied.
(p) "Disability" shall mean any physical or mental condition that
would qualify a Participant for a disability benefit under the long-term
disability plan maintained by any Company and applicable to the
Participant.
A-3
28
(q) "Equity Partnership Plans" shall mean the Plan, the Salomon Inc
Equity Partnership Plan for Professional and Other Highly Compensated
Employees and any other equity plan maintained by any Company and
designated by the Committee as an Equity Partnership Plan.
(r) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
(s) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(t) "Investment Period" shall mean, with respect to an Award or a
Rollover from a Prior Incentive Plan, the later of (i)(A) with respect to
Awards or such Rollovers made prior to January 1, 1996, the expiration of
the 5-year period beginning on the date as of which such Award is granted
or such Rollover is made and (B) with respect to Awards made on or after
January 1, 1996, the expiration of the 3-year period beginning on the date
as of which such Award is granted or (ii) the expiration of any period
determined pursuant to any Long-Term Investment Election made by a
Participant. In addition to the foregoing, the Investment Period with
respect to an Award or a Rollover from a Prior Incentive Plan shall end
upon the Participant's Permissive Retirement that occurs prior to the date
on which the Investment Period otherwise would end if the Participant so
elects in writing within 45 days after the date such Award is granted or
such Rollover is made or simultaneously with the filing of a Long-Term
Investment Election with respect to such Award or Rollover. The Investment
Period of a Rollover from another Equity Partnership Plan shall be
determined as if such Rollover were an Award under the Plan as of the date
on which the related award was granted under such other Equity Partnership
Plan.
(u) "Long-Term Investment Election" shall mean a Participant's
irrevocable written election pursuant to Section 10 hereof.
(v) "Minimum Eligible Compensation" shall mean: (i) $300,000 with
respect to 1990; (ii) effective as of January 1, 1991, with respect to each
calendar year after 1990 and before 1995, 1.5 multiplied by the
compensation limitation in effect under Section 401(a)(17) of the Code for
the immediately preceding calendar year; and (iii) with respect to each
calendar year beginning in 1995 and thereafter, 2.4 multiplied by the
compensation limitation in effect under Section 401(a)(17) for the
immediately preceding calendar year.
(w) "Net Shares" shall mean the number of shares purchased or deemed
to have been purchased with respect to or in anticipation of Awards and
awards under the other Equity Partnership Plans, excluding purchases or
deemed purchases with respect to dividends paid on Salomon Stock credited
to Participants' Accounts, less the number of shares credited to
Participants' Accounts (and not theretofore forfeited) from the Suspense
Account.
(x) "Participant" shall mean a key employee, including an officer or
director, of any Company who is determined by the Committee to be eligible
to participate in the Plan and who is designated a Participant pursuant to
Section 6 hereof.
(y) "Partnership Pool Plan" shall mean the 1988 Managing Directors'
Partnership Pool.
(z) "Permissive Retirement" shall mean a Participant's termination of
employment with the Companies and Affiliates, other than by reason of death
or Disability and other than for Cause, on or after the earliest to occur
of: (i) the December 31st following the date the Participant attains age 55
and completes 10 years of service determined pursuant to the Retirement
Plan; (ii) the Participant's 65th birthday; (iii) the December 31st
following the date the Participant completes 25 years of service determined
pursuant to the Retirement Plan; or (iv) the later of the date the
Participant has completed at least 10 years of service determined pursuant
to the Retirement Plan and the December 31st following the date the
Participant attains an age which, when added to the Participant's number of
years of service determined pursuant to the Retirement Plan, equals 75. The
Committee may consider an extended leave of absence to be a termination of
employment even though the Participant may render limited services to the
Companies or Affiliates during such leave.
A-4
29
(aa) "Plan" shall mean the Salomon Inc Equity Partnership Plan for Key
Employees.
(ab) "Prior Incentive Plan" shall mean the Partnership Pool Plan or
the Special Bonus Plan.
(ac) "Realization Event" shall mean, with respect to an Award or a
Rollover, the first to occur of (i) the expiration of the Investment Period
with respect to such Award or Rollover, (ii) the occurrence of a Change in
Control, (iii) the termination of the Plan pursuant to Section 18 hereof,
(iv) the Participant's termination of employment with a Company or
Affiliate as a result of the Participant's Disability or (v) the
Participant's death.
(ad) "Retirement Plan" shall mean the Salomon Brothers Inc Retirement
Plan, as amended from time to time.
(ae) "Revocation Event" shall mean a determination by the Board of
Directors in its sole discretion that any of the following has occurred or
is likely to occur:
(i) A determination by the Department of Labor or a court of
competent jurisdiction that the assets of the Trust are subject to Part
4 of Subtitle B of Title I of ERISA.
(ii) A determination by the Department of Labor or a court of
competent jurisdiction that the Plan is a "pension plan" (within the
meaning of Section 3(2) of ERISA) subject to Parts 2, 3 and 4 of
Subtitle B of Title I of ERISA.
(iii) A determination by the Internal Revenue Service or a court of
competent jurisdiction that any amount deposited in the Trust is taxable
to any Participant or Beneficiary prior to the distribution to the
Participant or Beneficiary of such amount.
(iv) A determination by Salomon Inc's independent public
accountants that the accounting expense to the Companies of maintaining
the Accounts under the Plan (other than a Participant's Accounts with
respect to an Award credited with 100 shares of Salomon Stock or less
that may be distributed in the form of cash) is based on a value of the
shares of Salomon Stock other than such value (A) on the date shares of
Salomon Stock are acquired by the Trust or (B) on the date the shares of
Salomon Stock are credited to a Participant's Accounts.
(af) "Rollover" shall mean an amount transferred to the Plan from
another Equity Partnership Plan or from a Prior Incentive Plan pursuant to
Section 7(b).
(ag) "Rollover Account" shall mean a book account maintained by
Salomon Inc and an account maintained in the Trust reflecting, with respect
to a Rollover, the number of shares of Salomon Stock to be distributed to a
Participant upon a Realization Event.
(ah) "Rollover Election" shall mean a written election by a
Participant to transfer to the Plan amounts credited to the Participant's
accounts from another Equity Partnership Plan or a Prior Incentive Plan
pursuant to Section 7(b).
(ai) "Salomon Stock" shall mean the common stock of Salomon Inc or any
successor thereto.
(aj) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(ak) "Special Bonus Plan" shall mean the Salomon Brothers Inc Special
Bonus Plan, adopted effective as of January 1, 1986.
(al) "Stock Account" shall mean a book account maintained by Salomon
Inc and an account maintained in the Trust reflecting, with respect to each
Award, the number of shares of Salomon Stock to be distributed to each
Participant upon a Realization Event.
(am) "Suspense Account" shall mean an account in the Trust in which
unallocated shares of Salomon Stock are held.
(an) "Total Cost of Net Shares" immediately after a purchase (or
deemed purchase) made in connection with or in anticipation of an award
under the Equity Partnership Plans or an allocation shall
A-5
30
mean the Average Cost Per Share immediately, preceding the purchase or
allocation, as the case may be, multiplied by the number of Net Shares
immediately preceding the purchase or allocation, as the case may be (i) in
the case of a purchase, plus (A) the number of such shares purchased
multiplied by (B) the amount paid per share, excluding brokerage
commissions, for such shares or (ii) in the case of an allocation, minus
(A) the number of shares allocated multiplied by (B) the Daily Value on the
date of the allocation.
(ao) "Trust" shall mean any trust established in connection with the
Plan.
(ap) "Trustee" shall mean the trustee of the Trust.
(aq) "Voluntary Award Election" shall mean, with respect to a
Participant described in Section 7(a)(iii), an election made pursuant to
Section 7(a)(iii) to reduce the Participant's Compensation by a percentage
of such Compensation (determined without reference to the Voluntary Award
Election) and have the amount by which the Participant's Compensation is so
reduced converted to an Award.
3. ELECTION BY A COMPANY TO PARTICIPATE IN THE PLAN
(a) By appropriate corporate action, subject to the approval of the Board
of Directors, any subsidiary or affiliate of Salomon Inc may adopt the Plan.
Such subsidiary or affiliate may recommend to the Committee which of its
employees should be eligible to participate in the Plan.
(b) By appropriate corporate action, a Company may terminate its
participation in the Plan.
(c) No affiliate or subsidiary of Salomon Inc that participates in the Plan
shall have any power with respect to the Plan except as specifically provided in
the Plan.
(d) As a condition of participation in the Plan, Salomon Inc shall require
any subsidiary or affiliate to enter into an agreement or agreements to obligate
such subsidiary or affiliate to pay to Salomon Inc or to the Trust, in cash, the
appropriate value, as determined by the Board of Directors, of any Salomon Stock
that Salomon Inc contributes to the Trust in respect of the Participants
employed by such subsidiary or affiliate. In addition, Salomon Inc may require
any subsidiary or affiliate to enter into such other agreement or agreements as
it shall deem necessary to obligate such subsidiary or affiliate to reimburse
Salomon Inc or the Trust for any other amounts paid hereunder, directly or
indirectly, in respect of such subsidiary's or affiliate's employees.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 14 hereof, shares of Salomon
Stock may be allocated to Participants' accounts under the Equity Partnership
Plans in an amount that, in the aggregate since the inception of the Equity
Partnership Plans in 1990, does not exceed 40,000,000 shares. In the event that
any shares of Salomon Stock allocated to a Participant's accounts under the
Equity Partnership Plans are forfeited for any reason, the number of shares of
Salomon Stock forfeited shall again be available for allocation under the Equity
Partnership Plans.
