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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Tremont Advisers, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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TREMONT ADVISERS, INC.
--------------------------
NOTICE OF 2001 ANNUAL MEETING
AND
PROXY STATEMENT
TUESDAY, JUNE 12, 2001
AT 2:00 P.M.
AT THE OFFICES OF
TREMONT ADVISERS, INC.
CORPORATE CENTER AT RYE
555 THEODORE FREMD AVENUE
SUITE C-206
RYE, NEW YORK 10580
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TREMONT ADVISERS, INC.
CORPORATE CENTER AT RYE
555 THEODORE FREMD AVENUE - SUITE C-206
RYE, NEW YORK 10580
May 4, 2001
Dear Shareholder:
On behalf of the Board of Directors and management, I
cordially invite you to attend the 2001 Annual Meeting of Shareholders to be
held on Tuesday, June 12, 2001 at 2:00 p.m. Eastern Daylight Time, at the
offices of Tremont Advisers, Inc. (the "Company") at Corporate Center at Rye,
555 Theodore Fremd Avenue, Suite C-206, Rye, New York 10580.
The notice of meeting and proxy statement accompanying this
letter describe the specific business to be acted upon.
In addition to the specific matters to be acted upon, there
will be a report on the progress of the Company and an opportunity for questions
of general interest to the shareholders.
It is important that your shares be represented at the
meeting. Whether or not you plan to attend in person, you are requested to vote,
sign, date and promptly return the enclosed proxy in the self-addressed envelope
provided.
Sincerely,
Sandra L. Manzke
Chairman of the Board
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TREMONT ADVISERS, INC.
CORPORATE CENTER AT RYE
555 THEODORE FREMD AVENUE - SUITE C-206
RYE, NEW YORK 10580
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Tremont Advisers, Inc.:
Notice is hereby given that the 2001 Annual Meeting of
Shareholders of Tremont Advisers, Inc. (the "Company") will be held at the
offices of the Company, located at Corporate Center at Rye, 555 Theodore Fremd
Avenue, Suite C-206, Rye, New York 10580 on Tuesday, June 12, 2001 at 2:00 p.m.
Eastern Daylight Time for the following purposes:
1. To elect eight (8) Directors, the names of whom are set forth
in the accompanying proxy statement, to serve until the 2002
Annual Meeting of Shareholders.
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Class B Common Stock, $0.01 par value per share, from
10,000,000 shares to 20,000,000 shares.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for 2001.
4. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on May 1,
2001 are the only shareholders entitled to notice of and to vote at the 2001
Annual Meeting of Shareholders and any adjournments thereof.
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE VOTE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE SELF-ADDRESSED ENVELOPE PROVIDED
AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN
PERSON, EVEN THOUGH YOU HAVE PREVIOUSLY SIGNED AND RETURNED YOUR PROXY.
By order of the Board of Directors
Suzanne S. Hammond
Secretary and Treasurer
May 4, 2001
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TREMONT ADVISERS, INC.
CORPORATE CENTER AT RYE
555 THEODORE FREMD AVENUE - SUITE C-206
RYE, NEW YORK 10580
May 4, 2001
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Tremont Advisers, Inc., a Delaware
corporation (the "Company") to be used at the 2001 Annual Meeting of
Shareholders (the "2001 Annual Meeting") to be held at the Company's offices
located at Corporate Center at Rye, 555 Theodore Fremd Avenue, Suite C-206, Rye,
New York 10580 on Tuesday, June 12, 2001 at 2:00 p.m. Eastern Daylight Time, and
all adjournments thereof.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by mail, but
certain officers and regular employees of the Company or its subsidiaries,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company's 2000 Annual Report, including
financial statements, the Proxy Statement and form of proxy/voting instruction
card (the "proxy card" or "proxy") are being mailed to the Company's
shareholders of record at the close of business on May 1, 2001. These
documents shall be mailed on or about May 4, 2001.
A shareholder signing and returning a proxy on the enclosed form has
the power to revoke it at any time before the shares subject to such proxy are
voted by notifying the Secretary of the Company in writing. If a shareholder
specifies how the proxy is to be voted with respect to any of the proposals for
which a choice is provided, the proxy will be voted in accordance with such
instructions. If a shareholder fails to so specify with respect to such
proposals, the proxy will be voted FOR Proposals No. 1, No. 2 and No. 3.
OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on May 1, 2001
are entitled to vote at the 2001 Annual Meeting. On that day, there were
1,734,386 shares of Class A Common Stock outstanding (each share being entitled
to four (4) votes or, in the aggregate, 6,937,544 votes) and 5,127,990 shares of
Class B Common Stock outstanding (each share being entitled to one (1) vote or,
in the aggregate, 5,127,990 votes). Thus, a total of 12,065,534 votes may be
cast.
