SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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
NUVEEN INVESTMENTS, 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)
Payment of filing fee (Check the appropriate box):
[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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(2) Aggregate number 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 fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NUVEEN INVESTMENTS, INC.
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, MAY 14, 2004
TO THE SHAREHOLDERS OF NUVEEN INVESTMENTS, INC.
Notice is hereby given that the annual meeting of the shareholders of
Nuveen Investments, Inc., a Delaware corporation (the "Company"), will be held
in the 6th floor auditorium of The Northern Trust Company, 50 South LaSalle
Street, Chicago, Illinois, on Friday, May 14, 2004, at 10:30 a.m. for the
following purposes:
1. To elect seven directors by vote of the holders of the Company's
Class A Common Stock and Class B Common Stock, voting together as a single
class, and two directors by vote of the holders of the Company's Class B
Common Stock, voting as a separate class, to serve until the next annual
meeting or until their successors shall have been duly elected and
qualified.
2. To ratify the selection of KPMG LLP as independent auditors for the
Company.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 15, 2004 are
entitled to notice of and to vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE POSTAGE PAID ENVELOPE ENCLOSED
FOR THAT PURPOSE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED, AND
SHAREHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE
IN PERSON.
March 30, 2004
ALAN G. BERKSHIRE
Secretary
NUVEEN INVESTMENTS, INC.
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Nuveen Investments, Inc. (the "Company") of proxies to
be voted at the annual meeting of the shareholders of the Company to be held on
May 14, 2004, and at any and all adjournments of such meeting.
At the annual meeting, shareholders will vote on the election of directors
and the ratification of the selection of KPMG LLP as independent auditors for
the Company. All duly executed proxies received by management prior to the
meeting will be voted in accordance with the choices specified by shareholders
on their proxies. If no choice is specified by a shareholder, the shares of such
shareholder will be voted FOR the election of the seven nominees for directors
listed in this Proxy Statement that are to be elected by the holders of the
Company's Class A Common Stock and Class B Common Stock, voting together as a
single class, and FOR ratification of the selection of the independent auditors
of the Company. Holders of the Company's Class B Common Stock are entitled to
nominate and elect at the meeting two additional directors as described in the
section entitled "Election of Directors" below. The Class B Shareholders have
nominated two directors to stand for election. Shareholders who execute proxies
may revoke them at any time before they are voted by filing with the Company a
written notice of revocation, by delivering a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
Proxies submitted by brokers for shares beneficially owned by other persons
may indicate that all or a portion of the shares represented by the proxies are
not being voted with respect to a particular matter. Applicable broker rules may
not permit a broker to vote shares held in street name with respect to such
matter in the absence of instructions from the beneficial owner of the shares.
The shares represented by broker proxies that are not voted with respect to such
matter will not be considered present and entitled to vote with respect to such
matter, although such shares may be considered present and entitled to vote for
other purposes and will count for purposes of determining the presence of a
quorum. If a quorum is present, these shares will not affect the determination
of whether such matter is approved.
As of March 15, 2004, there were issued and outstanding 19,657,576 shares
of Class A Common Stock and 73,325,214 shares of Class B Common Stock. The Class
A Common Stock and the Class B Common Stock are sometimes referred to
collectively herein as the "Common Stock" of the Company. Those persons who were
shareholders of record of each class of Common Stock at the close of business on
March 15, 2004 will be entitled to one vote for each share held.
Under the Company's By-laws, a majority of the outstanding shares of the
class or classes entitled to vote on a particular matter and represented in
person or by proxy will constitute a quorum for consideration of such matter at
the annual meeting. Under the Company's Restated Certificate of Incorporation,
in the event that any person or group becomes the beneficial owner (as defined
in the Restated Certificate of Incorporation) of more than 20% of the
outstanding shares of Class A Common Stock, the shares of Class A Common Stock
beneficially owned by such person or group in excess of 20% of the outstanding
shares of such class shall have no voting rights and shall be deducted from the
total number of shares of Class A Common Stock for purposes of determining the
number of shares of Class A Common Stock, or Common Stock, as the case may be,
necessary to constitute a quorum or required to approve a matter submitted for
shareholder approval. To the knowledge of the Company, on March 15, 2004 no
person or group was the beneficial owner of more than 20% of the outstanding
shares of Class A Common Stock.
This Proxy Statement was initially mailed to shareholders on or about March
30, 2004. The cost of preparing, printing and mailing this Proxy Statement, the
accompanying notice and the enclosed proxy, and all other costs in connection
with the solicitation of proxies, will be paid by the Company. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to furnish proxy material to the beneficial
owners of the Company's Class A Common Stock of whom they have knowledge and
will reimburse them for their expenses for so doing. Additional solicitation may
be made by letter, telephone or telecopier by officers and employees of the
Company and its affiliates.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
PRINCIPAL HOLDERS
The following table sets forth the beneficial ownership as of March 15,
2004 of the Company's Class A and Class B Common Stock, of each person who is
not a director or executive officer known by the Company to own beneficially
more than 5% of either such class. The percent of the total common stock
outstanding owned by each such person is based on the outstanding shares of
Class A and Class B Common Stock as of March 15, 2004. Unless otherwise noted,
the persons shown have sole voting and investment power.
<Table>
<Caption>
NUMBER OF
SHARES PERCENT OF PERCENT OF TOTAL
BENEFICIALLY CLASS OF CLASS COMMON STOCK
NAME AND ADDRESS OWNED STOCK OUTSTANDING OUTSTANDING
---------------- ------------ -------- ----------- ----------------
The St. Paul Companies, Inc. ................. 73,325,214 B 100.0% 78.9%
385 Washington Street
St. Paul, MN 55102
Wilmington Trust Corporation and
Wilmington Trust Company.................... 2,040,582(1) A 10.4 2.2
1100 N. Market Street
Wilmington, DE 19890
Nautical Trust................................ 1,701,439(2) A 8.7 1.8
c/o Thompson, Hine LLP
2000 Courthouse Plaza NE
P.O. Box 8801
Dayton, Ohio 45401
Barclays Bank PLC............................. 1,128,413(3) A 5.7 1.2
54 Lombard Street
London, EC3P 3AH
</Table>
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(1) According to a Schedule 13G/A filed on February 5, 2004. Wilmington Trust
Company is a wholly owned subsidiary of Wilmington Trust Corporation. These
entities have sole voting pursuant to 2,034,582 shares, sole investment
authority as to 2,004,582 shares, and shared voting and investment power as
to 6,000 shares.
(2) According to a Schedule 13G/A filed on February 10, 2004.
(3) According to a Schedule 13G filed on February 17, 2004. Barclays Global
Investors, NA, Barclays Global Fund Advisors and Barclays Capital Inc., each
a subsidiary of Barclays Bank PLC, a bank as defined
2
under Section 3(a)(6) of the Securities Exchange Act of 1934, beneficially own
an aggregate of 1,128,413 shares. Barclays Global Investors, NA is the
beneficial owner of 1,040,287 shares and has sole voting and investment power as
to 839,853 shares and no voting or dispositive power as to the remaining
shares. Barclays Global Fund Advisors is the beneficial owner of 33,126
shares and has sole voting and investment power as to 32,627 shares.
Barclays Capital Inc. is the beneficial owner of 55,000 shares and has sole
voting and investment power as to all of those shares.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership, as of March 15,
2004, of the Company's Class A Common Stock by each of the directors and
nominees, each of the executive officers named in the Summary Compensation
Table, and all directors and executive officers as a group (14 persons). The
percentage of outstanding Class A Common Stock owned by each such person and
such group is based on the outstanding shares of Class A Common Stock as of
March 15, 2004, and the percentage of the outstanding total Common Stock owned
by each such person and such group is based on the outstanding shares of Class A
and Class B Common Stock as of such date, plus, in each case, shares subject to
stock options held by each such person and such group that are currently
exercisable or exercisable within 60 days after such date. No shares of Class B
Common Stock are owned by any director, nominee for director or executive
officer of the Company. Unless otherwise noted, the persons shown have sole
voting and investment power.
