SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Salomon Brothers Fund Inc
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(Name of Registrant as Specified in Its Charter)
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THE SALOMON BROTHERS FUND INC
125 BROAD STREET, NEW YORK, NEW YORK 10004
March 13, 2003
Dear Stockholders:
We are pleased to enclose the notice and proxy statement for the Annual
Meeting of Stockholders of The Salomon Brothers Fund Inc (the "Fund"), to be
held on Tuesday, April 22, 2003, at the offices of Salomon Brothers Asset
Management Inc, 399 Park Avenue, 12th Floor, auditorium, New York, New York at
1:30 p.m.
The first proposal that will be presented at the Annual Meeting ("Proposal
1") is for the annual election of directors of the Fund. The Board of Directors
recommends that you vote "FOR" Proposal 1.
In addition, you are also being asked to vote on two proposals that have
been submitted by stockholders of the Fund. The first stockholder proposal
("Proposal 2") requests that the Board of Directors consider converting the
Fund to an open-end fund. The second stockholder proposal ("Proposal 3")
requests that the Board of Directors consider being compensated in shares of
the Fund, rather than in dollars. The Board of Directors has reviewed these
proposals and, after careful consideration, we recommend that you vote
"AGAINST" Proposal 2 and Proposal 3. The Board believes that votes "AGAINST"
Proposal 2 and Proposal 3 will be in the best interests of the Fund and its
stockholders.
We urge you to review the enclosed materials for all the details of the
proposals described above. It is very important that you complete and return
the enclosed proxy card. If we have not received your proxy card prior to the
date of the Annual Meeting, you may receive a telephone call from a
representative of the Fund encouraging you to exercise your right to vote.
To facilitate your attendance at the Annual Meeting, directions to 399
Park Avenue are printed on the next page.
If you have any questions or need assistance voting your shares, please
call D. F. King & Co., Inc., who is assisting the Fund, toll-free at
1-888-414-5566.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken
Chairman
DIRECTIONS TO THE SALOMON BROTHERS FUND ANNUAL MEETING OF STOCKHOLDERS
399 PARK AVENUE, 12TH FLOOR, AUDITORIUM
NEW YORK, NEW YORK
LOCATION: 399 Park Avenue is located in midtown Manhattan with entrances into
the building located on both Park and Lexington Avenues between 53rd and 54th
Streets.
PUBLIC TRANSPORTATION:
BY SUBWAY:
Lexington Avenue line: 6 Train to 51st Street
6th Avenue line: V Train to Lexington Avenue/53rd Street
8th Avenue line: E Train to Lexington Avenue/53rd Street
ALL BAGS, PURSES AND PACKAGES WILL BE SUBJECT TO
SCREENING PRIOR TO ENTRY INTO THE BUILDING.
STOCKHOLDERS ATTENDING THE ANNUAL MEETING MUST STOP AT THE SECURITY DESK.
PLEASE HAVE PHOTO ID AVAILABLE.
THE SALOMON BROTHERS FUND INC
125 BROAD STREET, NEW YORK, NEW YORK 10004
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 13, 2003
To the Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of The Salomon Brothers
Fund Inc (the "Fund") will be held at the offices of Salomon Brothers Asset
Management Inc, 399 Park Avenue, 12th Floor, auditorium, New York, New York, on
Tuesday, April 22, 2003, at 1:30 p.m., for the purposes of considering and
voting upon the following:
1. The election of directors (Proposal 1);
2. To consider a stockholder proposal to request that the Board of
Directors consider converting the Fund to an open-end Fund
(Proposal 2);
3. To consider a stockholder proposal to request that the Board of
Directors consider receiving compensation in shares of the Fund
rather than cash (Proposal 3); and
4. Any other business that may properly come before the Meeting.
The close of business on February 21, 2003 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting.
By Order of the Board of Directors,
/s/ Christina T. Sydor
Christina T. Sydor
Secretary
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TO AVOID UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN IT AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW LARGE OR HOW
SMALL YOUR HOLDINGS MAY BE.
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
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CORPORATE ACCOUNTS
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(1) ABC Corp. .................................... ABC Corp. (by John Doe, Treasurer)
(2) ABC Corp. .................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer ........... John Doe
(4) ABC Corp. Profit Sharing Plan ................ John Doe, Trustee
TRUST ACCOUNTS
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(1) ABC Trust .................................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 ......... Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
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(1) John B. Smith, Cust. f/b/o John B. Smith, John B. Smith
Jr. UGMA ...................................
