SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
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EXCHANGE ACT OF 1934
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Gabelli Asset Management Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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GABELLI ASSET MANAGEMENT INC.
ONE CORPORATE CENTER
RYE, NEW YORK 10580
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 13, 2003
------------------------
We cordially invite you to attend the Annual Meeting of Shareholders of
Gabelli Asset Management Inc. at the Bruce Museum, One Museum Drive, Greenwich,
CT 06830, on Tuesday, May 13, 2003, at 10:00 a.m. At the meeting, we will ask
shareholders to:
1. Elect a Board of six directors; and
2. Vote on any other business which properly comes before the meeting.
At the meeting, we will also review our 2002 financial results and outlook
for the future. We will be available to answer your questions.
Shareholders of record at the close of business on March 31, 2003, are
entitled to vote at the meeting or any adjournments. Please read the attached
proxy statement carefully and vote your shares promptly whether or not you are
able to attend the meeting.
We encourage all shareholders to attend the meeting.
By Order of the Board of Directors
JAMES E. MCKEE
Vice President, General Counsel
and Secretary
April 17, 2003
GABELLI ASSET MANAGEMENT INC.
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
------------------------
MAY 13, 2003
------------------------
INTRODUCTION; PROXY VOTING INFORMATION
We are sending you this proxy statement and the accompanying proxy card in
connection with the solicitation of proxies by the Board of Directors of Gabelli
Asset Management Inc. ("Gabelli" or the "Company") for use at our 2003 Annual
Meeting of Shareholders and at any adjournments. The purpose of the meeting is
to elect six directors and act upon any other matters properly brought to the
meeting. We sent you this proxy statement, the proxy card, and our 2002 Annual
Report on Form 10-K (containing Gabelli's financial statements and other
financial information for the year ended December 31, 2002) on or about April
17, 2003. The Annual Report, however, is not part of the proxy solicitation
materials.
Shareholders of record at the close of business on March 31, 2003, the
record date, are entitled to vote at the annual meeting. On this record date,
Gabelli had outstanding 6,769,941 shares of Class A Common Stock, par value
$.001 per share ("Class A Stock"), and 23,150,000 shares of Class B Common
Stock, par value $.001 per share ("Class B Stock").
The presence, in person or by proxy, of a majority of the aggregate voting
power of the shares of Class A Stock and Class B Stock outstanding on March 31,
2003 shall constitute a quorum for the transaction of business at the annual
meeting. The Class A Stock and Class B Stock vote together as a single class on
all matters. Each share of Class A Stock is entitled to one vote per share and
each share of Class B Stock is entitled to ten votes per share. Directors who
receive a plurality of the votes present or represented at the meeting are
elected to serve until the 2004 annual meeting or until their successors are
elected and qualify. Any matter other than the election of directors will be
determined by a majority of the votes present or represented at the meeting.
Abstentions and broker non-votes will count for purposes of establishing a
quorum, but will not count as votes cast for the election of directors or on any
other matter and accordingly will have no effect.
Gabelli will pay for the costs of soliciting proxies and preparing the
meeting materials. We ask securities brokers, custodians, nominees, and
fiduciaries to forward meeting materials to our beneficial shareholders as of
the record date, and will reimburse them for the reasonable out-of-pocket
expenses they incur. Directors, officers and employees of Gabelli and its
subsidiaries may solicit proxies personally or by telephone or other means, but
will not receive additional compensation.
The Board of Directors has selected Mario J. Gabelli, Robert S. Zuccaro and
James E. McKee to act as proxies. When you sign and return your proxy card, you
appoint Messrs. Gabelli, Zuccaro and McKee as your representatives at the
meeting. If you wish to change your vote before the meeting, deliver a letter
revoking the proxy to Gabelli's Secretary (James E. McKee, Gabelli Asset
Management Inc., One Corporate Center, Rye, NY 10580-1422) or properly submit
another proxy bearing a later date. Even if you vote your proxy before the
meeting, you may still attend the meeting, file a notice of revocation for the
previously submitted proxy, and then vote again in person. The last proxy
properly submitted by you is the one that will be counted.
Brokerage firms have the authority under New York Stock Exchange rules to
vote their clients' unvoted shares on certain routine matters, one of which is
the election of directors. If you do not vote your proxy, your brokerage firm
may choose to vote for you or leave your shares unvoted. We urge you to respond
to your brokerage firm to ensure that your proxy voting instructions are
followed.
ELECTION OF DIRECTORS
Six directors serve on our Board of Directors. The Board has renominated
all directors to hold office until the next annual meeting of shareholders and
until their respective successors are elected and qualify.
All properly executed proxies received in time to be tabulated for the
meeting will be voted FOR the election of the nominees named in the following
table, unless otherwise specifically instructed. If any nominee becomes unable
or unwilling to serve between now and the meeting, your proxies will be voted
FOR the election of a replacement designated by the Board of Directors.
THE NOMINEES
The following are brief biographical sketches of the six nominees. Unless
otherwise noted, they have been officers of the organizations named below or of
affiliated organizations as their principal occupations for more than five
years.
The Board of Directors recommends that you vote FOR all of the following
nominees:
MARIO J. GABELLI, age 60, has served as Chairman, Chief Executive Officer,
Chief Investment Officer and a director of the Company and its predecessors
since November 1976. In connection with those responsibilities, he serves as
director or trustee and/or officer of registered investment companies managed by
the Company and its affiliates ("Gabelli Funds"). Mr. Gabelli serves as Vice
Chairman and Chief Executive Officer of Lynch Interactive Corporation, a public
company engaged in multimedia and other services; Vice Chairman of Lynch
Corporation, a public company engaged in manufacturing; and a Director of Morgan
Group Holdings, Inc., a public holding company. In addition, Mr. Gabelli is the
Chairman and Chief Executive Officer of Gabelli Group Capital Partners, Inc., a
private company which owns all of the Company's Class B Stock; and the Chairman
of MJG Associates, Inc., which acts as a general partner or investment manager
of various investment funds and other accounts. Mr. Gabelli also serves as a
Governor of the American Stock Exchange; Overseer of Columbia University
Graduate School of Business; Trustee of Fairfield University, Roger Williams
University, Winston Churchill Foundation and E.L. Wiegand Foundation; Director
of the National Italian American Foundation and the American-Italian Cancer
Foundation; and Chairman, Patron's Committee of Immaculate Conception School.
