SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material 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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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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THE SALOMON BROTHERS FUND INC
125 BROAD STREET, NEW YORK, NEW YORK 10004
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 26, 2004
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 20, 2004, at 3:00 p.m., for the purposes of considering and
voting upon the following:
1. The election of directors (Proposal 1);
2. A stockholder proposal to request that the Board of Directors consider
liquidating the Fund (Proposal 2); and
3. Any other business that may properly come before the Meeting.
The close of business on February 23, 2004 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting.
Your vote is important. PLEASE TAKE A MOMENT TO SIGN AND RETURN YOUR PROXY
CARD IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If you prefer, you can vote
by touch-tone telephone or by the internet by following the instructions on
your proxy card. The Fund may also solicit proxies from stockholders
personally, by letter or telephone. Voting by telephone or through the internet
will reduce the time and costs associated with the proxy solicitation. When the
Fund records proxies by telephone or through the internet, it will use
procedures designed to (i) authenticate stockholders' identities, (ii) allow
stockholders to authorize the voting of their shares in accordance with their
instructions and (iii) confirm that their instructions have been properly
recorded. For more information, please call 1-800-423-2107.
By Order of the Board of Directors,
Robert I. Frenkel
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 (OR VOTE BY TELEPHONE OR THROUGH
THE INTERNET), NO MATTER HOW LARGE OR HOW SMALL YOUR HOLDINGS MAY BE.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT OUR PROXY
SOLICITOR, DF KING, AT 1-800-423-2107.
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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
(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
(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
(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 20, 2004 at 3:00 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 26, 2004. 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 proposal 2. The close of business on February 23, 2004
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 23, 2004, there were 99,959,350 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 Meeting may be adjourned 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. SBAM is an indirect wholly-owned subsidiary of
Citigroup Inc.
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.
Mr Clifford M. Kirtland attained Director Emeritus status on January 15, 2004.
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
- ------------------------- ----------------- ------------- ---------------------------- -------------- ----------------------
NON-INTERESTED DIRECTOR NOMINEES
Andrew L. Breech Director and Since 1991 President, Dealer 3 None
2120 Wilshire Blvd Member of Audit Operating Control Service,
Santa Monica, CA 90403 and Nominating Inc.
Age: 51 Committee
Carol L. Colman, Director and Since 1992 President, Colman 35 None
278 Hawley Road Member of Audit Consulting Co. Inc.
North Salem, NY 10560 and Nominating
Age: 58 Committee
William R. Dill, Director and Since 1985 Retired 3 None
25 Birch Lane Member of Audit
Cumberland Foreside, and Nominating
ME 04110 Committee
Age: 73
William R. Hutchinson Director and Since 2003 President, WR Hutchinson 42 Associated Banc-Corp.
535 N. Michigan Member of Audit & Associates Inc.; formerly
Suite 1012 Committee Group Vice President,
Chicago, IL 60611 Mergers and Acquisitions,
Age: 61 BP p.l.c
Louis P. Mattis Director and Since 1986 Consultant, Mattis & Co. 3 None
PO Box 6535 Member of Audit LLC
Snowmass Village, and Nominating
CO 81615 Committee
Age: 62
Thomas F. Schlafly Director and Since 1986 Of Counsel to Blackwell 3 None
720 Olive Street Member of Audit Sanders Peper Martin LLP
St. Louis, MO 63101 and Nominating (attorneys); President, The
Age: 55 Committee Saint Louis Brewery, Inc.
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*
It is the practice of the Fund that upon attainment of age 80, Fund 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.
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 CFA** Chairman, Since Managing Director, CGM; 221 None
Citigroup President and 2002 Chairman, President and
Asset Management Chief Executive Chief Executive Officer of
("CAM") Officer Smith Barney Fund
399 Park Avenue, Management LLC
4th Floor ("SBFM"), Travelers
New York, NY 10022 Investment Adviser, Inc.
Age 53 ("TIA") and Citi Fund
Management Inc.;
President and Chief
Executive Officer of certain
mutual funds associated
with Citigroup Inc.
("Citigroup"); Formerly,
Portfolio Manager of Smith
Barney Allocation Series
Inc. (from 1996 to 2001)
and Smith Barney Growth
and Income Fund (from
1996 to 2000)
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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 SBAM or certain 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, 2003:
DOLLAR RANGE** OF EQUITY AGGREGATE DOLLAR RANGE** OF EQUITY SECURITIES IN ALL FUNDS OVER-
NAME OF NOMINEE SECURITIES IN THE FUND SEEN BY NOMINEE AND ADVISED BY SBAM
- ----------------------- -------------------------- -----------------------------------------------------------------
NON-INTERESTED DIRECTOR NOMINEES
Andrew L. Breech D D
Carol L. Colman E E
William R. Dill C E
William R. Hutchinson 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.
3
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, 2003.
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 management and
evaluating the performance of the Fund's service providers including SBAM, the
custodian and the transfer agent. 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.
During the fiscal year ended December 31, 2003, the Board of Directors
held four regular meetings and two special meetings. Each Director attended at
least 75% of the aggregate number of meetings of the Board and the committees
for which he or she was eligible. The Fund does not have a formal policy
regarding attendance by Directors at annual meetings of stockholders but
encourages such attendance. All of the seven Directors then in office attended
the Fund's 2003 annual meeting of stockholders.
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 23, 2004, 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 77,751,225 shares, equal to approximately 77% 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
- ------------------------------- ---------------- ------------- ------------------------------------------
Andrew B. Shoup Senior Vice Since 2003 Director of CAM; Senior Vice President
CAM President and Chief Administrative Officer of
125 Broad Street and Chief mutual funds associated with Citigroup
10th Floor Administrative Inc.; Treasurer of certain mutual funds
New York, NY 10004 Officer associated with Citigroup. Head of
Age: 47 International Funds Administration of
Senior Vice 1998-2002 CAM from 2001 to 2003; Director of
President and Global Funds Administration of CAM
Treasurer from 2000 to 2001; Head of U.S.