5. ADMINISTRATION OF THE COMPANYPLAN
The Plan shall be administered by the Committee. The Committee shall have
full authority, consistent with the Plan, to administer the Plan, including
authority to interpret and construe any provision of the Plan and to adopt such
rules and regulations for administering the Plan and such forms of elections as
it may deem necessary or appropriate. Decisions of the Committee shall be final
and binding on all parties. Committee decisions shall be made by a majority of
its members present at a meeting (which meeting may be held by telephone) at
which a quorum is present. Any decision reduced to writing and signed by all of
the members of the Committee shall be as fully effective as if it had been made
at a meeting duly held. All expenses of the Plan shall be borne by Salomon Inc.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Companies shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Companies to whom any duty or power relating to the administration or
A-6
31
interpretation of the Plan has been delegated, against any cost, expense
(including counsel fees, which fees shall be paid as incurred) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any action, omission or determination relating to
the Plan, if such action, omission or determination was taken or made by such
member, director or employee in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Companies, and
with respect to any criminal action or proceeding, such member had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon a plea of nolo
comtendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Companies, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
6. ELIGIBILITY
(a) Effective as of January 1, 1991, the persons who shall be eligible to
participate in the Plan with respect to a calendar year shall be such employees
or classes of employees of the Companies (i) (A) whose principal work location
during such calendar year is within the United States of America or (B) who are
citizens of the United States of America, whose principal work location during
such calendar year is outside of the United States of America and who do not
participate in a plan maintained by their employer during such calendar year
that the Committee determines to be comparable to the Plan, (ii) (A) with
respect to an individual who did not participate in the Plan in the immediately
preceding year, whose Compensation with respect to such calendar year is at
least equal to the Minimum Eligible Compensation or (B) with respect to an
individual who did participate in the Plan in the immediately preceding year,
whose Compensation with respect to such calendar year is at least equal to the
compensation limitation under Section 401(a)(17) of the Code and who would have
been eligible for an Award under the Salomon Inc Equity Partnership Plan for
Professionals and Other Highly Compensated Employees for such calendar year and
(iii) who are designated as eligible to participate in the Plan by the
Committee.
(b) Notwithstanding Paragraph (a) of this Section, the Committee may from
time to time add or exclude from participation one or more individuals or
classes of individuals. Each eligible individual shall become a Participant
effective on the date as of which the individual (or class of individuals
including such individual) is designated as a Participant.
7. AWARDS AND ROLLOVERS UNDER THE PLAN
(a) Awards
(i) Subject to Paragraphs (ii) and (iv) of this Section, the Committee
shall grant Awards to Participants pursuant to the schedule attached hereto
as Appendix A. The Committee may from time to time and in its sole
discretion amend the schedule contained in Appendix A. Any such schedule
shall provide for Awards based on a percentage of a Participant's
Compensation (or, in the Committee's discretion, with respect to any
Participant whose year-end bonus constitutes "performance-based
compensation" under Section 162(m)(4)(C) of the Code, such Participant's
year-end bonus) with respect to a calendar year, and will reduce the
Participant's cash bonus that would otherwise be payable with respect to
such calendar year.
(ii) Notwithstanding the schedule attached hereto as Appendix A or any
amendment thereto, subject to Section 7(a)(iii), no Award to a Participant
with respect to a calendar year will exceed the lesser of (A)(1) for the
1991 calendar year, 50% of the Participant's Compensation for such calendar
year and (2) for each calendar year after 1991, 50% of the Participant's
Compensation or such greater percentage of Compensation as shall be
determined by the Committee in its sole discretion, (B) the dollar amount
of the bonus (excluding the amount of any up-front or sign-on bonus)
payable to such Participant with respect to such calendar year, before
reduction for any Award with respect to such calendar year, but reduced by
the portion of the bonus (other than an up-front or sign-on bonus)
contributed by the Companies pursuant to the Participant's salary reduction
election to (1) the
A-7
32
Retirement Plan or any similar plan, (2) a "cafeteria plan" within the
meaning of Code Section 125 or (3) an "employee stock purchase plan" within
the meaning of Code Section 423 or (C) any additional limit determined by
the Committee and included as part of an Award Schedule.
(iii) Effective as of January 1, 1994, any Participant whom the
Committee determines may be a "covered employee" within the meaning of
Section 162(m) of the Code in a calendar year (other than a Participant
whose year-end bonus constitutes "performance-based compensation" and whose
Award under Section 7(a)(i) is determined solely on the basis of the
Participant's year-end bonus) shall be permitted to receive an additional
Award for a calendar year based on the Participant's Voluntary Award
Election for such calendar year. Each Voluntary Award Election (A) shall
state the percentage of the Participant's Compensation (determined without
reference to the Voluntary Award Election) by which the Participant's
Compensation shall be reduced and converted to an Award hereunder, (B)
shall be made in such form as may be required by the Committee and (C)
shall be delivered to the Committee no later than December 31 of the
calendar year immediately preceding the calendar year for which the
Voluntary Award Election is made (or, with respect to Voluntary Award
Elections for the 1994 calendar year, no later than the date 30 days after
the Plan, as amended and restated as of January 1, 1994, is approved by
Salomon Inc's shareholders). Notwithstanding any Voluntary Award Election,
the amount by which the Participant's Compensation shall be reduced and
which shall be converted to an Award hereunder shall not exceed the lesser
of (1) the excess, if any, of (I) the Participant's Compensation after
reduction for any Award granted pursuant to Section 7(a)(i) over (II) $1
million, and (2) the dollar amount of the bonus (excluding the amount of
any up-front or sign-on bonus) payable to such Participant with respect to
such calendar year, after reduction for any Award granted pursuant to
Section 7(a)(i) with respect to such calendar year and further reduced by
the portion of the bonus (other than an up-front or sign-on bonus)
contributed by the Companies pursuant to the Participant's salary reduction
election to (A) the Retirement Plan or any similar plan, (B) a "cafeteria
plan" within the meaning of Code Section 125 or (C) an "employee stock
purchase plan" within the meaning of Code Section 423.
(iv) Notwithstanding the foregoing, effective as of January 1, 1991
with respect to calendar years beginning prior to January 1, 1996, unless
the Committee determines otherwise in its sole discretion, the following
individuals shall not be entitled to receive an Award for a calendar year
(whether or not Awards already have been allocated to Participants for such
calendar year):
(A) an individual who, prior to December 31 of such calendar year,
has notified the applicable Company or Affiliate that the individual
intends to terminate employment with the Companies and Affiliates
effective in such calendar year or the next succeeding calendar year;
(B) an individual who, prior to December 31 of such calendar year,
has been notified by the applicable Company or Affiliate that the
individual's employment with the Companies and Affiliates will be
terminated effective in such calendar year or the next succeeding
calendar year; or
(C) an individual whose employment with the Companies and
Affiliates terminates prior to the end of such calendar year.
(v) Notwithstanding the foregoing, effective as of January 1, 1996,
unless the Committee otherwise determines in its sole discretion, an
individual, who, prior to December 31 of such calendar year, has been
notified by the applicable Company or Affiliate that the individual's
employment with the Companies and Affiliates will be terminated effective
in such calendar year or the next succeeding calendar year shall not be
entitled to receive an Award for a calendar year (whether or not Awards
already have been allocated to Participants for such calendar year). An
individual who, prior to December 31 of such calendar year, has notified
the applicable Company or Affiliate that the individual intends to
terminate employment with the Companies and Affiliates effective in such
calendar year or the next succeeding calendar year shall receive an Award a
calendar year unless otherwise determined by the Committee in its sole
discretion (which determination may be made after Awards already have been
allocated to Participants for such calendar year).
A-8
33
(b) Rollovers
(i) A Participant shall be permitted to make a Rollover with respect
to a percentage, up to 100%, of the amount credited to such Participant's
accounts under the Partnership Pool Plan as of December 31, 1990 by
delivering to the Committee, on or before December 31, 1990, a Rollover
Election indicating the percentage of each such amount to be rolled over.
(ii) A Participant shall be permitted to make a Rollover with respect
to a percentage, up to 100%, of the amount credited to such Participant's
accounts under the Special Bonus Plan as of December 31, 1990 by delivering
to the Committee, on or before December 31, 1990, a Rollover Election
indicating the percentage of each such amount to be rolled over.
(iii) To the extent a Participant elects to roll over a portion of the
Participant's accounts under the Partnership Pool Plan or the Special Bonus
Plan, the Participant's rights under the Plan with respect to any such
amount shall be in lieu of all rights the Participant would have had under
either such Prior Incentive Plan.
(iv) Upon becoming eligible to participate in the Plan, all amounts
credited to the Participant's accounts under the Equity Partnership Plans
(other than the Plan) shall be transferred to the Plan as a Rollover.
(v) No Rollover shall be given effect with respect to a Participant
whose employment with the Companies terminates prior to the effective date
of such Rollover.
(c) Vesting of Awards and Rollovers
(i) Subject to Sections 7(a)(iv) and 11, with respect to Awards
granted and Rollover Elections made prior to January 1, 1996, each Award
and Rollover shall be 100% vested in each Participant, except as follows:
(A) a Participant shall forfeit any Award or Rollover if the
Participant's employment with a Company or an Affiliate is (or is deemed
to have been) terminated by such Company or Affiliate for Cause prior to
the Realization Event for that Award or Rollover;
(B) a Participant shall forfeit any shares of Salomon Stock
attributable to a Rollover from the Partnership Pool Plan if, prior to
the earlier of January 1, 1992 and the Realization Event for that
Rollover, the Participant's employment with the Companies and Affiliates
terminates (whether or not for Cause); and
(C) a Participant shall forfeit 20% of the shares of Salomon Stock
attributable to a Rollover from the Special Bonus Plan if, prior to the
earliest of (1) January 1, 1992, (2) the date the Participant would be
entitled to Permissive Retirement as a result of the criteria described
in Sections 2(z)(i), (ii) or (iii), (3) the date the Participant has
completed 10 years of service under the Retirement Plan in the capacity
of Managing Director and/or as a General Partner of Salomon Brothers
Inc, regardless of the Participant's age at the time of termination and
(4) the Realization Event for that Rollover, the Participant's
employment with the Companies and Affiliates terminates (whether or not
for Cause), provided, however, that a Participant who otherwise would
achieve full vesting as a result of Clauses (2) or (3) of this Paragraph
nevertheless shall forfeit 20% of the shares of Salomon Stock
attributable to a Rollover from the Special Bonus Plan if the
Participant joins a "competitor organization" prior to the Realization
Event for that Rollover.