RAYMOND C. AVANSINO, JR., age 60, has been a director of the Company since
February 2000. Mr. Avansino has been the Chairman of the Board and Chief
Executive Officer of the E.L. Wiegand Foundation of Reno, Nevada, a Nevada
private charitable trust, since 1982. He is of Counsel to the Nevada law firm of
Avansino, Melarkey and Knobel, a firm he founded in 1973. He served as President
and Chief Operating Officer of Hilton Hotels Corporation from 1993 to 1996, and
was a member of the Nevada Gaming Commission from 1981 to 1984.
2
JOHN C. FERRARA, age 51, has been a director of the Company since December
1999. Mr. Ferrara was the President and Chief Executive Officer of Space Holding
Corporation from January 2001 until March 2002, and Chief Financial Officer of
Space Holding Corporation from November 1999 to December 2000. From 1998 to
1999, he was the Executive Vice President and Chief Financial Officer for Golden
Books Family Entertainment, Inc. From 1989 to 1997, Mr. Ferrara was the Vice
President and Chief Financial Officer of Renaissance Communications Corporation.
From 1973 to 1989, he held various positions at American Express Company,
National Broadcasting Company (NBC) and Deloitte & Touche. Mr. Ferrara is a
director of Lynch Interactive Corporation.
PAUL B. GUENTHER, age 62, has been a director of the Company since August
2000. Mr. Guenther has been Chairman of the New York Philharmonic since 1996 and
Chairman of Fordham University since 1998. From 1988 to 1995, he served as
President of PaineWebber Incorporated. From 1994 until 1995, he also served as
President of PaineWebber Group, Inc., the parent company of PaineWebber
Incorporated. From 1966 until 1988, Mr. Guenther held a variety of other
positions at PaineWebber Incorporated. Mr. Guenther is a director of
Consolidated Freightways Corporation, a freight transportation company, and The
Guardian Life Insurance Company of America.
EAMON M. KELLY, age 66, has been a director of the Company and its
predecessors since 1992. Dr. Kelly is currently serving as a Professor at the
Payson Center for International Development and Technology Transfer as well as
in other departments at Tulane University, New Orleans. From 1981 through July
1998, he served as President and Chief Executive Officer of Tulane University.
From 1974 to 1979, Dr. Kelly served in numerous positions, including
Officer-in-Charge of Program Related Investments at the Ford Foundation, a
philanthropic organization with initiatives in community and housing
development, communications and public television, resources and environment,
higher and public education, the arts and minority enterprises. Dr. Kelly's
career includes numerous appointments, and most recently, the appointments by
President Clinton in 1995 to the National Science Board (the governing board of
the National Science Foundation) for which he served as Chairman from
1998 - 2002 and in 1994 to the National Security Education Board. Dr. Kelly is a
director of Energy Partners, Ltd., an oil and natural gas company.
KARL OTTO POHL, age 73, has been a director of the Company since 1998. Mr.
Pohl is a member of the Shareholder Committee of Sal. Oppenheim jr. & Cie., a
private investment bank; Chairman of InCentive Asset Management AG; and Chairman
of InCentive Capital AG. Mr. Pohl is a director or trustee of all but one of the
Gabelli Funds. Mr. Pohl is a former President of the Deutsche Bundesbank,
Germany's Central Bank, and was Chairman of its Central Bank Council from 1980
to 1991. He also served as German Governor of the International Monetary Fund
from 1980 to 1991 and as a Board Member to the Bank for International
Settlements. Mr. Pohl also served as Chairman to the European Economic Community
Central Bank Governors from 1990 to 1991.
THE BOARD OF DIRECTORS AND COMMITTEES
During 2002, there were six meetings of the Board of Directors. The Board
of Directors of Gabelli has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee regularly meets with Gabelli's independent accountants
to ensure that satisfactory accounting procedures are being followed and that
internal accounting controls are adequate, review fees charged by the
independent accountants and recommend the selection of independent accountants
to the
3
Board of Directors. Messrs. Avansino, Ferrara and Kelly, each of whom is an
independent director, are the members of the Audit Committee. The Audit
Committee met eight times during 2002.
As will be further described in the Report of the Compensation Committee,
this committee reviews the amounts paid to, and the services performed by, the
chief executive officer for compliance with the terms of his employment
agreement and generally reviews benefits and compensation for the other
executive officers. It also administers our Stock Award and Incentive Plan and
the Annual Performance Incentive Plan. Messrs. Avansino, Ferrara and Kelly, each
of whom is an independent director, are the members of the Compensation
Committee. The Compensation Committee met twice during 2002.
The Nominating Committee advises the Board of Directors on the selection
and nomination of individuals to serve as directors of Gabelli. Nominations for
director(s) submitted to the committee by shareholders are evaluated according
to our needs and the nominee's knowledge, experience and background. Messrs.
Gabelli and Pohl are the members of the Nominating Committee. The Nominating
Committee did not meet in 2002.
Also, in connection with Gabelli's offering of mandatory convertible
securities in January 2002, the Board of Directors appointed a Pricing
Committee. Messrs. Avansino, Ferrara, Gabelli and Guenther were the members of
the Pricing Committee. The Pricing Committee met twice in January 2002.
During 2002, each director attended 100% of the meetings of the Board and
the Board committees of which he was a member.
