SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FRANKLIN RESOURCES, INC.
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which transaction applies:
..............................................................
2) Aggregate number of securities to which transaction applies:
..............................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
..............................................................
4) Proposed maximum aggregate value of transaction:
..............................................................
5) Total fee paid:
..............................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: [ ]
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FRANKLIN RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
The Board of Directors of Franklin Resources, Inc. invites you to attend
the Annual Meeting of Stockholders. The meeting will be held on January 25,
2002 at 10:00 A.M., Pacific Standard Time, in the H. L. Jamieson
Auditorium, at One Franklin Parkway, Building 920, San Mateo, California,
for the following purposes:
1. To elect nine (9) Directors to the Board of Directors. Each Director
will hold office until the next Annual Meeting of Stockholders or
until that person's successor is elected and qualified;
2. To ratify and approve the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for the current fiscal year
ending September 30, 2002; and
3. To transact such other business that may be raised at the Annual
Meeting or any adjournments or postponements of the Annual Meeting.
You must own shares at the close of business on November 28, 2001 to be
entitled to receive notice of, and to vote on, all matters presented at the
meeting. Your vote is very important. Even if you think that you will
attend the meeting, we ask you to please return the proxy card. You can
vote by telephone, over the Internet, or by using the proxy card that is
enclosed.
By order of the Board of Directors,
Leslie M. Kratter
Secretary
December 17, 2001
San Mateo, California
Please vote by telephone or using the Internet as instructed on the
enclosed proxy card or complete, sign and return the proxy card in the
enclosed envelope.
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TABLE OF CONTENTS
SECTION PAGE
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NOTICE OF ANNUAL MEETING COVER PAGE
PROXY STATEMENT 1
VOTING INFORMATION 1
PROPOSAL 1: ELECTION OF DIRECTORS 3
NOMINEES 3
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES 4
PRINCIPAL HOLDERS OF VOTING SECURITIES 5
SECURITY OWNERSHIP OF MANAGEMENT 6
EXECUTIVE COMPENSATION 8
SUMMARY COMPENSATION TABLE 8
OPTION GRANTS IN LAST FISCAL YEAR 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR 10
EMPLOYMENT CONTRACTS 11
REPORT OF THE COMPENSATION COMMITTEE 12
REPORT OF THE AUDIT COMMITTEE 15
PERFORMANCE GRAPH 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE 18
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS 18
STOCKHOLDER PROPOSALS 18
THE ANNUAL REPORT 18
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FRANKLIN RESOURCES, INC.
One Franklin Parkway
San Mateo, California 94403
PROXY STATEMENT
December 17, 2001
This Proxy Statement and the accompanying Notice of Annual Meeting are furnished
in connection with the solicitation by the Board of Directors of Franklin
Resources, Inc., a Delaware corporation ("Franklin" or the "Company"), of the
accompanying proxy, to be voted at the Annual Meeting of stockholders to be held
on January 25, 2002, at 10:00 A.M., Pacific Standard Time, in the H. L. Jamieson
Auditorium, One Franklin Parkway, Building 920, San Mateo, California. We expect
that this Proxy Statement and the enclosed proxy will be mailed on or about
December 17, 2001 to each stockholder entitled to vote. The term "Franklin
Templeton Investments" as used in this Proxy Statement, refers to Franklin
Resources, Inc. and its consolidated subsidiaries.
VOTING INFORMATION
WHO CAN VOTE?
You may vote if you were a stockholder of record and owned shares at the close
of business on November 28, 2001 (the "Record Date"). You are entitled to one
vote for each share owned on that date on each matter presented at the meeting.
As of the Record Date, Franklin had 261,297,294 shares outstanding.
HOW MANY VOTES DO YOU NEED TO HOLD THE MEETING?
In order to take any action at the Annual Meeting, a majority of Franklin's
outstanding shares as of the record date must be present at the meeting. This is
called a quorum.
WHO COUNTS THE VOTES?
The Bank of New York will count the votes.
WHAT IS A PROXY?
A "proxy" allows someone else (the "proxy holder") to vote your shares on your
behalf. The Franklin Board of Directors is asking you to allow the people named
on the proxy card (Charles B. Johnson, the Chief Executive Officer; Martin L.
Flanagan, a President; and Leslie M. Kratter, the Secretary) to vote your shares
at the Annual Meeting.
HOW DO I VOTE BY PROXY?
Whether you hold shares directly as a stockholder of record or beneficially in
street name, you may vote without attending the meeting. You may vote by
granting a proxy or, for shares held in street name, by submitting voting
instructions to your stockbroker or nominee. You will be able to do this by
telephone, using the Internet or by mail. The deadline for voting by telephone
or by using the Internet is 11:59 p.m., Eastern Standard Time, on January 24,
2002. Please see your proxy card or the information your bank, broker, or other
holder of record provided you for more information on these options. Unless you
indicate otherwise on your proxy card, the persons named as your proxy holders
on the proxy card will vote your shares FOR all nominees to the Board of
Directors and FOR the ratification and approval of the appointment of
PricewaterhouseCoopers LLP as independent accountants for fiscal year ending
September 30, 2002.
CAN I CHANGE OR REVOKE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You can change or revoke your proxy by telephone, using the Internet, or by
mail, at any time before the Annual Meeting.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING INSTEAD OF VOTING BY PROXY?
Yes. However, we encourage you to complete and return the enclosed proxy card to
ensure that your shares are represented and voted.
HOW ARE VOTES COUNTED?
To be counted as "represented", either a proxy card must have been returned for
those shares, or the stockholder must be present at the meeting. The
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New York Stock Exchange (the "NYSE") allows brokers to cast votes for some
routine proposals, such as electing Directors and ratifying accountants, even if
you do not return your proxy card. Therefore, if you hold shares in a brokerage
account, but you do not return your proxy card, your broker can still vote your
shares. Abstentions and broker "non-votes" are counted as present and entitled
to vote for purposes of determining a quorum. A broker "non-vote" occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
For the election of Directors, a plurality of the votes cast is required. This
means that the nine (9) candidates who receive the most votes will be elected to
the nine (9) available positions on the Board. An affirmative vote of a majority
of shares represented at the Annual Meeting is required to approve the
appointment of PricewaterhouseCoopers LLP. Abstentions and broker "non-votes"
are not counted for purposes of election of Directors or approving the other
matters. Abstentions have the practical effect of a vote "against" the matter;
in contrast, a broker "non-vote" has the practical effect of reducing the
aggregate number of "for" votes required to pass the matter.
WHO PAYS FOR THIS PROXY SOLICITATION?
Your proxy is solicited by the Board of Directors of Franklin. Franklin pays the
cost of soliciting your proxy and reimburses brokerage costs and other fees for
forwarding proxy materials to you.
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PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES
The following nine (9) persons are nominated for election as members of the
Board of Directors of Franklin Resources, Inc. If elected, each Director will
serve until the next Annual Meeting of Stockholders or until that person's
successor is elected and qualified. Unless you mark "Exceptions" on your proxy
card to withhold authority to vote for one or all of these Directors, the
persons named as proxy holders intend to vote for all of these nominees. Listed
below are the names, ages, and principal occupations for the past five years of
the Director nominees.
HARMON E. BURNS
AGE 56
DIRECTOR SINCE 1991
Vice Chairman, Member-Office of the Chairman; officer and/or Director of many
other Company subsidiaries; officer and/or Director or trustee in 51 investment
companies of Franklin Templeton Investments.
