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 Sect. 240.14a-11(c) or Sect.
240.14a-12
FRANKLIN RESOURCES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 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 transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] 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:
FRANKLIN RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON JANUARY 24, 1995
To the Stockholders of Franklin Resources, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
FRANKLIN RESOURCES, INC. (the "Company") will be held at 10:00 a.m.,
Pacific Standard Time, on January 24, 1995 at the offices of the
Company, 777 Mariners Island Boulevard, San Mateo, California 94404.
At this meeting, the stockholders of the Company will consider and
vote on:
1. The election of nine (9) directors to hold office until the next
Annual Meeting of Stockholders or until their successors are elected
and shall qualify.
2. The ratification of the appointment by the Board of Directors of
Coopers & Lybrand L.L.P. as the Company's independent certified
accountants for the current fiscal year ending September 30, 1995.
3. The amendment of the Company's Annual Incentive Compensation
Plan.
Stockholders of record at the close of business on December 21,
1994 are entitled to notice of and to vote on all matters presented at
the meeting and at any adjournments or postponements thereof. Each
holder of shares of the Company's Common Stock is entitled to one (1)
vote for each share of Common Stock held on the record date.
By Order of the Board of Directors
Harmon E. Burns
Secretary
December 28, 1994
San Mateo, California
IF YOU DO NOT EXPECT TO BE PRESENT PERSONALLY AT THE MEETING, PLEASE
EXECUTE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
PROXY STATEMENT
FRANKLIN RESOURCES, INC.
777 Mariners Island Blvd.
San Mateo, California 94404
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 (the
"Company") of the accompanying proxy, to be voted at the Annual
Meeting of Stockholders to be held at the offices of the Company, 777
Mariners Island Boulevard, San Mateo, California, on January 24, 1995,
at 10:00 a.m. Pacific Standard Time and at any and all adjournments
thereof. A proxy may be revoked by a stockholder prior to its exercise
in any of three ways: by written notice to the Secretary of the
Company; by submission of another proxy bearing a later date; or by
voting in person at the Annual Meeting. Revocation by notice to the
Secretary of the Company or by submission of a later proxy will not
affect a vote on any matter which is taken prior to the receipt of the
notice or later proxy by the Company. The mere presence at the Annual
Meeting of the stockholder appointing the proxy will not revoke the
appointment. If not revoked, the proxy will be voted at the Annual
Meeting in accordance with the instructions indicated on the proxy by
the stockholder or, if no instructions are indicated, will be voted
FOR the slate of directors described herein, FOR ratification of the
appointment of Coopers & Lybrand L.L.P. as the Company's independent
certified public accountants, and FOR the adoption of the amendments
to the Company's Annual Incentive Compensation Plan, described herein.
These proxy materials are being mailed on or about December 28, 1994
to stockholders of record of the Company's $0.10 par value Common
Stock on December 21, 1994.
This solicitation is being made by the Company. All expenses of the
Company in connection with this solicitation will be borne by the
Company. In addition to solicitation by mail, proxies may also be
solicited personally, by telephone, telex, fax or telegraph, by
officers, directors and other employees of the Company without
additional compensation. The Company will also use a service agent to
request brokerage houses, custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of the shares held of
record by such persons and will reimburse such persons, the Company's
transfer agent, and the service agent for their reasonable out-of-
pocket expenses in forwarding such materials. The Company's transfer
agent and the service agent are paid for their services pursuant to a
standard fee schedule.
The Company's Annual Report for its fiscal year ended September 30,
1994, including financial statements, has been sent or is being sent
together with this Proxy Statement to all stockholders of record as of
the record date for the Annual Meeting. Such financial statements and
the Annual Report do not form any part of this proxy soliciting
material.
VOTING SECURITIES
Stockholders of record at the close of business on December 21,
1994 (the "Record Date"), are entitled to notice of, and to vote at,
the Annual Meeting and at any adjournments or postponements thereof.
Each holder of shares of the Company's $0.10 par value Common Stock,
(the "Common Stock"), is entitled to one (1) vote for each share of
such Common Stock held on the Record Date.
On November 28, 1994, 81,583,208 shares of Common Stock were
outstanding. The presence in person or by proxy at the Annual Meeting
of the holders of a majority of such shares shall constitute a quorum.
Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of a plurality of the votes cast by holders of shares
of Common Stock is required for the election of directors. The
affirmative vote of a majority of the shares of Common Stock
represented at the meeting and entitled to vote on each matter is
required for the approval of the ratification of the appointment of
Coopers & Lybrand L.L.P. and the approval of the Amendments to the
Company's Annual Incentive Compensation Plan. An abstention with
respect to any proposal will be counted as present for purposes of
determining the existence of a quorum and will have the practical
effect of a negative vote as to that proposal. The New York Stock
Exchange (the "NYSE") determines whether brokers that do not receive
instructions would be entitled to vote on the proposals contained in
this Proxy Statement. In the event of a broker non-vote with respect
to any issue coming before the meeting, such shares will be counted as
present for the purpose of determining the existence of a quorum, but
will not be deemed as present and entitled to vote as to that issue
for the purpose of determining the total number or shares of which a
majority is required for adoption.
The following persons are known by the Company as of November 28,
1994 to be beneficial owners of more than five percent (5%) of its
total outstanding Common Stock.
Name and Address of Amount and Nature of Percent of
Beneficial Owner (*) Beneficial Ownership Voting Securities(5)
Charles B. Johnson 16,190,602(1) 19.8
Rupert H. Johnson, Jr. 12,815,701(2) 15.7
R. Martin Wiskemann 07,956,426(3) 9.8
Hellman-Friedman Group 04,721,435(4) 5.5
(*) The address of Messrs. Johnson, Johnson and Wiskemann is: c/o
Franklin Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA
94404. The address of the Hellman-Friedman Group is One Maritime
Plaza, 12th Fl., San Francisco, CA 94111.
(1) Includes 14,503,166 shares held directly and 1,506,225 shares
held in an IRA account for which Mr. C. B. Johnson holds sole voting
and investment power. Also includes 181,211 shares of which Mr.
Johnson disclaims beneficial ownership, held by a private foundation
of which Mr. Johnson is a trustee.
(2) Includes 12,011,996 shares held directly and 768,415 shares
held in an IRA account for which Mr. R. H. Johnson, Jr. holds sole
voting and investment power. Also includes 30,000 shares of which Mr.
Johnson disclaims beneficial ownership, held by a private foundation
of which Mr. Johnson is a trustee and 1,124 shares held by a member of
Mr. Johnson's immediate family, of which Mr. Johnson disclaims
beneficial ownership. Also includes 4,166 shares of restricted stock
granted on December 8, 1993 pursuant to the Company's Universal Stock
Plan. Does not include 9,191 restricted shares to be issued pursuant
to incentive compensation arrangements for Mr. Johnson described in
the Summary Compensation Table elsewhere herein. Upon issuance, Mr.
Johnson is entitled to receive dividends and vote such 9,191
restricted shares, however, such shares are still subject to vesting
requirements.
(3) Includes 7,487,866 shares held directly and 468,560 shares held
in an IRA account for which Mr. Wiskemann holds sole voting and
investment power.
(4) Represents shares which may be acquired within sixty (60) days
through the exercise of an option held by a group ("Hellman-Friedman
Group") consisting of Hellman & Friedman Capital Partners II, L.P.;
Hellman & Friedman Investors L.P.; Hellman & Friedman Investors, Inc.;
H & F Orchard Partners, L.P.; H & F Orchard Investors, L.P.; H & F
Orchard Investors, Inc.; H & F International Partners, L.P.; H & F
International Investors L.P.; H & F International Investors, Inc.; F.
Warren Hellman; Tully M. Friedman; Magellan Pte. Ltd. and Government
of Singapore Investment Corporation. Percentages assume the exercise
of options for 4,721,435 shares and a concomitant increase of
outstanding shares to 86,304,643 for calculation of the Hellman-
Friedman Group percentage only. Mr. F. Warren Hellman disclaims
beneficial ownership of such shares.
