SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
AFFILIATED MANAGERS GROUP, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------
(2) Form, schedule or registration statement no.:
----------------------------------------------------------
(3) Filing party:
----------------------------------------------------------
(4) Date filed:
----------------------------------------------------------
AFFILIATED MANAGERS GROUP, INC.
TWO INTERNATIONAL PLACE, 23RD FLOOR
BOSTON, MASSACHUSETTS 02110
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2001
------------------------
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") of Affiliated Managers Group, Inc. ("AMG" or the "Company")
will be held on Wednesday, May 30, 2001, at 9:00 a.m. Boston time at the offices
of Goodwin Procter LLP at Exchange Place, 53 State Street, Boston, Massachusetts
02109 for the following purposes:
1. To elect seven directors of the Company to serve until the 2002 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified.
2. To consider and act upon a proposal to approve the amendment and
restatement of the Company's 1997 Stock Option and Incentive Plan.
3. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on April 17, 2001 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, par value $.01 per
share (the "Common Stock"), at the close of business on that date will be
entitled to notice of the Annual Meeting. Only stockholders of record of Common
Stock at the close of business on that date will be entitled to vote at the
Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is
being solicited by the Board of Directors of the Company, and to mail it
promptly in the enclosed postage-prepaid envelope. Any proxy may be revoked by
delivery of a later dated proxy. Stockholders of record who attend the Annual
Meeting may vote in person, even if they have previously delivered a signed
proxy.
By Order of the Board of Directors
/s/ NATHANIEL DALTON
Nathaniel Dalton
SECRETARY
Boston, Massachusetts
April 25, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ARE A STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL MEETING,
YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR
PROXY CARD.
AFFILIATED MANAGERS GROUP, INC.
TWO INTERNATIONAL PLACE, 23RD FLOOR
BOSTON, MASSACHUSETTS 02110
------------------------
PROXY STATEMENT
---------------------
FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2001
April 25, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Affiliated Managers Group, Inc. ("AMG" or
the "Company") for use at the 2001 Annual Meeting of Stockholders of the Company
to be held on Wednesday, May 30, 2001 at 9:00 a.m. Boston time at the offices of
Goodwin Procter LLP at Exchange Place, 53 State Street, Boston, Massachusetts,
02109, and at any adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, stockholders will be asked to vote upon the election of
seven directors of the Company, to consider a proposal to approve the amendment
and restatement of the Company's 1997 Stock Option and Incentive Plan, and to
act upon any other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about April 25, 2001. The Board
of Directors has fixed the close of business on April 17, 2001 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting (the "Record Date"). Only stockholders of record of the
Company's common stock, par value $.01 per share (the "Common Stock"), at the
close of business on the Record Date will be entitled to notice of the Annual
Meeting and to vote at the Annual Meeting. Holders of Common Stock outstanding
and entitled to vote as of the close of business on the Record Date will be
entitled to one vote for each share held by them. As of the Record Date, there
were 22,073,806 shares of Common Stock outstanding and entitled to vote at the
Annual Meeting.
The presence, in person or by proxy, of holders of at least a majority of
the total number of shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker non-votes (as defined below) will be
counted as present in determining the presence of a quorum. A plurality of votes
cast shall be sufficient for the election of directors. Abstentions and broker
non-votes will be disregarded in determining the "votes cast" for purposes of
electing directors and will not affect the election of the candidates receiving
a plurality of votes. The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote is required
to approve the amendment and restatement of the 1997 Stock Option and Incentive
Plan (the "Plan Amendment"). Abstentions will be included in determining the
number of shares of Common Stock present or represented and entitled to vote for
purposes of approval of the Plan Amendment, and will therefore have the effect
of votes "against" the proposal. Broker non-votes will not be counted in
determining the number of shares of Common Stock present or represented and
entitled to vote to approve the Plan Amendment, and will therefore not have the
effect of votes either "for" or "against" the proposal. A "broker non-vote" is a
proxy from a broker or other nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
the shares which are the subject of the proxy on a particular matter with
respect to which the broker or other nominee does not have discretionary voting
power.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED, POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR OF THE COMPANY NAMED IN THIS PROXY STATEMENT AND FOR THE PROPOSAL
TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S 1997 STOCK OPTION AND
INCENTIVE PLAN. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THE ELECTION
OF DIRECTORS AND THE PROPOSAL TO AMEND THE COMPANY'S 1997 STOCK OPTION AND
INCENTIVE PLAN WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE
PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has previously been
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 2000 Annual Report, including audited financial statements for
the fiscal year ended December 31, 2000, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation materials.
2
PROPOSAL 1: ELECTION OF DIRECTORS
INTRODUCTION
The Board of Directors of the Company currently consists of six members. At
the Annual Meeting, seven directors will be elected to serve until the 2002
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified. The Board of Directors has nominated Messrs. William J.
Nutt, Sean M. Healey, Richard E. Floor, Stephen J. Lockwood, Harold J. Meyerman,
William F. Weld, and Dr. Rita M. Rodriguez (the "Nominees") to serve as
directors. Other than Mr. Healey, each of the Nominees is currently serving as a
director of the Company. The Board of Directors anticipates that each of the
Nominees will, if elected, serve as a director. However, if any person nominated
by the Board of Directors is unable to accept election, the proxies will be
voted for the election of such other person or persons as the Board of Directors
may recommend. The Board of Directors will consider a nominee for election to
the Board of Directors recommended by a stockholder of record if the stockholder
submits the nomination in compliance with the requirements of the Company's
Amended and Restated By-laws (the "By-laws"). See "Other Matters--Stockholder
Proposals" for a summary of these requirements.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE ELECTION OF EACH OF THE NOMINEES.
INFORMATION REGARDING THE DIRECTORS/NOMINEES
The names, ages and a description of the business experience, principal
occupation and past employment during at least the last five years of each of
the Nominees are set forth below.
NAME AGE
- ---- --------
William J. Nutt............................................. 56
Sean M. Healey.............................................. 39
Richard E. Floor (1)(3)..................................... 60
Stephen J. Lockwood (1)(2).................................. 53
Harold J. Meyerman (2)(3)................................... 62
Rita M. Rodriguez (1)(2).................................... 58
William F. Weld (3)......................................... 55
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
WILLIAM J. NUTT founded the Company in December 1993 and is the Company's
Chairman and Chief Executive Officer. Mr. Nutt was President of The Boston
Company and was responsible for its institutional money management, mutual fund
administration, and master trustee and custodian businesses. As Chairman and CEO
of The Boston Company's principal subsidiary Boston Safe Deposit and Trust
Company, Mr. Nutt was responsible for its personal banking and trust business.
He is a Trustee of the New England Aquarium and, from 1990 to 1993, he served on
the Executive Committee of the Board of Governors of the Investment Company
Institute. Mr. Nutt received a J.D. from the University of Pennsylvania and a
B.A. from Grove City College.
3
SEAN M. HEALEY joined the Company in 1995 as Executive Vice President and in
1999 became President and Chief Operating Officer. Prior to joining AMG,
Mr. Healey was a Vice President in the Mergers and Acquisitions Department at
Goldman, Sachs & Co. focusing on financial institutions. Mr. Healey received a
J.D. from Harvard Law School, an M.A. from University College, Dublin and an
A.B. from Harvard College.
RICHARD E. FLOOR has been a director of the Company since its formation.
Mr. Floor has been a Partner at the law firm of Goodwin Procter LLP since 1975.
Mr. Floor is also a director of New America High Income Fund, a closed-end
investment company, and of Altamira Investment Services, Inc., a Canadian
open-end mutual fund manager. He also serves as Chairman of the Harvard Eating
Disorders Center.
STEPHEN J. LOCKWOOD has been a director of the Company since
September 1999. Mr. Lockwood is Managing Director of Stephen J. Lockwood &
Company, LLC, and was formerly the Vice Chairman and a member of the Board of
Directors of HCC Insurance Holdings, Inc. ("HCC"), a New York Stock Exchange
listed insurance holding company. Mr. Lockwood was the co-founder and served
through 1999 as the Chief Executive Officer of HCC's subsidiary, LDG Reinsurance
Corporation, which HCC acquired in 1996. In addition, he is a director of four
mutual funds managed by The Dreyfus Corporation, and serves on the Board of the
Inner City Scholarship Fund in Boston, Massachusetts.
HAROLD J. MEYERMAN has been a director of the Company since July 1999.
Mr. Meyerman retired as a Managing Director of the Global Financial Institutions
and Trade Group of The Chase Manhattan Bank in December of 1998. His
responsibilities at Chase included overseeing asset management companies. Before
joining Chase, Mr. Meyerman was President and Chief Executive Officer of First
Interstate Bank, Ltd., a unit of First Interstate Bancorp.
RITA M. RODRIGUEZ has been a director of the Company since January 2000.