(2) John B. Smith ................................ John B. Smith, Jr., Executor
THE SALOMON BROTHERS FUND INC
125 BROAD STREET, NEW YORK, NEW YORK 10004
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PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The Salomon Brothers Fund Inc (the "Fund") of proxies to
be used at the Annual Meeting of Stockholders of the Fund to be held at the
offices of Salomon Brothers Asset Management Inc, 399 Park Avenue, 12th Floor,
auditorium, New York, New York, on Tuesday, April 22, 2003 at 1:30 p.m., New
York Time (and at any adjournment or adjournments thereof), for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
proxy statement and the accompanying form of proxy are first being mailed to
stockholders on or about March 13, 2003. Stockholders who execute proxies
retain the right to revoke them in person at the Meeting or by written notice
received by the Secretary of the Fund at any time before they are voted.
Unrevoked proxies will be voted in accordance with the specifications thereon
and, unless specified to the contrary, will be voted FOR the election of
directors and AGAINST proposals 2 and 3. The close of business on February 21,
2003 has been fixed as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting. Each stockholder is entitled
to one vote for each full share and an appropriate fraction of a vote for each
fractional share held. As of February 21, 2003, there were 100,284,733 shares
of Common Stock outstanding.
In accordance with the Fund's By-Laws, a quorum is constituted by the
presence in person or by proxy of the holders of record of a majority of the
outstanding shares of the Fund's Common Stock entitled to vote at the Meeting.
In the event that a quorum is not present at the Meeting, or in the event that
a quorum is present but sufficient votes to approve the proposal relating to
the election of directors are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to a date not more than 120
days after the original record date to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies which they are entitled to vote FOR or AGAINST
any such proposal in their discretion. A stockholder vote may be taken on one
or more of the proposals in this proxy statement prior to any such adjournment
if sufficient votes have been received for approval. For purposes of
determining whether there is a quorum present at the Annual Meeting,
abstentions and Broker Non-Votes, as defined below, will be treated as shares
that are present. Abstentions and Broker Non-Votes do not count as votes cast
with respect to any proposal. With respect to a proposal requiring the
affirmative vote of a majority of the outstanding shares of Capital Stock, the
effect of abstentions and Broker Non-Votes is the same as a vote against such
proposal. "Broker Non-Votes" are shares held in the name of a broker or nominee
for which an executed proxy is received by the Fund, but are not voted on the
proposal because voting instructions have not been received from the beneficial
owners or persons entitled to vote and the broker or nominee does not have
discretionary voting power.
Salomon Brothers Asset Management Inc ("SBAM"), whose principal business
address is 399 Park Avenue, New York, New York 10022, is the Fund's investment
adviser and administrator.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to hold office until the
next Annual Meeting and until their successors are elected and qualified.
Unless authority is withheld, it is the intention of the persons named in the
proxy to vote the proxy FOR the election of the nominees named below. Each
nominee has indicated that he or she will serve if elected, but if any nominee
should be unable to serve, the proxy will be voted for any other person
determined by the persons named in the proxy in accordance with their judgment.
In September 2002, Heath B. McLendon resigned as Chairman, President and a
director of the Fund in order to serve as Chairman of the Equity Research
Policy Committee at Salomon Smith Barney Inc.
The following table provides information concerning each nominee for
election as director:
NUMBER OF
FUNDS ADVISED
BY SBAM AND
OVERSEEN OTHER
BY NOMINEE DIRECTORSHIPS
POSITION HELD LENGTH OF PRINCIPAL OCCUPATION (INCLUDING HELD BY
NAME, ADDRESS AND AGE WITH FUND TERM SERVED DURING PAST 5 YEARS THE FUND) NOMINEE
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NON-INTERESTED DIRECTOR NOMINEES
Andrew L. Breech Director Since 1991 President, Dealer 3 None
2120 Wilshire Blvd Operating Control Service,
Santa Monica, CA 90403 Inc.
Age: 50
Carol L. Colman, Director Since 1992 President, Colman 32 None
278 Hawley Road Consulting
North Salem, NY 10560
Age: 57
William R. Dill, Director Since 1985 Retired 3 None
25 Birch Lane
Cumberland Foreside,
ME 04110
Age: 72
Clifford M. Kirtland, Jr. Director Since 1987 Retired 3 None
9 Parkway Square
4200 Northside Pkwy,
NW
Atlanta, GA 30327
Age: 79
Louis P. Mattis Director Since 1991 Principal, Mattis & Co. LLP 3 Director of Epgenix
446 Oak Ridge Rd
Snowmass Village,
CO 81615
Age: 61
Thomas F. Schlafly Director Since 1986 Of Counsel to Blackwell 3 None
720 Olive Street Sanders Peper Martin LLP
St. Louis, MO 63101 (attorneys); President, The
Age: 54 Saint Louis Brewery, Inc.