(5) Except with respect to Hellman-Friedman Group's percentage
ownership as described in footnote 4 above, percentages are calculated
based upon 81,583,208 shares issued and outstanding on November 28,
1994 and do not include any restricted shares to be issued under
incentive compensation arrangements described in the Summary
Compensation Table and under the caption "Amendment of Annual
Incentive Compensation Plan" elsewhere herein and not yet issued as of
November 28, 1994.
SECURITY OWNERSHIP OF MANAGEMENT
The following information with respect to the outstanding shares of
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, is furnished as of November 28, 1994:
Amount and Nature of
Beneficial Percent of
Name Ownership(*) Class(*)
Harmon E. Burns 1,344,196(1) 1.6
Martin L. Flanagan 226,261(2) - (8)
Judson R. Grosvenor 1,206,512 1.5
F. Warren Hellman 3,147,623(3) 3.7(3)
Charles B. Johnson 16,190,602(4) 19.8
Charles E. Johnson 195,570(5) - (8)
Rupert H. Johnson, Jr. 12,815,701(6) 15.7
Harry O. Kline 0 - (7)
Peter M. Sacerdote 0 - (8)
Louis E. Woodworth 679,976(7) - (8)
Directors and Officers as 36,248,402(3) 42.8(3)
a Group of 18 Persons
(*) Represents ownership as of November 28, 1994. Does not include
81,055 restricted, but not yet issued, shares granted as of September
30, 1994 to the executive officers pursuant to the Company's Annual
Incentive Compensation Plan. Upon issuance, all restricted
stockholders have the right to vote and receive dividends on all
restricted shares. Does not include beneficial ownership of 7,956,426
shares by R. Martin Wiskemann, a principal shareholder of the Company
and an officer of certain subsidiaries of the Company.
(1) Includes 995,834 shares held directly and 319,282 shares held
in an IRA account for which Mr. Burns holds sole voting and investment
power. Also includes 24,914 shares of which Mr. Burns disclaims
beneficial ownership, held by a private foundation of which Mr. Burns
is a trustee. Also includes 4,166 shares of restricted stock granted
on December 8, 1993 pursuant to the Company's Universal Stock Plan.
Does not include 9,191 restricted, but not yet issued, shares granted
as of September 30, 1994 pursuant to the Company's Annual Incentive
Compensation Plan described elsewhere herein in the Summary
Compensation Table and under the caption "Amendment of Annual
Incentive Compensation Plan".
(2) Includes 98,107 shares held directly for which Mr. Flanagan
holds sole voting and investment power and 122,195 restricted shares
granted in connection with an acquisition by the Company of the assets
of Templeton, Galbraith & Hansberger Ltd. (hereinafter referred to as
"Templeton" and the "Acquisition"). Also includes 5,959 shares of
restricted stock granted on December 8, 1993 pursuant to the Company's
Universal Stock Plan. Does not include 16,296 restricted, but not yet
issued, shares granted as of September 30, 1994 pursuant to the
Company's Annual Incentive Compensation Plan described elsewhere
herein in the Summary Compensation Table and under the caption
"Amendment of Annual Incentive Compensation Plan".
(3) Represents shares which may be acquired within sixty (60) days
through the exercise of an option held by a group ("Hellman-Friedman
Group") consisting of Hellman & Friedman Capital Partners II, L.P.;
Hellman & Friedman Investors, L.P.; Hellman & Friedman Investors,
Inc.; H & F Orchard Partners, L.P.; H & F Orchard Investors, L.P.; H &
F Orchard Investors, Inc.; H & F International Partners, L.P.; H & F
International Investors, L.P.; H & F International Investors, Inc.; F.
Warren Hellman; and Tully M. Friedman. Does not include assumed
exercise for options for 1,573,812 shares held by Magellan Pte. Ltd.
and Government of Singapore Investment Corporation. For purposes of
Mr. Hellman's beneficial ownership and that of officers and directors
as a group, percentages assume exercise of option for 3,147,623 shares
and concomitant increase of outstanding shares to 84,730,831. Mr.
Hellman disclaims beneficial ownership of such shares.
(4) Includes 14,503,166 shares held directly and 1,506,225 shares
held in an IRA account for which Mr. C. B. Johnson holds sole voting
and investment power. Also includes 181,211 shares of which Mr.
Johnson disclaims beneficial ownership, held by a private foundation
of which Mr. Johnson is a trustee.
(5) Includes 187,976 shares held directly for which Mr. C. E.
Johnson holds sole voting and investment power. Also includes 7,594
shares of restricted stock granted on December 8, 1993 pursuant to the
Company's Universal Stock Plan. Does not include 11,407 restricted,
but not yet issued, shares granted as of September 30, 1994 pursuant
to the Company's Annual Incentive Compensation Plan described
elsewhere herein in the Summary Compensation Table and under the
caption "Amendment of Annual Incentive Compensation Plan".
(6) Includes 12,011,996 shares held directly and 768,415 shares
held in an IRA account for which Mr. R. H. Johnson, Jr. holds sole
voting and investment power. Also includes 30,000 shares of which Mr.
Johnson disclaims beneficial ownership, held by a private foundation
of which Mr. Johnson is a trustee and 1,124 shares held by a member of
Mr. Johnson's immediate family, of which Mr. Johnson disclaims
beneficial ownership. Also includes 4,166 shares of restricted stock
granted on December 8, 1993 pursuant to the Company's Universal Stock
Plan. Does not include 9,191 restricted, but not yet issued, shares
granted as of September 30, 1994 pursuant to the Company's Annual
Incentive Compensation Plan described elsewhere herein in the Summary
Compensation Table and under the caption "Amendment of Annual
Incentive Compensation Plan".
(7) Includes 318,320 shares held directly and 361,656 shares held
in an IRA account for which Mr. Woodworth holds sole voting and
investment power.
(8) Represents less than 1% of class.
PROPOSAL 1: ELECTION OF DIRECTORS
The following nine (9) persons have been nominated for election as
directors of the Company to serve until the next Annual Meeting of
Stockholders or until their successors are elected and shall qualify.
Unless authority to do so is withheld, the persons named as proxies
intend to vote in favor of the election of said nominees. The Voting
requirements for approval of this proposal are more particularly
described in the Caption "Voting Securities" elsewhere herein.
Director Name Age Principal Occupation During Last Since
Five Years
Charles B. Johnson 61 President, Chief Executive Officer 1969
and Director of the Company;
Chairman and Director, Franklin
Advisers, Inc. and
Franklin/Templeton Distributors,
Inc.; Director, Templeton
Worldwide, Inc., Franklin Bank,
and Franklin/Templeton Investor
Services, Inc.; Director, General
Host Corporation; and officer,
director, trustee or managing
general partner, as the case may
be, of most other principal
domestic subsidiaries of the
Company and of 32 of the
investment companies in the
Franklin Group of Funds and 6 of
the investment companies in the
Templeton Family of Funds.
Rupert H. Johnson, Jr. 54 Executive Vice President and 1969
Director of the Company; Director
and President, Franklin Advisers,
Inc.; Director and Executive Vice
President, Franklin/Templeton
Distributors, Inc.; Director,
Franklin/Templeton Investor
Services, Inc., Templeton
Worldwide, Inc., and Franklin
Bank; Director, Digidesign, Inc.;
and officer, director, trustee or
managing general partner, as the
case may be, of most other
principal domestic subsidiaries of
the Company and 32 of the
investment companies in the
Franklin Group of Funds and 6 of
the investment companies in the
Templeton Family of Funds.
Judson R. Grosvenor, 73 Formerly a partner in a member 1971
LHD firm of the NYSE and an allied
member of the NYSE. Over 30 years
experience in the investment
industry. Also engaged in the
hotel industry as a developer,
builder, and operator.