Dr. Rodriguez was formerly a full-time Director of the Export-Import Bank of the
United States. She was nominated to the position by President Reagan and
confirmed by the U.S. Senate in 1982, and continued to serve in this capacity by
direction of President Bush and President Clinton until her resignation in
March 1999. On the Export-Import Bank Board, she served as Chair of the Audit
Committee and the Exposure Management Committee. Prior to joining the
Export-Import Bank Board, Dr. Rodriguez was a professor of finance at the
University of Illinois at Chicago and an associate professor of business
administration at Harvard Business School. In addition, Dr. Rodriguez has
authored numerous journal articles and books on the subject of international
finance. Dr. Rodriguez also serves on the Board of Directors of the Academy for
Educational Development in Washington, D.C.
WILLIAM F. WELD has been a director of the Company since December 1997.
Mr. Weld is a Partner in the investment firm of Leeds Weld & Company. From 1991
to 1997, Mr. Weld served as the Governor of Massachusetts. His prior experience
includes two years as Assistant U.S. Attorney General, Criminal Division, and
five years as the United States Attorney for Massachusetts. Mr. Weld has also
previously been engaged in the private practice of law at McDermott, Will &
Emery, Hill & Barlow and Hale and Dorr LLP. Mr. Weld is also a director of
Edison Schools, Inc., a private manager of public schools, and of IDT
Corporation, a provider of telecommunications services.
During 2000, the Board of Directors met six times. During 2000, each
director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for which such
director served on the Board of Directors) and (ii) the total number of meetings
of all committees of the Board of Directors on which such director served
(during the periods for which such director served on such committee or
committees).
The Board of Directors has established an Audit Committee (the "Audit
Committee"), a Compensation Committee (the "Compensation Committee") and a
Nominating Committee (the "Nominating Committee"). The Audit Committee assists
the Board of Directors in the oversight of the Company's internal controls and
financial statements and the audit process. The Audit Committee currently
consists
4
of Messrs. Floor and Lockwood and Dr. Rodriguez. The Audit Committee met six
times during 2000. The Compensation Committee, which currently consists of
Messrs. Lockwood and Meyerman and Dr. Rodriguez, is responsible for overseeing
the Company's general compensation policies and establishing and reviewing the
compensation plans applicable to the Company's executive officers. The
Compensation Committee met four times during 2000. While the Company has a
Nominating Committee which was created in October 1999, and consists of
Messrs. Floor, Meyerman and Weld, recent nominees to the Board have been
nominated and then approved by the Board. The Nominating Committee accepts
proposals from stockholders of the Company if submitted in compliance with the
requirements of the By-laws.
COMPENSATION OF DIRECTORS
Directors of the Company who are also employees receive no additional
compensation for their service as directors. Messrs. Floor, Lockwood, Meyerman
and Weld and Dr. Rodriguez each receive an annual fee of $40,000 for his or her
service as a director. In addition, these directors each receive an annual fee
of $10,000 per committee for their service as a member of any of the Audit,
Compensation or Nominating Committees.
For their services as directors, non-employee directors are also eligible to
receive options to purchase shares of Common Stock under the Affiliated Managers
Group, Inc. 1997 Stock Option and Incentive Plan (the "1997 Plan"). On
January 25, 2000, in connection with her appointment to the Board of Directors,
Dr. Rodriguez was granted under the 1997 Plan an option to purchase up to 15,000
shares of Common Stock at an exercise price of $35.6875 per share, which option
vests in quarterly 937.5 share installments commencing on April 1, 2000. On
January 25, 2000, Messrs. Floor, Lockwood, Meyerman and Weld each were granted
under the 1997 Plan an option to purchase up to 5,000 shares of Common Stock at
an exercise price of $35.6875 per share, which option vests in quarterly 312.5
share installments commencing on April 1, 2000. On January 24, 2001,
Messrs. Floor, Lockwood, Meyerman and Weld and Dr. Rodriguez each were granted
under the 1997 Plan an option to purchase up to 7,500 shares of Common Stock at
an exercise price of $62.00 per share which option vests in quarterly 468.75
share installments commencing on April 1, 2001.
All directors of the Company are reimbursed for travel expenses incurred in
attending meetings of the Board of Directors and its committees.
INFORMATION REGARDING EXECUTIVE OFFICERS OF THE COMPANY
The names, ages and positions of the executive officers of the Company, as
well as a description of their business experience and past employment, are as
set forth below:
NAME AGE POSITION
- ---- -------- --------
William J. Nutt................ 56 Chief Executive Officer and Chairman of the Board of
Directors
Sean M. Healey................. 39 President and Chief Operating Officer
Seth W. Brennan................ 30 Senior Vice President, New Investments
Darrell W. Crate............... 34 Senior Vice President, Chief Financial Officer and Treasurer
Nathaniel Dalton............... 34 Senior Vice President, General Counsel and Secretary
For the biographical information for Messrs. Nutt and Healey, see
"--Information Regarding the Directors/Nominees."
SETH W. BRENNAN joined the Company in 1995 and became a Senior Vice
President in 2000 with responsibility for coordinating the Company's new
investment activities. Prior to joining AMG, Mr. Brennan was a Financial Analyst
in the Global Insurance Investment Banking Group at Morgan
5
Stanley & Co. Incorporated and in the Financial Institutions Group at
Wasserstein, Perella & Co. Mr. Brennan received a B.A. from Hamilton College.
DARRELL W. CRATE joined the Company as a Senior Vice President and Chief
Financial Officer in 1998. Prior to joining AMG, Mr. Crate was a Managing
Director in the Financial Institutions Group of Chase Manhattan Corporation
focusing exclusively on investment management firms. Mr. Crate received an
M.B.A. from Columbia Business School and a B.A. from Bates College.
NATHANIEL DALTON joined the Company as a Senior Vice President and General
Counsel in 1996 and in 2000 became responsible for AMG's Affiliate Development
efforts. Prior to joining AMG, Mr. Dalton was an attorney at Goodwin Procter
LLP, focusing on mergers and acquisitions, including those in the asset
management industry. Mr. Dalton received a J.D. from Boston University School of
Law and a B.A. from the University of Pennsylvania.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth information
concerning the compensation earned during the indicated periods by the Company's
Chief Executive Officer and the Company's four (4) other most highly compensated
executive officers whose total salary and bonus exceeded $100,000 during the
fiscal year ended December 31, 2000 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION ALL OTHER
COMPENSATION AWARDS COMPENSATION
---------------------- ------------ -----------------------------------
SECURITIES LONG-TERM
UNDERLYING DEFERRED OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($) COMPENSATION ($)
- --------------------------- -------- ---------- --------- ------------ ---------------- ----------------
William J. Nutt............. 2000 600,000 1,875,000(1) 140,000 2,005,435(2) 101,680(3)
Chairman and Chief 1999 550,000 1,300,000 140,000 1,500,000(4) 28,300(5)
Executive Officer 1998 462,500 575,000 82,500 -- 28,200(6)
Sean M. Healey.............. 2000 475,000 1,500,000(1) 120,000 1,586,957(2) 86,509(3)
President and Chief 1999 425,000 1,000,000 120,000 1,000,000(4) 28,300(5)
Operating Officer 1998 362,500 450,000 75,000 -- 28,200(6)
Seth W. Brennan............. 2000 225,000 750,000(1) 100,000 802,174(2) 79,506(3)
Senior Vice President 1999 175,000 500,100 75,000 600,000(4) 27,725(5)
1998 125,000 210,000 42,500 -- 26,904(6)
Darrell W. Crate............ 2000 300,000 900,000(1) 100,000 965,217(2) 77,299(3)
Senior Vice President 1999 250,000 700,000 150,000 750,000(4) 28,300(5)
1998(7) 159,375 275,000 140,000 -- 25,946(6)
Nathaniel Dalton............ 2000 300,000 900,000(1) 100,000 965,217(2) 80,601(3)
Senior Vice President 1999 250,000 700,000 100,000 750,000(4) 28,300(5)
1998 225,000 300,000 65,500 -- 27,792(6)
- ------------------------
(1) Includes (i) compensation by the Company under the Long-Term Executive
Incentive Plan approved by stockholders in May 2000, in the amounts of
$1,494,000, $995,000, $330,000, $220,000 and $223,000 on behalf of
Messrs. Nutt, Healey, Brennan, Crate and Dalton, respectively, and
(ii) other performance-based compensation by the Company in the amounts of
$381,000, $505,000, $420,000, $680,000 and $677,000 on behalf of
Messrs. Nutt, Healey, Brennan, Crate and Dalton, respectively.