(ii) Subject to Sections 7(a)(iv) and 11, with respect to Awards
granted on or after January 1, 1996, each Award and Rollover shall be
subject to forfeiture only as follows:
(A) A Participant shall forfeit the entire amount attributable to
any Award or Rollover if the Participant's employment is (or is deemed
to have been) terminated by such Company or Affiliate for Cause prior to
the Realization Event for that Award or Rollover;
A-9
34
(B) Subject to Paragraph (ii)(A), a Participant shall forfeit a
portion of the amount attributable to any Award or Rollover (other than
an Award resulting from a Voluntary Award Election) as follows in the
event the Participant voluntarily terminates employment with the Company
or Affiliate and joins a "competitor organization" prior to the
Realization Event for the Award or Rollover (without taking into account
any Long-Term Investment Election):
(I) if the termination occurs prior to the expiration of one
year after the Award or Rollover was granted or made, the Participant
shall forfeit 100% of the amount attributable to the Award or
Rollover;
(II) if the termination occurs on or after the expiration of one
year, but prior to the expiration of two years after the Award or
Rollover was granted or made, the Participant shall forfeit 73 1/3%
of the amount attributable to the Award or Rollover;
(III) if the termination occurs on or after the expiration of
the two years, but prior to the expiration of three years after the
Award or Rollover was granted or made, the Participant shall forfeit
46 2/3% of the amount attributable to the Award or Rollover;
(C) Subject to Paragraphs (ii)(A), (ii)(B) and (ii)(D) of this
Section, a Participant shall forfeit 20% of the amount attributable to
an Award or Rollover (other than an Award resulting from a Voluntary
Award Election) if, prior to the Realization Event for the Award or
Rollover (without taking into account any Long-Term Investment
Election), the Participant's employment with the Companies and
Affiliates terminates for any reason;
(D) Subject to Paragraph (ii)(A) of this Section, a Participant
whose employment with a Company or an Affiliate is involuntarily
terminated as a result of a downsizing or general reduction in work
force at the Company or Affiliate prior to the Realization Event for an
Award or Rollover (without taking into account any Long-Term Investment
Election) shall forfeit a portion of the amount attributable to the
Award or Rollover (other than an Award resulting from of a Voluntary
Award Election) as follows:
(I) if the termination occurs prior to the expiration of one
year after the Award or Rollover was made, the Participant shall
forfeit 20% of the amount attributable to the Award or Rollover;
(II) if the termination occurs on or after one year, but prior
to the expiration of two years after the Award or Rollover was made,
the Participant shall forfeit 13 1/3% of the amount attributable to
the Award or Rollover;
(III) if the termination occurs on or after two years, but prior
to the expiration or three years after the Award or Rollover was
made, the Participant shall forfeit 6 2/3% of the amount attributable
to the Award or Rollover.
Except as provided in this Section 7(c)(ii), a Participant shall not forfeit any
portion of the balance credited to the Participant's Accounts attributable to
Awards or Rollovers made on or after January 1, 1996.
(iii) For purposes of this Section, whether a participant's
termination of employment shall be considered voluntary or involuntary and
whether or not a termination is deemed to be as a result of a downsizing or
general reduction in workforce shall be determined by Salomon Inc in its
sole discretion. For purposes of this Section 7(c), the term "competitor
organization" shall mean an organization that is determined by the
Committee to be a competitor of Salomon Inc and/or its affiliates.
(d) Simultaneous Occurrence of Realization Event and Termination of
Employment
In the event of the simultaneous occurrence of a Realization Event
described in Section 2(ac)(iv) or 2(ac)(v) with respect to a Rollover from the
Partnership Pool Plan or the Special Bonus Plan and the termination of the
Participant's employment with the Companies and Affiliates, for purposes of
determining whether a Participant will forfeit any amount of such Rollover
pursuant to Section 7(c)(i), such Realization Event shall be deemed to have
occurred prior to such termination of the Participant's employment.
A-10
35
8. FUNDING OF THE PLAN
The Plan shall be unfunded. Benefits under the Plan shall be paid from the
general assets of Salomon Inc. Salomon Inc shall establish the Trust, which
shall be intended to be a "grantor trust" within the meaning of Section 671 of
the Code, pursuant to a trust agreement, to assist Salomon Inc in meeting its
obligations hereunder. Such trust agreement shall provide that the Trust shall
be invested primarily in Salomon Stock.
The trust agreement creating the Trust shall contain procedures to the
following effect:
(a) In the event of the insolvency of any Company, the assets of the
Trust shall be available to pay the claims of any creditor of such Company
to whom a distribution may be made in accordance with state and federal
bankruptcy laws. A Company shall be deemed to be "insolvent" if such
Company is subject to a pending proceeding as a debtor under the Federal
Bankruptcy Code (or any successor federal statute) or any state bankruptcy
code. In the event a Company becomes insolvent, the Board of Directors and
the Chief Executive Officer of Salomon Inc shall notify the Trustee of the
event as soon as practicable. Upon receipt of such notice, or if the
Trustee receives other written allegations of such Company's insolvency
from a third party considered by the Trustee to be reliable and
responsible, the Trustee shall cease making payments of benefits from the
assets of the Trust, shall hold the assets in the Trust for the benefit of
such Company's creditors and shall take such steps as are necessary to
determine within a reasonable period of time whether such Company is
insolvent. In making such determination, the Trustee may rely upon a
certificate of the Board of Directors and the Chief Executive Officer of
Salomon Inc or a determination by a court of competent jurisdiction that
such Company is or is not insolvent. In the case of the Trustee's
determination of such Company's insolvency, the Trustee will deliver assets
of the Trust to satisfy claims of such Company's creditors pursuant to a
final order of a court of competent jurisdiction.
(b) The assets of the Trust shall be available to pay any claim or
claims of any judgment creditor or judgment creditors of any Company to the
extent such claim or claims are then payable and the Company otherwise
shall fail to pay such claim or claims. The Board of Directors and the
Chief Executive Officer of Salomon Inc shall notify the Trustee as soon as
practicable in the event of any such failure of any Company to pay a
judgment creditor. Upon receipt of such notice, or if the Trustee receives
other written allegations of any Company's such failure to pay a judgment
creditor or judgment creditors from a third party considered by the Trustee
to be reliable and responsible, the Trustee shall, to the extent of such
failure, hold the assets of the trusts under the Equity Partnership Plans
for the benefit of such judgment creditor or judgment creditors and shall
take such steps as are necessary to determine within a reasonable period of
time whether such creditors are entitled to payment. In making such
determination, the Trustee may rely upon a certificate of the Board of
Directors and the Chief Executive Officer of Salomon Inc or a determination
by a court of competent jurisdiction that such creditors are or are not
entitled to payment. In the case of the Trustee's determination of any such
Company's failure to pay a judgment creditor or judgment creditors, the
Trustee will deliver assets of the trusts under the Equity Partnership
Plans to satisfy claims of such Company's judgment creditors as directed
pursuant to a final order of a court of competent jurisdiction. In the
event that the Trustee is required to hold any assets of the trusts under
the Equity Partnership Plans for the benefit of any judgment creditor,
Participants' Accounts shall be ratably reduced by such amount.
(c) In the event the Trustee ceases making payments of benefits as a
result of a Company's insolvency, the Trustee shall resume making payments
of benefits only after the Trustee has determined that no Company is then
insolvent or upon receipt of an order of a court of competent jurisdiction
requiring the payment of benefits. In the event the Trustee holds any
assets in the trusts under the Equity Partnership Plans for the benefit of
a judgment creditor of a Company, the Trustee shall, if the Trustee
determines that no Company then owes any such amount to a judgment
creditor, allocate the then remaining amounts that had been held for the
benefit of any such judgment creditor to the Participants' Accounts that
were reduced, pro rata in proportion to the excess of the reduction in each
such Participant's Accounts over the amounts paid by Salomon Inc to each
such Participant as a result of such reduction. No Participant shall
receive a restoration that exceeds the amount of the reduction together
A-11
36
with the earnings that would have accrued had no reduction been effected,
less amounts paid to the Participant by Salomon Inc as a result of the
reduction. Notwithstanding the provisions of this Section 8(c), the Trustee
shall restore Participants' Accounts in accordance with an order of a court
of competent jurisdiction. In the event the amount available for
restoration exceeds the amount required to be restored to Participants'
Accounts, such excess shall be allocated to the Suspense Account and shall
be treated as a purchase for the Plans at the Daily Value as of the date of
such allocation. In making any determination under this Section, the
Trustee may rely upon a certificate of the Board of Directors and the Chief
Executive Officer of Salomon Inc.
(d) The Trustee shall reinvest all dividends paid on Salomon Stock
held in the Trust in Salomon Stock as follows:
(i)(A) Subject to Paragraph (d)(i)(B) of this Section, solely with
respect to Awards and Rollovers made prior to January 1, 1996, as soon
as practicable after the payment date for dividends paid (or deemed
paid) on Salomon Stock credited (or deemed to be credited) to
Participants' Accounts, other than Salomon Stock credited to
Participants' Rollover Accounts with respect to a Rollover from a Prior
Incentive Plan, Salomon Inc shall contribute to the Trust, as
compensation to Participants, an amount equal to 17.65% of such
dividends (or deemed dividends) (less required withholding taxes, if
any). As soon as practicable after receipt of such dividends (or deemed
dividends) and any such 17.65% contribution, the Trustee shall use such
dividends (or deemed dividends) and contribution to purchase Salomon
Stock. With respect to Awards and Rollovers made on or after January 1,
1996, no such 17.65% contribution shall be required.
(B) If and to the extent that the Committee elects by notice to the
Trustee, Salomon Inc's 17.65% contribution obligation shall be satisfied
out of the Suspense Account. Effective as of January 1, 1991, if the
Committee makes such an election, the contribution obligation shall be
satisfied (1) first from the dividends paid on shares of Salomon Stock
held in the Suspense Account and (2) second from shares of Salomon Stock
held in the Suspense Account, based on the Daily Value of the shares on
the relevant payment date. Any such share shall be deemed to have been
purchased at such Daily Value for allocation purposes.
(C) Shares of Salomon Stock purchased or deemed purchased pursuant
to this Section 8(d)(i) shall be allocated to the Participant's Accounts
with respect to which they were purchased.