<Table>
<Caption>
NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS A TOTAL COMMON
BENEFICIALLY COMMON STOCK STOCK
NAME OWNED OUTSTANDING(1) OUTSTANDING(1)
---- ------------ -------------- --------------
John P. Amboian...................................... 1,064,408(2) 5.2% 1.1%
Willard L. Boyd...................................... 4,017(3) * *
Thomas A. Bradley.................................... 1,000(4) * *
John L. Carl......................................... 1,000 * *
W. John Driscoll..................................... 4,017(3) * *
Jay S. Fishman....................................... --(4) * *
William H. Heyman.................................... --(4) * *
Duane R. Kullberg.................................... 4,017(3) * *
Roderick A. Palmore.................................. 720(5) * *
Timothy R. Schwertfeger.............................. 2,393,197(6) 11.0 2.5
William Adams IV..................................... 336,000(7) 1.7 *
Alan G. Berkshire.................................... 310,194(8) 1.6 *
Allen J. Williamson.................................. 230,000(9) 1.2 *
Directors and executive officers as a group (14
persons)........................................... 4,546,075(10) 19.3 4.7
</Table>
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* Less than 1%.
(1) For the directors and executive officers of the Company, the percentage of
outstanding stock is determined by dividing the total number of shares
beneficially owned, which includes the shares that would be issued upon
exercise of their exercisable options and options that will become
exercisable within 60 days after March 15, 2004, by the total number of
outstanding shares plus the additional number of shares that would be
outstanding if the options and options that will become exercisable within
such 60 day period were exercised.
3
(2) As of March 15, 2004. Includes for Mr. Amboian 972,836 shares subject to
exercisable options, and excludes 144,000 shares of restricted stock,
granted under the Company's current Equity Incentive Award Plan (the
"Equity Plan"). Mr. Amboian does not have voting or investment power with
respect to such restricted shares because the receipt of such shares has
been deferred and the deferral period has not ended and is not scheduled to
end within 60 days. Also includes 1,572 shares in the Company's 401(k) Plan
as to which Mr. Amboian has no voting power. Mr. Amboian's address is c/o
Nuveen Investments, Inc., 333 West Wacker Drive, Chicago, Illinois 60606.
(3) Includes 1,017 shares underlying Restricted Stock Units granted under the
Equity Plan. Such shares cannot be certificated or sold by each of Mr.
Boyd, Mr. Driscoll or Mr. Kullberg until 6 months after each director's
service ends. The units have no voting rights.
(4) Does not include shares of Class B Common Stock held by St. Paul, for which
the listed director serves as an executive officer. Mr. Bradley is not
standing for re-election.
(5) Includes 720 shares of underlying Restricted Stock Units granted under the
Equity Plan. Such shares cannot be certificated or sold by Mr. Palmore
until 6 months after his service as a director ends. The units have no
voting rights.
(6) As of March 15, 2004. Includes for Mr. Schwertfeger 2,003,720 shares
subject to exercisable options, and excludes 242,000 shares of restricted
stock, granted under the Equity Plan. Mr. Schwertfeger does not have voting
or investment power with respect to such restricted shares because the
receipt of such shares has been deferred and the deferral period has not
ended and is not scheduled to end within 60 days. Mr. Schwertfeger has
shared voting and investment power as to 389,477 shares. Mr. Schwertfeger's
address is c/o Nuveen Investments, Inc., 333 West Wacker Drive, Chicago,
Illinois 60606.
(7) Includes 285,000 shares subject to currently exercisable options.
(8) Includes 285,000 shares subject to currently exercisable options, 6,000
shares with shared voting power, and 3,083 shares in the Company's 401(k)
Plan as to which Mr. Berkshire has no voting power.
(9) Includes 180,000 shares subject to currently exercisable options and 50,000
shares owned directly.
(10) Includes 3,921,556 shares subject to currently exercisable options. Does
not include 386,000 shares of restricted stock granted under the Equity
Plan, with respect to which the executive officers do not have voting or
investment power because the receipt of such shares has been deferred and
the deferral period has not ended and is not scheduled to end within 60
days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)"), as
amended, requires the Company's executive officers and directors, and persons
who own more than ten percent of a registered class of the Company's equity
securities, to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than ten-percent shareholders also are required by rules
promulgated by the SEC to furnish the Company with copies of all Section 16(a)
forms they file. During 2003, to the best knowledge of the Company, based on a
review of such forms provided to us and written representations from officers
and directors, all Section 16(a) reports were filed on a timely basis, except
that (1) a Form 4 report for each of Messrs. Schwertfeger, Amboian, Williamson,
Adams, and Berkshire and Ms. Margaret E. Wilson describing a stock option award
granted as
4
part of the Company's annual incentive program was inadvertently not filed on a
timely basis and (2) a Form 4 report for Mr. Williamson describing the surrender
of shares of common stock in payment of withholding taxes upon the vesting of a
restricted share award was inadvertently filed one day late.
ELECTION OF DIRECTORS
Under the provisions of the Company's Restated Certificate of
Incorporation, (i) so long as any shares of Class B Common Stock are
outstanding, the number of directors shall be ten or more and may not be changed
without the unanimous consent of either the Class B directors or the holders of
the Class B Common Stock, and (ii) so long as the holders of the Class B Common
Stock hold at least 20% of all outstanding shares of Common Stock, as is
currently the case, such holders shall be entitled to nominate and elect four
directors. The Nominating Committee of the Company's Board of Directors has
nominated and the Board of Directors has recommended to shareholders for
election, a total of nine persons serve as directors of the Company. This will
leave two Class B director vacancies on the Board of Directors, which may be
filled by action of the holders of the Class B Common Stock. Of these nominees,
seven directors are to be elected by the holders of the Class A Common Stock and
the holders of the Class B Common Stock, voting together as a single class, and
two directors are to be elected by the holders of the Class B Common Stock,
voting as a separate class.
A holder of Common Stock may, with respect to the election of the seven
directors to be elected by the Common Stock, (i) vote for the election of all of
such nominees named herein, (ii) withhold authority to vote for all such
nominees, or (iii) vote for the election of all such nominees, other than any
nominee with respect to whom the shareholder withholds authority to vote, by so
indicating in the appropriate space on the enclosed proxy. No holder of Class A
Common Stock may vote for more than seven directors. The election of such
directors requires the affirmative vote of a plurality of the shares of the
Common Stock present in person or by proxy at the meeting and entitled to vote
in such election. The election of the two Class B directors requires the
affirmative vote of a plurality of the shares of the Class B Common Stock
present in person or by proxy at the meeting and entitled to vote in such
election. Withholding authority to vote for a director nominee will not prevent
such director nominee from being elected. For purposes of determining the
approval of the matters submitted to the shareholders for a vote, abstentions
and broker non-voters will have no effect in the election of directors and will
be treated as shares voted against ratification of the selection of independent
auditors. Broker non-votes are shares held by brokers or nominees typically in
"street name" as to which (i) instructions have not been received from the
beneficial owners and (ii) the broker or nominee does not have discretionary
voting power on a particular matter.
The directors to be elected at the annual meeting will hold office until
the annual meeting in 2005 or until their successors are duly elected and
qualified. Unless otherwise instructed by the shareholders, it is the intention
of the persons named in the accompanying proxy to vote the proxies held by them
for the election of each of the nominees named in the "Nominees for Directors"
table. However, if any of the nominees shall not be a candidate for election at
the time of the meeting, it is intended that either the vacancy be filled by
adoption of a resolution so providing by the Board of Directors or by the voting
of such shares for such substitute nominee as may be selected by the Board of
Directors in the case of any of the seven directors to be elected by the Common
Stock, and as may be selected by the holders of Class B Common Stock in the case
of a Class B director.
5
All of the nominees are currently directors of the Company, who have
heretofore been elected directors by the shareholders at an annual meeting,
other than Mr. Carl who was appointed to fill a vacancy by the action of the
Board of Directors in August 2003. Mr. Carl was first brought to Company's
attention as a candidate to serve as a director by a third party executive
search firm.
NOMINEES FOR DIRECTORS
<Table>
<Caption>
NAME AGE PRINCIPAL OCCUPATIONS
---- --- ---------------------
John P. Amboian................ 42 Director of the Company since 1998; President since May
1999; prior thereto, Executive Vice President and Chief
Financial Officer of the Company; prior to June 1995, Senior
Vice President Finance, Strategic Planning and Systems &
Chief Financial Officer for Miller Brewing Company from June
1993 to May 1995.
Willard L. Boyd................ 76 Director of the Company since 1992; Professor of Law at the
University of Iowa Law School since 1954; President
Emeritus, Field Museum of Natural History since 1996; prior
thereto, President, Field Museum of Natural History from
1981 to 1996; President Emeritus, University of Iowa since
1981.
John L. Carl................... 56 Director of the Company since 2003; Member of the Board of
Directors of The ServiceMaster Company and Evanston
Northwestern Healthcare; prior thereto, Senior Vice
President and Chief Financial Officer for Allstate Insurance
Company from 1999 until July of 2002.