2
NUMBER OF
FUNDS ADVISED
BY SBAM AND
OVERSEEN OTHER
BY NOMINEE DIRECTORSHIPS
POSITION HELD LENGTH OF PRINCIPAL OCCUPATION (INCLUDING HELD BY
NAME, ADDRESS AND AGE WITH FUND TERM SERVED DURING PAST 5 YEARS THE FUND) NOMINEE
- ----------------------- --------------- ------------- --------------------------- -------------- --------------
INTERESTED DIRECTOR NOMINEE
R. Jay Gerken* Chairman, Since Managing Director, 226 None
Salomon Smith President and 2002 Salomon Smith Barney Inc.
Barney Inc. Director ("SSB"); Chairman,
399 Park Avenue, President and Chief
49th Floor Executive Officer of Smith
New York, NY 10022 Barney Fund Management
Age 52 LLC ("SBFM"), Travelers
Investment Adviser, Inc.
("TIA") and Citi Fund
Management Inc.
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* Mr. Gerken is an "interested person," as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") because he is a director
and/or officer of affiliates of SBAM, the Fund's investment adviser.
The following table provides information concerning the dollar range* of
equity securities beneficially owned by each nominee for election as director
as of December 31, 2002:
DOLLAR RANGE* OF EQUITY AGGREGATE DOLLAR RANGE* OF EQUITY SECURITIES IN ALL FUNDS OVERSEEN
NAME OF NOMINEE SECURITIES IN THE FUND BY NOMINEE AND ADVISED BY SBAM
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NON-INTERESTED DIRECTOR NOMINEES
Andrew L. Breech D E
Carol L. Colman D E
William R. Dill C E
Clifford M. Kirtland, Jr. C E
Louis P. Mattis C C
Thomas F. Schlafly C E
INTERESTED DIRECTOR NOMINEE
R. Jay Gerken B E
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* The dollar ranges are as follows: "A" = none; "B" = $1 - $10,000; "C" =
$10,001 - $50,000; "D" = $50,001 - $100,000; "E" = over $100,000.
No Director or nominee for election as director who is not an "interested
person" of the Fund as defined in the 1940 Act, nor any immediate family member
of such persons, had any interest in SBAM, the Fund's investment adviser, or
any person or entity (other than the Fund) directly or indirectly controlling,
controlled by, or under common control with SBAM as of December 31, 2002.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for ensuring that the Fund is
managed in the best interests of its stockholders. The directors oversee the
Fund's business by, among other things, meeting with the Fund's
3
management and evaluating the performance of the Fund's service providers
including SBAM, the custodian, the transfer agent and the administrator. As
part of this process, the directors consult with the Fund's independent
auditors and with their own separate independent counsel.
The Board of Directors has four regularly scheduled meetings each year and
additional meetings are scheduled as needed. In addition, the Board has an
audit committee, a nominating committee and a proxy committee, which meet
periodically during the year and whose responsibilities are described below.
The directors regularly review the Fund's financial statements,
performance and market price as well as the quality of the services being
provided to the Fund. As part of this process, the directors review the Fund's
fees and expenses to determine if they are reasonable and competitive in light
of the services being received and while also ensuring that the Fund continues
to have access to high quality services in the future. Based on these reviews,
the directors periodically make suggestions to the Fund's management and
monitor to ensure that responsive action is taken. The directors also monitor
potential conflicts of interest among the Fund, SBAM and its affiliates and
other funds and clients managed by SBAM to ensure that the Fund is managed in a
manner which is in the best interests of the Fund's stockholders.
At February 28, 2003, the directors and officers of the Fund as a group
owned beneficially less than 1% of the outstanding shares of the Fund's Common
Stock. To the knowledge of management, no person owned of record or owned
beneficially more than 5% of the Fund's shares of Common Stock outstanding at
that date, except that Cede & Co., a nominee for participants in Depository
Trust Company, held of record 75,417,269 shares, equal to approximately 75.20%
of the Fund's outstanding shares.
The Fund's executive officers are chosen each year at the first meeting of
the Board of Directors of the Fund following the Annual Meeting of
Stockholders, to hold office until the meeting of the Board following the next
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified. In addition to Mr. Gerken, the Fund's Chairman and
President, the executive officers of the Fund currently are:
4
POSITION(S)
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE FUND TIME SERVED DURING PAST 5 YEARS
- --------------------- ---- ----------- -------------------
Lewis E. Daidone Executive Vice Since 2002 Managing Director of SSB; Chief
Salomon Smith Barney Inc. President Financial Officer of the Smith Barney
399 Park Avenue and Chief Mutual Funds; Director and Senior Vice
New York, NY 10022 Administrative President of Smith Barney Fund
Age: 45 Officer Management LLC ("SBFM") and
Travelers Investment Adviser, Inc.
