SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the registrant |X |
Filed by a party other than the registrant | |
Check the appropriate box:
|X | Preliminary proxy statement
| | Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
T. ROWE PRICE ASSOCIATES,
INC.
(Name of Registrant as Specified in Charter)
Alvin M. Younger, Jr.,
Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X | $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2).
| | $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
| | Fee computed on the table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction
applies:
~BALT01A:40807:2:|02/17/95
4807-400024
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
| | 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:
PRELIMINARY COPY -- FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
ONLY
YOUR VOTE IS IMPORTANT--Please execute and return
the enclosed proxy promptly,
whether or not you plan to attend the
T. Rowe Price Annual Meeting of Stockholders.
[LOGO]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 1995
Notice is hereby given that the Annual Meeting of Stockholders
of T. Rowe Price Associates, Inc. (the "Company") will be held at
100 East Pratt Street, 12th Floor, Baltimore, Maryland, on April 6,
1995, at 10:00 a.m. for the following purposes:
(1) To elect eleven directors of the Company;
(2) To consider and act upon a proposed charter amendment to
increase the authorized Common Stock of the Company;
(3) To consider and act upon a proposed charter amendment to
authorize a class of undesignated Preferred Stock;
(4) To consider and act upon a proposed performance-linked
Executive Incentive Compensation Plan;
(5) To consider and act upon a proposed 1995 Director Stock
Option Plan; and
(6) To consider and act upon such other business as may
properly come before the meeting.
February 6, 1995, was fixed by the Board of Directors as the
record date for determination of stockholders entitled to notice of
and to vote at the meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Alvin M. Younger, Jr.
Secretary
Baltimore, Maryland
February 27, 1995
PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy are furnished to
stockholders of T. Rowe Price Associates, Inc. (the "Company") in
connection with the solicitation of proxies by the Company's Board
of Directors to be used at the annual meeting of stockholders
described in the accompanying notice and at any adjournments
thereof. The purpose of the meeting is to elect directors of the
Company, to consider and act upon amendments to the Company's
charter to increase the authorized Common Stock of the Company and
to authorize an undesignated class of Preferred Stock, to consider
and act upon a proposed performance-linked Executive Incentive
Compensation Plan, to consider and act upon a proposed 1995
Director Stock Option Plan, and to transact such other business as
may properly come before the meeting. This proxy statement and the
accompanying proxy are first being sent to stockholders on or about
February 27, 1995.
The record of stockholders entitled to notice of and to vote at
the annual meeting was taken as of the close of business on
February 6, 1995. At that date there were outstanding and entitled
to vote shares of Common Stock, par value $.20
per share. All share and per-share information included in this
proxy statement has been adjusted for the two-for-one stock split
effective at the close of business on November 30, 1993. In the
election of directors, each share is entitled to cast one vote for
each director to be elected; cumulative voting is not permitted.
For all matters except the election of directors, each share is
entitled to one vote. Directors are elected by a plurality of the
votes cast by the holders of shares of Common Stock at a meeting at
which a quorum is present. For purposes of the election of
directors, abstentions and broker non-votes are not considered to
be votes cast and do not affect the plurality vote required for
directors. The proposed charter amendment requires the affirmative
vote of a majority of the total number of shares of Common Stock
outstanding, and the proposed compensation plan requires the
affirmative vote of a majority of the votes cast. In the
discussion of each of these proposals included in this proxy
statement, the effect of abstentions and broker non-votes is
discussed. Article EIGHTH, Section 3 of the charter of the Company
limits the voting rights of certain persons and groups owning in
excess of 15% of the Company's Common Stock. The Company does not
believe that such provision will be applicable to any stockholders
at the 1995 annual meeting, but will apply such provision if
circumstances require.
The cost of soliciting proxies and preparing the proxy materials
will be borne by the Company. In order to ensure that sufficient
shares of Common Stock are represented at the meeting, the Company
has retained the services of Georgeson & Company, Inc. to assist it
in soliciting proxies for a fee of $8,000 plus reimbursement for
out-of-pocket expenses. In addition, the Company will request
securities brokers, custodians, nominees, and fiduciaries to
forward solicitation material to the beneficial owners of stock
held of record and will reimburse them for their reasonable
out-of-pocket expenses in forwarding such solicitation material.
In addition to solicitation of proxies by Georgeson & Company,
Inc., proxies may be solicited personally or by
telephone or telegram by directors, officers, and employees of the
Company or its subsidiaries without additional compensation to
them.
The Board of Directors has selected George J. Collins and George
A. Roche to act as proxies with full power of substitution. Any
stockholder executing a proxy has the power to revoke the proxy at
any time before it is voted. This right of revocation is not
limited or subject to compliance with any formal procedure. Any
stockholder may attend the meeting and vote in person whether or
not the stockholder has previously given a proxy.
Stockholder proposals intended to be presented at the 1995
annual meeting must be received by the Company for inclusion in the
Company's proxy statement and proxy relating to that meeting by
[October 30], 1995.
ELECTION OF DIRECTORS
The entire Board of Directors of the Company will be elected to
hold office until the next annual meeting of stockholders and until
their respective successors are elected and have qualified. All
eleven nominees currently serve as directors of the Company.
It is intended that all proxies received, unless otherwise
indicated, will be voted for the election of the persons named in
the following table, to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified. If any nominee should become unable or unwilling to
serve, the proxies will be voted for the election of such person as
may be designated by the Board of Directors to replace such
nominee.
Information Concerning Nominees
The following table presents information concerning persons
nominated by the Board of Directors for election as directors of
the Company. Except as indicated, the nominees have been officers
of the organizations named below as their principal occupations or
of affiliated organizations for more than five years. Positions of
the nominees as trustees, directors, or principal officers of the
T. Rowe Price Mutual Funds (including those Funds organized as
trusts referred to herein as the "Price Funds") and of certain
other affiliated registered investment companies are also
indicated. Stock ownership information is reported as of the
record date.
Age, principal occupation, directorships
with public companies, and beneficial
owner-
Name of Nominee ship of Common Stock (percent of
class)
Thomas H. Broadus, Jr. Mr. Broadus is 57 years old and has been a
director of the Company since 1979, a
managing director since 1989, a vice
president between 1971 and 1989, and an
employee since 1966.
He is president and a director of the Blue
Chip Growth Fund and a trustee of the Equity
Income Fund.
shares ( %) (6)
George J. Collins Mr. Collins is 54 years old and has
been a director of the Company since 1980,
president and chief executive officer since
1984, a managing director since 1989, a vice
president between 1975 and 1984, and an
employee since 1971. He is a director or
trustee of 19 equity and fixed income funds
within the Price Funds. Of these, he is
chairman of 14 funds and president of two
funds. (1)(2)(5)
shares ( %) (7)
James E. Halbkat, Jr. Mr. Halbkat is 60 years old and has been a
director of the Company since 1979. He is
President of U.S. Monitor Corporation, a
provider of public response systems.
(3)(4)(5)
14,000 shares *
Carter O. Hoffman Mr. Hoffman is 67 years old and has
been a director of the Company since 1973, a
managing director since 1989, a senior vice
president between 1980 and 1989, a vice
president between 1966 and 1980, and an
employee since 1961. He is chairman of the
Prime Reserve Fund and a director of two
other Price Funds.
shares * (8)
Henry H. Hopkins Mr. Hopkins is 52 years old and has
been a director of the Company since 1987, a
managing director since 1989, a vice
president between 1976 and 1989, and an
employee since 1972.
shares ( %) (9)
James S. Riepe Mr. Riepe is 51 years old and has been
a director of the Company since 1981, a
managing director since 1989, a
vice-president between 1981 and 1989, and
director of the investment services division
and an employee since 1981. He is chairman
of four of the 37 Price Funds on which he
serves as a director or trustee, is
chairman of New Age Media Fund, Inc., and is
president and a director of CUNA Mutual
Funds, Inc. He is also a director of
Rhone-Poulenc Rorer, Inc., a pharmaceuticals
company. (1)(2)
shares ( %) (10)
George A. Roche Mr. Roche is 53 years old and has been
a director of the Company since 1980, chief
financial officer since 1984, a managing
director since 1989, a vice president
between 1973 and 1989, and an employee since
1968. He is a director and the president of
the New Era Fund, and serves as a director
of two other Price funds. (1)(2)
shares ( %) (11)
John W. Rosenblum Mr. Rosenblum is 51 years old and has been a
director of the Company since 1991. He is
the Tayloe Murphy Professor at the Darden
Graduate School of Business Administration
("the Darden School"), University of
Virginia, and was Dean of the Darden School
from 1983 to 1993. He is also a director of
Chesapeake Corporation, a manufacturer of
paper products; Cadmus Communications Corp.,
a provider of printing and communication
services; Comdial Corp., a manufacturer of
telephone systems for businesses; and Cone
Mills Corporation, a textiles producer.