W. John Driscoll............... 75 Director of the Company since 1992; Retired since 1994;
prior thereto, Chairman from May 1993, formerly President,
of Rock Island Company. Director of Weyerhaeuser Company
until 2002.
Duane R. Kullberg.............. 71 Director of the Company since 1992; Retired since 1989;
prior thereto, Managing Partner and Chief Executive Officer
of Andersen Worldwide from 1980 to 1989. Director of the
Chicago Board Options Exchange, Inc. and Carlson Companies,
Inc.
Roderick A. Palmore............ 52 Director of the Company since 2002; Senior Vice President,
General Counsel and Secretary of Sara Lee Corporation since
1999; prior thereto, Deputy General Counsel and Vice
President of Sara Lee Corporation since 1996.
Timothy R. Schwertfeger........ 54 Director of the Company since 1992; Chairman and Chief
Executive Officer since 1996; prior thereto, Executive Vice
President of the Company since inception in 1992. Director
of Institutional Capital Corporation since 1996.
</Table>
6
NOMINEES FOR CLASS B DIRECTORS
<Table>
<Caption>
NAME AGE PRINCIPAL OCCUPATIONS
---- --- ---------------------
Jay S. Fishman................. 51 Director of the Company since October 2001; Chairman, Chief
Executive Officer and President of The St. Paul Companies,
Inc. since October 2001; prior thereto, Chairman, Chief
Executive Officer and President of The Travelers Insurance
Group Inc. Director of Platinum Underwriters Holdings, Ltd.
William H. Heyman.............. 55 Director of the Company since 2003; Executive Vice President
and Chief Investment Officer of The St. Paul Companies, Inc.
since May, 2002; prior thereto, Chairman since February
2001, previously Executive Vice President of Citigroup
Investments, and Chief Executive Officer of Tribeca
Investments, LLC. Director of Max Re Capital, Ltd.
(Reinsurance)
</Table>
CORPORATE GOVERNANCE
The Company is committed to following sound corporate governance
principles. The Company regularly monitors regulatory developments and reviews
its policies and procedures in the areas of corporate governance.
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines, which are posted on
the Company's website (www.nuveen.com) and available in print to shareholders
who request a copy. The guidelines set forth the practices the Board of
Directors will follow with respect to the composition of the Board, director
qualification and responsibilities, Board committees, director access, director
compensation, management succession and performance evaluation of the Board of
Directors, among other things. The Corporate Governance Guidelines page can be
found at www.nuveen.com, by clicking on "About Us," then "Investor Relations,"
and finally "Corporate Governance" and are also available in print to
shareholders who request a copy by mail or telephone.
DIRECTOR INDEPENDENCE STANDARDS
The corporate governance rules recently adopted by the New York Stock
Exchange ("NYSE") generally require that a majority of the members of the Board
of Directors of any listed company must qualify as independent directors. There
is an exception to this requirement for companies where more than 50% of the
voting power is held by an individual, a group or another company (a "Controlled
Company"). In view of the ownership of the Company's Class B stock by The St.
Paul Companies, Inc., the Company is a Controlled Company and the NYSE standards
do not require that a majority of the members of the Company's Board of
Directors be independent under the applicable standards. Pursuant to the
Company's Corporate Governance Guidelines, the Company's Board of Directors
shall seek to ensure that a sufficient number of members of the Board of
Directors are independent and available to serve on committees of the Board
requiring independent directors, including the Audit Committee. The Board of
Directors has determined that the members of the Audit Committee satisfy the
applicable requirements to be considered independent directors for purposes of
serving on the Audit Committee, as required by NYSE rules.
7
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has four board committees -- the Audit Committee, the
Compensation Committee, the Executive Committee and the Nominating and
Governance Committee. Current members of the committees are named below, with
the Chairman of each committee indicated with an asterisk.
<Table>
AUDIT COMMITTEE EXECUTIVE COMMITTEE
Duane R. Kullberg* Timothy R. Schwertfeger*
Willard L. Boyd John P. Amboian
John L. Carl Jay S. Fishman
W. John Driscoll
Roderick A. Palmore NOMINATING AND GOVERNANCE COMMITTEE
Willard L. Boyd*
COMPENSATION COMMITTEE John L. Carl
W. John Driscoll* W. John Driscoll
Willard L. Boyd Duane R. Kullberg
John L. Carl Roderick A. Palmore
Duane R. Kullberg
Roderick A. Palmore
</Table>
The AUDIT COMMITTEE is charged with assisting the Board of Directors in
monitoring (1) the quality and integrity of the Company's financial statements,
(2) the independent auditor's qualifications, independence and appointment, (3)
the performance of the Company's independent auditor and internal audit
function, and (4) the compliance by the Company with legal and regulatory
requirements. The Board of Directors has determined that the members of the
Audit Committee satisfy the independence and experience requirements of the NYSE
and SEC and also that the Chairman qualifies as an "audit committee financial
expert" as defined by the SEC. A copy of the current Audit Committee Charter is
attached as Appendix A and is also posted on the corporate governance section of
the Company's website (www.nuveen.com).
The COMPENSATION COMMITTEE is responsible for (1) discharging the Board of
Directors' responsibility relating to the compensation of the Chief Executive
Office and the other executive officers of the Company and the administration of
equity incentive award plans of the Company and (2) producing an annual report
on executive compensation for inclusion in the Company's proxy statement in
accordance with applicable regulations. A copy of the Compensation Committee
Charter is posted on the corporate governance section of the Company's website
(www.nuveen.com) and is available in print to the shareholders who request a
copy.
The EXECUTIVE COMMITTEE is charged with exercising the authority of the
Board of Directors in the management of the business of the Company in the
interval between meetings of the Board, except that it may not amend the
Restated Certificate of Incorporation or By-laws of the Company, adopt an
agreement of merger, consolidation, or sale, lease or exchange of substantially
all of the Company's property and assets, or take action with respect to the
dissolution of the Company or the removal or indemnification of directors.
The NOMINATING AND GOVERNANCE COMMITTEE is responsible for (1) identifying
individuals qualified to become Board members, and recommending to the Board
director nominees for election by all stockholders of the Company voting
together at the next annual meeting of shareholders (but not the "Class B
Directors" as defined in the Company's Restated Certificate of Incorporation),
(2) developing and recommending to the Board, the Corporate Governance
Guidelines applicable to the Company and (3) recommending to the Board
8
the formation of new Committees of the Board or the changes to the size or
purpose of any Committee of the Board. A copy of the Nominating and Governance
Committee charter is posted on the corporate governance section of the Company's
website (www.nuveen.com) and is available in print to shareholders who request a
copy.
MEETING ATTENDANCE
During the last fiscal year, the Company's Board of Directors held four
meetings, the Compensation Committee held five meetings, the Audit Committee
held six meetings and the Nominating and Governance Committee held three
meetings. The Executive Committee did not hold any meetings during the last
fiscal year. Each director attended at least 75% of the total number of Board
and applicable Committee meetings in the aggregate held in 2003. While the
Company has no formal policy regarding attendance at the annual meeting of
shareholders, directors are encouraged to attend, and all directors attended the
2003 meeting.
COMPENSATION OF DIRECTORS
Except for directors employed either by the Company or The St. Paul
Companies, Inc., or their subsidiaries, directors receive an annual fee of
$30,000, a fee of $2,500 for each meeting of the full Board attended, a fee of
$2,500 for each meeting of the Audit Committee attended, and a fee of $1,000 for
each meeting of the Nominating and Governance or Compensation Committee
attended. The Chairman of the Audit Committee receives an additional annual fee
of $10,000. The Chairman of the Nominating and Governance and Compensation
Committees receives an additional annual fee of $2,000. Additionally, except for
directors employed either by the Company or The St. Paul Companies, Inc., or
their subsidiaries, directors receive an annual award of Restricted Stock Units
("RSUs") equal to the whole number of shares of the Company's Class A Common
Stock with a value nearest to $25,000, based on the average closing prices for
the Class A Common Stock during the 20-trading day period ending on the trading
day prior to the award date. The award is made annually on the last day of the
director's term (i.e., the business day immediately prior to the day of the
annual shareholders' meeting). A director who resigns before the next annual
shareholders' meeting will receive no award of RSUs for the partial term
service. A director who dies or becomes disabled during his or her term receives
a pro rata award of RSUs based on the number of months served prior to death or
disability. A new director who joins the Board between annual shareholders'
meetings also receives a pro rata award of RSUs based on the number of months
served prior to the next annual shareholders' meeting. The RSUs are fully vested
when awarded to the directors. However, the RSUs must be deferred, which means
that they cannot be certificated or pledged, hypothecated or sold by a director
until six months after service on the Board by such director ends. Upon the
expiration of such six-month period, a director will receive shares of Class A
Common Stock equal to the number of RSUs that such director received during his
or her service as a director. To the extent the Company declares and pays
dividends on Class A Common Stock during the applicable period, a director will
be paid dividend equivalent units based on the number of RSUs held by such
director. The RSUs have no voting rights. Independent directors are also
eligible to participate, along with all the Company's employees, in the
Company's charitable gift matching program, under which the Company matches
contributions by directors and employees to qualifying charitable organizations
in an amount up to $10,000 per calendar year.
