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
[ ] 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 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 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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FRANKLIN RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON JANUARY 23, 1997
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 23, 1997 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 accountants for
the current fiscal year ending September 30, 1997.
3. The transaction of such other business as properly may come
before the Meeting or any adjournments or postponements thereof.
Stockholders of record at the close of business on December 16,
1996 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 20, 1996
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 23, 1997,
at 10:00 A.M. Pacific Standard Time and at any and all adjournments or
postponements 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
and FOR ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's independent accountants. These proxy materials are
being mailed on or about December 20, 1996 to stockholders of record
of the Company's $0.10 par value Common Stock on December 16, 1996
(the "Record Date").
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 officers, directors and other employees of the
Company by telephone, electronic mail or fax 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,
1996, 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 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 Common Stock held on the
Record Date.
On December 13, 1996, 83,739,711 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.
The outstanding shares and the share ownership by officers, directors
and nominees described elsewhere herein do not include a three-for-two
stock split effected in the form of a stock dividend payable January
15, 1997.
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 Annual 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. An abstention with respect to the
ratification of the appointment of Coopers & Lybrand L.L.P. 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 from beneficial
owners will 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 of shares of which a
majority is required for adoption.
The following persons are known by the Company as of December 13,
1996 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(a) Beneficial Ownership Voting Securities(e)
Charles B. Johnson 16,080,502(b) 19.2%
Rupert H. Johnson, Jr. 12,787,278(c) 15.3%
R. Martin Wiskemann 7,851,273(d) 9.4%
(a) The address of Messrs. C. B. Johnson, R. H. Johnson, Jr. and R.
M. Wiskemann is: c/o Franklin Resources, Inc., 777 Mariners Island
Blvd., San Mateo, CA 94404.
(b) Includes 14,378,127 shares held directly and 1,451,225 shares
held in an IRA account for which Mr. C. B. Johnson holds sole voting
and investment power. Also includes 251,150 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 11,941,339 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 67,945 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 and 1,124
shares held by a member of Mr. R. H. Johnson, Jr.'s immediate family,
of which Mr. R. H. Johnson, Jr. disclaims beneficial ownership. Also
includes a total of 8,455 shares of unvested restricted stock granted
in 1993, 1994 and 1995 under the Company's Universal Stock Plan (the
"Stock Plan"). Does not include 9,031 restricted, but not yet issued,
shares granted under the Stock Plan as of October 1, 1996 and pursuant
to the Company's Annual Incentive Compensation Plan (the "Incentive
Plan") as described in the Summary Compensation Table. Upon issuance,
Mr. R. H. Johnson, Jr. is entitled to receive dividends and vote such
9,031 restricted shares; however, such shares are still subject to
vesting requirements.
(d) Includes 7,482,170 shares held directly and 366,560 shares held
in an IRA account for which Mr. Wiskemann holds sole voting and
investment power. Also includes 543 shares of unvested restricted
stock granted in 1994 under the Stock Plan and pursuant to the
Incentive Plan.
(e) Percentages are calculated based upon 83,739,711 shares issued
and outstanding on December 13, 1996 and do not include any restricted
shares not yet issued as of December 13, 1996 under incentive
compensation arrangements described in the Summary Compensation Table
elsewhere herein. Restricted shares that have been issued, but that
are not yet vested and that are included herein, may be voted by Mr.
R.H. Johnson, Jr. and Mr. Wiskemann.
