SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DONALDSON, LUFKIN & JENRETTE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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DONALDSON, LUFKIN & JENRETTE, INC.
277 PARK AVENUE
NEW YORK, NEW YORK 10172
March 27, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Donaldson, Lufkin & Jenrette, Inc. The meeting will be held at the Company's
offices, 8th Floor, 277 Park Avenue, New York, New York 10172, on Tuesday,
May 9, 2000 at 10:00 a.m., New York City time.
The business of the meeting will be to (i) elect directors to the Company's
Board of Directors and (ii) ratify the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000. Information
on these matters can be found in the accompanying proxy statement. Holders of
DLJDIRECT Common Stock are not entitled to vote on these items but are welcome
to attend the meeting.
If you are a holder of DLJ Common Stock, then whether or not you plan to
attend the meeting in person, your shares should be represented and voted at the
meeting. Accordingly, after reading the enclosed proxy statement, kindly mark
the proxy card to indicate your vote, date and sign the proxy card, and return
it in the enclosed postage-paid envelope as soon as conveniently possible. If
you desire to vote in accordance with management's recommendations, you need not
mark your votes on the proxy card but need to sign, date and return it in the
enclosed postage-paid envelope in order to record your vote. If you later decide
to attend the meeting and wish to vote your shares personally, you may revoke
your proxy at any time before it is exercised.
Sincerely,
Joe L. Roby John S. Chalsty
PRESIDENT AND CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER
DONALDSON, LUFKIN & JENRETTE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Donaldson, Lufkin & Jenrette, Inc.:
Notice is hereby given that the 2000 Annual Meeting (the "Annual Meeting")
of the stockholders of Donaldson, Lufkin & Jenrette, Inc. (the "Company") will
be held at the Company's offices, 8th Floor, 277 Park Avenue, New York, New York
10172, on Tuesday, May 9, 2000, at 10:00 a.m., New York City time, for the
following purposes:
1. To elect all of the members of the Company's Board of Directors to
serve until the Company's next annual meeting and until such directors'
successors are elected and shall have qualified.
2. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the
Annual Meeting or at any adjournments thereof.
A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only holders of DLJ Common Stock of record
at the close of business on March 15, 2000 are entitled to notice of, and to
vote at, the Annual Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Marjorie S. White
SECRETARY
March 27, 2000
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. THIS WILL INSURE THAT YOUR SHARES ARE
VOTED IN ACCORDANCE WITH YOUR WISHES.
DONALDSON, LUFKIN & JENRETTE, INC.
277 PARK AVENUE
NEW YORK, NEW YORK 10172
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PROXY STATEMENT
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This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Donaldson, Lufkin & Jenrette, Inc., a Delaware
corporation (the "Company"), of proxies to be voted at the 2000 annual meeting
of stockholders to be held on Tuesday, May 9, 2000 at 10:00 a.m., New York City
time, at the Company's offices, 8th Floor, 277 Park Avenue, New York, New York
10172, and at any adjournments thereof (the "Annual Meeting"). The Notice of
Annual Meeting, this Proxy Statement and the accompanying proxy card are first
being mailed to stockholders on or about March 27, 2000.
At the Annual Meeting, holders of the Company's DLJ Common Stock ("DLJ
stockholders") will be asked (i) to elect the following persons as directors of
the Company to serve until the Company's next annual meeting and until such
directors' successors are elected and shall have qualified: Joe L. Roby, John S.
Chalsty, Anthony F. Daddino, David DeLucia, Hamilton E. James, Stuart M.
Robbins, Henri de Castries, Denis Duverne, Jane Mack Gould, Louis Harris,
Michael Hegarty, Henri G. Hottinguer, W. Edwin Jarmain, Francis Jungers, Edward
D. Miller, W.J. Sanders III, Stanley B. Tulin and John C. West, (ii) to ratify
the appointment of KPMG LLP as the Company's independent auditors for the fiscal
year ending December 31, 2000, and (iii) to take such other action as may
properly come before the Annual Meeting or any adjournments thereof.
GENERAL INFORMATION
SOLICITATION AND VOTING OF PROXIES; REVOCATION; RECORD DATE
All proxies duly executed and received by the Company will be voted on all
matters presented at the Annual Meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted in favor of the election to the Company's Board of
Directors of the eighteen nominees for director identified in this Proxy
Statement and the ratification of the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000. Any DLJ
stockholder may revoke his or her proxy at any time prior to the Annual Meeting
before it is voted by written notice to such effect delivered to the Company at
277 Park Avenue, New York, New York 10172, Attention: Marjorie S. White,
Secretary, by delivery prior to the Annual Meeting of a subsequently dated proxy
or by attending the Annual Meeting and voting in person.
Solicitation of proxies may be made by mail and may also be made by personal
interview, telephone, facsimile and electronic transmission, and by directors,
officers and regular employees of the Company without special compensation
therefor. The expenses of the preparation of proxy materials and the
solicitation of proxies for the Annual Meeting will be paid by the Company. The
Company expects to reimburse banks, brokers and other persons for their
reasonable out-of-pocket expenses in handling proxy materials for beneficial
owners. The Company has also retained Morrow & Co. to assist in the solicitation
of proxies at an anticipated fee of $4,000 plus expenses.
Only holders of record of DLJ Common Stock at the close of business on
March 15, 2000 (the "Record Date") will be entitled to vote at the Annual
Meeting. At the close of business on the Record Date, there were issued and
outstanding 127,370,814 shares of DLJ Common Stock, each of which is entitled to
one vote. Holders of DLJDIRECT Common Stock are not entitled to vote at the
Annual Meeting.
A quorum for the Annual Meeting consists of a majority of the total number
of shares of DLJ Common Stock outstanding on the Record Date. Directors of the
Company will be elected by a plurality vote of the shares of DLJ Common Stock
represented at the Annual Meeting and entitled to vote. Accordingly, abstentions
and broker non-votes will not affect the outcome of the election. The
affirmative vote of a majority of the shares of DLJ Common Stock represented at
the Annual Meeting and entitled to vote is required for the ratification of the
appointment of KPMG LLP as the Company's independent auditors for the fiscal
year ending December 31, 2000. On such item, an abstention will have the same
effect as a negative vote, but, because shares held by brokers will not be
considered entitled to vote on matters as to which the brokers withhold
authority, a broker non-vote will have no effect on the vote.
As of March 1, 2000, AXA Financial, Inc. (formerly called The Equitable
Companies Incorporated and, together with its subsidiaries other than the
Company, "AXF") beneficially owned an aggregate of 88,603,333 shares of DLJ
Common Stock, representing approximately 69.6% of the total number of shares of
DLJ Common Stock outstanding. AXA and certain of its affiliates beneficially
owns 1,836,667 shares of DLJ Common Stock. AXA is the largest shareholder of AXF
and, therefore, may be considered to beneficially own 90,440,000 shares of DLJ
Common Stock, representing 71.1% of the total number of shares of DLJ Common
Stock outstanding. See "Security Ownership of Certain Beneficial Holders and
Management." The affirmative vote of the shares of DLJ Common Stock beneficially
owned by AXF is sufficient to ensure election of the nominees to the Board of
Directors named herein and ratification of the appointment of KPMG LLP as the
Company's independent auditors for the fiscal year ending December 31, 2000.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR OF THE COMPANY (AS
SPECIFIED BELOW) AND RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
2
ITEM 1: ELECTION OF DIRECTORS
All the Company's directors will be elected at the Annual Meeting to serve
until the next succeeding annual meeting of the Company and until their
successors are elected and shall have qualified. All the nominees listed below
are currently serving as members of the Board of Directors and, except as stated
in the subsequent paragraph, the proxies solicited hereby will be voted FOR the
election of such nominees unless the completed proxy card directs otherwise.
The Board of Directors has been informed that all of the nominees listed
below are willing to serve as directors, but if any of them should decline or be
unable to act as a director, the individuals named in the proxies may vote for a
substitute designated by the Board of Directors. The Company has no reason to
believe that any nominee will be unable or unwilling to serve.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information and period of service as a director of the Company of
each nominee are set forth below.
JOE L. ROBY (60) was elected Chief Executive Officer of the Company in
February 1998 and has also served as President of the Company since
February 1996. He served as Chief Operating Officer of the Company from
November 1995 until February 1998. Previously, Mr. Roby had served as Chairman
of the Company's Banking Group since 1989. Mr. Roby joined the Company as a Vice
President in the Investment Banking Group in 1972 and became head of the group
in 1984. Mr. Roby has been a director of the Company since 1989. He is also a
director of Advanced Micro Devices, Inc. and Sybron International Corporation.
JOHN S. CHALSTY (66) was elected Chairman of the Board of the Company in
1996. Mr. Chalsty was Chief Executive Officer of the Company from 1986 until
February 1998, and also served as President of the Company from 1986 until 1996,
after having served as Chairman of the Company's Capital Markets Group for more
than two years. Mr. Chalsty joined the firm in 1969 as an oil analyst. He was
named Director of Research in 1971, was appointed head of the Investment Banking
Group in 1979, and was named Chairman of the Capital Markets Group in 1984.
Mr. Chalsty has been a director of the Company since 1971 and is also a director
of AXF, IBP, Inc., Occidental Petroleum Corporation and Sappi, Limited. He was a
member of the Executive Committee of AXA from January 1997 until January 2000.
From 1990 to 1994 he served as Vice Chairman of the New York Stock
Exchange, Inc.
ANTHONY F. DADDINO (59) was appointed Executive Vice President and Chief
Financial Officer of the Company in 1983 and also serves as Chairman of the
Finance Committee. Mr. Daddino has been a director of the Company since 1985. He
joined the Company in 1976 from the accounting firm of Peat, Marwick,
Mitchell & Co. where he was a Partner. He served as the Company's Chief
Accounting Officer and as a Group Managing Director prior to 1983. He is also a
director of International Commodities Export Corp.
3
DAVID DELUCIA (47) joined the Company in 1995 as a Managing Director and
Chief Operating Officer of the Fixed Income Division and became Head of that
division in 1997. Prior to that time he had been a Partner at Goldman, Sachs &
Co. from 1986 until 1995 in the fixed income division.
HAMILTON E. JAMES (49) was appointed Chairman of the Company's Banking Group
in 1995. Mr. James joined the Company as an Associate in the Investment Banking
Group in 1975 and since then has held various executive positions in the group
until his appointment as Chairman of the Banking Group. Mr. James has been a
director of the Company since 1996. He is also a director of Costco
Companies Inc.