(ii) Subject to Paragraph (d)(iv) of this Section, as soon as
practicable after the payment date for dividends paid on Salomon Stock
credited to Participants' Rollover Accounts as of the record date for
such dividends with respect to a Rollover from a Prior Incentive Plan,
the Trustee shall use the amount of such dividends to purchase Salomon
Stock. Shares of Salomon Stock purchased pursuant to this Section
8(d)(ii) shall be allocated to the Participant's Rollover Account with
respect to which they were purchased.
(iii) Subject to Paragraph (d)(iv), as soon as practicable after
receipt of dividends paid on Salomon Stock held in the Suspense Account,
the Trustee shall use the amount of such dividends to purchase Salomon
Stock. Shares of Salomon Stock purchased pursuant to this Section
8(d)(iii) (other than with dividends used to satisfy Salomon Inc's
contribution obligation pursuant to Paragraph (d)(i)(B)) shall be held
in the Suspense Account.
(iv) (A) Notwithstanding the foregoing, effective as of October 12,
1995, the Committee may, in its sole discretion, elect by Notice to the
Trustee to direct the Trustee to satisfy allocations in respect of
dividends paid on shares of Salomon Stock credited to Participants'
Accounts out of shares of Salomon Stock held in the Suspense Account
based on the Daily Value of Salomon Stock on the dividend payment date.
In such a case, the dividends paid on shares allocated to a
Participant's Stock Account shall be transferred to the Suspense
Account.
(B) To the extent the Committee elects to satisfy allocations under
the Equity Partnership Plans in respect of dividends paid on shares of
Salomon Stock credited to Participants' Accounts out of shares of
Salomon Stock held in the Suspense Account or otherwise at the election
of the
A-12
37
Committee, dividends paid on Salomon Stock held by the Trusts shall not
be reinvested in Salomon Stock but instead shall be held in the Suspense
Account and unless the Board of Directors otherwise directs the Trustee,
shall be invested in accordance with the investment guidelines
applicable to assets held in the Trusts and credited to a Participant's
Cash Account.
(e) Notwithstanding any other provision hereunder, Salomon Inc may, at
any time, by notice to the Trustee, substitute for part or all of the
assets held by the Trust other assets of equal fair market value at the
time of such substitution. The fair market value of any shares of Salomon
Stock being substituted shall be the Daily Value of such shares of Salomon
Stock on the day as of which the substitution is to be effected. The
Trustee shall distribute to Salomon Inc the assets to be substituted as
soon as practicable after receipt of a notice of substitution, but in no
case later than 7 days thereafter, provided, however, that in the event
Salomon Inc elects to substitute Salomon Stock held in the Trust within 90
days prior to the record date of a meeting of the shareholders of Salomon
Inc or on or after the commencement of a tender offer with respect to
Salomon Stock, the Trustee shall continue to hold the Salomon Stock to be
substituted and shall make voting decisions at such meeting and shall make
tender decisions with respect to such Salomon Stock pursuant to Section 13
of the Plan. As soon as practicable after the conclusion of such meeting or
the expiration of such tender offer, as the case may be, the Trustee shall
distribute such shares of Salomon Stock from the Trust to Salomon Inc.
Notwithstanding the foregoing, the Committee shall be permitted to modify
or eliminate the provisions described in Sections 8(a), (b), (c), (d) and (e) if
and to the extent it determines that such action is appropriate based on advice
of counsel.
9. MAINTENANCE OF ACCOUNTS
(a) Stock Account
(i) If, on November 30 of any calendar year, the number of shares held
in the Suspense Account is at least equal to (A) with respect to Awards
granted for the 1990 calendar year, 80% of the amount of shares necessary
to satisfy the total amount of Awards granted for such calendar year and
(B) with respect to Awards granted for each calendar year thereafter, 90%
of the amount of shares necessary to satisfy the total amount of Awards
granted for such calendar year, each Participant's Stock Account shall be
credited with a number of shares of Salomon Stock equal to the dollar
amount of such Participant's Award divided by the product of (A) with
respect to Awards granted prior to January 1, 1996, .85 multiplied by the
Average Cost Per Share of Salomon Stock on November 30 of the calendar year
for which the Award was granted to such Participant, and (B) with respect
to Awards granted on or after January 1, 1996, .80 multiplied by the
Average Cost Per Share of Salomon Stock on November 30 of the calendar year
for which the Award was granted to such Participant. In the event that on
any such November 30 the number of shares held in the Suspense Account is
less than 80% or 90%, as the case may be, of the number of shares necessary
to satisfy the total amount of Awards granted for such calendar year, each
Participant's Stock Account shall be credited with a number of shares of
Salomon Stock equal to the dollar amount of such Participant's Award
divided by the product of (1) with respect to Awards granted prior to
January 1, 1996, .85 multiplied by the Average Cost Per Share of Salomon
Stock on the date on which the shares are credited to such Participant's
Stock Account and (2) with respect to Awards granted on or after January 1,
1996, .80 multiplied by the Average Cost Per Share of Salomon Stock on the
date on which the shares are credited to such Participant's Stock Account.
(ii) If, as of the date an Award is granted, the number of shares held
in the Suspense Account is insufficient to satisfy such Award, the date on
which Salomon Stock in respect of such Award is credited to a Participant's
Stock Account shall be deferred until such date as the number of shares
held in the Suspense Account equals or exceeds the number of shares with
respect to such Award.
(iii) If the date as of which Awards are granted for a calendar year
is on or prior to the record date for the dividends payable on Salomon
Stock but the number of shares held in the Suspense Account is insufficient
to satisfy such Awards, (A) for purposes of Sections 8(d) and 9(a)(iv), the
shares held in the Suspense Account shall be treated as held in each
Participant's Stock Account pro rata in proportion
A-13
38
to each Participant's Award for such calendar year and (B) Salomon Inc
shall make a contribution to the Trust equal to the difference between (1)
the dividends that would have been paid on shares in respect of Awards for
such calendar year had the Suspense Account held sufficient shares to
satisfy the Awards for such calendar year and (2) the dividends actually
paid on the shares held in the Suspense Account. For purposes of Sections
8(d) and 9(a)(iv), the Salomon Inc contribution described in Clause (B) of
this Section shall be treated as a dividend paid on Salomon Stock held in a
Participant's Stock Account, pro rata in proportion to each Participant's
Award for such calendar year.
(iv) As of the payment date for dividends paid (or deemed paid) on
Salomon Stock held (or deemed held) in a Participant's Stock Account as of
the record date for such dividends, each such Participant's Stock Account
shall be credited with the number of shares of Salomon Stock that are in
fact purchased or deemed to have been purchased with such dividends and,
solely with respect to Awards granted prior to January 1, 1996, the
additional 17.65% compensation contribution made in respect of such
dividends, as determined pursuant to Section 8(d).
(v) Each Participant's Stock Account shall be reduced by the number of
shares of Salomon Stock distributed to the Participant in respect of an
Award, whether such shares are distributed from the Trust or directly from
Salomon Inc.
(b) Rollover Account
(i) With respect to a Participant who has an automatic Rollover of his
accounts from another Equity Partnership Plan to the Plan pursuant to
Section 7(b)(iv), the Committee shall maintain such Participant's Rollover
Account as follows:
(A) Each such Participant's Rollover Account shall be credited with
a number of shares of Salomon Stock that were credited to the
Participant's accounts under the Equity Partnership Plans immediately
prior to the Rollover.
(B) All assets held in such Participant's Accounts under any trust
maintained in connection with another Equity Partnership Plan
immediately prior to the Rollover shall be transferred to the
Participant's corresponding accounts under the Trust on the date as of
which the Rollover occurs.
(C) As of the payment date for dividends paid on Salomon Stock held
in a Participant's Rollover Account as of the record date for such
dividends, each such Participant's Rollover Account shall be credited
with the number of shares of Salomon Stock purchased or deemed to have
been purchased with such dividends and, solely with respect to Rollovers
occurring prior to January 1, 1996, the additional 17.65% compensation
contribution made in respect of such dividends, as determined pursuant
to Section 8(d).
(ii) With respect to a Participant who makes a Rollover Election with
respect to benefits under a Prior Incentive Plan, the Committee shall
maintain such Participant's Rollover Account as follows:
(A) Each such Participant's Rollover Account shall be credited as
of January 1, 1991 with the number of shares of Salomon Stock purchased
with the dollar amount rolled over from a Prior Incentive Plan.
(B) As of the payment date for dividends paid on Salomon Stock held
in a Participant's Rollover Account as of the record date for such
dividends, each such Participant's Rollover Account shall be credited
with the number of shares of Salomon Stock purchased with such
dividends.
(iii) Each Participant's Rollover Account shall be reduced by the
number of shares of Salomon Stock distributed to the Participant in respect
of a Rollover, whether such shares are distributed from the Trust or
directly from Salomon Inc.
(c) Cash Account
In the event that a Participant shall elect to tender shares of Salomon
Stock held in the Participant's Accounts pursuant to Section 13(b)(i), the
number of shares of Salomon Stock credited to such Participant's Accounts that
are tendered shall be converted to a dollar amount per share equal to the
consideration received in respect of such tender. Such dollar amount shall
thereafter be credited to the Participant's Cash Account
A-14
39
and shall be credited with interest during the period beginning on the date as
of which such shares were tendered and ending on the last day of the month
immediately preceding the month in which such amounts are paid to the
Participant at a rate which, through the end of the first calendar month in such
period, shall equal the London Interbank Offered Rate (LIBOR) for 1-month
deposits that appears in The Wall Street Journal on the date immediately
preceding the date that such shares were tendered, and which shall be
recalculated for each successive 1-month period based on the London Interbank
Offered Rate (LIBOR) for 1-month deposits published in The Wall Street Journal
on the last day of each preceding calendar month. If such rate does not appear
in The Wall Street Journal on any date as provided above, then such rate shall
be the last such rate that appeared in The Wall Street Journal prior to the date
of determination set forth above.
10. LONG-TERM INVESTMENT ELECTION
To the extent permitted by the Committee, each Participant who (a) is
employed by a Company or an Affiliate and (b) earned the Minimum Eligible
Compensation in the immediately preceding calendar year, shall be entitled to
make a Long-Term Investment Election with respect to an Award or Rollover. Any
such Long-Term Investment Election shall be delivered to the Committee no later
than a date 2 years prior to any date a Participant's Investment Period
otherwise would expire pursuant to the first sentence of Section 2(t) hereof.