Citibank Funds Administration of CAM
from 1998 to 2000.
Michael A. Kagan Executive Vice Since 2001 Managing Director of SBAM.
CAM President
399 Park Avenue
New York, NY 10022
Age: 43
Kevin Caliendo Executive Vice Since 2003 Director of CGM (since 2002);
CAM President Investment Officer of SBAM (since
399 Park Avenue 2002); Healthcare Equity Analyst and
New York, NY 10022 Convertible Bond Fund Portfolio
Age: 33 Manager for SAC Capital Advisors, LLC
(from 2001 to 2002); Convertible Bond
Analyst of the Healthcare sector for
Wachovia Securities (from 1998 to 2001)
Frances M. Guggino Controller Since 2002 Vice President, CGM; Controller of
CAM certain mutual funds associated with
125 Broad Street, 10th Floor Citigroup.
New York, NY 10004
Age: 46
Robert I. Frenkel Secretary and Since 2003 Managing Director and General Counsel,
CAM Chief Legal Global Mutual Funds for CAM and its
300 First Stamford Place Officer predecessor (since 1994); Secretary of
Stamford, CT 06902 Citi Fund Management Inc.; Secretary of
Age: 49 certain funds associated with Citigroup
Inc.; Chief Legal Officer of mutual funds
associated with Citigroup Inc.
The Fund's Audit Committee is composed of all directors who have been
determined not to be "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. The principal
functions of the Audit Committee are: (a) assist in the oversight of the
integrity of the Fund's financial statements, the Fund's compliance with legal
and regulatory requirements, the qualifications and independence of the Fund's
independent auditors and the performance of the Fund's internal audit function
and independent auditors; (b) approve, and recommend to the Independent Board
Members (as such term is defined in the Audit Committee Charter) for their
ratification, the selection, appointment, retention or termination of the Fund's
independent auditors, as well as approving the compensation thereof; and (c)
approve all audit and permissible non-audit services provided to the Fund and
certain other persons by such independent auditors. This Committee met twice
during the fiscal year ended December 31, 2003. The Fund adopted an Audit
Committee Charter at a meeting held on February 4, 2004, a copy of which is
attached to this Proxy Statement as Annex A.
The Fund's Nominating Committee, the principal function of which is to
select and nominate candidate nominees for election as Directors of the Fund, is
currently composed of Ms. Colman, Messrs. Breech, Dill,
5
Hutchinson, Mattis and Schlafly. Only Directors who are not "interested persons"
of the Fund as defined in the 1940 Act and who are "independent" as defined in
the New York Stock Exchange listing standards are members of the Nominating
Committee. The Nominating Committee may consider nominees recommended by a
stockholder as it deems appropriate. Stockholders who wish to recommend a
nominee should send recommendations to the Fund's Secretary that include all
information relating to such person that is required to be disclosed in
solicitations of proxies for the election of Directors. A recommendation must be
accompanied by a written consent of the individual to stand for election if
nominated by the Board of Directors and to serve if elected by the stockholders.
The Nominating Committee met once during the Fund's fiscal year ended December
31, 2003. The Fund adopted a Nominating Committee Charter at a meeting held on
February 4, 2004, a copy of which is attached to this Proxy Statement as Annex
B.
The Nominating Committee identifies potential nominees through its network
of contacts, and may also engage, if it deems appropriate, a professional search
firm. The Nominating Committee meets to discuss and consider such candidates'
qualifications and then chooses a candidate by majority vote. The Nominating
Committee does not have specific, minimum qualifications for nominees and has
not established specific qualities or skills that it regards as necessary for
one or more of the Fund's directors to possess (other than any qualities or
skills that may be required by applicable law, regulation or listing standard).
However, as set forth in Nominating Committee Charter, in evaluating a person as
a potential nominee to serve as a Director of the Fund, the Committee may
consider the following factors, among any others it may deem relevant:
o whether or not the person is an "interested person" as defined in the
1940 Act and whether the person is otherwise qualified under applicable
laws and regulations to serve as a Director of the Fund;
o whether or not the person has any relationships that might impair his or
her independence, such as any business, financial or family relationships
with Fund management, the investment manager of the Fund, Fund service
providers or their affiliates;
o whether or not the person serves on boards of, or is otherwise
affiliated with, competing financial service organizations or their
related mutual fund complexes;
o whether or not the person is willing to serve, and willing and able to
commit the time necessary for the performance of the duties of a Director
of the Fund;
o the contribution which the person can make to the Board and the Fund
(or, if the person has previously served as a Director of the Fund, the
contribution which the person made to the Board during his or her
previous term of service), with consideration being given to the person's
business and professional experience, education and such other factors as
the Committee may consider relevant;
o the character and integrity of the person; and
o whether or not the selection and nomination of the person would be
consistent with the requirements of the Fund's retirement policies.
During the fiscal year ended December 31, 2003, 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 2004, 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.
6
During the fiscal year ended December 31, 2003, 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 18, 2004, 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) previously received written confirmation 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.
Pursuant to the Audit Committee Charter adopted by the Fund's Board, the
Audit Committee is responsible for conferring with the Fund's independent public
accountants, reviewing annual financial statements and recommending the
selection of the Fund's independent public accountants. The Audit Committee
advises the full Board with respect to accounting, auditing and financial
matters affecting the Fund. The independent public accountants are responsible
for planning and carrying out the proper audits and reviews of the Fund's
financial statements and expressing an opinion as to their conformity with
accounting principles generally accepted in the United States of America.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Fund accounting,
financial management or internal control. Moreover, the Audit Committee relies
on and makes no independent verification of the facts presented to it or
representations made by management or the independent public accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles and policies, or internal controls and
procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not provide assurance that
the audit of the Fund's financial statements has been carried out in accordance
with generally accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting principles.