If a quorum is present, in person or by proxy, all elections for
Directors shall be decided by plurality of the votes cast in respect thereof. If
no voting direction is indicated on the proxy cards, the shares will be
considered votes for the nominees. In accordance with Delaware law, shareholders
entitled to vote for the election of Directors can withhold authority to vote
for all nominees for Directors or can withhold authority to vote for certain
nominees for Directors.
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Abstentions may be specified on all proposals submitted to a
shareholder vote other than the election of Directors. Abstentions will be
counted as present for purposes of determining the existence of a quorum
regarding the proposal on which the abstention is noted. Abstentions on the
Company's proposal to increase the number of authorized shares of Class B Common
Stock or to ratify the appointment of the independent auditors will not have any
effect for or against such proposal.
Brokers holding shares of the Company's Class A Common Stock and/or
Class B Common Stock (collectively, the "Common Stock") in street name who do
not receive instructions are entitled to vote on the election of Directors, the
increase in the number of authorized shares of Class B Common Stock and the
ratification of the appointment of the independent auditors. Under applicable
Delaware law, "broker non-votes" on any other non-routine proposal (where a
broker submits a proxy but does not have authority to vote a customer's shares
on such proposal) would not be considered entitled to vote on that proposal and
would not be counted in determining whether such proposal receives a majority of
the shares cast in respect thereof.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 2002 Annual
Meeting of Shareholders (the "2002 Annual Meeting") must be received by the
Company no later than January 15, 2002 in order to be included in the Company's
proxy statement and form of proxy for that meeting.
EXECUTION OF THE ACCOMPANYING PROXY CARD WILL NOT AFFECT A
SHAREHOLDER'S RIGHT TO ATTEND THE MEETING AND VOTE IN PERSON. ANY SHAREHOLDER
GIVING A PROXY HAS THE RIGHT TO REVOKE IT BY GIVING WRITTEN NOTICE OF REVOCATION
TO THE SECRETARY OF THE COMPANY AT ANY TIME BEFORE THE PROXY IS VOTED.
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
Eight (8) directors will be elected at the 2001 Annual Meeting to serve
for a term of one year, until the 2002 Annual Meeting and until their successors
have been duly elected and have qualified. If any nominee is unable to serve,
which the Board of Directors has no reason to expect, the persons named in the
accompanying proxy intend to vote for the balance of those named and, if they
deem it advisable, for a substitute nominee. The names of the nominees for
directors of the Company whose terms of office will continue after the 2001
Annual Meeting are listed below.
SANDRA L. MANZKE, 53, is the Company's Chairman of the Board and has
served as a director of the Company since 1987. Prior to becoming Chief
Executive Officer in May 1994, Ms. Manzke served as the Company's President. Ms.
Manzke is now the Co-Chief Executive Officer of the Company and also serves as
Chairman of the Board of Directors and President of Tremont Partners, Inc.
("TPI") and as a director of Tremont (Bermuda) Limited ("TBL").
ROBERT I. SCHULMAN, 55, is the Company's President and has been since
joining the Company in May 1994. Until August 2000, he also served as the
Company's Chief Operating Officer. At that time he was appointed Co-Chief
Executive Officer of the Company with Ms. Manzke. He has been a Director of the
Company since October 1993. As of June 1994, Mr. Schulman became President,
Chief Executive Officer and a Director of Tremont Securities, Inc. In July 1998,
Mr. Schulman became President of both Tremont Investment Management, Inc. and
Tremont Futures, Inc. Prior to May 31, 1994, he was Executive
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Vice President, Director of Products & Services at Smith Barney Shearson. Mr.
Schulman began his career in 1969 as an Account Executive trainee with E.F.
Hutton & Co., Inc., becoming the assistant branch manager of its Columbus
Circle, New York City branch. Subsequently, Mr. Schulman served as Vice
President and Regional Options and Futures Director of the Atlantic Region,
Senior Vice President and National Director of Leveraged Products, and as
Executive Vice President of all product sales at E.F. Hutton & Co., Inc. He has
served on the NYSE Derivative Product Committee, CBOE Retail Advisory Council,
NASD Options and Derivative Product Committee, Board of the New York Futures
Exchange and the NYSE Option Specialist Allocation Committee. Mr. Schulman is a
member of the committee which administers the Company's 1998 Stock Option Plan
(the "Plan administration committee"). He currently serves on the boards of
directors of two non-public companies, the Lockwood Financial Group, Ltd. and
M-Power, Inc.