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 December 13, 1996:
Amount and
Nature of
Beneficial Percent of
Name Ownership(a) Class(a)
Harmon E. Burns 1,042,555(b) 1.2%
Martin L. Flanagan 198,187(c) - %(j)
Judson R. Grosvenor 1,156,302(d) 1.4%
F. Warren Hellman 1,574,127(e) 1.9%
Charles B. Johnson 16,080,502(f) 19.2%
Charles E. Johnson 252,539(g) - %(j)
Rupert H. Johnson, Jr. 12,787,278(h) 15.3%
Harry O. Kline -0- - %(j)
James A. McCarthy 1,000 - %(j)
Peter M. Sacerdote 5,000 - %(j)
Louis E. Woodworth 714,976(i) - %(j)
Directors and Executive
Officers as a Group
(consisting of 21 persons) 34,300,018(a) 41%(a)
(a) Does not include an aggregate of 64,813 restricted, but not yet
issued, shares granted as of October 1, 1996 to the executive officers
of the Company under the Stock Plan and pursuant to the Incentive
Plan. Upon issuance, all restricted stockholders have the right to
vote and receive dividends on all restricted shares. Does not include
beneficial ownership of 7,851,273 shares by R. Martin Wiskemann, a
principal shareholder of the Company (but not an executive officer)
and a director and officer of certain subsidiaries of the Company.
(b) Includes 756,448 shares held directly and 250,000 shares held
in an IRA account for which Mr. Burns holds sole voting and investment
power. Also includes 27,666 shares of which Mr. Burns disclaims
beneficial ownership, held by a private foundation of which Mr. Burns
is a trustee. Also includes a total of 8,441 shares of unvested
restricted stock granted in 1993, 1994 and 1995 under the Stock Plan.
Does not include 9,031 restricted, but not yet issued, shares granted
under the Stock Plan as of October 1, 1996 and pursuant to the
Incentive Plan as described in the Summary Compensation Table
elsewhere herein.
(c) Includes 169,820 shares held directly for which Mr. Flanagan
holds sole voting and investment power and 13,863 restricted shares
granted in connection with the acquisition by the Company of the
assets of Templeton, Galbraith & Hansberger Ltd. (hereinafter referred
to as "Templeton" and the "Acquisition"). Also includes a total of
14,504 shares of restricted stock granted in 1993, 1994 and 1995 under
the Stock Plan. Does not include 10,837 restricted, but not yet
issued, shares granted under the Stock Plan as of October 1, 1996 and
pursuant to the Incentive Plan as described in the Summary
Compensation Table.
(d) Includes 1,097,658 shares held directly and 6,054 shares held
in an IRA account for which Dr. Grosvenor holds sole voting and
investment power. Also includes 52,590 shares of which Dr. Grosvenor
disclaims beneficial ownership, held in a private foundation of which
Dr. Grosvenor is a trustee. Dr. Grosvenor is not standing for re-
election.
(e) Represents shares the voting and disposition of which is
controlled by entities affiliated with Mr. Hellman through Hellman &
Friedman Capital Partners II, L.P., H & F Orchard Partners L.P. and H
& F International Partners L.P. Mr. Hellman is a shareholder, officer
and director of the ultimate general partners of the above named
partnerships, and is a partner in certain affiliated entities. Mr.
Hellman disclaims beneficial ownership of the above described shares.
Represents ownership arising out of exercise of option rights on
December 13, 1996 as more particularly described under Proposal 1:
Election of Directors elsewhere herein.
(f) Includes 14,378,127 shares held directly and 1,451,225 shares
held in an IRA account for which Mr. C. B. Johnson holds sole voting
and investment power. Also includes 251,150 shares of which Mr.
Johnson disclaims beneficial ownership, held by a private foundation
of which Mr. Johnson is a trustee.
(g) Includes 238,838 shares held directly for which Mr. C. E.
Johnson holds sole voting and investment power. Also includes a total
of 13,419 shares of restricted stock granted in 1993, 1994 and 1995
under the Stock Plan. Also includes 282 shares held by a member of
Mr. C. E. Johnson's immediate family, of which Mr. C. E. Johnson
disclaims beneficial ownership. Does not include 10,837 restricted,
but not yet issued, shares granted under the Stock Plan as of October
1, 1996 and pursuant to the Incentive Plan as described in the Summary
Compensation Table elsewhere herein.