Louis E. Woodworth 61 Private investor. President, 1981
Alpine Corp.
Harry O. Kline 67 Prior to 1988, a wholesaler and 1990
Regional Sales Manager of
Franklin/Templeton Distributors,
Inc. Over 40 years experience in
the investment industry.
Harmon E. Burns 49 Executive Vice President, Director 1991
and Secretary of the Company;
Executive Vice President, Franklin
Advisers, Inc. and
Franklin/Templeton Distributors,
Inc.; Director, Templeton
Worldwide, Inc.,
Franklin/Templeton Investor
Services, Inc., and Franklin Bank;
and officer, director, trustee or
managing general partner, as the
case may be, of most other
principal domestic subsidiaries of
the Company and 12 of the
investment companies in the
Franklin Group of Funds and 5 of
the investment companies in the
Templeton Family of Funds.
F. Warren Hellman 60 Partner, Hellman & Friedman 1992
(investment banking); Director and
General Partner, Matrix Partners;
Director, American President
Companies, Ltd.; Consilium, Inc.;
Levi Strauss Associates, Inc.;
Williams-Sonoma, Inc.; and Great
American Management & Investment,
Inc.
Director Name Age Principal Occupation During Last Since
Five Years
Peter M. Sacerdote 57 Limited Partner and Chairman of 1993
the Investment Committee of the
Goldman Sachs Group, L.P.
(investment banking and G.S.
Capital Partner, L.P. (merchant
banking fund). Formerly, General
Partner of Goldman Sachs Group,
L.P. Director, Weis Markets, Inc.;
and Qualcomm, Inc.
Charles E. Johnson 37 Senior Vice President of the 1993
Company; Director since December
1993; President and Director,
Templeton Worldwide, Inc.;
President, Franklin Institutional
Services Corporation; Senior Vice
President, Franklin/Templeton
Distributors Inc.; Chairman,
Franklin Agency, Inc.; Vice
President, Franklin Advisers,
Inc.; officer and/or director of
other subsidiaries of the Company
and officer, director or trustee
of 8 of the investment companies
in the Franklin Group of Funds and
6 of the investment companies in
the Templeton Family of Funds;
employed in various capacities by
the Company or its subsidiaries
since 1985.
Mr. Hellman is a principal in Hellman & Friedman, which is a part
of a group which purchased from the Company in connection with the
Acquisition, $150,000,000 of 6.25% subordinated debentures of
Templeton Worldwide, Inc., a wholly-owned subsidiary of the Company,
with options attached to purchase 4,721,435 shares of Common Stock at
$31.77 per share, subject to adjustments. In connection with that
transaction, Hellman & Friedman Capital Partners II, L.P., one of the
members of that investors group, received the right to nominate Mr.
Hellman for election as a member of the Board of Directors, and the
Company has agreed, to the extent permitted by law, to use its best
efforts to cause Mr. Hellman to become nominated and to vote all
shares for which the Company's management holds proxies or is
otherwise entitled to vote in favor of the election of Mr. Hellman.
Charles B. Johnson and Rupert H. Johnson, Jr. are brothers. Peter
M. Sacerdote is a brother-in-law of Charles B. Johnson and Rupert H.
Johnson. Charles E. Johnson is the son of Charles B. Johnson and the
nephew of Rupert H. Johnson, Jr. and Peter Sacerdote.
During the fiscal year ended September 30, 1994, directors who are
not officers of the Company received a standard fee of $6,000 per each
quarter, plus $2,000 per meeting attended. No additional fees are paid
to directors who serve on committees of the Board. Directors of the
Company, who are retired from other employment and not otherwise
eligible for group health coverage under the group health plan of the
Company or any or any other corporation by whom they are or were
employed, are entitled to receive reimbursement by the Company of the
cost of health insurance coverage comparable to that provided to
employees of the Company. During the fiscal year ended September 30,
1994, Louis E. Woodworth was reimbursed $1,360 for such expenses.
The Company has established a policy permitting the deferral of
payment of directors' fees and treatment of such deferral amounts as
hypothetical investments in the Common Stock of the Company on the
dates such fees would otherwise be payable to a director. Such
deferral can be terminated by either the Company or a director upon
ninety (90) days notice. Upon termination of such deferral, the
Company is obligated to pay a director an amount equal to such
hypothetical investment in the Company's Common Stock, including
reinvestment of dividends, based upon the closing price on the NYSE on
the date of such termination. During the fiscal year, Louis E.
Woodworth elected to defer directors' fees.
The Board has also adopted a policy whereby upon reaching the age
of 75, directors who are not also officers or employees of the Company
will retire and will become eligible to serve as a Director Emeritus,
without voting authority. Each Director Emeritus will receive such
compensation from the Company as is established by the Board and will
be available to provide such services to the Board as may be mutually
determined. In accordance with the policy and in recognition of his
services, Mr. Samuel Morse, a director of the Company from its
inception until 1990, currently serves as a Director Emeritus and
receives compensation equal to the compensation paid to a director who
attends each meeting of the Board.
Board and Committee Meetings
The Board of Directors held five (5) meetings (exclusive of
committee meetings) during the preceding fiscal year. Each director,
except F. Warren Hellman, attended at least seventy-five percent (75%)
of the Board meetings and each committee member, including F. Warren
Hellman, attended 100% of the committee meetings held during such
period. The Board has established an Audit Committee and a
Compensation Committee. The Board does not have a nominating
committee.
The Audit Committee of the Board of Directors consists of Mr.
Woodworth (Chairman) and Messrs. Grosvenor and Kline. Each of the
foregoing is a director who is not employed by the Company. The Audit
Committee is responsible for reviewing and helping to ensure the
integrity of the Company's financial statements. The Audit Committee
reviews the Company's financial statements and internal accounting
controls. The Committee meets with the Company's independent
accountants and reviews the scope of their audit and their report and
recommendations. The Audit Committee also recommends to the Board the
selection of the Company's independent accountants. The Committee met
one time during the fiscal year and all members attended.
The Compensation Committee of the Board of Directors consists of
Mr. Hellman (Chairman) and Messrs. Sacerdote and Woodworth. The
Compensation Committee was established to review and set the
compensation of the Chief Executive Officer, to determine the general
policies and guidelines pursuant to which the compensation of the
other executive officers is made and to perform other duties as
assigned from time to time by the Board. The Compensation Committee
also administers the Company's Annual Incentive Compensation Plan and
its Universal Stock Plan. The Compensation Committee met four (4)
times during the last completed fiscal year and all members of the
Committee were present for all meetings.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Company's compensation program for executive officers
(including the Chief Executive Officer) consists primarily of salary
and annual incentive bonuses based upon individual and Company
performance. A significant portion of the bonuses is paid in the form
of shares of restricted stock which are vested over a several year
period. For fiscal 1994, such shares were granted in equal
installments over a three (3) year vesting period.
Executive officers also participate in either a profit sharing, or
a combined profit sharing and 401(k) plan, and are entitled to receive
medical, life and disability insurance coverage and other corporate
benefits generally 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.
In January 1994, the salary of the Chief Executive Officer, Mr.
Charles B. Johnson, was increased by fifteen percent (15%). The
increase was a combination of a cost of living adjustment and an
adjustment relating to overall Company salary levels. The Committee
has determined that Mr. C. B. Johnson will continue to participate in
the Company's Annual Incentive Plan. Bonuses paid to Mr. C. B. Johnson
under this Plan depend upon both Company performance and Mr. C. B.
Johnson's performance as determined annually by the Committee.
The salaries of the two executive vice presidents, Rupert H.