COMPENSATION OF DIRECTORS
Mr. Gabelli receives no compensation for serving as a director of the
Company. The other directors receive annual cash retainers and meeting fees as
follows:
<Table>
Board Member................................................ $20,000
Committee Chairman.......................................... $ 5,000
Attendance in person at Board or Committee Meeting.......... $ 1,000
Attendance by telephone at Board or Committee Meeting....... $ 500
</Table>
Directors are also eligible to receive stock options. In February 1999, Mr.
Pohl was granted an option to purchase 10,000 shares of Class A Stock at an
exercise price of $16.275 per share. In February 2000, Messrs. Avansino and
Ferrara were each granted an option to purchase 10,000 shares of Class A Stock
at an exercise price of $16.00 per share. In August 2000, Mr. Guenther was
granted an option to purchase 10,000 shares of Class A Stock at an exercise
price of $23.0625 per share. In October 2002, Mr. Kelly was granted an option to
purchase 10,000 shares of Class A stock at an exercise price of $30.40. All of
the directors' stock options were granted at 100% of fair market value on the
date of grant and have a ten-year term and become exercisable with respect to
75% of the shares after three years from the date of grant and with respect to
100% of the shares after four years from the date of the grant.
4
INFORMATION REGARDING EXECUTIVE OFFICERS
Biographical information for Mr. Gabelli appears above. Brief biographical
sketches of the other executive officers of the Company are set forth below.
BRUCE N. ALPERT, age 51, has served as Executive Vice President and Chief
Operating Officer of Gabelli Funds, LLC or its predecessor since June 1988. Mr.
Alpert is an officer of all of the Gabelli Funds. Mr. Alpert is also a director
of Gabelli Advisers, Inc. From 1986 until June 1988, he worked at the
InterCapital Division of Dean Witter as Vice President and Treasurer of the
mutual funds sponsored by Dean Witter. From 1983 through 1986, he worked at
Smith Barney Harris Upham & Co. as Vice President in the Financial Services
Division and as Vice President and Treasurer of the mutual funds sponsored by
Smith Barney. Mr. Alpert also was an Audit Manager and Specialist at Price
Waterhouse in the Investment Company Industry Services Group from 1975 through
1983. Mr. Alpert is a Certified Public Accountant.
DOUGLAS R. JAMIESON, age 48, has served as Executive Vice President and
Chief Operating Officer of GAMCO Investors, Inc. (a wholly-owned subsidiary of
the Company) since 1986 and as a director of GAMCO Investors, Inc. since 1991.
Mr. Jamieson was an investment analyst with the Gabelli & Company, Inc. from
1981 to 1986.
JAMES E. MCKEE, age 39, has served as Vice President, General Counsel and
Secretary of the Company or its predecessor since August 1995 and as Vice
President, General Counsel and Secretary of GAMCO Investors, Inc. since December
1993. Mr. McKee also serves as Secretary of the Company's subsidiaries and most
of the Gabelli Funds. Prior to joining the Company, he was with the Securities
and Exchange Commission in New York as a Branch Chief from 1992 to 1993 and as a
Staff Attorney from 1989 through 1992, where he worked on matters involving
registered investment advisers and investment companies.
ROBERT S. ZUCCARO, age 46, has served as Vice President and Chief Financial
Officer of the Company since June 1998. Mr. Zuccaro also serves as a director of
Gabelli & Company, Inc. Prior to joining the Company, he was Vice President and
Treasurer of Cybex International, Inc., an international, publicly held
manufacturer of medical, rehabilitative and fitness products, from 1992 to 1997.
Mr. Zuccaro was previously with Shearson Lehman Bros. and Ernst & Young LLP. Mr.
Zuccaro is a Certified Public Accountant.
5
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table summarizes the
compensation of our executive officers who received the highest compensation
during 2002:
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------
ALL OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- -------
Mario J. Gabelli................... 2002 -0-(a) -0-(b) 37,728,104(c) -0- -0- -0-
Chairman of the Board, 2001 -0-(a) -0-(b) 47,115,626(c) -0- -0- -0-
Chief Executive Officer and 2000 -0-(a) -0-(b) 45,499,198(c) -0- -0- -0-
Chief Investment Officer
Bruce N. Alpert.................... 2002 300,000 150,000 100,889(e) -0- -0- -0-
Executive Vice President and 2001 300,000 250,000 68,300(e) -0- -0- -0-
Chief Operating Officer of 2000 300,000 600,000(d) 11,185(e) -0- -0- -0-
Gabelli Funds, LLC
Douglas R. Jamieson................ 2002 300,000 300,000 2,098,739(g) -0- -0- -0-
Executive Vice President and 2001 300,000 -0- 1,732,863(g) -0- -0- -0-
Chief Operating Officer of 2000 300,000 300,000(f) 1,889,030(g) -0- 3,000 -0-
GAMCO Investors, Inc.
James E. McKee..................... 2002 300,000 400,000(h) 598(i) -0- -0- -0-
Vice President, General Counsel 2001 300,000 250,000 50,526(i) -0- 5,000 -0-
and Secretary 2000 300,000 300,000(f) 532(i) -0- -0- -0-
Robert S. Zuccaro.................. 2002 300,000 100,000 598(j) -0- -0- -0-
Vice President and 2001 300,000 100,000 526(j) -0- -0- -0-
Chief Financial Officer 2000 287,500 300,000(f) 532(j) -0- -0- -0-
</Table>
- ---------------
(a) Mr. Gabelli received no fixed salary. Refer to footnote (c).
(b) Mr. Gabelli received no bonus.