Senior Vice 1998-2002 ("TIA").
President and
Treasurer
Michael A. Kagan Executive Vice Since 2001 Managing Director of SBAM.
SBAM President
399 Park Avenue
New York, NY 10022
Age: 42
Mark McAllister Executive Vice Since 2001 Director of SBAM.
SBAM President
399 Park Avenue
New York, NY 10022
Age: 40
Frances M. Guggino Controller Since 2002 Vice President, Citigroup Asset
Salomon Smith Barney Inc. Management.
125 Broad Street, 10th Floor
New York, NY 10004
Age: 45
Christina T. Sydor Secretary Since 1998 Managing Director of SSB; General
Salomon Smith Barney Inc. Counsel and Secretary of SBFM and TIA.
300 First Stamford Place
Stamford, CT 06902
Age: 52
The Fund's Audit Committee is composed entirely of directors who are not
"interested persons" of either the Fund, SBAM or their affiliates within the
meaning of the 1940 Act, and who are "independent" as defined in the New York
Stock Exchange listing standards. During the fiscal year ended December 31,
2002, the Fund's Audit Committee was composed of Messrs. Kirtland, Breech and
Schlafly. In January 2003, the Audit Committee was expanded to include all of
the directors who are not "interested persons" of the Fund, SBAM or their
affiliates within the meaning of the 1940 Act, and who are "independent" as
defined in the New York Stock Exchange listing standards. The principal
functions of the Audit Committee are: (i) to recommend to the Board the
appointment of the Fund's independent auditors; (ii) to review with the
independent auditors the scope and anticipated cost of their audit; and (iii)
to receive and consider a report from the independent auditors concerning their
conduct of the audit, including any comments or recommendations they might want
to make in that connection. This Committee held two meetings during the fiscal
year ended December 31, 2002. The Fund adopted an Audit Committee Charter at a
meeting held on April 11, 2000.
During the fiscal year ended December 31, 2002, the Fund's Nominating
Committee, whose principal function is to recommend nominees for election as
directors of the Fund, was composed of Messrs. Dill, Mattis and Schlafly. This
Committee held one meeting during the fiscal year ended December 31, 2002. In
January 2003, the Nominating Committee's name was changed to the Nominating and
Governance Committee, and its membership was expanded to include all of the
directors who are not "interested persons" of the Fund, SBAM or their
affiliates within the meaning of the 1940 Act, and who are "independent" as
defined in the New York Stock Exchange listing standards. The Nominating and
Governance Committee will be responsible for
5
recommending nominees for election as directors and reviewing compensation. The
Nominating and Governance Committee will accept nominations for the office of
director made by the stockholders in a written request addressed to the
Secretary of the Fund which includes biographical data and sets forth the
qualifications of the proposed nominee.
During the fiscal year ended December 31, 2002, the Fund's Proxy
Committee, whose principal function is to establish and monitor the Fund's
policy on voting proxies of companies whose securities are held in the Fund's
portfolio and determine the manner in which proxies for the Fund's securities
are voted, held one meeting. In January 2003, the Proxy Committee was
reconstituted to include all of the directors who are not "interested persons"
of the Fund, SBAM or their affiliates within the meaning of the 1940 Act, and
who are "independent" as defined in the New York Stock Exchange listing
standards.
During the fiscal year ended December 31, 2002, the Board of Directors met
eight times. Each director attended at least 75% of the aggregate number of
meetings of the Board and the committees for which he/she was eligible.
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on February 24, 2003, the
Audit Committee reports that it has (i) reviewed and discussed the Fund's
audited financial statements with management; (ii) discussed with
PricewaterhouseCoopers LLP ("PwC"), the independent auditors to the Fund, the
matters (such as the quality of the Fund's accounting principles and internal
controls) required to be discussed by Statement on Auditing Standards No. 61;
and (iii) reaffirmed written confirmation previously received from PwC that it
is independent and written disclosures regarding such independence as required
by Independence Standards Board Standard No. 1, and discussed with PwC the
auditors' independence. Based on the review and discussions referred to in
items (i) through (iii) above, the Audit Committee recommended to the Board of
Directors (and the Board has approved) that the audited financial statements be
included in the Fund's annual report for the Fund's fiscal year ended December
31, 2002.
A representative of PwC will be available at the Meeting to answer
appropriate questions and will have an opportunity to make a statement if he or
she chooses to do so.
