SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Atlanta/Sosnoff Capital Corporation
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ATALANTA/SOSNOFF CAPITAL CORPORATION
101 Park Avenue
New York, N.Y. 10178
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To the Stockholders of
Atalanta/Sosnoff Capital Corporation
The Annual Meeting of Stockholders of Atalanta/Sosnoff Capital
Corporation (the "Company") will be held at Bear, Stearns & Co. Inc., 245 Park
Avenue, 10th Floor, New York, New York, on Thursday, May 11, 2000 at 11:00 a.m.
local time, to consider and vote upon:
1. The election of directors for the ensuing year;
2. Approval of Amendments to the Management Incentive Plan;
3. Ratification of the appointment of independent auditors for 2000;
and
4. Such other matters as may properly come before the meeting.
The close of business on March 24, 2000 has been fixed as the record
date for the determination of the stockholders entitled to notice of, and to
vote at, the Annual Meeting, and any adjournments thereof. The Company's stock
transfer books will not be closed.
By Order of the Board of Directors,
Anthony G. Miller
Secretary
Dated: March 24, 2000
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, AND WISH TO HAVE YOUR STOCK
REPRESENTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ACCOMPANYING FORM OF
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
ATALANTA/SOSNOFF CAPITAL CORPORATION
101 Park Avenue
New York, N.Y. 10178
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PROXY STATEMENT
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This proxy statement is being mailed to the stockholders of
Atalanta/Sosnoff Capital Corporation (the "Company"), on or about March 31, 2000
in connection with the Annual Meeting of Stockholders to be held at Bear,
Stearns & Co. Inc., 245 Park Avenue, 10th Floor, New York, New York, on
Thursday, May 11, 2000 at 11:00 a.m. and any adjournments thereof.
Record Date
The close of business on March 24, 2000 has been fixed as the record
date for the determination of stockholders entitled to receive notice of, and to
vote at, the Annual Meeting.
Solicitation
The enclosed proxy is solicited by the Board of Directors of the
Company. The Chairman of the Board, the President and the Secretary have been
designated by the Board of Directors to act as proxyholders. All proxies
delivered pursuant to this solicitation are revocable at the option of the
person executing the same at any time prior to the voting of the proxy, by
delivering a valid superseding proxy or a written notice of revocation signed in
the same manner as the original proxy, or by attending the meeting and voting in
person.
Expenses
The cost of preparing, assembling and mailing the notice, proxy
statement and proxy will be borne by the Company. In addition to solicitation by
mail, certain officers and employees of the Company, who will receive no
compensation for their services other than their regular salaries, may solicit
proxies in person or by telephone or telegraph. These persons may be reimbursed
for their expenses. The Company may also make arrangements with brokerage
houses, custodians, nominees and other fiduciaries to send proxy material to
their principals, and the Company will reimburse them for their expenses.
Voting by Mr. Sosnoff
Martin T. Sosnoff, the Company's Chairman of the Board and Chief
Executive Officer, who owns approximately 77% of the Company's outstanding
common stock, has advised the Company that he intends to vote for the Board's
nominees as directors of the Company, and for the other specified matters to be
voted upon at the Annual Meeting. Accordingly, such matters can be approved
without the vote of any other stockholders of the Company.
Dated: March 24, 2000
1
Voting by Proxy
If the stockholder is a corporation, the accompanying proxy card should
be signed in its corporate name by an officer. If signed as attorney, executor,
administrator, trustee or guardian, the signer's full title should be given and,
if possible, a certificate or other evidence of appointment should be furnished.
If the stockholder specifies on the proxy card how the shares are to be
voted, they will be voted accordingly. If the stockholder does not specify on
the proxy card how the shares are to be voted, they will be voted "FOR" the
election of the nominees for directors listed herein; "FOR" the approval of the
Amendments to the Management Incentive Plan; and "FOR" the ratification of the
appointment of Arthur Andersen LLP as independent auditors for 2000.
If the stockholder wishes to give a proxy to someone other than those
designated by the Board of Directors, the three names appearing on the enclosed
proxy card may be crossed out and the name of another person may be inserted.
The signed proxy card should be presented at the meeting by the person
representing the stockholder. Such person should have proof of identification.
Outstanding Stock
The Company's common stock, $.01 par value, of which there were
9,063,627 shares outstanding as of March 24, 2000, constitutes the only class of
voting securities issued by the Company. Stockholders will be entitled to cast
one vote, in person or by proxy, for each share of the Company's common stock
they hold.
GENERAL INFORMATION
Board of Directors
The Board of Directors has responsibility for establishing broad
corporate policies and for the overall management and performance of the
Company, although it is not involved in day-to-day operating details. The
members of the Board who are not senior officers of the Company are kept
informed of the Company's business by various reports and documents given to
them from time to time, as well as by operating, financial and other reports
made at Board and Committee meetings.
Regular meetings of the Board of Directors are generally held four
times per year and special meetings are scheduled when required. The Board held
four regular meetings in 1999, and acted by unanimous written consent on one
occasion.
Compensation of Directors
Non-employee directors receive an annual retainer of $12,000. They also
receive a fee of $2,000 for each Board meeting attended, plus travel and
incidental expenses. The maximum annual director's fee is $20,000. The three
full-time employees who serve as directors receive only reimbursement of
expenses, if any, actually incurred in attending meetings. During fiscal 1999,
Mr. Thurston Twigg-Smith received $20,000 and Mr. Ronald H. Menaker received
$15,000 in regular compensation for serving as non-employee directors of the
Company.
2
Committees of the Board
The permanent Committees established by the Board of Directors to
assist it in the discharge of its responsibilities are described below. The
biographical information on the directors, set forth hereinafter in the proxy
statement, identifies the Committee memberships held by each director.
