SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ATALANTA/SOSNOFF CAPITAL CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ATALANTA/SOSNOFF CAPITAL CORPORATION
101 Park Avenue
New York, N.Y. 10178
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------
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 6, 1999 at 11:00 a.m.
local time, to consider and vote upon:
1. The election of directors for the ensuing year;
2. Approval of the Amendment to the Management Incentive Plan;
3. Ratification of the appointment of independent auditors for
1999; and
4. Such other matters as may properly come before the meeting.
The close of business on March 26, 1999 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 26, 1999
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
-----------
PROXY STATEMENT
-----------
This proxy statement is being mailed to the stockholders of
Atalanta/Sosnoff Capital Corporation (the "Company"), on or about March 31, 1999
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 6, 1999 at 11:00 a.m. and any adjournments thereof.
Record Date
The close of business on March 26, 1999 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 75.2% 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 26, 1999
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
Amendment to the Management Incentive Plan; and "FOR" the ratification of the
appointment of Arthur Andersen LLP as independent auditors for 1999.
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
9,338,401 shares outstanding as of March 26, 1999, 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
three regular meetings in 1998, 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 1998,
Mr. Thurston Twigg-Smith received $20,000 in regular compensation for serving as
a non-employee director of the Company, and Mr. William Landberg received
$15,000 for serving in the same capacity. Mr. Landberg was elected to the Board
at the April 29, 1998 Annual Meeting of Stockholders. Mr. Landberg became a
full-time employee of the Company's subsidiaries in January, 1999. During 1998,
Mr. Kenneth H. Iscol, a director since 1994, resigned. Mr. Iscol received $5,000
in regular compensation during 1998. See "Agreements and Transactions with
Directors and Executive Officers" for information about a payment made in 1998
under Mr. Iscol's deferred compensation arrangement which had been in effect
while he was a director.
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 1998 consisted of two non- employee directors, did
not meet during 1998 and acted once by unanimous written consent.
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 1998.
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 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
("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 1998, and acted by
unanimous written consent twice during 1998.
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 1998, 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 is
standing for election for the first time.
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, 47, since January, 1999 has been Senior Vice President,
Marketing of the Company's subsidiaries, and for more than five years prior
has 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 July 1998 has been an Advisory Director of, and for
more than five years prior thereto has been Senior Vice President of, and
held other offices with, J.P. Morgan Guaranty. It is contemplated that Mr.
Menaker shall become a member of the Audit, Compensation and Stock Option
Committees.
MARTIN T. SOSNOFF, 67, 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, 37, 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, 77, 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 1998.
Annual Compensation Long-Term Compensation
-------------------------------------- -------------------------
Securities All Other
Name and Other Annual Restricted Underlying Compen-
Principal Position Year Salary Bonus Compensation Stock Awards Options sation (9)
------------------ ---- ------ ----- ------------ ------------ ------- ----------
Martin T. Sosnoff 1998 $1,000,000 $8,000
Chairman of the Board; 1997 1,000,000 8,000
Chief Executive Officer; 1996 1,000,000 $245,700 (1) 6,250
Director
Craig B. Steinberg 1998 700,000 63,939 (2) $1,273,500 (3) 8,000
President and Director 1997 566,667 8,000
of Research; Director 1996 500,000 245,700 (1) 7,500
Anthony G. Miller 1998 350,000 371,438 (5) 8,000
Executive Vice President, 1997 250,000 100,000 (4) 8,000
Chief Operating Officer, 1996 225,000 122,900 (1) 7,500
Chief Financial Officer,
Secretary
James D. Staub 1998 192,500 $501,025 (6) 50,000 (8) 8,000
Senior Vice President 1997 140,000 453,425 (6) 7,000
of subsidiaries 1996 140,000 415,824 (6) 7,000
William M. Knobler 1998 400,000 (7) 490,715 (7) 8,000
Senior Vice President 1997 400,000 (7) 321,894 (7) 8,000
of subsidiary 1996 366,667 (7) 238,032 (7) 7,500
- ---------------------
(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 whereby Mr. Steinberg receives a
bonus based upon the pre-tax operating profits receivable by the
Company as general partner of the hedge fund Mr. Steinberg manages.
(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 $1,273,500 in 1998 (based on a
market price of $8.50 per share at the first anniversary), and none 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, and $5.0 million at December 31, 1998. In 1997, Mr. Steinberg was
loaned $46,740 with interest at the applicable federal rate for taxes
attributable to dividends paid on the shares received in his award. In
1998, Mr. Steinberg was loaned $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 1998, Mr. Steinberg paid $11,941 of interest to the Company related
to these loans.