(c) For 2002, represents: (i) $10,527,712 for creating and acting as portfolio
manager of several open-end Gabelli Funds; (ii) $3,266,837 for creating and
acting as portfolio manager of the closed-end Gabelli Funds; (iii)
$12,953,829 for acting as portfolio manager and/or attracting and providing
client service to a large number of the Company's separate accounts; (iv)
$1,446,321 for providing other services, including acting as portfolio
manager of partnerships and as a broker; (v) $9,532,807 representing the
incentive-based management fee (10% of the Company's pre-tax profits); and
(vi) $598 representing a contribution made under the Company's profit-
sharing plan. For 2001, represents: (i) $15,428,158 for creating and acting
as portfolio manager of several open-end Gabelli Funds; (ii) $5,200,356 for
creating and acting as portfolio manager of the closed-end Gabelli Funds;
(iii) $12,933,226 for acting as portfolio manager and/or attracting and
providing client service to a large number of the Company's separate
accounts; (iv) $2,228,628 for providing other services, including acting as
portfolio manager of partnerships and as a broker; (v) $11,324,732
representing the incentive-based management fee (10% of the Company's
pre-tax profits); and (vi) $526 representing a contribution made under the
Company's profit-sharing plan. For 2000, represents: (i) $15,720,450 for
creating and acting as portfolio manager of several open-end Gabelli Funds;
(ii) $5,786,995 for creating and acting as portfolio manager of the
closed-end Gabelli Funds; (iii) $11,610,310 for acting as portfolio manager
and/or attracting and providing client service to a large number of the
Company's separate accounts; (iv) $1,085,214 for providing other services,
including acting as portfolio manager of partnerships and as a broker; (v)
$11,295,697 representing the incentive-based management fee (10% of the
Company's pre-tax profits); and (vi) $532 representing a contribution made
under the Company's profit-sharing plan.
(d) $150,000 of this amount vested on December 31, 2002 and was paid in January
2003.
6
(e) For 2002, represents incentive-based variable compensation for attracting
and/or providing client service to separate accounts, shareholders of the
Gabelli Funds or investors in other products sponsored by the Company
("Variable Compensation") in the amount of $100,291 and a contribution made
by the Company under its profit-sharing plan of $598. For 2001, represents
Variable Compensation in the amount of $67,774 and a contribution made by
the Company under its profit-sharing plan of $526. For 2000, represents
Variable Compensation in the amount of $10,653, and a contribution made by
the Company under its profit-sharing plan of $532.
(f) $100,000 of this amount vested on December 31, 2002 and was paid to January
2003.
(g) For 2002, represents Variable Compensation in the amount of $2,098,141, and
a contribution made by the Company under its profit-sharing plan in the
amount of $598. For 2001, represents Variable Compensation in the amount of
$1,732,337 and a contribution made by the Company under its profit-sharing
plan of $526. For 2000, represents Variable Compensation in the amount of
$1,627,923, interest on deferred compensation equal to the appreciation in
the market value of $250,000 of the Class A Stock during 2000 in the amount
of $260,575, and a contribution made by the Company under its profit-sharing
plan of $532.
(h) $100,000 of this amount was paid as a special interim bonus in June 2002.
(i) For 2002 and 2000, represents contributions by the Company under its
profit-sharing plan. For 2001, represents a payment from a variable
compensation pool of $50,000, and a contribution by the Company under its
profit-sharing plan of $526.
(j) Represents contributions made by the Company under its profit-sharing plan.
OPTION GRANTS. No stock options were granted in 2002 to the executive
officers named in the Summary Compensation Table.
FISCAL YEAR-END OPTIONS TABLE. The following table shows the number of
unexercised options for those executive officers named in the Summary
Compensation Table. An "in-the-money" option was an option for which the option
price of the underlying stock was less than $30.04, the closing market price of
the Class A Stock on December 31, 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS
<Table>
<Caption>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002 DECEMBER 31, 2002 ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (3) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Mario J. Gabelli....... -0- -0- -0- -0- -0- -0-
Bruce N. Alpert........ 22,500 331,313 -0- 7,500 -0- 103,238
Douglas R. Jamieson.... 22,500 526,621 -0- 10,500 -0- 145,358
James E. McKee......... -0- -0- 18,750 11,250 258,094 86,031
Robert S. Zuccaro...... 4,500 106,514 33,000 12,500 454,245 172,063
</Table>
7
EQUITY COMPENSATION PLAN TABLE. The following table shows information
regarding outstanding options and shares reserved for future issuance under our
equity compensations plans as of December 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED WEIGHTED-AVERAGE EQUITY COMPENSATION
UPON EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS THE FIRST COLUMN)
- ------------- -------------------- -------------------- -----------------------
Equity compensation plans approved by
security holders.................... 615,406 $20.21 1,783,750
Equity compensation plans not approved
by security holders................. -0- -0- -0-
Total................................. 615,406 $20.21 1,783,750
</Table>
REPORT OF THE COMPENSATION COMMITTEE
Messrs. Avansino, Ferrara and Kelly, each of whom is an independent
director, are the members of the Compensation Committee. In this report, the
term "we" refers to members of the Compensation Committee. Our report on
executive compensation for 2002 follows:
We are responsible to the Board of Directors, and ultimately to the
shareholders of Gabelli, for:
- Reviewing the amounts paid to, and the services performed by, the chief
executive officer pursuant to his employment agreement for compliance
with the terms thereof;
- Administering the Stock Award and Incentive Plan and the Annual
Performance Incentive Plan; and
- Reviewing and approving the compensation policies and general
compensation levels for Gabelli's other executive officers.
We recognize that the investment management and securities industries are
highly competitive and that experienced professionals have significant career
mobility. We believe that the ability to attract, retain and provide appropriate
incentives for the highest quality professional personnel is essential to
maintain Gabelli's competitive position in the investment management and
securities industries, as well as to provide for the long-term success of
Gabelli.
We believe that Gabelli must pay competitive levels of cash compensation
and offer appropriate equity and other incentive programs. These programs must
always be consistent with stockholder interests. We think these programs are
necessary to motivate and retain Gabelli's professional personnel. These
compensation programs are keyed to achieve performance goals that our Committee
and the Board determine.
EXECUTIVE OFFICER COMPENSATION
The compensation for Gabelli's executive officers (other than for Mario J.
Gabelli ("Mr. Gabelli") whose compensation is described separately below) is
composed of base salary, annual bonus compensation, stock option awards and
incentive-based variable compensation.