STUART M. ROBBINS (56) was appointed Managing Director, Global Institutional
Equities, of the Company in 1995. Mr. Robbins joined the Company in 1984 as a
Vice President and Retail Industry Specialist. From 1987 until 1994 he was
Managing Director, Research and from 1994 until his appointment to his current
position he was a Managing Director and Co-Head, Institutional Equities.
HENRI DE CASTRIES (45) has been a director of the Company since 1993. Since
January 2000, Mr. de Castries has been Vice Chairman of the Management Board of
AXA. Since April 1998, Mr. de Castries has been Chairman of the Board of AXF and
since 1996 he has been Senior Executive Vice President Financial Services and
Life Insurance Activities of AXA. Prior thereto, Mr. de Castries was Executive
Vice President Financial Services and Life Insurance Activities from 1993 to
1996, General Secretary from 1991 to 1993 and Central Director of Finances from
1989 to 1991 of AXA S.A. He is also a director or officer of various
subsidiaries and affiliates of the AXA Group. He has been a director of AXF
since May 1994 and The Equitable Life Assurance Society of the United States
("Equitable Life"), a wholly-owned subsidiary of AXF, since September 1993. He
is also a director of Alliance Capital Management Corporation ("Alliance"), the
general partner of Alliance Capital Management L.P.
DENIS DUVERNE (46) has been a director of the Company since 1997.
Mr. Duverne is Group Executive Vice President-Finance, Control and Strategy of
AXA which he joined as Senior Vice President in 1995. Prior to that Mr. Duverne
was a member of the Executive Committee, Operations of Banque Colbert from 1992
to 1995. Mr. Duverne was Secretary General of Compagnie Financiere IBI from 1991
to 1992. Mr. Duverne worked for the French Ministry of Finance serving as Deputy
Assistant Secretary for Tax Policy from 1988 to 1991 and director of the
Corporate Taxes Department from 1986 to 1988. Mr. Duverne is a director of
Alliance and Equitable Life. He is also a director or officer of various
subsidiaries and affiliates of the AXA Group.
JANE MACK GOULD (61) has been a Senior Vice President and Portfolio Manager
of Alliance and its predecessors since 1969, after having joined that firm as a
research analyst in 1965.
LOUIS HARRIS (78) has been a director of the Company since 1995. Mr. Harris
has been an independent public opinion consultant since 1992. Prior thereto,
Mr. Harris was President of Louis Harris and Associates, Inc., an opinion
research company he founded in 1956. Mr. Harris had previously served on the
Board of Directors of the Company from 1971 to 1985 and had been an Advisory
Director of the Company from 1985 until his re-election to the Board in 1995.
4
MICHAEL HEGARTY (55) has been a director of the Company since May 1998.
Mr. Hegarty has been Senior Vice Chairman of AXF since April 1999 and Chief
Operating Officer of AXF since February 1998. He was Senior Executive Vice
President of AXF from January 1998 to April 1998. He has also been a director
and President of Equitable Life since January 1998 and Chief Operating Officer
since February 1998. From 1996 to 1997 he was Vice Chairman of Chase Manhattan
Corporation ("Chase"). Prior thereto, he was Vice Chairman (1995-1996) and
Senior Executive Vice President (1991-1995) of Chemical Bank, which merged with
Chase in 1996.
HENRI G. HOTTINGUER (65) has been a director of the Company since 1992. He
has been a partner of Hottinguer & Company since 1968 and he is also Chairman
and Chief Executive Officer of Banque Hottinguer and Societe Financiere pour le
Financement de Bureaux et d'Usines-Sofibus. Mr. Hottinguer is also Chairman of
the Supervisory Board of Credit Suisse Hottinguer, Vice President and Director
of Financiere Hottinguer, a director of Investissement Hottinguer S.A., AXA and
of various subsidiaries and affiliates of the AXA Group, representative of
Financiere SGTE at the Board of Schneider S.A., the Partner of Hottinguer & Cie
Zurich, Chairman of the Board of Hottinguer Capital Corp., and a director of
Swiss Helvetia Fund, Inc. and Hottinguer US Inc.
W. EDWIN JARMAIN (61) has been a director of the Company since 1992.
Mr. Jarmain is President of Jarmain Group Inc. (a private investment holding
company), a position he has held since 1979, and is also an officer and director
of several affiliated companies. He is also a director of AXF, Equitable Life,
AXA Insurance (Canada), Anglo Canada General Insurance Company, AXA Pacific
Insurance Company as well as an alternate director of National Mutual Holdings
Limited. From 1994 to 1998, Mr. Jarmain also served as non-executive chairman
and director of FCA International Ltd.
FRANCIS JUNGERS (73) has been a director of the Company since 1995.
Mr. Jungers is an independent consultant on energy and the Middle East and has
been so since 1978 when he retired as Chairman of the Board and Chief Executive
Officer of Arabian American Oil Company, an oil producing company with which
Mr. Jungers was associated for over thirty years. Mr. Jungers had previously
served on the Board of Directors of the Company from 1978 to 1985 and had been
an Advisory Director of the Company from 1985 until his re-election to the Board
in 1995. Mr. Jungers is also a director of the AES Corporation, Onix
Systems, Inc., Statia Terminals Inc. and Thermo Electron Corporation.
EDWARD D. MILLER (59) has been a director of the Company since 1997.
Mr. Miller has been President, Chief Executive Officer and a director of AXF
since August 1997. He was President of Equitable Life from August 1997 to
January 1998 and has been a director and Chief Executive Officer since
August 1997 and Chairman since January 1998. He is also a Senior Executive Vice
President of AXA and has been a member of the Executive Committee of AXA since
September 1997. Mr. Miller was Senior Vice Chairman of Chase from 1995 to 1997,
and President of Chemical Bank (which merged into Chase in 1995) from 1994 to
1995 and its Vice Chairman from 1991 to 1994. He is currently a director of
Alliance and KeySpan Energy Corporation (formerly Brooklyn Union Gas Co.).
W.J. SANDERS III (63) has been a director of the Company since 1995.
Mr. Sanders is Chairman of the Board and Chief Executive Officer of Advanced
Micro Devices, Inc., a semiconductor manufacturer he
5
founded in 1969. Mr. Sanders had previously served on the Board of Directors of
the Company from 1979 to 1985 and had been an Advisory Director of the Company
from 1985 until his re-election to the Board in 1995.
STANLEY B. TULIN (50) has been a director of the Company since 1997. He has
been Vice Chairman of AXF since 1999 and its Chief Financial Officer since
May 1997. He has been Director, Chairman, President and Chief Executive Officer
of Equitable Capital Management Corporation since June 1997, Director, Executive
Vice President and Chief Financial Officer of Equitable Investment Corporation
since June 1997 and Chairman, President, Chief Executive Officer and Chief
Financial Officer of ACMC, Inc. since July 1997. Mr. Tulin has been Vice
Chairman and Director of Equitable Life since February 1998, Senior Executive
Vice President from 1996 to February 1998 and Chief Financial Officer since
1996. Mr. Tulin was Chairman of the Insurance Consulting and Actuarial practice,
Coopers & Lybrand from 1988 to 1996 and a Principal of Milliman and
Robertson, Inc. from 1971 to 1988. He is currently a director of Alliance.
JOHN C. WEST (77) has been a director of the Company since 1995. Mr. West is
an attorney who has served as the United States Ambassador to the Kingdom of
Saudi Arabia and as Governor of the State of South Carolina. Mr. West had
previously served on the Board of Directors of the Company from 1981 to 1985 and
had been an Advisory Director of the Company from 1985 until his re-election to
the Board in 1995. Mr. West is Chairman of the Board of Seibels Bruce
Group, Inc. He is also Distinguished Professor of Middle East Studies at the
University of South Carolina.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR LISTED
ABOVE.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors has a standing Audit Committee (the "Audit
Committee") and a standing Compensation and Management Committee (the
"Compensation and Management Committee"). The Company does not currently have a
standing nominating committee.
The Audit Committee currently consists of Messrs. Jungers (Chairman) and
Jarmain. Among other things, the Audit Committee makes recommendations to the
Board of Directors regarding the engagement of the Company's independent
auditors, reviews the plan, scope and results of the audit, reviews with the
auditors and management the Company's policies and procedures with respect to
internal accounting and financial controls and reviews changes in accounting
policy and the scope of the non-audit services which may be performed by the
Company's independent auditors.
The Compensation and Management Committee currently consists of
Messrs. West (Chairman), Harris and Jarmain. The Compensation and Management
Committee has primary responsibility for all aspects of executive officer
compensation and benefits, including salaries and grants and awards under the
Company's 1995 Restricted Stock Unit Plan, 1996 Stock Option Plan, 1996
Incentive Compensation Plan and the DLJDIRECT 1999 Incentive Compensation Plan.
6
During 1999, the Board of Directors held five meetings, the Compensation and
Management Committee held five meetings and the Audit Committee held three
meetings. During 1999, each of the directors attended at least seventy-five
percent of the meetings of the Board of Directors or Committees held during the
period that he or she was a director.
COMPENSATION OF DIRECTORS
The Company's policy is not to pay compensation to directors who are also
employees of the Company, AXF or any affiliates of AXF. The Company's policy is
to pay independent directors an annual retainer of $25,000 plus $1,000 for each
Board Meeting attended and $500 for each meeting of a Committee of the Board
attended. Under the Company's 1996 Non-Employee Directors Stock Plan, on
November 21, 1996, April 16, 1997 and April 22, 1998 each non-employee director
was granted an option to purchase 8,000 shares of Common Stock. In 1999, that
plan was amended to provide that the number of shares for which annual grants
would be made is determined each year by the Board. For 1999, each non-employee
director was granted an option to purchase 4,000 shares of DLJ Common Stock. In
addition, each non-employee director was granted an option to purchase 4,000
shares of DLJDIRECT Common Stock under the DLJDIRECT 1999 Incentive Compensation
Plan. Each option has an exercise price equal to the fair market value of a
share of the stock as of the date of grant, will vest and be exercisable with
respect to one fourth of the covered shares on each of the first four
anniversaries of the date of grant and will have a ten-year term. Except for a
person whose service as a director is terminated for cause, after a person
ceases to be a director options remain exercisable for various periods,
depending on the reason for the termination.