AUDIT FEES. Fees for the annual audit of the Fund's financial statements
by PwC for the fiscal year ended December 31, 2002 were $39,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There were
no fees billed for financial information systems design and implementation
services rendered by PwC to the Fund, SBAM and entities controlled by or
affiliated with SBAM that provide services to the Fund for the fiscal year
ended December 31, 2002.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services, including fees for tax related services, rendered by PwC to the Fund,
SBAM and entities controlled by or affiliated with SBAM that provide services
to the Fund for the fiscal year ended December 31, 2002 were $3,500. The Audit
Committee of the Fund has determined that provision of these non-audit services
is compatible with maintaining the independence of PwC.
ADDITIONAL MATTERS
Under the federal securities laws, the Fund is required to provide to
stockholders in connection with the Meeting information regarding compensation
paid to the directors by the Fund, as well as by the various other
6
investment companies advised by SBAM. The following table provides information
concerning the compensation paid to each director during the fiscal year ended
December 31, 2002. Certain of the directors listed below are members of the
Audit Committee of the Fund and other committees of certain other investment
companies advised by SBAM, and, accordingly, the amounts provided in the table
include compensation for service on such committees. Please note that the Fund
does not provide any pension or retirement benefits to directors. In addition,
the Fund paid no remuneration during the fiscal year ended December 31, 2002 to
Mr. Gerken who is an "interested person" as defined in the 1940 Act.
TOTAL COMPENSATION
AGGREGATE FROM FUND AND
COMPENSATION FUND COMPLEX
NAME OF DIRECTORS FROM THE FUND DIRECTORSHIPS(A)
- ----------------- ------------- ----------------
Andrew L. Breech .................. $13,500 $35,500(3)
Carol L. Colman ................... $14,250 $90,950(32)
William R. Dill ................... $13,500 $35,500(3)
Clifford M. Kirtland, Jr. ......... $13,500 $35,500(3)
Louis P. Mattis ................... $11,250 $25,250(3)
Thomas F. Schlafly ................ $14,250 $32,750(3)
- ----------
(A) The numbers in parentheses indicate the applicable number of investment
company directorships held by that director.
Upon attainment of age 80, directors are required to change to emeritus
status. Directors emeritus are entitled to serve in emeritus status for a
maximum of 10 years, during which time they are paid 50% of the annual retainer
fee and meeting fees otherwise applicable to Fund directors, together with
reasonable out-of-pocket expenses for each meeting attended. During the Fund's
last fiscal year, total compensation paid by the Fund to a director emeritus
totaled $6,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and Section 30(h) of
the 1940 Act in combination require the directors and officers of the Fund,
persons who own more than 10% of the Fund's Common Stock, and SBAM and its
directors and officers to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the New York Stock Exchange.
Based solely on its review of the copies of such filings received by it and
certain other information received by it, the Fund believes that, for the
fiscal year ended December 31, 2002, all filing requirements applicable to such
persons were complied with, except that timely Form 3 filings may not have been
made by Anthony Pace, Peter Wilby, Maureen O'Callaghan, William Arnold, Virgil
Cumming, Mark Kleinman, Ross Margolies and Wendy Murdock. However, during the
Fund's fiscal year ended December 31, 2002, no purchases or sales were made by
any of the foregoing people and, with the exception of Anthony Pace, who is no
longer employed by SBAM, they have each subsequently filed Form 3s.
REQUIRED VOTE
The nominees as directors are elected by a plurality of the votes cast by
the holders of shares of the Fund's Common Stock present in person or
represented by proxy at a meeting at which a quorum is present. For purposes of
the election of directors, abstentions and broker non-votes will not be
considered votes cast, and do not affect the plurality vote required for
directors.
7
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT "INTERESTED PERSONS,"
AS DEFINED IN THE 1940 ACT, UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS VOTE
"FOR" EACH OF THE NOMINEES FOR DIRECTOR.
PROPOSAL 2: STOCKHOLDER PROPOSAL REGARDING OPEN-ENDING THE FUND
Mr. Fred S. Strauss, 630 Fifth Avenue, Suite 2263, New York, NY 10111, has
notified the Fund that he is the beneficial owner of 51,563 shares of the
Fund's Common Stock and that he intends to introduce the proposal set forth
below at the meeting.
"I request that the shareholders be given an opportunity to vote and
request that the board consider changing the Salomon Brothers Fund from a
closed-end fund to an open-ended fund."
Mr. Strauss has submitted the following statement in support of his
proposal:
"Here is an opportunity for this board to show that shareholder interests
are above those of management. This board should strongly endorse this change
since it would increase shareholder values by 15% immediately. This change is
way overdue and should have been recommended by the board a long time ago. SBF,
unfortunately, in its present form has become one of the worst performers in
its class.
The bonus to the company that the shareholders paid for last year when
they lost 20% of their capital is an outrage. The share buyback program is
totally inadequate. The overall performance of the fund should be an
embarrassment to all concerned.