CHARLES B. JOHNSON
AGE 68
DIRECTOR SINCE 1969
Chairman of the Board, Chief Executive Officer, Member-Office of the Chairman;
officer and/or Director of many other Company subsidiaries; officer and/or
Director or trustee in 48 investment companies of Franklin Templeton
Investments.
CHARLES E. JOHNSON
AGE 45
DIRECTOR SINCE 1993
President, Member-Office of the President; officer and/or Director of many other
Company subsidiaries; officer and/or Director or trustee in 33 investment
companies of Franklin Templeton Investments.
RUPERT H. JOHNSON, JR.
AGE 61
DIRECTOR SINCE 1969
Vice Chairman, Member-Office of the Chairman; officer and/or Director of many
other Company subsidiaries; officer and/or Director or trustee in 51 investment
companies of Franklin Templeton Investments.
HARRY O. KLINE
AGE 74
DIRECTOR SINCE 1990
Private investor. Vice President and Regional Sales Manager of
Franklin/Templeton Distributors, Inc. from 1980 to 1990. Over 49 years
experience in the mutual fund industry.
JAMES A. MCCARTHY
AGE 66
DIRECTOR SINCE 1997
Private investor. From 1993 to 1995, Chairman of Merrill Lynch & Co. Investor
Client Coverage Groups; formerly, Senior Vice President of Merrill Lynch and
Director, Global Institutional Sales. Total of 36 years experience with Merrill
Lynch.
PETER M. SACERDOTE
AGE 64
DIRECTOR SINCE 1993
Advisory Director and Chairman of the Investment Committee of the principal
investment area of Goldman, Sachs & Co. (investment banking). Director,
Qualcomm, Inc., Hexcel Corporation, and AMF Bowling, Inc. Formerly a general
partner and then a limited partner of the Goldman Sachs Group, L.P.
ANNE M. TATLOCK
AGE 62
DIRECTOR SINCE 2001
Vice Chairman, Member-Office of the Chairman; Chairman of the Board, Chief
Executive Officer and Director of Fiduciary Trust Company International, a
subsidiary of Company; officer and/or Director of certain other subsidiaries of
Company. Director, American General Corp., Fortune Brands, Inc. and Merck & Co.,
Inc.
LOUIS E. WOODWORTH
AGE 68
DIRECTOR SINCE 1981
Private investor. President, Alpine Corp., a private investment company.
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INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors held eight (8) meetings (not including committee
meetings) during the fiscal year ended September 30, 2001. For the fiscal year
ended September 30, 2001, each active Director attended at least seventy-five
percent (75%) of the aggregate number of meetings held by the Board. The Board
has an Audit Committee and a Compensation Committee, but does not have a
nominating committee.
The Compensation Committee consists of Messrs. Woodworth (Chairman), Sacerdote
and McCarthy. The Compensation Committee reviews and sets compensation for the
Chief Executive Officer, determines the general policies and guidelines for
compensating other executive officers, and performs other duties as assigned
from time to time by the Board. This committee also administers the Amended and
Restated 1998 Universal Stock Incentive Plan (the "Amended Stock Plan") and the
1994 Amended Annual Incentive Compensation Plan (the "Incentive Plan"). The
Compensation Committee met four (4) times during fiscal year 2001.
The Audit Committee consists of Messrs. Woodworth (Chairman), Kline and
McCarthy. The Audit Committee oversees the financial reporting activities of the
Company. The Audit Committee met five (5) times during fiscal year 2001.
FAMILY RELATIONS. Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
Peter M. Sacerdote, a director of the Company, is a brother-in-law of Charles B.
Johnson and Rupert H. Johnson, Jr. Charles E. Johnson is the son of Charles B.
Johnson, the nephew of Rupert H. Johnson, Jr. and Peter Sacerdote and the
brother of Gregory E. Johnson and Jennifer Bolt. Gregory E. Johnson is the son
of Charles B. Johnson, the nephew of Rupert H. Johnson, Jr. and Peter Sacerdote
and the brother of Jennifer Bolt and Charles E. Johnson. Jennifer Bolt is the
daughter of Charles B. Johnson, the niece of Rupert H. Johnson, Jr. and Peter
Sacerdote and the sister of Charles E. Johnson and Gregory E. Johnson.
PAYMENTS TO DIRECTORS. Directors who were not Franklin officers were paid $7,500
per quarter, plus $3,000 per meeting attended, during the last fiscal year. An
additional $1,500 per committee meeting attended is paid to Directors who serve
on Board committees. In addition, the Company has a policy of reimbursing
certain health insurance coverage for a Director or Director emeritus (described
below), who is retired from other employment and is not otherwise eligible for
group health coverage under Franklin's group health plan or any other company's
health plan. Franklin will reimburse the cost of health insurance coverage
comparable to that provided to other Franklin employees. During fiscal year
ended September 30, 2001, Louis E. Woodworth, a Director, was reimbursed $6,604
for health insurance expenses.
DEFERRED DIRECTOR FEES. Franklin also allows Directors to defer payment of their
Directors' fees, and to treat the deferred amounts as hypothetical investments
in Franklin common stock. Upon termination, the number of shares of stock that
the Director hypothetically purchased are added together, and Franklin must pay
the Director an amount equal to the value of the hypothetical investment,
including dividend reinvestment. Either Franklin or the individual Director can
terminate the fee deferral with ninety (90) days notice. During fiscal year
2001, Louis E. Woodworth elected to defer his Directors' fees.
DIRECTOR EMERITUS. The Board of Directors has adopted a policy that when a
Director reaches the age of 75, the Director will not stand for re-election. The
retired Director is then eligible to serve as a Director emeritus, without
voting authority. The Board of Directors determines the amount and type of
compensation and benefits that a Director emeritus is entitled to receive. The
Director emeritus provides services to the Board of Directors as may be mutually
determined between the Director emeritus and the Board of Directors from time to
time. Currently, a Director emeritus receives compensation equal to the
compensation paid to a Director who attends each meeting of the Board. During
the fiscal year ended September 30, 2001, Dr. Judson R. Grosvenor served as a
Director emeritus and received the compensation and benefits described above
under "Payments to Directors".
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PRINCIPAL HOLDERS OF VOTING SECURITIES
As of November 28, 2001, Franklin knows of the following persons who
beneficially own more than five percent (5%) of Franklin's total outstanding
common stock:
Name and Address of Amount and Nature of Percent of
Beneficial Owner(a) Beneficial Ownership Voting Securities
------------------- -------------------- -----------------
Charles B. Johnson 46,271,868(b) 17.71%
Rupert H. Johnson, Jr. 38,168,802(c) 14.61%
Elizabeth S. Wiskemann 22,021,108(d) 8.43%
(a) The addresses of Messrs. C. B. Johnson and R. H. Johnson, Jr. are: c/o
Franklin Resources, Inc., One Franklin Parkway, San Mateo, CA 94403. The
address of Elizabeth S. Wiskemann is: c/o John Bessolo, 7 Mount Lassen
Drive, Suite B-156, San Rafael, CA 94905.
(b) Includes 38,501,789 shares held directly, 3,963,675 shares held in an
IRA account and 3,000,000 shares held in a limited partnership for which
Mr. C. B. Johnson holds sole voting and investment power. Also includes
14,706 shares, which may be purchased pursuant to currently exercisable
options. Also includes approximately 6,332 shares which represent a
pro-rata number of shares equivalent to Mr. C. B. Johnson's percentage of
ownership of the holdings of the Franklin Templeton Profit Sharing 401(k)
Plan, (the "Profit Sharing Plan") as of September 30, 2001. Mr. C. B.