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 $371,438 in 1998 (based on a market
price of $8.50 per share at the first anniversary) and none 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, and $1.5
million at December 31, 1998. In 1997, Mr. Miller was loaned $13,633
with interest at the applicable federal rate for taxes attributable to
dividends paid on the shares received in his award. In 1998, Mr. Miller
was loaned $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 1998,
Mr .Miller paid $2,843 of interest to the Company related to these
loans.
(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) 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 1998 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, 1998 (assuming the investment in the
Company's common stock and such indices of $100 on December 31, 1993, 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]
Russell
Russell 2000/Financial
Year Ended December 31 2000 Index Company Services Index
- ---------------------- ---------- ------- --------------
1993 100 100 100
1994 98 66 101
1995 126 173 140
1996 147 106 180
1997 180 146 245
1998 175 106 227
Russell 2000/
Company Russell 2000 Financial Services
------- ------------ ------------------
Annualized rates of return:
5 years ended 12/31/98 1.2% 11.8% 17.8%
- -----------
(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.
7
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 1998; and (b) the basis for Mr.
Sosnoff's compensation in 1998, 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 17% 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 1998, aggregate
market transactions in the Company's common stock (excluding 249,000 shares
purchased in the market by the Company in December, 1998) equaled approximately
4.8% 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. However, the Committee does note that the
Company's book value per share grew 19% in 1998 to total $8.78 at year-end.
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 1998 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.
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.
1998 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. These declines primarily relate to the loss of managed assets
owing to poor relative performance results for clients in 1996 and 1997.
The changes in 1998 overall compensation as compared to 1997
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 1998 as compared with 1997. In the case of
Mr. Steinberg, his salary increased to an annual rate of $700,000 upon his
promotion to President in 1997. Mr. Steinberg also received a special bonus in
1998 of $63,939 pursuant to an agreement under which he receives a bonus based
upon the pre-tax operating earnings receivable by the Company as general partner
of the hedge fund which Mr. Steinberg manages. 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 in 1997, and he was paid a
discretionary bonus of $100,000 in 1997. His salary was increased to $350,000 at
the start of 1998.
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. No awards were made under the MIP for 1997 or 1998.
9
MIP Amendment. For the five years ended December 31, 2003, subject to
stockholder approval, the Sub-Committee has amended the MIP, to change the
method of computation and allocation of the Award Bonus Pool and to provide for
the participation by the three senior portfolio managers of the Company, Messrs.
Sosnoff, Steinberg, and Paul P. Tanico, and by Mr. Miller. Under the proposed
amendment, Messrs. Sosnoff and Steinberg will participate in the Award Bonus
Pool at 35% each, and Messrs. Miller and Tanico at 15% each. As amended, the MIP
measures increases in adjusted operating earnings against such earnings in the
1998 base year and provides for the allocation of 50% of such increases to the
Award Bonus Pool. See "Approval of Amendment to Management Incentive Plan"
hereinafter in this Proxy Statement. 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.
1998 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 1998 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.
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 rankings among investment
management organizations that manage aggregate client assets of comparable size.
In 1996 the investment performance in client accounts was substantially less
than the performance of relevant benchmarks. The Committee notes that while
1997's performance was also below relevant benchmarks, it was significantly
better than 1996 and the Company's equity peer group rankings improved from the
90th percentile in 1996 to above median in 1997. The Committee further notes
that investment performance in client accounts improved markedly in 1998,
exceeding all relevant benchmarks for the Company's composite equity, balanced
and fixed income products. Additionally, the Company's peer group rankings
improved to the top quartile in 1998. In the Committee's view, the elimination
or reduction of bonus payments made to the two senior portfolio managers,
including Mr. Sosnoff, under the MIP in 1998, 1997 and 1996 accurately reflects
the impact of underperformance in client accounts on the Company's operating
earnings growth experienced in those years.
Additionally, the MIP as amended would award a separate bonus to Mr.
Sosnoff, in an amount equal to 20% of each year's performance of the Company's
proprietary accounts in excess of relevant benchmarks. No bonus would be paid if
such performance were negative, even if it exceeded such benchmarks. This
computation would be made annually, based on each calendar year's performance
results.
Dated: March 10, 1999
The Compensation Committee
Martin T. Sosnoff
Thurston Twigg-Smith
The Compensation Sub-Committee
Thurston Twigg-Smith
10
Stock Option and Long Term Incentive Plans
Option Grants for 1998
On January 27, 1998 the Company granted incentive stock options for
50,000 shares at an exercise price of $9.00 per share to James D. Staub, Senior
Vice President, under the Company's 1996 Long Term Incentive Plan ("LTIP").
The following table sets forth information with respect to option
grants to the Company's Chief Executive Officer and the other four most highly
compensated executive officers.