The effect of a Long-Term Investment Election will be to defer the realization
of an Award until the earlier of the expiration of an additional 3-year period
beginning on the date the Participant's Investment Period otherwise would expire
or, if the Participant so elects at the time the Participant makes the Long-Term
Investment Election, the Participant's Permissive Retirement that occurs during
such additional 3-year period. The Committee may limit the ability of any
Participant to make a Long-Term Investment Election pursuant to uniform rules
adopted by it. No Participant shall be permitted to make more than two Long-Term
Investment Elections with respect to any Award or Rollover.
11. PAYMENTS UNDER THE PLAN
(a) Subject to Paragraphs (b), (d) and (e) of this Section, within 30
business days after the occurrence of a Realization Event with respect to an
Award or a Rollover, Salomon Inc shall deliver or cause to be delivered to the
Participant (i) certificates for a number of shares of Salomon Stock equal to
the number of whole shares of Salomon Stock credited to such Participant's
Accounts as of the Realization Event as a result of such Award or Rollover
(including shares reflecting the reinvestment of dividends paid thereon), and
cash with respect to any fractional shares of Salomon Stock credited to such
Participant's Accounts in an amount equal to the Daily Value of such fractional
shares as of the Realization Event, and (ii) with respect to a Participant who
has directed the Trustee to tender shares of Salomon Stock allocated to the
Participant's Accounts, the dollar amount credited to the Participant's Cash
Account as of the Realization Event in respect of such Award or Rollover. In the
event that shares of Salomon Stock that are allocated to a Participant's
Accounts as of the record date for a dividend are to be distributed to the
Participant prior to the payment date for such dividend, Salomon Inc shall
deliver or cause to be delivered from the Suspense Account to the Participant a
number of shares of Salomon Stock equal to the number of whole shares, and cash
with respect to that number of fractional shares, of Salomon Stock that could
have been purchased with the amount of such unpaid dividends, plus, solely with
respect to Awards granted and Rollover Elections made prior to January 1, 1996,
17.65% thereof, at the Daily Value as of the Realization Event. Notwithstanding
the fact that Salomon Inc establishes the Trust for the purpose of assisting it
in meeting its obligations under the Plan, Salomon Inc shall remain obligated to
pay the amounts credited to the Participants' Accounts. Nothing shall relieve
Salomon Inc of its liabilities under the Plan except to the extent amounts are
paid to Participants or Beneficiaries from assets of the Trust.
(b) Notwithstanding the foregoing, with respect to shares of Salomon Stock
allocated to Participants' Accounts in respect of Awards granted in 1990, 1991
and 1992:
(i) On or before December 31, 1992, Salomon Inc shall deliver or cause
to be delivered to Participants selected by the Committee, certificates for
a number of shares of Salomon Stock equal to 60% of the number of whole
shares of such Salomon Stock allocated to such Participant's Accounts
(including shares reflecting the reinvestment of dividends paid thereon),
and cash with respect to 60% of
A-15
40
any fractional shares of such Salomon Stock allocated to such Participant's
Accounts in an amount equal to the Daily Value of such fractional shares as
of the distribution date. Such distributions shall be made to a Participant
only if and to the extent the Committee determines in its sole discretion
that such distributions would not impair the rights of such Participant in
any Award or Rollover theretofore granted or made or any earnings with
respect thereto within the meaning of Section 18 of the Plan. Subject to
Section 11(b)(iii), the stock certificates so distributed to such
Participants shall be restricted as to transferability and shall remain
subject to Sections 7(c) and 11(c)(ii) of the Plan until the date that a
Realization Event would have occurred with respect to such shares had they
not been distributed to the Participant, and each such stock certificate
shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions contained in the Salomon Inc Equity Partnership Plan
for Key Employees (the violation of which may result in
forfeiture). A copy of the Plan is on file in the office of the
Secretary of Salomon Inc, Seven World Trade Center, New York,
New York 10048.
Any shares remaining in the Participants' Accounts in respect of the
1990, 1991 and 1992 Awards after the distribution of the shares pursuant to
this Section 11(b)(i) shall be distributed to Salomon Inc in exchange for
Salomon Inc's undertaking to pay the amounts set forth in Section
1l(b)(ii).
(ii) On or before December 31, 1992, Salomon Inc shall pay each
Participant who receives a distribution under Paragraph (b)(i) of this
Section cash equal to the following amounts:
(A) the Daily Value on December 9, 1992 of 36.24% of the shares
allocated to the Accounts of such Participant in respect of Awards
granted in 1990;
(B) the Daily Value on December 9, 1992 of 35.11% of the shares
allocated to the Account of such Participant in respect of Awards
granted in 1991; and
(C) 40% of the dollar amount of such Participant's 1992 Awards.
Notwithstanding Section 17 hereunder, in order to meet all federal,
state, local and other withholding tax requirements, if any, attributable
to a distribution described in Section 11(b), Salomon Inc shall withhold
from any distribution under this Section 11(b)(ii) cash equal to the amount
the Committee determines to be sufficient to satisfy the minimum federal,
state, local and other withholding tax requirements under applicable law.
(iii) Notwithstanding Section 11(b)(i), the Committee may, in its sole
discretion, waive the restrictions on transferability and other
restrictions applicable to shares distributed pursuant to Section 11(b)(i).
The Committee may impose such conditions on any such waiver, including,
without limitation, requiring a forfeiture of any portion of such shares,
as the Committee may determine in its sole discretion.
(c) The Plan's principal purpose is to provide Participants with a
continuing long-term investment in Salomon Stock. In order to accomplish that
principal purpose, it is imperative that Participants generally be required to
remain invested in the Salomon Stock allocated to their Accounts until the
occurrence of a Realization Event with respect to such Salomon Stock.
Accordingly:
(i) In the event that a court of competent jurisdiction finally
determines that Salomon Inc is obligated to distribute to a Participant,
Beneficiary or any other person certificates representing any shares of
Salomon Stock allocated to a Participant's Accounts prior to the occurrence
of a Realization Event with respect to such shares, the stock certificates
so distributed to such Participant, Beneficiary or other person shall be
restricted as to transferability until the date that a Realization Event
would have occurred with respect to such shares had they not been
distributed to the Participant, Beneficiary or other person and remained
subject to the Plan, and each such stock certificate shall bear the
following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions contained in the Salomon Inc Equity Partnership
A-16
41
Plan for Key Employees (the violation of which may result in
forfeiture). A copy of the Plan is on file in the office of the
Secretary of Salomon Inc, Seven World Trade Center, New York,
New York 10048.
(ii) Effective with respect to distributions of Salomon Stock
allocated to Participants' Accounts with respect to Awards under the Equity
Partnership Plans on or after March 4, 1992, prior to receiving any
distribution of such shares, each Participant shall be required to certify
in a form acceptable to the Committee that at no time after March 4, 1992
and before the occurrence of the Realization Event with respect to which
the distribution is to be made has the Participant, directly or indirectly,
held any equity or derivative security position with respect to Salomon
Stock, such as a short sale, a long put option or a short call option, that
increases in value as the value of Salomon Stock decreases. If the
Participant does not make the certification required by this Paragraph, the
Participant shall receive a distribution with respect to such Award or
Rollover equal to the number of shares of Salomon Stock otherwise to be
distributed as of the Realization Event reduced by (A) with respect to
Awards granted and Rollover Elections made prior to January 1, 1996, .15,
and (B) with respect to Awards granted and Rollover Elections made on or
after January 1, 1996, .20, multiplied by the number of shares of Salomon
Stock otherwise to be distributed, and the number of shares by which the
distribution is reduced shall be forfeited as of the Realization Event. In
the event that a Participant makes a false certification, the Participant
shall forfeit all of the shares allocated to his Accounts in respect of
Awards under the Equity Partnership Plans on or after March 4, 1992 as of
such Realization Event. All amounts forfeited hereunder shall be treated as
purchases for the Equity Partnership Plans at the Daily Value as of the
date of forfeiture of the number of shares forfeited pursuant to Section
2(c)(iv) hereof. For purposes of applying this Section 11(c)(ii) to shares
of Salomon Stock distributed to Participants pursuant to Sections 11(b)(i)
and 18(a), the Realization Date with respect to such Salomon Stock shall be
deemed to occur on the date as of which the restrictions under Section
11(b)(i) or 18(a), as the case may be, are to be removed and the removal of
such restrictions shall be deemed to be distributions under this Section.
(d) Effective with respect to Awards granted on or after December 1, 1993,
notwithstanding any other provision hereunder, if and to the extent that the
Committee determines any Company's or Affiliate's Federal tax deduction in
respect of a distribution under the Plan may be limited as a result of Section
162(m) of the Code, the Committee may delay such distribution as provided below.
In the event the Committee determines to delay a distribution, the Committee
shall convert the shares of Salomon Stock to a dollar amount equal to the
product of (i) the Daily Value of Salomon Stock on the date such shares
otherwise would have been distributed to the Participant multiplied by (ii) the
number of shares of Salomon Stock that otherwise would have been distributed to
the Participant in the absence of this Section 11(d). Such amount shall then be
credited to the Participant's Cash Account. The amount so credited to the
Participant's Cash Account shall, subject to the second succeeding sentence, be
credited with interest during the period beginning on the date on which the
distribution would have been made in the absence of this Section 11(d) and
ending on the last day of the month immediately preceding the month in which
such amount is paid to the Participant, at a rate which, through the end of the
first calendar month in such period, shall equal the London Interbank Offered
Rate for 1-month deposits that appears in The Wall Street Journal on the date
immediately preceding the date on which the distribution would have been made in
the absence of this Section, and which shall be recalculated for each successive
1-month period based on the London Interbank Offered Rate for 1-month deposits
published in The Wall Street Journal on the last day of each preceding calendar
month. If such rate does not appear in The Wall Street Journal on any date as
provided above, then such rate shall be the last such rate that appeared in The
Wall Street Journal prior to the date of determination set forth above. The
Committee may, in its discretion, elect not to credit interest to the
Participant's Cash Account at the London Interbank Offered Rate as described
above, but instead to adjust the amount so credited to the Participant's Cash
Account to reflect gains and losses that would have resulted from the investment
of such amount in any investment vehicle or vehicles selected by the Committee.