(2) Includes contributions and forfeitures allocated in 2000 under a
non-qualified defined contribution plan (the "Defined Contribution Plan")
established by the Company in 1999 to retain and to provide
6
continuing incentives for its executive officers and officers. Contributions
in 2000 will be distributable in 25% installments on each of the first four
anniversaries of the contribution, while balances constituting forfeitures
will be distributable in the installments (based on contributions) described
in footnote (4) below. The vesting and distribution of such Defined
Contribution Plan balances are subject to the participant satisfying certain
conditions, among them that the participant has not resigned from the
Company. The amounts set forth in the table include (i) compensation by the
Company under the Long-Term Executive Incentive Plan in the amounts of
$666,000, $805,000, $750,000, $860,000 and $857,000 on behalf of
Messrs. Nutt, Healey, Brennan, Crate and Dalton, respectively, (ii) other
performance-based compensation by the Company in the amounts of $1,209,000,
$695,000, $40,000 and $43,000 on behalf of Messrs. Nutt, Healey, Crate and
Dalton, respectively and (iii) forfeitures in the amounts of $130,435,
$86,957, $52,174, $65,217 and $65,217 on behalf of Messrs. Nutt, Healey,
Brennan, Crate and Dalton, respectively. The Company's contribution in 2000
to the Defined Contribution Plan was invested in equal portions in shares of
the Company's Common Stock and in investment vehicles managed by the
Company's investment management affiliates. Defined Contribution Plan
balances forfeited by the individual participants remain in the Defined
Contribution Plan and are reallocated to the remaining participants.
(3) Includes (i) contributions by the Company under its 401(k) Profit Sharing
Plan in the amount of $25,500 on behalf of Messrs. Nutt, Healey, Brennan,
Crate and Dalton; (ii) forfeitures allocated under the Company's 401(k)
Profit Sharing Plan in the amount of $1,677 on behalf of Messrs. Nutt,
Healey, Brennan, Crate and Dalton; (iii) the dollar value of insurance
premiums paid by the Company with respect to term life and long term
disability insurance policies in the amount of $4,700 each on behalf of
Messrs. Nutt, Healey, Crate and Dalton and $4,033 on behalf of Mr. Brennan;
(iv) the dollar value of financial service benefits (and taxes thereon) paid
by the Company in the amounts of $14,544, $17,793, $26,193, $17,793 and
$21,095 on behalf of Messrs. Nutt, Healey, Brennan, Crate and Dalton,
respectively; and (v) profit distributions earned on Long-Term Deferred
Compensation in the amounts of $55,259, $36,839, $22,103, $27,629 and
$27,629 on behalf of Messrs. Nutt, Healey, Brennan, Crate and Dalton,
respectively.
(4) Represents contributions made by the Company in 1999 under the Defined
Contribution Plan. The Company's contribution to the Defined Contribution
Plan was invested in equal portions in shares of the Company's Common Stock
and in investment vehicles managed by the Company's investment management
affiliates. Contributions will be distributable to each participant in 12.5%
installments on the second and third anniversary of the contribution and in
37.5% installments (in each case based on contributions) on the fourth and
fifth anniversary of the contribution. The vesting and distribution of such
contributions are subject to the participant satisfying certain conditions,
among them that the participant has not resigned from the Company. Defined
Contribution Plan balances forfeited by the individual participants remain
in the Defined Contribution Plan and are reallocated to the remaining
participants.
(5) Includes (i) contributions by the Company under its 401(k) Profit Sharing
Plan in the amount of $24,000 on behalf of Messrs. Nutt, Healey, Brennan,
Crate and Dalton; and (ii) the dollar value of insurance premiums paid by
the Company with respect to term life and long term disability insurance
policies for the benefit of the Named Executive Officers in the amount of
$4,300 on behalf of each of Messrs. Nutt, Healey, Crate and Dalton and
$3,725 on behalf of Mr. Brennan.
(6) Includes (i) contributions by the Company under its 401(k) Profit Sharing
Plan in the amount of $24,000 on behalf of Messrs. Nutt, Healey, Brennan and
Dalton and $23,906 on behalf of Mr. Crate; and (ii) the dollar value of
insurance premiums paid by the Company with respect to term life and long
term disability insurance policies for the benefit of the Named Executive
Officers in the amount of $4,200 on behalf of each of Messrs. Nutt and
Healey, $3,792 on behalf of Mr. Dalton, $2,040 on behalf of Mr. Crate and
$2,904 on behalf of Mr. Brennan.
(7) Mr. Crate's employment with the Company commenced in April 1998.
7
OPTION GRANTS. The following table sets forth the option grants made during
2000 to the Named Executive Officers.
OPTION GRANTS IN 2000
INDIVIDUAL
GRANTS
NUMBER OF ------------- POTENTIAL REALIZABLE VALUE
SECURITIES PERCENT OF AT ASSUMED ANNUAL RATES
UNDERLYING TOTAL OPTIONS OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM (1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
(#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
---------- ------------- ----------- ---------- ------------ ------------
William J. Nutt............. 60,000 6.9% $47.9375(2) 12/19/10 $1,808,858 $4,584,002
80,000 9.2% $53.1250(3) 8/14/10 $2,672,802 $6,773,405
Sean M. Healey.............. 50,000 5.8% $47.9375(2) 12/19/10 $1,507,382 $3,820,001
70,000 8.1% $53.1250(3) 8/14/10 $2,338,702 $5,926,730
Seth W. Brennan............. 40,000 4.6% $47.9375(2) 12/19/10 $1,205,905 $3,056,001
60,000 6.9% $53.1250(3) 8/14/10 $2,004,602 $5,080,054
Darrell W. Crate............ 40,000 4.6% $47.9375(2) 12/19/10 $1,205,905 $3,056,001
60,000 6.9% $53.1250(3) 8/14/10 $2,004,602 $5,080,054
Nathaniel Dalton............ 40,000 4.6% $47.9375(2) 12/19/10 $1,205,905 $3,056,001
60,000 6.9% $53.1250(3) 8/14/10 $2,004,602 $5,080,054
- --------------------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed rates of stock appreciation set by the Securities and
Exchange Commission (the "SEC") of five percent and ten percent compounded
annually from the date the respective options were granted. Actual gains, if
any, are dependent on the performance of the Common Stock. There can be no
assurance that the amounts reflected will be achieved.
(2) These options become exercisable over four years, with 25% becoming
exercisable on each of the four calendar year ends beginning in the year
following the date of grant.
(3) These options become exercisable over four years, with 25% becoming
exercisable on each of the four calendar year ends beginning in the year of
the date of grant.
OPTION EXERCISES IN LAST YEAR AND YEAR-END OPTION HOLDINGS. The following
table sets forth information concerning common stock acquired on exercise of
stock options during 2000, any value realized therein, the number of unexercised
options at the end of 2000 (exercisable and unexercisable) and the value of
stock options held at the end of 2000 by the Named Executive Officers. The
"Value Realized" column reflects the difference between the market price on the
date of exercise and the market price on the date of grant (which establishes
the exercise price for the option) for all options exercised, even though the
executive officers may have actually received fewer shares as a result of the
surrender of shares to pay the exercise price, or the withholding of shares to
cover the tax liability associated with the option exercise. Accordingly, the
"Value Realized" numbers do not necessarily reflect what the executive officers
might receive, should the executive officers choose to sell the shares acquired
by the option exercise, since the market price of the shares so acquired may at
any time be higher or lower than the price on the exercise date of the option.
2000 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT YEAR-END (#) AT YEAR-END ($)
EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
------------ ------------ ------------------------- -----------------------------
William J. Nutt............ 27,056 $ 720,183 287,319/253,125 $7,728,540/$3,911,616
Sean M. Healey............. 27,056 $1,016,108 234,819/218,125 $6,229,890/$3,381,703
Seth W. Brennan............ 62,500 $1,217,375 62,500/155,000 $1,136,825/$2,133,463
Darrell W. Crate........... 50,000 $ 797,111 110,000/230,000 $2,235,519/$4,004,513
Nathaniel Dalton........... 23,238 $ 699,433 133,262/181,500 $3,180,635/$2,803,278
- --------------------------
(1) Based on $54.875 per share, the closing price of the Common Stock on the New
York Stock Exchange ("NYSE") on December 29, 2000, the last day of trading
on the NYSE in 2000.
8
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of cumulative total stockholder
return for the period from November 21, 1997 (the date of the initial public
offering of the Company's Common Stock) through December 31, 2000, among the
Company, the Standard & Poor's 500 Stock Index (the "S&P 500 Index"), an asset
management industry composite index constructed and previously used by the
Company (the "Old Peer Group Index") and an asset management industry composite
index which is made up of the Old Peer Group Index and those asset management
industry companies that during 2000 made an initial public offering of their
securities, but does not include companies from the Old Peer Group Index which
announced in 2000 that they would be acquired (the "New Peer Group Index"). The
Old Peer Group Index includes BlackRock, Inc., Eaton Vance Corp., Federated
Investors, Inc., Franklin Resources, Inc., Gabelli Asset Management Inc., John
Nuveen & Co., Liberty Financial Companies, Inc., Neuberger Berman, LLC, Phoenix
Investment Partners, Ltd., The Pioneer Group, Inc., T. Rowe Price Associates,
United Asset Management Corporation, and Waddell and Reed Financial, Inc.