(h) Includes 11,941,339 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 67,945 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 and 1,124
shares held by a member of Mr. R. H. Johnson, Jr.'s immediate family,
of which Mr. R. H. Johnson, Jr. disclaims beneficial ownership. Also
includes a total of 8,455 shares of restricted stock granted in 1993,
1994 and 1995 under the Stock Plan. Does not include 9,031
restricted, but not yet issued, shares granted under the Stock Plan as
of October 1, 1996 and pursuant to the Incentive Plan as described in
the Summary Compensation Table elsewhere herein.
(i) Includes 362,280 shares held directly and 277,696 shares held
in an IRA account for which Mr. Woodworth holds sole voting and
investment power. Also includes 75,000 shares held by a member of Mr.
Woodworth's immediate family of which he disclaims beneficial
ownership.
(j) 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 under "Voting Securities" elsewhere herein.
Dir-
Principal Occupation During Last ector
Name Age Five Years Since
Charles B. Johnson 63 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,
Franklin/Templeton Investor
Services, Inc., Franklin Mutual
Advisers, Inc. and General Host
Corporation; officer and/or
director, as the case may be, of
most other principal domestic
subsidiaries of the Company;
officer and/or director, trustee
or managing general partner, as
the case may be, of 56 of the
investment companies in the
Franklin Templeton Group of Funds.
Rupert H. Johnson, Jr. 56 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., Franklin Bank and
Franklin Mutual Advisers, Inc.;
officer and/or director, trustee
or managing partner, as the case
may be, of most other principal
domestic subsidiaries of the
Company; and of 60 of the
investment companies in the
Franklin Templeton Group of Funds.
Louis E. Woodworth 63 Private investor. President, 1981
Alpine Corp.(private investments).
Harry O. Kline 69 Prior to 1988, a vice president 1990
and regional sales manager of
Franklin/Templeton Distributors,
Inc. Over 40 years experience in
the investment industry.
Harmon E. Burns 51 Executive Vice President, Director 1991
and Secretary of the Company;
Executive Vice President and
Director of Franklin/Templeton
Distributors, Inc., Executive Vice
President of Franklin Advisers,
Inc.; Director, Templeton
Worldwide, Inc.,
Franklin/Templeton Investor
Services, Inc., Franklin Bank and
Franklin Mutual Advisers, Inc.;
officer and/or director, as the
case may be, of most other
principal domestic subsidiaries of
the Company; officer and/or
director, trustee or managing
general partner, as the case may
be, of 60 of the investment
companies in the Franklin
Templeton Group of Funds.
F. Warren Hellman 62 Partner, Hellman & Friedman 1992
(private equity investments);
Director and General Partner,
Matrix Partners; Director,
American President Companies,
Ltd.; Levi Strauss Associates,
Inc.; and Williams-Sonoma, Inc.
Peter M. Sacerdote 59 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, Qualcomm, Inc.
Charles E. Johnson 39 Senior Vice President of the 1993
Company; President and Director,
Templeton Worldwide, Inc.;
President, Franklin Institutional
Services Corporation and Franklin
Mutual Advisers, Inc.; Senior Vice
President, Franklin/Templeton
Distributors Inc.; Chairman,
Franklin Agency, Inc.; Vice
President, Franklin Advisers,
Inc.; officer and/or director, as
the case may be, of other domestic
and international subsidiaries of
the Company; officer, director,
trustee or managing general
partner, as the case may be, of 39
of the investment companies in the
Franklin Templeton Group of Funds.
James A. McCarthy 61 Private investor. From 1993-95, New
Chairman, of Merrill Lynch & Co. Nomin
("Merrill") Investor Client ee
Coverage Groups; formerly, Senior.
Vice President of Merrill and
Director, Global Institutional
Sales. Total of 33 years
experience with Merrill.
Franklin Advisers, Inc., Franklin/Templeton Distributors, Inc.,
Franklin Bank, Franklin Agency, Inc., Franklin Institutional Services
Corporation, Franklin/Templeton Investor Services, Inc., Franklin
Mutual Advisers, Inc. and Templeton Worldwide, Inc. are all wholly-
owned subsidiaries of the Company.
Mr. Hellman is a principal in Hellman & Friedman, and is affiliated
with a group that 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.