8
BASE SALARY AND ANNUAL BONUS
Mr. Gabelli recommends to the Committee the amounts of the base salaries
and annual bonuses for the Company's executive officers, which amounts are
subject to our review and approval. We reviewed the base salaries proposed by
Mr. Gabelli for the executive officers in light of the responsibilities
associated with the position held, the individual's overall level of experience,
competitive practices and other subjective factors. The base salaries for all of
the executive officers (other than Mr. Gabelli who receives no base salary) were
set at $300,000 for both 2002 and 2003.
We also reviewed the annual bonuses and special interim bonus proposed by
Mr. Gabelli for the executive officers for their services in 2002 in light of
their individual and business unit performance and other subjective factors. We
approved the bonuses reflected in the Summary Compensation Table.
STOCK OPTIONS
Gabelli's executive compensation programs also include stock option awards,
which we believe provide additional incentives to increase shareholder value and
retain qualified individuals. No stock options were granted in 2002 to Gabelli's
staff. In prior years, stock option awards were granted with an exercise price
equal to the market price of the Class A Stock at the time of the grant,
becoming exercisable with respect to 75% of the shares after three years and
with respect to 100% of the shares after four years. Individual award levels are
based upon a subjective evaluation of each individual's overall past and
expected future contribution. There is no specific formula used to determine
option awards for any individual.
VARIABLE COMPENSATION
To the extent that they have the proper regulatory registrations, all of
Gabelli's staff are eligible to receive incentive-based variable compensation
for attracting and/or providing client service to separate accounts,
shareholders of the Gabelli Funds or investors in other products sponsored by
the Company. Mr. Jamieson, who provides client service to a significant number
of separate accounts managed by Gabelli, received the majority of his total 2002
compensation from variable compensation payments.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Gabelli received no base salary and no annual bonus in 2002, and he has
not been awarded any stock options. All of the compensation paid to Mr. Gabelli
in 2002 was incentive-based variable compensation that was paid in accordance
with Mr. Gabelli's Employment Agreement.
Prior to its initial public offering in February 1999, the Company entered
into an Employment Agreement with Mr. Gabelli relating to his service as
Chairman of the Board, Chief Executive Officer, Chief Investment Officer of the
Company, and executive for certain subsidiaries and Portfolio Manager for
certain mutual funds and separate accounts. Under the Employment Agreement, Mr.
Gabelli receives, as compensation for managing or overseeing the management of
investment companies and partnerships, attracting mutual fund accounts,
attracting or managing separate accounts, providing investment banking services,
acting as a broker or otherwise generating revenues for the Company, a
percentage of revenues or net profits relating to or generated by such
activities (which revenues or net profits are substantially derived from assets
under management). Such payments are made in a manner and at rates as agreed to
from time to time by the Company, which rates have been and generally will be
the same as those received by other professionals in the
9
Company performing similar services. With respect to the Company's institutional
and retail asset management, mutual fund advisory and brokerage business, the
Company generally pays out up to 40% of the revenues or net profits to the
portfolio managers, brokers and marketing staff who introduce, service or
generate such business, with payments involving the separate accounts being
typically based on revenues and payments involving the mutual funds being
typically based on net profits.
Pursuant to the Employment Agreement, in addition to his revenue or net
profit-based compensation, Mr. Gabelli receives an incentive-based management
fee in the amount of 10% of the aggregate pre-tax profits, if any, of the
Company as computed for financial reporting purposes in accordance with
generally accepted accounting principles (before consideration of this fee or
the $50 million deferred payment described below or any employment taxes
thereon) so long as he is an executive of the Company and devoting the
substantial majority of his working time to its business. This incentive-based
management fee is subject to our review at least annually for compliance with
the terms thereof. Mr. Gabelli has agreed that while he is employed by the
Company or until February 17, 2005, whichever is longer, he will not provide
investment management services outside of the Company, except for certain
permitted accounts. Pursuant to the Employment Agreement, an assignee of Mr.
Gabelli received a deferred payment of $50 million plus accrued interest paid on
January 2, 2002. Interest on the deferred payment had been payable quarterly at
an annual rate of 6%. Because these compensation arrangements involve variable
incentive-based fees, the $1.0 million deductibility limit of Section 162(m) is
generally not expected to apply to the payments. The Employment Agreement may
not be amended without the approval of this Committee.
COMPENSATION COMMITTEE
Raymond C. Avansino, Jr. (Chairman)
John C. Ferrara
Eamon M. Kelly
10
STOCK PERFORMANCE CHART
We are required by the Securities and Exchange Commission to provide you
with a comparison of the cumulative total return on our Class A Stock as of
December 31, 2002 with that of a broad equity market index and either a
published industry index or a peer group index selected by us. The following
chart compares the return on the Class A Stock with the return on the Russell
2000 Index and an index comprised of public companies with the Standard
Industrial Classification (SIC) Code 6282, Investment Advice. The comparison
assumes that $100 was invested in the Class A Stock at the Company's initial
public offering on February 11, 1999, and in each of the named indices, which
include the reinvestment of dividends, on February 11, 1999.
[COMPARISON GRAPH]
<Table>
<Caption>
Feb. 11, 1999 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 2001 Dec. 31, 2002
------------- ------------- ------------- ------------- -------------
Gabelli Asset
Management Inc. $100 $ 92.86 $189.65 $246.86 $171.43
Russell 2000 Index $100 $118.10 $113.00 $114.16 $ 89.52
Peer Group Index $100 $113.62 $191.07 $164.49 $128.68
</Table>
11
CERTAIN OWNERSHIP OF GABELLI'S STOCK
The following table sets forth, as of March 31, 2003, certain information
with respect to all persons known to Gabelli who beneficially own more than 5%
of the Class A Stock or Class B Stock. The table also sets forth information
with respect to stock ownership of the directors, each of the executive officers
named in the Summary Compensation Table, and all directors and executive
officers as a group. The number of shares beneficially owned is determined under
rules of the Securities and Exchange Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares over which a person has the sole
or shared voting or investment power and any shares which the person can acquire
within 60 days (e.g., through the exercise of stock options). Except as
otherwise indicated, the shareholders listed in the table have sole voting and
investment power with respect to the shares set forth in the table.