9
EXECUTIVE COMPENSATION
The following table shows information concerning the annual compensation
for services to the Company in all capacities of the chief executive officer and
the four other most highly compensated executive officers of the Company
(collectively the "Named Executive Officers") during the last three fiscal
years. The information in this table and the following tables has been adjusted
to reflect the Company's 2-for-1 stock split in June of 2002.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------
NAME AND --------------------------------------- RESTRICTED OPTIONS
PRINCIPAL OTHER ANNUAL STOCK (NUMBER OF ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) SHARES) COMPENSATION(4)
--------- ---- ------ -------- --------------- ---------- ---------- ---------------
Timothy R. 2003 $750,000 $4,609,000 -- -- 317,190 $10,975
Schwertfeger...........
Chairman and 2002 718,750 3,441,000 -- -- 246,959 11,762
Chief Executive Officer $2,847,900 540,000(3)
2001 500,000 2,100,000 -- -- 200,000 10,499
John P. Amboian.......... 2003 500,000 3,918,000 -- -- 269,652 10,975
President 2002 481,250 2,899,000 -- -- 209,797 11,762
2,330,600 440,000(3)
2001 350,000 1,800,000 $4,022 -- 170,000 10,499
Allen J. Williamson...... 2003 350,000 500,000 52,140 -- 40,000 10,975
Group President 2002 350,000 800,000 -- -- 80,000 11,762
Managed Assets -- 140,000(3)
2001 350,000 990,000 -- -- 130,000 10,499
William Adams IV......... 2003 270,000 1,100,000 -- -- 90,000 10,975
Executive Vice 2002 270,000 900,000 -- -- 80,000 11,762
President
-- 110,000(3)
2001 269,167 630,000 -- -- 76,000 10,499
Alan G. Berkshire........ 2003 270,000 750,000 -- -- 90,000 10,975
Senior Vice President 2002 270,000 650,000 -- -- 80,000 11,762
-- 130,000(3)
2001 269,167 530,000 582 -- 76,000 10,499
</Table>
- -------------------------
(1) The amounts shown were paid pursuant to the Executive Officer Performance
Plan in respect of the year shown.
(2) For Mr. Williamson, the amount shown represents the total value received
pursuant to a Company sponsored College Scholarship Plan. No other Named
Executive Officer received an amount in excess of the reporting threshold in
2003. For Messrs. Amboian and Berkshire, the amounts shown for 2001
represent the earnings in excess of 120% of the applicable federal long-term
interest rate on the portion of their respective deferred compensation
accounts under the Company's Deferred Bonus Plan on which the Company pays
interest at the "prime rate" as announced from time to time by Bank One,
N.A. The Company's Deferred Bonus Plan permits senior executives to defer
all or a portion of their annual
10
bonuses and elect to receive a return on the amounts so deferred measured by
(1) the prime rate or (2) the performance of one or more of a specified list
of investment products (mutual funds and private partnerships) sponsored by
the Company. For return elections based on the performance of a Company
investment product, the Company hedges its exposure by investing the
deferred amount in such product. The table does not include any earnings on
the deferred compensation account balances of Messrs. Amboian and Berkshire
for which a return based on Company investment product performance has been
elected.
(3) These restricted stock and stock option awards were part of a special equity
incentive award made during 2002 following a peer group benchmarking and
broad review of Company executive officer compensation arrangements. These
awards include extended vesting provisions with a performance-based
potential accelerated vesting in the case of the options. For Messrs.
Schwertfeger and Amboian, the restricted stock award amounts shown represent
the value of 110,000 shares and 90,000 shares, respectively, of restricted
stock awarded under the Equity Plan effective on May 9, 2002, with a market
value of $25.89 on the award date. The shares will vest in one installment
on May 9, 2008, provided that the participant is employed on such date. In
the event of the participant's earlier termination of employment due to
death, disability, retirement, by the Company without Cause, on account of
Good Reason or in a Disaffiliation Transaction (as defined in the Equity
Plan), the shares will vest pro rata based on the amount of time elapsed
between the effective date and the termination date, divided by the six-year
base vesting period. Dividends are payable with respect to all restricted
shares awarded under the Equity Plan except where the recipient has elected
to defer the receipt of dividends to a later date. The number of shares of
outstanding restricted stock granted to the Named Executive Officers as of
December 31, 2003 (including the shares shown in the table above), and the
market value of such shares based on the December 31, 2003, NYSE Composite
Transaction closing price of $26.66, are as follows: Mr.
Schwertfeger -- 242,000 shares with a value of $6,451,720; Mr.
Amboian -- 144,000 shares with a value of $3,839,040; Mr. Adams -- 6,000
shares with a value of $159,960 and Mr. Berkshire -- 21,000 shares with a
value of $559,860.
(4) In respect of calendar year 2003, includes contributions to the account of
each executive officer of $4,975, under the Company's tax-qualified
Employees' Profit Sharing Plan (including reallocations of forfeitures under
that plan) and $6,000 for matching 401(k) contributions under that plan.
11
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information relating to grants of stock options
made to the Named Executive Officers in January 2004 in respect of the fiscal
year ended December 31, 2003 pursuant to the Equity Plan.
<Table>
<Caption>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE VALUE(2)
---- ---------- ------------ ----------- ---------- ----------
Timothy R. Schwertfeger................ 317,190 10.6% $29.04 1/20/14 $1,687,451
John P. Amboian........................ 269,652 9.0% $29.04 1/20/14 1,434,549
Allen J. Williamson.................... 40,000 1.4% $29.04 1/20/14 212,800
William Adams IV....................... 90,000 3.0% $29.04 1/20/14 478,800
Alan G. Berkshire...................... 90,000 3.0% $29.04 1/20/14 478,800
</Table>
- -------------------------
(1) These options become exercisable with respect to the shares of the Company's
Class A Common Stock covered thereby in one installment on January 20, 2007.
(2) For options granted under the Equity Plan, the value is based on a variation
of the Black-Scholes option pricing model which assumes (1) a
weighted-average risk free interest rate of 3.2%, (2) a 2.7% dividend yield,
(3) a weighted-average expected life of 5.2 years, and (4) a volatility
factor of the Company's estimated stock price performance of 21%. The actual
value, if any, an individual may realize will depend on the excess of the
market price of the stock over the exercise or base price on the date the
option is exercised. There is no assurance that the value realized by an
executive will be at or near the value estimated under the above-described
variation of the Black-Scholes model. The estimated values under that model
are based on subjective assumptions as to interest rates, stock price
volatility and future dividend yield.
12
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows information regarding the exercise by the Named
Executive Officers during 2003 of options to purchase shares of the Company's
Class A Common Stock granted under the Equity Plan, the number of unexercised
options held by them at December 31, 2003 and the "in-the-money" value of such
unexercised options at that date.
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED UPON REALIZED OPTIONS AT 12/31/03 AT 12/31/03(1)
EXERCISE OF UPON --------------------------- ---------------------------
NAME OPTIONS EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------------- -------- ----------- ------------- ----------- -------------
Timothy R. Schwertfeger... -- -- 1,775,678 1,215,001 $28,103,540 $2,093,739
John P. Amboian........... 60,000 $1,181,008 1,018,870 1,013,763 15,744,864 1,781,160
Allen J. Williamson....... -- -- 75,000 455,000 908,873 938,350
William Adams IV.......... -- -- 195,000 356,000 2,785,800 813,100
Alan G. Berkshire......... -- -- 195,000 376,000 2,726,550 813,100
</Table>
- -------------------------
(1) Based on the New York Stock Exchange -- Composite Transaction closing price
of $26.66 for the Company's Class A Common Stock on December 31, 2003.
LONG-TERM INCENTIVE PLAN AWARDS
There were no long-term incentive plan awards (which are defined under
applicable disclosure rules to exclude restricted stock and stock option awards)
made to any of the Named Executive Officers during the fiscal year ended
December 31, 2003.