(3)(4)
shares *
Robert L. Strickland Mr. Strickland is 63 years old and has been
a director of the Company since 1991. He is
Chairman of Lowe's Companies, Inc., a
retailer of specialty home supplies, and is
a director of Hannaford Bros. Co., a food
retailer, since 1994. (1)(3)(4)
2,000 shares *
M. David Testa Mr. Testa is 50 years old and has been
a director of the Company since 1981, a
managing director since 1989, a vice
president between 1976 and 1989, and an
employee since 1972; Mr. Testa has also
served as Chairman of the Board of Rowe
Price-Fleming International, Inc. since
1979. He is a director and the president of
the Equity Series, and is a director or
trustee of 13 other Price Funds. He serves
as chairman of five of these Funds. (1)(2)(5)
shares ( %) (12)
Philip C. Walsh Mr. Walsh is 73 years old and has been
a director of the Company since 1987. He is
currently a consultant to Cyprus Amax
Minerals Company, the successor by merger to
Cyprus Minerals Company. From 1985 to 1993,
he served as a director of Cyprus Minerals
Company. (3)(4)(5)
PS95 - 1/27/95
2,000 shares *
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(22 persons) shares ( %) (13)
* Indicates holdings of less than 1 percent.
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Management Committee of the Board of Directors.
(3) Member of the Audit Committee of the Board of Directors.
(4) Member of the Executive Compensation Committee of the Board of
Directors.
(5) Member of the Nominating Committee of the Board of Directors.
(6) Includes shares which may currently be acquired by
Mr. Broadus upon the exercise of stock options. Also includes shares
held by Mr. Broadus as custodian for a minor child, shares
held by a charitable foundation of which Mr. Broadus is an executive
officer, and shares owned by family members. Also includes
shares held in trusts for members of Mr. Broadus's immediate family.
Does not include an aggregate of 140,000 shares held in trusts for family
members of two other directors of the Company of which trusts Mr. Broadus
is a co-trustee. Mr. Broadus disclaims beneficial ownership of the shares
described in the two immediately preceding sentences.
(7) Includes shares which may currently be acquired by
Mr. Collins upon the exercise of stock options. Also includes 67,602
shares owned by a family member and as to which Mr. Collins disclaims
beneficial ownership.
(8) Includes 14,000 shares owned by a family member and as to which
Mr. Hoffman disclaims beneficial ownership.
(9) Includes shares which may currently be acquired by
Mr. Hopkins upon the exercise of stock options.
(10) Includes shares which may currently be acquired by
Mr. Riepe upon the exercise of stock options. Also includes 20,000 shares
owned by a member of Mr. Riepe's family and 70,000 shares held in trusts for
members of Mr. Riepe's family, as to which Mr. Riepe disclaims beneficial
ownership. Also includes 42,000 shares held in a charitable foundation of
which Mr. Riepe is a trustee and as to which Mr. Riepe has voting and
disposition power.
(11) Includes shares which may currently be acquired by
Mr. Roche upon the exercise of stock options, and 200,000 shares held by or
in trusts for members of Mr. Roche's family and as to which Mr. Roche
disclaims beneficial ownership.
(12) Includes shares which may currently be acquired by
Mr. Testa upon the exercise of stock options, and 80,000 shares held in
trusts for members of Mr. Testa's family and as to which Mr. Testa disclaims
beneficial ownership.
(13) Includes shares which may currently be acquired by all
executive officers as a group upon the exercise of stock options.
PS95 - 1/27/95
Unless otherwise indicated in the foregoing notes, the
individuals named above have sole voting and disposition powers
over the shares beneficially owned by them.
Information Regarding the Board of Directors and Certain
Committees
During 1994 there were six meetings of the Board of Directors of
the Company. Each director attended at least 75% of the combined
total number of meetings of the Board and Board committees of which
he was a member. The Board of Directors of the Company has an
Audit Committee, Executive Compensation Committee, and a Nominating
Committee.
The Audit Committee meets with the Company's independent
accountants to review whether satisfactory accounting procedures
are being followed by the Company and whether internal accounting
controls are adequate, to inform itself with regard to non-audit
services performed by the independent accountants, and to review
fees charged by the independent accountants. The Audit Committee
also recommends to the Board of Directors the selection of
independent accountants. The directors designated in note (3)
above are members of the Audit Committee, which met on four
occasions.
As described in the report of the Executive Compensation
Committee, the Executive Compensation Committee establishes the
compensation for certain executive officers of the Company and
generally reviews benefits and compensation for all officers and
employees. It also administers the Company's stock option and
stock purchase plans. The directors designated in note (4) above
are members of this Committee and met [five] times.
The Nominating Committee advises the Board of Directors with
respect to the selection and nomination of individuals to serve as
directors of the Company. The directors designated in note (5) on
the previous page are members of the Nominating Committee and met
on two occasions. Nominations for director which are presented to
the Nominating Committee by stockholders are considered in light of
the needs of the Company, as well as the nominee's individual
knowledge, experience, and background.
COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS
Summary Compensation Table. The following table sets forth
certain information concerning the compensation for the last three
completed fiscal years of the chief executive officer and the four
executive officers of the Company who, in addition to the chief
executive officer, received the highest compensation during 1994.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation (1) Compensation Awards Compensation (4)
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted (#) (3)
George J. Collins 1994 $325,000 $1,250,000 -0- $22,500
President, Chief Execu- 1993 290,008 750,000 35,000
30,000
tive Officer and 1992 265,000 500,000 12,000 30,000
Managing Director
James S. Riepe 1994 275,000 1,250,000 -0- 22,500
Managing Director 1993 248,750 750,000 30,000 30,000
1992 230,000 500,000 24,000 30,000
George A. Roche 1994 275,000 1,250,000 -0- 22,500
Chief Financial Officer 1993 248,750 750,000 30,000
30,000
and Managing Director 1992230,000 500,000 24,000 30,000
M. David Testa 1994 275,000 1,250,000 300,000 26,625
Managing Director 1993 248,750 750,000 30,000 33,731
1992 230,000 500,000 24,000 33,450
Brian C. Rogers 1994 250,000 810,000 25,000 26,250
Managing Director 1993 220,833 400,000 24,000 33,312
1992 190,000 350,000 30,000 32,850
(1)No officer named above received any perquisites and other personal
benefits the aggregate amount of which exceeded the lesser of either
$50,000 or 10% of the total annual salary and bonus reported for 1994 in
the Summary Compensation Table.
(2)Bonuses are generally based upon individual, group, and corporate
performance and are allocated and paid at year end. Bonuses are
discretionary and vary significantly from year to year and among
eligible employees. In recent years, bonuses have been a significant
portion of compensation. See "Report of the Executive Compensation
Committee." Payment of the portion of the 1994 Bonus that is not
deductible for federal income tax purposes has been deferred until such
time as it will be deductible.
(3)The number of shares subject to options have been adjusted in
accordance with the terms of the options for the two-for-one stock split
effective at the close of business on November 30, 1993.
(4)Included in other compensation is a $22,500, $30,000 and $30,000
contribution for 1994, 1993 and 1992, respectively, for each of the named
individuals to the Company's tax-qualified profit sharing plan, which
provides retirement benefits based on the investment performance of each
participant's account under the plan. Also includes $4,125, $3,731 and
$3,450 in employer matching contributions under the Company's 1986
Employee Stock Purchase Plan for Mr. Testa for 1994, 1993 and 1992,
respectively, and $3,750, $3,312 and $2,850 in employer matching
contributions under the Company's 1986 Employee Stock Purchase Plan for
Mr. Rogers for 1994, 1993 and 1992, respectively.
Option Grants Table. The following table sets forth certain
information relating to options granted to purchase shares of
Common Stock of the Company. Options generally become exercisable
in the first through fifth anniversaries of the date of grant. The
Company's 1990 and 1993 Stock Incentive Plans provide that the
right to exercise options may be accelerated by the Company. Any
decision to accelerate options held by executive officers will be
made in the sole discretion of the Executive Compensation Committee
on such terms and conditions as this committee determines to be
appropriate under the circumstances.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Percent of Potential
Realizable Value at As-
Securities Total Options sumed Annual
Rates of Stock Price
Underlying Granted to Exercise or Appreciation
for Option Term (2) _
Options Employees inBase Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date
0%(3) 5% 10%
George J. Collins 0 0% N/A N/A $0 $0 $0
James S. Riepe 0 0 N/A N/A 0 0 0
George A. Roche 0 0 N/A N/A 0 0 0
M. David Testa 300,000 24.4% $32.25 11/10/04 0 $6,084,600 $15,419,400
Brian C. Rogers 25,000 2.0 32.25 11/10/04 0 507,050 1,284,950
The 5% and 10% assumed rates of stock price appreciation
used to calculate potential gains to optionees are mandated by the
rules of the Securities and Exchange Commission. To put these
hypothetical gains into perspective, the following additional
information is being provided.