The Audit Committee recommends to the Board (for appointment by the
Board and ratification by the stockholders) independent public accountants to be
used by the Company, reviews recommendations made by the independent public
accountants concerning the Company's accounting methods and system of internal
controls, reviews and reports to the Board with respect to the audit conducted
by the Company's independent public accountants, reviews with the independent
auditors the firm's relationship with management, and approves each major
professional service provided by the independent auditors in non-audit fields.
The Audit Committee, which in 1999 consisted of two non- employee directors, met
once during 1999.
The Executive Committee has, subject to certain exceptions, all the
powers and duties of the Board of Directors in the management of the Company
when the Board is not in session and which are not in conflict with specific
powers conferred by the Board upon any other Committee. The Executive Committee
consists of Messrs. Sosnoff and Steinberg. The Executive Committee did not
formally meet during 1999.
The Compensation Committee acts on recommendations of management
concerning the compensation of executive officers of the Company, including the
Chief Executive Officer, and sets compensation policy. A Sub-Committee of the
Compensation Committee administers the Company's Management Incentive Plan
("MIP"). The Stock Option Committee administers options outstanding under the
Company's terminated Stock Option ("SOP") and Incentive Stock Purchase Plans.
The Stock Option and Compensation Committees administer the Company's 1996 Long
Term Incentive Plan ("LTIP"). Mr. Sosnoff and the outside directors comprise the
Compensation and Stock Option Committees, while the outside directors form the
Sub-Committee of the Compensation Committee. These Committees did not meet in
1999.
The Company has no standing Nominating Committee.
Compensation Committee Interlocks and Insider Participation
Mr. Sosnoff, the Company's Chief Executive Officer and principal
stockholder, is a member of the Compensation Committee and the Stock Option
Committee. He does not participate in decisions relating to his compensation, is
not a member of the Compensation Sub-Committee, and does not participate in
decisions relating to the MIP. See "Board Compensation Committee Report"
hereinafter in this proxy statement. In 1999, these Committees had two
non-employee directors as members.
3
PROPOSAL 1
ELECTION OF DIRECTORS
A Board of five directors is to be elected at the Annual Meeting; each
director so elected to hold office for a term of one year and until the election
and qualification of a successor. It is intended that the proxies will be voted
for the following persons nominated by the Board of Directors:
William Landberg, Ronald H. Menaker, Martin T. Sosnoff, Craig B.
Steinberg and Thurston Twigg-Smith
Each of the nominees has indicated his willingness to serve as a member
of the Board of Directors, if elected; however, in case any nominee shall for
any reason become unavailable for election the proxy holders will have
discretionary authority to use the proxies they hold to vote for a substitute.
Mr. Sosnoff was first elected by the stockholders in 1986, prior to the
Company's initial public offering. Mr. Twigg-Smith was first elected by the
stockholders in 1994. Mr. Steinberg was appointed to the Board in August, 1997
and first elected by the stockholders in 1998. Mr. Landberg was first elected by
the stockholders in 1998. Mr. Menaker was first elected by the stockholders in
1999.
Messrs. Sosnoff and Steinberg are executive officers of the Company,
and Mr. Landberg is a marketing officer of the Company's subsidiaries.
Information about the proposed nominees' principal occupations, Board
Committee memberships and other information follows. Information about their
ownership of the outstanding common stock of the Company appears hereinafter
under the caption, "Beneficial Ownership of Securities of the Company."
Name, Principal Occupation
and Other Information
WILLIAM LANDBERG, 48, since January, 1999 has been Senior Vice President,
Marketing of the Company's subsidiaries, and for more than five years prior
thereto had been a Certified Public Accountant in private practice and
Chairman of NSV Communications Corporation, a value added reseller of
Lucent and SONY telecommunications equipment.
RONALD H. MENAKER, 55, since January 1, 2000 has been retired. From July, 1998
through December, 1999 was an Advisory Director of, and for more than five
years prior thereto was a Managing Director of, and held other offices
with, J.P. Morgan Guaranty. Mr. Menaker serves on the Audit, Compensation
and Stock Option Committees.
MARTIN T. SOSNOFF, 68, is the founder of the Company and has been Chairman of
the Board, Chief Executive Officer, and Chief Investment Officer of the
Company and its subsidiaries since their inceptions.
Mr. Sosnoff serves on the Executive, Compensation and Stock Option
Committees
CRAIG B. STEINBERG, 38, has been President and Director of Research, and
has held other offices, with the Company and its subsidiaries since 1985.
Mr. Steinberg serves on the Executive Committee.
THURSTON TWIGG-SMITH, 78, for more than five years has been Chairman of the
Board and Chief Executive Officer of Persis Corporation (newspaper
publishing). Mr. Twigg-Smith serves on the Audit, Compensation and Stock
Option Committees.
4
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and to each of the Company's four other most
highly compensated executive officers who were officers during 1999.
Annual Compensation Long-Term Compensation
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Securities All Other
Name and Other Annual Restricted Underlying Compen-
Principal Position Year Salary Bonus Compensation Stock Awards Options sation (9)
------------------ ---- ------ ----- ------------ ------------ ------- -----------
Martin T. Sosnoff 1999 $1,000,000 $3,446,000 (1) $16,000
Chairman of the Board; 1998 1,000,000 8,000
Chief Executive Officer; 1997 1,000,000 8,000
Director
Craig B. Steinberg 1999 700,000 86,758 (2) $1,479,750 (3) 16,000
President and Director 1998 700,000 63,939 (2) 1,273,500 (3) 8,000
of Research; Director 1997 566,667 8,000
Anthony G. Miller 1999 350,000 50,000 (4) 431,594 (5) 16,000
Executive Vice President, 1998 350,000 371,438 (5) 8,000
Chief Operating Officer, 1997 250,000 100,000 (4) 8,000
Chief Financial Officer,
Secretary
James D. Staub 1999 175,000 $489,188 (6) 16,000
Senior Vice President 1998 192,500 501,025 (6) 50,000 (8) 8,000
of subsidiaries 1997 140,000 453,425 (6) 7,000
William M. Knobler 1999 334,245 (7) 1,499,800 (7) 16,000
Senior Vice President 1998 400,000 (7) 490,715 (7) 8,000
of subsidiary 1997 400,000 (7) 321,894 (7) 8,000
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(1) Represents amounts received as bonuses by participants in the Company's
MIP. See "Management Incentive Plan" hereinafter in this proxy
statement. No bonuses were payable in 1998 and 1997 under the Plan.