<Table>
<Caption>
AMOUNT AND
NATURE OF
TITLE OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER* CLASS OWNERSHIP OF CLASS
- ------------------------- -------- ---------- ----------
Barclays Global Investors, NA............................... Class A 363,125(1) 5.4%
Baron Capital Group, Inc. .................................. Class A 688,300(2) 10.2%
Cascade Investment, L.L.C. ................................. Class A 1,886,792(3) 21.8%
Chilton Investment Company, Inc. ........................... Class A 856,300(4) 12.6%
Roger Engemann & Associates, Inc. .......................... Class A 463,850(5) 6.9%
Westcap Investors, LLC...................................... Class A 731,049(6) 10.8%
Mario J. Gabelli............................................ Class A 113,265 1.7%
Class B 23,150,000(7) 100%
Bruce N. Alpert............................................. Class A 39,500(8) **
Douglas R. Jamieson......................................... Class A 9,500(9) **
James E. McKee.............................................. Class A 28,092(10) **
Robert S. Zuccaro........................................... Class A 47,810(11) **
Raymond C. Avansino, Jr..................................... Class A 91,500(12) 1.4%
John C. Ferrara............................................. Class A 17,500(13) **
Paul B. Guenther............................................ Class A 10,000 **
Eamon M. Kelly.............................................. Class A 4,650 **
Karl Otto Pohl.............................................. Class A 10,000(14) **
All Directors and Executive Officers as a Group............. Class A 371,817 5.4%
Class B 23,150,000 100%
</Table>
- ---------------
(*) The address of each beneficial owner of more than 5% of the Class A Stock
or Class B Stock is as follows: Barclays Global Investors, NA, 45 Fremont
Street, San Francisco, CA 94105; Baron Capital Group, Inc., 767 Fifth
Avenue, New York, NY 10153; Cascade Investment, LLC, 2365 Carillon Point,
Kirkland, WA 98033: Chilton Investment Company, Inc., 65 Locust Avenue,
New Canaan, CT 06840; Roger Engemann & Associates, Inc., 600 North
Rosemead Blvd., Pasadena, CA 91107; Westcap Investors, LLC, 11111 Santa
Monica Blvd., Los Angeles, CA 90025; and Mario J. Gabelli, One Corporate
Center, Rye, NY 10580.
(**) Represents beneficial ownership of less than 1%.
(1) As reported in a Schedule 13G, dated February 10, 2003. According to this
filing, Barclays Global Investors, NA has sole voting and dispositive power
with respect to 322,896 of the reported shares and Barclays Global Fund
Advisors has sole voting and dispositive power with respect to 40,229 of
the reported shares.
(2) As reported in an amendment to Schedule 13G, dated February 10, 2003.
According to this filing, Baron Capital Group, Inc. and Ronald Baron
beneficially own 688,300 shares, BAMCO, Inc. beneficially owns 625,300,
Baron Capital Management, Inc.
12
beneficially owns 63,000 shares, and Baron Growth Fund and Baron Small Cap
Fund each beneficially own 299,000 shares, and each of the reporting
persons has shared voting and dispositive power with respect to these
shares. These reporting persons disclaim beneficial ownership to the extent
these shares are held by their investment advisory clients and not directly
by the reporting persons.
(3) As reported in a Schedule 13D, dated August 27, 2001. Cascade Investment,
L.L.C.'s beneficial ownership of these shares assumes the conversion of a
$100 million convertible note purchased by it from the Company. The shares
beneficially owned by Cascade Investment, L.L.C. may be deemed to be
beneficially owned by William H. Gates III, the sole member of Cascade
Investment, L.L.C.
(4) As reported in an amendment to Schedule 13G, dated February 14, 2003.
According to this filing, Chilton Investment Company, Inc. has sole voting
and dispositive power with respect to all of the reported shares.
(5) As reported in an amendment to Schedule 13G, dated January 28, 2003.
According to this filing, Roger Engemann & Associates, Inc. and Pasadena
Capital Corporation have shared voting and dispositive power with respect
to these shares.
(6) As reported in an amendment to Schedule 13G, dated March 18, 2003.
According to this filing, Westcap Investors, LLC has sole voting power with
respect to 550,472 of the reported shares and sole dispositive power with
respect to 180,577 of the reported shares.
(7) Owned by Gabelli Group Capital Partners, Inc. ("GGCP") and two of its
subsidiaries. Mr. Gabelli disclaims beneficial ownership of these shares in
excess of his ownership interest in GGCP.
(8) Includes 7,500 shares that may be acquired through the exercise of stock
options.
(9) Includes 7,500 shares that may be acquired through the exercise of stock
options.
(10) Includes 25,000 shares that may be acquired through the exercise of stock
options.
(11) Includes 45,500 shares that may be acquired through the exercise of stock
options.
(12) Includes 7,500 shares that may be acquired through the exercise of stock
options. 60,000 shares are owned by entities for which Mr. Avansino serves
as a director or officer. Mr. Avansino disclaims beneficial ownership of
these 60,000 shares.
(13) Includes 7,500 shares that may be acquired through the exercise of stock
options.
(14) Represents shares that may be acquired through the exercise of stock
options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of filings made under Section 16(a) of the
Securities Exchange Act of 1934, we believe that our directors and executive
officers and other shareholders who may own 10% or more of Gabelli's common
stock have complied with the requirements of Section 16(a) the Securities
Exchange Act of 1934 to report ownership, and transactions which change
ownership, on time, except that a Form 5 was filed on behalf of Mr. Kelly in
February 2003 relating to a grant of options in October 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gabelli Group Capital Partners, Inc. ("GGCP"), formerly known as Gabelli
Funds, Inc., and two of its subsidiaries own all of the Company's Class B Stock,
representing approximately 97% of the combined voting power and 77% of the
outstanding shares of the Company's common stock.