13
RETIREMENT PLANS
Each of the Named Executive Officers participates in the Company's
non-contributory Retirement Plan, in which employees hired prior to January 1,
2002 who have completed one year of service and attained age 21 are eligible to
participate. Employees of certain subsidiaries of the Company are not eligible
to participate in the Retirement Plan. The table below sets forth with respect
to the Retirement Plan and the Excess Benefit Retirement Plan (the "Excess
Benefit Plan", described below) the estimated annual straight life annuity
benefits calculated upon retirement at normal retirement age for employees with
the remuneration and years of service indicated.
<Table>
<Caption>
AVERAGE
FINAL BASE ESTIMATED ANNUAL BENEFITS YEARS OF SERVICE
SALARY ----------------------------------------------------
- ---------- 15 20 25 30 35
----------------------------------------------------
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
$150,000 $ 33,750 $ 45,000 $ 56,250 $ 67,500 $ 78,750
$175,000 $ 39,375 $ 52,500 $ 65,625 $ 78,750 $ 91,875
$200,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $105,000
$300,000 $ 67,500 $ 90,000 $112,500 $135,000 $157,500
$400,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$500,000 $112,500 $150,000 $187,500 $225,000 $262,500
$600,000 $135,000 $180,000 $225,000 $270,000 $315,000
$700,000 $157,500 $210,000 $262,500 $315,000 $367,500
$800,000 $180,000 $240,000 $300,000 $360,000 $420,000
</Table>
Each participant's benefits are determined under a formula which takes into
account years of credited service and the participant's average monthly
compensation during the five consecutive calendar years of highest annual
compensation in the ten consecutive calendar years prior to retirement, less a
portion of primary Social Security benefits. The maximum annual benefit payable
under the plan was not to exceed the lesser of $160,000 in 2003, and 100% of a
participant's average aggregate compensation for the three consecutive years in
which he received the highest aggregate compensation from the Company or such
lower limit as may be imposed by the Internal Revenue Code. Participants vest
after five years of service to the Company and its subsidiaries. The plan
generally provides for payments to or on behalf of each vested employee upon
such employee's retirement at the normal retirement age provided under the plan
or later, although provision is made for payment of early retirement benefits on
a graduated reduced basis according to provisions of the plan. Normal retirement
age under the plan is 65. An employee whose age and years of service add up to
90 is entitled to an unreduced pension despite not having attained normal
retirement age.
The Company has adopted an Excess Benefit Retirement Plan, which provides
certain highly compensated employees who participate in the Retirement Plan,
including, but not limited to, Messrs. Schwertfeger, Amboian, Williamson, Adams
and Berkshire with additional retirement income in an amount equal to the
difference between (i) the benefits any such employee would have received under
the Retirement Plan but for limitations imposed by the Internal Revenue Code on
the amount of annual benefits payable pursuant to a tax-qualified retirement
plan and (ii) the benefits actually payable to such employee under the
Retirement Plan.
The credited years of service under the Retirement Plan and the Excess
Benefit Plan for Messrs. Schwertfeger, Amboian, Adams, Berkshire and Williamson
as of December 31, 2003 were 25, 7.5,
14
21.5, 5 and 2, respectively. Compensation on which plan benefits are based
includes only base salary, as shown in the Summary Compensation Table, and not
bonuses, incentive compensation, or profit-sharing plan contributions. The
annual base salaries for Messrs. Schwertfeger, Amboian, Williamson, Adams and
Berkshire as of December 31, 2003 were $750,000, $500,000, $350,000, $270,000
and $270,000, respectively.
EMPLOYMENT AGREEMENTS
Effective November 1, 2002, the Company entered into employment agreements
(each, an "Agreement") with Mr. Schwertfeger and Mr. Amboian (each, an
"Executive"). Each Agreement provides for a three-year initial term and an
automatic one-year extension on the second and subsequent anniversaries of the
Agreement if Executive remains employed by the Company. Under each Agreement,
Executive will receive (1) an annual base salary ($750,000 for Mr. Schwertfeger
and $500,000 for Mr. Amboian) which amount cannot be reduced during the term of
the Agreement, (2) continued participation in the Company's 2002 Executive
Officer Performance Plan or its successors consistent with past practices and
competitive pay practices, and (3) a right to participate in the Company's
employee benefit programs and policies. In the event Executive's employment is
terminated (a) other than for Cause or (b) for Good Reason (each as defined
hereafter), Executive will receive (1) a pro-rated annual bonus for the year of
termination based on his average bonus for the last three years ("Recent Average
Bonus"), (2) a lump sum cash payment equal to three times Executive's annual
base salary plus his Recent Average Bonus, (3) continuation of welfare benefits
for the earlier of three years or the date of re-employment with another
employer, (4) three years of additional service credit under the Company's
Retirement Plan, and (5) immediate vesting of all outstanding equity awards.
Cause as defined in each Agreement means (1) the willful and continued
failure of Executive to perform substantially his duties with the Company, (2)
willful engaging by Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company, (3) conviction of a felony
or a guilty or nolo contendere plea by Executive, or (4) a material breach of
Executive's responsibility under the Agreement to maintain the confidential
information. The term "Good Reason" is defined as (1) any action by the Company
which results in a material diminution of Executive's position, authority,
duties or responsibilities, (2) any failure by the Company to pay Executive the
contractually determined compensation, (3) a requirement that Executive be based
at an office or location other than Chicago, Illinois, (4) the failure by the
Company to require any successor to expressly assume and agree to perform the
Agreement, (5) a termination of Executive not permitted by the Agreement, and
(6) the failure of the Board of Directors to nominate Executive for election to
the Board or to appoint Executive, in Mr. Schwertfeger's case, to each Committee
of the Board (other than the Audit, Compensation and Nominating Committees) and,
in Mr. Amboian's case, to the Executive and Bonus Committees of the Board, where
legally permitted to do so. In addition, Executive's resignation shall be deemed
to be a termination for Good Reason (a) where such termination would constitute
a "Qualifying Termination" under the St. Paul Special Severance Policy and any
successor plan or policy for its most senior executives, (b) where Executive
resigns for any reason during the 60 day period following the six-month
anniversary of a Change of Control of the Company (as defined under the Equity
Plan) where Executive was not actively and substantially involved in the
negotiation of the terms of such Change of Control transaction, and (c) when
Executive resigns at any time during the two years following such a Change of
Control when (1) his title, position, authority, duties and responsibilities are
changed adversely, (2) a change is made without his consent to the Company's
business strategy or business operations which is
15
inconsistent in any material respect with the Company's business strategy or
business operations immediately prior to the Change of Control, and (3)
Executive is asked to report to any person other than the Chief Executive
Officer or the Board of Directors of a publicly traded company that is the
Company or a successor to the Company (where the Company is publicly traded) or
the Chief Executive Officer of the ultimate parent of the acquiring Company
(where the Company is privately held). Each Agreement further provides that
Executive will not be permitted to solicit or hire any person employed by the
Company for twelve months after termination of employment and that in the event
Executive becomes entitled to benefits or payments in connection with the
termination of his employment following a Change of Control which subjects him
to any excise taxes imposed by Section 4999 of the Internal Revenue Code, the
Company will reimburse Executive in an amount necessary to fully offset such tax
payments.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report:
The Company offers compensation and incentive programs that maintain a
direct relationship between total compensation levels and Company financial
results. The programs are designed to provide incentives throughout the Company
by sharing profits with all employees. The total amount available for incentive
awards to all employees (including cash and equity awards) has historically been
a fixed percentage of the Company's pre-incentive, pre-tax net operating income.
This provides a strong incentive for profitability and control of costs as the
compensation of executives and all other employees is directly related to
Company earnings. In general, employee incentive awards are based on individual
performance. They recognize each employee's contribution to the Company's
success, both during the year in which they are awarded and during prior years.
They also take into account management's expectations for each employee's future
development. This process permits management to compensate employees for their
longer-term performance, to encourage and reward employee growth and
productivity, and to develop strong relationships between the Company and its
employees at all levels. The long-term equity incentive awards made under the
Amended and Restated 1996 Equity Incentive Award Plan do not vest until the end
of a specified period, generally three years.