(2) Based on an agreement with the Company, Mr. Steinberg receives a bonus
based upon the pre-tax operating profits received by the Company as
general partner of the investment partnership Mr. Steinberg manages on
behalf of the Company. See "Management Incentive Plan" hereinafter in
this proxy statement.
(3) Represents non-cash compensation required to be reported for tax
purposes. Mr. Steinberg was awarded the right to purchase and purchased
600,000 shares of the Company's common stock for the purchase price of
$0.01 per share as of September 17, 1997 under the Company's LTIP. For
tax purposes, the Company and Mr. Steinberg report the compensation
element of the award in the years in which the Company's right to
repurchase equal fractions of the award lapse at the first through the
fourth anniversaries of the date of the award. Under this method, Mr.
Steinberg will report compensation of $1,479,750 in 1999 (based on a
market price of $9.88 per share at the second anniversary), and
reported $1,273,500 in 1998 (based on a market price of $8.50 per share
at the first anniversary). The Company recorded unearned compensation
in shareholders' equity of approximately $7.0 million at the time of
the award which is being amortized to compensation expense.
Approximately $436,000 was expensed in the fourth quarter of 1997 for
financial reporting purposes and approximately $1.7 million is being
expensed in each full calendar year thereafter as the right to
repurchase the award lapses. At September 17, 1997, the stock award
value was approximately $7.0 million based on the difference between
the purchase price and the market value of the award at such date, and
the stock award value was approximately $7.2 million based upon such
calculation at December 31, 1997, $5.0 million at December 31, 1998,
and $5.2 million at December 31, 1999. In 1997, the Company loaned Mr.
Steinberg $46,740 with interest at the applicable federal rate for
taxes attributable to dividends paid on the shares received in his
award. In 1998, the Company loaned Mr. Steinberg $539,847 with interest
at the applicable federal rate for taxes attributable to the
compensation element of his award and dividends paid on the unvested
shares received in his award. In 1999, the Company loaned Mr. Steinberg
$849,338 with interest at the applicable federal rate for taxes
attributable to the compensation element of his award. In 1998, Mr.
Steinberg paid $11,941 of interest to the Company related to these
loans, and in 1999 he paid $45,603.
5
(4) Represents a discretionary bonus paid.
(5) Represents non-cash compensation required to be reported for tax
purposes. Mr. Miller was awarded the right to purchase and purchased
175,000 shares of the Company's common stock for the purchase price of
$0.01 per share as of September 17, 1997 under the Company's LTIP. For
tax purposes, the Company and Mr. Miller report the compensation
element of the award in the years in which the Company's right to
repurchase fractions of the award lapses at the first through the
fourth anniversaries of the date of the award. Under this method, Mr.
Miller will report compensation of $431,594 in 1999 (based on a market
price of $9.88 per share at the second anniversary), and reported
$371,438 in 1998 (based on a market price of $8.50 per share at the
first anniversary). The Company recorded unearned compensation in
shareholders' equity of approximately $2.0 million at the time of the
award which will be amortized to compensation expense. Approximately
$127,000 was expensed in the fourth quarter of 1997 for financial
reporting purposes and approximately $508,000 is being expensed in each
full calendar year thereafter as the right to repurchase the award
lapses. At September 17, 1997, the stock award value was approximately
$2.0 million based on the difference between the purchase price and the
market value of the award at such date, and the stock award value was
approximately $2.1 million based upon such calculation at December 31,
1997, $1.5 million at December 31, 1998 and $1.5 million at December
31, 1999. In 1997, the Company loaned Mr. Miller $13,633 with interest
at the applicable federal rate for taxes attributable to dividends paid
on the shares received in his award. In 1998, the Company loaned Mr.
Miller $157,455 with interest at the applicable federal rate for taxes
attributable to the compensation element of the award and dividends
paid on the unvested shares received in his award. In 1999, the Company
loaned Mr. Miller $243,265 with interest at the applicable federal rate
for taxes attributable to the compensation element of the award. In
1998, Mr. Miller paid $2,843 of interest to the Company related to
these loans, and in 1999 he paid $13,149.
(6) Represents additional compensation paid to Mr. Staub in lieu of a bonus
based upon a percentage of investment advisory fees received by the
Company from clients solicited by Mr. Staub under an agreement with the
Company. See "Agreements and Transactions with Directors and Executive
Officers" hereinafter in this proxy statement.
(7) Represents the revenues received by the Company from clients of the
Company to whom Mr. Knobler provides investment management services,
net of the costs associated with such revenues under an arrangement
with the Company. Mr. Knobler's salary is set by him within levels of
such net revenues projected by the Company for each year. The 1999
amount includes $1,498,766 representing the first installment payment
made to Mr. Knobler from the Company in January, 1999 relating to the
relinquishment of the right to receive revenue from such clients under
a new facilities agreement with the Company. See "Agreements and
Transactions with Directors and Executive Officers".
(8) Represents incentive stock options for 50,000 shares at an exercise
price of $9.00 per share. See "Stock Option and Long Term Incentive
Plans" hereinafter in this proxy statement.