Percent of Potential Realizable
Value at As-
Total Options sumed Annual
Rates of Stock Price
Granted to Exercise or Appreciation for
Option Term (2) _
OptionsEmployees inBase Price Expiration
Name Granted Fiscal Year (Per Share)(1) Date
0%(3) 5% 10%
$1,475,695,431
Potential Gain to
Named Executives as
a Percentage of Potential
All Stockholders Gain N/A N/A N/A N/A N/A 1.13% 1.13%
(1)Options were granted at
100% of fair market value on the date of grant.
(2)The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from
November 11, 1994 (the date of grant of the 1994 option awards) to
November 10, 2004 (the date of expiration of such options) of 0%, 5%, and
10%, the latter two assumed rates being required under the rules of the
Securities and Exchange Commission. Based on these assumed annual rates
of stock price appreciation of 0%, 5%, and 10%, respectively, the Company's
stock price at November 10, 2004 is projected to be $32.25, $52.532,
and $83.648, respectively. These assumptions are not intended to forecast
future appreciation of the Company's stock price. Indeed, the Company's
stock price may increase or decrease in value over the time period set
forth above. The potential realizable value computation does not take into
account federal or state income tax consequences of option exercises or
sales of appreciated stock.
(3)Optionees will not realize
value under their 1994 option grants without a stock price appreciation which
will benefit all stockholders.
(4)The number of shares subject to options granted in 1994 is not
included in the number of shares outstanding used to calculate potential
realizable value at the assumed annual rates of stock price appreciation
of 0%, 5%, and 10%, respectively.
Aggregated Option Exercises and Fiscal Year-End Option Values
Table. The following table sets forth certain information
concerning the exercise of stock options, the number of unexercised
options and the value of unexercised options at the end of 1994 for
the executive officers whose compensation is reported in the
Summary Compensation Table. Value is considered to be, in the case
of exercised options, the difference between the exercise price and
the market price on the date of exercise, and, in the case of
unexercised options, the difference between the exercise price and
market price at December 31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1994 at December 31, 1994
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) Realized Unexercisable) (1) Unexercisable) (2)
George J. Collins N/A N/A 39,800/47,200 $627,725/$360,150
James S. Riepe 4,800 $110,700 27,600/56,000 275,250/530,000
George A. Roche 8,600 153,525 19,200/56,000 166,050/530,000
M. David Testa 11,100 250,219 27,300/356,000 295,881/530,000
Brian C. Rogers 11,000 222,375 94,800/88,000 1,553,438/709,312
(1)All share and per share figures have been adjusted in accordance
with the terms of the options for the two-for-one stock split effective
at the close of business on November 30, 1993.
(2)An "In-the-Money" option is an option for which the option price
of the underlying stock is less than the market price at December 31,
1994, and all of the value shown reflects stock price appreciation
since the granting of the option.
Compensation of Directors. Directors who are also officers do
not receive directors' fees. Each independent director received a
$50,000 retainer for his 1994 services as a director and member of
the various committees on which he serves.
Executive Compensation Committee Interlocks and Insider
Participation
During 1994 Philip C. Walsh (Chairman), James E. Halbkat, Jr.,
John W. Rosenblum, and Robert L. Strickland served as members of
the Executive Compensation Committee. No director or executive
officer of the Company is a director or executive officer of any
other corporation that has a director or executive officer who is
also a director or board committee member of the Company.
Report of the Executive Compensation Committee
The Executive Compensation Committee of the Board of
Directors (the "Committee"), comprised solely of the independent
directors named below, is responsible to the Board and by
extension to the stockholders for: (i) determination of the
compensation of the chief executive officer and the other
managing directors who are also members of the Company's
management committee (collectively, the "Senior Executive
Officers") as well as the other officers of the Company who are
also directors; (ii) administration of the Company's stock
incentive plans as required by Rule 16b-3 under the Securities
Exchange Act of 1934; and (iii) review and approval of the
compensation policies and general levels of compensation for the
Company's remaining Managing Directors and other key-employees,
for whom individual compensation decisions are made by a
management-level compensation committee.
The Committee recognizes that the investment management and
securities industries are highly competitive, and that
experienced professionals have significant career mobility. Its
members believe that the ability to attract, retain and provide
appropriate incentives for the highest quality professional
personnel is essential to retain the Company's competitive
position in the mutual fund and investment management industry,
and thereby to provide for the long-term success of the Company
in the interests of its shareholders.
The Committee believes that competitive levels of cash
compensation, together with equity incentive programs that are
consistent with shareholder interests, are necessary for the
motivation and retention of the company's professional personnel.
The Company's compensation programs are keyed to achievement, as
determined by the Committee, of short- and long-term performance
goals.
During 1994, base salaries for each of the individuals named
in the table on page __ (the "Named Officers") were unchanged
from the annual levels established during 1993 (which levels, in
the case of each of the Senior Executive Officers had not
previously been changed since the Company's initial public
offering in 1986). Consistent with compensation practices
generally applied in the investment management and other
financial services industries with which the Company competes for
talent, base salaries for the Named Officers are intended to form
a relatively low percentage (substantially below 50%) of total
cash compensation. The annual discretionary cash bonus has been
the principal means of rewarding the Named Officers for
individual and group performance and, in recent years, has been
the major component of cash compensation.
At the outset of 1994, the Company's Board of Directors
established a specific earnings target relative to three year
average growth rates and a corresponding target bonus pool that
is available for the payment of bonuses to a significant number
of the Company's professional staff. During the course of the
year, the amount of the aggregate bonus pool was substantially
increased above the initial target bonus pool to reflect the fact
that the Company's performance during the year substantially
exceeded the initial earnings target.
The Executive Compensation Committee first determined the
portion of the aggregate bonus pool to be made available to the
other persons (other than the Named Officers) eligible to receive
awards from the aggregate bonus pool. The Executive Compensation
Committee then determined individual bonus awards for the Named
Officers that would be made available from the remainder of the
aggregate bonus pool. In making bonus awards to all
participants, the Company and the Committee recognized that
market and competitive forces require compensation levels for a
significant percentage of the Company's investment and other
professional staff sufficient to prevent loss of promising
personnel to direct competitors or other participants in the
investment and financial services markets.
In addition to its primary consideration of the quantitative
factors described above, the Committee gave significant
consideration to a series of specific, qualitative performance
factors that it believed reflected the Named Officers'
performance but were not capable of precise measurement. The
qualitative factors were considered for purposes of determining
both the aggregate amount of the bonus pool to be made available
as well as individual bonus awards. For 1994, the principal
qualitative factors which the Committee assessed in determining
the incentive compensation of the Senior Executive Officers
included relative investment performance, marketing
effectiveness, management of corporate assets, expense control,
and corporate infrastructure development. These qualitative
factors were not accorded specific weightings, and were applied
by the Executive Compensation Committee as appropriate to take
into account the varied individual responsibilities among the
Senior Executive Officers. The Committee determined that the
Senior Executive Officers as a team had demonstrated outstanding
long-term management performance in these areas. In the view of
the Committee, this performance could have justified a
significant further increase in the bonus pool over and above the
amount previously determined due to the strong performance on the
enumerated quantitative factors, but the Committee determined to
make no further upward adjustments. In the case of Mr. Rogers,
the principal qualitative factor weighed was the superior
investment performance of the portfolios for Mr. Rogers was
responsible.
In light of the decision to recommend for stockholder
approval a performance-based incentive plan for years beginning
in 1995, as described elsewhere in this proxy statement, the
Committee determined to defer payment of a portion of the cash
bonuses payable to each of the Named Officers that would be
non-deductible in 1994 until such time as these payments are
fully deductible or the Committee otherwise determines to effect
the payments. Assuming stockholder ratification of this
incentive plan, the deferred portion of the 1994 bonus will be
paid during 1995. Thus, no portion of the compensation payable
to the Named Executive Officers for 1994 performance is expected
to be non-deductible.
In recent years, equity incentive awards in the form of
stock option grants have been directed primarily to officers
including certain managing directors other than the Senior
Executive Officers. Individual awards have been based on
evaluation of the same individual and group performance goals
that form the basis of bonus awards. Preliminary determinations
for key employees other than Managing Directors are made by a
management-level compensation committee, which are then reviewed
and approved by the Executive Compensation Committee.