Phoenix Investment Partners, Ltd., The Pioneer Group, Inc., and United Asset
Management Corporation (collectively, the "Acquired Companies") have been
included in the Old Peer Group Index through the public announcements of their
acquisitions, which were on July 24, 2000, May 15, 2000, and June 19, 2000,
respectively. As outlined above, the New Peer Group Index includes Stilwell
Financial, Inc. from the date of its initial public offering on June 26, 2000,
and excludes the Acquired Companies. The stock performance graph assumes an
investment of $100 in each of the Company and the indices, and the reinvestment
of any dividends. The historical information set forth below is not necessarily
indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, THE S&P 500 INDEX
AND PEER GROUPS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL RETURN
AFFILIATED MANAGERS GROUP, INC. S & P 500 NEW PEER GROUP OLD PEER GROUP
11/21/97 100 100 100 100
12/31/97 123.4 100.91 95.77 95.51
12/31/98 127.13 129.74 83.24 84.29
12/31/99 172.08 157.04 88.36 86.6
12/31/00 233.51 142.74 124.81 134.77
* Based on $100 invested as of November 21, 1997 in Common Stock or the
Indices, including the reinvestment of dividends.
9
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Lockwood and Meyerman and
Dr. Rodriguez, each a non-employee director of the Company, with Mr. Lockwood
serving as the Chairman of the Committee. The Compensation Committee is
responsible for overseeing the Company's general compensation policies and
establishing and reviewing the compensation plans applicable to the Company's
executive officers. In that capacity, the Compensation Committee administers the
Company's stock option and incentive plans, as well as the Long-Term Executive
Incentive Plan approved by the stockholders of the Company at the 2000 Annual
Meeting.
COMPENSATION POLICIES
The Compensation Committee structures its policies and programs to further
two basic philosophies: first, that executive compensation should be closely
aligned with increases in stockholder value as measured by growth in Cash
earnings per share (as defined below); and second, that executive compensation
should be designed to retain the services of key members of senior management of
the Company. In keeping with these two philosophies, the Compensation Committee
closely monitors the allocation of the Company's executives' compensation among
its various components: base salary, bonus, stock and stock option grants, so as
to maintain an appropriate balance between fixed and performance-based
compensation. The Compensation Committee also sets the timing of payments within
the bonus, stock and stock option categories so as to maintain an appropriate
balance between current and deferred payments. Throughout these processes, the
Compensation Committee strives to create the optimum level of incentives to
ensure that key executives remain with the Company and manage the Company's
affairs with the goal of increasing value to stockholders.
BASE SALARY
In determining base salary levels for the Company's executive officers, the
Compensation Committee annually reviews the amounts of base compensation being
paid to executive officers of other companies in the industry, including those
comprising the New Peer Group Index set forth on page 9. The Compensation
Committee intends that the base salary levels of the Company's executive
officers be somewhat below the median level for executives in similar positions
in comparable public companies in the industry. The Compensation Committee
believes it is appropriate to target a base salary level that reflects the
Compensation Committee's belief that total compensation should focus more on
performance-based compensation. Based on the Compensation Committee's philosophy
and the factors stated above, the Compensation Committee approved 2001 base
salaries for the executive officers as follows: Mr. Nutt, $625,000; Mr. Healey,
$500,000; and each of Messrs. Brennan, Crate and Dalton, $325,000.
PERFORMANCE-BASED COMPENSATION
In determining the performance-based compensation levels for the Company's
executive officers, the Compensation Committee considers the Company's earnings
after interest expense and income taxes but before depreciation and amortization
and extraordinary items ("Cash earnings") per share to be the primary basis for
measuring the performance of the Company. In 2000, the Company adopted the
Long-Term Executive Incentive Plan (the "LTEIP"), which was approved by
stockholders in May 2000. Under the terms of the LTEIP, executives covered under
the LTEIP are eligible to receive incentive compensation for any fiscal year in
which the Company achieves the target Cash earnings per share established by the
Compensation Committee within the first 90 days of the fiscal year. The
Company's Cash earnings per share of $3.85 for 2000 exceeded the target Cash
earnings per share established by the
10
Compensation Committee for fiscal year 2000, resulting in the creation of the
Incentive Pool pursuant to the pre-established formula under the LTEIP.
In addition to Cash earnings per share, the Compensation Committee considers
certain additional Company and individual performance factors to be important in
determining the appropriate level of compensation for the Company's executive
officers. Where appropriate, the Compensation Committee considers the
performance of the Company's Common Stock, the performance of the Company (with
respect to a number of financial measures) relative to other companies in its
peer group and the performance of the Company relative to the financial markets
generally, along with a broad assessment of qualitative management performance
on both an individual and aggregate basis.
Once the Compensation Committee has determined the total performance-based
compensation to award each of the Company's executive officers, the Compensation
Committee then addresses the form and timing of such payments. In general, the
Compensation Committee believes that as performance-based compensation
increases, the amounts of compensation which are both awarded in Company Common
Stock and deferred should increase accordingly. With respect to 2000, the
Compensation Committee determined that half of the total performance-based
compensation payable to the executive officers should be deferred and that the
deferred portion should be paid to the executives in 25% installments over the
next four years. The Compensation Committee further determined that, of the
deferred portion of each executive's performance-based compensation, half should
be invested in Company Common Stock and half should be invested in investment
products managed by the Company's Affiliates. Consistent with the objective that
compensation should be designed to retain key executive officers, the
Compensation Committee has determined that all such deferred compensation
payments are contingent upon the continued employment of the executive officer
with the Company.
The Compensation Committee's determinations of the performance-based
compensation for each executive officer, and the form and timing of all
payments, are described more fully in the Summary Compensation Table.
STOCK OPTION AWARDS
While recognizing that performance-based compensation provides rewards for
positive short-term performance, the Compensation Committee believes that awards
of stock options provide long-term incentive compensation to executive officers
that is aligned directly with the achievement of enhanced shareholder value for
stockholders through an appreciating stock price. The Compensation Committee
intends to grant stock options annually on the basis of the Company's
performance and individual contributions to that performance. In making its
grants, the Compensation Committee considers the potential stock option grants
in relationship to the current and deferred compensation to be paid in any
particular year. While the Compensation Committee follows no particular formula,
it believes that in years in which compensation is relatively lower, grants to
executive officers should be relatively higher, and that grants should be
somewhat lower in years in which compensation is relatively higher. Grants of
stock options to executive officers, based on the Compensation Committee's
review of the Company's performance and individual contributions to that
performance for 2000, are described in the Option Grants in 2000 Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In determining the annual and performance-based compensation levels for
Mr. Nutt, the Company's Chairman and Chief Executive Officer, the Compensation
Committee applies the same principles and methods applied to other executive
officers. On that basis, and based upon its assessment of Mr. Nutt's
contributions relative to other senior managers of the Company, the Compensation
Committee determined Mr. Nutt's overall compensation to be appropriate.
11
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986 places a limit on the
tax deduction for compensation in excess of $1 million paid to certain "covered
employees" of a publicly held corporation (generally the corporation's chief
executive officer and its next four most highly compensated executive officers
in the year that the compensation is paid). At the 2000 Annual Meeting, the
stockholders of the Company approved the LTEIP which permits performance
compensation paid thereunder to such covered employees to be deductible by the
Company. In implementing its compensation policies, the Committee considered the
effects of the adoption of the LTEIP and the opportunities it afforded to
preserve the tax deductibility of compensation to executive officers. The
Compensation Committee's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible to the extent
permitted while simultaneously providing the Company's executive officers with
appropriate rewards for their performance.
STEPHEN J. LOCKWOOD
HAROLD J. MEYERMAN
RITA M. RODRIGUEZ
12
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the Compensation
Committee of the Board of Directors, which currently consists of
Messrs. Lockwood and Meyerman and Dr. Rodriguez. Mr. Nutt, Chairman and Chief
Executive Officer of the Company, served on the Compensation Committee until his
resignation from the Committee on May 25, 2000. Mr. Nutt did not participate in
the consideration or recommendation of his own compensation arrangements, nor
did Mr. Nutt participate in the consideration of his own option grants.
CERTAIN TRANSACTIONS
During 2000, the Company retained Goodwin Procter LLP for certain legal
services. Richard E. Floor, a director of the Company, is the sole shareholder
of Richard E. Floor, P.C., which is a partner in Goodwin Procter LLP.
During 2000, in connection with the Company's senior credit facility (the
"Credit Facility") with a syndicate of banks managed by The Chase Manhattan
Bank, as Administrative Agent, and Nationsbank, N.A., as Documentation Agent,
the Company paid The Chase Manhattan Bank and Nationsbank, N.A. an
administrative agency fee of $75,000. In addition, the Company paid each of The
Chase Manhattan Bank and Nationsbank, N.A. interest under the Credit Facility in
accordance with its terms.
Chase Equity Associates, L.P. was a stockholder of the Company during 2000.
Prior to its merger with and into J.P. Morgan Partners (BHCA), L.P., Chase
Equity Associates was a limited partnership whose sole limited partner was an
affiliate of Chase Manhattan Corporation (the former parent company of The Chase
Manhattan Bank) and whose sole general partner had as its partners certain
employees of The Chase Manhattan Bank (including John M. B. O'Connor, a director
of the Company during 2000) and an affiliate of Chase Manhattan Corporation.
