Exhibit 10.31
ATALANTA/SOSNOFF CAPITAL CORPORATION (AND SUBSIDIARIES)
AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN
FOR THE
FIVE YEARS ENDING DECEMBER 31, 2003
WHEREAS, in December 1992, the Board of Directors of Atalanta/Sosnoff
Capital Corporation and its direct and indirect subsidiaries (the "Company")
adopted a Management Incentive Plan (the "Original Plan") effective January 1,
1993 for the senior executive officers of the Company and identified the
participants therein for the three years ended December 31, 1995, subject to,
and upon the recommendation and approval of, the Compensation Committee (the
"Committee") of the Board of Directors, composed of the then two non-employee
directors, Messrs. Kenneth H. Iscol and Thurston Twigg-Smith, (the "Outside
Directors") and Martin T. Sosnoff, Chairman of the Board;
WHEREAS, the Compensation Committee duly recommended and approved the
Original Plan in January 1993 and reported its recommendation and approval of
the Original Plan to the stockholders of the Company in its Report included in
the proxy statement of the Company furnished to stockholders in connection with
the 1993 Annual Meeting of Stockholders of the Company and the Company described
the Original Plan in that proxy statement;
WHEREAS, subsequent to the adoption by the Board and the approval by
the Committee of the Original Plan, the Omnibus Budget Reconciliation Act of
1993 (the "Act") became law. Effective for fiscal years beginning on or after
January 1, 1994, the Act denies deductions for federal income tax purposes for
compensation in excess of $1,000,000 per year to the chief
executive officer and to any of the four other most highly compensated officers,
unless such compensation is excluded from the deduction limitation. Compensation
under the Original Plan was excluded from the deduction limitation since (i) the
performance goals were established by a compensation committee consisting solely
of two or more outside directors (a Compensation Sub-Committee was established
for that purpose (the "Compensation Sub-Committee")), (ii) the material terms
under which the compensation was to be paid, including the performance goals,
were disclosed to and approved by stockholders of the Company in a separate
vote, and (iii) prior to payment, the Compensation Sub-Committee certified that
the performance goals and any other material terms were in fact satisfied. The
Act also provides that stockholder approval and certification by the
Compensation Sub-Committee as described above must be made conditions to the
right of the executive to receive the performance based compensation. To comply
with the provisions of the Act to qualify the compensation payable to certain
executives under the Management Incentive Plan as performance based compensation
eligible for exclusion from the deduction limit, the Management Incentive Plan
as amended and restated was submitted to the stockholders for approval at the
1994 Annual Meeting of Stockholders. Consistent with the Act, the approval by
stockholders and certification by the Compensation Sub-Committee were made
conditions to the rights of a participant to receive any benefits under the
Management Incentive Plan with respect to fiscal years of the Company beginning
after December 31, 1993;
WHEREAS, Subsequent to its initial restatement, pursuant to its
recommendation and adoption by the Compensation Sub-Committee and the approval
of the Board of Directors, subject to stockholder approval, the Original Plan
was amended on July 29, 1996 (the "First Amendment") to change the method of
allocating Bonuses from the Annual Award Pool and the
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identity of the Participants therein for the three years ended December 31, 1998
and the First Amendment was duly approved by stockholders at the 1996 Annual
Meeting of Stockholders;
WHEREAS, pursuant to its recommendation and adoption by the
Compensation Sub-Committee and the approval of the Board of Directors on March
10, 1999 and, subject to stockholder approval to be sought at the 1999 Annual
Meeting of Stockholders, the Original Plan, as restated, and as amended by the
First Amendment, has been amended and restated as provided herein (the "Second
Amendment") for the five years ending December 31, 2003. (The Original Plan as
previously restated, and as amended by the First Amendment and, as amended and
restated as provided herein is referred to herein as the "Plan".);
WHEREAS, the purpose of setting forth the Plan herein is to confirm the
terms of the Plan as adopted by the Board of Directors and recommended and
approved by the Compensation Sub-Committee for the five years ending December
31, 2003; and
WHEREAS, a Compensation Sub-Committee of the Compensation Committee
consisting of an outside director has established the performance goals set
forth in the Plan (which shall be reconfirmed by the outside directors of such
Sub-Committee), and has approved and adopted the Plan and recommended its
approval by the stockholders of the Company.