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, 2003.
Submitted by the Audit Committee of the Board of Directors:
Andrew L. Breech
Carol L. Colman
William R. Dill
William R. Hutchinson
Louis P. Mattis
Thomas F. Schlafly
March 26, 2004
7
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.
FEES PAID TO INDEPENDENT ACCOUNTANTS
AUDIT FEES. The aggregate fees billed by PricewaterhouseCoopers, LLP
("PwC") in connection with the annual audit of the Fund's financial statements
and for services normally provided by PwC in connection with the statutory and
regulatory filings of the Fund for the fiscal years ended December 31, 2003 and
December 31, 2002 were $42,000 and $39,000, respectively, including out of
pocket expenses.
AUDIT RELATED FEES. There were no Audit Related Fees billed for the Fund
for the years ended December 31, 2003 and December 31, 2002.
In addition, there were no Audit Related Fees billed in the years ended
December 31, 2003 and December 31, 2002 for assurance and related services by
PwC to SBAM and any entity controlling, controlled by or under common control
with SBAM that provides ongoing services to the Fund ("SBAM and such other
entities together, the "Service Affiliates"), that were related to the operation
and financial reporting of the Fund. Accordingly, there were no such fees that
required pre-approval by the Audit Committee for the period May 6, 2003 to
December 31, 2003 (prior to May 6, 2003 services provided were not required to
be approved by the Fund's Audit Committee).
TAX FEES. The aggregate fees billed by PwC for tax compliance, tax advice
and tax planning services, which include the filing and amendment of federal,
state and local income tax returns, timely RIC qualification review, and tax
distribution and analylsis planning, rendered by PwC to the Fund for the fiscal
years ended December 31, 2003 and December 31, 2002 were $3,500 and $6,000,
respectively.
There were no fees billed by PwC to the Service Affiliates for tax services
for the period May 6, 2003 through December 31, 2003 that were required to be
approved by the Fund's Audit Committee.
ALL OTHER FEES. There were no other fees billed for other non-audit
services rendered by PwC to the Fund for the fiscal years ended December 31,
2003 and December 31, 2002.
All other fees billed by PwC to the Service Affiliates for other non-audit
services for the period May 6, 2003 through December 31, 2003 that were required
to be approved by the Fund's Audit Committee, which included the issuance of
reports on internal controls under Statement of Auditing Standards No. 70
relating to various Citigroup Asset Management ("CAM") entities, were $558,750.
Generally, the Audit Committee must approve (a) all audit and permissible
non-audit services to be provided to the Fund and (b) all permissible non-audit
services to be provided by PwC to the Service Affiliates that relate directly to
the operations and financial reporting of the Fund. The Audit Committee may
implement policies and procedures by which such services are approved other than
by the full Committee, but has not yet done so.
The aggregate non-audit fees billed by PwC for services rendered to the
Fund for the fiscal years ended December 31, 2003 and December 31, 2002 were
$3,500 and $6,000 respectively. The aggregate non-audit fees billed by PwC for
services rendered to the Service Affiliates for the fiscal years ended December
31, 2003 and December 31, 2002 were $18.3 million and $6.4 million,
respectively.
The Audit Committee has considered whether the provision of non-audit
services to the Service Affiliates that were not pre-approved by the Audit
Committee (because they did not require pre-approval) is compatible with
8
maintaining PwC's independence. All services provided by PwC to the Fund or to
the Service Affiliates that were required to be approved by the Audit Committee
were pre-approved.
A representative of PwC, if requested by any stockholder, will be present
via telephone at the Meeting to respond to appropriate questions from
stockholders and will have an opportunity to make a statement if he or she
chooses to do so.
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 investment
companies advised by SBAM. The following table provides information concerning
the compensation paid to each director during the fiscal year ended December 31,
2003 and the total compensation paid to each Director by the Fund and other
funds advised by SBAM and its affiliates for the calendar year ended December
31, 2003. Certain of the directors listed below are members of the Audit and
Nominating Committees 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, 2003 to Mr. Gerken who is an "interested person" as defined in the 1940 Act.
TOTAL COMPENSATION
FROM THE FUND
AGGREGATE AND OTHER FUNDS
COMPENSATION ADVISED BY SBAM AND
FROM THE FUND ITS AFFILIATES FOR
FOR FISCAL YEAR CALENDAR YEAR
NAME OF DIRECTORS ENDED 12/31/03 ENDED 12/31/03
- ------------------------------------- ----------------- --------------------
DIRECTORSHIPS***
Andrew L. Breech .................... $12,750 $ 29,000(3)
Carol L. Colman ..................... $18,000 $ 197,350(35)
William R. Dill ..................... $12,750 $ 28,250(3)
William R. Hutchinson* .............. $ 4,750 $ 114,600(42)
Clifford M. Kirtland, Jr.** ......... $12,750 $ 35,500(3)
Louis P. Mattis ..................... $11,250 $ 25,250(3)
Thomas F. Schlafly .................. $12,750 $ 28,250(3)
- ----------
* Mr. Hutchinson became a Director of the Fund on July 29, 2003.
** Mr. Kirtland attained Director Emeritus status on January 15, 2004.
*** 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 $5,250.
9
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. The
Fund believes that for the fiscal year ended December 31, 2003, all relevant
persons have complied with applicable filing requirements during its most
recently completed fiscal year, except that Evan Merberg inadvertently failed to
file on a timely basis his Initial Report on Form 3 with respect to the Fund,
which has subsequently been filed.
RECENT DEVELOPMENTS
A stockholder, Mr. Gary A. Bentz, has informed the Fund that he intends to
solicit proxies for election to the Fund's Board of Directors of himself and
five other individuals. Therefore, you may be receiving proxy solicitation
material from Mr. Bentz.