W.W. Walker, Jr., a director of the Company during 2000, is Managing Director of
Bank of America Capital Investors, an affiliate of Nationsbank, N.A.
In August 1995, the Skyline Funds, for which Skyline Asset Management, L.P.
(one of the investment management firms in which the Company holds a majority
interest) provides investment advisory services, retained Funds
Distributor, Inc. as a distributor of shares of the Skyline Funds. During 2000,
Mr. Nutt was Chairman of Funds Distributor, Inc., and the Chairman and Chief
Executive Officer and majority stockholder of its parent, Boston Institutional
Group, Inc. During 2000, the Skyline Funds paid Funds Distributor, Inc.
approximately $66,799.
As part of a loan program for participating executive officers and officers,
the Company made a loan of $200,000 to Sean M. Healey during 2000. The loan has
a 30-year maturity (but accelerates upon termination of employment) and is
secured by real property with a rate of interest assessed at the lesser of 6.25%
or the Applicable Federal Rate.
13
PROPOSAL 2: APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE COMPANY'S 1997 STOCK OPTION AND INCENTIVE PLAN
INTRODUCTION
On April 13, 2001, the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, the Plan Amendment pursuant to which the
following changes would be made to the 1997 Plan:
- The number of shares of Common Stock reserved for issuance under the 1997
Plan would be increased from 3,250,000 to 4,550,000.
- The maximum number of shares for which awards other than options may be
granted under the Plan on and after April 13, 2001 shall not exceed
250,000 shares of Common Stock in the aggregate.
- The term of each option will not exceed seven years from the date of its
grant.
- Options may not have an exercise price per share of Common Stock less than
100% of the fair market value of a share of Common Stock on the date of
grant, except when the option is granted in lieu of cash compensation.
REASONS FOR THE PLAN AMENDMENT
The Board of Directors believes that the Company's growth and long-term
success depend in large part upon retaining and motivating key personnel and
that such retention and motivation can be achieved in part through grants under
the 1997 Plan. The Board of Directors also believes that stock options and other
equity-based awards can play an important role in the success of the Company by
encouraging and enabling the officers and other employees of the Company, upon
whose judgment, initiative and efforts the Company depends for sustained growth
and profitability, to acquire a proprietary interest in the long-term
performance of the Company. The Board of Directors anticipates that providing
such persons with a direct stake in the Company will ensure a closer
identification of the interests of the participants in the 1997 Plan with those
of the Company, thereby stimulating the efforts of such participants to promote
the Company's future success and strengthen their desire to remain with the
Company.
The Board of Directors believes that the number of shares of Common Stock
reserved for issuance under the 1997 Plan is not sufficient for future granting
needs. As of April 17, 2001, there are 394,552 shares of Common Stock remaining
for issuance under the 1997 Plan. Giving effect to option grant and cancellation
activity through April 17, 2001, including options to purchase 7,125 shares of
Common Stock that were canceled and options to purchase 102,500 shares of Common
Stock that were granted, there are options to purchase 2,508,400 shares of
Common Stock which have been granted but remain unexercised, with a weighted
average exercise price of $37.13 per share of Common Stock and a weighted
average remaining life of 8.4 years. This figure of options outstanding but
unexercised gives effect to all stock option exercise activity (the exercise of
options to purchase 46,125 shares of Common Stock) through April 17, 2001.
The Board of Directors believes that increasing the number of shares
issuable under the 1997 Plan will help the Company accomplish these goals and
will keep the Company's equity incentive compensation in line with that of its
competitors. Accordingly, the Board of Directors has voted, subject to
shareholder approval, to increase the number of shares of Common Stock available
under the 1997 Plan by 1,300,000 shares.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT AND RESTATEMENT OF THE 1997 PLAN.
14
SUMMARY OF THE 1997 PLAN
The following description of certain features of the 1997 Plan is intended
to be a summary only and does not describe every provision of the 1997 Plan.
INTRODUCTION. The 1997 Plan was adopted by the Board of Directors in
October 1997 and was subsequently approved by the Company's stockholders, and
was then amended and restated in 1999 and such amendment and restatement was
approved by the Company's stockholders in May 1999. The 1997 Plan permits
(i) the grant of options to purchase shares of Common Stock intended to qualify
as incentive stock options under the Code ("Incentive Options"), (ii) the grant
of options that do not so qualify ("Non-Qualified Options"), (iii) the grant of
stock appreciation rights, (iv) the issuance or sale of Common Stock with
vesting or other restrictions ("Restricted Stock"), (v) the issuance or sale of
Common Stock without restrictions ("Unrestricted Stock"), (vi) the grant of the
right to receive Common Stock in the future with or without vesting or other
restrictions ("Deferred Stock Awards"), (vii) the grant of Common Stock upon the
attainment of specified performance goals ("Performance Share Awards") and
(viii) the grant of the right to receive cash dividends with the holders of the
Common Stock as if the recipient held a specified number of shares of the Common
Stock ("Dividend Equivalent Rights"). These grants may be made to officers and
other employees, directors, advisors, consultants and other key persons of the
Company and its subsidiaries. The 1997 Plan currently provides for the issuance
of 3,250,000 shares of Common Stock. If adopted, the Plan Amendment would
increase the number of shares of Common Stock authorized and reserved for
issuance to 4,550,000. Options with respect to no more than 700,000 shares of
Common Stock may be granted to any one individual in any calendar year. In
addition, after April 13, 2001, awards under the 1997 Plan, other than options,
may not be granted with respect to more than 250,000 shares of Common Stock in
the aggregate.
PLAN ADMINISTRATION; ELIGIBILITY. If the 1997 Plan is administered by the
Compensation Committee, then all members of the Compensation Committee must be
"disinterested persons" as that term is defined under the rules promulgated by
the Commission, and "outside directors" as defined in Section 162(m) of the Code
and the regulations promulgated thereunder. The plan administrator (the
"Administrator") has full power to select, from among the employees and other
persons eligible for awards, the individuals to whom awards will be granted, to
make any combination of awards to participants, and to determine the specific
terms and conditions of each award, subject to the provisions of the 1997 Plan.
Persons eligible to participate in the 1997 Plan are those officers,
employees and other key persons, such as consultants, of the Company and its
subsidiaries who are responsible for or contribute to the management, growth or
profitability of the Company and its subsidiaries, as selected from time to time
by the Administrator. Non-employee Directors are also eligible for certain
awards under the 1997 Plan.
STOCK OPTIONS. The 1997 Plan permits the granting of (i) Incentive Options
and (ii) Non-Qualified Options. Only employees of the Company and its
subsidiaries may be granted Incentive Options. The option exercise price of each
option will be determined by the Administrator but may not be less than 100% of
the fair market value of the Common Stock on the date of grant. An employee
participating in the 1997 Plan may, however, elect, with the consent of the
Administrator, to receive discounted Non-Qualified Options in lieu of cash
bonuses, to the extent such discount does not (in the aggregate) exceed the
amount of such employee's cash bonus. In the case of such grants, the option
exercise price may be less than 100% of the fair market value of the Common
Stock on the date of grant.
STOCK APPRECIATION RIGHTS. The Administrator may award a stock appreciation
right ("SAR") either as a freestanding award or in tandem with a stock option.
Upon exercise of the SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share specified in the related stock
option (or, in the case of a freestanding SAR, the price per share specified in
such right, which price may not be less than 100% of the fair market value of
the Common Stock on the date of grant) times the number of shares of
15
Common Stock with respect to which the SAR is exercised. This amount may be paid
in cash, Common Stock, or a combination thereof, as determined by the
Administrator.
STOCK OPTION GRANTED TO NON-EMPLOYEE DIRECTORS. The 1997 Plan contemplates
the grant to each additional non-employee Director of a Non-Qualified Option
upon his or her initial election to the Board of Directors. The exercise price
of each such Non-Qualified Option is the fair market value of the Common Stock
on the date of grant, and each such grant is subject to vesting requirements as
determined by the Administrator. The Administrator may also grant additional
Non-Qualified Options to non-employee Directors.
RESTRICTED STOCK. The Administrator may also award shares of Restricted
Stock to officers, other employees and key persons of the Company. The
conditions and restrictions applicable to the Restricted Stock may include the
achievement of certain performance goals and/or continued employment with the
Company through a specified restricted period. The vesting period shall be
determined by the Administrator. These conditions and restrictions, as well as
the purchase price of shares of Restricted Stock, are determined by the
Administrator. If the performance goals and other restrictions are not attained,
the employees forfeit their awards of Restricted Stock.
UNRESTRICTED STOCK. The Administrator may also grant shares (at no cost or
for a purchase price determined by the Administrator) of Unrestricted Stock to
employees and key persons in recognition of past services or other valid
consideration, and shares of Unrestricted Stock may be issued in lieu of cash
compensation to be paid to such employees and key persons.
DEFERRED STOCK AWARDS. The Administrator may also award Deferred Stock
Awards which are ultimately payable in the form of shares of Unrestricted Stock.