7
EXECUTIVE COMPENSATION AND BENEFIT PLANS
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers based on 1999 salary and annual bonuses
(collectively, the "Named Executive Officers") who were serving as executive
officers at the end of the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------- ---------------------------------------------------
RESTRICTED OPTIONS/ ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL STOCK SARS LTIP COMPENSATION
POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) AWARDS($)(2) (#)(3) PAYOUTS($)(4) ($)(5)
- ------------------ ---- ----------- ----------- --------------- ------------ -------- ------------- ------------
Joe L. Roby........... 1999 $175,000 $12,500,000 $129,040(7) -- 500,000 $ -- $161,235
President and Chief 1998 175,000 8,500,000 115,770(7) -- -- 2,559,098 237,429
Executive Officer 1997 175,000 9,500,000 107,664(7) -- -- 2,414,243 163,797
John S. Chalsty....... 1999 $225,000(6) $10,000,000 $127,628(8) -- -- -- $436,368
Chairman 1998 500,000 8,000,000 159,931(8) -- -- -- 358,466
1997 500,000 12,500,000 155,400(8) -- -- -- 369,886
Anthony F. Daddino.... 1999 $175,000 $4,000,000 $ 17,603(9) -- 25,000 $ -- $197,621
Executive Vice 1998 175,000 3,375,000 25,868(9) -- -- 1,933,127 210,019
President and Chief 1997 175,000 3,750,000 25,201(9) -- -- 1,823,705 193,093
Financial Officer
Michael A. Boyd....... 1999 $150,000 $ 900,000 $ 5,383(10) -- -- $ -- $ --
Senior Vice 1998 150,000 770,000 14,130(10) -- -- 871,188 5,051
President and 1997 150,000 825,000 14,452(10) -- -- 821,876 --
General Counsel
Edward J. Resch....... 1999 $145,000 $1,350,000 $ 5,896(11) -- 5,000 $ -- $ 12,717
Senior Vice
President and Chief
Accounting Officer
- ------------------------------
(1) Includes amounts contributed by each of the Named Executive Officers under
various deferred compensation plans maintained by the Company.
(2) In exchange for surrendering amounts accrued under certain multi-year
compensation arrangements maintained by the Company, each of the Named
Executive Officers received restricted stock units under the Company's 1995
Restricted Stock Unit Plan at the time of the Company's initial public
offering in October 1995 (the "Initial Public Offering"). Each restricted
stock unit represents the right to receive a share of Common Stock, subject
to certain conditions described below. Units awarded
8
under the 1995 Restricted Stock Unit Plan fall into two categories: "Base
Units" and "Premium Units." Base Units vested 50% in February 1997 and
February 1998. Premium Units vest in three equal installments in each of
February 1998, February 1999 and February 2000. No dividends or dividend
equivalents are paid on the restricted stock units. As of December 31, 1999,
the last day of trading during the fiscal year ended December 31, 1999, the
aggregate value of the unvested restricted stock units, based on the average
of the high and low prices of Common Stock as reported on the New York Stock
Exchange on such date of $48.46875 was $2,481,697, $3,308,913, $1,378,742,
$206,816 and $197,122 for Messrs. Roby, Chalsty, Daddino, Boyd and Resch,
respectively.
(3) The options shown for Mr. Roby for 1999 have an exercise price of $54.25, a
term of ten years, and become exercisable in four equal installments on
November 17, 2000, November 17, 2001, November 17, 2002 and November 17,
2003. The options shown for Mr. Daddino for 1999 have an exercise price of
$45.8125, a term of ten years, and become exercisable in four equal
installments, on January 20, 2000, January 20, 2001, January 20, 2002, and
January 20, 2003. The options shown for Mr. Resch for 1999 have an exercise
price of $41.125, a term of ten years, and become exercisable in four equal
installments on January 14, 2000, January 14, 2001, January 14, 2002 and
January 14, 2003. The Company's stock plans do not permit the granting of
stock appreciation rights ("SARs").
(4) All amounts shown for 1998 reflect amounts earned under the Company's
1994-1996 Long Term Incentive Plan. The amounts shown for Mr. Roby in 1997
reflect payment of amounts earned under the Company's 1994-1996 Long Term
Incentive Plan and amounts previously earned under a prior multi-year bonus
program. The amounts shown for Mr. Daddino reflect payments made in 1998 and
1997 of amounts earned under the Company's 1994-1996 Long Term Incentive
Plan.
(5) Of the amounts shown in the table $161,235, $138,421 and $166,386 for 1999,
$153,178, $124,869 and $160,736 for 1998 and $163,797, $138,394 and $169,066
for 1997 reflect the value of premiums paid by the Company on behalf of
Messrs. Roby, Chalsty and Daddino, respectively, under split-dollar life
insurance policies. The amounts represent the present value of the interest
projected, on an actuarial basis, to accrue for the benefit of
Messrs. Roby, Chalsty and Daddino, respectively, on the portions of the
premiums paid by the Company in that year. In addition, $297,947, $31,235
and $12,717 is included for 1999 for Messrs. Chalsty, Daddino and Resch,
respectively, and $84,251, $233,597, $49,283 and $5,051 is included for 1998
for Messrs. Roby, Chalsty, Daddino and Boyd respectively and $231,492 and
$24,027 is included for 1997 for Messrs. Chalsty and Daddino, respectively
to reflect distributions in 1999, 1998 and 1997 in respect of units awarded
in prior years under a plan which allocated to the participants a portion of
the profits realized by the Company on certain investments.
(6) Effective February 17, 1999, Mr. Chalsty's salary is $175,000 per annum.
(7) Of the amounts shown in the table for Mr. Roby, $43,316, $51,246 and $28,547
reflect the use of transportation equipment provided by the Company in 1999,
1998 and 1997, respectively. In addition, $85,724, $64,524 and $79,117 of
the amounts shown reflect the value of financial planning services provided
on Mr. Roby's behalf by DLJ Asset Management Group, Inc. ("DLJAM") during
1999, 1998 and 1997, respectively.
(8) Of the amounts shown in the table for Mr. Chalsty, $17,845, $42,456 and
$18,804 reflect the use of transportation equipment provided by the Company
in 1999, 1998 and 1997, respectively. In addition, $13,783, $21,475 and
$40,596 of the amounts shown reflect the value of financial planning
services provided on his behalf by DLJAM during 1999, 1998 and 1997,
respectively, and $96,000, $96,000 and $96,000 of the amounts shown reflect
contributions by the Company toward the cost of an apartment for
Mr. Chalsty during 1999, 1998 and 1997, respectively.
(9) Of the amounts shown in the table for Mr. Daddino, $12,381, $21,291 and
$22,001 reflect the use of transportation equipment provided by the Company
in 1999, 1998 and 1997, respectively. In addition, $5,222, $4,577 and $3,200
of the amounts shown reflect the value of financial planning services
provided on Mr. Daddino's behalf by DLJAM during 1999, 1998 and 1997,
respectively.
(10) Of the amounts shown in the table for Mr. Boyd, $2,183, $10,930 and $11,252
reflect the use of transportation equipment in 1999, 1998 and 1997,
respectively. In addition, $3,200, $3,200 and $3,200 of the amounts shown
reflect the value of financial planning services provided on Mr. Boyd's
behalf by DLJAM during 1999, 1998 and 1997, respectively.
(11) The amounts shown for Mr. Resch reflect the use of transportation equipment
provided by the Company in 1999.
9
STOCK OPTION TRANSACTIONS IN 1999
The following table sets forth certain information concerning stock options
granted on DLJ Common Stock during 1999 by the Company to Mr. Roby, Mr. Daddino
and Mr. Resch, the Named Executive Officers who received grants in 1999. The
hypothetical present value on date of grant shown below is presented pursuant to
the rules of the Securities and Exchange Commission (the "Commission") and is
calculated under the Modified Black-Scholes Option Pricing Model. The actual
before-tax amount, if any, realized upon the exercise of a stock option will
depend upon the excess, if any, of the market price of the DLJ Common Stock over
the exercise price per share of the stock option at the time the stock option is
exercised. There is no assurance that the hypothetical present value of the
stock option reflected in this table will be realized.
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE OR
UNDERLYING EMPLOYEES IN BASE PRICE GRANT DATE
NAME OPTIONS GRANTED(1) FISCAL YEAR(2) ($/SH) EXPIRATION DATE PRESENT VALUE ($)(3)
- ---- ------------------ ------------------ ----------- --------------- --------------------
Joe L. Roby.......... 500,000 10.5% $ 54.25 11/16/2009 $7,758,584
Anthony F. Daddino... 25,000 .5% 45.8125 1/19/2009 303,604
Edward J. Resch...... 5,000 .1% 41.125 1/13/2009 53,671
- --------------------------
(1) The option to Mr. Roby was granted November 17, 1999 and becomes exercisable
in four equal installments on November 17, 2000, November 17, 2001,
November 17, 2002 and November 17, 2003. The option to Mr. Daddino was
granted on January 20, 1999 and becomes exercisable in four equal
installments on January 20, 2000, January 20, 2001, January 20, 2002, and
January 20, 2003. The option to Mr. Resch was granted on January 14, 1999
and becomes exercisable in four equal installments on January 14, 2000,
January 14, 2001, January 14, 2002 and January 14, 2003.
(2) The percentage shown is based on total option grants on DLJ Common Stock to
employees in 1999 of 4,760,175 shares. These options have exercise prices
ranging from $37.75 to $65.50.
(3) The hypothetical present value on grant date is calculated under the
Modified Black-Scholes Option Pricing Model, which is a mathematical formula
used to value options traded on stock exchanges. This formula considers a
number of factors in hypothesizing an option's present value. Factors used
to value the options granted include the stock's expected volatility rate of
33%, risk free rate of return (5.97%, 4.63% and 4.46% for the options of
Messrs. Roby, Daddino and Resch, respectively), dividend yield (.46%, .55%
and .61%, respectively), projected time of exercise (five years) and
projected risk of forfeiture rate for vesting period (25%).