Part or all of the amount credited to the Participant's Cash Account hereunder
shall be paid to the Participant at such times as shall be determined by the
Committee, if and to the extent the Committee determines that a Company's or an
Affiliate's deduction for any such payment will not be reduced by Section 162(m)
of the Code. Notwithstanding the foregoing, the entire balance credited to the
Participant's Cash Account hereunder shall be paid to the Participant within
A-17
42
30 business days after the earlier of (A) the date the Participant ceases to be
a "covered employee" within the meaning of Section 162(m) of the Code or (B) the
occurrence of a Change in Control.
(e) Notwithstanding Paragraph (a)(i) of this Section, effective as of
October 12, 1995, any Participant who has credited to his Accounts with respect
to an Award 100 shares of Salomon Stock or less on the Realization Date for such
Award shall, unless the Participant otherwise elects at such time and in such
form as may be acceptable to the Committee, receive, in lieu of a distribution
of certificates for the number of whole shares of Salomon Stock credited to the
Participant's Accounts as of the Realization Date as a result of such Award, a
distribution in cash equal to the Daily Value on the distribution date of the
number of whole shares of Salomon Stock allocated to the Participant's Accounts
as a result of such Award.
12. SECURITIES MATTERS
(a) Subject to Sections 11 and 18, with respect to shares of Salomon Stock
allocated to Participants' Accounts in respect of Awards or Rollovers granted or
made on or before December 31, 1992, Salomon Inc shall use its best efforts to
assure that any securities distributed to Participants hereunder are marketable
at the time of distribution, including, to the extent required under applicable
law, effecting the registration pursuant to the Securities Act of any shares of
Salomon Stock to be distributed hereunder or effecting similar compliance under
any state laws.
(b) Subject to Section 11, with respect to shares of Salomon Stock
allocated to Participants' Accounts in respect of Awards or Rollovers granted or
made after December 31, 1992, Salomon Inc shall use its best efforts to assure
that any securities distributed to Participants hereunder on or after the
Realization Date for the Award or Rollover with respect to which the
distribution is made are marketable at the time of distribution, including, to
the extent required under applicable law, effecting the registration pursuant to
the Securities Act of any shares of Salomon Stock to be distributed hereunder or
effecting similar compliance under any state laws.
(c) Notwithstanding anything herein to the contrary, Salomon Inc shall not
be obligated to cause to be issued or delivered any certificates evidencing
shares of Salomon Stock pursuant to the Plan unless and until Salomon Inc is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of the New York Stock Exchange and any other securities
exchange on which shares of Salomon Stock are traded. The Committee may require,
as a condition of the issuance and delivery of certificates evidencing shares of
Salomon Stock pursuant to the terms hereof, the recipient of such shares to make
such covenants, agreements and representations, and that such certificates bear
such legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(d) Without limitation on the Committee's powers pursuant to Paragraph (c)
of this Section, if and to the extent required by Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act or by any comparable or successor exemption
under which the Board of Directors believes it is appropriate for the Plan to
qualify, the Committee may (i) restrict a Participant's ability to sell any
shares of Salomon Stock distributed to such Participant hereunder until the
expiration of 6 months (or such other period as the Committee deems appropriate)
after the date as of which such shares were allocated to the Participant's
Accounts, (ii) in lieu of distributing shares of Salomon Stock that were
allocated to a Participant's Accounts within 6 months (or such other period as
the Committee deems appropriate) prior to the Realization Event, distribute a
cash amount equal to the Daily Value of such Salomon Stock as of the Realization
Event or (iii) impose such other conditions on the exercise of any election
under the Plan or in connection with any distribution under the Plan as the
Committee deems appropriate.
13. VOTING AND TENDER OF SALOMON STOCK
(a) Voting Rights
(i) Each Participant shall be entitled to direct the Trustee, and the
Trustee shall have no discretion, as to the manner in which Salomon Stock
that is entitled to vote and is allocated to such Participant's
A-18
43
Accounts is to be voted. The Trustee shall vote combined fractional shares,
to the extent possible, to reflect the directions of the Participants
holding such shares.
(ii) The Trustee shall have no discretion as to the voting of (A) any
Salomon Stock allocated to any Participant's Accounts for which the Trustee
does not receive affirmative and valid Participant voting directions and
(B) any Salomon Stock held in the Suspense Account. The Trustee shall vote
such Salomon Stock in the same proportions as Salomon Stock held in the
Trust for which the Trustee receives affirmative and valid Participant
voting instructions under the Equity Partnership Plans.
(iii) Notwithstanding any other provision of this Section, the Trustee
shall vote the shares of Salomon Stock held in the Accounts of any
Participant with respect to whom counsel to Salomon Inc advises the
Participant would be taxed on the value of the Participant's Accounts if
the Participant were permitted to direct the voting of such shares, in the
same proportions as Salomon Stock held in the Trust for which the Trustee
receives affirmative and valid Participant voting instructions under the
Equity Partnership Plans.
(b) Tender Rights
(i) If any person shall commence a tender or exchange offer or any
similar transaction with respect to Salomon Stock, each Participant shall
be entitled to direct the Trustee, and the Trustee shall have no
discretion, as to whether the Salomon Stock allocated to such Participant's
Accounts is to be tendered and whether such tender is to be revoked (to the
extent such a revocation is permitted by the terms of such tender or
exchange offer or applicable law). The Trustee shall tender shares of
Salomon Stock allocated to any Participant's Accounts for which the Trustee
shall have received affirmative and valid Participant directions to tender
(except to the extent such directions are revoked prior to such tender);
the Trustee shall revoke the tender of shares of Salomon Stock allocated to
any Participant's Accounts for which the Trustee shall have received
affirmative and valid Participant directions to revoke such tender.
(ii) The Trustee shall have no discretion as to whether or not to
tender, or whether to revoke tenders with respect to any Salomon Stock held
in the Suspense Account. The Trustee shall tender or not and shall revoke
tenders with respect to shares of Salomon Stock held in the Suspense
Account in the same proportions as the shares of Salomon Stock held in the
Trust for which the Trustee receives affirmative and valid Participant
directions whether or not to tender and whether to revoke such tender.
(iii) The Trustee shall not tender, or revoke the tender of, shares
allocated to Participants' Accounts for which the Trustee does not receive
affirmative and valid Participant directions.
(iv) To the extent that a Participant elects to tender shares of
Salomon Stock held in the Participant's Accounts, the Trustee shall
transfer the consideration the Trustee receives as a result of such tender
to the Participant's Cash Account.
(v) Notwithstanding any other provision of this Section, the Trustee
shall tender or not and shall revoke tenders with respect to shares of
Salomon Stock held in the Accounts of Participants with respect to whom
counsel to Salomon Inc advises that the Participant would be taxed on the
value of the Participant's Accounts if the Participant were permitted to
direct the tender of shares, in the same proportions as the shares of
Salomon Stock held in the Trust for which the Trustee receives affirmative
and valid Participant directions whether or not to tender and whether to
revoke such tender.
(c) Tender Prior to Allocation
In the event the Trustee is required to make any tender decision prior to
the date on which any shares of Salomon Stock are allocated to any Participant's
Accounts, the Trustee shall poll the participants under the Equity Partnership
Plans (other than the Participants described in Paragraph (b)(v) of this
Section) and shall tender or revoke tenders with respect to shares in proportion
to the number of tender or revocation directions received by such participants.
Each such participant shall have one vote.
A-19
44
(d) Notices and Information Statements
Salomon Inc shall provide the Trustee and each Participant with notices and
information statements (including proxy statements) when voting rights are to be
exercised, and with respect to tender, exchange or similar offers, at the same
time and in the same manner (except to the extent the Exchange Act requires
otherwise) as such notices and information statements (including proxy
statements) are provided to shareholders of Salomon Inc generally.
(e) Confidentiality of Voting and Tender Directions
The Trustee shall devise and implement a procedure that is designed to
assure the confidentiality of any Participant's voting or tender directions so
that in directing the Trustee to vote or tender any shares of Salomon Stock,
Participants are in fact rendering independent decisions without influence from
any Company. Salomon Inc shall cooperate with the Trustee in devising and
implementing such procedures to the extent the Trustee so requests.
14. ADJUSTMENT OF ACCOUNTS IN CERTAIN EVENTS
(a) Unless the Committee otherwise determines, a Participant's Accounts
shall be adjusted to reflect any securities, cash and other property received
with respect to shares of Salomon Stock credited to such Participant's Accounts
as a result of any stock dividend or split, recapitalization, extraordinary
dividend, merger, consolidation, combination or exchange of shares or similar
change or any other event that the Committee, in its sole discretion, deems
appropriate. The purpose of this adjustment is to treat Participants as if they
were shareholders of Salomon Stock with respect to the number of shares credited
to their Accounts. However, the Committee may, in its sole discretion, convert
any securities, cash or other property that would have been received in respect
of shares of Salomon Stock credited to a Participant's Accounts into an
equivalent number of equity securities of Salomon Inc or any successor company
or into cash or other property of equivalent value.
(b) In the event of any change in the number of shares of Salomon Stock
outstanding by reason of any stock dividend or split, recapitalization,
extraordinary dividend, merger, consolidation, combination or exchange of shares
or similar corporate change or any other event that the Committee, in its sole
discretion, deems appropriate, the maximum aggregate number of shares of Salomon
Stock subject to the Equity Partnership Plans shall be appropriately adjusted by
the Committee. In the event of any change in the number of shares of Salomon
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number and class of shares of
Salomon Stock subject to the Equity Partnership Plans as the Committee may deem
appropriate.
(c) Except as is expressly provided in this Section, a Participant shall
have no rights as a result of any stock dividend or split, recapitalization,
extraordinary dividend, merger, consolidation, combination or exchange of shares
or similar corporate change.