The hypothetical value of the options as of their date of grant has
been calculated below, using the Black-Scholes option pricing model, based upon
a set of assumptions set forth in the footnote to the table. It should be noted
that this model is only one method of valuing options, and the Company's use of
the model should not be interpreted as an endorsement of its accuracy. The
actual value of the options may be significantly different, and the value
actually realized, if any, will depend upon the excess of the market value of
the common stock over the option exercise price at the time of exercise.
Option Grants During 1998
Number of % of Total
Shares Options
Underlying Granted to Hypothetical
Name Options Employees in Exercise Price Expiration Value at Grant
- ---- Granted (1) 1998 ($/Share) Date Date (2)
----------- ---- --------- ---- --------
James D. Staub 50,000 100% $9.00 1/27/08 $163,500
(1) Stock options entitle the holder to purchase shares of common stock at
a price which is equal to the fair market value per share for such
stock on the date the stock option was granted. Stock options become
exercisable over a four and one half year period (beginning six months
after the date of grant) in five equal installments. No stock option
may be exercised after the expiration of ten years from the date of
grant. In the event of a change in control of the Company (as defined)
the ability to exercise stock options is accelerated.
(2) The estimated present value at grant date of options granted during
1998 has been calculated using the Black-Scholes option pricing model,
based upon the following assumptions:
- expected option life of ten years;
- a risk-free interest rate of 5.5%, expected dividend yield
of 2.9%, and expected volatility of 33%.
The approach used in developing the assumptions upon which the
Black-Scholes valuation was done is consistent with the requirements of
Statement of Financial Accounting Standards No. 13, "Accounting for
Stock-Based Compensation."
11
Exercises and Awards Outstanding
Option Exercises and Year-End Values for 1998
No stock options were exercised or cancelled in 1998.
The table below sets forth the following information with respect to
option exercises during 1998 by the Company's Chief Executive Officer and the
other four most highly compensated executive officers and the status of their
unexercised options at December 31, 1998.
Aggregated Option Exercises During 1998 and Option Values on December 31, 1998
Number of
Shares Value Number of Unexercised Value of Unexercised
Acquired Upon Realized Options 12/31/98 Exercise In-the-Money Options 12/31/98 (1)
Exercise of Uponn Price Per
Name Option Exercise Exercisable Unexercisable Share Exercisable Unexercisable
- ---- ------ -------- ----------- ------------- ----- ----------- -------------
Craig B. Steinberg ---- ---- 60,000 40,000 $ 9.50 ---- ----
Anthony G. Miller ---- ---- 30,000 20,000 9.50 ---- ----
James D. Staub ---- ---- 50,000 ---- 6.13 $ 109,375 ----
10,000 40,000 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 $8.3125 per share, the closing
price of the common stock reported for New York Stock Exchange
transactions on December 31, 1998.
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 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 and the LTIP). 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.
12
For 1998, no bonuses were awarded under the MIP, computed as described
above, based upon a decrease in adjusted operating earnings in 1998 as compared
to 1997.
Profit-Sharing Plan
The Company has a Profit-Sharing Plan for its employees. For the year
ended December 31, 1998, contributions in the amount of $130,851 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, 1998. The $17,500 retroactive amount was deferred and
paid in 1998.
Mr. Robert J. Kobel is party to an employment agreement (the
"Agreement") entered into in December 1995. In August, 1997 Mr. Kobel was
terminated without cause as President of the Company. Under the terms of the
Agreement, Mr. Kobel receives severance payments at an annual rate of $700,000,
his salary at termination, over the two year period ending November 15, 1999.
Upon termination of his employment, Mr. Kobel became subject to non-competition
and non-solicitation restrictions for the same two-year period.
Mr. Iscol is a party to an agreement with the Company pursuant to which
his director's compensation was deferred until he ceased to be a member of the
Company's Board of Directors. Under this agreement, Mr. Iscol's deferred
compensation fluctuated based upon an index of the investment performance of the
Company's proprietary investment account. Mr. Iscol resigned from the Board in
1998 and, as a result, received a payment of $162,179 under his agreement.
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.
13
BENEFICIAL OWNERSHIP OF SECURITIES
OF THE COMPANY
The following table sets forth information as of December 31, 1998 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 1998, 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 (8)
- ----------------- ------------------------- --------------------
Martin T. Sosnoff 7,018,516 (1) 74.0%
Craig B. Steinberg 660,000 (2) 7.0%
Anthony G. Miller 205,000 (3) 2.2%
William M. Knobler 1,100 (4) (9)
James D. Staub 60,000 (5) .6%
Thurston Twigg-Smith(6) 1,000 (9)
All executive officers and directors
as a Group (9 persons) 7,945,616 (7) 83.7%
- -----------
(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 LTIP and 60,000
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 40,000 shares
at an exercise price of $9.50 per share.