JOHN L. KEELEY, JR., 60, has been a Director of the Company since
January 1994. Mr. Keeley is President, Treasurer and a director of Keeley
Investment Corporation, a registered broker-dealer. He has held these positions
since 1977. He is also President and a Director of Keeley Asset Management
Corporation, a registered investment advisor and of Keeley Small Cap Value Fund,
Inc., an open-end mutual fund. He is the general partner of various investment
partnerships and an officer of the John L. Keeley, Jr. Foundation. Mr. Keeley
became a Director of the Marquette National Corporation in 1994. Mr. Keeley is a
member of the Company's Audit Committee and the Plan administration committee.
JIMMY L. THOMAS, 59, has been a Director of the Company since November
1994. Prior to retiring in 1998, Mr. Thomas was Senior Vice President-
Financial Services and Treasurer of Gannett Co., Inc., a position he held since
December 1991. Mr. Thomas also serves on the Regional Advisory Board of HSBC
Bank USA. Mr. Thomas is a member of the Company's Audit Committee and the Plan
administration committee.
ALAN A. RHEIN, 58, has been a Director of the Company since June 1997.
In 1995, he was a founding principal of Lockwood Financial Group Ltd., an
investment management consulting firm, and is President and Chief Executive
Officer of Lockwood Financial Services, its broker-dealer division. He started
his financial services career as an account executive in 1965 with E.F. Hutton &
Co. He spent the next 23 years with that firm in a variety of positions from
Account Executive, Branch Manager to Executive Vice President in charge of the
Atlantic Region. In 1986, Mr. Rhein was elected to the Board of Directors of
E.F. Hutton & Co. After the Shearson Lehman takeover of E.F. Hutton, Mr. Rhein
was promoted to Group President. In 1993, Mr. Rhein was recruited by Prudential
Securities to serve as Executive Vice President in charge of their entire Retail
Branch System. Mr. Rhein is Chairman of the Company's Audit Committee and a
member of the Plan administration committee.
RICHARD E. O'BRIEN, 43, has been a Director of the Company since June
1998. He has been the Vice President, Secretary and General Counsel of Mutual
Risk Management Ltd., the indirect holder of Class B Common Stock equal to
approximately 20% of the aggregate of the Company's outstanding Class A Common
Stock and Class B Common Stock, since March 1995. From 1990 until 1995 Mr.
O'Brien was a partner in Dunnington, Bartholow & Miller, a law firm located in
New York City. Mr. O'Brien is a member of the Plan administration committee.
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NICOLA MEADEN, 41, has been a Director of the Company since June 1999.
Ms. Meaden is a Managing Director of the Company and is the founder and Chief
Executive Officer of Tremont TASS (Europe) Limited ("TASS"). Prior to
establishing TASS in 1990, Ms. Meaden worked for the London-based commodity and
futures brokerage company Gourlay Wolff where she was responsible for developing
and managing its managed futures department, including launching and managing
multi-manager offshore funds.
BRUCE D. RUEHL, 40, has been a Director of the Company since June 1999.
He is a Managing Director of the Company and its Chief Investment Strategist,
and is responsible for all manager research activities. Prior to joining the
Company in 1993, Mr. Ruehl was a vice president and principal of Reliance
Properties, Inc. where he advised private real estate partnerships investing in
bank and RTC-owned properties. Previously, he was with Shearson Lehman's
Consulting Services Department as Vice President and National Product Manager
overseeing proprietary manager investment activities and new products and,
before that, was with Brown Brothers Harriman & Co.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
THE SLATE OF DIRECTOR-NOMINEES. THE VOTE REPRESENTING A PLURALITY OF THE VOTES
OF THE SHARES OF COMMON STOCK ENTITLED TO VOTE, CAST IN PERSON OR BY PROXY AT
THE 2001 ANNUAL MEETING, IS REQUIRED TO ELECT EACH OF THE DIRECTORS.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is responsible for the management and direction
of the Company and for establishing broad corporate policies. Regular meetings
of the Board of Directors were held each quarter during 2000. Members of the
Board of Directors are kept informed of the Company's business through various
documents and reports provided by the Chairman and other corporate officers, and
by participating in Board of Directors and committee meetings. Each Director has
access to all books, records and reports of the Company, and members of
management are available at all times to answer their questions. The Board of
Directors has an Audit Committee and the Plan administration committee, and
intends to consider the establishment of a Disclosure Policy Committee to
oversee the Company's compliance with Regulation Fair Disclosure, adopted by the
Securities and Exchange Commission in August 2000.
The Board of Directors held four meetings in 2000. Each Director
attended all of the meetings of the Board of Directors (except for two Directors
who each missed one meeting). Directors who are not employees of the Company
received $5,000 for each Board of Directors meeting attended and $2,500 for each
telephonic Board Meeting in which they participated. Each Director is reimbursed
for out-of-pocket expenses.