Johnson disclaims any beneficial ownership of such shares. Also includes
785,366 shares of which Mr. C. B. Johnson disclaims beneficial ownership,
held by a private foundation of which Mr. C. B. Johnson is a trustee.
(c) Includes 35,509,145 shares held directly and 2,205,245 shares held in
an IRA account for which Mr. R. H. Johnson, Jr. holds sole voting and
investment power. Also includes 45,373 shares, which may be purchased
pursuant to currently exercisable options. Also includes approximately
5,333 shares which represent a pro-rata number of shares equivalent to Mr.
R. H. Johnson, Jr.'s percentage of ownership of the holdings of the Profit
Sharing Plan as of September 30, 2001. Mr. R. H. Johnson, Jr. disclaims any
beneficial ownership of such shares. Also includes 400,334 shares of which
Mr. R. H. Johnson, Jr. disclaims beneficial ownership, held by a private
foundation of which Mr. R. H. Johnson, Jr. is a trustee. Also includes
3,372 shares held by a member of Mr. R. H. Johnson Jr.'s immediate family,
of which Mr. R. H. Johnson, Jr. disclaims beneficial ownership.
(d) Includes 20,837,702 shares held directly. Also includes 147,726 shares
of which Ms. E. S. Wiskemann disclaims beneficial ownership, held by a
private foundation, of which Ms. E. S. Wiskemann is a trustee. Also
includes 1,035,680 shares held in an IRA account that has yet to be
distributed, for which the late R. Martin Wiskemann held sole voting and
investment power, of which Ms. E. S. Wiskemann is the primary beneficiary.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table lists the common stock beneficially owned by each Director,
each executive officer named in the Summary Compensation Table, each nominee for
Director and all Directors, nominees and executive officers as a group. The
stock holdings are listed as of November 28, 2001:
Amount and Nature of
Name Beneficial Ownership Percent of Class
---- -------------------- ----------------
Harmon E. Burns 1,840,122(a) *
Martin L. Flanagan 731,836(b) *
Allen J. Gula, Jr. 110,381(c) *
Charles B. Johnson 46,271,868(d) 17.71%
Charles E. Johnson 428,559(e) *
Gregory E. Johnson 541,998(f) *
Rupert H. Johnson, Jr. 38,168,802(g) 14.61%
Harry O. Kline 3,000 *
James A. McCarthy 5,000 *
Peter M. Sacerdote 25,000 *
Anne M. Tatlock 342,764(h) *
Louis E. Woodworth 1,924,928(i) *
Directors, Director
Nominees and
Executive Officers
as a Group
(consisting of 19 91,491,430(j) 35.01%
persons)
* Represents less than 1% of class
(a) Includes 1,200,008 shares held directly and 500,002 shares held in an
IRA account for which Mr. H. E. Burns holds sole voting and investment
power. Also includes 45,374 shares, which may be purchased pursuant to
currently exercisable options. Also includes 90,000 shares of which Mr. H.
E. Burns disclaims beneficial ownership, held by a private foundation of
which Mr. H. E. Burns is a trustee. Also includes approximately 4,738
shares which represent a pro-rata number of shares equivalent to Mr. H. E.
Burns' percentage of ownership of the holdings of the Profit Sharing Plan,
as of September 30, 2001. Mr. H. E. Burns disclaims any beneficial
ownership of such shares.
(b) Includes 576,749 shares held directly for which Mr. M. L. Flanagan
holds sole voting and investment power. Also includes 137,782 shares, which
may be purchased pursuant to currently exercisable options. Also, includes
a total of 16,666 shares of unvested restricted stock granted in March 2001
under the Amended Stock Plan. Also includes approximately 639 shares which
represent a pro-rata number of shares equivalent to Mr. M. L. Flanagan's
percentage of ownership of the holdings of the Profit Sharing Plan, as of
September 30, 2001. Mr. M. L. Flanagan disclaims any beneficial ownership
of such shares.
(c) Includes 13,806 shares held directly for which Mr. A. J. Gula, Jr.
holds sole voting and investment power. Also includes 86,001 shares, which
may be purchased pursuant to currently exercisable options. Also includes a
total of 10,574 shares of unvested restricted stock granted in September
1999 under the 1998 Universal Stock Incentive Plan.
(d) See footnote (b) under "Principal Holders of Voting Securities."
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(e) Includes 296,848 shares held directly for which Mr. C. E. Johnson holds
sole voting and investment power. Also includes 123,782 shares, which may
be purchased pursuant to currently exercisable options. Also includes 7,929
shares held by members of Mr. C. E. Johnson's immediate family, of which
Mr. C. E. Johnson disclaims beneficial ownership.
(f) Includes 409,222 shares held directly for which Mr. G. E. Johnson holds
sole voting and investment power. Also includes 120,177 shares, which may
be purchased pursuant to currently exercisable options. Also includes
12,599 shares held by members of Mr. G. E. Johnson's immediate family, of
which Mr. G. E. Johnson disclaims beneficial ownership.
(g) See footnote (c) under "Principal Holders of Voting Securities."
(h) Includes 298,198 shares held directly for which Ms. A. M. Tatlock holds
sole voting and investment power. Also, includes a total of 3,743 of
unvested restricted stock granted in July 2001 under the Amended Stock
Plan. Also includes 38,202 shares held in an employee benefit plan in
effect prior to the acquisition of Fiduciary Trust Company International
("Fiduciary") by the Company. Also includes 2,621 shares held by a member
of Ms. A. M. Tatlock's immediate family, of which Ms. A. M. Tatlock
disclaims beneficial ownership.
(i) Includes 1,106,840 shares held directly and 598,088 shares held in an
IRA account for which Mr. L. E. Woodworth holds sole voting and investment
power. Also includes 220,000 shares held by a member of Mr. L. E.
Woodworth's immediate family, of which Mr. L. E. Woodworth disclaims
beneficial ownership. Does not include any hypothetical shares described
under "Proposal 1: Election of Directors - Deferred Director Fees."
(j) Includes 682,475 shares, which may be purchased pursuant to currently
exercisable options.
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EXECUTIVE COMPENSATION
The following table provides compensation information for the Company's Chief
Executive Officer and each of the four highest compensated executive officers of
the Company (determined as of September 30, 2001) for the last three fiscal
years.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------
Restricted Securities All
Fiscal Other Annual Stock Underlying Other
Name and Principal Position Year Salary Bonus(a) Compensation Awards Options Compensation(m)
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Charles B. Johnson, 2001 $ 594,330 $ 0 $ 131,095(c) $ 0 0 $ 888
Chairman of the Board, Chief 2000 $ 594,637 $ 0 $ 80,433(c) $ 0 22,059(i) $ 14,722
Executive Officer 1999 $ 596,922 $ 460,000 $ 67,537(c) $ 0 23,000(j) $ 15,017
Martin L. Flanagan, 2001 $ 783,378 $ 400,000 $ 0 $1,084,025(g) 250,000(k) $ 888
President, Member- 2000 $ 782,677 $1,000,000 $ 0 $ 0 81,671(i) $ 14,722
Office of the President 1999 $ 788,847 $ 552,000 $ 0 $ 0 82,800(j) $ 15,017
Allen J. Gula, Jr., 2001 $ 655,393 $ 200,000 $ 315,943(d)(e) $ 0 158,000(k) $ 105,988(n)
President, Member- 2000 $ 657,455 $ 812,683(b) $ 290,732(e) $ 0 0 $ 99,055(n)
Office of the President 1999 $ 56,667 $ 0 $ 0 $1,140,009(h) 50,000(l) $ 0
Charles E. Johnson, 2001 $ 780,128 $ 400,000 $ 0 $ 0 208,000(k) $ 5,988
President, Member- 2000 $ 782,677 $ 552,333 $ 602,566(f) $ 0 81,671(i) $ 15,722
Office of the President 1999 $ 788,847 $ 552,000 $ 0 $ 0 82,800(j) $ 16,017
Gregory E. Johnson, 2001 $ 780,132 $ 400,000 $ 0 $ 0 208,000(k) $ 888
President, Member- 2000 $ 680,997 $ 552,333 $ 0 $ 0 76,264(i) $ 14,722
Office of the President 1999 $ 381,927 $ 360,000 $ 0 $ 0 50,000(j) $ 14,822
(a) Includes bonuses earned in fiscal year 2001 and paid in fiscal year 2002.