Management does not refer to the fact that while the shareholders would
have an immediate and substantial appreciation of about $1.50 per share as a
result of the change of the Salomon Brothers Fund from closed-end to open-end,
management has nothing to gain, in fact, may record reduced earnings as a
result.
The shareholders have a right to know why management so vigorously opposes
this change from taking place."
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE AGAINST THIS STOCKHOLDER PROPOSAL
FOR THE REASONS SET FORTH BELOW.
The Board of Directors believes that conversion to an open-end fund would
be harmful to the long-term interests of our stockholders.
This is the fourth time that the Fund's stockholders have considered a
stockholder proposal to convert the Fund to an open-end fund. On each of the
three previous occasions -- in 1974, 1975 and 1992 -- the stockholders
overwhelmingly voted against the proposal. The directors continue to believe
that conversion to an open-end fund is not in the best interests of a majority
of our stockholders, and that the Fund should remain as a closed-end investment
company.
A principal reason offered in support of proposals to open-end a
closed-end fund is the elimination of the discount. Although the effect of
open-ending might be to provide those stockholders who redeem their shares
following the conversion with a quick, one-time profit, the directors believe
that it would be at the expense of other stockholders who have invested for the
longer term and wish to remain in a closed-end fund.
8
Although it is not possible to predict whether all of the effects
discussed below would take place if the Fund were to open-end, an independent
study of closed-end funds that converted to an open-end structure(1) noted the
following detrimental effects of open-ending:
o Net assets plunged due to large redemptions
o Portfolio holdings were liquidated to meet redemptions
o Liquidations meant necessary realization of significant capital gains
creating a tax liability for stockholders
o Expense ratios increased for remaining stockholders due to reduction
in total assets
o Investment styles were altered -- for example, funds were required to
maintain larger cash reserves to provide for stockholder redemptions
While the conversion of the Fund to open-end status may result in an
immediate gain to stockholders as a result of the elimination of the discount,
stockholders who want to remain invested in the Fund for the longer term might
find that their money was invested in an entity with many characteristics
different from -- and possibly less attractive than -- the one in which they
had purchased shares.
While discounts persist, investors are able to purchase shares in the
market and put more than a dollar of net assets to work for them for every
dollar invested. While there can be no guarantee of a fund's future
performance, if the discount continues, investors may benefit from greater
income yields on their investments than they would receive on shares purchased
at net asset value. This can be a significant advantage, particularly for
investors who hold their shares for the longer term.
In fact, 31% of the registered holders of the Fund's Common Stock are
currently taking advantage of this situation by participating in the Fund's
Dividend Reinvestment Plan in order to take the Fund's dividends, year-end gain
distributions, or both, in additional shares. This opportunity to invest at a
discount would be lost after open-ending.
In addition to the long-term effects mentioned above, the significant
costs of the process of conversion to an open-end fund, including the legal,
accounting and printing costs, would be borne by the stockholders. The Fund has
historically had a low expense ratio (the ratio of operating expenses to
average net assets) compared to other closed-end funds. If the Fund open-ended,
the directors believe it is reasonable to expect there would be significant
redemptions. The Fund's expense ratio might also increase as a result, as fixed
expenses would be spread over a smaller asset base and additional charges such
as distribution expenses would be imposed.
The directors believe that the Fund's investment performance is more
important than the discount to most long-term investors. The Fund was organized
in 1929 and has operated successfully as a closed-end investment company
providing investors with favorable returns for many years.
While the directors are concerned about the discount from net asset value
at which the Fund's stock has been trading recently, they believe that the
overall consequences of changing the Fund to an open-end fund would make such a
step unwise at this time. However, the Fund has regularly investigated the
possible reasons
- ----------
(1) CDA/Wiesenberger, Study of Closed-End Funds that Open-End, September 21,
1998. CDA/Wiesenberger is a mutual fund tracking service and has provided
mutual fund data to financial professionals for more than 55 years.
9
for the discount and possible approaches for reducing it, including share
repurchase programs and amendments to the Dividend Reinvestment Plan. Both the
share repurchase program and the Dividend Reinvestment Plan amendments have
tended to narrow the Fund's discount. In 2002, the Board authorized the Fund to
repurchase from time to time in the open market up to 1,000,000 shares of the
Fund's Common Stock. The Board of Directors directed the management of the Fund
to repurchase shares of the Fund's Common Stock at such times and in such
amounts as management believes will enhance stockholder value, subject to
review by the Fund's Board of Directors. As of March 3, 2003, 855,500 shares of
the 1,000,000 shares authorized have been repurchased in this ongoing program.