(9) Represents contributions by the Company to the account of such officers
under the Company's Profit Sharing Plan for its employees. See "Profit
Sharing Plan" hereinafter in this proxy statement.
Except as noted, none of the individuals listed above received non-cash
compensation during 1999 in excess of the lesser of $50,000 or 10% of
his total annual salary and bonus.
6
COMPARATIVE STOCK PERFORMANCE
The following line graph compares the cumulative total shareholder
return on the Company's common stock with the cumulative total return of the
Russell 2000 Index(1) and the Russell 2000/Financial Services Index(2) over the
five year period ended December 31, 1999 (assuming the investment in the
Company's common stock and such indices of $100 on December 31, 1994, and the
reinvestment of all dividends):
Comparison of Five-Year Cumulative Total Stockholder
Return Among the Company, Russell 2000 Index,
and Russell 2000/Financial Services Index
[LINE GRAPH]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Russell 2000 Index $100 $128 $150 $183 $178 $216
Russell 2000/Financial Services Index 100 139 179 243 226 213
Company 100 262 161 221 161 166
Russell 2000/
Company Russell 2000 Financial Services
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Annualized rates of return:
5 years ended 12/31/99 10.7% 16.7% 16.3%
(1) The Russell 2000 Index is published by the Frank Russell Company and is
widely recognized as a measure of the performance of small market
capitalization stocks like the Company's common stock.
(2) The Russell 2000/Financial Services Index is an index of the
performance of financial services companies within the Russell 2000
Index.
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BOARD COMPENSATION COMMITTEE REPORT
The Board has requested that the Compensation Committee describe in
this Report (a) its compensation policies generally applicable to the executive
officers of the Company, including the specific relationship of corporate
performance to executive compensation for 1999; and (b) the basis for Mr.
Sosnoff's compensation in 1999, including the factors and criteria on which Mr.
Sosnoff's compensation was based and the relationship of the Company's
performance to such compensation describing the measures of performance on which
such compensation was based.
Compensation Policies Generally Applicable to Executive Officers
In formulating its compensation policies for executive officers, the
Committee considers many factors, including the major factors described below:
Industry Compensation Standards, Salary History, Performance in Position, Tenure
of Employment.
The Committee believes that in order to attract and retain executive
officers of the highest quality the Company must provide a total package of
compensation that is competitive with other companies in the Company's segment
of the financial services industry. The Committee also reviews the salary
histories of current and prospective executive officers in making compensation
recommendations. In addition, the Committee reviews information about the
performance of executive officers. In formulating its compensation policies the
Committee generally places less weight on the qualitative elements of executive
officer performance, and more weight on the economic indices of the officer's
performance measured by the financial performance of the aspect of the Company's
business for which the officer is primarily responsible. The Committee believes
that an officer's employment tenure is entitled to some weight in assessing
appropriate levels of compensation.
Company Performance-General
The Committee believes that in the Company's case in the formulation of
executive officer compensation policy the Committee should not accord
significant weight to the market performance of the Company's common stock. The
Committee notes that the price at which the Company's common stock trades often
bears little resemblance to the underlying fundamentals of the Company. Because
of the ownership structure (only approximately 14% of the Company's common stock
is held by the public) and lack of coverage by analysts, there is very little
trading activity in the common stock of the Company. During 1999, aggregate
market transactions in the Company's common stock (excluding shares purchased in
the market by the Company) equaled approximately 5.8% of the common stock
outstanding. As a result of this low turnover, the performance of the common
stock has not reliably reflected the financial results or prospects for the
Company; instead, it generally reflects market forces that result in volatile
stock performance because of the lack of market liquidity. Thus, in the
Committee's view, the investment performance of the Company's common stock has
not offered the Committee reliable guidance in formulating executive officer
compensation policy and in setting appropriate compensation levels for the
Company's executive officers. The Committee notes that the Company's book value
per share grew 28% in 1999 to total $11.21 at year-end, primarily as a result of
the returns in the Company's investment accounts, which has not been reflected
in stock performance.
Financial Performance
The Committee has developed a number of financial performance criteria
in formulating its executive compensation policy and a number of specific
criteria assessing the appropriateness of specific executive officer
compensation.
In evaluating the performance of the executive officers of the Company
as a group generally, and in reference to 1999 compensation, the Committee has
reviewed the efficiency and productivity of the Company, and the Company's
employees managed by the executive officers as measured by the following
financial performance criteria: (1) Operating revenues, pre-tax operating income
and pre-tax operating income per employee, (2) pre-tax operating income yield on
assets under management, (3) pre-tax operating margin, (4) investment
performance of managed assets, including the Company's proprietary accounts, and
(5) other financial criteria.
8
In reviewing the compensation of specific executive officer positions,
the Committee places more weight on criteria relevant to the responsibilities of
that position. Thus, relatively more weight is attributed to revenue criteria in
evaluating the performance of executives engaged primarily in marketing and
investment management and related support activities and relatively more weight
is attributed to income criteria in fixing the compensation of personnel engaged
in cost management and related support activities.
1999 Compensation and the Management Incentive Plan
The general year to year increases in compensation of the executive
officers of the Company prior to 1997 reflects the steady improvement in the
operations of the Company. Operating revenues, operating income, operating
margin and operating income per employee all reached seven year highs in 1996,
and then declined in 1997 and 1998, reflecting declines in average managed
assets, operating revenues, and operating income. Operating revenues increased
in 1999, reflecting an increase in assets under management. The declines
described above primarily relate to the loss of managed assets in those years
owing to poor relative performance results for clients in 1996 and 1997.