Total compensation for Executives is comprised of base salaries and
benefits, annual incentive awards and long-term equity incentives. The senior
executives participate in the Executive Officer Performance Plan, under which
annual incentives are determined based on Company-wide financial results,
including earnings exceeding a threshold return on stockholders' equity and the
growth of earnings from the prior year. A significant percentage of the awards
under this plan are payable in the form of equity, primarily through the use of
at-the-money stock options, which generally do not vest until the end of three
years. This program provides a strong alignment of executive and stockholder
interests and encourages increasing ownership of Company stock by management.
The various components of executive compensation reflect the following
policies:
- Base salaries are set near the median level for the asset management
industry, as the Company has emphasized annual cash incentive awards
and long-term equity incentive awards to provide total compensation
levels sufficient to attract and retain talented and productive
executives. During 2003, the annual base salaries of the Chief
Executive Officer ("CEO") and President of $750,000 and $500,000,
respectively were not adjusted.
16
- Annual incentive awards for the Company's officer-directors (which
includes the Chief Executive Officer and President) and the other
executive officers are made under the Executive Officer Performance
Plan, which provides for formula-based annual awards. The specific
formula used to determine awards was revised in 2002, following a
review of the Company's executive officer compensation arrangements,
and the revised plan was approved by the Company's shareholders. For
2003, the Executive Officer Performance Plan provided for an award
payable to the CEO equal to the sum (I) 2.0% of the Company's
pre-incentive, pre-tax net operating income in excess of 20% of the
average stockholders' equity for the year and (II) 8.5% of the
increase in the Company's 2003 after-incentive, pre-tax net operating
income over the same measure for the prior year. As provided in the
plan, the award payable to the next most senior officer-director
(President) was 85% of the award for the CEO. For all other plan
participants, the formula maximum of 60% of the CEO's award was
reduced by the Committee in its discretion. Of the formula award for
officer-directors, the Committee continued in 2003 its practice of
paying 70% in cash.
- To align executive interests more closely with those of stockholders,
a significant portion of the annual incentive awards payable under the
Executive Officer Performance Plan has been payable in the form of
at-the-money stock options, valued using a modified Black-Scholes
valuation methodology, which generally vest in one installment at the
end of three years. For 2003, this portion continued at 30% for the
officer-directors.
- As noted above, the formula established in 2002 under the Executive
Officer Performance Plan to determine annual incentive awards for
senior executives includes a component based on return of average
stockholders' equity and a component based on growth in
after-incentive, pre-tax net operating income. Assuming returns on
stockholders' equity continue in a manner consistent with the
historical level of returns, for net operating income growth of
approximately 8-10%, the formula established in 2002 was designed to
produce an award that grows commensurately. For net operating income
growth above this level, the formula was designed to produce an award
that grows at significantly increasing rates from the prior year. For
net operating income growth below this level (or for a decline in net
operating income), the formula was designed to produce an award that
falls at significantly increasing rates from the prior year. The cash
bonus awards and annual incentive option grants for 2003 for Mr.
Schwertfeger and Mr. Amboian set forth in the Summary Compensation
Table reflect the increased growth in the Company's after-incentive,
pre-tax net operating income from 2002 to 2003 of approximately 14%
and the strong return on average stockholders' equity for 2003.
The Committee further believes that Nuveen's profitability-linked
compensation programs have served the Company well and will continue to do so.
We believe that the caliber and motivation of the Company's executive officers,
and its other employees, and the quality of their leadership are particularly
important factors affecting the Company's long-term performance.
The Committee is aware that the Internal Revenue Code provides a $1 million
limit on the deductibility for federal tax law purposes of compensation paid to
top executives of publicly-traded companies, subject to certain exceptions. The
exceptions include one for compensation based on attainment of objective
performance standards that have been approved by stockholders. The Company's
Executive Officer Performance Plan is designed to qualify for this exception and
to permit the continued full deductibility of compensation paid to
17
executive officers thereunder. Options granted to executive officers under the
Company's equity-based plans are also generally intended to qualify for this
exception. The Committee intends to continue to pursue compensation strategies
and programs designed to permit the Company to retain federal tax benefits while
providing appropriate performance incentives. The Committee may from time to
time award compensation that is not fully deductible for tax purposes in
circumstances it deems appropriate.
As the Company's business continues to evolve, we will periodically review
the Company's compensation programs and make appropriate changes to ensure that
the specific programs and performance objectives in effect best fit the
Company's operating environment.
W. John Driscoll, Chairman
Willard L. Boyd
John L. Carl
Duane R. Kullberg
Roderick A. Palmore
18
STOCKHOLDER RETURN INFORMATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Class A Common Stock
(the "Shares") to the Russell 2000 Index and an internally calculated Peer Group
for the 5-year period commencing December 31, 1998 and ending December 31, 2003.
In each case, the chart assumes a $100 investment on December 31, 1998 and that
all dividends are reinvested. The Average Annual Return on the Shares for the
period was 22.21%.
COMPARISON OF CUMULATIVE TOTAL RETURN
[LINE GRAPH]
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
DEC-1998 DEC-1999 DEC-2000 DEC-2001 DEC-2002 DEC-2003
- ----------------------------------------------------------------------------------------------------------------
Nuveen Investments 100 100 164 234 226 244
Russell 2000 100 121 118 121 96 142
Peer Group 100 112 172 172 129 185
</Table>
19
The Company's Peer Group includes all domestic publicly traded investment
management firms with a market capitalization of at least 1% of the Peer Group.
The results are included for each full year in which the firm was publicly
traded and met the minimum capitalization requirements. The return of the Peer
Group is weighted by the market capitalization of each firm at the beginning of
each year such firms are included in the Peer Group. The following companies are
included in the Peer Group:
<Table>
Affiliated Managers Group............................ AMG (1999-2000)
Alliance Capital Management.......................... AC
Blackrock............................................ BLK (2000-present)
Eaton Vance.......................................... EV
Federated Investors.................................. FII
Franklin Resources................................... BEN
Gabelli Asset Management............................. GBL (2000-present)
Neuberger Berman..................................... NEU (2000-2002)
Phoenix Investment Counsel........................... PXP (1999)
PIMCO Advisers....................................... PA (1999)
Pioneer Group........................................ PIOG (1999)
SEI Investments...................................... SEIC
Stillwell Financial.................................. SV (2001-present)
T. Rowe Price Associates............................. TROW
United Asset Management.............................. UAM (1999)
Waddell & Reed....................................... WDR
</Table>
20
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for assisting
the Board in monitoring (1) the quality and integrity of the Company's financial
statements, (2) the independent auditor's qualifications, independence and
appointment (3) the performance of the Company's independent auditor and
internal audit function, and (4) the compliance by the Company with legal and
regulatory requirements. Among other responsibilities, we review, in our
oversight capacity, the Company's annual financial statements with both
management and the independent auditors and we meet periodically with the
independent and internal auditors to consider their evaluation of the Company's
financial and internal controls. We also select, subject to shareholder
ratification, the Company's independent auditors. Our Committee is composed of
five non-employee directors and operates under a written charter adopted and
approved by the Board of Directors. The Board of Directors has determined that
each Committee member is independent as currently defined by New York Stock
Exchange listing standards.
In discharging our duties, we have met with, and held discussions with,
management and the Company's independent and internal auditors regarding, among
other things, the audited financial statements. Management has represented to
the independent auditors that the Company's consolidated financial statements
were prepared in accordance with generally accepted accounting principles. We
have also discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees). The Company's independent auditors provided to the Committee the
written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and we discussed with
representatives of the independent auditor their firm's independence. As
provided in the Audit Committee Charter, it is not the Committee's
responsibility to determine, and the considerations and discussions referenced
above do not ensure, that the Company's financial statements are complete and
accurate and presented in accordance with generally accepted accounting
principles.
Based on our review and discussions with management and the independent
auditors, the representations of management and the report of the independent
auditors to our committee, we have recommended that the Board of Directors
include the audited consolidated financial statements in the Company's Annual
Report on Form 10-K.
Duane R. Kullberg, Chairman
Willard L. Boyd
John L. Carl
W. John Driscoll
Roderick A. Palmore
21
FEES AND SERVICES OF INDEPENDENT AUDITORS
FEES PAID TO INDEPENDENT AUDITORS. The following table shows the fees paid
by the Company for audit and other services provided by KPMG LLP for fiscal
years 2003 and 2002.
<Table>
<Caption>
2003 2002
---- ----
Audit Fees.................................................. $299,500 $258,500
Audit Related Fees(1)....................................... 48,900 62,948
Tax Fees(2)................................................. 86,000 79,500
All Other Fees.............................................. -0- -0-
-------- --------
Total: $434,400 $400,948
</Table>
- -------------------------
(1) For 2003 and 2002, Audit Related Fees primarily consisted of fees for
professional services relating to executive compensation reports, the debt
covenant compliance report, the Company's benefit plan audits, acquisition
related expenses related to the Company's purchase of NWQ Investment
Management Company, Inc., and other accounting related matters.