The Deferred Stock Awards may be subject to such conditions and restrictions as
the Administrator may determine, including the achievement of certain
performance goals and/or continued employment with the Company through a
specified restricted period. If the performance goals and other restrictions are
not attained, the participants forfeit their Deferred Stock Awards.
Subject to the consent of the Administrator, a non-employee Director, an
employee or key person of the Company may make an irrevocable election to
receive a portion of his fees or compensation in Deferred Stock Awards (valued
at fair market value on the date the cash compensation would otherwise be paid).
DIVIDEND EQUIVALENT RIGHTS. The Administrator may grant Dividend Equivalent
Rights, which give the recipient the right to receive credits for dividends that
would be paid if the grantee had held a specified number of shares of Common
Stock. Dividend Equivalent Rights may be settled in cash, shares, or a
combination thereof.
PERFORMANCE SHARE AWARDS. The Administrator may also grant Performance
Share Awards to employees or other key persons of the Company entitling the
recipient to receive shares of Common Stock upon the achievement of individual
or Company performance goals and such other conditions as the Administrator
shall determine.
TAX WITHHOLDING. Participants under the 1997 Plan are responsible for the
payment of any federal, state or local taxes which the Company is required by
law to withhold upon any option exercise or vesting of other awards.
Participants may elect to have the minimum tax withholding obligations satisfied
either by authorizing the Company to withhold shares of Common Stock to be
issued pursuant to an option exercise or other award, or by transferring to the
Company shares of Common Stock having a value equal to the amount of such taxes.
AMENDMENTS AND TERMINATION. The Board of Directors may at any time amend or
discontinue the 1997 Plan and the Administrator may at any time amend or cancel
outstanding awards for the purpose of
16
satisfying changes in the law or for any other lawful purpose. No such action
may be taken, however, which adversely affects any rights under outstanding
awards without the holder's consent. Further, amendments to the 1997 Plan shall
be subject to approval by the Company's stockholders if and to the extent
required by the Code to preserve the qualified status of Incentive Options or to
preserve tax deductibility of compensation earned under stock options and stock
appreciation rights.
CHANGE IN CONTROL PROVISIONS. The 1997 Plan provides that in the event of a
sale of all or substantially all of the assets or Common Stock of the Company, a
merger or consolidation which results in a change in control of the Company or
the liquidation or dissolution of the Company (a "Change in Control"), all stock
options and stock appreciation rights shall automatically become fully
exercisable. In addition, at any time prior to or after a Change of Control, the
Administrator may accelerate awards and waive conditions and restrictions on any
awards to the extent it may determine appropriate.
NEW 1997 PLAN BENEFITS. No grants have been made with respect to the
additional shares of Common Stock which would be reserved for issuance if the
Plan Amendment is approved by stockholders. The number of shares of Common Stock
that may be granted to executive officers and non-executive officers is
indeterminable at this time.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the principal federal income tax consequences
of transactions under the 1997 Plan. It does not describe all federal tax
consequences under the 1997 Plan, nor does it describe state or local tax
consequences.
INCENTIVE OPTIONS. No taxable income is generally realized by the optionee
upon the grant or exercise of an Incentive Option. If shares of Common Stock
issued to an optionee pursuant to the exercise of an Incentive Option are sold
or transferred after two years from the date of grant and after one year from
the date of exercise, then (i) upon sale of such shares, any amount realized in
excess of the option price (the amount paid for the shares) will be taxed to the
optionee as a long-term capital gain, and any loss sustained will be a long-term
capital loss, and (ii) there will be no deduction for the Company for federal
income tax purposes. The exercise of an Incentive Option will give rise to an
item of tax preference that may result in alternative minimum tax liability for
the optionee.
If shares of Common Stock acquired upon the exercise of an Incentive Option
are disposed of prior to the expiration of the two-year and one-year holding
periods described above (a "disqualifying disposition"), generally (i) the
optionee will realize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of the shares of common
stock at exercise (or, if less, the amount realized on a sale of such shares of
common stock) over the option price thereof, and (ii) the Company will be
entitled to deduct such amount. Special rules will apply where all or a portion
of the exercise price of the Incentive Option is paid by tendering shares of
Common Stock.
If an Incentive Option is exercised at a time when it no longer qualifies
for the tax treatment described above, the option is treated as a Non-Qualified
Option. Generally, an Incentive Option will not be eligible for the tax
treatment described above if it is exercised more than three months following
termination of employment (or one year in the case of termination of employment
by reason of disability). In the case of termination of employment by reason of
death, the three-month rule does not apply.
NON-QUALIFIED OPTIONS. With respect to Non-Qualified Options under the 1997
Plan, no income is realized by the optionee at the time the option is granted.
Generally (i) at exercise, ordinary income is realized by the optionee in an
amount equal to the difference between the option price and the fair market
value of the shares of Common Stock on the date of exercise, and the Company
receives a tax deduction for the same amount, and (ii) at disposition,
appreciation or depreciation after the date of exercise is treated as either
short-term or long-term capital gain or loss depending on how long the shares of
17
Common Stock have been held. Special rules will apply where all or a portion of
the exercise price of the Non-Qualified Option is paid by tendering shares of
Common Stock.
PARACHUTE PAYMENTS. The vesting of any portion of any option or other award
that is accelerated due to the occurrence of a Change of Control may cause a
portion of the payments with respect to such accelerated awards to be treated as
"parachute payments" as defined in the Code. Any such parachute payments may not
be deductible by the Company, in whole or in part, and may subject the recipient
to a non-deductible 20% federal excise tax on all or a portion of such payment
(in addition to other taxes ordinarily payable).
LIMITATION ON COMPANY'S DEDUCTIONS. As a result of Section 162(m) of the
Code, the Company's deduction for certain awards under the 1997 Plan may be
limited to the extent that a Covered Employee receives compensation in excess of
$1 million in such taxable year of the Company (other than performance-based
compensation that otherwise meets the requirements of Section 162(m) of the
Code).
18
AUDIT COMMITTEE REPORT
The Audit Committee consists of Messrs. Floor and Lockwood and
Dr. Rodriguez, each a non-employee director of the Company, with Mr. Floor
serving as the Chairman of the Committee. The Audit Committee's purpose is to
assist the Board of Directors in oversight of the Company's internal controls
and financial statements and the audit process. With the exception of
Mr. Floor, the Board of Directors has determined in its business judgment that
all members of the Committee are "independent" as will be required by listing
standards of the New York Stock Exchange ("NYSE") to become effective in
June 2001. To comply with the new NYSE standards, the Board intends to replace
Mr. Floor with an independent Audit Committee member in advance of the effective
date. The Committee operates pursuant to a Charter that was amended and restated
by the Board on April 13, 2001; a copy of the Charter is attached to this proxy
statement as Exhibit I.
Management is responsible for the preparation, presentation and integrity of
the Company's financial statements, accounting and application of financial
reporting principles and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
independent auditors, PricewaterhouseCoopers LLP, are responsible for performing
an independent audit of the consolidated financial statements in accordance with
generally accepted auditing standards.
In performing its oversight role, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors. The Committee has also discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as currently in effect. The Committee has
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as currently in effect. The Committee has
also considered whether the provision of information technology consulting
services relating to financial information systems design and implementation (if
any) and other non-audit services by the independent auditors is compatible with
maintaining the auditors' independence and has discussed with the auditors the
auditors' independence.
Based on the reports and discussions described in this Report, and subject
to the limitations on the role and responsibilities of the Committee referred to
below and in the Charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual Report
on Form 10-K for the fiscal year ended December 31, 2000.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including with respect to auditor independence. Members
of the Committee rely without independent verification on the information
provided to them and on the representations made by management and the
independent auditors. Accordingly, the Audit Committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions referred to above do not assure that
the audit of the Company's financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that PricewaterhouseCoopers LLP is in fact "independent."
RICHARD E. FLOOR
STEPHEN J. LOCKWOOD
RITA M. RODRIGUEZ
19
AUDIT FEES
The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP ("PwC") for the audit of AMG's financial statements
for the fiscal year ended December 31, 2000 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for that
fiscal year were $579,218.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PwC rendered no professional services to AMG for information technology
services relating to financial information systems design and implementation for
the fiscal year ended December 31, 2000.
ALL OTHER FEES
The aggregate fees for services rendered by PwC to the Company, other than
the services described above under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees," for the fiscal year ended December 31,
2000 were approximately $2.6 million.
20
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 1, 2001 (in the case of executive
officer and directors) and December 31, 2000 (in the case of beneficial owners
of more than 5% of the Common Stock), certain information regarding the
beneficial ownership of Common Stock by (i) each person or "group" (as that term
is defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act")) known by the Company to be the beneficial owner of more than 5%
of the Common Stock, (ii) each executive officer of the Company, (iii) each
director and Nominee and (iv) all directors and executive officers as a group
(10 persons). Except as otherwise indicated, the Company believes, based on
information furnished by such persons, that each person listed below has sole
voting and investment power over the shares of Common Stock shown as
beneficially owned, subject to community property laws, where applicable.