10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR (1999) AND FY-END OPTION/SAR
VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED UNDERLYING UNEXERCISED MONEY OPTIONS AT FY-END
ON VALUE REALIZED OPTIONS AT FY-END(#) ($)(1)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------------- ------------------------- ----------------------------
Joe L. Roby.............. -- -- 1,323,384/625,000 $45,262,752/4,027,344
John S. Chalsty.......... -- -- 1,272,714/0 44,505,218/0
Anthony F. Daddino....... 100,000 $6,519,311 430,298/25,000 15,046,983/66,406
Michael A. Boyd.......... -- -- 79,544/0 2,781,554/0
Edward J. Resch.......... -- -- 17,954/15,000 422,829/181,406
- --------------------------
(1) An "in-the-money option" is an option for which the market price of the
underlying DLJ Common Stock at year-end 1999 exceeds the exercise price of
the option. The value of unexercised, in-the-money options shown above is
based upon the difference between the exercise price of all options and
$48.46875, the average of the high and low prices of the DLJ Common Stock as
reported on the New York Stock Exchange on December 31, 1999, the last day
of trading during the fiscal year ended December 31, 1999. The actual
amount, if any, realized upon exercise of stock options will depend upon the
market price of the DLJ Common Stock relative to the exercise price per
share of the stock option at the time the stock option is exercised. There
is no assurance that the values of unexercised in-the-money stock options
reflected in this table will be realized.
CERTAIN DEFERRED COMPENSATION PLANS AND ARRANGEMENTS
Certain employees, including four of the Named Executive Officers, deferred
a portion of their 1983 or 1984 compensation in return for which the Company
agreed to pay each of them a specified annual benefit for 15 years beginning at
age 65. Benefits are based upon the participant's age and the amount deferred
and are calculated to yield an approximate 12.5% annual compound return. In the
event of the participant's disability or death, an equal or lesser amount is to
be paid to the participant or his beneficiary. After age 55, participants, the
sum of whose age and years of service is equal to or greater than 80, may elect
to have their benefits begin before age 65, in an actuarially reduced amount.
The Company has funded its obligations through the purchase of life insurance
policies. The table below shows as to the Named Executive Officers the estimated
annual benefit payable at age 65. Each of these individuals is fully vested in
the applicable benefit.
ESTIMATED
NAME ANNUAL BENEFITS
- ---- ---------------
Joe L. Roby................................................. $56,527
John S. Chalsty............................................. 47,053
Anthony F. Daddino.......................................... 107,313
Michael A. Boyd............................................. 75,369
11
COMPENSATION AND MANAGEMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Management Committee during the fiscal
year ended December 31, 1999 was an officer or employee of the Company.
Mr. Jarmain has been a director of AXF and Equitable Life since 1992. See
"Security Ownership of Certain Beneficial Holders and Management" and "Certain
Relationships and Related Transactions."
COMPENSATION AND MANAGEMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Management Committee of the Board of Directors (for the
purposes of this report, the "Committee") is composed entirely of independent
outside directors, none of whom is a current officer or employee of the Company
or its subsidiaries. The Committee is responsible for the establishment of
policies governing and for the implementation, administration and interpretation
of all aspects of executive officer compensation, which includes base salary,
short term performance incentives, long term performance incentives and equity
based incentives. The Committee reviews the compensation of executive officers
on an ongoing basis, developing and executing cost and tax-effective plans with
the following objectives:
- Support the Company's business strategies and goals,
- Attract and retain the highest caliber executive officers by providing
compensation opportunities comparable to those offered by other leading
financial services firms with whom the Company competes for business and
talent,
- Motivate high performance in an entrepreneurial incentive-driven culture,
- Closely align executive officers' interests with stockholders' interests,
and
- Reward results achieved short term and in the long term creation of
shareholder value.
The compensation policy of the Company is to base total compensation on
performance. By virtue of the Company's establishment of relatively low fixed
base compensation and highly-leveraged incentive opportunities, total
compensation will vary directly with the financial results of the Company and
the total returns to its stockholders, and may exceed the 75th percentile for
superior performance.
The Committee was established immediately prior to the Company's Initial
Public Offering. As such, the Committee is administering certain plans that were
approved and in place prior to its establishment. The Committee views such plans
as appropriate and supportive of the policies and objectives discussed above.
In its deliberations, the Committee utilizes the services of an independent
consulting firm with expertise in executive compensation among financial
services firms, as well as historical marketplace survey data. For 1999, the
survey data reviewed in setting compensation levels for executive officers are
based on a group of nine firms. Of these firms, six are included in the Peer
Group Index used for the Common Stock Performance graph set forth below. See
"Common Stock Performance." The firms not included in the Peer Group Index are
either not publicly traded or owned, or have a mix of businesses not
representative of the
12
Company on an overall basis, although various segments are comparable to certain
divisions of the Company.
It is the intention of the Committee that executive officer compensation be
determined and administered on the basis of total compensation, rather than
based on separate free-standing components. In keeping with the Company's policy
of sustaining its entrepreneurial incentive-driven culture, no Company-paid
retirement benefits are provided to executive officers.
The total compensation program for executive officers established by the
Committee is comprehensive and integrated to include salary, short term and long
term performance incentives, and equity-based incentives.
SALARY
Salaries are generally significantly below median for similar positions
within the financial services industry. Salaries are reviewed annually by the
Committee for appropriateness in consideration of the Company's compensation
policy, marketplace practice, the Company's financial results, individual
position responsibilities and performance.
SHORT TERM AND LONG TERM PERFORMANCE INCENTIVES
1996 INCENTIVE COMPENSATION PLAN. The 1996 Incentive Compensation Plan,
which is administered by the Committee, provides for the award of short term and
long term incentives based on Company profitability. At the beginning of each
performance period, each executive officer is assigned an interest in one or
more award pools. After completion of each performance period, the Committee
evaluates the performance of each executive officer based on the criteria
discussed below and, in its sole and absolute discretion, may reduce or increase
awards, except that the Committee may only reduce and may not increase an award
to a current Named Executive Officer. Awards may be paid in cash, stock-based
payments, or any combination thereof.
SHORT TERM PERFORMANCE INCENTIVES. Aggregate short term incentive
compensation awards are based primarily on the Company's profitability over a
one or two year period. Individual awards are based on an assessment of
individual, business unit, and Company performance.
In assessing such performance, the Committee evaluates a number of
quantitative and qualitative factors without assigning weights and considers
absolute and relative results achieved and strategic progress during the prior
one or two years, as well as over a period of years. Such performance is
evaluated by comparisons to prior years, peer companies and overall industry
performance. Factors considered may include the quality, consistency and level
of earnings, growth, return on equity, cost control and margins, as well as the
services rendered and value added to clients of the Company.
With regard to 1999, pre-tax profits increased 58.8% from 1998 reflecting
the strongest performance in the Company's history, and awards to most executive
officers were increased from prior year levels in recognition of this
performance and competitive pay levels.
13
LONG TERM PERFORMANCE INCENTIVES. Long term performance incentives are
generally based on the Company's adjusted cumulative net income and return on
equity over a period of three years or longer. Such incentives are designed to
strengthen the coincidence of interest of executive officers and the Company's
shareholders in the long term growth of enterprise value, as well as to
encourage retention among key managers of the Company through vesting and
competitive compensation opportunities.
The number of units awarded to each executive officer is subject to annual
review and reflects their individual performance, responsibility level, and
potential impact on the long term financial results of the Company. Awards of
units have been made under the Company's 1997-1999 Long Term Incentive ("LTI")
Plan for the 1997-1999 performance period.
EQUITY-BASED INCENTIVES
- 1995 RESTRICTED STOCK UNIT PLAN. Executive officers were granted
restricted stock units in 1995 under the 1995 Restricted Stock Unit Plan.
These grants were made to executive officers in exchange for reduction in
the value of their interests in the 1991 or 1994 LTI Plan. Restricted
stock units granted in 1995 will be fully vested in February 2000. No
executive officer received a restricted stock unit grant in 1999.
- 1995 STOCK OPTION PLAN. Executive officers were granted options to
purchase shares of Common Stock under the 1995 Stock Option Plan. These
grants were made to executive officers in exchange for reduction in the
value of their interests in the 1991 or 1994 LTI Plan. Options granted
under the 1995 Stock Option Plan became fully vested in 1998. No further
grants will be made under this plan which has been replaced by the 1996
Stock Option Plan, as discussed below.
The value of restricted stock units and stock options awarded under the
1995 Restricted Stock Unit Plan and the 1995 Stock Option Plan may be
realized only after vesting and will depend on the market value of the
Company's Common Stock in the future. Thus, the ultimate value of such
restricted stock unit and stock option awards will provide a continuing
incentive to executive officers for the creation of shareholder value.
- 1996 STOCK OPTION PLAN. At the 1996 Annual Meeting stockholders approved
the 1996 Stock Option Plan which is administered by the Committee and
provides for the award of stock options to employees of the Company.
- DLJDIRECT 1999 INCENTIVE COMPENSATION PLAN. At the 1999 Special Meeting
stockholders approved the DLJDIRECT 1999 Incentive Compensation Plan which
is administered by the Committee and provides for the award of stock
options and other equity-based awards as well as annual cash incentive and
performance awards to employees and directors of the Company.
The Committee does not consider stock holdings, prior option or stock
grants, prior long term performance incentive awards or the appreciation
thereon when making future option, stock and long term performance
incentive award determinations.
14
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Both the quantitative and qualitative criteria referenced above are applied
in assessing the performance and determining the compensation of the Chief
Executive Officer, who participates in the Company's executive compensation
program on the same basis as all other executive officers.
In setting the 1999 total compensation of Mr. Roby, the Chief Executive
Officer, the Committee took into account the annual and long-term performance of
the Company under his leadership and its strategic progress, all of which were
viewed as outstanding and reflected in the results realized by the Company in
1999.
1999 was a year of high performance for the Company. Net income was the
strongest ever in the Company's forty-year history. The Company earned a record
$600.7 million, 62% greater than 1998 net income of $370.9 million. Total
revenues rose 32% to a record $7.1 billion, and net revenues rose 41% to
$5.6 billion, as the Company significantly expanded the market share of major
components of its investment banking businesses. In addition, the Company
undertook a successful public offering of DLJDIRECT stock which tracks
separately the performance of the Company's existing on-line discount brokerage
and related investment services business.
In consideration of these outstanding results, the Chief Executive Officer
received an annual incentive award of $12.5 million for 1999. This represented a
47% increase from his 1998 annual incentive award. His salary of $175,000 was
last increased in 1987. Mr. Roby also received an option grant on 500,000 shares
in 1999 in recognition of his promotion to Chief Executive Officer in 1998 and
the superior results achieved in 1999. The option becomes exercisable in four
equal installments through 2003.
The Committee believes that the total compensation of the Chief Executive
Officer is appropriate relative to his performance, the performance of the
Company and the compensation of other heads of high-performing investment firms.