(2) For 2003 and 2002, Tax Fees consisted of principally of professional
services relating to the Company's federal and state tax returns and also
included miscellaneous tax related services.
PRE-APPROVAL POLICIES AND PROCEDURES. The Audit Committee Charter provides
that the Committee is responsible for pre-approving all audit services and
permitted non-audit services to be performed for the Company by the independent
auditor. In addition, the Audit Committee has adopted a standing resolution that
authorizes the Chairman of the Audit Committee, between meetings of the
Committee, to pre-approve fees and expenses of any permitted non-audit services
to be performed for the Company by its independent auditor, including tax
services, provided (1) that such non-audit services are not services that relate
to regularly recurring needs of the Company of the type covered by an annual
engagement and (2) that the total value of such services, together with other
non-audit services pre-approved by the Chairman pursuant to this delegation of
authority subsequent to the most recent meeting of the Committee, does not
exceed 20% of the estimated cost of the annual audit services of the independent
auditors most recently approved by the Committee. All of the fees paid by the
independent auditors in 2003 were pre-approved in accordance with these
provisions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an existing $250 million revolving loan agreement with its
majority shareholder, The St. Paul Companies, Inc. ("St. Paul") under which no
borrowings are currently outstanding. This loan facility has no scheduled
expiration date, however any borrowings thereunder are required to be repaid
within 30 days of a demand by St. Paul and carries a floating interest rate of
one month USD LIBOR plus margin of up to 0.25%.
From time to time, one or more of the Company's registered investment
advisers may manage assets for St. Paul or its affiliates (including its pension
funds and/or insurance accounts) on arm's length terms in a collective
investment vehicle offered to others as well as St. Paul or in a separate
account pursuant to a customary investment advisory agreement with St. Paul. As
of December 31, 2003, the Company managed approximately $130 million in assets
for St. Paul pursuant to such arrangements.
22
SELECTION OF AUDITORS
The independent certified public accounting firm of KPMG LLP, a member of
the international accounting firm Klynveld Peat Marwick Goerdeler, has been
selected by the Audit Committee of the Board of Directors to act as the auditors
for the Company and its subsidiaries for the current fiscal year. At the annual
meeting, the shareholders will be asked to ratify the selection of KPMG LLP. A
holder of the Class A or Class B Common Stock may, with respect to the selection
of independent auditors, (i) vote "FOR" such selection, (ii) vote "AGAINST" such
selection or (iii) "ABSTAIN" from voting on the selection. A vote to abstain
from voting on this matter will have the effect of a vote against such
selection. Broker non-votes will be treated as shares voted against the
ratification of independent auditors.
KPMG LLP, which has served as independent auditors of the Company and its
subsidiaries since the Company's inception in March 1992, is expected to have a
representative present at the annual meeting. The representative will have the
opportunity to make a statement and will be available to respond to appropriate
questions of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
PROPOSALS BY SHAREHOLDERS FOR 2005 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 2005
annual meeting of shareholders must be received by the Company by November 30,
2004 in order to be considered for inclusion in the Company's 2005 Annual
Meeting Proxy Statement and form of proxy to be mailed in March 2005. Such
proposal must be in writing and comply with the proxy rules of the Securities
and Exchange Commission.
Notice of any proposal to be presented by any shareholder at any meeting of
shareholders, as set forth in the By-laws of the Company, shall be given to the
Secretary of the Company not less than 60 nor more than 90 days prior to the
date of the meeting: provided however, that if the date of the meeting is first
publicly announced or disclosed less than 70 days prior to the date of the
meeting, such notice shall be given not more than ten days after such date is
first so announced or disclosed. Any shareholder who gives notice of any such
proposal shall deliver therewith the text of the proposal to be presented and a
brief written statement of the reasons why such shareholder favors the proposal
and setting forth shareholder's name and address, the number and class of all
shares beneficially owned and any material interest of such shareholder in the
proposal. The person presiding at the meeting shall determine whether such
notice has been duly given and shall direct that proposal not to be considered
if such notice has not been duly given.
The By-laws of the Company provide that a shareholder wishing to nominate a
candidate for election to the Board of Directors is required to give notice to
the Secretary of the Company of such nomination. The notice of nomination must
be received by the Company not less than 60 days nor more than 90 days prior to
the shareholders' meeting, or if less than 70 days' notice or prior disclosure
of the meeting date is given or made, the notice of nomination must be received
within ten days after the meeting date is announced. The notice of nomination is
required to contain certain information as set forth in the By-laws about both
the nominee and the shareholder making the nomination. The Company may require
that the proposed nominee furnish other information to determine that person's
eligibility to serve as director. The Nominating and Governance Committee will
consider such a nomination as it deems appropriate in its discretion. A
23
nomination that does not comply with the above requirements will not be
considered. There are no other policies of the Nominating and Governance
Committee in place regarding the consideration of persons recommended by
shareholders as candidates for election to the Board of Directors. As noted
above, the Company is a "Controlled Company" under the NYSE corporate governance
rules.
Such proposals or nominations should be addressed to Alan G. Berkshire, c/o
Corporate Secretary, Nuveen Investments, Inc., 333 West Wacker Drive, Chicago,
Illinois 60606.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders who wish to communicate with one or more directors of the
Company may do so as in the following manner. All such communications should be
addressed to: Nuveen Investments, Inc. Board of Directors, c/o Corporate
Secretary, Nuveen Investments, Inc., 333 West Wacker Drive, Chicago, Illinois,
60606. The Corporate Secretary will relay the communications to the Chairman of
the Nominating and Governance Committee, provided that the Corporate Secretary
may exercise his discretion not to forward (1) communications that do not relate
specifically to the Company or its business operations, including solicitations
and invitations to seminars or other events, and (2) communications that do not
present credible evidence that they are from a Company shareholder.
GENERAL
Management does not intend to present and does not have reason to believe
that others will present any other items of business at the meeting. However, if
other matters are properly presented at the meeting for a vote, the persons
named in the proxies will have discretion to vote in accordance with their own
judgment on such matters.
A list of shareholders entitled to be present and to vote at the meeting
will be available at the offices of the Company, 333 West Wacker Drive, Chicago,
Illinois, for inspection by any shareholder during regular business hours for
ten days prior to the date of the meeting.
A COPY (EXCLUDING EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2003 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE SECRETARY
AT NUVEEN INVESTMENTS, INC., 333 WEST WACKER, CHICAGO, ILLINOIS 60606.
Failure of a quorum to be present at the meeting will necessitate
adjournment. The persons named in the enclosed proxy may also move for an
adjournment of the meeting to permit further solicitation of proxies with
respect to any of the proposals if they determine that adjournment and further
solicitation is reasonable and in the best interests of the shareholders. Under
the Company's By-laws, an adjournment of a meeting requires the affirmative vote
of a majority of the shares present in person or represented by proxy at the
meeting.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
ALAN G. BERKSHIRE
Secretary
24
EXHIBIT A
NUVEEN INVESTMENTS, INC.
AUDIT COMMITTEE CHARTER
A. NAME
There shall be a committee of the Board of Directors of Nuveen Investments,
Inc. (hereinafter referred to as the "Company") to be known as the Audit
Committee.
B. PURPOSE
The Audit Committee shall assist the Board in monitoring (1) the quality
and integrity of the financial statements of the Company, (2) the independent
auditor's qualifications and independence, (3) the performance of the Company's
independent auditor and internal audit function, and (4) the compliance by the
Company with legal and regulatory requirements. In doing so, the Audit Committee
shall seek to maintain free and open means of communication among the Directors,
the independent auditors, the internal auditors and the management of the
Company. The members of the Audit Committee shall be appointed by the Board on
the recommendation of the Nominating Committee. The Audit Committee serves at
the pleasure of the Board of Directors.
C. MEMBERSHIP
The Audit Committee shall be composed of at least three directors. The
members of the Audit Committee shall meet the independence and experience
requirements of the New York Stock Exchange, Section 10A of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Securities and Exchange Commission (the "Commission"). It is the intention of
the Board that at least one member of the Audit Committee shall be a "financial
expert" as defined by the Commission and determined by the Board of Directors,
exercising its business judgment. Audit Committee members shall not
simultaneously serve on the audit committees of more than two other
publicly-traded companies.