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.
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 NAMED IN THIS PROXY STATEMENT.
PROPOSAL 2: STOCKHOLDER PROPOSAL REGARDING LIQUIDATING 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 of Directors consider liquidating the Salomon Brothers
Fund."
Mr. Strauss has submitted the following statement in support of his
proposal:
"SBF has performed poorly during the last few years, yet in spite of this
bad performance the Fund has taken a bonus while shareholders have suffered
double-digit losses.
Liquidation would provide shareholders $2 per share above current price,
with no taxes due by most shareholders since they have losses in SBF.
The Fund no longer pays a reasonable dividend such as it did for so many
years.
The Fund is selling at a huge discount to asset value and management is
taking no steps to reduce this discount. In fact, management, quite
obviously, is satisfied to maintain this discount since it stops shareholders
from leaving the Fund. Shareholders who are in need of cash or are displeased
with the performance would not sell shares at a 14% discount.
10
The Fund has spent more than $150,000,000 on purchasing shares in the
second quarter, including shares in companies that are already in the
portfolio (at full price) not taking advantage of the 14% discount at which
the Fund is selling. Not one dollar was spent on stock repurchasing, which
would have reduced the discount.
The Board of Salomon Brothers is not an independent board looking after
the interests of their shareholders. One director is on more than 200 boards,
another on more than 30. All others are on multiple Smith Barney boards and
are even entitled to retirement benefits. None of the Directors can exercise
independent judgment when they depend on the good will of management to
remain on the board creating an insurmountable conflict of interest.
The Salomon Brothers Fund has been and is good for management and a
disaster for the shareholders. Stockholders have no choice but to ask for
liquidation of the Fund to get the value they deserve."
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE AGAINST THIS STOCKHOLDER PROPOSAL
FOR THE REASONS SET FORTH BELOW.
THE BOARD OF DIRECTORS STRONGLY BELIEVES THAT MR. STRAUSS' PROPOSAL TO
LIQUIDATE THE FUND IS A DRASTIC MEASURE THAT IS NOT IN THE BEST INTERESTS OF THE
FUND'S STOCKHOLDERS.
LAST YEAR, stockholders overwhelmingly rejected Mr. Strauss' proposal to
open-end the Fund, a slightly different proposal from his current proposal, with
77.30% of voted shares cast against his proposal. The Directors believe that, by
that vote, the stockholders clearly demonstrated their confidence in the
long-term performance of the Fund.
THIS YEAR, Mr. Strauss is proposing to liquidate the Fund. Liquidation
means that the Fund will be permanently closed, its assets sold, and proceeds
distributed proportionally to investors. Investors will then need to manage the
cash themselves, or find another money manager or investment fund.
LAST YEAR Mr. Strauss made many of the same arguments that he does in his
current proposal.
THIS YEAR, the Directors would like to respond to those same arguments as
well as Mr. Strauss' additional arguments because the Directors believe, as they
did last year, that his current proposal to liquidate the Fund does not reflect
the interests of the vast majority of the Fund's stockholders:
FIRST, MR. STRAUSS CLAIMS that despite poor performance during the past few
years the Fund has taken a bonus.
OUR RESPONSE is that Mr. Strauss should get his facts straight. First, the
bonus Mr. Strauss is apparently referring to is a performance based fee put in
place some years ago to emphasize the importance of good investment results.
Under the plan, which is described on page 21 of the annual report that
stockholders recently received, compensation to the Fund's investment manager,
Salomon Brothers Asset Management Inc ("SBAM"), increases by a maximum annual
adjustment of 0.10% only if and when the Fund's investment performance exceeds
the investment records of the S&P 500 Index. The Fund's compensation decreases
proportionately if the Fund underperforms the S&P 500 Index. Second, although in
some recent periods the Fund has underperformed the S&P 500 Index, the Fund's
performance for the year ended December 31, 2003 was excellent. The Fund
11
returned 33.47% based upon the NYSE market price and 31.96% based upon its net
asset value per share. This is in comparison to the S&P 500 Index average of
28.68% over the same time period (returns are based upon the 12-month period
ended December 31, 2003, including the reinvestment of dividends and capital
gains, if any).
SECOND, MR. STRAUSS CLAIMS that liquidation of the Fund "would provide
shareholders $2 per share above current price, with no taxes due by most
shareholders since they have losses in SBF."
OUR RESPONSE is that once again Mr. Strauss does not have the facts
straight. Rather than losses in the Fund, there is in fact $310,542,692 in
unrealized gains in the Fund as of December 31, 2003, representing over 22% of
the total net assets of the Fund. Secondly, there can be no assurance to
stockholders that liquidation of the Fund's assets would result in the receipt
of the amount stated in Mr. Strauss' proposal or that liquidation would be a
tax-free event. Liquidation is a typically lengthy process, especially for a
fund of this size. In the time it could take to properly liquidate the Fund,
many market and/or economic events could occur that would result in a change in
the value of the Fund's assets and net asset value per share, and in its stock
price. It is impossible to predict whether all or any of the uncertainties
listed below could affect the value of the Fund's assets, although the potential
for such uncertainties does exist:
o The value of the Fund's assets may decline due to adverse market
conditions during the time required to liquidate the Fund;
o The costs and expenses involved in liquidation would reduce the amount
stockholders receive;
o The distributions received by stockholders upon liquidation will likely
be treated for federal income tax purposes as a taxable sale and also
subject stockholders to applicable state and local income taxes. The
distributions may bring about unexpected tax consequences for some
stockholders, depending upon the original purchase price of their shares,
at a time that may not be economically opportune for them; and
o Any contingent or unknown liabilities must be satisfied prior to any
distribution to stockholders, therefore reducing the aggregate amount of
distribution to stockholders.