On December 13, 1996, the Company repurchased approximately $75
million of such debentures and associated option rights representing
the right to acquire 2,360,245 shares of the Company's common stock
for approximately $165.8 million and the holders of the remaining
debentures exercised the remaining associated option rights with
respect to such remaining $75 million of debentures, which debentures
were converted into 2,361,190 shares of Company's common stock;
1,574,127 of such shares are controlled by Hellman & Friedman
Investors, Inc. ("HFII"). Mr. Hellman is a director and officer of
HFII. The obligation of the Company to vote in favor of Mr. Hellman
remains in effect as described above.
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, Jr. Charles E. Johnson is the son of Charles B. Johnson and
the nephew of Rupert H. Johnson, Jr. and Peter M. Sacerdote.
During the fiscal year ended September 30, 1996, directors who are
not officers of the Company received a standard fee of $7,500 per
quarter, plus $3,000 per meeting attended. An additional fee of
$1,500 is 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 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, 1996, Judson R. Grosvenor and Louis E. Woodworth were reimbursed
$2,832 and $1,244, respectively, 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 may 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 of such stock
on the NYSE on the date of such termination. During the 1996 fiscal
year, Louis E. Woodworth elected to defer directors' fees. As of
September 30, 1996, the amount accrued for Mr. Woodworth's benefit
pursuant to such deferral policy based upon the 1996 Price (as
hereinafter defined) of the Company's Common Stock was $141,089.00.
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 not stand for re-election 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. Each Director
Emeritus receives compensation equal to the compensation paid to a
director who attends each meeting of the Board. In accordance with
the policy, Dr. Judson R. Grosvenor will not stand for re-election.
Section 16(a) Beneficial Ownership Reporting Compliance
During the fiscal year ended September 30, 1996, the following
persons inadvertently failed to file transaction reports in a timely
manner in accordance with Section 16 of the Securities Exchange Act of
1934 with respect to the following transactions: Loretta Fry, a Vice
President, a Form 4 reporting the sale of 1,800 shares during February
1996, and Jennifer J. Bolt, a Vice President, a Form 4 reporting the
sale of 225 shares during August 1996.
Board and Committee Meetings
The Board of Directors held five (5) meetings (exclusive of
committee meetings) during the preceding fiscal year ended September
30, 1996. Each director attended at least seventy-five percent (75%)
of the aggregate of the total number of Board meetings and the total
number of committee meetings of which such director is a member 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
two (2) times during the preceding fiscal year.
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 Incentive Plan and the Stock Plan. The
Compensation Committee met four (4) times during the preceding fiscal
year.
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 portion of the bonuses may be paid in the form of
shares of restricted stock which are vested over a several year
period. For fiscal 1996, such shares were granted with vesting in
equal installments over a three (3) year period.
Executive officers also participate in 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 1996, the salary of the Chief Executive Officer, Mr.
Charles B. Johnson, was increased by five percent (5%). The Committee
has determined that Mr. C. B. Johnson will continue to participate in
the 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 Committee
has also taken into account Mr. Johnson's position as a principal
shareholder of the Company in determining his compensation and in the
award of a bonus to him exclusively in cash.
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 five percent (5%) in January 1996. The salary
of Martin L. Flanagan, the Chief Financial Officer, was determined by
the Chief Executive Officer and was increased 5% in October 1995.
Effective January 1, 1996, the salary of Charles E. Johnson was
increased by five percent (5%) and was determined by the Chief
Executive Officer in consultation with the Committee.
Bonus payments to executive officers, including the Chief Executive
Officer, are determined by the Committee under the Incentive 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
252% increase of the Company's net income from the fiscal year ended
September 30, 1990 to the fiscal year ended September 30, 1996; the
approximate 406% increase in the market capitalization of the Company
from fiscal 1990 to fiscal 1996; and the general stability of the
Company's profit margin since the Acquisition. 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 continuing changes in the Company's
financial and business structure as a result of the Acquisition and
the successful management of such changes.