The Executive Compensation Committee has compared the
Company's compensation levels to relevant publicly available data
for the investment management, securities and other financial
service industries and found the Company's compensation levels to
be competitive. Certain of these companies are included in the
CRSP Total Return Index for NASDAQ Financial Stocks shown in the
Stock Performance Chart below. The Company believes it competes
for executive talent with a large number of investment
management, securities, and other financial services companies,
some of which are privately owned and others of which have
significantly larger market capitalizations than the Company.
The practice of the Company and the Executive Compensation
Committee is to review available compensation data from a large
universe of financial services companies. The Executive
Compensation Committee receives the assistance of an independent
compensation consulting firm in reviewing and analyzing this data
and determining executive compensation and policies. The
Committee's goal is to maintain compensation programs which are
competitive and, where performance justifies, above industry
compensation averages. The Committee determined that actual 1994
compensation packages were consistent with this goal.
In establishing the compensation of the Named Officers, the
Committee took into account the fact that the four Senior
Executive Officers constituted the Company's senior management
team during 1994 and thus had broad Company-wide management
responsibilities as well as line operating responsibilities.
Each of these individuals has been a member of the Company's
Management Committee since 1984. A larger base salary for Mr.
Collins reflected the additional responsibilities inherent in his
position as Chief Executive Officer. The levels of 1994 bonus
compensation reflected attainment by the Company of record
operating income and earnings per share, in each case
substantially in excess of initial targets, as well as the
consistently favorable performance relative to specific
qualitative performance factors discussed above. Subject to the
considerations regarding the long-term contributions of Mr. Testa
described below, the four Senior Executive Officers were viewed
as making generally equivalent contributions to 1994 performance.
In the case of Mr. Rogers, the Executive Compensation Committee
took into consideration the strong investment performance and
growth in assets under management of the Company's Equity Income
Fund, of which Mr. Rogers is the chief portfolio manager, and the
fact that this fund is one of the largest of the T. Rowe Price
mutual funds and an important contributor to Company revenues.
In 1994, the Executive Compensation Committee determined to
make a stock option award to Mr. Testa covering 300,000 shares of
common stock at the closing NASDAQ price on the date of grant
($32.25 per share). This option award was significantly greater
than option awards that had been made in the past and was made,
on the basis of past performance, to
provide Mr. Testa a strong incentive to continue to provide the
Corporation with similar contributions for the foreseeable
future. In making this award, the Executive Compensation
Committee specifically recognized the unique contribution of Mr.
Testa over a long number of years to the creation, growth, and
leadership of the Company's international investment management
business which was a major contributor to the Company's
investment management asset and revenue growth in 1994 and a very
significant contributor in prior recent years. The Committee
also considered Mr. Testa's significant contributions to
leadership in restructuring of the Company's equity management
function, which has enjoyed consistently favorable relative
investment performance recently. In order to minimize the
dilutive effect of option awards, the Executive Compensation
Committee determined to make no option awards during 1994 to the
other Senior Executive Officers.
In making this option award to Mr. Testa, the Committee's
intention, in recognizing superior past long-term performance,
was to provide an additional incentive to continue this
performance for a significant period in the future and to
reinforce the Company's policies to base compensation awards to
its executive officers largely on performance. To solidify the
link of the award to Mr. Testa to long-term future performance,
Mr. Testa's option award becomes first exercisable in three equal
annual installments commencing in November, 1997, and it expires
in November, 2004, which is longer than the vesting period
established in other stock option grants awarded by the Company
in recent years.
In determining option awards, the Executive Compensation
Committee received the advice of its independent compensation
consultants concerning option award practices of other public
companies, including companies which compete with the
Corporation for talent.
During 1994, the Executive Compensation Committee determined
to design a bonus plan for years commencing January 1, 1995 that
is intended to permit full deductibility of bonus payments to the
Named Officers. As a result, the Company's Executive Incentive
Compensation Plan, included on pages __ to __ of this proxy
statement, has been recommended to stockholders for approval at
the 1995 annual meeting.
The Executive Compensation Committee believes that 1994
compensation levels disclosed in this proxy statement are
reasonable and appropriate in light of the very strong results
relative to the Corporation's financial and qualitative
performance targets.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
John W. Rosenblum
Robert L. Strickland
STOCK PERFORMANCE CHART
As part of the proxy statement disclosure requirements mandated
by the Securities and Exchange Commission, the Company is required
to provide a five-year comparison of the cumulative total
shareholder return on its Common Stock with that of a broad equity
market index and either a published industry index or a
Company-constructed peer group index.
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock
during the five years ended December 31, 1994 with the cumulative
total return on the CRSP Total Return Index for the NASDAQ Stock
Market (US Companies), the CRSP Total Return Index for NASDAQ
Financial Stocks, and the S&P 500 Index. The comparison assumes
$100 was invested on December 31, 1989 in the Company's Common
Stock and in each of the foregoing indices and the reinvestment of
dividends.
There can be no assurance as to future trends in the cumulative
total return of the Company's Common Stock or of the following
indices. The Company does not make or endorse any predictions as
to future stock performance.
PERFORMANCE GRAPH
GRAPH PLOT POINTS
1989
1990
1991
1992
1993
1994
T. Rowe Price
Associates, Inc.
$100
$84
$161
$166
$215
$227
CRSP Total Return
Index for the
NASDAQ Stock Market
(US Companies)
(1)
100
85
136
159
181
177
CRSP Total Return
Index for NASDAQ
Financial Stocks
(1)
100
77
119
170
197
198
S&P 500 Index (2)
100
97
126
136
150
152
(1) The CRSP Total Return Index for the NASDAQ Stock Market (US
Companies) is an index comprising all domestic common shares traded on
the NASDAQ National Market and the NASDAQ Small-Cap Market. The CRSP
Total Return Index for NASDAQ Financial Stocks is an index comprising
all financial company American Depository Receipts, domestic common
shares and foreign common shares traded on the NASDAQ National Market
and the NASDAQ Small-Cap Market. This index represents SIC Codes 60
through 67. The Company will provide the names of companies included in
this index upon the written request of the stockholder. These indices
were prepared for NASDAQ by the Center for Research in Securities Prices
("CRSP") at the University of Chicago and distributed to NASDAQ-listed
companies to assist them in complying with proxy rule disclosure
requirements. The Company has not independently verified the computation
of these total return indices.
(2) Total return performance for the S&P 500 Index provided by Standard &
Poor's.
PROPOSALS TO INCREASE AUTHORIZED COMMON STOCK
AND TO CREATE A CLASS OF UNDESIGNATED PREFERRED STOCK
The Board of Directors of the Company has adopted resolutions
declaring advisable and recommending to the Company's stockholders
for their approval, two separate amendments to the Company's
charter. The first amendment provides for the increase of the
authorized shares of Common Stock from 48,000,000 shares to
100,000,000 shares. The second amendment provides for the creation
of a class of 20,000,000 shares of undesignated Preferred Stock,
which would be subject to classification and reclassification by
the Board of Directors without stockholder approval. The text of
the proposed amendments is included in the form of Articles of
Amendment attached hereto as Exhibit A.
The terms of the proposed class of Preferred Stock provides that
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption thereof (collectively, the
"Limitations and Restrictions") may be determined by the Board of
Directors of the Company prior to the issuance of such stock. As
such, the Board of Directors of the Company will in the event of
the approval of this proposal by the Company's stockholders be
entitled to authorize the creation and issuance of 20,000,000
shares of Preferred Stock in one or more series with such
Limitations and Restrictions as may be determined in the Board's
sole discretion, with no further authorization by stockholders
required for the creation and issuance thereof.
The additional shares of Common Stock and Preferred Stock could
be issued, in many cases without stockholder approval, for a
variety of corporate purposes including the raising of additional
capital to support expansion of the Company's growth, either
through internally-generated growth or through acquisitions, and
stock issuances in connection with the acquisition of other
business organizations, employee incentive plans, stock splits and
recapitalizations of the Company's capital structure. Management
of the Company is cognizant of the trends toward consolidation in
the investment management industry, and believes that there may be
enhanced prospects for growth through acquisition in the future.
Consistent with these trends, the Company from time to time reviews
various acquisition prospects and periodically engages in
discussions regarding such possible acquisitions. Currently, the
Company is not a party to any agreements or understandings
regarding any material acquisitions that would require issuance of
any shares authorized by the proposed charter amendment. In
addition, acquisitions involving stock issuances above certain
enumerated thresholds would require stockholder approval under
applicable rules of the Nasdaq Stock Market and in some
circumstances Maryland law.