TAX CONSIDERATIONS
The Committee's policy is to preserve corporate tax deductions while
maintaining the flexibility to approve compensation arrangements that it deems
to be in the best interests of the Company and its stockholders, but which may
not always qualify for full tax deductibility.
Compensation and Management Committee
LOUIS HARRIS
W. EDWIN JARMAIN
JOHN C. WEST, CHAIRMAN
15
COMMON STOCK PERFORMANCE--DLJ COMMON STOCK
The following chart compares the cumulative total return on stockholder
investment in DLJ Common Stock since the Company's public offering date
(October 24, 1995) with that of the Standard & Poor's 500 and a Peer Group
Index. All indices include the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DONALDSON, LUFKIN & JENRETTE, INC. NEW PEER GROUP OLD PEER GROUP S&P 500
10/24/95 $100.00 $100.00 $100.00 $100.00
12/31/95 $115.74 $94.22 $96.74 $111.20
12/31/96 $122.94 $146.36 $141.64 $130.81
12/31/97 $274.20 $262.97 $246.09 $174.44
12/31/98 $284.53 $278.30 $276.04 $224.29
12/31/99 $337.37 $506.94 $539.51 $271.48
COMPOUND
ANNUAL
RETURN
10/24/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RATE
-------- -------- -------- -------- -------- -------- --------
Donaldson, Lufkin & Jenrette, Inc.... $100.00 $115.74 $122.94 $274.20 $284.53 $337.37 33.8%
New Peer Group*...................... $100.00 $ 94.22 $146.36 $262.97 $278.30 $506.94 47.4%
Old Peer Group**..................... $100.00 $ 96.74 $141.64 $246.09 $276.04 $539.51 49.7%
S&P 500.............................. $100.00 $111.20 $130.81 $174.44 $224.29 $271.48 27.0%
- --------------------------
* New peer group includes Bear Stearns Companies, Goldman Sachs Group Inc.,
Lehman Brothers Holdings, Merrill Lynch & Co., Inc., Morgan Stanley Group
(10/24/95 - 5/30/97), Morgan Stanley Dean Witter & Co. (6/1/97 - 12/31/99)
and Paine Webber Group Inc. Assumes conversion of Morgan Stanley Group
shares into Morgan Stanley Dean Witter & Co. on 6/1/97.
** Old peer group includes Bear Stearns Companies, Lehman Brothers Holdings,
Morgan Stanley Group (10/24/95 - 5/30/97) and Morgan Stanley Dean Witter &
Co. (6/1/97-12/31/99). Assumes conversion of Morgan Stanley Group shares
into Morgan Stanley Dean Witter & Co. on 6/1/97.
16
COMMON STOCK PERFORMANCE--DLJDIRECT COMMON STOCK
The following chart compares the cumulative total return on stockholder
investment in DLJDIRECT Common Stock since its issue date (May 26, 1999) with
that of the Standard & Poor's 500 and a Peer Group Index. All indices include
the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DLJDIRECT PEER GROUP* S&P 500
5/26/99 $100.00 $100.00 $100.00
12/31/99 $67.82 $69.16 $115.26
COMPOUND
ANNUAL
RETURN
5/26/99 12/31/99 RATE
-------- -------- --------
DLJdirect................................................... $100.00 $ 67.82 -47.8%
Peer Group*................................................. 100.00 69.16 -46.1%
S&P 500..................................................... 100.00 115.26 26.8%
- --------------------------
* Peer group includes Ameritrade Holding Corporation, E*Trade Group, Inc.,
Investment Technology Group, J.B. Oxford Holdings, Inc., Knight/Trimark
Group, Inc., National Discount Brokers and TD Waterhouse Group.
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table sets forth, as of March 1, 2000, the total number of
shares of DLJ Common Stock and DLJDIRECT Common Stock beneficially owned, and
the percent so owned, by each director and nominee for director, by each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding DLJ Common Stock and DLJDIRECT Common Stock, by the Named Executive
Officers and by all current directors and executive officers as a group. No
person owns more than 1% of DLJDIRECT common stock.
DLJ
--------------------------
CURRENT DLJDIRECT
BENEFICIAL OWNERSHIP(1) ---------
-------------------------- NUMBER
NUMBER OF OF
SHARES PERCENT SHARES
--------------- -------- ---------
AXA(2)...................................................... 90,440,000 71.1% --
25 Avenue Matignon
75008 Paris, France
AXA Financial, Inc.(3)...................................... 88,603,333 69.6 --
1290 Avenue of the Americas
New York, New York 10104
The Equitable Life Assurance................................ 39,961,540 31.4 --
Society of the United States(4)
1290 Avenue of the Americas
New York, New York 10104
Joe L. Roby(5).............................................. 1,868,726 1.4 25,000
John S. Chalsty(6).......................................... 1,998,532 1.5 20,250
Anthony F. Daddino(7)....................................... 709,848 * 10,250
David DeLucia(8)............................................ 197,540 * 10,250
Hamilton E. James(9)........................................ 1,105,611 * 10,250
Edward J. Resch(10)......................................... 24,230 * 250
Stuart M. Robbins(11)....................................... 614,349 * 10,250
Michael A. Boyd(12)......................................... 123,376 * 1,250
Henri de Castries(13)....................................... 2,000 * 2,500
Denis Duverne(14)........................................... 2,000 * 2,500
Jane Mack Gould(15)......................................... 4,000 * 2,500
Louis Harris(16)............................................ 15,080 * 2,500
Michael Hegarty(17)......................................... 0 * 2,500
Henri G. Hottinguer(18)..................................... 21,336 * 2,500
W. Edwin Jarmain(19)........................................ 27,248 * 2,500
Francis Jungers(20)......................................... 21,000 * 7,500
Edward D. Miller(21)........................................ 0 * 2,500
Stanley B. Tulin(22)........................................ 1,000 * 2,500
W.J. Sanders III(23)........................................ 19,810 * 12,500
John C. West(24)............................................ 35,100 * 2,500
All directors and executive officers as a group(25)......... 7,183,406 5.4 132,750
- --------------------------
* Less than 1.0%.
18
(1) The table provides certain information regarding the beneficial ownership of
DLJ Common Stock and DLJDIRECT Common Stock by AXA, AXF, Equitable Life,
each of the Company's directors and all directors and executive officers as
a group.
(2) AXA is AXF's largest stockholder, beneficially owning approximately 58% of
AXF's outstanding common stock. As of March 1, 2000, a group of four French
mutual insurance companies (the "Mutuelles AXA") owned, directly or
indirectly through various holding companies, approximately 23.3% of the
issued shares representing 36.7% of the voting power of AXA. For insurance
regulatory purposes, the shares of capital stock of AXF beneficially owned
by AXA and its subsidiaries have been deposited into a voting trust to
ensure that certain of the indirect minority shareholders of AXA do not
exercise control over AXF or certain of its insurance subsidiaries.
(3) The number listed includes shares of Common Stock beneficially owned by
AXF's wholly-owned subsidiary, Equitable Life.
(4) The number listed includes shares of Common Stock beneficially owned through
its wholly-owned subsidiary, Equitable Holdings, L.L.C.
(5) The Current Beneficial Ownership column for Mr. Roby includes 515,016 vested
restricted stock units and 1,323,384 option shares exercisable within
60 days. In addition, Mr. Roby beneficially owns 100,000 shares of common
stock of AXF, including 50,000 option shares exercisable within 60 days,
2,500 American Depositary Receipts ("ADRs") of AXA and 5,000 option shares
of AXA which are exercisable within 60 days.
(6) The Current Beneficial Ownership column for Mr. Chalsty includes 1,500
shares owned by Mr. Chalsty's wife, 712,552 vested restricted stock units
and 1,272,714 option shares exercisable within 60 days. In addition,
Mr. Chalsty beneficially owns 232,000 shares of common stock of AXF,
including 200,000 option shares exercisable within 60 days, 2,500 ADRs of
AXA and 10,000 option shares of AXA which are exercisable within 60 days.
(7) The Current Beneficial Ownership column for Mr. Daddino includes 212,347
vested restricted stock units and 436,548 option shares exercisable within
60 days. Mr. Daddino beneficially owns 200 shares of common stock of AXF
which are held in an insurance trust for the benefit of his wife and
children and also holds an option to purchase 100,000 shares of common stock
of AXF which is exercisable within 60 days.
(8) The Current Beneficial Ownership column for Mr. DeLucia includes 190,806
option shares exercisable within 60 days.
(9) The Current Beneficial Ownership column for Mr. James includes 725,372
option shares exercisable within 60 days and 5,803 shares held in his
account under the Company's 401(k) Retirement Savings Plan. Mr. James also
holds 1,000 ADRs of AXA.
(10) The Current Beneficial Ownership column for Mr. Resch includes 19,204
option shares exercisable within 60 days and 532 shares held in his account
under the Company's 401(k) Retirement Savings Plan.
(11) The Current Beneficial Ownership column for Mr. Robbins includes 435,224
option shares exercisable within 60 days.
(12) The Current Beneficial Ownership column for Mr. Boyd includes 79,544 option
shares exercisable within 60 days.
(13) Mr. de Castries also beneficially owns 86,665 shares of common stock of
AXF, all of which are option shares exercisable within 60 days, 63,625
shares of common stock of AXA, and 59,125 option shares of AXA which are
exercisable within 60 days.
(14) Mr. Duverne also beneficially owns 53,999 shares of common stock of AXF, of
which 4,000 are shares owned with his wife and 49,999 are option shares
exercisable within 60 days. In addition, Mr. Duverne beneficially owns
15,000 shares of common stock of AXA and 10,000 option shares exercisable
within 60 days.
19
(15) The Current Beneficial Ownership column for Ms. Gould includes 1,000 option
shares exercisable within 60 days.
(16) The Current Beneficial Ownership column for Mr. Harris includes 9,000
option shares exercisable within 60 days.
(17) Mr. Hegarty also beneficially owns 296,794 shares of common stock of AXF,
including 295,956 option shares exercisable within 60 days and 3,750 option
shares of AXA exercisable within 60 days.
(18) The Current Beneficial Ownership column for Mr. Hottinguer includes 17,000
option shares exercisable within 60 days.
(19) The Current Beneficial Ownership column for Mr. Jarmain includes 17,000
option shares exercisable within 60 days. Mr. Jarmain also beneficially owns
22,029 shares of common stock of AXF.