In its review of compensation, and, in particular, in determining
the amount and form of actual awards under the Plan for the Chief
Executive Officer and the other executive officers, 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. 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 Incentive Plan motivates executive officers to achieve results.
Moreover, the payment of incentive compensation in the form of stock
of the Company 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, applied for the first time to the Company
in the fiscal year ended September 30, 1995. The Committee recognized
the potential effects of Section 162(m) on the Company in determining
incentive compensation awards for the year ended September 30, 1996,
but believed that the compensation awards granted for such fiscal year
were commensurate with the performance of the covered employees and
were necessary and appropriate to meet competitive requirements even
if such compensation exceeded the deductibility limits of Section
162(m).
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, 1996, Goldman Sachs &
Co., the parent company of which Mr. Sacerdote is a limited partner
("Goldman"), served as an agent for the sale of notes under the
Company's medium-term note and commercial paper programs and received
payments in connection with the sale of such commercial paper. From
time to time, Goldman has also performed other services for the
Company. Fees paid to such investment banking firm did not exceed
five percent (5%) of such firm's consolidated gross revenues for such
firm's last full completed fiscal year.
As set forth in more detail under Proposal 1: Election of
Directors, the Company entered into a transaction on December 13, 1996
with entities affiliated with Mr. Hellman.
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 was party to a three (3) year employment contract
entered into at the time of the Acquisition which ended on October 31,
1995 and which provided for the payment to him of salary, bonuses and
the grant of shares of restricted stock, which are included in Mr.
Flanagan's compensation in the Summary Compensation Table.
COMPENSATION TABLES AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Restricted
Name and Principal Stock All Other
Position Year Salary Bonus Awards(g) Compensation
Charles B. Johnson, 1996 $544,688 $ 400,000 $ 21,059(a)
President, Chief 1995 $518,750 $ 260,000 $ 19,714(a)
Executive
Officer 1994 $483,268 $ 259,842 $ 20,760(a)
Rupert H. Johnson, Jr., 1996 $490,219 $ 400,000 $ 599,997(b) $ 21,059(a)
Executive Vice 1995 $466,875 $ 226,000 $ 338,997(c) $ 19,714(a)
President 1994 $431,500 $ 225,600 $ 338,394(d) $ 30,000(a)
Harmon E. Burns, 1996 $490,219 $ 400,000 $ 599,997(b) $ 22,059(a)
Executive Vice 1995 $466,875 $ 225,200 $ 337,811(c) $ 19,714(a)
President 1994 $431,500 $ 225,600 $ 338,394(d) $ 20,760(a)
Martin L. Flanagan, 1996 $716,625 $1,480,000 $ 719,983(b) $ 21,059(a)
Senior Vice President, 1995 $682,500 $ 400,000 $ 599,989(c) $ 19,714(a)
Chief Financial Officer 1994 $650,000 $ 400,000 $ 599,986(d) $122,753(f)
Charles E. Johnson, 1996 $686,094 $ 480,000 $ 719,983(b) $ 21,547(a)
Senior Vice President 1995 $549,375 $ 400,000 $2,499,989(c) $ 22,500(a)
1994 $351,164 $ 280,000 $ 419,983(d) $ 98,209(a),(e)
(a) Represents Company contributions to the Company's combined
Profit Sharing/401(k) defined contribution plan (the "Main Plan") for
Messrs. C. B. Johnson, R. H. Johnson, Jr., H. E. Burns and for M. L.
Flanagan for 1995 and 1996, and to that of the Subsidiary Plan
described below for 1994. For Mr. C. E. Johnson, represents a
combination of contributions to a profit sharing plan of a subsidiary
(the "Subsidiary Plan") and the Main Plan for 1996; for 1995
represents contributions to the Subsidiary Plan and for 1994
represents a combination of a contribution to the Subsidiary Plan and
the Main Plan.
(b) Represents the value of shares of to-be-issued restricted stock
of the Company granted as of October 1, 1996 by the Compensation
Committee of the Board of Directors for the fiscal year ended
September 30, 1996 in the following amounts: Mr. R. H. Johnson, Jr.,
9,031; Mr. H. E. Burns, 9,031; Mr. M. L. Flanagan, 10,837; and Mr. C.