The Board of Directors is required to make any determination to
issue shares of Common Stock or Preferred Stock based on its
judgment as to the best interests of the stockholders and the
Company. Although the Board of Directors has no present intention
of doing so, it could issue shares of Common Stock or Preferred
Stock that could, depending on the terms of such series, make more
difficult or discourage an attempt to obtain control of the Company
by means of merger, tender offer, proxy contest or other means.
When, in the judgment of the Board of Directors, this action will
be in the best interest of the stockholders and the Company, such
shares
could be used to create voting or other impediments or to
discourage persons seeking to gain control of the Company. Such
shares could be privately placed with purchasers favorable to the
Board of Directors in opposing such action. The Board of Directors
could also authorize holders of a series of Preferred Stock to vote
either separately as a class or with the holders of the Company's
Common Stock, on any merger, sale or exchange of assets by the
Company or any other extraordinary corporate transaction. The
issuance of new shares could also be used to dilute the stock
ownership of a person or entity seeking to obtain control of the
Company should the Board of Directors consider the action of such
entity or person not to be in the best interests of the
stockholders and the Company. In addition, the shares of Preferred
Stock could be issued in the event the Board of Directors were to
adopt a stockholder rights plan in order to protect stockholders in
the event of an unsolicited attempt to acquire the Company which
the Board of Directors does not believe to be in the best interests
of the Company's stockholders. The Company has no present plans to
issue shares of Preferred Stock or to adopt a stockholder rights
plan. Accordingly, the terms of any Preferred Stock subject to
this proposal cannot be stated or estimated with respect to any or
all of the Preferred Stock authorized.
The Board of Directors believes the increase in the authorized
Common Stock and the creation of the Preferred Stock are in the
best interests of the Company and its stockholders and has declared
the amendment advisable. Stockholders are required under
Securities and Exchange Commission Rules to consider the two
amendments separately. The Board of Directors recommends a vote
"FOR" the amendment to the Company's charter to increase from
48,000,000 to 100,000,000 shares the authorized Common Stock and
"FOR" the amendment to the Company's charter to authorize
20,000,000 shares of a new class of undesignated Preferred Stock.
The affirmative vote of a majority of the total number of shares of
Common Stock outstanding will be required for adoption of each of
the two amendments. Abstentions and broker non-votes will have the
effect of a vote against each of the amendments. The proposals are
independent such that failure to adopt one proposal will not affect
adoption of the other proposal.
Proposal to Approve Executive Incentive Compensation
Plan
On February 13, 1995, the Executive Compensation Committee
recommended to the Board of Directors adoption of the Executive
Compensation Plan (the "Incentive Plan"). The Board of Directors
adopted the Incentive Plan on February 13, 1995, subject to
stockholder approval. The following text is the Incentive Plan:
Purpose and Effects of Incentive Plan. The Incentive Plan is
intended to assure that the cash compensation of the Chief
Executive Officer ("CEO") and the other executive officers whose
compensation is required to be reported in the Company's annual
proxy statement will be fully deductible for federal income tax
purposes, notwithstanding the $1,000,000 annual limitation on
certain types of compensation imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended. The Incentive Plan ties
directly the incentive compensation payable to the chief executive
officer and certain other executive officers to attainment of
specific financial performance targets. Thus, incentive
compensation payments will be further aligned with the interests of
all stockholders.
Participation. The Participants in the Incentive Plan shall
be the CEO, the members of the Company's Management Committee, and
certain other executive officers of the Company designated at the
outset of the fiscal year by the Executive Compensation Committee
of the Board of Directors (the "Committee"), which Committee is
comprised solely of independent directors. At February 13, 1995,
the Company had 18 managing directors, seven (7) of whom have been
designated by the Executive Compensation Committee to be
Participants. Amounts payable from the Incentive Pool (computed in
accordance with the following paragraph) established under the
Incentive Plan are in addition to, and not in substitution for,
base salaries, which are reviewed by the Committee annually at
approximately mid-year. Unless otherwise determined by the
Executive Compensation Committee in its sole discretion (which may
be made on a case-by-case basis), the CEO and each member of the
Management Committee is eligible to receive annual bonuses from the
Incentive Pool only. Other Participants will be eligible for other
incentive compensation based upon the operating performance and
enumerated qualitative factors, as evaluated by the Executive
Compensation Committee with the input of management, of the
business unit for which such Participant is responsible, in
addition to amounts payable from the Incentive Pool.
Establishment of Incentive Pool under the Incentive Plan. The
Incentive Plan establishes a maximum Incentive Pool payable to the
Participants under the Incentive Plan in the aggregate for any
fiscal year of the Company. The Incentive Pool is determined under
the formula described below which relates incentives to the
Company's annual Income before Income Taxes and Minority Interests
for that year ("Adjusted Earnings"), subject to a requirement that
a threshold ratio of net income to average stockholders' equity for
the fiscal year ( the "Threshold ROE") is attained. The Incentive
Pool, subject to reduction if required by the next paragraph, will
be computed on a cumulative basis as follows: (1) for Adjusted
Earnings up to $25 million, 5% of Adjusted Earnings will be
available under the Incentive Pool, establishing a maximum
Incentive Pool of $1,250,000; (2) for Adjusted Earnings above $25
million to $50 million, an additional 7% of
Adjusted Earnings will be available under the Incentive Pool,
establishing a maximum cumulative Incentive Pool of $3,000,000; and
(3) for Adjusted Earnings above $50 million, an additional 8% of
Adjusted Earnings will be available under the Incentive Pool,
establishing a maximum cumulative Incentive Pool of $3,000,000 plus
8% of Adjusted Earnings over $50 million.
The ROE is defined under the Incentive Plan as the ratio of
annual net income (excluding the effect of extraordinary items for
purposes of generally accepted accounting principles) to average
stockholders' equity for the year. The Threshold ROE that must be
attained to permit the maximum cumulative Incentive Pool to be
fully payable under the Incentive Plan is 20%. If the Company's
ROE for the fiscal year is less than 20% but at least 10%, for each
full percentage point shortfall the maximum cumulative Incentive
Pool is reduced by five percentage points. Thus, if the ROE is
15%, three-quarters (75%) of the maximum cumulative Incentive Pool
shall be payable, and if the ROE is 10%, one-half (50%) of the
maximum cumulative Incentive Pool shall be payable. If the
Company's ROE falls below 10% for any fiscal year, there shall be
no Incentive Pool and no bonus payment will be made from the
Incentive Pool for that fiscal year.
Payments under the Incentive Plan. The maximum share of the
Incentive Pool payable to any Participant is limited to 40%. The
actual amount paid from the Incentive Pool for any fiscal year may
be less but not greater than the maximum amount available for
payment from the Incentive Pool, based on the formula for that
year, and the Executive Compensation Committee shall have sole and
exclusive discretion to reduce the share or amount payable to any
Participant from the Incentive Pool.
Prior to the payment of any amounts from the Incentive Pool
for any fiscal year, the Executive Compensation Committee shall
certify (to the extent required by, and as defined in, any
applicable IRS Regulations) in writing that the Threshold ROE and
Adjusted Earnings goals and any other material terms used to
determine amounts payable from the Incentive Pool were in fact
satisfied. For this purpose, approved minutes of the Executive
Compensation Committee shall be treated as a written certification
and no other separate written certification shall be required. All
amounts payable from the Incentive Pool shall be paid in cash as
soon as practicable after such certification.
The Incentive Plan permits the Executive Compensation
Committee to make a determination that the Threshold ROE and
Adjusted Earnings have been attained so as to permit payment of
awards under the Incentive Plan, in whole or in part, prior to the
conclusion of the year. For these purposes, the Executive
Compensation Committee is permitted to rely on the Company's most
recently available internal interim financial statements
(containing such adjustments and accruals as are required under
generally accepted accounting principles), which may be adjusted,
if and to the extent permitted by the IRS Regulations, to take into
account the Company's projected results of operations for the
remainder of the year based on available data concerning assets
under management in mutual fund and investment advisory accounts
and other appropriate adjustments.
The actual amounts that will be paid to Participants from the
Incentive Pool for 1995 and future years are not currently
determinable, as such amounts will depend on the Company's results
of operations and return on average equity and the Executive
Compensation Committee's determination of the share or amount of
the maximum cumulative Incentive Pool to be paid to each
Participant. Similarly, since the Incentive Plan was not in effect
for 1994 or prior years, it is not possible to determine the
amounts under the Incentive Plan which would have been received by
the Participants from a hypothetical Incentive Pool for 1994 or
prior years, except that for 1994 the maximum amount payable to any
single Participant would have been approximately $3.5 million and
the amount payable to each Participant, assuming equal incentive
awards utilizing the entire Incentive Pool, to five participants,
would have been approximately $1.7 million. The bonus awards for
1994 performance and prior years since the Company's initial public
offering have been considerably less than the amounts payable had
the Incentive Plan been in place for those years.
