SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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ATALANTA/SOSNOFF CAPITAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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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 Wednesday, April 29, 1998 at 11:00 a.m. local
time, to consider and vote upon:
1. The election of directors for the ensuing year;
2. Ratification of the appointment of independent auditors for 1998; and
3. Such other matters as may properly come before the meeting.
The close of business on March 27, 1998 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 27, 1998
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, 1998
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
Wednesday, April 29, 1998 at 11:00 a.m. and any adjournments thereof.
Record Date
The close of business on March 27, 1998 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 73.2% 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 27, 1998
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; and "FOR" the ratification
of the appointment of Arthur Andersen LLP as independent auditors for 1998.
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 9,587,401
shares outstanding as of March 27, 1998, 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 two
regular meetings in 1997, one special meeting, and acted by unanimous written
consent on three occasions.
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 two
full-time employees who serve as directors receive only reimbursement of
expenses, if any, actually incurred in attending meetings. During fiscal 1997
Messrs. Kenneth H. Iscol and Thurston Twigg-Smith received $20,000 each in
regular compensation for serving as the non-employee directors of the Company.
Mr. Twigg-Smith received additional special renumeration of $25,000 for serving
as a member of an independent committee formed to consider any proposal made by
Mr. Sosnoff with management to take the Company private. The attempt to "go
private" was abandoned in August, 1997 and the independent committee disbanded.
Mr. Iscol, who also served as a member of that committee, declined to accept
comparable special renumeration. For information about the deferral of Mr.
Iscol's compensation as a Board member, see "Agreements and Transactions with
Directors and Executive Officers" hereinafter in this proxy statement.
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 consists of two non- employee directors, met once in
1997.
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
currently consists of the two employee directors. The Executive Committee did
not formally meet during 1997.
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. The
Compensation Committee and the Sub-Committee met once in 1997. The Stock Option
Committee administers the Company's Stock Option, Incentive Stock Purchase and
Restricted Stock Bonus Plans. The Stock Option and Compensation Committees
administer the Company's 1996 Long Term Incentive Plan. These Committees did not
meet in 1997, and acted by unanimous written consent once during 1997.
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 Management Incentive Plan. See "Board Compensation
Committee Report" hereinafter in this proxy statement. These Committees have two
non-employee directors as members.
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PROPOSAL 1
ELECTION OF DIRECTORS
A Board of four 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, 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.
He and Mr. Landberg are standing for election for the first time.
Messrs. Steinberg and Sosnoff are senior executive officers of the Company.
Information about the proposed nominees' principal occupations, Company
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, 46, for more than five years has been a Certified Public
Accountant in private practice and is Chairman of NSV Communications
Corporation, a value added reseller of Lucent and SONY telecommunications
equipment.
MARTIN T. SOSNOFF, 66, 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, 36, has been President and Director of Research, and held
other offices, with the Company and its subsidiaries since 1985.
Mr. Steinberg serves on the Executive Committee.
THURSTON TWIGG-SMITH, 76, 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.
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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, to each of the Company's four other most highly compensated
executive officers who were officers at fiscal year end, and to a former
executive officer based on annual compensation earned during fiscal 1997.
Annual Compensation
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Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation (8)
------------------ ---- ------ ----- ------------ ----------------
Martin T. Sosnoff 1997 $1,000,000 $ --(1) $8,000
Chairman of the Board; 1996 1,000,000 245,700(1) 6,250
Chief Executive Officer; 1995 1,000,000 580,800(1) 5,769
Director
Craig B. Steinberg 1997 566,667 --(1) (3) 8,000
President and Director 1996 500,000 245,700(1) 7,500
of Research; Director 1995 500,000(2) 348,600(1) 7,500
Anthony G. Miller 1997 250,000 100,000(4) (5) 8,000
Executive Vice President, 1996 225,000 122,900(1) 7,500
Chief Operating Officer, 1995 175,000 203,300(1) 7,500
Chief Financial Officer,
Secretary
James D. Staub 1997 140,000 $453,425(6) 7,000
Senior Vice President 1996 140,000 415,824(6) 7,000
of subsidiaries 1995 100,000 390,080(6) 5,000
William M. Knobler 1997 400,000(7) 321,894(7) 8,000
Senior Vice President 1996 366,667(7) 238,032(7) 7,500
of subsidiary 1995 300,000(7) 96,738(7) 7,500
Robert J. Kobel 1997 612,500(8)
Former President and 1996 700,000 245,700(1) 7,500
Chief Operating Officer; 1995 600,000 580,800(1) 7,500
Director
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(1) Represents amounts received as bonuses by participants in the Company's
Management Incentive Plan. See "Management Incentive Plan" hereinafter in
this proxy statement.