Section 1. Purpose. The purpose of the Company's Plan is to provide a
stimulus to Participants to a continuing high level of commitment to further
improvement in the financial performance of the Company by giving them a direct
interest in the financial performance of the Company through basing incentive
compensation on exceeding base year adjusted operating earnings and relevant
benchmarks in investment performance.
Section 2. Term. Subject to stockholder approval, pursuant to Section
10, the Plan
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shall be effective as of January 1, 1999 (the "Effective Date"),
and shall be applicable for each of the five fiscal years of the Company during
the period ending December 31, 2003, unless amended or terminated by the Company
pursuant to Section 9.
Section 3. Coverage. For purposes of the Plan, the term "Participant"
shall include the senior executive officers of the Company serving as such at
any time during the fiscal year who are selected by the Compensation
Sub-Committee. As used herein, the term "Company" includes both the Company and
its direct and indirect subsidiaries, unless the context otherwise requires. The
Participants for the five fiscal years during the period ending December 31,
2003 were determined by the Compensation Sub-Committee and have been approved by
the Board of Directors and stockholders of the Company and their names and
titles and the Annual Award Pool in which they participate are set forth on
Exhibit A annexed hereto.
Section 4. Annual Award Pool.
4.1. For each fiscal year of the Company, each Participant shall be
entitled to receive a bonus award (a "Bonus") payable from an annual award pool
in which he participates, in an amount determined as provided in Section 5. For
each fiscal year, each Participant who was not a full year Participant shall be
entitled to a Bonus for such fiscal year to the extent set forth in Section 5.2
hereof. The annual award pools (each an "Annual Award Pool") shall consist of an
Operating Earnings Pool (the "Earnings Pool") and an Investment Performance Pool
(the "Performance Pool").
4.2. The Earnings Pool and the Performance Pool for each fiscal year
shall be determined and paid as soon as practicable after the end of such fiscal
year of the Company and in no event later than 45 days thereafter and shall be
an amount determined as follows:
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(a) If the Company's Adjusted Operating Earnings as defined in
Section 4.2(c) hereof for the fiscal year in which an Earnings Pool is to be
computed hereunder (the "Computation Year") exceeds the level of Adjusted
Operated Earnings achieved in fiscal year 1998 of $5,996,000 (the "Base Year"),
then subject to the limitation set forth in subsection (b) hereof, the Earnings
Pool shall be an amount equal to the positive difference, if any, between
Adjusted Operating Earnings in the Computation Year and the Base Year multiplied
by fifty percent (50%).
(b) In no event shall the Earnings Pool as determined in
accordance with subsection (a) hereof exceed an amount which when subtracted
from the consolidated earnings of the Company would result in the reduction of
net earnings per share by more than ten percent 10%.
(c) For purposes of this Plan, the "Adjusted Operating
Earnings" for a fiscal year shall be the consolidated operating earnings of the
Company and its subsidiaries, determined in accordance with generally accepted
accounting principles, plus amounts paid or accrued with respect to amounts
payable (i) under the Restricted Stock Bonus Plan of the Company, (ii) under the
1996 Long Term Incentive Plan of the Company, (iii) under this Plan, (iv) as a
result of acquisitions, and (v) such other amounts paid, payable, accrued and/or
chargeable to operating income as the Sub-Committee shall determine in its
discretion should not be deducted from revenues for purposes of the Plan. By way
of example, but not limitation, the Sub-Committee has determined that amounts
chargeable to compensation expense in the acquisition of the business of William
M. Knobler should be added as an adjustment to operating earnings for purposes
of the Plan.
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(d) The Performance Pool for each fiscal year (a
"ComputationYear") during which the Plan is in effect shall be computed by
determining the investment performance of the Company's proprietary account,
consisting of cash, cash equivalents, investments at market and investments in
limited partnerships (the "Account") in such ComputationYear and comparing it to
a blended index composed of 70% of the performance of the S&P500 and 30% of the
performance of the Lehman Brothers Intermediate Government Bond Index (the
"Benchmark") for such Computation Year. The Investment Pool shall be an amount
equal to twenty percent (20%) of the positive difference, if any, by which the
investment performance of the Account in any Computation Year exceeds the
Benchmark, multiplied by the average market value of the Account during such
Computation Year, provided, however, that no amount shall be credited to the
Performance Pool unless the investment performance of the Account is positive.