Amendments or Termination. The Incentive Plan may be amended
or terminated at any time at the sole discretion of the Board of
Directors. No amendment of the Incentive Plan may increase the
amount available under the Incentive Pool or increase the
allocation of benefits between Participants from the Incentive Pool
without the requirement of a vote of the stockholders. The
Incentive Plan will automatically terminate in the event of the
repeal of Section 162(m) or other change in the law that would
eliminate the requirement for a written, performance-based plan to
provide full deductibility of incentive payments for federal income
tax purposes.
The Board of Directors recommends a vote "FOR" approval of the
Incentive Plan. The affirmative vote of a majority of the votes
cast at the meeting will be required to approve the Incentive Plan.
Accordingly, abstentions and broker non-votes will not be
considered to be votes cast and will have no effect on the outcome
of the matter.
Proposed 1995 Director Stock Option Plan
The Company's 1995 Director Stock Option Plan (the "Director
Plan") was approved by the Board of Directors on February 13, 1995,
subject to stockholder approval. A copy of the Director Plan is
attached hereto as Exhibit B, and the following summary description
is qualified by reference to the Director Plan. The purpose of the
Director Plan is to provide Non-Employee Directors with an equity
interest in the Company in order to attract and retain
well-qualified individuals to serve as Non-Employee Directors and
to further align the interests of Non-Employee Directors of the
Company with those of the stockholders of the Company.
Number of Shares
The Director Plan provides that 70,000 shares of the Company's
Common Stock, which number is subject to adjustment to reflect
certain subsequent stock changes such as stock dividends, stock
splits, and share exchanges, will be available for the granting of
stock options at the times contemplated by the Director Plan to
Non-Employee Directors of the Company. If an option expires before
its exercise, the shares may again be subject to options.
Administration; Eligibility
The Director Plan shall be administered by the Board of
Directors of the Company; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
under the Director Plan. Only persons who are not employees of the
Company or any of its affiliates or subsidiaries ("Non-Employee
Directors") are eligible to participate in the Director Plan.
Stock Options
The stock options to be granted under the Director Plan are
not qualified under any section of the Internal Revenue Code of
1986, as amended (the "Code") ("non-qualified options") and will be
granted at 100% of the fair market value of the underlying Common
Stock on the date of grant.
As to Directors in office as of April 6, 1995, the Director
Plan provides for the grant of an option to purchase 4,000 shares
of Common Stock at the close of business on April 6, 1995 and an
option to purchase 2,000 shares of Common Stock at the close of
business on the last Thursday of the month during each succeeding
year in which the annual meeting of stockholders is held, subject
to a maximum award of options to purchase 10,000 shares of Common
Stock. All current directors have been in office for at least
three years.
As to subsequently elected Directors, the Director Plan
provides for the grant of an option to purchase 2,000 shares of
Common Stock as of the close of business on the date of the first
regular meeting of directors held on or after the Director's
initial election, and an option to
purchase 2,000 shares of Common Stock at the close of business on
the last Thursday of the month during each succeeding year in which
the annual meeting of stockholders is held, subject to a maximum
award of options to purchase 10,000 shares of Common Stock.
Each option granted under the Plan shall become exercisable in
full one year after the initial grant, but shall not be exercisable
as to any shares prior thereto. Upon exercise, the option price is
to be paid in full in cash, in shares of the Company's Common Stock
previously owned by the option holder or acquired upon option
exercises having a market value on the date of exercise equal to
the aggregate option price, or in a combination hereof. No stock
option may be exercised after the earlier to occur of: (i) the
expiration of 10 years after the date such option was granted; and
(ii) five years after a Non-Employee Director ceases to be a
Director for any reason, during which period any installments of
options which first become exercisable may thereafter be exercised.
In the case of death, the option may be exercised by a deceased
Director's estate or heirs for such five year period.
Amendments; Term of Plan
This Director Plan may be amended, suspended, terminated or
reinstated, in whole or in part, at any time by the Board of
Directors; provided, however, that any provisions of this Director
Plan regarding the amount and price of options to be awarded to
Non-Employee Directors and the timing of awards, or that may be
deemed to set forth a formula that determines the amount, price,
and timing of awards, may not be amended more than once every six
months, other than to comport with any changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the
rules under such statutes; and, provided further, however, that no
such amendment shall become effective without the approval of the
stockholders of the Company to the extent stockholder approval is
required in order to comply with Rule 16b-3 of the Securities
Exchange Act of 1934. No option may be granted under the Plan
after April 30, 2002.
Federal Income Tax Consequences
The following is a general summary of the current Federal
income tax treatment of the non-qualified stock options, to be
granted under the Director Plan based upon the current provisions
of the Code and regulations promulgated thereunder. No tax
consequences result from the grant of the option. An option holder
who exercises a non-qualified stock option with cash will generally
realize compensation taxable as ordinary income in an amount equal
to the difference between the option price and the fair market
value of the shares on the date of exercise, and the Company will
be entitled to a deduction from income in the sale amount. The
option holder's basis in such shares will be the fair market value
on the date exercised, and when he disposes of the shares he will
recognize capital gain or loss, either long-term or short-term,
depending on the holding period of the shares.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" the Director
Plan. Approval requires a majority of the votes cast at the
meeting. Accordingly, abstentions and broker non-votes will not be
considered to be votes cast and will have no effect on the outcome
of the matter.
CERTAIN OWNERSHIP OF THE COMPANY'S COMMON
STOCK
A Schedule 13G dated , 1995, states that
Ariel Capital Management, Inc. ("Ariel"), an investment advisor
registered under the Investment Advisers Act of 1940, beneficially
owns 1,640,340 shares of the Company's Common Stock, or
approximately 5.74% of the shares outstanding on that date. The
Schedule states that these shares are owned by various investment
advisory clients of Ariel and were acquired in the ordinary course
of business and not for the purpose of changing or influencing
control of the Company. The address of Ariel is 307 North Michigan
Avenue, Chicago, Illinois 60601.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Mr. Peter Van Dyke, a Managing Director of the Company, acquired
indirect beneficial ownership of 4,000 of Common Stock on February
4, 1994, as a result of his appointment as Co-Trustee of the
Beatrice Sommer Van Dyke Revocable Trust. This event was reported
on a Form 3 on October 11, 1994.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of its
Audit Committee, has selected Price Waterhouse, independent
accountants, to examine the financial statements of the Company for
the year 1995. This firm has served as independent accountants of
the Company since 1985. A partner of the firm will be present at
the annual meeting and available to respond to appropriate
questions, and will have an opportunity to make a statement if he
desires to do so.
In 1994 Price Waterhouse performed various professional services
for the Company, including completion of the examination of
financial statements of the Company for 1993, preliminary work on
the examination for 1994, and preparation of corporate tax returns.
Price Waterhouse also examines the financial statements of
approximately 46% of the Price Funds as well as other sponsored
investment products.
The Audit Committee of the Board of Directors of the Company
approved the audit services provided by Price Waterhouse and the
related fees and took into consideration the non-audit services
provided by Price Waterhouse. The Committee considered the
possible effect of these
non-audit services on the independence of Price Waterhouse and
concluded there was no material effect upon their independence.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters
to be presented for action at the meeting other than those
mentioned above. However, if any other matters properly come
before the meeting, it is intended that the persons named in the
accompanying proxy will vote on such other matters in accordance
with their judgment of the best interests of the Company.
Exhibit A
T. ROWE PRICE ASSOCIATES, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Associates, Inc., a Maryland corporation, having
its principal office in Baltimore City, Maryland (which is
hereinafter called the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Article SIXTH of the charter of the Corporation is
hereby amended to read as follows:
SIXTH: (a) The total number of shares of stock of all classes
which the Corporation has authority to issue is 120,000,000 shares
of capital stock (par value $.20 per share), amounting in aggregate
par value to $24,000,000, of which 100,000,000 shares (par value
$.20 per share), amounting in aggregate par value to $20,000,000
are classified as "Common Stock" and 20,000,000 shares (par value
$.20 per share) amounting in aggregate par value to $4,000,000 are
classified as "Preferred Stock."
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of the Common Stock and the Preferred
Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to
classification or reclassification by the Board of Directors,
and shall have the rights and terms hereinafter specified,
subject to the terms of any other stock provided in the
charter pursuant to classification or reclassification by the
Board of Directors or otherwise in accordance with law.
(2) Subject to the provisions of Article EIGHTH Section
(3) of the charter of the Corporation, each share of Common
Stock shall have one vote, and, except as otherwise provided
in respect of any Preferred Stock, the exclusive voting power
for all purposes shall be vested in the holders of the Common
Stock.