(2) Mr. Steinberg's 1995 compensation was based on an employment agreement with
the Company. See "Agreements and Transactions with Directors and Executive
Officers" hereinafter in this proxy statement.
(3) 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 1996 Long Term Incentive
Plan. 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 lapses at the first through the
fourth anniversaries of the date of the award. Under this method, Mr.
Steinberg will not report compensation in 1997. The Company recorded
unearned compensation in shareholders' equity of approximately $7.0 million
at the time of the award which will be amortized to compensation expense.
Approximately $436,000 was expensed in the fourth quarter of 1997 for
financial reporting purposes and approximately $1.7 million will be
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. In 1997 Mr. Steinberg was loaned $46,740 with interest
at the federal statutory rate for taxes attributable to dividends paid on
the shares received in his award.
5
(4) Represents a discretionary bonus paid
(5) 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 1996 Long Term Incentive Plan.
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
not report compensation in 1997. 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 will be 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. In 1997, Mr. Miller was loaned
$13,633 with interest at the federal statutory rate for taxes attributable
to dividends paid on the shares received in his award.
(6) Represents additional compensation paid to Mr. Staub in lieu of 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.
(8) Mr. Kobel was terminated without cause as President in August, 1997
pursuant to the terms of an employment agreement with the Company. See
"Agreements and Transactions with Directors and Executive Officers"
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 1997 in excess of the lesser of $50,000 or 10% of his
total annual salary and bonus.
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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, 1997 (assuming the investment in the Company's
common stock and such indices of $100 on December 31, 1992, 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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
YEAR ENDED DECEMBER 31
RUSSELL 2000/
COMPANY RUSSEL 2000 INDEX FINANCIAL SERVICES INDEX
------- ----------------- -------------------------
1992 100 100 100
1993 157 119 123
1994 103 117 124
1995 271 150 172
1996 166 175 221
1997 228 214 301
Russell 2000/
Company Russell 2000 Financial Services
------- ------------ ------------------
Annualized rates of return:
5 years ended 12/31/97 18.0% 16.4% 24.7%
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(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 1997; and (b) the basis for Mr.
Sosnoff's compensation in 1997, 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. (See "Company
Performance-Financial.") 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 12% 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 1997, aggregate
market transactions in the Company's common stock equaled approximately 3.8% of
the common stock outstanding. As a result, 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.
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 1997 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, and (5) other financial criteria.
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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.
1997 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, reflecting a
13% decline in average managed assets, a 9% decline in operating revenues, and a
41% decline in operating income. These 1997 declines primarily relate to the
loss of managed assets owing to poor relative performance results for clients in
1996 and 1997.
The changes in 1997 overall compensation as compared to 1996 compensation
for executive officers, with the exception of Mr. Staub and Mr. Knobler who have
separate arrangements with the Company, are attributable to no bonus payments
made under the Management Incentive Plan ("MIP"), as a result of a decline in
operating earnings in 1997 as compared with 1996. In the case of Mr. Steinberg,
his salary increased to an annual rate of $700,000 upon his promotion to
President. In the case of Mr. Miller, his salary increased to an annual rate of
$300,000 upon his promotion to Executive Vice President and Chief Operating
Officer, and he was paid a discretionary bonus of $100,000 in 1997. In the case
of Mr. Kobel, his employment was terminated without cause in August, 1997 and,
pursuant to the terms of his Employment Agreement, was paid his base salary for
an additional ninety days. See "Executive Compensation" and "Agreements and
Transactions with Directors and Executive Officers" elsewhere in this proxy
statement.
The Subcommittee concurred in the recommendation of Mr. Sosnoff and in
September, 1997 granted to Messrs. Steinberg and Miller restricted awards of
common stock under the terms of the 1996 Long Term Incentive Plan. Such awards,
which vest over four years, are designed to provide a substantial incentive to
the discharge of their expanded responsibilities and to recognize their past
performance. See "Executive Compensation" hereinbefore in this proxy statement.
The MIP is designed to reflect the financial performance criteria which
should be applied in determining executive officer compensation. It 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. 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 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 (a) no awards are payable under the MIP unless there is a 9.5% or better
improvement in adjusted operating earnings (as defined in the MIP) over the
highest level of adjusted operated earnings achieved in any of the three
immediately preceding fiscal years, (b) the annual award pool cannot exceed 50%
of incremental adjusted operating earnings above the threshold and (c) aggregate
annual bonuses under 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. For the three years
ended December 31, 1998, the MIP was amended to change the method of allocation
of the Award Bonus Pool and to provide for the participation of the following
current officers: the two senior portfolio managers of the Company, Messrs.