(b) Includes payment of a one time sign-on bonus of $260,000 to Mr. A. J. Gula,
Jr. in October 1999.
(c) Includes $126,377, $75,715 and $62,016 representing personal use of Company
aircraft by Mr. C. B. Johnson during fiscal years 2001, 2000 and 1999,
respectively, valued using the Standard Industry Fare formula provided for by
Internal Revenue Code regulations.
(d) Includes $106,000, which represents the portion of a loan forgiven by the
Company in fiscal year 2001. See also Certain Relationships and Related
Transactions.
(e) Includes a housing supplement of $100,000 that was paid in each of fiscal
year 2000 and fiscal year 2001, which Franklin is obligated to pay to Mr. A. J.
Gula, Jr. on a continuing basis during his employment with the Company. Also
includes other payments for household, lease and other expenses in connection
with Mr. A. J. Gula, Jr.'s relocation from Ohio to California. See also Certain
Relationships and Related Transactions.
(f) Includes a one time payment of $599,391 in connection with Mr. C. E.
Johnson's relocation from Florida to California.
(g) Represents the value on the date of grant of shares of restricted stock
granted by the Compensation Committee to Mr. M. L. Flanagan on March 22, 2001,
vested or vesting in approximately equal installments on each of September 28,
2001, September 30, 2002, and September 30, 2003. As of the end of fiscal year
2001, Mr. M. L. Flanagan held 16,666 shares of unvested restricted stock, which
had a value of $577,810 based upon the closing price on the NYSE on September
30, 2001 of $34.67.
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(h) Represents the value on the date of grant of shares of restricted stock
granted by the Compensation Committee to Mr. A. J. Gula, Jr. on September 15,
1999, vested or vesting in approximately equal installments on each of August
31, 2000, August 31, 2001 and August 30, 2002. As of the end of fiscal year
2001, Mr. A. J. Gula, Jr. held 10,574 shares of unvested restricted stock, which
had a value of $366,601 based upon the closing price on the NYSE on September
30, 2001 of $34.67.
(i) Represents options that were granted on November 17, 1999 with an exercise
price of $32.875, which was the closing price on the NYSE on the date of the
grant. These options expire on September 28, 2007 and are subject to continued
employment and become exercisable in approximately three equal increments on
September 29, 2000, September 28, 2001, and September 30, 2002.
(j) Represents grants of five year options to purchase shares of common stock
(the "Five Year Options"). The Five Year Options were granted on October 23,
1998 and have an exercise price of $33.25, the closing price on the NYSE on that
date. On September 30, 2003, any unvested portion of the option will
automatically become exercisable. In addition, if at any time after September
28, 2000 and prior to September 30, 2003 the price of the Company's stock is
equal to or greater than $66.50 per share during any consecutive 30 day trading
period, 100% of the option will become immediately exercisable until December
31, 2003 (the "Expiration Date"). The vesting may also be accelerated based upon
the compounded annual growth rate of the Company's stock measured from the price
on the grant date (the "Growth Rate") as follows:
ONE-THIRD EXERCISABLE: On or after September 28, 2001 but before September
30, 2003, if the Growth Rate is equal to or greater than 15% but less than
20% during any consecutive 30 day trading period, 33.3% of the original
grant will become exercisable on or after September 28, 2001 and a second
33.3% will become exercisable on or after September 30, 2002 with the
remainder exercisable on or after September 30, 2003 until the Expiration
Date.
ONE-HALF EXERCISABLE: On or after September 28, 2001 and prior to September
30, 2003, if the Growth Rate is equal to or greater than 20% but less than
25% during any consecutive 30 day trading period, 50% of the original grant
will become exercisable on or after September 28, 2001 and the remainder
shall become exercisable on or after September 30, 2002 until the
Expiration Date.
FULL EXERCISABILITY: On or after September 30, 2001 and prior to September
30, 2003, if the Growth Rate is equal to or greater than 25% during any
consecutive 30 day trading period, 100% of the original grant will become
immediately exercisable until the Expiration Date.
(k) Represents certain options that were granted on November 21, 2000 with an
exercise price of $37.50, which was the closing price on the NYSE on the date of
the grant. These options expire on November 21, 2010 and are subject to
continued employment and become exercisable in approximately three equal
increments on September 28, 2001, September 30, 2002 and September 30, 2003.
Also represents certain options that were granted on December 15, 2000 with an
exercise price of $34.50, which was the closing price on the NYSE on the date of
the grant. These options expire on December 15, 2010 and are subject to
continued employment and become exercisable in approximately three equal
increments on September 28, 2001, September 30, 2002 and September 30, 2003.
(l) Represents grants of options that were granted to Mr. A. J. Gula, Jr. on
September 15, 1999 with an exercise price of $30.875 per share, which was the
closing price on the NYSE on the date of the grant. These options expire on
April 15, 2008 and are subject to continued employment and become exercisable in
three equal increments on August 31, 2000, August 31, 2001 and August 30, 2002.
(m) Represents Company contributions to the combined Profit Sharing/401(k) Plan.
(n) Includes a contribution of $83,333.34 and $99,999.96 made by Franklin in
fiscal year 2000 and fiscal year 2001, respectively, under a Supplemental
Executive Retirement Plan. See also Certain Relationships and Related
Transactions.
9
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OPTION GRANTS IN LAST FISCAL YEAR
During the last fiscal year, options were granted to the Named Executive
Officers as indicated in the table below. No Stock Appreciation Rights were
awarded.
OPTION GRANTS IN LAST FISCAL YEAR ENDED SEPTEMBER 30, 2001
- --------------------------------------------------------------------------------------------
Potential
Realizable Value at Assumed Annual Rates
Of Stock Price Appreciation for
Option Term(c)
- ----------------------------------------------------------------------------------------------------
Individual Grants
- ----------------------------------------------------------------------------------------------------
Number of
Securities % of Total Exercise
Underlying Options Granted or Base
Options to Employees in Price Expiration
Name Granted(a) Fiscal Year(b) ($/Share) Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Charles B.