Prior to its initial public offering in February 1999, the Company and GGCP
entered into a Management Services Agreement, with a one-year term and renewable
annually, under which the Company will provide certain services for GGCP,
including furnishing office space and equipment, providing insurance coverage,
overseeing the administration of its business and providing personnel to perform
certain administrative services. The Management Services Agreement was renewed
in May 2002. Pursuant to the Management Services Agreement, GGCP paid the
Company $300,000 for services provided in 2002.
As of December 5, 1997, GGCP entered into a master lease agreement with
M4E, LLC, which is owned by the children of Mr. Gabelli, for a 60,000 square
foot building, of which approximately 9,000 square feet are currently subleased
to other tenants. The master lease for the building and property, which is
located at 401 Theodore Fremd Avenue, Rye, New York (the "Building"), expires on
April 30, 2013. From December 5, 1997 through December 31, 2002, GGCP agreed to
pay rent equal to $720,000 per year. From January 1, 2003 through December 31,
2003, the rent will increase to $756,000 per year. From January 1, 2004 through
13
April 30, 2013, the rent will be a minimum of $765,000 per year, adjusted for
inflation. GGCP agreed to be responsible under the master lease for all
operating expenses, costs of electricity and other utilities and taxes. As of
February 9, 1999, GGCP assigned all of its rights and obligations under the
master lease to the Company.
As of December 5, 1997, GGCP subleased to Lynch Corporation, a company for
which Mr. Gabelli serves as Vice Chairman and is a significant stockholder,
approximately 5,000 square feet in the Building. The sublease had a five-year
term. With the assignment of the master lease, the Company became the successor
as landlord to GGCP under this sublease. As of September 1, 1999, Lynch
Corporation assigned all of its rights and obligations under the sublease to
Lynch Interactive Corporation, a company for which Mr. Gabelli serves as Vice
Chairman and is a significant stockholder. Effective May 1, 2001, the parties
agreed to reduce the leased space to approximately 3,300 square feet. Effective
December 5, 2002, the Company and Lynch Interactive Corporation extended the
lease on this space for five years, although the Company has a right to
terminate it after three years. Pursuant to this lease, Lynch Interactive
Corporation pays rent to the Company at the rate of $28 per square foot plus $3
per square foot for electricity, subject to adjustment for increases in taxes
and other operating expenses. The total amount paid in 2002 for rent and other
expenses under this lease was $72,858.
GAMCO Investors, Inc. ("GAMCO"), a wholly-owned subsidiary of the Company,
has entered into agreements to provide advisory and administrative services to
MJG Associates, Inc., which is wholly-owned by Mr. Gabelli, and to Gabelli
Securities, Inc. ("GSI"), a majority-owned subsidiary of the Company, with
respect to the private investment funds managed by each of them. Pursuant to
such agreements, GSI and MJG Associates, Inc. paid GAMCO $50,000 and $10,000,
respectively, (excluding reimbursement of expenses) for 2002.
Gabelli Securities International Limited ("Gabelli Securities
International") was formed in 1994 to provide management and investment advisory
services to offshore funds and accounts. Marc Gabelli, a portfolio manager of
the Company and the son of Mr. Gabelli, owns 55% of Gabelli Securities
International and GSI owns the remaining 45%.
In 1994, Gabelli International Gold Fund Limited ("GIGFL"), an offshore
investment company investing primarily in securities of issuers with
gold-related activities, was formed and Gabelli Securities International entered
into an agreement to provide management services to GIGFL. GSI in turn entered
into an agreement with Gabelli Securities International to provide investment
advisory services to GIGFL in return for receiving all investment management
fees paid by GIGFL. Pursuant to such agreement, GSI received investment
management fees of $29,162 for 2002.
In April 1999, Gabelli Global Partners, Ltd., an offshore investment fund,
was incorporated. Gabelli Securities International and Gemini Capital
Management, LLC ("Gemini"), an entity owned by Marc Gabelli, were engaged by the
fund as investment advisors as of July 1, 1999. The fund paid half of the
management fees for 2002, approximately $119,230, to Gabelli Securities
International which amount it in turn paid to GSI for services provided.
In April 1999, GSI formed Gabelli Global Partners, L.P., an investment
limited partnership for which GSI and Gemini are the general partners. In March
2002, Gabelli Global Partners, L.P. changed its name to Gemini Global Partners,
L.P. Gemini received half of the management fee paid by the partnership to the
general partners in the amount of $138,077 for 2002.
14
In December 1999, Gabelli European Partners, Ltd., an offshore investment
fund, was incorporated. Gabelli Securities International was engaged as an
investment advisor by the fund as of January 1, 2000. For services rendered by
GSI, Gabelli Securities International paid GSI all of the incentive and
management fees it received for 2002 from the fund in the amount of $129,432.
Effective January 1, 1999, Gabelli Funds, LLC, a subsidiary of the Company,
entered into an agreement to provide advisory and administration services to
Gemini with respect to the funds it manages. Pursuant to this agreement, Gemini
paid Gabelli Funds, LLC $5,000 for services provided in 2002.
For 2002, the Company reimbursed GGCP in the amount of $86,225 for GGCP's
incremental costs (but not the fixed costs) relating to the Company's use of an
airplane in which GGCP owns a fractional interest.
In connection with the purchase of shares of GSI prior to the Company's
initial public offering, Mr. Zuccaro, Marc Gabelli and Matthew R. Gabelli, a
Vice President -- Trading of the Company and the son of Mr. Gabelli, executed
demand notes with respect to loans of $72,420, $111,080, and $66,409,
respectively, each of which accrued interest at the rate of 7%. In November
2002, these loans together with all accrued and unpaid interest were repaid in
full.