Johnson, Jr., and Harmon E. Burns were determined by the Chief
Executive Officer in consultation with such individuals. Such salaries
were increased twenty percent (20%) in January 1994 and principally
reflect a combination of a cost of living adjustment and an adjustment
relating to overall Company salary levels. Such officers are also
participants in the Company's Annual Incentive Compensation Plan,
pursuant to which a substantial portion of their annual compensation
will be dependent upon the Company's performance. The compensation of
Mr. Flanagan was primarily determined in accordance with his
employment contract, which provided for salary, an incentive bonus
plan and participation in corporate benefit plans. A substantial
portion of Mr. Flanagan's incentive bonus was in the form of an award
of restricted stock vesting over a three year period under the
Company's Annual Incentive Plan.
Bonus payments to executive officers are determined by the
Committee under the Annual Incentive Compensation Plan. As a general
matter, the size of the pool available for such bonus payments is a
percentage of pre-tax operating income of the Company, 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 Plan. In determining the percentage, the Committee
considers a variety of factors including the performance of the
Company's stock as compared to the indices set forth in the
performance graph included in this proxy statement; the increase in
book value of the Company's common stock; the more than 180% increase
of the Company's net income from the fiscal year ending September 30,
1990 to the fiscal year ending September 30, 1994; the approximate
475% increase in the market capitalization of the Company from fiscal
1990 to fiscal 1994; and the general stability of the Company's profit
margin from fiscal 1990 to fiscal 1994. The Committee considered a
number of factors, but no specific weighting was given to any
particular factor in determining the percentage for the pool. The
Committee also considered the changes in the Company's financial and
business structure as a result of the Acquisition and the success of
the integration of the Franklin and Templeton operations while
maintaining the unique nature of the Templeton investment process.
In its review of compensation, and, in particular, in determining
target awards and the amount and form of actual awards under the Plan
for the Chief Executive Officer and the other executive officers not
previously affiliated with Templeton, the Committee considered amounts
paid to executive officers in prior years as salary, bonus and other
compensation, the Company's overall performance during the prior five
(5) year period, and its future objectives and challenges. In respect
of Mr. C. B. Johnson, the Committee also took into account the level
of his stock ownership. Although the Committee considered a number of
different individual and Company performance factors, no specific
weighting was given to any such factor.
The Committee believes that the opportunity to earn awards under
the Annual Incentive Compensation Plan motivates executive officers to
achieve results. Moreover, the ability to pay incentive compensation
in the form of stock of the Company or stock rights better aligns the
interests of the management of the Company with those of its
shareholders and further encourages them to focus on the long range
growth and development of the Company.
Section 162(m) of the Internal Revenue Code, which limits the
deductibility by the Company of certain executive compensation for
federal income tax purposes, will apply for the first time to the
Company in the fiscal year ending September 30, 1995. The Committee is
currently examining the Company's executive compensation program in
view of Section 162(m) and the regulations thereunder proposed by the
Internal Revenue Service in 1993 and 1994. No policy determination
regarding this matter has yet been made.
Respectfully Submitted:
Compensation Committee
F. Warren Hellman, Chairman
Peter M. Sacerdote
Louis E. Woodworth
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended September 30, 1994, Goldman Sachs &
Co., the parent company of which Mr. Sacerdote is a limited partner,
served as an agent for the sale of notes under the Company's medium-
term note program and received payments in connection with the sale of
such notes. Amounts paid to such investment banking firm did not
exceed 5% of such firm's consolidated gross revenues for such firm's
last full completed fiscal year.
Employment Contracts
Mr. Charles B. Johnson has an employment contract with the Company
pursuant to which the Company is obligated, in the event of Mr.
Johnson's death or permanent disability, to pay one year's salary.
Under the contract, Mr. Johnson is employed as the President and Chief
Executive Officer at a salary determined from time to time by the
Board of Directors, which has assigned the review of Mr. Johnson's
compensation arrangements to the Compensation Committee.
Mr. Flanagan is party to a three (3) year employment contract
ending on October 31, 1995, which provides for the payment to him of
annual compensation of at least $450,000. Pursuant to such contract,
Mr. Flanagan was also paid $2,992,000 in bonus payments ($192,000 of
which was paid after the close of the fiscal year) and received
100,000 shares of Franklin restricted stock valued at $26.08 per share
as of the date of such grant, which vested on October 30, 1994. The
Company purchased 25,000 of such shares from Mr. Flanagan on October
31, 1994 at $40.875 per share, the closing price of such shares on the
NYSE on October 31, 1994.
COMPENSATION TABLES AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Restricted All Other
Name and Principal Year Salary Bonus Stock Compensation
Position Awards(11)
Charles B. Johnson 1994 $483,268 $259,842 $ 20,760(1)
President, CEO 1993 $425,572 $216,535 $ 21,006(1)
1992 $395,571 $161,228 $ 19,519(1)
Rupert H. Johnson, Jr., 1994 $431,500 $225,600 $ 338,394(2) $ 30,000(1)
Executive Vice 1993 $368,500 $188,000 $ 187,991(3) $ 27,435(1)
President
1992 $338,500 $138,400 $ 19,519(1)
Harmon E. Burns, 1994 $431,500 $225,600 $ 338,394(2) $ 20,760(1)
1992 $338,500 $138,400 $ 19,519(1)
Martin L. Flanagan, 1994 $650,000 $400,000 $ 599,986(2) $122,753(10)
Senior Vice President 1993 $442,500 $5,171,280(5) $6,651,302(6) $844,760(7)
Chief Financial
Officer(4)
Charles E. Johnson, 1994 $351,164 $280,000 $ 419,983(2) $ 98,209(1),(9)
Senior Vice President 1993 $248,201 $290,731(9) $ 342,679(8) $ 21,006(1)
1992 $221,003 $309,920(9) $ 19,519(1)
1. Represents Company contributions to the Company's combined
Profit Sharing/401(k) defined contribution plan for Messrs. C. B.
Johnson, R. H. Johnson, Jr., and H. E. Burns. For Mr. C. E. Johnson,
represents contributions to such plan for a portion of the fiscal year
and a contribution to a profit sharing plan of a subsidiary for the
remainder of such year.
2. Represents shares of to-be-issued restricted stock vesting in
approximately equal installments on each of October 1, 1995, October
1, 1996, and October 1, 1997, granted by the Compensation Committee of
the Board of Directors of the Company as of September 30, 1994 to the
following persons: Mr. R. H. Johnson, Jr., 9,191; Mr. H. Burns, 9,191;
Mr. M. Flanagan, 16,296; and Mr. C. E. Johnson, 11,407. Such shares
were granted at a grant price of $36.8180, representing the average of
the closing price on the NYSE on September 30, 1994 and the five (5)
trading days before and after such date.
3. Represents 4,166 shares of restricted stock vesting in
approximately equal installments on each of October 1, 1995, October
1, 1996, and October 1, 1997, granted on December 8, 1993 at a grant
price of $45.125 per share, which was equal to the closing price of
the Company's Common Stock on the NYSE on December 7, 1993.
4. Includes compensation for Mr. Flanagan only since commencement
of employment on November 1, 1992. Mr. Flanagan served as an officer
and director of various subsidiary companies of the Company until his
election as Senior Vice President of the Company on March 15, 1993.
5. Includes $2,000,000 paid to Mr. Flanagan under an employment
contract entered into in connection with the Acquisition, pursuant to
which Mr. Flanagan was obligated to repay such monies to the Company
on a pro-rata basis if he ceased to be employed by the Company or a
subsidiary of the Company prior to October 30, 1993. Also includes an
additional $2,800,000 paid pursuant to such employment contract, which
Mr. Flanagan was obligated to repay to the Company if he was not still
employed by the Company, or a subsidiary of the Company on October 30,
1994, $179,280 in a fiscal 1993 bonus payment, and an additional
$192,000 paid under such employment contract in November 1994.