Johnson 0 0% - - - -
- ----------------------------------------------------------------------------------------------------
Martin L. 200,000 $37.50 11/21/10 $3,492,972 $8,333,326
Flanagan 50,000 3.8% $34.50 12/15/10 $ 803,384 $1,916,665
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Charles E. 83,000 $37.50 11/21/10 $1,449,583 $3,458,330
Johnson 125,000 3.1% $34.50 12/15/10 $2,008,459 $4,791,663
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Gregory E. 83,000 $37.50 11/21/10 $1,449,583 $3,458,330
Johnson 125,000 3.1% $34.50 12/15/10 $2,008,459 $4,791,663
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Allen J. 83,000 $37.50 11/21/10 $1,601,045 $3,893,016
Gula, Jr. 75,000 2.4% $34.50 12/15/10 $1,330,989 $3,236,363
- ----------------------------------------------------------------------------------------------------
(a) Represents options granted November 21, 2000 and December 15, 2000,
which vest in equal one-third increments over a 3 year period. See
footnote (k) to the Summary Compensation Table.
(b) Represents the aggregate percentage granted to each Named Executive
Officer of the total options awarded to employees of 6,639,276 shares
in fiscal year 2001.
(c) We are required by the Securities and Exchange Commission to use a 5%
and 10% assumed rate of appreciation over the applicable option term.
This does not represent our estimate or projection of the future
common stock price. If Franklin's common stock does not appreciate in
value from the grant price, the Named Executive Officers will receive
no benefit from the options.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-The-Money Options at
Name Year-End Fiscal Year-End
Exercisable/Unexercisable(a) Exercisable/Unexercisable(b)
- --------------------------------------------------------------------------------------
Charles B. Johnson 14,706/30,353 $26,397/$45,859
Martin L. Flanagan 137,782/276,689 $100,568/$172,108
Charles E. Johnson 123,782/248,689 $104,818/$180,608
Gregory E. Johnson 120,177/214,087 $98,347/$130,797
Allen J. Gula, Jr. 86,001/121,999 $130,752/$71,747
- --------------------------------------------------------------------------------------
(a) The Named Executive Officers did not exercise any options during fiscal year
2001.
(b) Market value of underlying securities is based on the closing price of
Franklin's common stock on the NYSE on September 30, 2001 of $34.67 per share
minus the exercise price.
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EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Charles B. Johnson has an employment contract with Franklin pursuant to
which the Company is obligated, in the event of Mr. C. B. Johnson's death or
permanent disability, to pay one year's salary to his estate. Under the
contract, Mr. C. B. Johnson is employed as the Chairman of the Board, Chief
Executive Officer, and Member-Office of the Chairman at a salary determined from
time to time by the Board of Directors, which has assigned the review of Mr. C.
B. Johnson's compensation arrangements to the Compensation Committee.
Ms. Anne M. Tatlock has a five year employment agreement with Franklin and
Fiduciary, which commenced in April 2001. Under the employment agreement, Ms. A.
M. Tatlock is entitled to a base salary equal to a minimum of $590,000 per year,
which is subject to review by the Chief Executive Officer and Franklin's
Compensation Committee (which shall not result in a decrease in such base
salary). Ms. A. M. Tatlock is also entitled to, at a minimum, the following
bonus and incentive compensation: (a) a bonus for the period (i) commencing
January 1, 2001 and ending December 31, 2001 and (ii) commencing January 1, 2002
and ending September 30, 2002, on an annualized basis, of not less than
$609,281, of which Ms. A. M. Tatlock is entitled to receive an annualized
short-term bonus of $296,500 payable in cash and an annualized long-term bonus
of $312,781 to be granted in the form of restricted stock that vests over 3
years; (b) after September 30, 2002, awards, grants or payments that may be
awarded under Franklin's incentive compensation plan; (c) additional services
compensation, in the amount of $2,125,000, which is payable in equal annual cash
payments of $425,000 over five years, subject to certain conditions relating to
Ms. A. M. Tatlock's continued employment; (d) stock options calculated using the
amount of $530,000, 50% of which are exercisable on April 10, 2004 and 50% of
which are exercisable on April 10, 2005, subject to Ms. A. M. Tatlock's
continued employment with Franklin; (e) an allowance for financial and tax
planning of up to $15,000 for fiscal year 2001 and $5,000 for each subsequent
fiscal year during the term of the employment agreement; and (f) such luncheon
club memberships and other such memberships in accordance with Fiduciary's
policy and practices.
Mr. Allen J. Gula, Jr. has a Change of Control Agreement where he is eligible to
receive, if his employment is terminated within two years following a change of
control of Franklin, other than for cause, disability or death or by the
executive after a reduction of base salary or mandatory relocation, an amount
equal to two and one-half times his annual base salary, plus average annual
incentive compensation, the acceleration in the vesting of all unvested
restricted stock awards and stock option grants then outstanding awarded to Mr.
A. J. Gula, Jr. and the continuation of health benefits for a limited time. If
Mr. A. J. Gula, Jr., other than for cause, voluntarily terminates his employment
within a certain window period following a change of control, Mr. A. J. Gula,
Jr. is eligible to receive an amount equal to his one year's base salary, plus
average annual incentive compensation, and the continuation of health benefits
for a limited time.
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REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of Franklin's previous
or future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings made by Franklin under those
statutes, the following report shall not be deemed to be incorporated by
reference into any prior filings nor future filings made by Franklin under those
statutes.
COMPENSATION PHILOSOPHY
The Compensation Committee believes that the opportunity to earn incentive
compensation motivates employees, including executive officers, to achieve
improved results. Moreover, awarding incentive compensation in the form of
Company stock aligns the interests of management with the interests of
stockholders, and further encourages management to focus on the Company's long
range growth and development. Franklin's compensation program for executive
officers (including the Chief Executive Officer) has over the last four years
consisted primarily of salary and annual incentive bonuses based upon individual
and Company performance.
BONUS AWARDS
The Company generally uses a combination of two employee benefit plans to award
bonuses to employees: the 1994 Amended Annual Incentive Compensation Plan (the
"Incentive Plan") and the Amended and Restated 1998 Universal Stock Incentive
Plan (the "Amended Stock Plan"). The overall bonus pool is determined pursuant
to the Incentive Plan, which allows for both cash and stock awards to Company
employees, including executive officers and the Chief Executive Officer. The
stock component of an award is then granted through the Amended Stock Plan. As a
general matter, the size of the award pool available for bonus payments is a
percentage of the Company's pre-tax operating income, which consists of net
operating income, exclusive of passive income and calculated before interest,
taxes, and extraordinary items, and after accrual of awards under the Incentive
Plan. In determining the percentage of the pre-tax operating income that will go
into the award pool, the Compensation Committee considers a variety of factors
including the performance of the Company's stock compared to the indices set
forth in the performance graph included in this Proxy Statement and the increase
or decrease in market price of the Company's common stock.
In view of the significant decline in the stock market and the Company's assets
under management, the Compensation Committee decided that it was prudent not to
substantially increase compensation costs. Therefore, the Compensation Committee
implemented the following measures: (i) the bonus pool awarded for fiscal year
2001 was reduced by over 15% from the previous year, with the focus of the
largest rewards on the Company's top-performing employees; and (ii) the Company
did not make a contribution to the Company's profit sharing plan.
In setting the general award pool for fiscal year 2001, the Compensation
Committee considered the 22.8% decrease in pre-tax operating income between
fiscal year 2000 and fiscal year 2001 as well as the 22.7% increase in the
Company's pre-tax operating income over the last five (5) fiscal years. The
Compensation Committee also considered the 22.0% overall decrease in the value
of the Company's stock from the beginning of fiscal year 2001 to the end of
fiscal year 2001.