The changes in 1999 overall compensation as compared with 1998 for
executive officers, with the exception of Mr. Staub and Mr. Knobler who have
separate arrangements with the Company, are attributable to no operating bonus
payments made under the Management Incentive Plan ("MIP"), as a result of a
decline in operating earnings in 1999 as compared with 1998. While investment
performance in the Company's managed client accounts has improved significantly
in absolute and relative terms in 1998 and 1999, it has not been reflected in an
increase in assets under management, except for increases attributable to
account investment performance. Mr. Steinberg, the President of the Company, was
paid a special bonus in 1999 of $86,758 pursuant to an agreement under which he
receives a bonus based upon the pre-tax operating earnings received by the
Company as general partner of the investment partnership which Mr. Steinberg
manages on behalf of the Company. For 2000 and thereafter, the Sub-Committee has
approved an amendment to the MIP to provide Mr. Steinberg with incentive
compensation based on the operating earnings and performance of such investment
partnership.
The MIP is designed to reflect the financial performance criteria which
the Company believes should be applied in determining executive officer
compensation. One component (the "Operating Earnings Component") is based on
pre-tax operating earnings before non-cash charges, which the Committee believes
is an appropriate measure of the performance of executive personnel who function
in the revenue producing and in the cost control areas of the Company. Messrs.
Sosnoff and Steinberg participate in the Operating Earnings Component of the
Award Bonus Pool at 35% each, and Messrs. Miller and Tanico participate at 15%
each. The MIP is administered by a Sub-Committee of the Compensation Committee,
which is composed entirely of non-employee directors. The Committee believes
that the Operating Earnings Component of the MIP provides a stimulus to a
continuing high level of commitment to further improvement in the financial
performance of the Company. The Committee notes that in the Operating Earnings
Component (a) no awards are payable unless there is an increase in adjusted
operating earnings (as defined in the MIP) over the 1998 base level of adjusted
operated earnings, (b) the annual Award Bonus Pool cannot exceed 50% of
incremental adjusted operating earnings above the threshold, and (c) aggregate
annual bonuses under the Operating Earnings Component of the MIP are capped at
10% of earnings per share in any one year. The Sub-Committee believes that these
limitations strike an appropriate balance by fulfilling the need to continue to
motivate executive personnel while not unduly impacting the financial results of
the Company. No operating bonus awards were made under the MIP for 1997, 1998,
and 1999.
The Sub-Committee amended the MIP in 1999 to create an Investment
Performance Component of the MIP to provide incentive compensation to Mr.
Sosnoff in an amount equal to 20% of each year's performance of the Company's
proprietary accounts in excess of an identified benchmark. Under the amendment,
no bonus is paid if such performance is negative, even if it exceeded such
benchmark. The computation is made annually, based on each calendar year's
performance results, and is subject to a separate and independent limitation
that it not exceed 10% of earnings per share in any one year. Mr. Sosnoff was
awarded $3,446,000 for 1999 related to this Component of the MIP.
9
This year, the Sub-Committee has proposed an amendment to the
Investment Performance Component of the MIP to provide incentive compensation to
the Company's President and to change the benchmark against which performance of
the Company's proprietary accounts is measured. The MIP does not preclude the
Board of Directors of the Company, upon approval of the Sub-Committee, from
making discretionary bonus payments to participants in the MIP in addition to
the amounts determined under the Plan.
MIP Amendments
For the four years ended December 31, 2003 the Sub-Committee has
proposed that the Investment Performance Component of the MIP be amended,
subject to stockholder approval, to provide that the President, Craig B.
Steinberg, receive an annual bonus based upon the investment performance of
Sabre Partners, L.P., an investment partnership which he manages on behalf of
the Company, equal to (i) 50% of the pre-tax operating income (revenues less
direct expenses) that the Company receives from that partnership (the "Sabre
Performance Bonus") and (ii) 20% of the outperformance of the Company's
investment in such partnership as compared to the S&P 500 Index (the
"Outperformance Bonus"), provided, that the Outperformance Bonus would be
payable if, and only to the extent that, the performance of the Company's
investment in such partnership is positive, and the closing net asset value of
any measurement period for the computation of the Outperformance Bonus exceeds
the highest level of net assets previously achieved. These computations will be
made annually, based on each calendar year's results, and is subject to a
separate and independent limitation that it not exceed 10% of earnings per share
in any one year. See "Approval of Amendments to Management Incentive Plan"
hereinafter in this Proxy Statement.
The Sub-Committee has also proposed that the benchmark against which
the performance of the Company's proprietary accounts is measured in computing
Mr. Sosnoff's investment performance bonus under the Investment Performance
Component of the MIP be changed so that it is no longer fixed at 70% S&P 500
Index and 30% Lehman Brothers Intermediate Government Corporate Bond Index, but
instead is 100% S&P 500 Index. See "Approval of Amendments to Management
Incentive Plan" hereinafter in this Proxy Statement.
The 1999 Compensation of Mr. Sosnoff
Mr. Sosnoff has not participated in this part of the Committee's review
or Report, or in its description of the basis for his compensation generally.
The Committee notes that there are certain qualitative factors in the
analysis of Mr. Sosnoff's compensation generally and in 1999 that, in its view,
should be taken into account in establishing appropriate bases for such
compensation. Mr. Sosnoff is the founder of the Company, which was founded in
1986 to acquire its operating subsidiaries and make a public offering of its
Common Stock. Mr. Sosnoff is the founder of such subsidiaries and is the
Company's principal stockholder. The Company bears his name. He also is a widely
known and respected member of the financial community and has written regularly
in the financial press. The Committee believes his reputation has enhanced the
stature of the Company and has had and will continue to have a salutary affect
on its marketing activities.
In conjunction with the Company's other executive officers, Mr.
Sosnoff's compensation is evaluated under the compensation policies generally
applicable to executive officers, including growth in the Company's book value
per share, and the financial performance criteria considered relevant by the
Committee.