THIRD, MR. STRAUSS CLAIMS the Fund, in contrast to prior years, no longer
pays a "reasonable" dividend.
OUR RESPONSE is that the Fund's investment objective is, and has always
been, growth and conservation of capital. The Directors believe that it is not
appropriate for the Fund to sell portfolio securities simply in order to bolster
the Fund's dividend payments. The Directors believe that the Fund's approach to
the payment of dividends and distributions to stockholders is in furtherance of
the Fund's objectives and is in the interest of the Fund's stockholders who have
invested in the Fund for the longer term.
FOURTH AND FIFTH, MR. STRAUSS CLAIMS the Fund is selling at a "huge"
discount to asset value and management is taking no steps to reduce the
discount, at least in part, in his opinion, to discourage shareholders from
exiting the Fund. At the same time he states the Fund has spent $150,000,000 on
purchasing portfolio securities in the second quarter.
OUR RESPONSE is that the Directors are, in fact, concerned about the
discount from net asset value at which the Fund's stock has been trading
recently. Mr. Strauss seems to suggest, however, that the Fund should forego
opportunities to purchase portfolio securities at times when the Fund's stock is
trading at a discount. The Board strongly disagrees with Mr. Strauss'
suggestion.
The Directors regularly investigate and review the possible reasons for the
discount and discuss possible approaches for reducing it. One of the approaches
undertaken by the Directors includes share repurchase
12
programs, which have tended to narrow the Fund's discount. The Board of
Directors has 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. The Fund's stock repurchases are also limited by the Federal
securities laws, which set constraints on the amount of stock the Fund can
repurchase at any one time. From July 2002 to December 31, 2003, the Fund
repurchased 980,400 shares with a total cost of $9,025,787, at a weighted
average discount from net asset value of 14.6% per share.
SIXTH, MR. STRAUSS questions the independence of the Fund's Board.
OUR RESPONSE is that, first, both the Investment Company Act of 1940 (the
"1940 Act") and the listing standards of the New York Stock Exchange (the
"NYSE") set requirements for the independence of fund boards. And, in fact, the
Fund has met and exceeded both the 1940 Act and NYSE requirements for many
years, with six of the Fund's seven Directors satisfying the criteria for
director independence. These six Directors are not employees of the Fund, nor
are they employed or otherwise affiliated with SBAM or any other affiliate or
service provider of the Fund. And second, while certain Directors do oversee a
large number of funds advised by SBAM, we believe they bring years of valuable
experience in corporate governance and the investment fund industry to their
service on the Fund's Board.
LASTLY, MR. STRAUSS ASSERTS, INCORRECTLY, that the Directors are entitled
to retirement benefits.
OUR RESPONSE is that they do not, contrary to Mr. Strauss' assertion,
receive "retirement benefits" from any Salomon fund. Please see page 9 of the
proxy statement as evidence (this same information appeared in last year's proxy
statement).
FURTHERMORE, THE DIRECTORS WOULD LIKE TO EMPHASIZE THAT ALL OF THE
DIRECTORS OF THE FUND ARE INVESTORS IN THE FUND, WHICH ALIGNS THE INTERESTS OF
THE FUND'S DIRECTORS WITH THE INTERESTS OF THE STOCKHOLDERS. The independent
Directors have an average of fifteen years of experience serving as Directors of
the Fund and have consistently exercised their independent judgment for the
benefit of the Fund and its stockholders.
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 operations of the Fund. The Directors believe that Mr. Strauss'
projection of the benefits of liquidation is unrealistic, given the expenses
that would be incurred during liquidation and the possible tax consequences for
many shareholders. The Directors also believe that liquidation to eliminate the
discount would be at the expense of stockholders who have invested in and wish
to continue to invest in the Fund for the longer term. Stockholders considered
and rejected Mr. Strauss' 2003 proposal to eliminate the discount by converting
the Fund to an open-end fund by a margin of 77.30% of the votes cast on Mr.
Strauss' proposal. It is the Directors' belief that this overwhelming rejection
of the proposal conveys the continued confidence of a majority of the Fund's
stockholders in the long-term performance of the Fund.
YOUR VOTE AGAINST MR. STRAUSS' 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.
13
The presence at the Annual Meeting, either in person or by proxy, of the
holders of a majority of the shares of the Fund outstanding and entitled to vote
at the Annual Meeting constitutes a quorum for the transaction of business.
For purposes of determining whether there is a quorum at the Annual
Meeting, abstentions and broker non-votes will be treated as shares that are
present. 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 liquidate 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
liquidation is advisable. If the Board were to determine that it was in the best
interests of the Fund and its stockholders to liquidate the Fund, you would be
asked to consider a formal proposal from the Board at a later date.
THE DIRECTORS BELIEVE THAT YOUR VOTE "AGAINST" THIS PROPOSAL IS IN THE BEST
INTERESTS OF THE FUND AND ITS STOCKHOLDERS.
14
PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS AND OTHER STOCKHOLDER COMMUNICATIONS
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 2005
must be received by the Fund for inclusion in the Fund's proxy statement and
proxy relating to that meeting no later than November 15, 2004. 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 20, 2005 to February 18, 2005. However, if the Fund's 2005 Annual
Meeting is held earlier than March 21, 2005 or later than June 19, 2005, such
written notice must be delivered to the Secretary of the Fund during the period
from 90 days before the date of the 2005 Annual Meeting to the later of 60 days
prior to the date of the 2005 Annual Meeting or 10 days following the public
announcement of the date of the 2005 Annual Meeting.
The Fund's Audit Committee has also established guidelines and procedures
regarding the receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters (collectively,
"Accounting Matters"). Persons with complaints or concerns regarding Accounting
Matters may submit their complaints to the Citigroup Chief Compliance Officer
("CCO"). Persons who are uncomfortable submitting complaints to the CCO,
including complaints involving the CCO, may submit complaints directly to the
Fund's Audit Committee Chair (together with the CCO, "Complaint Officers").