15. CERTAIN DIVESTITURES
(a) Company with Publicly Traded Stock That No Longer is a 50% Affiliate
In the event of any transaction immediately after which any Company both
ceases to be a member of a "controlled group of corporations" (as that term is
defined in Section 414(b) of the Code but substituting the phrase "at least 50%"
for the phrase "at least 80%" in each place that it appears in Section 1563 (a)
of the Code) of which Salomon Inc is a member and either has stock that is
publicly traded or is a member of a "controlled group of corporations" (as that
term is defined in Section 414(b) of the Code) with any trades or businesses,
one or more members of which have publicly traded stock as a result of the
transaction:
(i) the Salomon Stock credited to the Accounts of (A) Participants who
are employed by such Company immediately after the transaction and (B)
terminated Participants who are not so employed, but who were employed by
such Company on the date that their employment with the Companies and
Affiliates terminated, shall be converted to equivalent amounts of such
publicly traded stock based on the
A-20
45
relative values of such publicly traded stock and Salomon Stock immediately
after the transaction. Thereafter, each such Participant's Accounts shall
be maintained in such publicly traded stock and such Company shall cease to
participate in the Plan with respect to future Awards;
(ii) the Board of Directors of the affected Company shall succeed to
the powers of the Committee and the Board of Directors under the Plan with
respect to the Participants described in Section 15(a)(i); and
(iii) a separate trust containing the Accounts of such Participants
shall be created to hold the stock credited to the Participants' Accounts.
Such trust shall be substantially the same as the Trust and shall be
created pursuant to a trust agreement between the affected Company and the
Trustee.
(b) Company with Publicly Traded Stock That Remains a 50% Affiliate
In the event that a public market develops for the stock of any Company and
immediately after such public market develops such Company remains a member of a
"controlled group of corporations" (as that term is defined in Section 414(b) of
the Code but substituting the phrase "at least 50%" for the phrase "at least
80%" in each place that it appears in Section 1563(a) of the Code) of which
Salomon Inc is a member, the Salomon Stock credited to the Accounts of (i) the
Participants who are employed by such Company immediately after such public
market develops and (ii) terminated Participants who are not so employed, but
who were employed by such Company on the date that their employment with the
Companies and Affiliates terminated, shall be converted to equivalent amounts of
the publicly traded stock of such Company based on the principles described in
Section 15(a)(i), or its economic equivalent, as the Committee deems
appropriate, unless the Committee and the Company determine that such a
conversion would be financially detrimental to any Company or Affiliate or such
Participants. Thereafter, each such Participant's Accounts shall be maintained
in such publicly traded stock or its economic equivalent, as the case may be,
and such Company shall cease to participate in the Plans with respect to future
Awards.
(c) Satisfaction of Obligations After a Divestiture
In the event of a divestiture described in this Section 15, any
distributions in respect of the shares credited to the affected Participants'
Accounts as of the date of the divestiture shall be deemed to be payments in
respect of Salomon Inc's obligations under the Plan, except to the extent such
obligations are assumed and discharged by the affected Company.
16. NO SPECIAL EMPLOYMENT RIGHTS
Nothing contained in the Plan shall confer upon any Participant any right
with respect to the continuation of the Participant's employment by any Company
or Affiliate or interfere in any way with the right of any Company or Affiliate
at any time to terminate such employment or to increase or decrease the
compensation of the Participant. Nothing in the Plan shall be deemed to give any
employee of any Company or Affiliate any right to participate in the Plan.
17. PAYROLL AND WITHHOLDING TAXES
All federal, state, local and other withholding tax requirements, if any,
attributable to a distribution shall be met pursuant to the following
procedures:
(a) The Companies and Affiliates shall have the right to withhold from
any cash amounts payable to a Participant (including salary, bonus or any
other amounts payable from any Company or Affiliate to the Participant) an
amount sufficient to satisfy such federal, state, local and other
withholding tax requirements, prior to the delivery of any certificate or
certificates for such shares of Salomon Stock or other payments under the
Plan; or
(b) Salomon Inc shall have the right to require Participants to remit
to Salomon Inc in cash an amount sufficient to satisfy such federal, state,
local and other withholding tax requirements, prior to the delivery of any
certificate or certificates for such shares of Salomon Stock or other
payments under the Plan; or
A-21
46
(c) Salomon Inc (or, if a distribution is to be made from the Trust,
the Trustee) shall have the right to withhold a number of such shares of
Salomon Stock, the Daily Value of which on the date the shares of Salomon
Stock are to be distributed to the Participant the Committee determines to
be sufficient to satisfy the minimum federal, state, local and other
withholding tax requirements under applicable law. In the event that the
Trustee withholds shares of Salomon Stock pursuant to this Paragraph, the
Trustee shall, as directed by Salomon Inc, (i) distribute such shares of
Salomon Stock from the Trust to Salomon Inc or (ii) continue to hold such
shares in the Suspense Account and, in either case, Salomon Inc shall make
or shall cause to be made from the Trust, as the case may be, to the
appropriate governmental entity the appropriate withholding tax payments.
18. TERMINATION AND AMENDMENT
The Plan may be terminated with respect to any or all Participants at any
time by the Board of Directors. Subject to Section 21 hereof, upon such
termination, the amounts credited to the Accounts of each Participant with
respect to whom the Plan has been terminated shall be distributed to each such
Participant in order to meet the benefit obligations under the Plan with respect
to each such Participant. With respect to any termination effected on or before
December 31, 1992, if and to the extent that the Committee determines in its
sole discretion that the following distribution method would not impair the
rights of any such Participant in any Award or Rollover theretofore granted or
made or any earnings with respect thereto within the meaning of this Section 18,
the benefit obligation under the Plan shall be satisfied in the following
manner:
(a) Salomon Inc shall deliver or cause to be delivered to Participants
with respect to whom the Plan is terminated certificates for a number of
shares of Salomon Stock equal to 60% of the number of whole shares of
Salomon Stock allocated to such Participant's Accounts in respect of Awards
(including shares reflecting the reinvestment of dividends paid thereon),
and cash with respect to 60% of any fractional shares of Salomon Stock
allocated to such Participant's Accounts in respect of Awards in an amount
equal to the Daily Value of such fractional shares as of the distribution
date. The stock certificates so distributed to such Participants shall be
restricted as to transferability and shall remain subject to Section 7(c)
and 11(c)(ii) of the Plan until the date that a Realization Event would
have occurred with respect to such shares had they not been distributed to
the Participant, and each such stock certificate shall bear the following
legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
contained in the Salomon Inc Equity Partnership Plan for Key Employees
(the violation of which may result in forfeiture). A copy of the Plan is
on file in the office of the Secretary of Salomon Inc, Seven World Trade
Center, New York, New York 10048.
Any shares remaining in the Participants' Accounts in respect of the 1990, 1991
and 1992 Awards after the distribution of the shares pursuant to this Section
18(a) shall be distributed to Salomon Inc in exchange for Salomon Inc's
undertaking to pay the amounts set forth in Section 18(b).
(b) On or before December 31, 1992, Salomon Inc shall pay each
Participant who receives a distribution under Paragraph (a) of this Section
cash equal to the following amounts:
(i) the Daily Value on December 9, 1992 of 36.24% of the shares
allocated to the Account of such Participant in respect of Awards
granted in 1990;
(ii) the Daily Value on December 9, 1992 of 35.11% of the shares
allocated to the Accounts of such Participants in respect of Awards
granted in 1991; and
(iii) 40% of the dollar amount of such Participant's 1992 Awards.
Notwithstanding Section 17 hereunder, in order to meet all federal,
state, local and other withholding tax requirements, if any,
attributable to a termination on or before December 31, 1992 described
in Paragraphs (a) and (b) of this Section, Salomon Inc shall withhold
from any distribution under this Paragraph (b) cash equal to the amount
the Committee determines to be
A-22
47
sufficient to satisfy the minimum federal, state, local and other
withholding tax requirements under applicable law.
(c) In the event the entire Plan is terminated, the remaining assets,
if any, in the Trust after the payment of such benefits shall be paid to
Salomon Inc. In the event of a partial termination of the Plan, the assets,
if any, remaining in any terminated Accounts shall be held in the Suspense
Account and may be used to satisfy Salomon Inc's contribution requirements
hereunder; provided, however, that (i) with respect to a termination
described in Paragraphs (a) and (b) of this Section, and (ii) in the event
of a partial termination of the Plan involving 40% or more of the amounts
payable under the Plan immediately prior to such termination, the Board of
Directors may elect that any such remaining assets be distributed to
Salomon Inc.
(d) The Plan may be amended by the Board of Directors from time to
time in any respect, provided, however, that if and to the extent required
by Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act or by any comparable or successor exemption under which
the Board of Directors believes it is appropriate for the Plan to qualify,
no amendment shall be effective without the approval of the shareholders of
Salomon Inc that (a) except as provided in Section 14 hereof, increases the
number of shares of Salomon Stock that may be distributed under the Plan,
(b) materially increases the benefits accruing to individuals under the
Plan or (c) materially modifies the requirements as to eligibility for
participation in the Plan. No amendment or termination shall be made that
would impair the rights of any Participant in any Award or Rollover
theretofore granted or made, or any earnings with respect thereto, without
such Participant's prior written consent; provided, however, that Salomon
Inc may amend the Plan and the Trust from time to time in such a manner as
may be necessary to prevent the trust agreement pursuant to which the Trust
is created, the Equity Partnership Plans or the Trust from becoming subject
to ERISA and to avoid the current taxation of the assets held in the trusts
established in connection with the Equity Partnership Plans to
Participants. Neither a Participant's incurring any income tax liability
nor the loss of an investment opportunity as a result of the termination
of, or, with respect to amounts allocated to Participants' Accounts on or
after December 31, 1992, any amendment to, the Plan shall be considered an
impairment of the rights of a Participant.
19. PAYMENTS UPON THE DEATH OF A PARTICIPANT
Each Participant shall have the right to designate in writing from time to
time a Beneficiary by filing a written notice of such designation with the
Committee. A Participant's designation of a Beneficiary may be revoked by filing
with the Trustee an instrument of revocation or a later designation. Any
designation or revocation shall be effective when received by the Trustee. In
the event of the death of a Participant, any payment required to be made
hereunder to such Participant shall be made to such Participant's Beneficiary.