The Audit Committee is comprised of Messrs. Rhein, Keeley and Thomas,
all of whom are independent directors. Information regarding the functions
performed by the Audit Committee and the number of meetings held during the
fiscal year is set forth in the "Report of the Audit Committee" below. The Audit
Committee must recommend the Company's financial statements for a particular
period to the Board of Directors before the Company may include them in any
report filed with the Securities and Exchange Commission. The Audit Committee is
governed by, and performs such other duties as are set forth in, its written
charter approved by the Board of Directors, a copy of which is included as
Appendix A hereto. The charter is in compliance with all of the requirements of
the Nasdaq Marketplace Rules. All members of the Audit Committee attended all of
its meetings. Directors do not receive any additional compensation for serving
on the Audit Committee.
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REPORT OF THE AUDIT COMMITTEE
Management has the primary responsibility for the financial statements
and the financial reporting process, including the systems of internal controls.
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. In fulfilling its oversight responsibilities, the
Committee reviewed the audited financial statements in the Company's 2000 Annual
Report with management and discussed the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Company's independent auditors are responsible for expressing an
opinion on the conformity of the Company's audited financial statements with
generally accepted accounting principles. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Committee held two meetings during fiscal year 2000.
When the Committee met with the independent auditors, the members of
the Committee reviewed and discussed their judgments as to the quality and
acceptability of the Company's accounting principles. In addition, the Committee
received from the independent auditors disclosures regarding the auditors'
independence required by Independence Standards Board Standard No.1 and
discussed with them the auditors' independence from the Company and its
management. In this connection, the Committee considered the compatibility of
non-audit services provided to the Company by the auditors with the auditors'
independence. The Committee and the auditors also discussed the overall scope
and plans for their respective audits and such other matters as are required to
be discussed by them under generally accepted auditing standards and by the
Independence Standards Board, including the matters covered in Statement on
Auditing Standards No.61.
In reliance on these reviews and discussions, the Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000
to be filed with the Securities and Exchange Commission. The Board approved this
recommendation. The Committee and the Board also appointed, subject to
shareholder approval, the Company's independent auditors for fiscal year 2001.
Alan A. Rhein, Audit Committee Chairman
John L. Keeley, Jr., Audit Committee Member
Jimmy L. Thomas, Audit Committee Member
March 7, 2001
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers to file reports of their holdings of
and transactions in the Company's stock with the Securities and Exchange
Commission (the "SEC"). Based on the Company's records and the directors and
executive officers' representations to the Company, the Company believes that
during fiscal 2000 these requirements were met, except Robert I. Schulman filed
a late report as a result of a problem related to the SEC's electronic filing
procedures. That filing reported a total of six sale transactions that occurred
in November 2000.
OWNERSHIP OF SHARES
The table set forth on the following page contains information relating
to the beneficial ownership of Common Stock by members of the Board of
Directors, by each of the executive officers listed in the Summary Compensation
Table, by the Directors and the executive officers as a group, and by certain
other beneficial owners as of February 28, 2001. Information as to the number of
shares of Common Stock owned and the nature of ownership has been provided by
these individuals and is not within the direct knowledge of the Company. Unless
otherwise indicated, the named individuals possess sole voting and investment
power with respect to the shares listed. The following information has been
furnished to the Company or is based on Schedules 13D, or any amendments
thereto, received by the Company as filed with the SEC.
The information set forth in the table has been adjusted to reflect the
impact of the five-for-four stock split effected on August 8, 2000.
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STOCK OWNERSHIP TABLE
Number of Shares
----------------
Owned % of
----- ----
Name and Address of Beneficial Owner Class A Class B Class A Class B
- ------------------------------------ ------- -------- -------- -------
Sandra L. Manzke (1) 256,089 599,648 15% 12%
555 Theodore Fremd Avenue
Rye, New York
Robert I. Schulman (2) 12,180 521,658 * 10%
555 Theodore Fremd Avenue
Rye, New York
Barry H. Colvin (3) -- 43,325 * 1%
555 Theodore Fremd Avenue
Rye, New York
Nicola Meaden (4) -- 384,592 * 7%
Charter House
13-15 Carteret Street
London, England
John L. Keeley, Jr. (5) 107,379 560,349 6% 11%
401 South LaSalle Street
Chicago, Illinois
Alan Rhein (6) -- 53,905 * 1%
405 Park Avenue
New York, New York
Jimmy L. Thomas (7) -- 81,250 * 2%
205 Fox Meadow Drive
Orchard Park, New York 14127
Bruce D. Ruehl (8) 5,992 187,076 * 4%
555 Theodore Fremd Avenue
Rye, New York
Mario J. Gabelli (9) 694,143 306,040 39% 6%
Gabelli Asset Management Inc.
555 Theodore Fremd Avenue
Rye, New York
Brighton Communications Corporation (10) -- 170,063 * 3%
401 Theodore Fremd Ave.
Rye, New York
Legion Insurance Company (11) -- 1,351,536 * 26%
One Logan Square
Philadelphia, PA
Directors and Officers as a group: 408,507 2,543,777 24% 49%
- -------------
* Less than one percent.