Complaints may be submitted on an anonymous basis.
The CCO may be contacted at:
Citigroup Asset Management
Compliance Department
399 Park Avenue, 4th Floor
New York, NY 10022
Complaints may also be submitted by telephone at 800-742-5274. Complaints
submitted through this number will be received by the CCO.
The Fund's Audit Committee Chair may be contacted at:
The Salomon Brothers Fund Inc.
Audit Committee Chair
c/o Robert K. Fulton, Esq.
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
Any stockholder who wishes to send any other communications to the Board
should also deliver such communications to the Secretary of the Fund at the
address listed above. The Secretary is responsible for determining, in
consultation with other officers of the Fund, counsel, and other advisers as
appropriate, which stockholder communications will be relayed to the Board.
OTHER INFORMATION
The Fund's Annual Report containing financial statements for the fiscal
year ended December 31, 2003 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.
15
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, 1-800-423-2107.
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 26, 2004
16
ANNEX A
AUDIT COMMITTEE CHARTER
AMENDED AND RESTATED AS OF FEBRUARY 4, 2004
ESTABLISHMENT AND PURPOSE
This document serves as the Charter for the Audit Committee (the
"Committee") of the Board of each registered investment company (the "Fund")
advised by Smith Barney Fund Management or Salomon Brothers Asset Management or
one of their affiliates (each, an "Adviser") listed on Appendix A hereto (each
such Charter being a separate Charter). The primary purposes of the Committee
are to (a) assist Board oversight of (i) the integrity of the Fund's financial
statements, (ii) the Fund's compliance with legal and regulatory requirements
(iii) the qualifications and independence of the Fund's independent auditors and
(iv) the performance of the Fund's internal audit function and independent
auditors; (b) approve, and recommend to the Independent Board Members (as such
term is defined below) for their ratification, the selection, appointment,
retention or termination of the Fund's independent auditors, as well as
approving the compensation thereof; (c) approve all audit and permissible
non-audit services provided to the Fund and certain other persons by the Fund's
independent auditors; and (d) for each closed-end Fund, prepare the report
required to be prepared by the Committee pursuant to the rules of the Securities
and Exchange Commission for inclusion in the Fund's annual Proxy Statement.
DUTIES AND RESPONSIBILITIES
The Fund's independent auditors are accountable to the Committee.
The Committee shall:
1. Bear direct responsibility for the appointment, compensation, retention
and oversight of the Fund's independent auditors, or of any other public
accounting firm engaged for the purpose of performing other audit,
review or attest services for the Fund.
2. Confirm with any independent auditor retained to provide audit services
that the independent auditor has ensured the appropriate rotation of the
lead audit partner pursuant to applicable regulations.
3. Approve (a) all audit and permissible non-audit services1 to be provided
to the Fund and (b) all permissible non-audit services to be provided by
the Fund's independent auditors to the Adviser and any Covered Service
Providers if the engagement relates directly to the operations and
financial reporting of the Fund. The Committee may implement policies
and procedures by which such services are approved other than by the
full Committee.
- ----------
1 The Committee shall not approve non-audit services that the Committee
believes may impair the independence of the auditors. As of the date of the
approval of this Audit Committee Charter, permissible non-audit services
include any professional services (including tax services), that are not
prohibited services as described below, provided to the Fund by the
independent auditors, other than those provided to the Fund in connection
with an audit or a review of the financial statements of the Fund.
Permissible non-audit services may not include: (i) bookkeeping or other
services related to the accounting records or financial statements of the
Fund; (ii) financial information systems design and implementation; (iii)
appraisal or valuation services, fairness opinions or contribution-in-kind
reports; (iv) actuarial services; (v) internal audit
4. Discuss with the independent auditors any disclosed relationships or
services that may diminish the objectivity and independence of the
independent auditors and, if so determined by the Committee, recommend
that the Board take appropriate action to ensure the independence of the
independent auditors.
5. Review, in consultation with the independent auditors, the proposed
scope of the Fund's audit each year, including the audit procedures to
be utilized in the review of the Fund's financial statements.
6. Inquire of the Adviser and the independent auditors as to significant
tax and accounting policies elected by the Fund (including matters
affecting qualification under Subchapter M of the Internal Revenue
Code).
7. Review with the independent auditors any problems or difficulties the
auditors may have encountered during the conduct of the audit and
management's response, including a discussion with the independent
auditors of the matters required to be discussed by Statement on
Auditing Standards No. 61, 89, 90 or any subsequent Statement, relating
to the conduct of the audit.
8. Review, in consultation, as appropriate, with the independent auditors
and significant Fund service providers, matters relating to internal
controls over financial reporting and disclosure controls and procedures
of the Fund and of the Fund's significant service providers.
9. Request, receive and/or review from the independent auditors such other
materials as deemed necessary or advisable by the Committee in the
exercise of its duties under this Charter; such materials may include,
without limitation, any other material written communications bearing on
the Fund's financial statements, or internal or disclosure controls,
between the independent auditors and the Fund, the Adviser or other Fund
service providers, such as any management letter or schedule of
unadjusted differences, and any comment or "deficiency" letter (to the
extent such letters relate to financial reporting) received from a
regulatory or self-regulatory organization addressed to the Fund or the
Adviser that relates to services rendered to the Fund.