(20) The Current Beneficial Ownership column for Mr. Jungers includes 17,000
option shares exercisable within 60 days. The DLJDIRECT column includes 500
shares owned by Mr. Jungers' wife.
(21) Mr. Miller beneficially owns 732,711 shares of common stock of AXF,
including 732,511 option shares exercisable within 60 days and 12,500 option
shares of AXA exercisable within 60 days.
(22) The 1,000 shares shown are owned with his wife. Mr. Tulin also beneficially
owns 278,753 shares of common stock of AXF, including 253,280 option shares
exercisable within 60 days. Of these shares 8,000 are owned with his wife.
In addition, Mr. Tulin owns 2,000 ADRs of AXA and 7,500 option shares of AXA
which are exercisable within 60 days.
(23) The Current Beneficial Ownership column for Mr. Sanders includes 17,000
option shares exercisable within 60 days. In addition, 2,500 shares are
owned directly by his wife, as to which shares Mr. Sanders disclaims
beneficial ownership.
(24) The Current Beneficial Ownership column for Mr. West includes 17,000 option
shares exercisable within 60 days. Of the Common Stock beneficially owned by
Mr. West, 9,600 shares are held on his behalf by a profit sharing plan. In
addition, 400 shares are owned directly by his wife, as to which shares
Mr. West disclaims beneficial ownership.
(25) The Current Beneficial Ownership column includes 1,439,915 vested
restricted stock units and 4,874,194 option shares exercisable within
60 days. All directors and executive officers as a group also beneficially
own 1,905,151 shares of common stock of AXF, 174,000 shares of common stock
of AXA and 8,000 ADRs of AXA.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten-percent of a registered class of the Company's equity
securities, to file initial statements of beneficial ownership (Form 3), and
statements of changes in beneficial ownership (Forms 4 or 5), of DLJ Common
Stock and other equity securities of the Company with the Commission and the New
York Stock Exchange, Inc. Officers, directors and greater than ten-percent
shareholders are required by Commission regulation to furnish the Company with
copies of all such forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no additional forms
were required for those persons, the Company believes that all filing
requirements applicable to its officers, directors, and greater than ten-percent
beneficial owners were complied with during 1999.
20
ITEM 2: RATIFICATION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed KPMG LLP to audit the accounts of the Company for the fiscal year
ending December 31, 2000. KPMG LLP has audited the consolidated financial
statements of the Company since the Company was founded. KPMG LLP
representatives will be present at the Annual Meeting with the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
Stockholder ratification of the appointment of KPMG LLP as the Company's
independent auditors is not required by the Company's bylaws or otherwise. The
Board of Directors has elected to seek such ratification as a matter of good
corporate practice. Should the stockholders fail to ratify the appointment of
KPMG LLP as the Company's independent auditors for the fiscal year ending
December 31, 2000, the Board of Directors will consider whether to retain that
firm for such year.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REGISTRATION RIGHTS AND INDEMNIFICATION AGREEMENT
Under a Registration Rights and Indemnification Agreement between the
Company and AXF, the Company has granted AXF the right to require the Company to
register shares of DLJ Common Stock held by AXF for sale in accordance with
AXF's intended method of disposition thereof (a "demand registration"). AXF may
require up to six such demand registrations, with no more than one every six
months. Additionally, the Company has granted to AXF the right subject to
certain exceptions to participate in registrations of DLJ Common Stock initiated
by the Company on its own behalf or on behalf of its stockholders (a "piggy-back
registration"). The Company is required to pay expenses (other than underwriting
discounts and commissions) incurred by AXF in connection with the demand and
piggy-back registrations. Subject to certain limitations specified in the
Registration Rights and Indemnification Agreement, AXF's registration rights are
assignable to third parties. The Registration Rights and Indemnification
Agreement provides for indemnification and contribution by the Company for the
benefit of AXF and permitted assigns and their related persons relating to the
demand and piggy-back registrations. In addition, such Agreement provides for
indemnification and contribution by the Company for the benefit of AXF and its
related persons with respect to other securities offerings by the Company and
financial and other information provided by the Company to AXF and in Exchange
Act reports.
TAX SHARING AGREEMENTS
The Company was included in AXF's consolidated tax group for Federal income
tax purposes through December 31, 1996. In connection with the Initial Public
Offering, the Company and AXF entered into a Federal income tax sharing
agreement (the "Federal Income Tax Sharing Agreement"). Pursuant to the Federal
Income Tax Sharing Agreement, the Company and AXF generally make payments
between them such that, with respect to any period in which the Company was a
member of AXF's consolidated tax group for Federal income tax purposes (a
"Pre-Deconsolidation Period"), the amount of Federal income taxes to be paid by
the Company will be determined as though the Company were to file for such
period and all prior periods separate Federal income tax returns (generally
including any amounts determined to be due as a result of a redetermination of
the Federal income tax liability of the AXF consolidated group arising from an
audit or otherwise) as the common parent of an affiliated group of corporations
filing a consolidated return rather than being a consolidated subsidiary of AXF.
The Company is also entitled to receive certain payments from AXF in respect of
carrybacks of tax assets, if any, of the Company, determined on a separate
return basis, arising in a Pre-Deconsolidation Period beginning after the
completion of the Initial Public Offering. The amount of any such payment will
generally be determined, in the case of a carryback to a Pre-Deconsolidation
Period ending on or before the completion of the Initial Public Offering, by the
actual tax benefit received by the AXF consolidated group from such carryback,
or, in the case of a carryback to any Pre-Deconsolidation Period beginning after
the completion of the Initial Public Offering, by the benefit that the Company
would have received from such carryback on a separate return basis.
22
With respect to the period the Company was a part of the AXF consolidated
group, AXF continues to have all the rights of a common parent of a consolidated
group, will be the sole and exclusive agent for the Company in any and all
matters related to the Federal income tax liability of the Company and will be
responsible for the preparation and filing of consolidated Federal income tax
returns. In addition, each member of a consolidated group for Federal income tax
purposes is jointly and severally liable for the Federal income tax liability of
each other member of its consolidated group. Accordingly, under the Federal
Income Tax Sharing Agreement, AXF has agreed to indemnify the Company against
such liabilities to the extent that they relate to the Federal income tax
liability of the AXF consolidated group for periods that the Company is included
in the AXF consolidated group, except to the extent attributable to the Company.
The Federal Income Tax Sharing Agreement also contains provisions in respect
of certain Federal income tax matters relating to a carryback of a tax asset, if
any, of the Company from a period beginning on or after the date on which the
Company ceases to be eligible for inclusion in AXF's consolidated group (a
"Post-Deconsolidation Period") to a Pre-Deconsolidation Period. Under the
Federal Income Tax Sharing Agreement, (i) the Company will agree to forego the
carryback of any net operating losses to a Pre-Deconsolidation Period unless AXF
consents to such carryback, which consent shall not be unreasonably withheld,
and (ii) the Company may be entitled to receive certain payments from AXF in
respect of any tax assets carried back to Pre-Deconsolidation Periods.
The Company also filed combined, consolidated or unitary income tax returns
with ACMC, Inc. ("ACMC"), an indirect wholly-owned subsidiary of AXF, in certain
states and localities for periods through December 31, 1996. The Company and
ACMC have entered into a tax sharing agreement (the "State Tax Sharing
Agreement"), pursuant to which the Company and ACMC have agreed that with
respect to any period in which the Company and ACMC have filed or file a
combined, consolidated or unitary income tax return in a state or local taxing
jurisdiction, the amount of combined, consolidated or unitary income taxes to be
paid by ACMC will be determined as though ACMC were to file for such period and
all prior periods separate income tax returns with respect to such state or
local taxing jurisdiction. The Company has agreed to indemnify ACMC against any
combined, consolidated or unitary income taxes for periods in which the Company
files combined, consolidated or unitary income tax returns with ACMC, except to
the extent attributable to ACMC.
EMPLOYEES' SECURITIES COMPANY
Selected employees of the Company, including executive officers, are offered
the opportunity to become members of the DLJ First ESC L.P. and DLJ ESC II L.P.
(the "ESCs"), investment vehicles which qualify as "employees' securities
companies" for purposes of the Investment Company Act of 1940, as amended. The
ESCs invest in the Company's merchant banking portfolio companies, typically
acquiring between 30% and 40% of the Company's investment in such companies. The
amounts invested by members are augmented in the ratio of 4:1 by a combination
of recourse loans from the Company and preferred contributions to the ESC by the
Company which have a capped return equal to the prime rate plus 1 3/4%, each of
which is repaid to the Company upon realization of the applicable portfolio
investments.
23
Amounts invested in the ESCs by each of the Company's executive officers for
1999 are set forth below:
YEAR ENDED
NAME DECEMBER 31, 1999
- ---- -----------------
Joe L. Roby................................................. $300,000
John S. Chalsty............................................. 240,000
Michael A. Boyd............................................. 20,000
Anthony F. Daddino.......................................... 110,000
David DeLucia............................................... 105,000
Gates H. Hawn............................................... 60,000
Hamilton E. James........................................... 477,000
Edward J. Resch............................................. 20,000
Stuart M. Robbins........................................... 105,000
The amount of loans made to the Company's executive officers and preferred
contributions made in the ESCs by the Company on behalf of the Company's
executive officers for 1999, as well as the amount of such loans outstanding for
the year December 31, 1999, are set forth below:
LOANS AND PREFERRED
LOANS AND PREFERRED CONTRIBUTIONS
CONTRIBUTIONS OUTSTANDING
YEAR ENDED FOR THE YEAR ENDED
NAME DECEMBER 31, 1999 DECEMBER 31, 1999
- ---- ------------------- -------------------
Joe L. Roby............................................... $1,304,000 $2,841,000
John S. Chalsty........................................... 1,156,000 2,473,000
Michael A. Boyd........................................... 85,000 189,000
Anthony F. Daddino........................................ 509,000 1,129,000
David DeLucia............................................. 441,000 1,019,000
Gates H. Hawn............................................. 290,000 620,000
Hamilton E. James......................................... 1,989,000 5,005,000
Edward J. Resch........................................... 80,000 201,000
Stuart M. Robbins......................................... 447,000 953,000
DLJ FUND INVESTMENT PARTNERS, L.P.