6. Includes 144,724 shares of the Company's Common Stock issued to
Mr. Flanagan in a transaction in which restricted shares of Templeton
were converted into restricted shares of the Company's Common Stock at
a value of $26.08 per share, which represented an agreed upon price
which was equal to the fair market value of the Company's Common Stock
at the time of such agreement. Original vesting dates for such shares
were retained resulting in vesting of some of such shares within three
(3) years of the new issue date but five (5) years from the original
grant date. At September 30, 1994, 22,529 of such shares had vested
and 122,195 of such shares had not vested. The unvested shares had a
then aggregate market value based upon a closing price on the NYSE of
the Company's Common Stock of $37.375 per share (assuming no
restrictions) of $4,567,038. The vesting schedule for the remaining
shares is as follows for the year ending September 30, 1995, 62,148
shares; the year ending September 30, 1996, 41,638; the year ending
September 30, 1997, 18,409 shares. Also includes 5,959 shares of
restricted stock vesting in installments of 1987, 1986, and 1986
shares respectively on each of October 1, 1995, October 1, 1996 and
October 1, 1997 granted on December 8, 1993, at a price of $45.125 per
share, which was equal to the closing price of the Company's stock on
the NYSE on December 7, 1993. Also includes 100,000 restricted shares
issued in connection with an employment contract entered into with Mr.
Flanagan, also valued at $26.08 per share. All of such employment
contract shares have vested as more particularly described under the
caption "Employment Contracts" elsewhere herein.
7. Represents the sum of the following: (i) forgiveness in March
1993 of a $100,000 loan made by Templeton, prior to the Acquisition;
(ii) $500,000 in deferred cash compensation payable on January 1, 1997
based upon continued employment through that date and subject to
increase or decrease based upon the investment performance of
Templeton Growth Fund from January 1, 1992 to January 1, 1997; (iii) a
$30,000 Company contribution by a subsidiary of the Company to a
defined contribution plan in which Mr. Flanagan is a participant; and
(iv) $214,760 paid to Mr. Flanagan to cash out certain options held by
Mr. Flanagan on Templeton shares.
8. Represents 7,594 shares of restricted stock vesting in
approximately equal installments on each of October 1, 1995, October
1, 1996, and October 1, 1997, granted on December 8, 1993 at a grant
price of $45.125 per share, which was equal to the closing price of
the Company's Common Stock on the NYSE on December 7, 1993.
9. Bonuses include commissions of $215,592 for 1992 and $164,567
for 1993. Other compensation for fiscal 1994 includes forgiveness of
indebtedness of $68,209 more particularly described under the caption
"Certain Relationships and Related Transactions" elsewhere herein.
10. Includes forgiveness during the fiscal year of a loan to Mr.
Flanagan in the amount of $100,000 and a $22,753 contribution to the
Company's combined Profit Sharing/401(k) defined contribution plan.
11. Upon issuance, dividends are paid on restricted shares and
holders are entitled to vote such shares in the same manner as other
shares of the Company's Common Stock. The price of the Company's
Common Stock on September 30, 1994 on the NYSE, the last day of its
most recently completed fiscal year, was $37.375. The value of the
restricted stock holdings of the persons listed in the Summary
Compensation Table based upon such price on September 30, 1994 was as
follows: Charles B. Johnson, $0; Rupert H. Johnson, Jr., $499,218;
Harmon E. Burns, $499,218; Martin L. Flanagan, $5,398,819; and Charles
E. Johnson, $710,162.
PERFORMANCE GRAPH
The following performance graph compares the performance of an
investment in the Company's Common Stock for the last five (5) fiscal
years to that of the Standard & Poor's 500 Composite Stock Price Index
and to the Standard and Poor's MidCap 400 Index. The graph assumes
that the value of the investment in the Company's Common Stock, and
each index was $100 on September 30, 1989 and that all dividends were
reinvested. Many companies with principal lines of business that might
be deemed to be in competition with the Company are not publicly
traded. Although there are some publicly traded companies that have
lines of business comparable to the Company, such lines of business
are not generally the principal line of business for such companies
and, therefore, a comparison of stock performance or a construction of
a peer group index is not appropriate. Therefore, the Company has
chosen the Standard and Poor's MidCap 400, an index of which it is
part, as an index of issuers with similar market capitalization for
comparative purposes.
Comparison of Five Year Cumulative Total Return
[PERFORMANCE GRAPH FILED IN PAPER FORM UNDER FORM SE]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Acquisition, Templeton loaned Mr. Flanagan monies
secured by a mortgage on Mr. Flanagan's residence in Nassau, Bahamas.
Such loan is still outstanding to a successor company and bears
interest at the rate of 5.98%. The largest aggregate amount
outstanding during the fiscal year was $531,576.
Prior to the fiscal year ended September 30, 1994, in connection
with Mr. Flanagan's move to the Company's executive offices in
California, the Company advanced $744,298 to Martin and Jennifer
Flanagan, his spouse, to repay a mortgage on residential real property
in Ft. Lauderdale, Florida. Such advance was secured by an equitable
lien on such real property and accrued interest at the rate of 3.69%
per annum, the applicable Federal rate under Section 1274(d) of the
Internal Revenue Code. Such loan and accrued interest was repaid in
full on December 3, 1993 in connection with a sale of such real
property.
Pursuant to a policy followed by Templeton, loans were made from
time to time by Templeton to certain executive officers which were
forgiven if such officer was still employed by Templeton one year
after the granting of such loan. A loan in the amount of $100,000 made
to Mr. Flanagan after the Acquisition was forgiven by the successor
company to Templeton in March 1994.
The Company has generally followed a policy of making loans to
employees for the purpose of exercising stock options. No such stock
options were granted during the fiscal year and no loans were made to
executive officers for purposes of exercising stock options during the
fiscal year. During the fiscal year, a loan previously made to
exercise such options was outstanding to Charles E. Johnson, a Senior
Vice President and director of the Company. The largest aggregate
amount outstanding during the fiscal year was $89,333, bearing
interest at the rate of 8.19%. The remaining outstanding aggregate
balance of such loan of $68,209, including accrued interest was
forgiven during the fiscal year.
During the fiscal year, loans were also outstanding to certain
executive officers of the Company from Franklin Bank, a subsidiary of
the Company. Such loans were made in the ordinary course of business
and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions and did not involve more than the normal risk of
collectibility or present other unfavorable features. In addition,
certain executive officers were holders of credit cards issued by
Franklin Bank upon substantially the same terms as those prevailing at
the time for comparable cards issued to other Franklin Bank customers.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Coopers &
Lybrand L.L.P. as independent certified accountants to audit the books
and accounts of the Company for its current fiscal year ending
September 30, 1995. Coopers & Lybrand L.L.P. has no direct or indirect
financial interest in the Company. During the fiscal year ended
September 30, 1994, the audit services provided by Coopers & Lybrand
L.L.P. consisted of the rendering of opinions on the financial
statements of the Company and its subsidiaries. They also provided
certain non-audit services in connection with the consideration and
execution of the Acquisition; they provided no other material non-
audit services. The Board of Directors recommends ratification of
their appointment. It is the intention of the persons named as proxy
holders to vote for such ratification. The Voting requirements for
approval of this proposal are more particularly described in the
caption "Voting Securities" elsewhere herein. It is not expected that
a representative of the accountants will be present at the Annual
Meeting
PROPOSAL 3: AMENDMENT OF ANNUAL INCENTIVE COMPENSATION PLAN
The Board of Directors proposes that the stockholders approve the
adoption of the Franklin Resources, Inc. Amended Annual Incentive
Compensation Plan (the "Amended Incentive Plan"), in the form attached
as Exhibit "A" to this Proxy Statement, which Amended Incentive Plan
was approved by the Compensation Committee of the Board of Directors
(the "Committee") and the Board, subject to approval by the
stockholders at the Annual Meeting. The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Meeting is required to approve the adoption of
the Amended Incentive Plan. The Voting requirements for approval of
this proposal are more particularly described in the Caption "Voting
Securities" elsewhere herein.