10. For each closed-end Fund, establish procedures regarding the receipt,
retention and treatment of complaints that the Fund may receive
regarding Fund accounting, internal accounting controls or
- ----------
outsourcing services; (vi) management functions or human resources; (vii)
broker or dealer, investment adviser or investment banking services; (viii)
legal services and expert services unrelated to the audit; and
(ix) any other service the Public Company Accounting Oversight Board
determines, by regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit services is not
required so long as: (i) the aggregate amount of all such permissible
non-audit services provided to the Fund, the Adviser and any service
providers controlling, controlled by or under common control with the
Adviser that provide ongoing services to the Fund ("Covered Service
Providers") constitutes not more than 5% of the total amount of revenues
paid to the independent auditors during the fiscal year in which the
permissible non-audit services are provided to (a) the Fund, (b) the
Adviser and (c) any entity controlling, controlled by or under common
control with the Adviser that provides ongoing services to the Fund during
the fiscal year in which the services are provided that would have to be
approved by the Committee; (ii) the permissible non-audit services were not
recognized by the Fund at the time of the engagement to be non-audit
services; and (iii) such services are promptly brought to the attention of
the Committee and approved by the Committee (or its delegate(s)) prior to
the completion of the audit.
2
auditing matters, including procedures for the confidential or anonymous
submission by Fund officers, employees, stockholders or service providers
of concerns regarding questionable accounting or auditing matters related
to the Fund.
11. For each closed-end Fund, obtain and review a report by the Fund's
independent auditors describing (i) the auditing firm's internal
quality-control procedures; (ii) any material issues raised by the most
recent internal quality-control review, or peer review, of the auditing
firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by the auditing firm, and any steps taken
to deal with any such issues; and (iii) (to assess the auditor's
independence) all relationships between the independent auditor and the
Fund.
12. For each closed-end Fund, discuss policies with respect to risk
assessment and risk management.
13. For each closed-end Fund, review hiring policies for employees or
former employees of the Fund's independent auditors.
14. For each closed-end Fund, discuss with management and the Fund's
independent auditors the Fund's audited financial statements and discuss
with management the Fund's unaudited financial statements, including any
narrative discussion by management concerning the Fund's financial
condition and investment performance and, if appropriate, recommend the
publication of the Fund's annual audited financial statements in the
Fund's annual report in advance of the printing and publication of the
annual report.
15. For each closed-end Fund, discuss the Fund's earnings press releases,
as well as financial information and earnings guidance provided to
analysts and rating agencies;
16. For each closed-end Fund, review and evaluate annually the performance
of the Committee and the adequacy of this Charter and recommend any
proposed changes to the Charter to the Board for approval.
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain, as it deems
necessary to carry out its duties, special counsel and other experts or
consultants at the expense of the Fund. The Fund shall provide appropriate
funding, as determined by the Committee, for the Committee to carry out its
duties and its responsibilities, including (a) for compensation to be paid to,
or services to be provided by, the Fund's independent auditors or other public
accounting firm providing audit, review or attest services for the Fund, (b) for
payment of compensation to any outside legal, accounting or other advisors,
counsel or consultants employed by the Committee and (c) for the ordinary
administrative expenses of the Committee. In performing its duties, the
Committee shall consult as it deems appropriate with the members of the Board,
officers and employees of the Fund, the Adviser, the Fund's sub-adviser(s), if
any, the Fund's counsel, counsel to the Independent Board Members and the Fund's
other service providers.
COMPOSITION
The Committee shall be composed of each Board member who has been
determined not to be an "interested person," as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act"), of the
Fund (the "Independent Board Members"), or such lesser number as the Board of
the Fund may specifically determine and reflect in the Board's minutes, each of
whom shall be financially literate and at least one of whom shall have
accounting or related financial management expertise as determined by the Fund's
Board
3
in its business judgment. Each member of the Committee must also meet the
independence and experience requirements as set forth in Section 303.01(B) of
the New York Stock Exchange's Listed Company Manual or as set forth in Section
121(a) of the American Stock Exchange's listing standards, as applicable, and
the independence requirements applicable to investment companies set forth in
Rule 10A-3 under of the Securities Exchange Act of 1934. For those Funds listed
on the New York Stock Exchange, no member of the Committee may serve on the
audit committees of more than three public companies, including the Funds,
unless the Board determines that such simultaneous service would not impair the
ability of such member to serve on the Committee effectively. The Committee
shall elect a Chairperson, who shall preside over Committee meetings. The
Chairperson shall serve for a term of three years, which term may be renewed
from time to time.
MEETINGS
The Committee shall meet on a regular basis, but not less frequently than
twice a year. Special meetings may also be held upon reasonable notice to the
members of the Committee. An agenda shall be established for each meeting. The
Committee may request any officer or employee of the Fund, the Fund's counsel,
counsel to the Independent Board Members, the Adviser, the Fund's independent
auditors or other interested persons to attend a meeting of the Committee or to
meet with any members of, or consultants to, the Committee. The Committee will
meet periodically with the Fund's independent auditors outside the presence of
the Fund's and the Adviser's officers and employees. The Committee will also
meet periodically with the Fund's management outside the presence of the Fund's
independent auditors. Meetings of the Committee may be held in person, by
telephone or by other appropriate means.
One-third of the Committee's members, but not fewer than two members, shall
constitute a quorum. At any meeting of the Committee, the decision of a majority
of the members present and voting shall be determinative as to any matter
submitted to a vote
REPORTING
The Chairperson shall report regularly to the Board on the result of the
Committee's deliberations and make such recommendations as deemed appropriate
LIMITS ON ROLE OF COMMITTEE
The function of the Committee is oversight. The Fund's management is
responsible for (i) the preparation, presentation and integrity of the Fund's
financial statements, (ii) the maintenance of appropriate accounting and
financial reporting principles and policies and (iii) the maintenance of
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The independent auditors are
responsible for planning and carrying out proper audits and reviews. In
fulfilling their responsibilities hereunder, it is recognized that members of
the Committee are not employees of the Fund. As such, it is not the duty or
responsibility of the Committee or its members to conduct "field work" or other
types of auditing or accounting reviews or procedures or to set auditor
independence standards. Each member of the Committee shall be entitled to rely
on (i) the integrity of those persons and organizations within and outside the
Fund from which it receives information and (ii) the accuracy of the financial
and other information provided to the Committee by such persons and
organizations absent actual knowledge to the contrary (which shall be promptly
reported to the Fund's Board) and (iii) statements made by the officers and
employees of the Fund, the Adviser or other third parties as to any information
technology, internal audit and other non-audit services provided by the
independent
4
auditors to the Fund. The designation of a person as an "audit committee
financial expert," within the meaning of the rules adopted and implemented
under Section 407 of the Sarbanes-Oxley Act of 2002, shall not impose any
greater responsibility or liability on that person than the responsibility and
liability imposed on such person as a member of the Committee, nor does it
decrease the duties and obligations of other Committee members or the Board.