(3) Subject to the provisions of law and any preferences
of any Preferred Stock, dividends, including dividends
payable in shares of another class of the Corporation's
stock, may be paid on the Common Stock of the Corporation at
such time and in such amounts as the Board of Directors may
deem advisable.
(4) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or
involuntary, the holders of the Common Stock shall be
entitled,
after payment or provision for payment of the debts and other
liabilities of the Corporation and the amount to which the
holders of any Preferred Stock shall be entitled, to share
ratably in the remaining net assets of the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to
classify and reclassify any unissued shares of Preferred
Stock by fixing or altering in any one or more respects from
time to time before issuance the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of
redemption of such shares of stock; provided, that the Board
of Directors shall not classify or reclassify any of such
shares into shares of the Common Stock, or into any class or
series of stock (i) which is not prior to the Common Stock
either as to dividends or upon liquidation and (ii) which is
not limited in some respect either as to dividends or upon
liquidation. Subject to the foregoing, the power of the
Board of Directors to classify and reclassify any of the
shares of Preferred Stock shall include, without limitation,
subject to the provisions of the charter, authority to
classify or reclassify any unissued shares of such stock into
a class or classes of preferred stock, preference stock,
special stock or other stock, and to divide and classic
shares of any class into one or more series of such class, by
determining, fixing, or altering one or more of the
following:
(a) The distinctive designation of such class or
series and the number of shares to constitute such
class or series; provided that, unless otherwise
prohibited by the terms of such or any other class or
series, the number of shares of any class or series may
be decreased by the Board of Directors in connection
with any classification or reclassification of unissued
shares and the number of shares of such class or series
may be increased by the Board of Directors in
connection with any such classification or
reclassification, and any shares of any class or series
which have been redeemed, purchased, otherwise acquired
or converted into shares of Common Stock or any other
class or series shall become part of the authorized
capital stock and be subject to classification and
reclassification as provided in this Section.
(b) Whether or not and, if so, the rates, amounts
and times at which, and the conditions under which,
dividends shall be payable on shares of such class or
series, whether any such dividends shall rank senior or
junior to or on a parity with the dividends payable on
any other class or series of Preferred Stock, and the
status of any such dividends as cumulative, cumulative
to a limited extent or non-cumulative and as
participating or non-participating.
(c) Whether or not shares of such class or series
shall have voting rights, in addition to any voting
rights provided by law and, if so, the terms of such
voting rights.
(d) Whether or not shares of such class or series
shall have conversion or exchange privileges and, if
so, the terms and conditions thereof, including
provision for adjustment of the conversion or exchange
rate in such events or at such times as the Board of
Directors shall determine.
(e) Whether or not shares of such class or series
shall be subject to redemption and, if so, the terms
and conditions of such redemption, including the date
or dates upon or after which they shall be redeemable
and the amount per share payable in case of redemption,
which amount may vary under different conditions and at
different redemption dates; and whether or not there
shall be any sinking fund or purchase account in
respect thereof, and if so, the terms thereof.
(f) The rights of the holders of shares of such
class or series upon the liquidation, dissolution or
winding up of the affairs of, or upon any distribution
of the assets of, the Corporation, which rights may
vary depending upon whether such liquidation,
dissolution or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and
whether such rights shall rank senior or junior to or
on a parity with such rights of any other class or
series of stock.
(g) Whether or not there shall be any limitations
applicable, while shares of such class or series are
outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of
moneys for purchase or redemption of, any stock of the
Corporation, or upon any other action of the
Corporation, including action under this Section, and,
if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions,
including restrictions on transferability, and
qualifications of shares of such class or series, not
inconsistent with law and the charter of the
Corporation.
(6) For the purposes hereof and of any articles
supplementary to the charter providing for the classification
or reclassification of any shares of Preferred Stock or of
any other charter document of the Corporation (unless
otherwise provided in any such articles or document), any
class or series of stock of the Corporation shall be deemed
to rank:
(a) prior to another class or series either as to
dividends or upon liquidation, if the holders of such
class or series shall be entitled to the receipt of
dividends or of amounts distributable on liquidation,
dissolution or winding up, as the case may be, in
preference or priority to holders of such other class
or series;
(b) on a parity with another class or series
either as to dividends or upon liquidation, whether or
not the dividend rates, dividend payment dates or
redemption or liquidation price per share thereof be
different from those of such others, if the holders of
such class or series of stock shall be entitled to
receipt of dividends or amounts distributable upon
liquidation, dissolution or winding up, as the case may
be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or
priority over the holders of such other class or
series; and
(c) junior to another class or series either as to
dividends or upon liquidation, if the rights of the
holders of such class or series shall be subject or
subordinate to the rights of the holders of such other
class or series in respect of the receipt of dividends
or the amounts distributable upon liquidation,
dissolution or winding up, as the case may be.
SECOND: (a) As of immediately before the amendment the total
number of shares of stock of all classes which the Corporation has
authority to issue is 48,000,000 shares, of which no shares are
Preferred Stock (par value $.20 per share) and 48,000,000 shares
are Common Stock (par value $.20 per share).
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is 120,000,000
shares, of which 20,000,000 shares are Preferred Stock (par value
$.20 per share) and 100,000,000 shares are Common Stock (par value
$.20 per share).
(c) The aggregate par value of all shares having a par value is
$9,600,000 before the amendment and $24,000,000 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the description, as amended, of each class, including
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption is set forth above in Article
FIRST.
EXHIBIT B
T. ROWE PRICE ASSOCIATES, INC.
PROPOSED 1995 DIRECTOR STOCK OPTION PLAN
1. PURPOSES OF THE DIRECTOR PLAN:
T. Rowe Price Associates, Inc. (the "Company") has adopted the
1995 Director Stock Option Plan for Non-Employee Directors (the
"Director Plan") to provide for the issuance of options to purchase
shares of the Company's Common Stock, par value $.20 per share (the
"Stock") as a means of long-term compensation for members of the
Board of Directors of the Company in order to provide Non-Employee
Directors with an equity interest in the Company in order to
attract and retain well-qualified individuals to serve as
Non-Employee Directors and to further align the interests of
Non-Employee Directors of the Company with those of the
Stockholders of the Company. For purposes of this Plan,
Non-Employee Directors are persons who are not employees of the
Company or any of its affiliates or subsidiaries.
2. ADMINISTRATION:
The Director Plan shall be administered by the Board of
Directors of the Company; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
hereunder.
3. STOCK SUBJECT TO OPTION:
The Company will reserve 70,000 authorized but unissued shares
of Stock for issuance and delivery under the Director Plan, subject
to adjustment as provided in paragraph 6 hereof. If any
unexercised option terminates for any reason, the shares of the
Stock covered thereby shall become available for grant again.
4. ELIGIBILITY:
The individuals who shall be eligible to participate in the
Director Plan shall be all Non-Employee Directors of the Company.
5. TERMS AND CONDITIONS OF OPTIONS:
Options under the Director Plan are intended to be
non-statutory stock options not qualifying under any section of the
Internal Revenue Code of 1986, as amended (the "Code"). All stock
options granted under the Director Plan shall be subject to the
following provisions:
(a) Option Price. The exercise price per share
with respect to each option shall be 100% of the fair
market value of the Stock on the date the option is
granted. For purposes hereof, fair market value shall be
the last reported sale price
in the NASDAQ National Market (or any other recognized
securities market on which the stock is traded if not
then traded on the NASDAQ National Market) on the date of
grant, or the next succeeding business day on which the
NASDAQ National Market (or such other market) is open for
business and reports an actual transaction in the
Company's common stock. If the Stock is not then traded
on any recognized market, fair market value shall be as
determined by the Board of Directors in accordance with
applicable federal income tax and securities
regulations.
(b) Option Grants.
(i) Each Director in office on April 6, 1995 shall
be granted an option to purchase 4,000 shares of Common
Stock at the close of business on April 6, 1995 and an
option to purchase 2,000 shares of Common Stock at the
close of business on the last Thursday of the month
during each succeeding year in which the annual meeting
of stockholders is held, subject to a maximum award of
options to purchase 10,000 shares of Common Stock.
(ii) Each Director initially elected as a director
after April 6, 1995 shall be granted an option to
purchase 2,000 shares of Common Stock as of the close of
business on the date of the first regular meeting of
directors held on or after the date the participant's
initial election as a director and an option to purchase
2,000 shares of Common Stock at the close of business on
the last Thursday of the month during each succeeding
year in which the annual meeting of stockholders is held,
subject to a maximum award of options to purchase 10,000
shares of Common Stock.
(c) Exercise of Options.