Selected employees of the Company, including certain executive officers, are
limited partners of DLJ Fund Investment Partners, L.P. ("FIP"), an investment
vehicle organized to allow these employees to invest on a leveraged basis in
funds and other investment vehicles sponsored by certain of the Company's
clients and potential clients and on a co-investment basis in transactions in
which the Company's clients also invest. Amounts invested by the limited
partners are augmented in the ratio of 2:1 by preferred contributions to FIP by
the Company which have a capped return equal to the prime rate plus 1 3/4%.
24
Amounts committed to FIP by each of the Company's executive officers are set
forth below:
NAME AT DECEMBER 31, 1999
- ---- --------------------
Joe L. Roby............................................... $2,000,000
John S. Chalsty........................................... 2,000,000
Michael A. Boyd........................................... -0-
Anthony F. Daddino........................................ 500,000
David DeLucia............................................. -0-
Gates H. Hawn............................................. 500,000
Hamilton E. James......................................... 2,000,000
Edward J. Resch........................................... -0-
Stuart M. Robbins......................................... 500,000
The amounts of preferred contributions made to FIP by the Company on behalf
of each of the Company's executive officers in 1999 as well as the loan balances
outstanding at December 31, 1999 are set forth below:
PREFERRED
PREFERRED CONTRIBUTIONS
CONTRIBUTIONS OUTSTANDING
YEAR ENDED FOR YEAR ENDED
NAME DECEMBER 31, 1999 DECEMBER 31, 1999
- ---- ----------------- -----------------
Joe L. Roby................................. $666,000 $1,449,000
John S. Chalsty............................. 666,000 1,449,000
Michael A. Boyd............................. -0- -0-
Anthony F. Daddino.......................... 167,000 362,000
David DeLucia............................... -0- -0-
Gates H. Hawn............................... 167,000 362,000
Hamilton E. James........................... 666,000 1,449,000
Edward J. Resch............................. -0- -0-
Stuart M. Robbins........................... 167,000 362,000
DLJ FUND INVESTMENT PARTNERS II, L.P.
Selected employees of the Company, including certain executive officers, are
limited partners of DLJ Fund Investment Partners II, L.P. ("FIP II"), an
investment vehicle organized to allow these employees to invest on a leveraged
basis in funds and other investment vehicles in the alternative investment
arena. Amounts invested by the limited partners are augmented in the ratio of
1:1 by non-recourse loans to FIP II by the Company which have a capped return
equal to the prime rate plus 1 3/4%.
25
Amounts committed to FIP II by each of the Company's executive officers are
set forth below:
NAME AT DECEMBER 31, 1999
- ---- --------------------
Joe L. Roby............................................... $1,000,000
John S. Chalsty........................................... -0-
Michael A. Boyd........................................... 250,000
Anthony F. Daddino........................................ -0-
David DeLucia............................................. -0-
Gates H. Hawn............................................. 500,000
Hamilton E. James......................................... 2,000,000
Edward J. Resch........................................... -0-
Stuart M. Robbins......................................... -0-
The amounts of non-recourse loans made to FIP II by the Company on behalf of
each of the Company's executive officers for 1999 as well as the loan balances
outstanding for the year ended December 31, 1999 are set forth below:
NON-RECOURSE LOANS
NON-RECOURSE LOANS OUTSTANDING FOR
YEAR ENDED YEAR ENDED
NAME DECEMBER 31, 1999 DECEMBER 31, 1999
- ---- ------------------ ------------------
Joe L. Roby............................... $338,000 $405,000
John S. Chalsty........................... -0- -0-
Michael A. Boyd........................... 85,000 101,000
Anthony F. Daddino........................ -0- -0-
David DeLucia............................. -0- -0-
Gates H. Hawn............................. 169,000 203,000
Hamilton E. James......................... 677,000 810,000
Edward J. Resch........................... -0- -0-
Stuart M. Robbins......................... -0- -0-
OTHER AFFILIATED TRANSACTIONS
The Company, AXF and their respective affiliates engage in a variety of
transactions in the ordinary course of their respective businesses. As a general
rule, the Company has not retained an independent third party to evaluate
transactions with AXF and there has been no independent committee of the Board
of Directors to evaluate such transactions. Notwithstanding this fact, the
Company believes that each of the arrangements described below was made on an
arm's-length basis. This belief is based on the fact that the terms and
conditions of such transactions (including the fees or other amounts paid by the
Company in connection with such transactions) were established through
arm's-length negotiations which took into account (i) the terms and conditions
of transactions of the same or a similar nature entered into by the Company with
unaffiliated third parties, (ii) the terms and conditions of transactions of the
same or a similar nature entered into by AXF with unaffiliated third parties,
and/or (iii) the terms and conditions of
26
market transactions of the same or a similar nature entered into by unaffiliated
third parties. Notwithstanding the foregoing, there can be no assurance that the
Company could not have obtained more favorable terms from an unaffiliated third
party. While there can be no assurance, the Company anticipates that future
transactions with AXF will be made on an arm's-length basis consistent with past
practice.
FINANCIAL SERVICES PROVIDED BY OR TO THE COMPANY
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") from time to
time provides investment banking, underwriting and administrative services to
AXF, AXA and their subsidiaries. The fees related to investment banking services
were $16,492,000 and the fees related to administrative services were $4,000 in
1999. DLJSC from time to time also provides brokerage and research services to
AXF, AXA and their subsidiaries. Such services were provided on an arm's-length
basis in the ordinary course of business at rates comparable to those paid at
the time by unaffiliated third parties.
DLJSC and Pershing distribute certain Alliance sponsored funds and cash
management products and receive standard sales concessions and distribution
payments. In addition, Alliance and Pershing have an agreement pursuant to which
Pershing recommends to certain of its correspondent firms the use of Alliance
cash management products for which it is allocated a portion of the revenues
derived by Alliance from sales through the Pershing correspondents. Amounts paid
by Alliance to the Company in connection with the above distribution services
during 1999 totaled $75 million.
AXA Advisors, LLC ("AXA Advisors"), an indirect wholly-owned subsidiary of
AXF and a successor to EQ Financial Consultants, Inc., has arrangements with
DLJAM pursuant to which AXA Advisors' registered representatives are compensated
for referring investment advisory clients to DLJAM. Referral amounts paid by
DLJAM during 1999 totaled $178,000.
AXA Advisors distributes DLJAM's mutual funds for which it receives standard
sales concessions, which during 1999 totaled $297,000.
AXA Advisors and DLJSC are parties to a portfolio manager agreement with
respect to AXF Classic Strategies, a wrap fee investment program offered through
AXA Advisors. Amounts paid to AXA Advisors by DLJSC were $764,000.
Alliance and DLJAM share investment management responsibility for a number
of institutional accounts. The amount of advisory fees received from such
accounts that were allocated to DLJAM during 1999 totaled $50,000.
On December 26, 1995, DLJSC issued 300,000 shares of its non-voting
Adjustable Rate Cumulative Preferred Stock for $30 million. On May 24, 1996,
DLJSC issued 15,000 additional shares of its non-voting Adjustable Rate
Cumulative Preferred Stock, for an aggregate purchase price of $1.5 million, to
WSW 1995 Exchange Fund, L.P. At December 31, 1999, 315,000 shares were issued
and outstanding, of which 155,000 were held by the Company. The General Partner
of such partnership is a subsidiary of DLJAM. Such preferred stock will
automatically be redeemed by DLJSC 15 years from the date of issuance thereof
and may be redeemed at the option of DLJSC at any time prior to such date.
27
During 1999, the Company provided investment banking and underwriting
services to Advanced Micro Devices, Inc., of which Mr. Sanders is Chairman of
the Board and Chief Executive Officer, for fees totaling approximately
$3,750,000.
Certain directors, officers and employees of the Company, AXF, AXA and their
subsidiaries maintain margin accounts with DLJSC. Margin account transactions
for such directors, officers and employees are conducted by DLJSC in the
ordinary course of business and are substantially on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons and did not involve more than the normal
risk of collectibility or present other unfavorable features. In addition,
certain of such directors, officers and employees had investments or commitments
to invest in various funds sponsored by subsidiaries of the Company. Such
investments or commitments have been made on the same basis as those made by
investors not affiliated with the Company and the aggregate of such investments
are less than 8% of the investments in any such fund. DLJSC also, from time to
time and in the ordinary course of business, enters into transactions involving
the purchase or sale of securities from or to such directors, officers and
employees and members of their immediate families, as principal. Such
transactions on a principal basis are effected on substantially the same terms
as similar transactions with unaffiliated third parties except that in some
instances directors, officers and employees are not charged placement fees.
DLJSC offers its employees reduced commission rates.
INSURANCE COVERAGE OBTAINED FROM AXF
The Company has purchased split-dollar life insurance policies on the lives
of Messrs. Chalsty, Roby, Daddino, James and Pechter from Equitable Life at
rates comparable to those paid at the time by unaffiliated third parties. The
aggregate amount of premiums for these policies borne by the Company in 1999
were approximately $170,000 for Mr. Chalsty and $185,000 each for Messrs. Roby,
Daddino, James and Pechter.
In addition, the Company from time to time purchases life insurance policies
from Equitable Life on the lives of several hundred employees, including
Messrs. Chalsty, Roby, Daddino, James and Pechter, who participate in deferred
compensation plans maintained by the Company. The Company believes these
purchases are at rates comparable to those that could be obtained from
unaffiliated third parties. During 1999, the aggregate premiums paid under such
policies for all participants was approximately $28.1 million.
AXF arranges for directors and officers liability insurance coverage for
itself and its subsidiaries, including the Company under a policy written by
insurance companies unaffiliated with AXF. Based on a review of market rates,
the Company believes that such rates are at least as favorable to the Company as
could be obtained from unaffiliated third parties.
FINANCIAL SERVICES OBTAINED FROM AFFILIATES
Alliance provides investment management services to certain of the Company's
employee benefit plans at rates comparable to those paid at the time by
unaffiliated third parties. Advisory fees from these accounts during 1999
totaled $1.5 million.
28
An affiliate of AXA, AXA Investment Managers GS Ltd. ("AXA Asset
Management"), provides investment management services to the DLJ Winthrop
International Equity Fund and the DLJ Winthrop Developing Markets Fund (the
"Funds"), a set of mutual funds sponsored by DLJ Asset Management Group, Inc.
pursuant to a sub-advisory agreement between DLJAM and AXA Asset Management.
Advisory fees of $428,168 were paid by DLJAM to AXA Asset Management relating to
the Fund's fiscal year ending October 31, 1999. In addition, DLJAM pays for
various direct fund expenses on behalf of the Funds and AXA Asset Management
reimburses DLJAM for 50% of such expenses. The total amount of expenses
reimbursed was approximately $61,000.