A similar share repurchase program was conducted from October 1995 to 1997,
during which 929,500 shares were repurchased. The amendments to the Dividend
Reinvestment Plan provide that when stock of the Fund is trading at a discount
to net asset value, Dividend Reinvestment Plan participants receive dividends
and distributions in the form of shares purchased in the open market. As noted
above, 31% of the Fund's registered stockholders currently participate in the
Dividend Reinvestment Plan.
In summary, the directors believe that there is an important continuing
service to be provided to the Fund's stockholders and to the investing public
by maintaining the Fund as a large and broadly diversified closed-end
investment fund. Your vote against this proposal will help to ensure the Fund's
continuity as a closed-end fund, which the directors believe is in the
long-term interest of all its stockholders.
REQUIRED VOTE
Approval of this proposal requires the affirmative vote of a majority of
the votes cast at the Annual Meeting in person or by proxy on the matter.
Abstentions and Broker Non-Votes will not be counted as either for or against
the proposal. If not otherwise specified, proxies will be voted AGAINST
approval of the proposal. The proposal is advisory only and asks the Board of
Directors to consider taking the steps necessary to convert the Fund to an
open-end structure. The adoption of the proposal would not in itself result in
any action. Should the proposal be approved by the Fund's stockholders, the
Board of Directors will meet to determine if such a conversion is advisable. If
the Board were to determine that it was in the best interests of the Fund and
its stockholders to convert the Fund to an open-end structure, you would be
asked to consider a formal proposal from the Board at a later date.
THE DIRECTORS BELIEVE THAT YOUR VOTE "AGAINST" PROPOSAL 2 WILL BE IN THE
BEST INTERESTS OF THE FUND AND ITS STOCKHOLDERS.
10
PROPOSAL 3: STOCKHOLDER PROPOSAL REGARDING PAYMENT TO DIRECTORS IN SHARES
Mr. Robert W. Gordon, P.O. Box 4721, Emerald Isle, NC 28594, is the
registered owner of 2,305 shares of the Fund's Common Stock and has notified
the Fund that he intends to introduce the proposal set forth below at the
meeting.
"I request that the shareholders be given an opportunity to vote and
request that SBF Directors be paid in shares, not dollars, to be held for at
least six months."
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE AGAINST THIS STOCKHOLDER PROPOSAL
FOR THE REASONS SET FORTH BELOW.
Throughout the history of the Fund, the individuals who have served as
directors of the Fund have frequently also been stockholders of the Fund. The
Fund encourages its directors to purchase shares of the Fund whenever doing so
would be an appropriate investment for a director. At this time, all of the
directors of the Fund are investors in the Fund, and each independent director
has held his or her shares for at least two years. Several of the directors
have held their shares for over ten years. Each independent director
beneficially owns at least $10,000 worth of shares of the Fund, and some own
well over $50,000 worth of Fund shares. The Board is aware that share ownership
can be a useful way to align the interests of the Fund's directors with the
interests of stockholders.
The Board does not believe, however, that the Fund should compensate
directors for their services in Fund shares. That in essence would be making an
investment decision for directors that may not be appropriate for them. The
Board believes the policy of encouraging directors to own Fund shares has been
effective since each director owns Fund shares. Furthermore, because the
directors are subject to tax on the compensation they receive from the Fund, if
they receive the full amount of their compensation in shares that they must
hold for at least six months, they will be required to use other assets to pay
their taxes.
In summary, the Board does not believe that requiring the directors to
accept compensation in the form of shares would benefit the Fund and its
stockholders. The directors' interests are already aligned with the interests
of stockholders through the directors' current and continuing ownership of Fund
shares.
REQUIRED VOTE
Approval of this proposal requires the affirmative vote of a majority of
the votes cast at the Annual Meeting in person or by proxy on the matter.
Abstentions and Broker Non-Votes will not be counted as either for or against
the proposal. If not otherwise specified, proxies will be voted AGAINST
approval of the proposal. The proposal is advisory only and asks the Board of
Directors to consider taking the steps necessary to compensate the directors in
shares of the Fund. The adoption of the proposal would not in itself result in
any action. Should the proposal be approved by the Fund's stockholders, the
Board of Directors will meet to determine if such action is advisable.
THE DIRECTORS BELIEVE THAT YOUR VOTE "AGAINST" PROPOSAL 3 WILL BE IN THE
BEST INTERESTS OF THE FUND AND ITS STOCKHOLDERS.