The Compensation Committee considered all of the above factors, and additional
weight was given to the performance related factors of the Company set forth
above in determining the percentage of pre-tax operating income allocated to the
award pool.
In its review of individual compensation, and, in particular, in determining the
amount and form of actual awards under the Incentive Plan for the Chief
Executive Officer and the other executive officers, the Compensation Committee
has historically considered amounts paid to executive officers in prior years as
salary, bonus and other compensation, the
12
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Company's overall performance during the prior five (5) fiscal years, and its
future objectives and challenges. Although the Compensation Committee considered
a number of different individual and Company performance factors, again the
factors relating to the decline in the stock market, assets under management and
the value of the Company's stock in fiscal year 2001 were given additional
weight.
SALARIES OF NAMED EXECUTIVE OFFICERS
The other Named Executive Officers (as defined below), who generally receive a
pay raise on January 1st of each year, did not receive any salary increase on
January 1, 2001. As part of a Company-wide plan to decrease expenses, effective
November 1, 2001, the base salaries of the Named Executive Officers were reduced
by 10%. In connection with a Company-wide review, the Compensation Committee
intends to review the salary levels for the Named Executive Officers in 6 months
from November 1, 2001 based upon several considerations, including the Company's
performance and general economic conditions.
BONUSES AND FISCAL YEAR 2001 STOCK OPTIONS OF NAMED EXECUTIVE OFFICERS
In recent years, the Company's senior management, including Messrs. C. B.
Johnson, R. H. Johnson, Jr., M. L. Flanagan, C. E. Johnson, A. J. Gula, Jr., and
G. E. Johnson (together, the "Named Executive Officers"), have received
approximately 50% of their annual bonuses in the form of cash and 50% in the
form of stock option grants in lieu of restricted stock awards granted to other
executive officers. Because the Company does not make a determination on bonus
awards for a particular fiscal year until after such fiscal year ends, the
Company reports the cash portion of any bonus award earned during the fiscal
year by a Named Executive Officer, but reports the stock option related portion
of any bonus awarded for a particular fiscal year only after it has actually
been awarded, which normally occurs in the subsequent fiscal year. In connection
with fiscal year 2001, the Compensation Committee made bonus awards to the Named
Executive Officers, except for C. B. Johnson, which consisted of both cash and
stock options. Mr. M. L. Flanagan also received a restricted stock award during
fiscal year 2001.
FISCAL YEAR 2001 BONUS AWARDS
For fiscal year 2001, the Compensation Committee awarded year-end cash bonuses
to the Named Executive Officers. Other employees, including other executive
officers, were awarded bonuses consisting of cash and restricted stock.
Consistent with the practice established in fiscal year 2000, bonuses awarded
consisted of a combination of 65% cash and 35% restricted stock. Certain Company
employees, whose awards were $1.0 million dollars and over, were awarded bonuses
consisting of 40% cash and 60% restricted stock.
SPECIAL BONUS CONSIDERATIONS FOR CEO
The Committee reviews the participation of Mr. C. B. Johnson in the Company's
Incentive Plan annually, and has determined that he will continue to
participate. Bonuses paid to Mr. C. B. Johnson depend upon both his performance
and that of the Company. The Compensation Committee has also taken into account
Mr. C. B. Johnson's position as a principal stockholder of the Company, and the
dividends received on those holdings, in determining his compensation and bonus.
Because of his large share holdings, Mr. C. B. Johnson is materially impacted by
changes in the Company's stock price. Therefore, the Compensation Committee does
not feel that stock-related bonuses should be a significant component of Mr. C.
B. Johnson's compensation and has historically awarded bonuses to him primarily
in cash. The Compensation Committee notes Mr. C. B. Johnson's compensation is
significantly lower than that received by CEOs of comparable companies. In view
of the various factors affecting Company performance as set forth above, the
Board decided not to grant Mr. C. B. Johnson a cash bonus award, or any stock
option grants during fiscal year 2001 and to reduce Mr. C. B. Johnson's salary
by 10%.
13
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OTHER BENEFITS
Executive officers also participate in a combined Profit Sharing/401(k) Plan and
are entitled to receive medical, life and disability insurance coverage and
other corporate benefits available to most employees of the Company.
Contributions to the Company's Profit Sharing Plan are determined by the Board,
which takes into consideration the profitability of the Company. As stated
above, the Compensation Committee decided not to make a contribution to the
Company's Profit Sharing Plan for fiscal year 2001.
COMPENSATION TAX CONSIDERATIONS
Section 162(m), which limits the deductibility by the Company of certain
executive compensation for federal income tax purposes, applied for the first
time to the Company in the fiscal year ended September 30, 1995. The Amended
Stock Plan is drafted to comply with Section 162(m) and the options granted
thereunder are qualified performance-based incentive stock awards intended to be
deductible within the limitations of Section 162(m). Failure to comply with the
requirements of Section 162(m) may limit the Company's ability to take tax
deductions for compensation paid to each Named Executive Officer in excess of
$1.0 million. While the Company will endeavor to comply with Section 162(m) in
the future to take advantage of potential tax benefits, the Company may make
awards that do not comply with Section 162(m) if it believes that the awards
were commensurate with the performance of the covered employees and were
necessary and appropriate to meet competitive requirements.
Respectfully Submitted:
COMPENSATION COMMITTEE
Louis E. Woodworth, Chairman
James A. McCarthy
Peter M. Sacerdote
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in the preceding
section. No member of the Compensation Committee was an officer or employee of
the Company or any of its subsidiaries during fiscal year 2001. None of the
executive officers of the Company has served on the board of directors or on the
compensation committee of any other entity that has or had executive officers
serving as a member of the Board of Directors or Compensation Committee of the
Company.
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REPORT OF THE AUDIT COMMITTEE
Notwithstanding anything to the contrary set forth in any of Franklin's previous
or future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings made by Franklin under those
statutes, the following report shall not be deemed to be incorporated by
reference into any prior filings nor future filings made by Franklin under those
statutes.
MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE
The Audit Committee consists of Louis E. Woodworth, James A McCarthy and Harry
O. Kline. Each of the members of the Audit Committee is independent as defined
under the NYSE rules. The Board of Directors has adopted and the Audit Committee
operates under a written charter, which was published in the proxy statement for
the Company's Annual Meeting held on January 25, 2000.
The primary purpose of the Audit Committee is to assist the Board of Directors
in fulfilling its responsibility to oversee the Company's financial reporting
activities. The committee meets with the Company's independent accountants and
reviews the scope of their audit, report and recommendations. The Audit
Committee also recommends to the Board of Directors the selection of the
Company's independent accountants.
REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2001
The Audit Committee has reviewed and discussed the audited financial statements
of Franklin for the fiscal year ended September 30, 2001 with Franklin's
management. The Audit Committee has discussed with PricewaterhouseCoopers LLP
("PwC"), Franklin's independent accountants, the matters required to be
discussed by the Statement on Auditing Standards No. 61 (Communication with
Audit Committees).
The Audit Committee has also received the written disclosures and the letter
from PwC required by Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committees) and the Audit Committee has discussed the
independence of PwC with that firm.
AUDIT FEES. The aggregate fees billed by PwC and its respective affiliates for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended September 30, 2001 and for the reviews of
the financial statements included in the Company's Quarterly Reports on Form
10-Q for that fiscal year were approximately $1.4 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There were no fees
billed by PwC for professional services rendered for information technology
services relating to financial information systems design and implementation for
the fiscal year ended September 30, 2001.