10
It is also the policy of the Committee to review Mr. Sosnoff's
compensation in relation to the performance of the Company's client accounts for
which he has primary responsibility in setting investment policy and the
performance of the Company's own proprietary accounts. The Committee notes that
investment performance in client accounts improved markedly in 1998 and 1999,
exceeding all relevant benchmarks for the Company's composite equity and
balanced products. The Company's peer group rankings improved to the top
quartile in 1998 and 1999. Mr. Sosnoff earned an investment performance bonus of
$3,446,000 for 1999 under the Investment Performance Component of the MIP based
upon the performance of the Company's proprietary accounts in 1999, which
achieved net investment performance totaling 46.0% vs. the 70/30 benchmark's
return of 14.6%. In the Sub-Committee's view, Mr. Sosnoff's achievement of the
significant increase in the Company's proprietary accounts' net assets is
appropriately reflected in Mr. Sosnoff's increased compensation.
Dated: February 29, 2000
The Compensation Committee
Martin T. Sosnoff
Thurston Twigg-Smith
Ronald H. Menaker
The Compensation Sub-Committee
Thurston Twigg-Smith
Ronald H. Menaker
11
STOCK OPTION AND LONG TERM INCENTIVE PLANS
Option Grants for 1999
There were no option grants made in 1999.
Exercises and Awards Outstanding
Option Exercises and Year-End Values for 1999
No stock options were exercised or cancelled in 1999.
The table below sets forth information with respect to the status of
unexercised options, if any, held at December 31, 1999 by the Company's Chief
Executive Officer and the other four most highly compensated executive officers.
Aggregated Option Exercises During 1999 and Option Values on December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Number of
Shares Value Number of Unexercised Value of Unexercised In-the-
Acquired Upon Realized Options 12/31/99 Exercise Money Options 12/31/99 (1)
Exercise of Upon ----------------------------- Price Per -------------------------------
Name Option Upon Exercise Exercisable Unexercisable Share Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------------
Craig B. Steinberg ---- ---- 80,000 20,000 $ 9.50 ---- ----
- -------------------------------------------------------------------------------------------------------------------------------
Anthony G. Miller ---- ---- 40,000 10,000 9.50 ---- ----
- -------------------------------------------------------------------------------------------------------------------------------
James D. Staub ---- ---- 50,000 ---- 6.13 $ 128,125 ----
- -------------------------------------------------------------------------------------------------------------------------------
20,000 30,000 9.00 ---- ----
- -------------------------------------------------------------------------------------------------------------------------------
(1) Values are calculated by subtracting the exercise price from the fair
market value of the underlying common stock. For purposes of this
table, fair market value is deemed to be $8.6875 per share, the closing
price of the common stock reported for New York Stock Exchange
transactions on December 31, 1999.
As of September 17, 1997, the Company awarded 775,000 shares of
restricted stock at the issue price of $.01 per share to two senior executives
under the terms of the LTIP. Craig B. Steinberg, President and Director of
Research, received 600,000 shares and Anthony G. Miller, Executive Vice
President and Chief Operating Officer, received 175,000 shares. Such restricted
stock awards vest over four years.
Management Incentive Plan
The purpose of the Operating Earnings Component of the Management
Incentive Plan (the "MIP") is to directly relate year-end bonuses of
participants to growth in operating earnings of the Company (adjusted for
non-cash charges under the RSBP and current year accruals under the MIP and the
LTIP and comparable non-cash charges) compared with the base year of 1998. The
maximum aggregate annual award payable to participants under the Operating
Earnings Component of the MIP is subject to the limitation that it cannot result
in a reduction of earnings per share in any one year of more than 10%. Each
participant's share of the aggregate award of the Operating Earnings Component
of the MIP is payable at year-end in assigned percentages.
12
For 1999, no bonuses were awarded under the Operating Earnings
Component of the MIP, computed as described above, based upon a decrease in
adjusted operating earnings in 1999 as compared with 1998.
Under the Investment Performance Component of the MIP, Mr. Sosnoff is
entitled to an annual bonus (the "Investment Performance Bonus") equal to 20% of
the amount by which the investment performance of the proprietary accounts of
the Company exceeds a benchmark of 70% S&P 500 Index and 30% Lehman Brothers
Intermediate Government Corporate Bond Index, so long as such performance is
positive, and subject to the limitation that it cannot result in a reduction of
earnings per share in any one year of more than 10%.
For 1999, an Investment Performance Bonus of $3,446,000 was awarded
under the MIP to Mr. Sosnoff, computed as described above, based upon the
investment performance of the Company's proprietary investment accounts.
Profit-Sharing Plan
The Company has a Profit-Sharing Plan for its employees. For the year
ended December 31, 1999, contributions in the amount of $264,733 were made to
the Plan.
AGREEMENTS AND TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to Company policy, certain expenses of Mr. Sosnoff which were
initially paid by the Company, to the extent the Company and Mr. Sosnoff have
determined that such expenses would not be borne by the Company, were repaid to
the Company with interest.
Upon termination of his employment Mr. Steinberg is subject to
non-competition and non-solicitation restrictions under his employment agreement
with the Company.
Mr. Staub and certain other members of the marketing and sales staffs
of the Company and its subsidiaries receive additional compensation based on
varying percentages of the revenues attributable to Company clients they have
solicited. Such compensation under certain conditions may continue after
termination of employment. Mr. Staub entered into a new employment agreement in
December 1997, whereby his base salary was increased from $140,000 to $175,000,
retroactive to July 1, 1997. The $17,500 retroactive amount was deferred and
paid in 1998.