Sosnoff and Steinberg, and Mr. Miller, Executive Vice President and Chief
Operating Officer.
1997 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 1997 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
9
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 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 the financial performance criteria considered
relevant by the Committee.
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 account. From 1990 through 1995, the Company significantly
improved its standing in the performance ratings among investment management
organizations that manage aggregate client assets of comparable size. However,
since 1996 the investment performance in client accounts was less than the
performance of relevant benchmarks. The Committee notes that while 1997's
performance was below relevant benchmarks, it was significantly better than 1996
and the Company's peer group rankings improved from the 90th percentile in 1996
to above median in 1997. In the Committee's view, the reduced bonus payments
made to the two senior portfolio managers, including Mr. Sosnoff, under the MIP
in 1997 and 1996 accurately reflects the impact of underperformance in client
accounts on the Company's operating earnings growth experienced in 1997 and
1996.
Dated: March 10, 1998
The Committee
Kenneth H. Iscol
Martin T. Sosnoff
Thurston Twigg-Smith
The Sub-Committee
Kenneth H. Iscol
Thurston Twigg-Smith
10
Stock Option and Long Term Incentive Plans
On January 27, 1998 the Company granted incentive stock options for 50,000
shares at an exercise price of $9.00 per share to James D. Staub, Senior Vice
President, under the Company's 1996 Long Term Incentive Plan ("LTIP").
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, 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.
On December 7, 1995 the Company granted non-qualified options with an
exercise price of $9.50 per share for 800,00 shares of its common stock to three
senior executives under the Company's 1987 Stock Option Plans (" SOP "). Options
on 650,000 shares were granted to Mr. Kobel, options on 100,000 shares were
granted to Mr. Steinberg, and options on 50,000 shares were granted to Mr.
Miller. No awards were made in 1996 under the SOP. The LTIP was approved in
1996. No option awards were made under the LTIP in 1996.
No stock options or purchase rights were exercised during fiscal 1996 under
the SOP and Incentive Stock Purchase Plan, and such Plans were canceled in 1996
in connection with stockholder approval of the LTIP. Such cancellation does not
affect options outstanding.
Upon his termination without cause, Mr. Kobel's options on 650,000 shares
at an exercise price of $9.50 per share were cancelled in 1997 and are no longer
outstanding. Additionally, non-qualified options granted in 1987 on 35,000
shares at a strike price of $14.00 per share to other employees expired
worthless in 1997.
Grants and Awards Outstanding
At December 31, 1997 there were options to purchase 200,000 shares
outstanding under the SOP. Options to purchase 110,000 shares are currently
exercisable. Of such options, Mr. Steinberg owns non-qualified options for
100,000 shares at an exercise price of $9.50 per share, 40,000 of which are
currently exercisable. Such options had a fair market value of $250,000 at
December 31, 1997 based on the difference between the closing price ($12.00 per
share) of the common stock and the exercise price.
Mr. Miller owns options to purchase 50,000 shares at $9.50 per share,
20,000 which are currently exercisable. Such options had a fair market value of
$125,000 at December 31, 1997 based on the difference between the closing price
($12.00 per share) of the common stock and the exercise price.
Mr. Staub owns incentive stock options for 50,000 shares at an exercise
price of $6.13 per share, all of which are currently exercisable. Such options
had a value of $293,750 at December 31, 1997 based on the difference between the
closing price ($12.00 per share) of the common stock and the exercise price.
Management Incentive Plan
The purpose of the Management Incentive Plan (the "MIP") is to directly
relate year-end bonuses of participants to a minimum of 9.5% year-to-year growth
in operating earnings of the Company (adjusted for non-cash charges under the
RSBP and current year accruals under the MIP). The maximum aggregate award
payable to participants under the MIP is subject to the limitation that it
cannot result in a reduction of earnings per share of more than 10%. Incremental
year-to-year adjusted operating earnings growth of less than 9.5% will result in
no awards under the MIP. For every one percent of growth in year-to-year
operating earnings above 9.5%, the aggregate award payable under the MIP
increases in one and one quarter percent increments from 25% (at 9.5%) to a
maximum of 50% (at 29.5%) of the amount of increase in adjusted operating
earnings achieved in any of the immediately preceding three fiscal years of the
Company. Each participant's share of the aggregate award is payable at year-end
in assigned percentages.