E. Johnson, 10,837. Such shares vest in approximately equal one third
(1/3) increments on September 30, 1997, September 30, 1998 and
September 30, 1999. Such shares were granted at a grant price of
$66.4375, representing the average of the closing price of the
Company's Common Stock on the NYSE on September 30, 1996 and the five
(5) trading days before and after such date.
(c) Represents the value of shares of restricted stock vested or
vesting in approximately equal installments on each of September 30,
1996, September 30, 1997, and September 30, 1998, granted by the
Compensation Committee of the Board of Directors of the Company as of
October 1, 1995 in the following amounts: Mr. R. H. Johnson, Jr.,
6,006; Mr. H. Burns, 5,985; Mr. M. Flanagan, 10,630; and Mr. C. E.
Johnson, 10,630. Such shares were granted at a grant price of
$56.443, representing the average of the closing price on the NYSE on
September 29, 1995 and the five (5) trading days before and after such
date. For Mr. C.E. Johnson, also represents the value of a grant of
50,000 shares of Company stock on March 22, 1995 at #38.00 per share.
(d) Represents the value of shares of restricted stock vested or
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 in the following amounts: 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
$36.818, 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.
(e) All other compensation for fiscal 1994 includes forgiveness of
indebtedness of $68,209 representing a loan by the Company to Mr. C.
E. Johnson in order to exercise Company stock options.
(f) 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
Main Plan.
(g) Upon issuance, restricted shares have the same rights as other
shares of the Company's Common Stock. Based upon the closing price on
the New York Stock Exchange Composite Tape on September 30, 1996 of
$66.375 (the "1996 Price"), the value of the issued and to-be-issued
unvested restricted stock holdings of the persons listed in the
Summary Compensation Table was as follows: Charles B. Johnson, $0;
Rupert H. Johnson, Jr., $1,160,633; Harmon E. Burns, $1,159,704;
Martin L. Flanagan, $2,602,166; and Charles E. Johnson, $1,609,992.
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
("R") and to the Standard and Poor's MidCap 400 Index("R"). The graph
assumes that the value of the investment in the Company's Common
Stock, and each index was $100 on September 30, 1990 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
Franklin Resources, Inc., S&P 500 and S&P Midcap
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
FY91
Franklin
Resources: $100 $126 $121 $156 $152 $142 $139 $141 $132 $138 $166 $175
S&P 500: $100 $102 $97 $108 $106 $108 $106 $109 $109 $108 $112 $110
S&P MidCap: $100 $104 $100 $112 $114 $116 $112 $110 $111 $108 $114 $111
FY92
Franklin
Resources: $162 $181 $210 $195 $221 $207 $215 $194 $213 $220 $241 $255
S&P 500: $111 $111 $115 $117 $118 $119 $122 $119 $122 $122 $122 $126
S&P MidCap: $112 $115 $122 $126 $127 $125 $130 $126 $132 $133 $133 $138
FY93
Franklin
Resources: $276 $269 $249 $258 $280 $249 $229 $213 208 $210 $208 $222
S&P 500: $125 $128 $127 $128 $133 $129 $123 $125 $127 $124 $128 $133
S&P MidCap: $139 $140 $137 $143 $147 $144 $138 $139 $137 $133 $137 $144
FY94
Franklin
Resources: $211 $231 $215 $202 $192 $220 $221 $229 $249 $254 $284 $313
S&P 500: $130 $133 $128 $130 $133 $139 $143 $147 $153 $156 $161 $162
S&P MidCap: $142 $143 $137 $138 $140 $147 $149 $152 $156 $162 $171 $174
FY95
Franklin
Resources: $329 $290 $302 $288 $307 $330 $327 $328 $340 $350 $322 $342
S&P 500: $169 $168 $175 $179 $185 $187 $188 $191 $196 $197 $188 $192
S&P MidCap: $178 $174 $181 $181 $183 $190 $192 $198 $201 $198 $184 $195
FY96
Franklin
Resources: $382
S&P 500: $203
S&P MidCap: $203
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Acquisition, Templeton loaned Mr. Flanagan monies
secured by a mortgage on Mr. Flanagan's then residence in Nassau,
Bahamas. Such loan is still outstanding to a subsidiary of the
Company and bears interest at the rate of 5.98%. The largest
aggregate amount outstanding during the fiscal year was $500,353. As
of November 30, 1996, $480,337 was outstanding under the loan.