(3) includes 175,000 shares issued under the Company's LTIP and 30,000
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.
(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.
(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 10,000 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 40,000 shares at an exercise price of $9.00 per
share.
(6) Mr. Twigg-Smith's business address is Persis Corporation, 2447 Makiki
Heights Drive, Honolulu, Hawaii 96822.
(7) includes shares owned by executive officers of subsidiaries who have
been designated as executive officers of the Company. Includes 150,000
shares subject to currently exercisable options under the SOP and LTIP.
Does not include non-currently exercisable options to purchase 100,000
shares.
(8) Calculated on the basis of 9,338,401 shares outstanding plus
150,000 shares subject to currently exercisable options.
(9) less than .1% of shares outstanding.
14
PROPOSAL 2
APPROVAL OF AMENDMENT TO MANAGEMENT INCENTIVE PLAN
History. The purpose 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 the MIP in effect
through December 31, 1998, aggregate awards increased from 25% to 50% of
year-to-year increases in adjusted operating earnings above 9.5% (See Management
Incentive Plan hereinabove in this proxy statement). 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%. For both of
the three-year periods during which the MIP has been in effect, the base year
against which growth in adjusted operating earnings has been measured has been
the year with the highest level of adjusted operating earnings in each such
period. Each participant's share of the aggregate award has been payable at
year-end.
The MIP was approved by stockholders in 1994 after its adoption by the
Compensation Sub-Committee of the Board of Directors. For the three years ended
December 31, 1995 payments to participants were made in the proportion which
each employee's 1993 annual base salary bore to the 1993 base annual salary of
all participants (except, for this purpose, the base annual salary of Messrs.
Sosnoff and Kobel was deemed to be $500,000 each). For the three years ended
December 31, 1998, the Sub-Committee amended the MIP to change the method of
allocation of the Award Bonus Pool and to provide for the participation by the
then four senior portfolio managers of the Company, and by one other officer,
Mr. Miller, at fixed percentages.
For 1997 and 1998, no bonuses were awarded under the MIP, computed as
described above.
The Amendment. For the five years ended December 31, 2003, subject to
stockholder approval, the Sub-Committee has amended the MIP (i) to change the
method of computation of the increase in adjusted operating earnings in a year
by using 1998 as the base year ("Base Year") in all such annual computations;
(ii) to change the method of allocation of the Award Bonus Pool to provide for
the participation by the current three senior portfolio managers of the Company,
Messrs. Sosnoff, Steinberg and Tanico, and by the Company's Executive Vice
President and Chief Operating Officer, Mr. Miller. Messrs. Sosnoff and Steinberg
will participate at 35% each, and Messrs. Miller and Tanico will participate at
15% each; (iii) to provide that 50% of annual increases in adjusted operating
earnings above the level in the Base Year would be payable to participants in
the award bonus pool; (iv) to provide that the bonus based on growth in
operating earnings would remain subject to the limitation that it cannot result
in a reduction in earnings per share of more than 10%; (v) to provide that the
MIP would be terminated in the event of a "change in control", as defined; and
(vi) to provide for a special bonus to Mr. Sosnoff described below.
Under the amendment, a special bonus would be awarded to Mr. Sosnoff
based on the amount by which the performance of the Company's proprietary
accounts (i.e. cash and cash equivalents; investments, at market; and
investments in limited partnerships) exceeds a blended 70% S&P 500 / 30% Lehman
Brothers Intermediate Government Corporate Bond indices benchmark. In the event
that performance exceeds the benchmark, Mr. Sosnoff would receive a special
bonus equal to 20% of the excess. No bonus would be paid if performance is
negative, even if it exceeds such benchmark. The bonus based on investment
performance would be subject to a separate and independent limitation that it
cannot result in a reduction of earnings per share of more than 10%; such bonus
would not be counted in the component of the MIP based on operating earnings
growth and an adjustment would be made to eliminate the effect of such bonus on
operating earnings.
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.
15
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 1999, 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 19, 1999 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
16
ATALANTA/SOSNOFF CAPITAL CORPORATION
P Proxy Solicited on Behalf of the Board of Directors of
R the Company for Annual Meeting Thursday, May 6, 1999
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 Thursday, May 6, 1999 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 AND FOR PROPOSAL 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors. ---- ---- 2. Approval of Amendment ---- ---- ----
(see reverse) / / / / to Management Incentive / / / / / /
---- ---- Plan. ---- ---- ----
FOR AGAINST ABSTAIN
3. Approval of Independent ---- ---- ----
Accountants. / / / / / /
---- ---- ----
/Table>
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.