OTHER TRANSACTIONS WITH AXF
In 1993, Equitable Life purchased 200,000 shares of the Company's Cumulative
Exchangeable Preferred Stock for $20.0 million. In 1996, these shares were
exchanged, pursuant to the terms thereof, for $20.0 million aggregate principal
amount of the Company's 9.58% Subordinated Exchange Notes due 2003. The Company
paid interest on these notes to Equitable Life of $1.9 million in 1999. Such
interest was paid on a PRO RATA basis to all holders of 9.58% Subordinated
Exchange Notes, including unaffiliated third parties.
AXF has committed, subject to approval by AXF on a
transaction-by-transaction basis, to provide $750 million of subordinated debt
financing to the DLJ Bridge Fund. Interest payments and other distributions to
Equitable Life from the DLJ Bridge Fund during 1999 totaled $8.4 million. The
Company has agreed to pay AXF the first $25 million of aggregate principal
losses incurred by AXF with respect to all bridge loans. To the extent such
payments by the Company do not fully cover any such losses incurred by AXF, AXF
is entitled to receive all other distributions otherwise payable to the Company
with respect to DLJ Bridge Fund activities until such losses have been
recovered. The Company has also agreed to pay AXF the amount, if any, by which
any principal loss on an individual loan exceeds $150 million. In addition, AXF
is entitled to one-third of any equity securities obtained in connection with
any bridge loan.
Equitable Life has invested an aggregate of $73.0 million in Sprout Growth,
L.P., Sprout Growth II, L.P., Sprout Capital V, L.P., Sprout Capital VI, L.P.,
Sprout Capital VII, L.P., and Sprout Capital VIII, L.P., (collectively, the
"Sprout Funds"), venture capital funds sponsored by the Company. Distributions
to Equitable Life from the Sprout Funds during 1999 were $16.1 million. Such
distributions were paid on a PRO RATA basis to all investors, including
unaffiliated third parties.
Pursuant to a Services Agreement between a subsidiary of DLJDIRECT Holdings
Inc. and an affiliate of AXF, the subsidiary provides services to AXF in return
for monthly fees. These services include development services such as
technological solutions to enhance account security, maintenance services
(including hotline support, scheduled maintenance and informal training) and
hosting services such as the interconnection, monitoring and provision of
servers to support AXF's Internet applications. Fees paid by AXF amounted to
$221,000 in 1999.
The Company currently leases certain of its office facilities from joint
ventures in which AXF participates. Total lease payments by the Company with
respect to such facilities were approximately
29
$1.4 million for 1999. DLJDIRECT currently occupies office facilities owned by a
joint venture in which AXF participates. Amounts paid under this agreement were
approximately $410,000 in 1999.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the Commission as currently in effect,
any holder of at least $1,000 in market value of DLJ Common Stock who has held
such DLJ Common Stock for at least one year and who desires to have a proposal
presented in the Company's proxy material for use in connection with the annual
meeting of stockholders to be held in 2000 must transmit that proposal (along
with his or her name, address, the number of shares of DLJ Common Stock that he
or she holds of record or beneficially, the dates upon which the securities were
acquired and documentary support for a claim of beneficial ownership) in writing
as set forth below. Proposals of stockholders intended to be presented at the
annual meeting of stockholders to be held in 2001 must be received by Marjorie
S. White, Secretary, Donaldson, Lufkin & Jenrette, Inc., 277 Park Avenue, New
York, New York 10172, no later than November 20, 2000.
Holders of DLJ Common Stock who want to have proposals submitted for
consideration at future meetings of the stockholders should consult the
applicable rules and regulations of the Commission with respect to such
proposals, including the permissible number and length of proposals and other
matters governed by such rules and regulations.
ADDITIONAL INFORMATION
THE COMPANY WILL MAKE AVAILABLE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999, WHEN IT BECOMES AVAILABLE, AND ANY QUARTERLY
REPORTS ON FORM 10-Q OF THE COMPANY FILED THEREAFTER, WITHOUT CHARGE, UPON
WRITTEN REQUEST TO THE SECRETARY, DONALDSON, LUFKIN & JENRETTE, INC., 277 PARK
AVENUE, NEW YORK, NEW YORK 10172. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT, AS OF THE RECORD DATE (MARCH 15, 2000), THE PERSON MAKING
THE REQUEST WAS A BENEFICIAL OWNER OF COMMON STOCK ENTITLED TO VOTE.
In order to ensure timely delivery of any such document prior to the Annual
Meeting, any request should be received by the Company promptly.
OTHER BUSINESS
The Company knows of no other matters which may come before the Annual
Meeting. However, if any such matters properly come before the Annual Meeting,
the individuals named in the proxies will vote on such matters in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Marjorie S. White
SECRETARY
March 27, 2000
30
STOCKHOLDER'S PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
P DONALDSON, LUFKIN & JENRETTE, INC.
R
O To: Donaldson, Lufkin & Jenrette, Inc.
X I appoint Marjorie S. White and Michael A. Boyd, individually and
together, as my proxies, with power of substitution, to vote all of my
Y DONALDSON, LUFKIN & JENRETTE, INC. common stock at the Annual Meeting of
Stockholders of DONALDSON, LUFKIN & JENRETTE, INC. to be held at the
Company's offices, 8th Floor, 277 Park Avenue, New York, New York
10172, on Tuesday, May 9, 2000, at 10:00 a.m., New York City time, and
at any adjournment or postponement of the meeting.
MY PROXIES WILL VOTE THE SHARES REPRESENTED BY THIS PROXY AS DIRECTED ON
THE OTHER SIDE OF THIS CARD, BUT IN THE ABSENCE OF ANY INSTRUCTIONS FROM
ME, MY PROXIES WILL VOTE "FOR" THE ELECTION OF ALL THE NOMINEES LISTED
UNDER ITEM 1 AND "FOR" ITEM 2. MY PROXIES MAY VOTE ACCORDING TO THEIR
DISCRETION ON ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE
MEETING. I MAY REVOKE THIS PROXY PRIOR TO ITS EXERCISE.
PLEASE SIGN AND DATE THE OTHER SIDE OF THIS CARD.
(Please fill in the appropriate boxes on the other side.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
PLEASE MARK YOUR |
/X/ CHOICES LIKE THIS | 6670
IN BLUE OR BLACK INK. -------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL THE NOMINEES LISTED
UNDER ITEM 1 AND "FOR" ITEM 2.
Item 1. Election of all the members of the WITHHOLD
Company's Board of Directors. FOR ALL AUTHORITY
NOMINEES FOR ALL NOMINEES
Nominees: Joe L. Roby, John S. Chalsty,
Anthony F. Daddino, David DeLucia, Hamilton E. / / / /
James, Stuart M. Robbins, Henri de Castries,
Denis Duverne, Jane Mack Gould, Louis Harris,
Michael Hegarty, Henri G. Hottinguer, W. Edwin
Jarmain, Francis Jungers, Edward D. Miller,
W.J. Sanders III, Stanley B. Tulin and
John C. West.
For, except vote withheld for the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2. Ratification of the appointment of KPMG LLP / / / / / /
as Donaldson, Lufkin & Jenrette, Inc.'s
independent auditors for 2000.
Note: Please sign exactly as name(s)
appear(s) above. If acting as an
executor, administrator, trustee,
guardian, etc., you should so indicate
in signing. If the stockholder is a
corporation, please sign the full
corporate name, by a duly authorized
officer. If shares are held jointly,
each stockholder named should sign.
Date and promptly return this card in
the envelope provided.
,2000
-----------------------------------------
SIGNATURE(S) DATE
,2000
-----------------------------------------
SIGNATURE(S) DATE
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401 (K) RETIREMENT SAVINGS PLAN DIRECTION SOLICITED BY THE BOARD OF DIRECTORS OF
DONALDSON, LUFKIN & JENRETTE, INC.
P
To: Fidelity Management Trust Company, Trustee
R
I direct Fidelity Management Trust Company, Trustee under the 401 (k)
O Retirement Savings Plan for Employees of Donaldson Lufkin and Jenrette,
Inc., to vote in person or by proxy all of the shares of DONALDSON,
X LUFKIN & JENRETTE, INC. common stock allocated to the account of the
undersigned under such Plan at the Annual Meeting of Stockholders of
Y DONALDSON, LUFKIN & JENRETTE, INC. to be held at the Company's offices,
8th Floor, 277 Park Avenue, New York, New York 10172, on Tuesday, May 9,
2000, at 10:00 a.m., New York City time, and at any adjournment or
postponement of the meeting.
THE SHARES REPRESENTED BY THIS DIRECTION WILL BE VOTED AS DIRECTED ON
THE OTHER SIDE OF THIS CARD, BUT IN THE ABSENCE OF ANY INSTRUCTIONS FROM
ME, WILL BE VOTED "FOR" THE ELECTION OF ALL THE NOMINEES LISTED UNDER
ITEM 1 AND "FOR" ITEM 2. THE TRUSTEE MAY VOTE ACCORDING TO ITS
DISCRETION ON ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE SIGN AND DATE THE OTHER SIDE OF THIS CARD.
(Please fill in the appropriate boxes on the other side.)
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PLEASE MARK YOUR |
/X/ CHOICES LIKE THIS | 3866
IN BLUE OR BLACK INK. -------
Item 1. Election of all the members of the WITHHOLD
Company's Board of Directors. FOR ALL AUTHORITY
NOMINEES FOR ALL NOMINEES
Nominees: Joe L. Roby, John S. Chalsty,
Anthony F. Daddino, David DeLucia, Hamilton E. / / / /
James, Stuart M. Robbins, Henri de Castries,
Denis Duverne, Jane Mack Gould, Louis Harris,
Michael Hegarty, Henri G. Hottinguer, W. Edwin
Jarmain, Francis Jungers, Edward D. Miller,
W.J. Sanders III, Stanley B. Tulin and
John C. West.
For, except vote withheld for the following nominee(s):
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FOR AGAINST ABSTAIN
Item 2. Ratification of the appointment of KPMG LLP / / / / / /
as Donaldson, Lufkin & Jenrette, Inc.'s
independent auditors for 2000.
Note: Please sign exactly as name(s)
appear(s) above.
,2000
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SIGNATURE(S) DATE
,2000
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SIGNATURE(S) DATE
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