The Stockholders of the Company approved the Company's existing
Annual Incentive Compensation Plan (the "Existing Plan") on January
19, 1994 at the Annual Meeting of Stockholders. The Company then
implemented the Existing Plan for the fiscal year ended September 30,
1994 and awards were made to employees thereunder, including awards to
certain persons described in the Summary Compensation Table elsewhere
herein. The Committee and the Board of Directors of the Company
believe that the general conceptual framework of the Existing Plan is
workable and will serve as a viable employment incentive to achieve
the highest levels of performance by the employees of the Company.
However, it is the belief of the Board and the Committee that the
Existing Plan should be amended to simplify its structure and to
afford greater flexibility to the Committee in the administration of
such Plan.
The principal proposed changes to the Existing Plan are summarized
below, but are qualified in their entirety by reference to the Amended
Incentive Plan attached as Exhibit "A" and incorporated herein by this
reference:
Annual Incentive Points
Existing:
The Existing Plan provided that Covered Employees (as defined
below) would be classified into two categories, principals and
associates, by action of the Committee. A target incentive award pool
was then to be established on an annual basis for bonus payments to
Covered Employees and would be funded based upon the performance of
the Company during the fiscal year. Such award pool was then to be
further divided into a principals' pool and an associates' pool. The
principals' pool would then be further divided into an "A" pool and a
"B" pool. The Committee would then assign annual incentive points
("Points"). Such Points awarded at the beginning of a fiscal year
would represent a pre-determined interest in the "A" pool at the time
that bonus awards were made at the end of the Company's fiscal year.
This had the effect of giving each principal who was awarded Points
under such Plan a guaranteed bonus at year end if the Company met its
pre-determined performance goals, independent of the job performance
of such principal. Points were to be awarded on an annual basis, based
upon the number of Covered Employees in the principals' pool and the
performance of a particular employee during the prior fiscal year.
Award payments to principals from the "B" pool and to associates under
the Existing Plan would then be determined on a discretionary basis by
the Committee, based upon the job performance of the Covered Employee
during the fiscal year.
The Board and Committee believe that the use of the Points system
limits the flexibility of the Committee in structuring incentive
compensation. Since Points were based upon the prior year's job
performance, employees were in effect guaranteed a portion of their
bonus based upon the Company's performance and their prior year job
performance. The Board and the Committee are also concerned about the
fairness issues arising from the assignment of Points at the beginning
of the fiscal year and the subsequent hiring of an employee who would
qualify as a principal in the middle of the fiscal year.
Proposed:
Therefore, the Amended Incentive Plan set forth in Exhibit "A"
eliminates the use of Points as well as the division of the
principals' pool into an "A" and "B" category. Under the Amended
Incentive Plan, awards will continue to be based upon Company
performance, but such awards will be based more directly upon an
employee's actual performance and contributions during a fiscal year.
The Committee will also have the maximum opportunity to adjust
individual awards at year end to actual demonstrated performance
during such fiscal year.
Timing of Plan Participation and Notice to Participants
Existing:
The Existing Plan required a determination of principals and
associates at the beginning of the Plan year and did not specifically
address the issue of eligible employees hired during a fiscal year.
The Existing Plan was not specific, but the Point system was generally
based upon the concept of notification to Covered Employees of awards
at or near the beginning of a fiscal year.
Proposed:
The Amended Incentive Plan provides that employees hired during the
course of a fiscal year may be participants under the Plan as either
principals or associates. Such Amended Incentive Plan further
specifies that the Committee may notify Covered Employees of the
amount of their target awards at any time during a fiscal year. The
Amended Incentive Plan also specifies that the Committee shall
determine awards for Covered Employees on leave of absence for any
portion of a fiscal year.
Other Changes
Existing:
The Existing Plan had certain duplicate language and also described
performance ratings under the Plan relative to specific categories on
the Company's performance appraisal rating form.
Proposed:
The Amended Incentive Plan eliminates duplicate language and also
ties performance rating evaluations under such Plan to the median
level of performance of a Plan participant's peers and not to a
particular rating category.
Continuing Provisions
The Amended Incentive Plan will continue to be administered by the
Committee, none of whom are officers or employees of the Company.
Members of the Board of Directors, who are not employees of the
Company, are not covered under the Amended Incentive Plan. If approved
by Stockholders, the Amended Incentive Plan would be applicable for
the fiscal year ending September 30, 1995.
The Amended Incentive Plan will remain applicable only to exempt
personnel of the Company and its subsidiaries, as that term is used in
the Federal Fair Labor Standards Act or where state law is more
restrictive, then the applicable state law ("Covered Employees"). Such
standard will remain applicable to personnel of foreign subsidiaries
for Amended Incentive Plan purposes as if such statutes were
applicable to such companies. The general purpose of the Amended
Incentive Plan remains to reward the contributions made to the Company
by Covered Employees by providing them an opportunity to share in the
Company's annual performance results with a view to attracting,
retaining and motivating eligible employees to achieve the highest
levels of performance results.
The Amended Incentive Plan continues to provide for the
establishment of an award pool (the "Award Pool") based upon changes
in the Company's net operating income, exclusive of passive income and
calculated before interest, taxes, and extraordinary items, such as
special compensation payouts on account of mergers and after accrual
of incentive awards under the Amended Incentive Plan defined under the
Amended Incentive Plan as "PTOI," not to exceed 15% of PTOI. The
Committee will determine on an annual basis the percentage of PTOI to
be allocated to the Award Pool at varying levels of PTOI. The
Committee will also determine if the Award Pool should be further
segregated by subsidiary company or companies and the division of such
Award Pool between principals and associates.
No minimum or maximum awards are provided for under the Amended
Incentive Plan and allocations do not carry over from fiscal year to
fiscal year. Amounts not paid under the Amended Incentive Plan may be
used for distribution as incentive compensation to employees who are
not covered under such Amended Incentive Plan. The Amended Incentive
Plan continues to provide for certain pro-rations to employees in the
event of death or permanent or long term disability. Awards will
continue to be made in the form of current or deferred cash payments
as well as in restricted Common Stock or stock options or restricted
shares of investment companies in the Franklin Templeton funds. At
least twenty-five percent (25%) of any award under the Amended
Incentive Plan will continue to be in cash. Restricted shares of
Common Stock may be subject to vesting requirements based upon
continued employment as established by the Committee.
All non-cash awards will continue to be issued in accordance with
the Company's Universal Stock Plan. It is still intended that the
Amended Incentive Plan meet the requirements for disinterested
administration under Rule 16 (b) promulgated under by the Securities
and Exchange Commission under Section 16 (b) of the Securities
Exchange Act of 1934. The Amended Incentive Plan could be further
amended in the future without stockholder approval to increase the
cost to the Company by increasing the percentage of PTOI awarded
thereunder or to change the allocation of benefits thereunder. The
Amended Incentive Plan does not presently limit such allocation but
does limit awards under the Incentive Plan to 15% of PTOI.
Plan Benefits
In addition to the fiscal year 1994 grants of restricted stock
under the Existing Plan described in the Summary Compensation Table
elsewhere herein, the Committee granted 34,970 shares of restricted
stock to the other executive officers as a group of 8 persons, 1,725
shares to non executive officers as a group, and 333,214 shares to all
other Covered Employees excluding officers. The Committee also
authorized the issuance of certain stock options to certain employees
of foreign subsidiaries of the Company on a comparable basis to the
restricted stock issuance described above. All such restricted shares
were granted at a grant price of $36.8180, representing the average of
the closing price on the New York Stock Exchange on September 30, 1994
and the five (5) trading days before and after such date. The price of
the Company's Common Stock on September 30, 1994, the last day of its
most recently completed fiscal year, was $37.375.
SHAREHOLDER PROPOSALS
Any shareholder intending to present any proposal for consideration
at the Company's next Annual Meeting must, in addition to meeting
other applicable requirements, mail such proposal to the Company so
that it is received at the Company's executive offices no later than
August 30, 1995.