(i) Except as provided in paragraph (ii) below,
full payment for shares acquired shall be made in cash or
by certified check at or prior to the time that an
option, or any part thereof, is exercised. The
participant will have no rights as a stockholder until
the certificate for those shares as to which the option
has been exercised is issued by the Company. Each option
granted under this Plan shall become exercisable in full
one year after the initial grant, but shall not be
exercisable as to any shares prior thereto.
(ii) Shares of the Company's Common Stock with a
value equal to the exercise price or a combination of
cash and Stock with a value equal to the exercise price
may be used as payment for shares acquired.
(d) Term of Option. No stock option may be
exercised after the earlier to occur of: (i) the
expiration of 10 years after the date such option was
granted; or (ii) five years after the Non-Employee
Director ceases to be a Director for any
reason, during which period any installments which first
become exercisable may thereafter be exercised.
(e) Options Nonassignable and Nontransferable.
Each option and all rights thereunder shall not be
assignable or transferable during the Director's life,
but may be transferred by will or pursuant to the laws of
descent and distribution to the extent permitted under
applicable federal securities and tax laws.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:
If the shares of the Stock outstanding are increased,
decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Company, without receipt of
consideration by the Company, through reorganization, merger,
recapitalization, reclassification, stock split-up, stock dividend,
stock consolidation, or otherwise, an appropriate and proportionate
adjustment shall be made in the number or kind of shares as to
which options have been or may be granted. Any such adjustment in
an outstanding option shall be made without change in the aggregate
purchase price to be paid upon the exercise thereof. Adjustments
under this paragraph shall be made by the Board of Directors, whose
determination as to what adjustments shall be made, and the extent
thereof, shall be final and conclusive. No fractional shares of
Stock shall be issued under the Director Plan on account of any
such adjustment.
In the event of a reorganization, merger, consolidation, sale
of substantially all of the assets, or any other form of corporate
reorganization in which the Company is not the surviving entity or
a statutory share exchange in which the Company is not the issuer,
all options then outstanding under the Director Plan will terminate
as of the effective date of the transaction. The surviving entity
in its absolute and uncontrolled discretion may tender an option or
options to purchase shares on its terms and conditions, both as to
the number of shares or otherwise, as shall substantially preserve
the rights and benefits of any option then outstanding under the
Director Plan.
7. EFFECTIVE DATE OF THE DIRECTOR PLAN:
The Director Plan shall become effective upon its adoption by
the Board of Directors and subsequent approval by a majority of the
votes cast in person or by proxy at a meeting of the stockholders
of the Company held within 12 months of the action of the Board of
Directors described above.
8. TERMINATION DATE:
No options may be granted under the Director Plan after April
30, 2002. Subject to paragraph 5(d), options granted before April
30, 2002 under the Director Plan may be exercised after that date
in accordance with their terms.
9. AMENDMENT:
This Director Plan may be amended, suspended, terminated
or restated, in whole or in part, at any time by the Board of
Directors; provided, however, that any provisions of this Plan
regarding the amount and price of options to be awarded to
Non-Employee Directors and the timing of awards, or that may be
deemed to set forth a formula that determines the amount, price,
and timing of awards may not be amended more than once every six
months, other than to comport with any changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the
rules under such statutes; and, provided further, however, that no
such amendment shall become effective without the approval of the
stockholders of the Company to the extent stockholder approval is
required in order to comply with Rule 16b-3 of the Securities
Exchange Act of 1934.
10. COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the
Director Plan shall be subject to any and all requirements and
restrictions that may, in the opinion of the Board, be necessary or
advisable for the purposes of complying with any statute, rule or
regulation of any governmental authority, or any agreement, policy
or rule of any stock exchange or other regulatory organization
governing any market on which the Stock is traded.
11. MISCELLANEOUS:
(1) Expenses. The Company shall bear all expenses and costs
in connection with the administration of the Director Plan.
(2) Applicable Law. The validity, interpretation and
administration of this Plan and any rules, regulations,
determinations or decisions made hereunder, and the rights of any
and all persons having or claiming to have any interest herein or
hereunder, shall be determined exclusively in accordance with the
laws of the State of Maryland, without regard to the choice of laws
provisions thereof.
(3) Headings. The headings herein are for reference purposes
only and shall not affect the meaning or interpretation of the
Director Plan.
(4) Notices. All notices or other communications made or
given pursuant to this Director Plan shall be in writing and shall
be sufficiently made or given if hand-delivered or mailed by
certified mail, addressed to any Non-Employee Director at the
address contained in the records of the Company or to the Company
at its principal office.
(5) Federal Securities Law Requirement. Awards granted
hereunder shall be subject to all conditions required under Rule
16b-3 to qualify the award for any exception from the provisions of
Section 16(b) of the Securities Exchange Act of 1934 available
under that Rule.
PRELIMINARY COPY -- FOR THE INFORMATION OF
THE
SECURITIES AND EXCHANGE COMMISSION ONLY
T. ROWE PRICE ASSOCIATES, INC.
Revocable Proxy Solicited on Behalf of the Board
of Directors
THE UNDERSIGNED STOCKHOLDER of T. Rowe Price Associates, Inc.
hereby appoints George J. Collins and George A. Roche the lawful
attorneys and proxies of the undersigned with full power of
substitution to vote, as designated below, all shares of Common Stock
of the Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on Thursday, April 6, 1995,
at 10:00 a.m., at 100 East Pratt Street, Baltimore, Maryland 21202,
and at any and all adjournments thereof with respect to the matters
set forth below and described in the Notice of Annual Meeting and
Proxy Statement dated March 2, 1994, receipt of which is hereby
acknowledged.
This Proxy, when properly completed and returned, will be voted in
the manner directed herein by the undersigned stockholder. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ITEMS LISTED ON
THE REVERSE SIDE.
(Continued and to be dated and signed
on the reverse side.)
P.O. BOX 11358
NEW YORK, NY 10203-0358
(1) ELECTION OF DIRECTORS FOR
WITHHELD
EXCEPTIONS*
Nominees: Thomas H. Broadus, Jr., George J. Collins, James E.
Halbkat, Jr., Carter O. Hoffman, Henry H. Hopkins, James S. Riepe,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M. David
Testa and Philip C. Walsh.
*Exceptions:
(INSTRUCTIONS: To withhold authority for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the
space provided.)
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO
INCREASE THE AUTHORIZED COMMON STOCK.
FOR AGAINST
ABSTAIN
(3) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO
AUTHORIZE A CLASS OF UNDESIGNATED PREFERRED STOCK.
FOR AGAINST
ABSTAIN
(4) TO APPROVE A PERFORMANCE-LINKED EXECUTIVE INCENTIVE
COMPENSATION PLAN.
FOR AGAINST
ABSTAIN
(5) TO APPROVE THE 1995 DIRECTOR STOCK OPTION PLAN
FOR AGAINST
ABSTAIN
(6) IN THEIR DISCRETION, the proxies are authorized to vote
upon such other business as may properly come before the
meeting or at any adjournment thereof.
Change of Address and/or Comments Mark Here
Please date and sign exactly as your name
appears to the left. All joint owners should
sign. When signing as a fiduciary,
representative or corporate office, give full
title as such. If you receive more than one
proxy card, please sign and return all cards
received.
Dated:
(Signature)
~BALT01A:42530:1:|02/17/95
4807-400024
(Signature if held
jointly)
Votes must be indicated (x) in black or
blue ink.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
[form of text of notice to accompany computer-generated proxy card
-- driving directions will also be included on the reverse of the
form, but are not filed herewith]
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON THURSDAY, APRIL 6, 1995
Dear Stockholder:
The Annual Meeting of Stockholders of T. Rowe Price Associates,
Inc. will be held at 10 a.m. on Thursday, April 6, 1995 at 100 East
Pratt Street, 12th Floor, Baltimore, Maryland, for the following
purposes:
(1) To elect eleven directors
(2) To approve an amendment to the charter to increase the
authorized Common
Stock
(3) To approve an amendment to the charter to authorize a
class of undesignated preferred stock
(4) To approve a performance-linked Executive Incentive
Compensation Plan
(5) to approve the 1995 Director Stock Option Plan
Only record holders of Common Stock of T. Rowe Price Associates,
Inc. as of the close of business on February 6, 1995 will be
entitled to vote at the meeting or any adjournment thereof.
To make sure your vote is counted, we urge you to complete and sign
the proxy/voting instruction card below, detach it from this
letter, and return it in the enclosed postage-paid envelope. The
prompt return of your signed proxy will help reduce proxy
solicitation expenses; it does not, however, affect your right to
attend the meeting and vote in person. Directions to the meeting
site are provided on the reverse side of this letter.
BY ORDER OF THE BOARD OF DIRECTORS
March ___, 1995 ALVIN M. YOUNGER, JR.
Managing Director, Treasurer and
Secretary