ALL OTHER FEES. The aggregate fees billed by PwC for services rendered to the
Company, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees," for the fiscal
year ended September 30, 2001 were approximately $6.9 million.
The Audit Committee has considered and determined that the provision of
non-audit services is compatible with maintaining the principal auditors'
independence.
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 for filing with the SEC.
Respectfully Submitted:
AUDIT COMMITTEE
Louis E. Woodworth, Chairman
Harry O. Kline
James A. McCarthy
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PERFORMANCE GRAPH
The following performance graph compares the performance of an investment in
Franklin's common stock for the last five (5) fiscal years to that of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), an index to
which the Company was added in April 1998, and to the Standard & Poor's
Financial Index (the "S&P Financial"). The S&P 500 consists of 500 stocks chosen
for market size, liquidity, and industry group representation. It is a
market-value weighted index (stock price times number of shares outstanding),
with each stock's weight in the index proportionate to its market value. The S&P
500 is one of the most widely used benchmarks of U.S. equity performance. The
S&P Financial is a capitalization-weighted index of the stocks of approximately
70 companies that are in the S&P 500 and whose primary business is in a
sub-sector of the financial industry. It is designed to measure the performance
of the financial sector of the S&P 500. The graph assumes that the value of the
investment in the Company's common stock and each index was $100 on September
30, 1996 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(Graph Appears Here)
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
FY96
Franklin
Resources: $100.00 $106.28 $107.80 $103.04 $123.40 $132.53 $115.41 $133.95 $146.79 $164.62 $192.87 $175.61
S&P 500: $100.00 $102.64 $110.24 $107.85 $114.53 $115.21 $110.26 $116.76 $123.65 $129.07 $139.23 $131.18
Fin. Index $100.00 $107.31 $117.51 $113.02 $122.21 $126.86 $117.58 $125.86 $131.58 $138.72 $155.12 $143.30
FY97
Franklin
Resources: $211.56 $204.14 $204.14 $197.43 $203.57 $231.81 $243.23 $244.37 $222.11 $245.51 $197.86 $146.22
S&P 500: $138.20 $133.40 $139.40 $141.60 $143.05 $153.20 $160.90 $162.37 $159.30 $165.62 $163.68 $139.67
Fin. Index $154.74 $151.24 $157.10 $164.76 $159.81 $174.70 $184.48 $187.26 $182.52 $189.96 $189.73 $145.57
FY98
Franklin
Resources: $135.38 $171.61 $194.15 $145.08 $151.93 $144.22 $127.39 $181.60 $197.58 $184.45 $173.04 $163.05
S&P 500: $148.45 $160.45 $170.00 $179.63 $187.04 $180.97 $188.03 $195.20 $190.31 $200.72 $194.26 $193.03
Fin. Index $148.25 $166.04 $177.29 $180.64 $184.21 $186.46 $193.31 $206.20 $194.48 $202.26 $189.35 $180.38
FY99
Franklin
Resources: $138.52 $158.77 $142.51 $145.36 $161.91 $123.11 $151.64 $146.22 $135.95 $137.66 $162.77 $172.47
S&P 500: $187.49 $199.28 $203.10 $214.91 $203.92 $199.80 $219.22 $212.43 $207.76 $212.75 $209.26 $222.02
Fin. Index $170.51 $198.45 $188.72 $184.62 $178.35 $158.86 $187.87 $181.73 $193.67 $181.88 $200.44 $219.10
FY00
Franklin
Resources: $201.82 $194.56 $164.30 $172.93 $212.46 $189.54 $177.54 $198.26 $202.14 $207.94 $195.93 $186.30
S&P 500: $210.09 $209.05 $192.23 $193.01 $199.73 $181.21 $169.51 $182.61 $183.54 $178.93 $176.99 $165.58
Fin. Index $224.26 $223.31 $209.94 $228.85 $227.88 $212.50 $205.87 $213.27 $221.47 $221.21 $217.31 $203.68
FY01
Franklin
Resources $157.27
S&P 500 $151.97
Fin. Index $191.32
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the time that Franklin acquired substantially all of the assets of
Templeton, Galbraith & Hansberger Ltd. ("Templeton") in 1992, Templeton loaned
Mr. Martin L. Flanagan monies secured by a deed of trust on Mr. M. L. Flanagan's
then residence in Nassau, Bahamas. Such loan is still outstanding to a
subsidiary of the Company and bears interest at the annual rate of 5.98%. The
largest aggregate amount outstanding during fiscal year 2001 was $403,804. As of
November 28, 2001, $378,797 was outstanding under the loan.
In June 1995, prior to the time that Mr. Kenneth A. Lewis became an executive
officer of Franklin, in connection with his relocation from Florida to
California, Franklin made a loan to Mr. K. A. Lewis, secured by a deed of trust
on his residence. The largest amount outstanding on the loan, which bears
interest at the annual rate of 5%, during fiscal year 2001 was $475,225 and as
of November 28, 2001, $464,012 was outstanding.
In October 1997, prior to the time that Mr. Charles R. Sims became an executive
officer of Franklin, in connection with his relocation from Canada to
California, Franklin made two loans to Mr. C. R. Sims, one of which is secured
by a deed of trust on his residence and bears interest at the annual rate of 5%.
The largest amount outstanding on the first loan during fiscal year 2001 was
$621,113 and as of November 28, 2001, $608,631 was outstanding. The largest
amount outstanding on the second loan during fiscal year 2001 was $28,333. The
second loan was forgivable by the Company in equal installments over a three (3)
year period. One-third of the second loan was forgiven on each of October 1998,
October 1999 and October 2000, respectively.
In August 1999, Mr. Allen J. Gula, Jr. became an executive officer of Franklin.
In May 2000, Franklin provided Mr. A. J. Gula, Jr. with a line of credit for up
to $2,000,000 in connection with his relocation from Ohio to California. The
line of credit is secured by a deed of trust on Mr. A. J. Gula, Jr.'s personal
residence. Mr. A. J. Gula, Jr. is entitled to draw against the line of credit
over a two year period with monthly interest only payments during such period,
and after two (2) years from the anniversary date of the loan, the outstanding
balance of the line of credit will become a 28 year fully amortized loan
(collectively, the "Loan"). Any outstanding balance on the Loan will bear
interest at the annual rate of 6%. The largest amount outstanding on the Loan
during fiscal year 2001 was $1,894,000 and as of November 28, 2001, $1,894,000
was outstanding. The total amount of $500,000 of the Loan is forgivable by the
Company in equal installments of $100,000 over a five (5) year period,
commencing May 1, 2001, contingent upon Mr. A. J. Gula, Jr.'s continued
employment.
In February 2000, Murray L. Simpson became an executive officer and general
counsel of Franklin, and in connection with his relocation from Hong Kong to
California during fiscal year 2001, Franklin made a loan in the amount of
$2,000,000 to Mr. M. L. Simpson. The loan is secured by a deed of trust on his
personal residence, which bears interest at the annual rate of 5.57%, and is
payable over 30 years. The largest amounting outstanding on the loan during
fiscal year 2001 was $2,000,000 and as of November 28, 2001, $1,994,587 was
outstanding.
The Company makes purchases of the Company's common stock from employees and
executive officers on the same terms and conditions to pay taxes due in
connection with the vesting of restricted stock awards and matching grants which
the Company provides under the Employee Stock Incentive Plan ("ESIP"), each
purchase of which is ratified by the Company's Board of Directors. On September
3, 2001 and in connection with the vesting of certain restricted stock awards,
the Company purchased 3,696 shares of Franklin's common stock from Mr. A. J.