OTHER MATTERS
So far as the management of the Company is aware, only the
aforementioned matters will be acted upon at the Annual Meeting of
Stockholders. If any other matters properly come before the meeting,
it is intended that the accompanying proxy may be voted on such
matters in accordance with the views of management.
IF YOU CANNOT PERSONALLY ATTEND THE MEETING, PROMPT EXECUTION AND
RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-
PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
EXHIBIT A
FRANKLIN RESOURCES, INC.
Amended Annual Incentive Compensation Plan
I. PURPOSE
Franklin Resources, Inc. (the "Company") hereby establishes the
Amended Annual Incentive Compensation Plan for Principals and
Associates (as hereinafter defined) to reward the contributions to the
Company made by Principals and Associates by providing them an
opportunity to share in the organization's annual performance results.
Through these incentives, the Company intends to attract, retain, and
motivate eligible employees to achieve the highest levels of
performance results in the financial services business.
II. DEFINITIONS
When used in this plan document, the following words and phrases
shall have the following meanings:
2.1 Associates' Pool means the portion of the Award Pool allocated
to Incentive Awards for Associates.
2.2 Award Pool means the total dollars available for funding
awards under the Plan. The Award Pool is comprised of the Associates'
Pool and the Principals' Pool.
2.3 Committee means the Compensation Committee of the Board of
Directors of the Company as described in Section 9.1 below.
2.4 Company means Franklin Resources, Inc. and its affiliates.
2.5 Incentive Award means the actual current value of the award to
a Participant regardless of the form of the award, determined at the
end of the Plan Year.
2.6 Participant means all Principals and Associates who have been
determined by the Committee to be Participants, except employees who
participate in commission-based incentive plans or who are non-exempt
employees.
2.7 Plan means the Amended Annual Incentive Compensation Plan for
Principals and Associates as set forth in this document, as amended
from time to time.
2.8 Pre-Tax Operating Income ("PTOI") means the net operating
income of Franklin Resources, Inc., exclusive of passive income and
calculated before interest, taxes and extraordinary items (such as
special compensation payouts on account of merger) and after accrual
of Incentive Awards under the Plan.
2.9 Plan Year means the 12-month period beginning on the first day
of each fiscal year of the Company, currently October 1.
2.10 Principals' Pool means the portion of the Award Pool
allocated to Incentive Awards for Principals.
2.11 Stock means Franklin Resources, Inc. common stock reserved
for issuance under the Franklin Resources, Inc. Universal Stock Plan
and includes shares issued subject to restrictions and stock options.
2.12 Target Award means a potential bonus opportunity for a
Participant budgeted at the beginning of the Plan Year.
III. PARTICIPATION
3.1 All Principals and Associates employed by the Company at the
beginning of the Plan Year are eligible to be Participants during that
Plan Year. The Committee shall in its sole discretion determine
annually which employees are Principals. All other eligible exempt
staff are Associates. The Committee may, in its sole discretion, add
exempt employees hired during a Plan Year as either Principals or
Associates and may adjust Target Awards for such persons based upon
such interim employment.
3.2 A non-exempt employee who becomes exempt during a Plan Year
shall be eligible for an Incentive Award from the Associates' Pool, in
the Committee's sole discretion.
3.3 A Participant who changes status (e.g., Associate to
Principal) shall continue in his former status for that Plan Year.
3.4 A Participant's award will be based upon an evaluation of a
Participant's overall performance, including the successful
accomplishment of annual goals and objectives, as well as other
performance factors. A Participant who receives a formal performance
appraisal and whose overall evaluation is at less than the median
level of performance relative to such Participant's peers still
remains eligible for an Incentive Award, but the award may be reduced,
even to zero. Participants on written warning may be eligible for an
Incentive Award at the sole discretion of the Committee, but the Award
may be reduced, even to zero.
IV. AWARD POOL FUNDING AND INDIVIDUAL AWARDS
4.1 At or near the beginning of each Plan Year, the Committee
shall
(a) Determine the percentage, not to exceed Fifteen Percent
(15%), if any, of PTOI that will be allocated to the Award Pool at
various levels of Company performance measured by changes in PTOI from
the prior year. The Committee may also determine if in its opinion
prevailing circumstance dictates, that the Award Pool for particular
identified groups of Principals and/or Associates shall be based upon
the PTOI of particular identified subsidiary or subsidiaries of the
Company. The determinations made by the Committee shall be subject to
approval of the Board of Directors of the Company;
(b) Determine the allocation of the Award Pool of the Company
and any identified subsidiary or subsidiaries of the Company as
described in (a) above, between the Associates' Pool(s) and the
Principal's Pool(s);
4.2 After consideration of recommendations made by management
personnel, the Committee shall generally determine the amount of
Target Awards for Participants under the Plan. The Committee may, in
its sole discretion, advise Participants of particular Target Awards
or ranges of Target Awards at any time during the Plan Year.
4.3 The actual amounts allocated to the Award Pool(s) shall be
determined after the end of each Plan Year, based upon actual Company
performance and PTOI.
4.4 Actual Incentive Awards are determined following the end of
each Plan Year. Actual Incentive Awards will vary from the Target
Awards depending on the PTOI allocated to the Award Pool and a
Participant's individual performance.
4.5 The Principals' Pool will be allocated among any or all
Principals on the basis of a Participant's individual performance and
based upon the accomplishment of such Participant's goals and
objectives for the Plan Year. No Principals are guaranteed a payout
from the Principals' Pool.
4.6 The Associates' Pool will be allocated among any or all
Associates on the basis of the Participant's individual performance
and based upon the accomplishment of such Participant's goals and
objectives for the Plan Year. No Associates are guaranteed a payout
from the Associates' Pool.
4.7 To promote the highest levels of individual performance, there
is no minimum or maximum which applies to individual Incentive Awards
of any Participant. Amounts not allocated as awards do not carry over
to the next Plan Year, and may be used for distribution as incentive
compensation to employees who are not Participants in the Plan.
V. PAYMENT OF ANNUAL AWARDS
5.1 Incentive Awards may, in the Committee's discretion, be paid
in the following time and manner:
(a) Incentive Awards may be paid in cash or in a combination of cash
and Stock and shares of investment companies in the Franklin Templeton
funds, subject to restrictions and vesting determined by the Committee
to be appropriate.
(b) At least 25% of the Incentive Award will be paid in cash at
such time after the end of the Plan Year as determined by the
Committee. The balance (if any) of the cash portion of an Incentive
Award shall be paid at such later time and in such manner as the
Committee determines. Participants shall be notified in writing as to
the date and time of payment of any such deferred portion of the
Incentive Award.
(c) Any immediately vested Stock awarded as part of an
Incentive Award shall be distributed (whether or not subject to
restrictions) at such time after the end of the Plan Year as
determined by the Committee. Stock subject to future vesting shall be
issued (whether or not subject to restrictions) as soon as
administratively practicable.
VI. PAYMENT IN EVENT OF DEATH, DISABILITY, LEAVE OF ABSENCE OR
RETIREMENT
6.1 Death of Participant
A Participant who dies is entitled to a pro-rated Incentive Award
based on performance up to the last day worked. Payment shall be made
in cash in a single payment as soon as practical following the end of
the Plan Year in which death occurred. If the Participant dies
following the end of a Plan Year but before Incentive Awards for that
year have been paid, the Participant's full Incentive Award shall be
paid in cash in a single payment when it would otherwise have been
paid. Payment of Incentive Awards on account of death shall be paid to
the person designated by the Participant as beneficiary under this
Plan. If there is no such designation or the designated beneficiary
fails to survive the Participant, payment shall be made to the
Participant's spouse or if there is none, the Participant's estate.