In carrying out its responsibilities, the Committee's policies and
procedures shall be adapted, as appropriate, in order to best react to a
changing environment
AMENDMENTS
This Charter may be amended by a vote of a majority of the Board members.
5
Appendix A
Salomon Brothers Capital Fund Inc
Salomon Brothers Investors Value Fund Inc
The Salomon Brothers Fund Inc *
*Closed-end Fund. The duties and responsibilities of paragraphs 10, 11, 12 and
13 and any other provision applicable exclusively to closed-end funds
apply to this fund only.
6
ANNEX B
NOMINATING COMMITTEE CHARTER
ORGANIZATION
The Nominating Committee of each registered investment company listed on
Appendix A hereto (each, a "Fund" and together, the "Funds") shall be composed
solely of Directors who are not "interested persons" of the Fund as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act") and, with respect to those Funds listed on the New York Stock Exchange,
who are "independent" as defined in the New York Stock Exchange listing
standards ("Independent Directors"). The Board of Directors of the Fund (the
"Board") shall nominate the members of the Committee and shall designate the
Chairperson of the Committee. The Chairperson shall preside at each meeting of
the Committee.
RESPONSIBILITIES
The Committee shall select and nominate persons for election or appointment by
the Board as Directors of the Fund.
EVALUATION OF POTENTIAL NOMINEES
In evaluating a person as a potential nominee to serve as a Director of the
Fund, the Committee should consider among other factors it may deem relevant:
o whether or not the person is an "interested person" as defined in the
1940 Act and whether the person is otherwise qualified under applicable
laws and regulations to serve as a Director of the Fund;
o whether or not the person has any relationships that might impair his or
her independence, such as any business, financial or family
relationships with Fund management, the investment manager of the Fund,
other Fund service providers or their affiliates;
o whether or not the person serves on boards of, or is otherwise
affiliated with, competing financial service organizations or their
related mutual fund complexes;
o whether or not the person is willing to serve, and willing and able to
commit the time necessary for the performance of the duties of a
Director of the Fund;
o the contribution which the person can make to the Board and the Fund
(or, if the person has previously served as a Director of the Fund, the
contribution which the person made to the Board during his or her
previous term of service), with consideration being given to the
person's business and professional experience, education and such other
factors as the Committee may consider relevant;
o the character and integrity of the person; and
o whether or not the selection and nomination of the person would be
consistent with the requirements of the Fund's retirement policies.
While the Committee is solely responsible for the selection and nomination of
Directors, the Committee may consider nominees recommended by Fund stockholders
as it deems appropriate. Stockholders who wish to recommend a nominee should
send nominations to the Secretary of the Fund that include all information
relating
to such person that is required to be disclosed in solicitations of proxies for
the election of Directors. The recommendation must be accompanied by a written
consent of the individual to stand for election if nominated by the Board of
Directors and to serve if elected by the stockholders.
QUORUM
A majority of the members of the Committee shall constitute a quorum for the
transaction of business, and the act of a majority of the members of the
Committee present at any meeting at which there is a quorum shall be the act of
the Committee.
NOMINATION OF DIRECTORS
After a determination by the Committee that a person should be selected and
nominated as a Director of the Fund, the Committee shall present its
recommendation to the full Board for its consideration.
MEETINGS
The Committee may meet either on its own or in conjunction with meetings of the
Board. Meetings of the Committee may be held in person, video conference or by
conference telephone. The Committee may take action by unanimous written
consent in lieu of a meeting.
Adopted: February 4, 2004
APPENDIX A
Salomon Brothers Capital Fund Inc
Salomon Brothers Investors Value Fund Inc
The Salomon Brothers Fund Inc
- --------------------------------------------------------------------------------
THE SALOMON YOUR VOTE IS IMPORTANT
BROTHERS FUND INC VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET TELEPHONE MAIL
https://www.proxyvotenow.com/sbf 1-866-213-1446
o Go to the website address listed o Use any touch-tone telephone. o Mark, sign and date your proxy card.
above. o HAVE YOUR PROXY CARD READY. o Detach your proxy card.
o HAVE YOUR PROXY CARD READY. OR o Follow the simple recorded OR o Return your proxy card in the
o Follow the simple instructions that instructions. postage-paid envelope provided.
appear on your computer screen.
Your telephone or Internet vote
authorizes the named proxies to vote
your shares in the same manner as if you
marked, signed and returned your proxy
card. If you have submitted your proxy
by the Internet or telephone there is no
need for you to mail back your proxy card.
1-866-213-1446
CALL TOLL-FREE TO VOTE
------------------------------------------
------------------------------------------
- -------------------------- 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: 01 Andrew L. Breech, 02 Carol L. Colman, 03 William R. Dill, 04 R. Jay
Gerken, 05 William R. Hutchinson, 06 Louis P. Mattis, 07 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 liquidating the Fund
-----------------------------------------
3. The persons named as proxies are authorized to vote in their discretion on
any other business as may properly come before the meeting.
To change your address, please mark this box. [ ]
-----------------------------------------
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, Andrew B. Shoup and Barbara
Allen 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 20, 2004 at 3:00 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 PROPOSAL 2.
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