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED COMMON STOCK (2)
- ---------------------------- ------------------ ----------------
Lone Pine Capital LLC....................................... 1,483,100 (3) 6.72%
William J. Nutt............................................. 499,443 (4) 2.23%
Sean M. Healey.............................................. 321,099 (5) 1.44%
Seth W. Brennan............................................. 55,282 (6) *
Darrell W. Crate............................................ 136,000 (7) *
Nathaniel Dalton............................................ 138,694 (8) *
Richard E. Floor............................................ 36,280 (9) *
Stephen J. Lockwood......................................... 5,780(10) *
Harold J. Meyerman.......................................... 14,530(11) *
Rita M. Rodriguez........................................... 5,156(12) *
William F. Weld............................................. 10,155(13) *
All directors and executive officers as a group (10
persons).................................................. 1,222,418(14) 5.33%
- ------------------------
* Less than 1%
(1) Unless otherwise indicated, the mailing address for each stockholder and
director is c/o AMG, Two International Place, 23rd Floor, Boston,
Massachusetts, 02110. The address of Lone Pine Capital LLC is Two Greenwich
Plaza, Greenwich, Connecticut 06830.
(2) In computing the number of shares of Common Stock beneficially owned by a
person, shares of Common Stock subject to options and warrants held by that
person that are currently exercisable or that become exercisable within
60 days of March 1, 2001 are deemed outstanding. For purposes of computing
the percentage of outstanding shares of Common Stock beneficially owned by
such person, such shares of stock subject to options or warrants that are
currently exercisable or that become exercisable within 60 days of March 1,
2001 are deemed to be outstanding for such person but are not deemed to be
outstanding for purposes of computing the ownership percentage of any other
person. As of March 1, 2001, a total of 23,100,356 shares of Common Stock
were either outstanding or subject to options, warrants or other convertible
securities that are exercisable or that will become exercisable within
60 days.
(3) The 1,483,100 shares reported by Lone Pine Capital LLC may be deemed to be
beneficially owned by Stephen F. Mandel, Jr., including (a) 268,447 shares
of Common Stock beneficially owned by Lone Pine Associates LLC, of which
(i) 53,395 shares of Common Stock are beneficially owned by Lone Spruce,
L.P. ("Lone Spruce"); (ii) 117,167 shares of Common Stock are beneficially
owned by Lone Balsam, L.P. ("Lone Balsam"); and (iii) 97,885 shares of
Common Stock are beneficially owned by Lone Sequoia, L.P. ("Lone Sequoia")
and (b) 1,214,653 shares of Common Stock beneficially owned by Lone Pine
Capital LLC. Lone Pine Associates LLC is the general partner of Lone Spruce,
Lone Sequoia and Lone Balsam, and has the power to direct the affairs of
Lone Spruce, Lone Sequoia and
21
Lone Balsam, including decisions respecting the disposition of the proceeds
from the sale of shares. Mr. Mandel is the Managing Member of Lone Pine
Associates LLC and in that capacity directs its operations. Lone Cypress, a
client of Lone Pine Capital LLC of which Mr. Mandel is the Managing Member,
has the power to direct the receipt of dividends from or the proceeds of the
sale of shares.
(4) Includes 287,319 shares of Common Stock subject to options exercisable
within 60 days. Excludes (i) 253,125 shares subject to unvested options; and
(ii) 22,259 shares held in trust pursuant to a non-qualified defined
contribution plan and subject to vesting upon the satisfaction of certain
conditions.
(5) Includes 234,819 shares of Common Stock subject to options exercisable
within 60 days. Excludes (i) 218,125 shares subject to unvested options; and
(ii) 14,839 shares held in trust pursuant to a non-qualified defined
contribution plan and subject to vesting upon the satisfaction of certain
conditions.
(6) Includes 37,500 shares of Common Stock subject to options exercisable with
60 days. Excludes (i) 155,000 shares subject to unvested options; and
(ii) 8,904 shares held in trust pursuant to a non-qualified defined
contribution plan and subject to vesting upon the satisfaction of certain
conditions.
(7) Includes 135,000 shares of Common Stock subject to options exercisable
within 60 days. Excludes (i) 205,000 shares subject to unvested options; and
(ii) 11,129 shares held in trust pursuant to a non-qualified defined
contribution plan and subject to vesting upon the satisfaction of certain
conditions.
(8) Includes 116,862 shares of Common Stock subject to options exercisable
within 60 days. Excludes (i) 181,500 shares subject to unvested options; and
(ii) 11,129 shares held in trust pursuant to a non-qualified defined
contribution plan and subject to vesting upon the satisfaction of certain
conditions.
(9) Includes 5,780 shares of Common Stock subject to options exercisable within
60 days. Excludes 16,720 shares subject to unvested options.
(10) Represents 5,780 shares of Common Stock subject to options exercisable
within 60 days. Excludes 16,720 shares subject to unvested options.
(11) Includes 12,030 shares of Common Stock subject to options exercisable
within 60 days. Excludes 10,470 shares subject to unvested options.
(12) Represents 5,156 shares of Common Stock subject to options exercisable
within 60 days. Excludes 17,344 shares subjected to unvested options.
(13) Represents 10,155 shares of Common Stock subject to options exercisable
within 60 days. Excludes 12,345 shares subject to unvested options.
(14) Includes 850,401 shares of Common Stock subject to options exercisable
within 60 days. Excludes 68,260 shares held by executive officers in trust
pursuant to a non-qualified defined contribution plan and subject to vesting
upon the satisfaction of certain conditions.
22
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. Executive officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company copies of all Section 16(a) forms they file. To the
Company's knowledge, W.W. Walker, Jr. (a former director of the Company) and
William J. Nutt inadvertently failed to file a Form 4 (as required under
Section 16(a)) in a timely fashion in 2000. To the Company's knowledge, based
solely on a review of the copies of such reports provided to the Company and
written representations from certain reporting persons that no other reports
were required during, or with respect to, 2000, all other Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners have been satisfied.
INDEPENDENT PUBLIC ACCOUNTANTS
As discussed in the Audit Committee Report, the accounting firm of
PricewaterhouseCoopers LLP served as the Company's independent public
accountants during 2000 and is expected to continue to do so for fiscal year
2001. A representative of PricewaterhouseCoopers LLP is expected to be present
at the Annual Meeting, will be given an opportunity to make a statement if he or
she so desires and is expected to be available to respond to appropriate
questions.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the Annual Meeting as possible,
special solicitation of proxies may, in certain instances, be made personally or
by telephone, telegraph, mail or other electronic means by one or more employees
of the Company. The Company also may reimburse brokers, banks, nominees and
other fiduciaries for postage and reasonable clerical expenses of forwarding the
proxy materials to their principals who are beneficial owners of Common Stock.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted pursuant to Rule 14a-8 ("Rule 14a-8")
under the Exchange Act and intended to be presented at the Company's 2002 Annual
Meeting of Stockholders must be received by the Company at its principal
executive office on or before December 24, 2001 to be eligible for inclusion in
the proxy statement and form of proxy to be distributed by the Board of
Directors in connection with such meeting.
Any stockholder proposals (including recommendations of nominees for
election to the Board of Directors) intended to be presented at the Company's
2002 Annual Meeting of Stockholders, other than a stockholder proposal submitted
pursuant to Rule 14a-8, must be received in writing at the principal executive
office of the Company no later than March 17, 2002, nor prior to January 31,
2002, together with all supporting documentation required by the By-laws.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
23
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 2000 (INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES THERETO), WHICH WAS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ON APRIL 2, 2001, WILL BE PROVIDED WITHOUT CHARGE TO ANY
PERSON TO WHOM THIS PROXY STATEMENT IS MAILED UPON THE WRITTEN REQUEST OF ANY
SUCH PERSON TO NATHANIEL DALTON, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY, AFFILIATED MANAGERS GROUP, INC., TWO INTERNATIONAL PLACE, 23RD FLOOR,
BOSTON, MASSACHUSETTS 02110.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED.
24
EXHIBIT I
AFFILIATED MANAGERS GROUP, INC.
AUDIT COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS
APRIL 13, 2001
I. GENERAL STATEMENT OF PURPOSE
The Audit Committee of the Board of Directors (the "Audit Committee" or the
"Committee") of Affiliated Managers Group, Inc. (hereinafter referred to as the
"Company") assists the Board of Directors (the "Board") in general oversight and
monitoring of management's and the independent auditor's participation in the
Company's financial reporting process, of the Company's system of internal
financial controls, of the audit process and of the Company's procedures for
compliance with legal and regulatory requirements. The primary objective of the
Audit Committee in fulfilling these responsibilities is to promote and to
preserve the integrity of the Company's financial statements and the
independence and performance of the Company's external independent auditor.
II. AUDIT COMMITTEE COMPOSITION
The Audit Committee shall consist of at least three members who shall be
appointed annually by the Board and shall satisfy the qualification requirements
set forth in Sections 303.01 and 303.02 of the New York Stock Exchange Listed
Company Manual. The Board shall designate one member of the Audit Committee to
be Chairman of the Committee.