Gula, Jr. at a price of $41.32 per share. On October 1, 2001 and in connection
with the vesting of certain restricted stock awards, the Company purchased 2,913
shares from Mr. M. L. Flanagan,
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1,775 shares from Mr. Leslie M. Kratter and 2,069 shares from Mr. M. L. Simpson
(each an executive officer of the Company) at the price of $34.10 per share. The
price per share paid by the Company for each purchase represents the price at
which the stock vested, which is the average of the high and low price of the
Company's stock on the NYSE on that date.
On February 1, 2001 and August 1, 2001 and in connection with a matching grant
made on such dates, the Company purchased 42.65 shares at a price of $46.72 and
101.51 shares at a price of $43.50, respectively, from Mr. L. M. Kratter, an
executive officer with the Company, which is the average of the high and low
price of Franklin's stock on the NYSE on that date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires officers,
Directors and persons who own more than 10% of Franklin's common stock (the
"Reporting Persons") to file reports of ownership and changes in ownership with
the SEC. Based solely on review of copies of such forms received or written
representations from the Reporting Persons, the Company believes that with
respect to the fiscal year ended September 30, 2001, all Reporting Persons
complied with applicable filing requirements.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPEDNDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as independent
accountants to audit the books and accounts of Franklin for its current fiscal
year ending September 30, 2002. PricewaterhouseCoopers LLP has no direct or
indirect financial interest in Franklin. During the fiscal year ended September
30, 2001, PricewaterhouseCoopers LLP rendered opinions on the financial
statements of Franklin and its subsidiaries, as well as the open-end and
closed-end investment companies managed and advised by the Company's
subsidiaries. In addition, PricewaterhouseCoopers LLP provides the Company with
tax consulting and compliance services and accounting and financial reporting
advice on transactions and regulatory filings. The Board of Directors recommends
ratification of the appointment. The proxy holders intend to vote to ratify and
approve PricewaterhouseCoopers LLP as the Company's independent accountants. The
voting requirements for this proposal are described above under "Voting
Information". We do not expect that a representative of the accountants will be
present at the Annual Meeting.
STOCKHOLDER PROPOSALS
Any stockholder intending to present any proposal in accordance with Rule 14a-8
under the Securities Exchange Act of 1934 for consideration at Franklin's next
Annual Meeting in 2003 must, in addition to meeting other applicable
requirements, mail such proposal to: Leslie M. Kratter, Secretary, Franklin
Resources, Inc., One Franklin Parkway, Building 920, San Mateo, CA 94403. The
proposal must be submitted in the form required by the Securities and Exchange
Commission rules and regulations.
Stockholder proposals in accordance with Rule 14a-8 must be received by Franklin
at the address above no later than August 20, 2002. The Company may exercise
discretionary voting authority under proxies solicited by it for the 2003 Annual
Meeting of Stockholders if it receives notice of a proposed non-Rule 14a-8
stockholder action after November 2, 2002.
THE ANNUAL REPORT
Franklin's Annual Report for the fiscal year ended September 30, 2001, including
financial statements, has been sent, or is being sent together with this Proxy
Statement, and is available for viewing on the Internet, to all stockholders as
of the record date. We are legally required to send you this information to help
you decide how to vote your proxy. Please read it carefully. However, the
financial statements and the Annual Report do not legally form any part of this
proxy soliciting material.
18
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FRANKLIN RESOURCES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
With this proxy, the stockholder signing below appoints Charles B. Johnson,
Martin L. Flanagan, and Leslie M. Kratter (the "proxy holders"), or any one of
them, as the stockholder's proxies with full power of substitution. The
stockholder appoints the proxy holders collectively and as individuals, to vote
all the stockholder's shares of Franklin Resources, Inc. ("Franklin") common
stock at the Annual Meeting of Stockholders, and at any and all adjournments or
postponements of the meeting, on the matters set forth on the reverse side of
this card. The Annual Meeting of Stockholders will be held on January 25, 2001,
at 10:00 a.m., Pacific Standard Time, in the H. L. Jamieson Auditorium, One
Franklin Parkway, Building 920, San Mateo, California.
THE BOARD OF DIRECTORS HAS SOLICITED THIS PROXY AND IT WILL BE VOTED AS
SPECIFIED ON THIS PROXY CARD ON THE FOLLOWING PROPOSALS PROPOSED BY FRANKLIN. IF
YOU DO NOT MARK ANY VOTES OR ABSTENTIONS, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS AND FOR RATIFICATION AND APPROVAL OF
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR ENDING
SEPTEMBER 30, 2002. IF ANY OTHER MATTERS COME BEFORE THE MEETING TO BE VOTED ON,
THE PROXY HOLDERS NAMED IN THIS PROXY WILL VOTE, ACT AND CONSENT ON THOSE
MATTERS IN ACCORDANCE WITH THE VIEWS OF MANAGEMENT.
Continued on the reverse side. Must be signed and dated on the reverse
side.
To change your address, please mark this box ____
FRANKLIN RESOURCES, INC.
P.O. BOX 11121
NEW YORK, N.Y. 10203-0121
Please complete, sign and date this proxy on the reverse side and return it
promptly in the accompanying envelope.
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FRANKLIN RESOURCES, INC.
Two New Ways to Vote
VOTE BY INTERNET OR TELEPHONE
24 hours a Day - 7 Days a Week
Save your Company Money - It's Fast and Convenient
TELEPHONE
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1-800-430-4778
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the simple directions.
OR
INTERNET
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http://proxy.shareholder.com/ben/
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your control number, located
in the box below, to create an electronic ballot.
OR
MAIL
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Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided. Make sure the pre-printed address shows through the envelope
window. Please do not mail additional cards in the return envelope.
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Your telephone or Internet vote authorizes the proxy holders named in the proxy
to vote your shares in the manner as if you marked, signed and returned the
proxy card. If you have submitted your proxy by telephone or the Internet there
is no need for you to mail back your proxy. The deadline for voting by telephone
or by using the Internet is at 11:59 p.m., Eastern Standard Time, January 24,
2002.
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YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING
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CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
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DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
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____ Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
X Votes must be indicated (x) in Black or Blue Ink.
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Note: Please sign exactly as your name appears on the proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If shares
are held jointly, each holder should sign.
Management recommends a vote FOR proposals 1 and 2:
1. ELECTION OF DIRECTORS:
FOR ALL ____ WITHHOLD FOR ALL ____ EXCEPTIONS* ____
Nominees: 01-Harmon E. Burns, 02-Charles B. Johnson, 03-Charles E. Johnson,
04-Rupert H. Johnson, Jr., 05-Harry O. Kline, 06-James A. McCarthy, 07-Peter M.
Sacerdote, 08-Anne M. Tatlock, 09-Louis E. Woodworth.
(Instructions: To withhold authority to vote for any individual nominee, mark
the "Exceptions*" box and write that nominee's name on the following blank
line.)
Exceptions*_____________________________________________________________________
2. Ratification and approval of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending September 30, 2002.
FOR ___ AGAINST ___ ABSTAIN ___
3. In their discretion, the proxy holders are authorized to vote on other
business matters that are properly brought at the meeting or any
adjournments or postponements thereof.
Shareholder sign here Date
_______________________________________________________ ____________________
Co-Owner sign here
_______________________________________________________
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