In May 1985, Atalanta/Sosnoff Management Corporation ("Management")
entered into an employment agreement with Mr. William M. Knobler, Senior Vice
President, to provide investment related services to both Management and
Atalanta/Sosnoff Capital Corporation (Delaware), the Company's operating
subsidiaries. Under the terms of the agreement, Mr. Knobler was paid the net
profits relating to the client accounts he managed at Management (the "Net
Profits"), which represents the advisory fees and commissions for such accounts,
net of clearance and floor brokerage charges, allocated payroll, overhead and
out-of-pocket expenses incurred on his behalf by Management.
Effective October 1, 1998, Management entered into a new agreement with
Mr. Knobler for the period ending December 31, 2000, under which Mr. Knobler is
relinquishing the net profits from the investment management and brokerage
services provided to the accounts he manages to Management. Pursuant to this
agreement, Management has made (or will make) payments to Mr. Knobler in three
installments in January 1999, 2000 and 2001, based upon a multiple of annualized
revenues from such accounts. In addition, Management and Mr. Knobler agreed to
change the split of Net Profits paid to Mr. Knobler from 100% during the
twelve-month period ended September 30, 1998, to 50% for the twelve-month period
ended September 30, 1999, 25% for the twelve-month period ending September 30,
2000, and 0% thereafter. Commissions and advisory fee revenues related to such
investment advisory and brokerage services for 1999 amounted to $1,466,130, and
related compensation expenses amounted to $1,835,384, which includes $1,498,766
paid to Mr. Knobler representing 50% of the purchase price associated with Mr.
Knobler relinquishing the right to receive revenues from the accounts he
manages.
13
Options issued under the SOP and LTIP, and restricted stock award
shares granted under the LTIP provide for accelerated vesting in the event of a
change in control of the Company, as defined. Certain of the Company's
agreements with employees provide for additional payments to them, or the right
for such employee to terminate his employment and continue to receive payments
from the Company in the event of a change in control, as defined.
The directors, officers and employees of the Company or its operating
subsidiaries are ordinarily required to execute personal securities transactions
through the Company's broker-dealer subsidiary and are allowed a discount from
the commission rates offered to unaffiliated customers. In addition, the Company
provides personal investment management and advisory services to certain
officers of the Company and its operating subsidiaries and their associates
without charge.
BENEFICIAL OWNERSHIP OF SECURITIES
OF THE COMPANY
The following table sets forth information as of December 31, 1999 as
to the beneficial ownership of Company common stock by (1) each person known by
the Company to own 5% or more of the common stock, (2) each director and nominee
for director of the Company, (3) the Company's Chief Executive Officer, (4) each
of the Company's other four most highly compensated executive officers for
fiscal 1999, and (5) the directors and executive officers of the Company as a
group. The persons named in the table have sole voting and investment power with
respect to all shares of common stock owned by them and use the Company's
address as their business address, unless otherwise noted.
Beneficial Owners Shares Beneficially Owned Percent of Class (9)
- ----------------- ------------------------- --------------------
Martin T. Sosnoff 7,018,516 (1) 75.8%
Craig B. Steinberg 680,000 (2) 7.3%
Anthony G. Miller 215,000 (3) 2.3%
William M. Knobler 1,100 (4) (9)
James D. Staub 70,000 (5) .8%
William Landberg 1,000 (10)
Ronald H. Menaker (6) 1,000 (10)
Thurston Twigg-Smith(7) 1,000 (10)
All executive officers and directors
as a Group (10 persons) 7,987,616 (8) 86.2%
- -----------
(1) includes 6,000 shares owned as custodian for a child under the Uniform
Gift to Minors Act.
(2) includes 600,000 shares issued under the Company's LTIP and 80,000
shares issuable upon exercise of currently exercisable options issued
under the Company's SOP at an exercise price of $9.50 per share. Does
not include non-currently exercisable options to purchase 20,000 shares
at an exercise price of $9.50 per share.
(3) includes 175,000 shares issued under the Company's LTIP and 40,000
shares issuable upon exercise of currently exercisable options issued
under the Company's SOP at an exercise price of $9.50 per share. Does
not include non-currently exercisable options to purchase 10,000 shares
at an exercise price of $9.50 per share.
(4) includes 600 shares held in his Individual Retirement Account, 100
shares held by his wife, 200 shares held by her Individual Retirement
Account, and 200 shares held by a private charitable foundation
controlled by Mr. Knobler.
14
(5) includes 50,000 shares issuable upon exercise of currently exercisable
options issued under the Company's SOP at an exercise price of $6.13
per share and 20,000 shares issuable upon exercise of currently
exercisable options issued under the Company's LTIP at an exercise
price of $9.00 per share. Does not include non-currently exercisable
options to purchase 30,000 shares at an exercise price of $9.00 per
share.
(6) Mr. Menaker's address is 700 Smoke Hollow Trail, Franklin Lakes, New
Jersey, 07417.
(7) Twigg-Smith's business address is Persis Corporation, 2447 Makiki
Heights Drive, Honolulu, Hawaii 96822.
(8) includes shares owned by executive officers of subsidiaries who have
been designated as executive officers of the Company. Includes 190,000
shares subject to currently exercisable options under the SOP and LTIP.
Does not include non-currently exercisable options to purchase 60,000
shares.
(9) Calculated on the basis of 9,075,127 shares outstanding at December 31,
1999 plus 190,000 shares subject to currently exercisable options.
(10) less than .1% of shares outstanding.
15
PROPOSAL 2
APPROVAL OF AMENDMENTS TO MANAGEMENT INCENTIVE PLAN
History. The Company has had a Management Incentive Plan since 1993.