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(1) Includes 60,377 shares of Class A Common Stock and 67,851 shares of Class B
Common Stock owned by the Tremont Advisers, Inc. Savings Plan (the "Savings
Plan") over which Ms. Manzke has investment discretion and 64,687 shares of
Class B Common Stock subject to currently exercisable stock options and/or stock
options exercisable within 60 days after February 28, 2001 (collectively, the
"Currently Exercisable Options").
(2) Includes 12,180 shares of Class A Common Stock and 13,208 shares of Class B
Common Stock owned by the Savings Plan over which Mr. Schulman has investment
discretion and 162,812 shares of Class B Common Stock subject to Currently
Exercisable Options.
(3) Includes 40,625 shares of Class B Common Stock subject to Currently
Exercisable Options
(4) Includes 284,327 shares of Class B Common Stock subject to Currently
Exercisable Options.
(5) Includes 31,250 shares of Class B Common Stock owned by Mr. Keeley's wife,
14,062 shares of Class B Common Stock owned by the John L. Keeley Jr.
Foundation, 54,687 shares of Class B Common Stock owned by the KIC Profit
Sharing Plan & Trust, 54,687 shares of Class B Common Stock owned by the KIC
Pension Plan & Trust, 102,675 shares of Class B Common Stock owned by Kamco
Limited Partnership No. 1 and 30,802 shares of Class B Common Stock owned by JGJ
Partnership. Mr. Keeley is deemed to have beneficial ownership of the foregoing.
Also includes 14,062 shares of Class B Common Stock subject to Currently
Exercisable Options.
(6) Includes 22,656 shares of Class B Common Stock subject to Currently
Exercisable Options.
(7) Includes 3,125 shares of Class B Common Stock subject to Currently
Exercisable Options.
(8) Includes 5,992 shares of Class A Common Stock and 2,140 shares of Class B
Common Stock owned by the Savings Plan over which Mr. Ruehl has investment
discretion and 29,687 shares of Class B Common Stock subject to Currently
Exercisable Options.
(9) Includes 407,465 shares of Class A Common Stock and 3,540 shares of Class B
Common Stock owned by a family partnership over which Mr. Gabelli has sole
voting power and investment power. Includes 22,800 shares of Class A Common
Stock owned by a family foundation over which Mr. Gabelli has voting and
investment power, of which Mr. Gabelli disclaims beneficial ownership. Includes
47,067 shares of Class A Common Stock subject to a voting agreement appointing
Mr. Gabelli proxy with the power to vote such shares, which voting agreement
expires in June 2001. Does not include shares listed elsewhere in this table
which are held by Brighton Communications Corporation ("Brighton"), of which Mr.
Gabelli specifically disclaims beneficial ownership. Mr. Gabelli is the
principal shareholder, as well as the Chairman of the Board and Chief Executive
Officer, of Gabelli Asset Management Inc. ("GAMI"), the ultimate parent company
for a variety of operating companies engaged in various aspects of the
securities business, including Gabelli Securities, Inc. ("GSI"), a
majority-owned subsidiary of GAMI; and Gabelli & Company, Inc. ("Gabelli &
Company"), a wholly-owned subsidiary of GSI and a registered broker-dealer. Mr.
Gabelli is also Chairman of the Board and Chief Executive Officer of Gabelli
Group Capital Partners, Inc. ("GGCP"), which owns approximately 80% of the
common stock of GAMI. Acting in these capacities, Mr. Gabelli has the authority
for making voting and investment decisions on behalf of GGCP and GSI and,
therefore, may be deemed to be the beneficial owner of shares of the Company
owned by or held in accounts of GGCP and GSI. Of the remaining shares of Class A
Common Stock owned by Mr. Gabelli and affiliates of Gabelli, 52,390 shares are
held by GSI and 282 shares are held by GGCP.
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(10) Mr. Gabelli is Chairman of the Board and Chief Executive Officer of
Brighton, and he and his affiliates and their clients are principal shareholders
of Lynch Corporation ("Lynch"). Mr. Gabelli may be deemed to be a beneficial
owner of the shares of the Company owned by Brighton, a subsidiary of Lynch, by
virtue of his and certain affiliated parties' significant beneficial ownership
of the common stock of Lynch. Mr. Gabelli, however, specifically disclaims
beneficial ownership of all of the shares of the Company's Common Stock held by
Brighton.
(11) Mutual Risk Management, Ltd.'s ("MRM") wholly-owned subsidiary, MGL
Investment, Ltd., purchased these shares during 1997 and 1999. These shares were
transferred, effective December 31, 1999, to Legion Insurance Company, another
of MRM's wholly-owned subsidiaries.