In 2002, Mr. Gabelli, by virtue of a newly entered into relationship, now
has a spouse who has been at the firm since 1984.
The Company has an agreement with Mr. Karl Otto Pohl to pay him an annual
retainer fee equal to the difference between $250,000 and the amounts received
by Mr. Pohl directly from the Mutual Funds for his service on their boards of
directors. The Mutual Funds did not pay Mr. Pohl any amount in 2002.
As required by the Company's Code of Ethics, the Company's staff members
are required to maintain their brokerage accounts at Gabelli & Company unless
they receive permission to maintain an outside account. Gabelli & Company offers
all of its staff the opportunity to engage in brokerage transactions at
discounted rates. Accordingly, many of the Company's staff members, including
the executive officers or entities controlled by them, have brokerage accounts
at Gabelli & Company and have engaged in securities transactions through it at
discounted rates. From time to time, the Company through its subsidiaries in the
ordinary course of business has also provided brokerage or investment advisory
services to the Company's directors, the substantial shareholders listed in the
table under "Certain Ownership of Gabelli's Stock" or entities controlled by
such persons for customary fees.
REPORT OF THE AUDIT COMMITTEE
Messrs. Avansino, Ferrara and Kelly, each of whom is an independent
director, are the members of the Audit Committee. In this report, the term "we"
refers to the members of the Audit Committee.
The Board of Directors has adopted a written charter for the Audit
Committee. A copy of that charter was included as Appendix A to our 2001 proxy
statement. There have been no material changes to the charter since then. Our
job is one of oversight as set forth in our charter. Gabelli's management is
responsible for preparing Gabelli's financial statements and for maintaining
internal controls. The independent auditors are responsible for auditing the
financial statements and expressing an opinion as to whether those audited
financial statements fairly represent the financial position, results of
operations and cash flows of Gabelli in conformity with generally accepted
accounting principles.
We have reviewed and discussed Gabelli's audited 2002 financial statements
with management and with Ernst & Young LLP, Gabelli's independent auditors.
We have discussed with Ernst & Young LLP the matters required by Statement
on Auditing Standards No. 61, Communication with Audit Committees.
15
We have received from Ernst & Young LLP the written statements required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and have discussed with Ernst & Young LLP its independence.
Based on the review and discussions referred to above, we have recommended
to the Board of Directors that the audited financial statements be included in
Gabelli's Annual Report on Form 10-K for the year ended December 31, 2002 for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Eamon M. Kelly (Chairman)
Raymond C. Avansino, Jr.
John C. Ferrara
INDEPENDENT ACCOUNTANTS
SELECTION OF ERNST & YOUNG LLP
In November 2002, the Audit Committee considered and recommended, and
Gabelli's Board of Directors approved, the selection of Ernst & Young LLP to be
our independent accountants for the year ending December 31, 2002. Gabelli has
not selected auditors for the current year, since its normal practice is for the
Audit Committee and the Board to make the selection later in the year. Ernst &
Young LLP has been Gabelli's independent auditors since its inception in 1998.
Representatives of this firm will be present at the meeting. They will have the
opportunity to make a statement and respond to appropriate questions from
shareholders.
ERNST & YOUNG LLP FEES FOR 2002
Audit Fees. Fees billed to Gabelli by Ernst & Young LLP with respect to
the audit of the 2002 financial statements and interim reviews of quarterly
financial statements for 2002 were $379,000.
Financial Information Systems Design and Implementation Fees. No services
were performed and no fees were billed to Gabelli by Ernst & Young LLP in
connection with financial information systems design and implementation projects
for 2002.
All Other Fees. All other fees billed to Gabelli by Ernst & Young LLP with
respect to 2002 were $103,060, which fees were for tax return preparation and
review of registration statements.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining Ernst & Young's
independence.
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Qualified shareholders who want to have proposals presented at our 2004
annual meeting must deliver them to Gabelli by December 18, 2003, in order to be
considered for inclusion in next year's proxy statement and proxy.
16
OTHER MATTERS
We know of no other matters to be presented to you at the meeting other
than the election of directors. If other matters are considered at the meeting,
the proxies will vote on these matters in accordance with their judgment of the
best interests of Gabelli.
We will provide a free copy of Gabelli's Annual Report on Form 10-K for the
year ended December 31, 2002. Requests should be in writing and addressed to
Gabelli's Chief Financial Officer (Robert S. Zuccaro, Gabelli Asset Management
Inc., One Corporate Center, Rye, NY 10580-1422).
17
PROXY
GABELLI ASSET MANAGEMENT INC.
Proxy Solicited by the Board of Directors
for the Annual Meeting of Shareholders, May 13, 2003
(see Proxy Statement for discussion of items)
The undersigned hereby appoints Mario J. Gabelli, James E. McKee and
Robert S. Zuccaro, and each of them, jointly and severally, as proxies, with
power of substitution, to vote all shares of Gabelli Asset Management Inc. Class
A Common Stock which the undersigned is entitled to vote on all matters which
may properly come before the 2003 Annual Meeting of Shareholders of Gabelli
Asset Management Inc., or any adjournment thereof.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
[ X ] Please mark
votes as in this
example
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
- --------------------------------------------------------------------------------
1. Election of six directors, each for a one-year term.
Nominees: (01) Raymond C. Avansino, Jr., (02) John C. Ferrara, (03) Mario J.
Gabelli, (04) Paul B. Guenther, (05) Eamon M. Kelly and (06) Karl Otto Pohl
FOR [ ] WITHHOLD [ ]
ALL FROM ALL
NOMINEES NOMINEES
[ ] --------------------------------------------
For all nominees except as noted above
The shares represented by this Proxy Card will be voted as specified, but if no
specification is made they will be voted FOR Item 1 and at the discretion of the
proxies on any other matter that may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE CHANGES AT LEFT [ ]
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full name and title as such.
Please sign, date and return promptly in the accompanying envelope.
Signature: Date: Signature: Date:
--------------------------------- ------------ -------------------------------- -------------------