The purpose of the Operating Earnings Component of the Management Incentive Plan
(the "MIP") is to directly relate year-end bonuses of participants to annual
growth in operating earnings of the Company (adjusted for non-cash charges under
the LTIP, current year accruals under the MIP and comparable charges). Under
this Component of the MIP in effect for the five years ended December 31, 2003,
50% of the increase in each year's adjusted operating earnings over adjusted
operating earnings in 1998 are allocated to an Award Bonus Pool in which the
current three senior portfolio managers of the Company, Messrs. Sosnoff,
Steinberg and Tanico, and the Company's Executive Vice President and Chief
Operating Officer, Mr. Miller, participate. Messrs. Sosnoff and Steinberg
participate at 35% each, and Messrs. Miller and Tanico participate at 15% each.
The Operating Earnings Component is subject to the limitation that it cannot
result in a reduction in earnings per share of more than 10% in any one year.
The MIP terminates in the event of a "change in control", as defined. No bonuses
have been paid under the Operating Earnings Component of the MIP in any of the
last three calendar years.
Under the the Investment Performance Component of the MIP, an annual
bonus is awarded to Mr. Sosnoff if the performance of the Company's proprietary
accounts (i.e. cash and cash equivalents; investments at market; and investments
in Company investment companies and limited partnerships) exceeds a blended 70%
S&P 500 Index / 30% Lehman Brothers Intermediate Government Corporate Bond Index
benchmark. In the event that performance exceeds the benchmark, Mr. Sosnoff
receives a bonus equal to 20% of that excess. No bonus is paid if performance is
negative, even if it exceeds such benchmark. The bonus is also subject to a
separate and independent limitation that it cannot result in a reduction of
earnings per share of more than 10% in any one year. Such bonus, and the Sabre
Performance and Outperformance Bonuses described below, are counted in the
Operating Earnings Component of the MIP and an adjustment is made to eliminate
the effect of such bonuses on operating earnings. In 1999, Mr. Sosnoff earned a
$3,446,000 bonus under this Component of the MIP.
The Amendments. Subject to stockholder approval, the Sub-Committee has
amended the Investment Performance Component of the MIP to (i) change the
benchmark against which Mr. Sosnoff's Investment Performance Bonus is measured
so that it is no longer fixed at a blended 70% S&P 500 Index / 30% Lehman
Brothers Intermediate Corporate Government Bond Index but instead is compared
100% to the S&P 500 Index, and (ii) establish a bonus program for the Company's
President, Craig B. Steinberg, under which he would receive a bonus based upon
the investment performance of Sabre Partners, L.P., an investment partnership
which he manages on behalf of the Company, equal to (i) 50% of the pre-tax
operating income (revenues less direct expenses) that the Company receives from
that partnership (the "Sabre Performance Bonus"), and (ii) 20% of the
outperformance of the Company's investment in such partnership as compared with
the S&P 500 Index (the "Outperformance Bonus"), provided, that the
Outperformance Bonus would be payable if, and only to the extent that, the
performance of the Company's investment in such partnership is positive, and the
closing net asset value of any measurement period for the computation of the
Outperformance Bonus exceeds the highest level of net assets previously
achieved. These computations will be made annually, based on each year's
results. The sum of the Sabre Performance Bonus and the Outperformance Bonus are
subject to a separate and independent limitation that such sum cannot result in
a reduction of earnings per share of more than 10% in any one year. The
Investment Performance Component of the MIP remains in effect until December 31,
2003.
The Sub-Committee, with the concurrence of the Board of Directors, has
recommended that stockholders vote "FOR" the proposal to amend the Management
Incentive Plan.
16
PROPOSAL 3
APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee,
reappointed the firm of Arthur Andersen LLP as independent auditors for the
Company for 2000, subject to ratification by the stockholders. Arthur Andersen
LLP has served as the independent auditors for the Company since 1989.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement if he so desires
and to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the proposal to ratify
the appointment of Arthur Andersen LLP as independent auditors.
STOCKHOLDER PROPOSALS
Any proposal to be presented at next year's Annual Meeting must be
received at the principal executive offices of the Company not later than
November 17, 2000 directed to the attention of the Secretary, for consideration
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting. Any such proposal must comply in all respects with the rules and
regulations of the Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors knows of no other matters that may come before
the meeting. If any matters other than those referred to above should properly
come before the meeting, it is the intention of the persons designated by the
Board to serve as proxies to vote such proxies in accordance with their best
judgment.
If any of the proposed nominees for election to the Board of Directors
should become unavailable to serve at or before the time of the meeting, a
substitute nominee or nominees may be chosen by the persons authorized by the
Board to vote the proxies.
By Order of the Board of Directors,
Anthony G. Miller
Secretary
17
P ATALANTA/SOSNOFF CAPITAL CORPORATION
R Proxy Solicited on Behalf of the Board of Directors of
O the Company for Annual Meeting May 11, 2000
X
Y The undersigned hereby constitutes and appoints Martin T. Sosnoff,
Craig B. Steinberg and Anthony G. Miller, and each of them, his true
and lawful agents and proxies with full power of substitution in each,
to represent the undersigned at the Annual Meeting of Stockholders of
Atalanta/Sosnoff Capital Corporation, to be held at Bear, Stearns &
Co., Inc., 245 Park Avenue, 10th Floor, New York, New York, on
Thursday, May 11, 2000 and at any adjournments thereof, on all matters
coming before said meeting.
Election of Directors, Nominees:
William Landberg, Ronald H. Menaker, Martin T. Sosnoff, Craig B.
Steinberg, Thurston Twigg-Smith
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTOR'S RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION
OF DIRECTORS, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
FOR WITHHELD
1. Election of Directors. / / / /
(see reverse)
For, except vote withheld for the following nominees(s):
FOR AGAINST ABSTAIN
2. Approval of Amendments to / / / / / /
Management Incentive Plan / / / / / /
FOR AGAINST ABSTAIN
3. Approval of independent / / / / / /
accountants.
SIGNATURE(S) DATE
-------------------- -------
SIGNATURE(S) DATE
-------------------- -------
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.