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EXECUTIVE COMPENSATION
The following table sets forth the annual, long-term and other
compensation for the officer serving as the Company's Chairman of the Board of
Directors and Co-Chief Executive Officer (the "Chairman"), as well as the
Company's four highest paid executive officers other than the Chairman,
including the President and Co-Chief Executive Officer (collectively, the "Named
Executives"), during the Company's last three fiscal years.
Long Term Compensation
------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------- ----------------------- -------
Other Annual Restricted Securities
Compen- Stock Underlying LTIP All Other
sation Award(s) Options/ Payout Compensation
Name and Principal Position Year Salary ($) Bonus ($)(1) ($) ($) SARs (#) ($) ($)
- ---------------------------- ----- ---------- ------------ ------------ ---------- ---------- -------- ------------
Sandra L. Manzke 2000 391,400 450,000 - - 12,500 - -
Chairman and Co-Chief 1999 380,000 372,000 - - 13,750 - 58,275(2)
Executive Officer 1998 373,000 310,000 - - - - -
Robert I. Schulman 2000 352,300 405,000 - - 12,500 945,600(3)
President and 1999 342,000 334,800 - - 12,500 - 58,275(2)
Co-Chief Executive Officer 1998 335,700 279,000 - - - - 295,000(3)
Barry H. Colvin 2000 228,100 200,000 - - 100,000 - 45,800(2)
Chief Operating Officer 1999 38,400 100,000 - - 31,250 - -
1998 - - - - - - -
Bruce D. Ruehl 2000 220,800 200,000 - - 50,000 - -
Chief Investment Strategist 1999 155,000 125,000 - - 6,250 - 33,300(2)
1998 150,000 150,000 - - 6,250 - -
Nicola Meaden 2000 183,300 200,000 - - 48,000 - -
Chief Executive Officer- 1999 125,000 90,000 - - 6,250 - 33,300(2)
Tremont (TASS) Europe 1998 - - - - - - -
Limited
- -----------------
(1) A portion of the bonuses for Ms. Manzke, Mr. Schulman, Mr. Ruehl, Mr. Colvin
and Ms. Meaden which accrued in 1999 were actually paid in 2000. These amounts
were $150,000, $135,000, $30,000, $20,000 and $32,200, respectively. A portion
of the bonuses for Ms. Manzke, Mr. Schulman and Mr. Ruehl which accrued in 1998
were actually paid in 1999. These amounts were $105,000, $94,500, and $30,000,
respectively.
(2) Value of FITX common stock distributed as a bonus to the employee.
(3) Represents compensation as a result of the exercise of certain stock
options.
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OPTION GRANTS IN LAST FISCAL YEAR
Presented below is information respecting options to purchase the
Company's Class B Common Stock (the "Options") granted to the Named Executives
during 2000.
Percent of Total Options
Number of Securities Granted to Employees in Exercise or Base Price
Name Underlying Options Fiscal Year ($/sh) Expiration Date
- ---- -------------------- ------------------------ ---------------------- ---------------
Sandra L. Manzke 12,500 4% $11.55 December 6, 2005
Robert I. Schulman 12,500 4% $10.50 December 6, 2005
Barry H. Colvin 100,000 31% $10.50 December 6, 2005
Bruce D. Ruehl 50,000 16% $10.50 December 6, 2005
Nicola Meaden 48,000 15% $10.50 December 6, 2005
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
Presented below is information respecting Options exercised by each of
the Named Executives during 2000 and the unexercised Options held by them as of
December 31, 2000.
Number of
Securities Underlying
Unexercised Options Value of Unexercised In-the-
Shares Acquired on at December 31, 2000 MoneyOptions at December 31, 2000
Name Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- -------------- ------------------------- -------------------------
Sandra L. Manzke - - 64,687 16,250 $546,700 $25,800
Robert I. Schulman 120,000 $945,600 162,812 15,625 $1,621,300 $38,600
Barry H. Colvin - - 40,625 90,625 $98,900 $172,600
Bruce D. Ruehl - - 29,687 40,625 $148,500 $67,700
Nicola Meaden - - 271,389 52,064 $1,670,500 $96,200
EMPLOYMENT CONTRACTS
Both the Company's Chairman of the Board and Co-Chief Executive
Officer, Sandra L. Manzke, and the Company's President and Co-Chief Executive
Officer, Robert I. Schulman, entered into amendments dated as of December 6,
2000 to their respective employment agreements with the Company. Their amended
agreements expire on December 31, 2001 and will be automatically renewed from
year to year unless terminated in a timely manner.