By way of example of the foregoing, if (i) the Account had an average market
value of $100 million during the Computation Year, (ii) the investment
performance of the Account was 10%, and (iii) the Benchmark's performance was 8%
in the ComputationYear, then the positive difference of 2% in performance would
be multiplied by 20% and the product of 0.4% would be multiplied by the average
market value of the Account during the Computation Year, resulting in a
Performance Pool of $400,000.
(e) In no event shall the Performance Pool, as determined in
accordance with subsection (d) hereof, considered separately from the Earnings
Pool and without aggregation with it, exceed an amount which when subtracted
from the consolidated earnings of the Company would result in the reduction of
net earnings per share by more than ten percent (10%).
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Section 5. Allocations.
5.1. A Bonus shall be allocated to each Participant from the Annual
Award Pool in which he participates in the percentages assigned to such
Participant in Exhibit A.
5.2. Notwithstanding anything in this Plan to the contrary, any
Participant who ceases to be an employee of the Company for any reason (other
than death or disability) prior to the end of a fiscal year shall not be
entitled to a Bonus with respect to such year. If such Participant ceased to be
an employee of the Company by reason of death or disability prior to fiscal
year-end then a Bonus shall be allocated to such Participant for the full fiscal
year.
5.3. The Compensation Sub-Committee may elect as to any or all of the
Participants to pay to any such Participant a portion of such Participant's
Bonus in shares of Common Stock, par value $.01 per share, of the Company valued
by the Compensation Sub-Committee as it shall determine in its discretion based
on the market value at the date of the issuance of such stock to such
Participant, the average market value thereof for an appropriate period prior to
such issuance, and taking into account, as it shall deem appropriate, the
non-marketability, of such stock or book value as determined in accordance with
generally accepted accounting principles, at the time of issuance provided,
however, that any proposed discount from market value for the Common Stock as so
determined to take account of such non-marketability, resulting in an increase
in the number of shares of the Common Stock issuable to any such Participant
shall not be taken if, upon advice of counsel, the Compensation Sub-Committee
determines that such discount would constitute an impermissible exercise of
discretion by the Compensation Sub-Committee increasing any such Participant's
Bonus and resulting in any portion of such Participant's compensation under the
Plan not being qualified performance based compensation deductible by the
Company for federal income tax purposes under Section 162(m) of the Internal
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Revenue Code of 1986, as amended. In no event shall Company Common Stock issued
to any such Participant as so valued represent more than 25% of the value of
such Participant's Bonus for any fiscal year. The Participant shall acknowledge
that the disposition of any Common Stock awarded as a Bonus is subject to
restriction under federal and state securities laws and shall agree to such
other restrictions as the Compensation Sub-Committee may impose as a condition
to the issuance of such stock. The Compensation Sub-Committee may determine that
payment of a portion of the Bonuses shall be deferred, the periods of such
deferrals and the interest, if any, to be paid in respect to deferred payments.
The Compensation Sub-Committee may also define such other conditions of payment
of Bonuses as it may deem desirable in carrying out the purposes of the Plan.
Any Participant, prior to December 1 of any Computation Year, may elect to defer
receipt of his Bonus for such period, not exceeding ten years, as he shall
determine.
5.4 The aggregate Bonuses awarded for any year shall not exceed the
applicable Annual Award Pool for such year, including amounts awarded to
Participants who were not employees of the Company for the entire fiscal year.
In any fiscal year, any balance in either Annual Award Pool attributable to a
forfeiture of Bonus under Section 5.3 as a result of a Participant ceasing to be
an employee during such year (collectively, "Unawarded Bonuses"), or any portion
thereof, shall be distributed among all remaining Participants in proportion to
their respective shares.