11
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS
All proposals by stockholders of the Fund which are intended to be
presented at the Fund's next Annual Meeting of Stockholders to be held in 2004
must be received by the Fund for inclusion in the Fund's proxy statement and
proxy relating to that meeting no later than November 13, 2003. Any stockholder
who desires to bring a proposal at the Fund's Annual Meeting of Stockholders
without including such proposal in the Fund's proxy statement must deliver
written notice thereof to the Secretary of the Fund (addressed to The Salomon
Brothers Fund Inc, 125 Broad Street, New York, New York 10004) during the
period from January 22, 2004 to February 23, 2004.
OTHER INFORMATION
The Fund's Annual Report containing financial statements for the fiscal
year ended December 31, 2002 is available, free of charge, by writing to the
Fund c/o Salomon Brothers Asset Management Inc at the address listed on the
front cover, or by calling 1-888-777-0102.
EXPENSES OF PROXY SOLICITATION
The costs of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Fund. Proxies may also be
solicited personally by officers of the Fund and by regular employees of SBAM,
or its affiliates, or other representatives of the Fund or by telephone or
telegraph, in addition to the use of mails. Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation material to their
principals to obtain authorization for the execution of proxies, and they will
be reimbursed by the Fund for such out-of-pocket expenses.
In addition, D.F. King & Co., Inc. ("D.F. King"), a proxy solicitation
firm, has been retained to assist in the solicitation of the proxy vote. It is
anticipated that D.F. King will be paid by the Fund for such solicitation
services in an amount estimated at $20,000 plus reasonable out-of-pocket
expenses. Therefore, expenses of the Meeting will include costs of (1)
preparing, assembling and mailing material in connection with the solicitation,
(2) soliciting proxies by officers or employees, personally or by telephone or
telegraph, (3), reimbursing brokerage houses, banks and other fiduciaries and
(4) compensating the proxy solicitor.
If you have any questions or need assistance in voting, please contact
D.F. King at its toll-free number, 1-888-414-5566.
OTHER BUSINESS
The Fund's Board of Directors does not know of any other matter which may
come before the Meeting. If any other matter properly comes before the Meeting,
it is the intention of the persons named in the proxy to vote the proxies in
accordance with their judgment on that matter.
March 13, 2003
12
- --------------------------------------------------------------------------------
- -------------------------- v DETACH PROXY CARD HERE v --------------------------
[ ] PLEASE MARK, SIGN, AND RETURN [X]
THIS PROXY PROMPTLY USING THE VOTES MUST BE INDICATED
ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
1. The election of directors
FOR [ ] WITHHOLD [ ] EXCEPTIONS [ ]
ALL FOR ALL
Nominees: Andrew L. Breech, Carol L. Colman, William R. Dill, R. Jay Gerken,
Clifford M. Kirtland, Jr., Louis P. Mattis, Thomas F. Schlafly
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
Exceptions
----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2.
FOR AGAINST ABSTAIN
2. To request that the Board of Directors [ ] [ ] [ ]
consider converting the Fund to an open-end
fund
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
FOR AGAINST ABSTAIN
3. To request that the Board of Directors [ ] [ ] [ ]
consider being compensated in shares of the
Fund rather than cash
4. The persons named as proxies are authorized to vote in their discretion on
any other business as may properly come before the meeting.
-----------------------------------------
S C A N L I N E
-----------------------------------------
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Date Share Owner sign here Co-Owner sign here
- -------------------------- -------------------------- ------------------------
4186
THE SALOMON BROTHERS FUND INC
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Jay Gerken, Robert A. Vegliante, Lewis
E. Daidone and Robert M. Nelson and each of them, attorneys and proxies for the
undersigned, with full power of substitution and revocation to represent the
undersigned and to vote on behalf of the undersigned all shares of The Salomon
Brothers Fund Inc (the "Fund") which the undersigned is entitled to vote at the
Fund's Annual Meeting of Stockholders (the "Meeting") to be held at Salomon
Brothers Asset Management Inc, 399 Park Avenue, 12th Floor, auditorium, New
York, New York on Tuesday, April 22, 2003 at 1:30 p.m. and at any adjournment
thereof. The undersigned hereby acknowledges receipt of the Notice of Meeting
and accompanying Proxy Statement and hereby instructs said attorneys and
proxies to vote said shares as indicated hereon. In their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the Meeting. A majority of the proxies present and acting at the Meeting
in person or by substitute (or, if only one shall be so present, then that one)
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner directed by
the stockholder.
IF NO DIRECTION IS MADE TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF NOMINEES AS DIRECTORS AND AGAINST PROPOSALS 2 AND 3.
Please refer to the Proxy Statement for a
discussion of the proposals.
Please Sign and Date on Reverse Side and Mail
in Accompanying Postpaid Envelope. THE SALOMON BROTHERS FUND INC
P.O. BOX 11193
I will attend the meeting. [ ] NEW YORK, N.Y. 10203-0193
To change your address, please mark this box. [ ]