Ms. Manzke is entitled to a minimum annual salary of $420,000 and a
bonus determined by the Board of Directors. Mr. Schulman is entitled to a
minimum annual salary of $378,000 and a bonus determined by the Board of
Directors; however, in no event may Mr. Schulman's salary or bonus in any year
be less than 90% of Ms. Manzke's salary and bonus for that year.
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Ms. Manzke's employment may be terminated due to illness, disability or
other incapacity if she is unable to perform her duties for a period of 90
consecutive days. If her employment is so terminated, she will receive her base
salary and accrued bonus until December 31, 2001. In the event of her death, her
right to compensation ceases immediately. In the event of the termination of Ms.
Manzke's employment for any reason, including death, the Company has the option,
exercisable within 90 days after the termination, to acquire all of her stock in
the Company for a price equal to its market value on the date of termination.
Ms. Manzke has agreed that she will not sell or dispose of her stock in the
Company without first offering to sell the stock to the Company at a price equal
to its then market value.
If Mr. Schulman is disabled or his employment is terminated by the
Company without cause or by him with cause, he will receive his base salary and
accrued bonus until December 31, 2001. If his employment is terminated by the
Company with cause or by him without cause, or in the event of his death, his
right to compensation ceases immediately.
Upon executing his employment agreement in 1994, Mr. Schulman was
granted options to purchase 439,647 shares of the Company's Class B Common Stock
at an exercise price of $1.12 per share, the then current fair market value.
114,375 of these options, all of which are fully vested and will expire on the
anniversary of the grant date in 2001, remain unexercised. If Mr. Schulman's
employment is terminated for any reason, including the expiration of the
employment agreement, any unvested options will lapse; vested but unexercised
options will remain outstanding and exercisable under the original terms and
conditions, subject to an option in favor of TPI to purchase all of Mr.
Schulman's stock no later than seven days after the date of termination for a
per share price equal to the best bid price on the date of termination and the
purchase price for each option shall be the greater of (i) $1.12 or (ii) the
amount of the best bid price for a share of Common Stock on the date of
termination less $1.12. Mr. Schulman has agreed that he will not dispose of the
Class B Common Stock he acquires pursuant to the options or the unexercised
options without first offering them to TPI for the per share price applicable in
the case of the termination of his employment.
In August 2000, the Company's Chief Operating Officer, Barry H. Colvin,
entered into an employment agreement with the Company that expires on January 1,
2002. Mr. Colvin is entitled to a minimum salary of $275,000 and an annual bonus
of at least $200,000 if he is employed by the Company on the date that the
Company usually pays annual performance bonuses. The Company may terminate Mr.
Colvin's employment without cause at any time. In that event, he will receive
severance equal to the balance of the compensation due to him through December
31, 2001, but benefits and any other employee entitlements will cease as of the
date of termination. If Mr. Colvin terminates his employment before January 1,
2002, then, within 15 days after his last day of employment, he must pay the
Company $50,000 for the time, opportunity loss, cost of securing his
replacement, absence of continuity and the adverse impact on customers and
employees caused by his departure.
INDEMNIFICATION FOR CERTAIN LIABILITIES
The By-Laws of the Company provide that the Company may indemnify its
directors and officers to the fullest extent permitted by the laws of the
Delaware General Corporation Law against all expenses, liability and loss
(including attorneys' fees, judgment, fines and amounts paid in settlement)
incurred by them in any action, suit or proceeding arising out of certain of
their actions or omissions in their capacities as directors or officers. Article
Seven of the Company's Restated Certificate of Incorporation provides that, with
certain exceptions, no director of the Company may be liable to the Company for
monetary damages as a result of a breach of his fiduciary duties as a director.
The Company has acquired directors' and officers' liability insurance for its
directors and officers.
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The Delaware Supreme Court has held the directors' duty of care to a
corporation and its shareholders requires the exercise of an informed business
judgment. Having become informed of all material information reasonably
available to them, directors must act with requisite care in the discharge of
their duties. The Delaware General Corporation Law permits a corporation through
its certificate of incorporation to exonerate its directors from personal
liability to the corporation or its shareholders for monetary damages for a
breach of their fiduciary duty of care as a director, with certain exceptions.
The exceptions include a breach of the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, improper declaration of dividends and transactions from which
the director derived an improper personal benefit. As noted above, the Company's
Restated Certificate of Incorporation exonerates its directors, acting in such
capacity, from monetary liability to the extent permitted by this statutory
provision. This limitation of liability provision does not eliminate a
shareholder's right to seek non-monetary, equitable remedies such as an
injunction or rescission in order to redress an action taken by directors.
However, as a practical matter, equitable remedies may not be available in all
situations, and there may be instances in which no effective remedy is
available.