Section 6. Administration and Interpretation. The Plan shall be
administered by the Compensation Sub-Committee, which shall have the sole
authority to make rules and regulations for the administration of the Plan. The
interpretations and decisions of the Compensation Sub-
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Committee with regard to the Plan shall be final and conclusive. The
Compensation Sub-Committee may request advice or assistance or employ such
persons (including, without limitation, legal counsel and accountants) as it
deems necessary for the proper administration of the Plan.
Section 7. Administrative Expenses. Any expense incurred in the
administration of the Plan shall be borne by the Company out of its general
funds and not charged against the Annual Award Pool, except insofar as such
expenses shall be taken into account in determining Adjusted Operating Earnings
hereunder.
Section 8. Amendment or Termination.
(a) The Compensation Sub-Committee of the Company may from
time to time amend the Plan in any respect or terminate the Plan in whole or in
part (and shall terminate the Plan upon the happening of an event described in
subsection (b) hereof), provided, however, that no such action shall
retroactively impair or otherwise adversely affect the rights of any Participant
to benefits under the Plan which have accrued prior to the date of such action
and, provided, further, that no amendment to the Plan shall effect a change in
the material terms thereof which would result in any portion of a Bonus made
hereunder not being deductible for federal income tax purposes under Section
162(m) of the Internal Revenue Code of 1986, as amended.
(b) The Plan shall be terminated upon a "change in control" as
defined herein. For the purposes hereof a change in control shall mean:
(i) a change in the majority of the Board of
Directors so that a majority of its members
are comprised of persons not nominated by
existing members of the Board of Directors;
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(ii) consummation of a transaction or series of
transactions as a result of which persons
who currently own 50% of the outstanding
common stock of the Company cease to own 50%
thereof; or
(iii) the Company shall cease to have a class of
equity securities registered pursuant to
Sections 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended.
Section 9. No Assignment. The rights of a Participant hereunder,
including without limitation the right to receive a Bonus, shall not be sold,
assigned, transferred, encumbered or hypothecated by a Participant (except by
testamentary disposition or intestate succession), and during the lifetime of
any recipient any payment of a Bonus shall be payable only to such recipient.
Section 10. Stockholder Approval. This Plan shall be subject to
approval by an affirmative vote of the stockholders of the Company holding a
majority of the Common Stock of the Company outstanding at the 1999 Annual
Meeting of Stockholders with respect to all Bonuses accrued on or after January
1, 1999, and such stockholder approval shall be a condition to the right of a
Participant to receive any such Bonus hereunder.
Section 11. Certification by Compensation Sub-Committee. As a condition
to the right of a Participant to receive any Bonus under this Plan for fiscal
years beginning after December 31, 1998 the Compensation Sub-Committee shall
first be required to certify, by written resolution of the Compensation
Sub-Committee or other appropriate written certification, that the performance
goals set forth in Section 4.2 have been satisfied and that the applicable
Annual Award Pool and the Bonus for each Participant has been accurately
determined in
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accordance with the provisions of this Plan.
Section 12. No Preclusion. Nothing in the Plan shall preclude the Board
of Directors of the Company, or any Committee or Sub-Committee of the Board
thereunto duly authorized, where circumstances warrant, from making
discretionary bonus payments to any of the Participants or to any other employee
of the Company, not made pursuant hereto.
Date Adopted: March 10, 1999
Date Approved
by Stockholders: May 6, 1999
Date reconfirmed
by Sub-Committee: May 6, 1999
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EXHIBIT A
1999-2003 PARTICIPANTS IN THE ANNUAL AWARD POOLS
OF THE
MANAGEMENT INCENTIVE PLAN
NAME TITLE PERCENTAGE
---- ----- ----------
EARNINGS POOL
Martin T. Sosnoff, Chairman of the Board and 35%
Chief Executive Officer
Craig B. Steinberg, President and Director of Research 35%
Anthony G. Miller, Executive Vice President, Chief Operating 15%
Officer, Chief Financial Officer, Secretary
Paul P. Tanico Executive Vice President,
Portfolio Manager (of Subsidiaries) 15%
PERFORMANCE POOL
Martin T. Sosnoff Chairman of the Board and
Chief Executive Officer 100%