Unless the Participant's Beneficiary designation provides otherwise, no person
shall be entitled to benefits upon the death of the Participant unless such
person survives the Participant. If the Beneficiary designated by a Participant
does not survive the Participant or if the Participant has not made a valid
Beneficiary designation, such Participant's Beneficiary shall be such
Participant's estate. If the Participant's Beneficiary is the Participant's
estate, no payment shall be made unless the Committee shall have been furnished
with such evidence as the Committee may deem necessary to establish the validity
of the payment.
20. SHAREHOLDER APPROVAL REQUIRED
The Plan, as amended and restated as of January 1, 1996, is subject to
approval by the shareholders of Salomon Inc at their annual meeting in May, 1996
in accordance with applicable law, the rules of the New York Stock Exchange and
the requirements of Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act. If the Plan is not so approved, then the Plan shall remain in full force
and effect without regard to the amendments adopted effective as of January 1,
1996.
A-23
48
21. EFFECT OF REVOCATION EVENT
Upon the occurrence of a Revocation Event, the Board of Directors may, in
its sole discretion, elect to terminate the Plan, the Trust, or any
Participant's Accounts. In the event that the Board of Directors elects to so
terminate the Plan, the Trust or any Participant's Accounts as a result of a
Revocation Event, in consideration of and as soon as practicable after Salomon
Inc's providing the Trustee with a written undertaking to pay to Participants
the amount required to be paid under this Section, all amounts held in the Trust
(or if the entire Trust is not terminated, any terminated Accounts) shall be
distributed to Salomon Inc. Salomon Inc shall, in its sole discretion, (a) pay
to each Participant whose Accounts are terminated, as soon as practicable after
the date of such termination, a lump sum in cash equal to the Daily Value
multiplied by the number of shares of Salomon Stock and cash amounts reflected
in each Participant's Accounts as of the date of such termination, (b)
distribute to each Participant whose Accounts are terminated, as soon as
practicable after the date of such termination, that number of shares of Salomon
Stock that would have been distributable to such Participant under the Plan and
pay to such Participant at such time any cash allocated to the Participant's
Cash Account or (c) distribute to each Participant whose Accounts are terminated
that number of shares of Salomon Stock and that amount of cash that would have
been distributable to such Participant at such time as shares and cash would
have been distributable to such Participant under the Plan, had the Plan
continued. If it is finally determined in a proceeding that Salomon Inc either
controls or was offered the right to control and declines, that the
Participant's interest in the Trust was taxable to the Participant,
notwithstanding any termination of such Participant's Accounts in the Trust,
Salomon Inc shall pay or distribute the Participant's interest (whether or not
the Board of Directors has previously elected to terminate the Plan, the Trust
or the Participant's Accounts) in accordance with either Clause (a) or (b) of
the preceding sentence.
22. MISCELLANEOUS
(a) No transfer (other than any transfer made by will or by the laws of
descent and distribution) by a Participant of any right to any payment
hereunder, whether voluntary or involuntary, by operation of law or otherwise,
shall vest the transferee with any interest or right in or with respect to such
payment, and the transfer shall be of no force and effect.
(b) The Plan and all rights hereunder shall be subject to and interpreted
in accordance with the laws of the State of New York, without reference to the
principles of conflicts of law.
A-24
49
APPENDIX A
AWARD SCHEDULE
AWARDS FOR ANNUAL MEETING MAY 3,1996 AND THEREAFTER
COMPENSATION
(IN THOUSANDS) AWARD*
- --------------------------------------------- ---------------------------------------------
Less than $360............................... 0
$ 16,500 plus 15% of the excess over
$360 but not over 500........................ $ 360,000
37,500 plus 20% of the excess over
Over 500 but not over 750.................. 500,000
87,500 plus 25% of the excess over
Over 750 but not over 1,000................. 750,000
150,000 plus 30% of the excess over
Over 1,000 but not over 2,000................ 1,000,000
450,000 plus 35% of the excess over
Over 2,000 but not over 5,000................ 2,000,000
5,000 or more................................ 1,500,000
- ---------------
* The maximum dollar amount of any Award that a participant shall be granted in
any year (prior to conversion to Salomon Stock) is an amount that, when added
to the aggregate dollar amounts of all prior Awards (prior to conversion to
Salomon Stock), including amounts described in Section 11(b)(i) of the Plan,
with respect to which a Realization Event has not occurred as of the Award
date or is not expected to occur within 60 days after the Award date, does not
exceed $20 million.
AWARD SCHEDULE
AWARDS FOR 1995
COMPENSATION
(IN THOUSANDS) AWARD*
- --------------------------------------------- ---------------------------------------------
$0 -- 100.................................... 2% Compensation
$ 2,000 plus 5% of the excess over
Over 100 but not over 300.................. $ 100,000
12,000 plus 12.5% of the excess over
Over 300 but not over 500.................. 300,000
37,000 plus 20% of the excess over
Over 500 but not over 750.................. 500,000
87,000 plus 30% of the excess over
Over 750 but not over 1,000................. 750,000
162,000 plus 40% of the excess over
Over 1,000 but not over 1,500................ 1,000,000
362,000 plus 50% of the excess over
Over 1,500 but not over 2,000................ 1,500,000
612,000 plus 60% of the excess over
Over 2,000 but not over 2,500................ 2,000,000
912,000 plus 75% of the excess over
Over 2,500 but not over 3,850................ 2,500,000
1,924,500 plus 50% of the excess over
Over 3,850 but not over 5,000................ 3,850,000
Over 5,000 but not over...................... 2,500,000
- ---------------
* The maximum dollar amount of any Award that a participant shall be granted in
any year (prior to conversion to Salomon Stock) is an amount that, when added
to the aggregate dollar amounts of all prior Awards (prior to conversion to
Salomon Stock), including amounts described in Section 11(b)(i) of the Key
Employee Plan, with respect to which the Realization Event has not occurred as
of the Award date or is not expected to occur within 60 days after the Award
date, does not exceed $20 million.
A-25
50
AWARD SCHEDULE
PHIBRO DIVISION
AWARDS FOR 1993 AND 1994
COMPENSATION
(IN THOUSANDS) AWARD
- --------------------------------------------- ---------------------------------------------
0 -- $350.................................... 0
Over 350 but not over 500.................. 15% of the excess over $ 350,000
$ 22,500 plus 20% of the excess over
Over 500 but not over 1,000................. 500,000
122,500 plus 30% of the excess over
Over 1,000 but not over...................... 1,000,000
AWARDS SCHEDULE
AWARDS FOR 1991 THROUGH 1994
COMPENSATION
(IN THOUSANDS) AWARD
- --------------------------------------------- ---------------------------------------------
$0 -- 100.................................... 2% of Compensation
$ 2,000 plus 5% of the excess over
Over 100 but not over 300.................. $ 100,000
12,000 plus 12 1/2% of the excess over
Over 300 but not over 500.................. 300,000
37,000 plus 20% of the excess over
Over 500 but not over 750.................. 500,000
87,000 plus 30% of the excess over
Over 750 but not over 1,000................. 750,000
162,000 plus 40% of the excess over
Over 1,000 but not over 1,500................ 1,000,000
362,000 plus 50% of the excess over
Over 1,500 but not over 2,000................ 1,500,000
612,000 plus 60% of the excess over
Over 2,000 but not over 2,500................ 2,000,000
912,000 plus 75% of the excess over
Over 2,500................................... 2,500,000
AWARDS SCHEDULE
AWARDS FOR 1990
COMPENSATION
(IN THOUSANDS) AWARD
- --------------------------------------------- ---------------------------------------------
$0 -- 100.................................... 2% of Compensation
$ 2,000 plus 5% of the excess over
Over 100 but not over 300.................. $ 100,000
12,000 plus 8% of the excess over
Over 300 but not over 500.................. 300,000
28,000 plus 13% of the excess over
Over 500 but not over 750.................. 500,000
60,500 plus 20% of the excess over
Over 750 but not over 1,000................. 750,000
110,500 plus 27% of the excess over
Over 1,000 but not over 1,500................ 1,000,000
245,500 plus 33% of the excess over
Over 1,500 but not over 2,000................ 1,500,000
410,500 plus 40% of the excess over
Over 2,000 but not over 2,500................ 2,000,000
610,500 plus 50% of the excess over
Over 2,500................................... 2,500,000
A-26
51
SALOMON INC
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting May 1, 1996
P
R The undersigned hereby constitutes and appoints Robert E. Denham,
Robert
O H. Mundheim and Arnold S. Olshin, and each of them, his true and
R lawful
X agents and proxies with full power of substitution in each, to
represent, Y and to vote the shares of, the undersigned at the Annual Meeting
O of Stockholders of SALOMON INC to be held in the Salomon Brothers
Auditorium, Seven World Trade Center, New York, New York, on Wednesday, May
3, 1995X 1, 1996 at 10:00 a.m. and at any adjournments thereof on all matters coming
before said meeting.
Y
Election of Directors.Directors, Nominees:
Dwayne O. Andreas, Warren E. Buffett, Robert E. Denham, Claire M. Fagin,
John L. Haseltine, Gedale B. Horowitz, Deryck C. Maughan, David O.
Maxwell, William F. May, Charles T. Munger, Shigeru Myojin, Louis A.
Simpson, Robert G. Zeller
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,BOXES.
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-------------------
SEE REVERSE
SIDE
-------
- --------------------------------------------------------------------------------
S FOLD-------------
-FOLD AND DETACH HERE SHERE-
22
/X/52
PLEASE MARK YOUR
0345/X/ VOTES AS IN THIS
EXAMPLE.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this
proxy will be voted FOR election of each nominee.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTEnominee and FOR ELECTION OF EACH NOMINEE.
- --------------------------------------------------------------------------------Proposal 2.
FOR WITHHELD
1. Election of
Directors / / / /
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------------------------------------
2. Amendment of FOR AGAINST ABSTAIN
Equity Partnership / / / / / /
Plan for Key
Employees
This Proxy Must Be Signed Exactly as Name Appears Hereon.
Executors, administrators, trustees, etc., should give
full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer.
--------------------------------------
----------------------------------------------------------------------------------------------
--------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
S FOLD-FOLD AND DETACH HERE S
PLEASE SIGN, DETACH AND RETURN
YOUR PROXY PROMPTLYHERE-