PROPOSAL NO. 2.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED STOCK
The Board of Directors has adopted a resolution to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Class B Common Stock from 10,000,000 shares to 20,000,000 shares. To effect the
proposed change in authorized capital stock, shareholders are being asked to
vote upon the proposal that Article FOURTH of the Certificate of Incorporation
be amended to read in its entirety as follows:
"FOURTH: The aggregate number of shares of all classes of
capital stock which the Corporation shall have the authority
to issue is 26,000,000 shares of capital stock, of which
amount 1,000,000 shares shall be designated Preferred Stock,
$1.00 par value; 5,000,000 shares shall be designated Class A
Common Stock, $0.01 par value; and 20,000,000 shares shall be
designated Class B Common Stock, $0.01 par value. All cross
references in each part of this Article FOURTH refer to other
paragraphs in such part unless otherwise indicated."
If the proposed amendment increasing the authorized number of shares of
Class B Common Stock is approved, the additionally authorized shares will be
available for issuance by action of the Board of Directors without any further
shareholder approval except as may be required by law or under the rules of any
stock exchange on which the shares may then be listed. The Company does not
anticipate that approval will be necessary for potential issuances that may be
made. The shareholders are also being asked to authorize and direct the officers
of the Company to execute and file all documents and to do all things necessary
to affect the aforesaid amendment. If the proposed amendment to the Certificate
of Incorporation is not approved, the Board of Directors may reconsider
proposing the matter at some time in the future.
As of February 28, 2001, 5,127,990 shares of the presently authorized
10,000,000 shares of Class B Common Stock were issued and outstanding. In
addition, of these authorized shares, 1,174,933 were reserved for issuance upon
exercise of options, including 612,500 shares reserved under the 1998 Stock
Option Plan, and 1,734,386 for shares into which Class A Common Stock is
convertible. As of February 28, 2001, 1,962,691 shares were remaining
available for issuance. If the proposed increase of authorized Class B Common
Stock is approved, 11,962,691 shares of Class B Common Stock will be available
for issuance after reservation is made for the shares issuable upon exercise
of options and shares into which Class A Common Stock is convertible as
described above.
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The Board of Directors of the Company believes that the proposed
increase in the number of shares of authorized Class B Common Stock is
appropriate so that shares will be available, if needed, for issuance in
connection with future financings, possible acquisitions and for other corporate
purposes. The availability of the additional shares will provide the Company
with greater flexibility in connection with meeting its future requirements. The
Company has no present plan to issue any of these shares.
THE AFFIRMATIVE VOTE REPRESENTING A MAJORITY OF THE VOTES OF THE SHARES
OF COMMON STOCK ENTITLED TO VOTE, CAST IN PERSON OR BY PROXY AT THE 2001 ANNUAL
MEETING, IS NECESSARY TO ADOPT THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF CLASS B COMMON
STOCK. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT.
PROPOSAL NO. 3.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent accountants to audit the financial
statements of the Company for the current fiscal year. Fees for the last fiscal
year amounted to $183,000 for the annual audit and $151,000 for non-audit
services, including $83,500 for audits required by regulatory bodies, $17,000
for quarterly reviews, $13,000 for the audit of the Company's employee benefit
plan and $37,500 for accounting consulting services. No fees were charged to the
Company for financial information systems design and implementation.
Representatives of the firm of Ernst & Young LLP are expected to be
present at the 2001 Annual Meeting and will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS. THE AFFIRMATIVE VOTE
REPRESENTING A MAJORITY OF THE VOTES OF THE SHARES OF COMMON STOCK ENTITLED TO
VOTE, CAST IN PERSON OR BY PROXY AT THE 2001 ANNUAL MEETING, IS REQUIRED FOR THE
RATIFICATION OF THIS SELECTION.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. The persons named in the enclosed form of proxy or their
substitutes will vote with respect to any such matters in accordance with their
best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN
AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By order of the Board of Directors,
Suzanne S. Hammond
Secretary and Treasurer
Dated: May 4, 2001
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APPENDIX A
TREMONT ADVISERS, INC.
AUDIT COMMITTEE CHARTER
(Approved June 6, 2000)
Organization
There shall be a committee of the board of directors to be known as the
audit committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
subsidiaries.
- Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of
the independent auditors.
- Review with the independent auditors, the company's financial and
accounting personnel, the adequacy and effectiveness of the accounting
and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures
are desirable. Further, the committee periodically should review
company policy statements to determine their adherence to the code of
conduct.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the
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disclosure and content of the financial statements to be presented to
the shareholders. Any changes in accounting principles should be
reviewed.
- Provide sufficient opportunity for the independent auditors to meet
with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and the cooperation that the independent auditors received
during the course of the audit.
- Review accounting and financial human resources and succession planning
within the company.
- Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
While the audit committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the audit committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
Management is responsible for preparing the Company's financial statements and
the independent auditor is responsible for auditing those financial statements.
Nor is it the duty of the audit committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
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