III. MEETINGS
The Audit Committee generally is to meet at least four times per year in
person or by telephone conference call. A fall meeting will be held in October
to discuss, among other topics, the scope of the year-end audit. A spring
meeting will be held in March prior to the finalization of the Form 10-K. The
Committee will meet at other times as appropriate.
IV. AUDIT COMMITTEE ACTIVITIES
The principal activities of the Audit Committee will generally include the
following:
A. REVIEW OF CHARTER
- Review and reassess the adequacy of this Charter annually and submit it to
the Board for approval.
B. AUDITED FINANCIAL STATEMENTS AND ANNUAL AUDIT
- Review the overall audit plan, including the degree of involvement at each
of the Affiliates, with the independent auditor and the members of
management who are responsible for maintaining the Company's accounts and
preparing the Company's financial statements, including the Company's
Chief Financial Officer (the "Senior Accounting Executive").
- Review and discuss with management (including the Company's Senior
Accounting Executive) and with the independent auditor:
(i) the Company's annual audited financial statements, including any
significant financial reporting issues which have arisen in connection
with the preparation of such audited financial statements;
I-1
(ii) the adequacy of the Company's internal financial reporting controls
that could significantly affect the integrity of the Company's
financial statements; and
(iii) major changes in and other questions regarding accounting and auditing
principles and procedures.
- Review and discuss with the independent auditor (outside of the presence
of management) how the independent auditor plans to handle its
responsibilities under the Private Securities Litigation Reform Act of
1995, and receive assurances from the auditor that it will, as soon as
practicable, inform the appropriate level of the Company's management and
ensure that the Audit Committee is adequately informed with respect to any
"illegal acts" (as defined in Section 10A of the Private Securities
Litigation Reform Act of 1995) that have been detected or have otherwise
come to the attention of the independent auditor in the course of the
audit, unless the illegal act is clearly inconsequential.
- Review and discuss with the independent auditor (outside of the presence
of management) any problems or difficulties that the auditor may have
encountered with management or others and any management letter provided
by the auditor and the Company's response to that letter. This review
shall include considering any difficulties encountered by the auditor in
the course of performing its audit work, including any restrictions on the
scope of its activities or its access to information.
- Review and discuss major changes to the Company's accounting principles
and practices, including recent professional and regulatory
pronouncements, as may be suggested by the independent auditor or
management and understand their impact on the financial statements.
- Discuss with the independent auditor such issues as may be brought to the
Audit Committee's attention by the independent auditor pursuant to
Statement of Auditing Standards No. 61 ("SAS 61").
- Based on the Audit Committee's review and discussion with (1) management
concerning the audited financial statements, (2) the independent auditor
concerning the matters required to be discussed by SAS 61, and (3) the
independent auditor concerning the independent auditor's independence,
make a recommendation to the Board as to whether the Company's audited
financial statements should be included in the Company's Annual Report on
Form 10-K.
- Prepare the Audit Committee report required by Item 306 of Schedule 14A of
the Securities Exchange Act of 1934 (or any successor provision) to be
included in the Company's annual proxy statement.
C. UNAUDITED QUARTERLY FINANCIAL STATEMENTS
- Review and discuss with management and the independent auditor the
Company's quarterly financial statements. Such review shall include
discussions by the Chairman of the Audit Committee or the Audit Committee
with the independent auditor of such issues as may be brought to the
Chairman's or Audit Committee's attention by the independent auditor
pursuant to Statement on Auditing Standards No. 71.
- Approve earnings press releases and communicate approval to the Board.
D. MATTERS RELATING TO SELECTION, PERFORMANCE AND INDEPENDENCE OF INDEPENDENT
AUDITOR
- Recommend to the Board appointment of the independent auditor.
- Instruct the independent auditor that the independent auditor's ultimate
accountability is to the Board and the Audit Committee.
I-2
- Evaluate on an annual basis the performance of the independent auditor
and, if necessary in the judgment of the Audit Committee, recommend that
the Board replace the independent auditor.
- Request that the independent auditor provide the Audit Committee with the
written disclosures and the letter required by Independence Standards
Board Standard No. 1, and review and discuss with the independent auditor
the independent auditor's independence and whether or not persons other
than the auditor's full-time employees performed more than 50% of the
hours expended during its engagement to audit the Company's financial
statements for the most recent fiscal year.
- Approve on an annual basis the fees to be paid to the independent auditor.
- Consider whether the provision of non-audit services by the independent
auditor is compatible with maintaining the auditor's independence.
- Review the information about fees of the independent auditor that is to be
included in the Company's annual proxy statement.
E. MATTERS RELATING TO THE INDEPENDENCE OF THE AUDIT COMMITTEE
- Periodically review the independence of each member of the Audit Committee
and promptly bring to the attention of management and the Board any
relationships or other matters that may in any way compromise or adversely
affect the independence of any member of the Audit Committee or any
member's ability to assist the Audit Committee in fulfilling its
responsibilities under this Charter, including any such relationship or
other matter that may have caused or may in the future cause the Company
to fail to comply with the requirements set forth in Sections 300.01 and
303.02 of the New York Stock Exchange Listed Company Manual.
F. GENERAL
- Provide regular updates to the Board concerning the Committee's
activities. This will be accomplished with the presentation of the
Committee minutes by a member of the Committee.
- Review the adequacy of the Company's risk management processes and
internal financial control structure. Management will make presentations
and updates to the Committee, as appropriate.
- Review any noteworthy legal and regulatory matters brought to the
Committee's attention that could have a significant impact on the
Company's financial statements.
- Perform such other finance oversight functions as may be requested by the
Board.
- In performing its responsibilities, the Audit Committee shall be entitled
to rely upon advice and information that it receives in its discussion and
communications with management and the independent auditor. The Audit
Committee shall have the authority to retain special legal, accounting or
other professionals to render advice to the Committee. The Audit Committee
shall have the authority to request that any officer or employee of the
Company, the Company's outside legal counsel, the Company's independent
auditor or any other professional retained by the Company to render advice
to the Company attend a meeting of the Audit Committee or meet with any
members of or advisors to the Audit Committee.
- Notwithstanding the responsibilities and powers of the Audit Committee set
forth in this Charter, the Audit Committee does not have the
responsibility of planning or conducting audits of the Company's financial
statements or determining whether or not the Company's financial
statements are complete, accurate and in accordance with generally
accepted accounting principles. Such responsibilities are the duty of
management and, to the extent of the independent auditor's audit
responsibilities, the independent auditor. It also is not the duty of the
Audit Committee to resolve disagreements, if any, between management and
the independent auditor or to ensure compliance with laws, regulations or
Company policies.
I-3
AFFILIATED MANAGERS GROUP, INC.
TWO INTERNATIONAL PLACE, 23RD FLOOR, BOSTON, MASSACHUSETTS 02110
Proxy for Common Stock
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O
X
Y The undersigned hereby appoints William J. Nutt, Sean M. Healey and
Nathaniel Dalton, and each of them, proxies with full power of substitution to
vote for and on behalf of the undersigned at the Annual Meeting of Stockholders
of Affiliated Managers Group, Inc. (the "Company"), to be held at the offices of
Goodwin Procter LLP at Exchange Place, 53 State Street, Boston, Massachusetts
02109 on Wednesday, May 30, 2001 at 9:00 a.m., Boston time, and at any
adjournments or postponements thereof, hereby granting full power and authority
to act on behalf of the undersigned at said meeting and any adjournments or
postponements thereof. The undersigned hereby revokes any proxy previously given
in connection with such meeting and acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement and the 2000 Annual Report to
Stockholders.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED, THE
UNDERSIGNED'S VOTE WILL BE CAST "FOR" EACH OF THE NOMINEES FOR DIRECTOR OF
THE COMPANY NAMED IN THE ACCOMPANYING PROXY STATEMENT AND "FOR" THE PROPOSAL
TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE AFFILIATED MANAGERS GROUP,
INC. 1997 STOCK OPTION AND INCENTIVE PLAN. The undersigned's votes will be
cast in accordance with the proxies' discretion on such other business as may
properly come before the meeting or any adjournments or postponements
thereof. PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
|X| Please mark your votes as indicated in this example
1. Proposal to elect Messrs. William J. Nutt, Sean M. Healey, Richard E.
Floor, Stephen J. Lockwood, Harold J. Meyerman and William F. Weld and
Dr. Rita M. Rodriguez as directors of the Company, each for a one-year
term to continue until the 2002 Annual Meeting of Stockholders and
until the successor of each is duly elected and qualified.
/ / FOR ALL / / WITHHELD
FROM ALL ---------------------------
Withheld as to the nominees
noted above
2. Proposal to approve the amendment and restatement of the Affiliated
Managers Group, Inc. 1997 Stock Option and Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. To consider and act upon such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Date ______________________, 2001
For joint accounts, each owner Signature:_______________________
should sign. Executors,
administrators, trustees, corporate Signature:_______________________
officers and others acting in a
representative capacity should give
full title or authority.