11
For fiscal 1997, no bonuses were awarded under the MIP, computed as described
above, based upon a decrease in adjusted operating earnings in fiscal 1997 as
compared to fiscal 1996.
Profit-Sharing Plan
The Company has a Profit-Sharing Plan for its employees. For the year ended
December 31, 1997, contributions in the amount of $135,460 were made to the
Plan.
AGREEMENTS AND TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Mr. Kobel is party to an employment (the "Agreement") entered into in
December 1995. In August, 1997 Mr. Kobel was terminated without cause as
President. Under the terms of the Agreement, Mr. Kobel will receive severance
payments at an annual rate of $700,000, his salary at termination, over the next
two years. Upon termination of his employment, Mr. Kobel is subject to
non-competition and non-solicitation restrictions for a two year period which he
may shorten to one year by forgoing the second year's severance.
Upon termination of his employment Mr. Steinberg is subject to
non-competition and non-solicitation restrictions under his employment agreement
with the Company.
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.
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 to $175,000.
Mr. Iscol is a party to an agreement with the Company pursuant to which his
director's compensation is deferred until he ceases to be a member of the
Company's Board of Directors. Under this agreement, Mr. Iscol's deferred
compensation fluctuates based upon an index of the investment performance of the
Company's proprietary investment account.
Options issued under the SOP and LTIP, and restricted stock awards 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 at 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.
12
BENEFICIAL OWNERSHIP OF SECURITIES
OF THE COMPANY
The following table sets forth information as of December 31, 1997 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
1997, 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 7,021,516(1) 72.4%
Craig B. Steinberg 640,300(2) 6.6%
Robert J. Kobel 596,944 6.2%
Anthony G. Miller 195,000(3) 2.0%
Kenneth H. Iscol(4) 1,000 (10)
William M. Knobler 1,100(5) (10)
James D. Staub 50,000(6) .5%
Thurston Twigg-Smith(7) 1,000 (10)
All executive officers and
directors as a Group (11 persons) 8,507,447(8) 87.7%
- -----------
(1) includes 6,000 shares owned as custodian for a minor child under the
Uniform Gift to Minors Act.
(2) includes 600,000 shares issued under the Company's 1996 Long Term Incentive
Plan. Includes 40,000 shares issuable upon exercise of currently
exercisable options issued under the Company's Option Plans at an exercise
price of $9.50 per share. Does not include non-currently exercisable
options to purchase 60,000 shares at an exercise price of $9.50 per share.
(3) includes 175,000 shares issued under the Company's 1996 Long Term Incentive
Plan. Includes 20,000 shares issuable upon exercise of currently
exercisable options issued under the Company's Option Plans at an exercise
price of $9.50 per share. Does not include non-currently exercisable
options to purchase 30,000 shares at an exercise price of $9.50 per share.
(4) Mr. Iscol's business address is 63 Lyndel Road, Pound Ridge, New York,
10576.
(5) 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.
(6) includes 50,000 shares issuable upon exercise of currently exercisable
options issued under the Company's Option Plans at an exercise price of
$6.13 per share.
(7) Mr. Twigg-Smith's business address is Persis Corporation, P.O. Box 3110,
Honolulu, Hawaii 96802.
(8) includes shares owned by executive officers of subsidiaries who have been
designated as executive officers of the Company. Includes 110,000 shares
subject to currently outstanding options under the Option Plans. Does not
include non-currently exercisable options to purchase 90,000 shares.
(9) Calculated on the basis of 9,587,401 shares outstanding plus 110,000 shares
subject to currently exercisable options.
(10) less than .1% of shares outstanding.
13
PROPOSAL 2
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 1998 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 20,
1998 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,
/s/ Anthony G. Miller
Anthony G. Miller
Secretary
14
ATALANTA/SOSNOFF CAPITAL CORPORATION
P Proxy Solicited on Behalf of the Board of Directors of
R the Company for Annual Meeting April 29, 1998
O
X The undersigned hereby constitutes and appoints Martin T. Sosnoff, Craig B. Steinberg and Anthony G. Miller,
Y 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 Wednesday, April 29, 1998 and
at any adjournments thereof, on all matters coming before said meeting.
Election of Directors, Nominees:
William Landberg, 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 AND FOR PROPOSAL 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors. ---- ---- 2. Approval of independent ---- ---- ----
(see reverse) / / / / accountants. / / / / / /
---- ---- ---- ---- ----
For, except vote withheld for the following nominees(s):
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.