On September 5, 1996, the Company purchased 20,000 shares of the
Company's Common Stock from Charles B. Johnson, an officer, director
and principal shareholder of the Company and 26,095 shares from Harmon
E. Burns, an officer and director of the Company, both at a price of
$59.25 per share representing the closing price of such Common Stock
on the New York Stock Exchange Composite Tape on that date. On
December 10, 1996, the Company purchased 100,000 shares of the
Company's Common Stock from R. Martin Wiskemann, a substantial
shareholder of the Company, and an officer and directors of certain
subsidiaries of the Company, as a price of $68.00 per share
representing the closing price of such Common Stock on the New York
Stock Exchange Composite Tape on that date. Such transactions were
made in connection with the Company's previously announced stock
repurchase program as approved by the Company's Board of Directors.
The purchases from Mr. Johnson and from Mr. Burns were also
specifically ratified by the Company's Board of Directors with Mr.
Johnson and Mr. Burns abstaining from voting on such ratification.
The purchase from Mr. Wiskemann was also notified by the Board
In June 1995, prior to the time that Mr. Kenneth A. Lewis became an
executive officer of the Company, in connection with his relocation
from Florida to California, the Company made two loans to Mr. Lewis,
one of which is secured by a mortgage on his residence (the "Mortgage
Loan"). The largest amount outstanding on the Mortgage Loan during
the fiscal year, which loan bears interest at the rate of 5%, was
$518,117. The largest amount outstanding on the second loan during
the 1996 fiscal year, which loan is non-interest bearing, was $75,000.
As of November 30, 1996, $509,028 was outstanding under the Mortgage
Loan and $50,000 was outstanding under the second loan.
The Company has generally followed a policy of making loans to
employees for the purpose of exercising stock options. No loans were
made to executive officers for purposes of exercising stock options
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.
As set forth in more detail under Proposal 1: Election of
Directors, the Company entered into a transaction on December 13, 1996
with entities affiliated with Mr. Hellman.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Coopers &
Lybrand L.L.P. ("C&L") as independent accountants to audit the books
and accounts of the Company for its current fiscal year ending
September 30, 1997. C&L has no direct or indirect financial interest
in the Company. During the fiscal year ended September 30, 1996, the
audit services provided by C&L consisted of the rendering of opinions
on the financial statements of the Company and its subsidiaries. C&L
also rendered opinions on the financial statements of open and closed-
end investment companies managed and advised by subsidiaries of the
Company. In addition, C&L provides tax consulting services for the
Company and its management consulting division has been engaged as
consultant to assist the Company in the conversion of certain of its
shareholder services computer systems to a new transfer agency system.
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 under "Voting Securities"
elsewhere herein. It is not expected that a representative of the
accountants will be present at the Annual Meeting.
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 23, 1997 and in such form as is required under the rules and
regulations promulgated by the Securities and Exchange Commission.
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.
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 offices of the
Company, 777 Mariners Island Blvd., San Mateo, California at 10:00
a.m., Pacific Standard Time, on January 23, 1997 and at any and
all adjournments or postponements 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 ITEM 2. 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; F. W. Hellman C. B. Johnson; C. E.
Johnson; R. H. Johnson, Jr.; H. Kline; J. McCarthy; 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 L.L.P. as
independent public accountants for the fiscal year ending
September 30, 1997.
FOR__ AGAINST__ ABSTAIN__
3. 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:____________________, 1997
_________________
Signature
_________________
Signature
Votes must be indicated (X) in Black or Blue Ink. ___