6.2 Disability
A Participant who ceases to be an employee on account of permanent
and total disability as a result of which the Participant shall be
eligible for payments under Company long term disability insurance
policies, shall be entitled to receive a pro-rated Incentive Award
based on performance up to the last day worked. Payment shall be made
in cash in a single installment as soon as practical following the end
of the fiscal year in which employment terminated.
6.3 Leave of Absence
The Committee, in its sole discretion, shall determine Incentive
Awards, if any, to be paid to Participants on leave of absence for any
portion of the Plan Year.
6.4 Retirement
A Participant who retires during the Plan Year is eligible to
receive a pro-rated Incentive Award based on performance to the date
of retirement in cash in a single payment as soon as practical
following the end of the fiscal year in which the Participant retires.
A Participant has "retired" for purposes of this Plan if he terminates
employment with the Company after reaching age 55 with at least 10
years of Company service.
VII. PAYMENT IN EVENT OF TERMINATION OF EMPLOYMENT
7.1 Involuntary Termination of Employment
(a) If a Participant's employment is terminated by the Company
as a result of the Company's dissatisfaction with the job related
activities of the Participant or conviction of the Participant of a
felony, the Participant shall forfeit any rights to any unpaid
Incentive Awards under the Plan.
(b) If a Participant's employment is terminated for reasons
other than those described in 7.1(a) above, the Participant is
eligible to receive, in the sole discretion of the Committee, a pro-
rated Incentive Award based upon performance during the Plan Year to
the date of termination.
7.2 Voluntary Termination of Employment
If a Participant voluntarily resigns from employment at the
Company, no Incentive Awards will be paid. The Participant shall
forfeit the right to any Incentive Awards for the current performance
year.
VIII. AMENDMENT OR TERMINATION
8.1 Amendment.
The Committee reserves the right in its discretion to amend this
Plan at any time in whole or in part, provided, however, that no
amendment shall result in the forfeiture of any Participant's
Incentive Awards earned as of the end of the fiscal year immediately
preceding the date the Committee adopts the amendment.
8.2 Termination.
The Committee may terminate the Plan at any time. Termination shall
not result in the forfeiture of any Participant's Incentive Awards
which have been determined but not yet paid.
IX. ADMINISTRATION
9.1 Administration of the Plan.
This Plan shall be adopted by the shareholders of Franklin
Resources, Inc. and administered by the Compensation Committee of the
Board of Directors of Franklin Resources, Inc.:
(a) The Committee shall consist of not less than two (2)
members, who, during the one-year period preceding appointment to the
Committee, did not receive Awards under the Plan. Committee members
shall not be eligible for Awards while serving on the Committee.
(b) The Committee shall meet at such times and places and upon
such notice as the chairperson determines. A majority of the Committee
shall constitute a quorum. Any acts by the Committee may be taken at
any meeting at which a quorum is present and shall be by majority vote
of those members entitled to vote. Additionally, any acts reduced to
writing or approved in writing by all the members of the Committee
shall be valid acts of the Committee.
(c) Among the administrative responsibilities of the Committee
shall be the determination of Principals, Target Awards and Incentive
Awards. This may be accomplished by adopting specific methods of
determining the Awards which are then administered by other management
personnel of the Company.
(d) The Committee shall have the sole authority, in its
absolute discretion, to adopt, amend, and rescind such rules and
regulations as, in its opinion, may be advisable in the administration
of the Plan, to construe and interpret the Plan, the rules and
regulations, and any instruments evidencing Incentive Awards and to
make all other determinations deemed necessary or advisable for the
administration of the Plan. All decisions, determinations, and
interpretations of the Committee shall be binding on all Participants.
(e) The Plan is intended to meet the requirements for
disinterested administration under Rule 16-b promulgated by the
Securities and Exchange Commission under Section 16(b) of the
Securities Exchange Act of 1934 and shall be administered and
construed accordingly.
9.2 Non-alienation of Benefits.
No benefit under this Plan may be sold, assigned, transferred,
conveyed, hypothecated, encumbered, anticipated, or otherwise disposed
of, and any attempt to do so shall be void. No such benefit shall,
prior to receipt thereof by a Participant, be in any manner subject to
the debts, contracts, liabilities, engagements, or torts of such
Participant.
9.3 No Limitation of Rights.
Nothing in this Plan shall be construed to limit in any way the
Company's general personnel policies and procedures particularly with
respect to the right of the Company to terminate a Participant's
employment at any time for any reason whatsoever with or without
cause; nor shall it be evidence of any agreement or understanding,
express or implied, that the Company (a) will employ a Participant in
any particular position, (b) will ensure participation in any
incentive programs, or (c) will grant any awards for such programs.
9.4 Applicable Law.
This Plan shall be construed and its provisions enforced and
administered in accordance with the laws of the State of California.
9.5 Mandatory Arbitration.
As part of this Plan, the Company is implementing an alternative
dispute resolution procedure for its employees. In the event there is
any dispute arising out of the following: unlawful harassment;
discrimination and termination of employment with the Company, which
the parties are unable to resolve through direct discussion or
mediation, regardless of the kind or type of dispute, the Participant
and the Company agree to submit all such disputes exclusively to final
and binding arbitration pursuant to the provisions of the Federal
Arbitration Act, or, if inapplicable, the provisions of applicable
state law, or any successor or replacement statutes, upon a request
submitted in writing to the Human Resources Department within the
applicable statutory limits or the statute of limitations. Any failure
to timely request arbitration shall constitute a waiver of all rights
to raise any claims in any forum arising out of any dispute that was
subject to arbitration. The limitations period set forth in this
paragraph shall not be subject to tolling, equitable or otherwise. Any
agreement to arbitrate disputes contained in a securities registration
application shall take precedence over this agreement. All substantive
rights guaranteed under the statutes are still recognized through
arbitration, and arbitration is merely a substituted forum for dispute
resolutions.
This Plan is hereby adopted by the Company on this _____ day of
January, 1995.
FRANKLIN RESOURCES, INC.
PROXY
FRANKLIN RESOURCES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint Charles B.
Johnson, Harmon E. Burns, Deborah R. Gatzek and Leslie M. Kratter
or any of them, the attorneys and proxies of the undersigned with
full power of substitution and appointment, collectively and as
individuals, to vote all the undersigned's shares of Common Stock
of Franklin Resources, Inc. (the "Company") at the Annual Meeting
of Stockholders of the Company, to be held at the office of the
Company, 777 Mariners Island Blvd., San Mateo, California at 10:00
a.m. January 24, 1995 and at any and all adjournments thereof,
upon the matters set forth on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT
WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES
SPECIFIED IN THE PROXY STATEMENT AND FOR ITEMS 2 AND 3. IF ANY
OTHER MATTERS DO COME BEFORE THE MEETING, THE PERSONS NAMED IN
THIS PROXY WILL VOTE, ACT AND CONSENT WITH RESPECT THERETO IN
ACCORDANCE WITH THE VIEW OF MANAGEMENT.
Continued and to be signed and dated on the reverse side.
1. ELECTION OF DIRECTORS: FOR all nominees listed below.__
WITHHOLD AUTHORITY to vote for all nominees listed below.__
*EXCEPTIONS___
Nominees: H. E. Burns; J. Grosvenor; F. W. Hellman C. B.
Johnson; C. E. Johnson; R. H. Johnson, Jr.; H. Kline; P.
Sacerdote; L. Woodworth
*Exceptions _________________________________________________
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name
in the space provided.
2. Ratification of the selection of Coopers & Lybrand as
independent public accountants for the fiscal year ending
September 30, 1995.
FOR__ AGAINST__ ABSTAIN__
3. Adoption of Amended Annual Incentive Compensation Plan.
FOR__ AGAINST__ ABSTAIN__
4. In their discretion, the proxy holders are authorized to vote
upon such other business which may come before the Meeting.
Change of Address Mark Here ___
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
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.
Dated:____________________, 1995
_________________
Signature
_________________
Signature
Votes must be indicated (X) in Black or Blue Ink. ___