D. MEETINGS AND ACCESS TO ADVISORS AND OTHERS
The Audit Committee shall meet as often as it determines, but no less
frequently than quarterly. The Audit Committee shall meet separately,
periodically, with management, with the internal auditor and with the
independent auditor. The Audit Committee shall have the authority to retain, at
the expense of the Company, separate legal, accounting or other consultants to
advise the Committee, in its discretion, and may request any officer or employee
of the Company or the Company's independent auditors or outside counsel to
attend a meeting of the Committee or to meet with any members of, or consultants
to, the Committee. The Company's independent auditors and internal auditors
shall have unrestricted access at any time to committee members.
E. AUTHORITY AND RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes that its
policies and procedures should remain flexible, in order to react to changing
conditions and requirements applicable to the Company. To the extent that
responsibilities of the Committee relate specifically to applicable requirements
of stock exchange rules or provisions of the Exchange Act, such responsibilities
shall be subject to the effective date of such requirements and any subsequent
amendment to, or interpretation of, such requirements.
The Audit Committee shall be responsible for the following:
Financial Statements and Disclosure Matters
1. Reviewing and discussing with management and the independent auditors
the Company's annual audited financial statements, including disclosures made in
"Management's Discussion and Analysis," the results of the audit, and any
matters required to be discussed pursuant to Statement on Auditing Standards No.
61. The Committee shall recommend to the Board of Directors whether the audited
financial statements should be included in the Company's Annual Report on Form
10-K.
2. Reviewing and discussing with management and the independent auditor the
Company's quarterly financial statements, including disclosures made in
"Management's Discussion and Analysis," the results of the independent auditor's
review of the quarterly financial statements, and any matters required to be
discussed pursuant to Statement of Auditing Standards No. 61, prior to the
filing of the Company's Form 10-Q.
3. Discussing with management and, if available, the independent auditor,
the Company's earnings press releases, as well as financial information and
earnings guidance provided to analysts and rating agencies. Such discussion may
be done generally, consisting of discussing the types of information to be
disclosed and the types of presentations to be made. The Chairman of the Audit
Committee shall be authorized to have such discussions with management on behalf
of the Audit Committee.
4. Discussing with management and the independent auditor significant
financial reporting issues and judgments made in connection with the preparation
of the Company's financial statements, including any significant changes in the
Company's selection or application of accounting principles and any major issues
as to the adequacy of the Company's internal controls and any special audit
steps adopted in light of control deficiencies.
5. Discussing with management and the independent auditor the effect of
regulatory and accounting initiatives, as well as any "off-balance sheet"
structures used by the Company, on the Company's financial statements.
6. Reviewing and discussing reports from the independent auditor regarding
(a) all critical accounting policies and practices to be used; (b) all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, ramifications of
the use of such alternative treatments and disclosures, and the treatment
preferred by the independent auditor; and (c) other material written
communications between the independent auditor and management, such as any
management letter or schedule of unadjusted differences.
2
7. Discussing with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management policies.
8. Reviewing disclosures made to the Audit Committee by the Company's
principal executive officer and principal financial officer during their
certification process for the Company's periodic reports about any significant
deficiencies in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or other employees who
have a significant role in the Company's internal controls.
Independent Auditors
9. Having the sole authority to appoint or replace the independent auditor,
subject, if applicable, to shareholder ratification; and compensating and
overseeing the work of the independent auditor (including the resolution of
disagreements between management and the independent auditor regarding financial
reporting), who shall report directly to the Audit Committee, for the purpose of
preparing or issuing an audit report or related work.
10. Meeting periodically with the independent auditor to review its audit
plans and staffing for the audit, and at the completion of its annual
examination, to review (a) its evaluation of the financial and internal controls
of the Company and (b) any significant changes required in the originally
planned audit program.
11. Pre-approving all audit services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Company by its
independent auditor, subject to the de minimus exceptions for non-audit services
described in Section 10A of the Exchange Act, which are approved by the Audit
Committee prior to the completion of the audit.
12. Obtaining and reviewing at least annually any report required to be
provided by the independent auditor or requested by the Committee in its
discretion (including a formal written statement delineating all relationships
between the auditors and the Company) regarding (a) the independent auditor's
internal quality-control procedures; (b) any material issues raised by the most
recent internal quality-control review, or peer review, of the firm, or by an
inquiry or investigation by governmental or professional authorities within the
preceding five years respecting one or more independent audits carried out by
the firm; (c) any steps taken to deal with any such issues; and (d) all
relationships between the independent auditor and the Company and its
affiliates; and evaluating the qualifications, performance and independence of
the independent auditor, including a review and evaluation of the lead partner,
taking into account the opinions of management and the Company's internal
auditors. The Audit Committee shall present its conclusions with respect to the
independent auditor to the Board.
13. Reviewing any reports from the independent auditor mandated by Section
10A of the Exchange Act, and obtaining from the independent auditor any
information with respect to illegal acts in accordance with such Section 10A.
14. Ensuring the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law, and further considering the rotation
of the independent auditing firm itself.
3
15. Recommending to the Board of Directors policies for the Company's
hiring of employees or former employees of the independent auditor who
participated in the audit of the Company.
Internal Audit Matters
16. Reviewing with management and the internal auditor the Company's
procedures for the monitoring of its system of internal controls, and approving,
in advance, any termination and replacement of the Company's Manager of Internal
Audit, who shall have a direct reporting relationship with the Committee (and
shall report administratively to an appropriate corporate officer.
17. Meeting periodically with the Manager of Internal Audit to review the
internal audit plans and staffing and, with respect to internal audit work that
has been completed, to review (a) audit results, (b) reports on
exposures/controls, irregularities and control failures, (c) the disposition of
recommendations for improvements in internal controls made by internal and
external auditors and (d) any significant change in audit plans as originally
made.
18. Monitoring the Company's policies and procedures for the review of
expenses of selected members of senior management.
Other Responsibilities
19. Reviewing with the Company's general counsel legal matters that may
have a material impact on the Company's financial statements or the Company's
compliance policies.
20. Reviewing at least annually any reports of regular examinations of the
Company by regulatory authorities.
21. Reviewing with the Company's general counsel on a quarterly basis the
status of any pending examination of the Company by regulatory authorities that
is not regular in nature and receiving a report from the Company upon the
substantial completion of such examination.
22. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies which raise material issues regarding
the Company's financial statements or accounting policies.
23. Obtaining reports from management with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's code of business conduct and ethics.
24. Establishing procedures, as required by Section 10A of the Exchange
Act, for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing matters,
and the confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
25. Performing any special reviews, investigations or oversight
responsibilities requested by the Board of Directors.
26. Reporting to the Board of Directors regularly on the activities of the
Audit Committee.
4
27. Preparing the report required by the rules of the SEC to be included in
the Company's annual proxy statement.
28. Reviewing annually the Audit Committee's own performance.
29. Reviewing and reassessing annually the adequacy of this Charter and
recommending to the Board of Directors for approval any proposed changes deemed
necessary or advisable by the Committee.
RESPONSIBILITIES OF OTHERS
Although the Audit Committee shall have the authority and responsibilities
set forth in this Charter, it is not the responsibility of the Audit Committee
to plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. That is the responsibility of management and the
independent auditors.
5
(NUVEEN LOGO)
Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
NUVEEN INVESTMENTS, INC.
PROXY
PROXY FOR ANNUAL MEETING
to be held at 10:30 a.m. Chicago time in the 6th floor auditorium of
The Northern Trust Company, 50 South LaSalle St., Chicago, Illinois on
May 14, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Timothy R. Schwertfeger and John P.
Amboian, and either of them, with full power of substitution, proxies for the
undersigned to represent and vote as specified in this Proxy all shares of Class
A Common Stock that the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Nuveen Investments, Inc. to be held on May 14, 2004, and at any
adjournment or adjournments thereof, including authority to vote on (1) the
election of directors and (2) ratification of the selection of KPMG LLP as
independent auditors.
Unless otherwise instructed on the reverse side, all shares will be
voted (1) FOR the election of directors and (2) FOR ratification of the
selection of KPMG LLP as independent auditors.
(THIS PROXY CONTINUES AND MUST BE VOTED AND SIGNED ON THE REVERSE SIDE)
Change of Address NUVEEN INVESTMENTS, INC.
P.O. BOX 11116
- ----------------------------------------- NEW YORK, N.Y. 10203-0116
- -----------------------------------------
- -----------------------------------------
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<Table>
- DETACH PROXY CARD HERE -
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SIGN, DATE AND RETURN THE
[ ] PROXY CARD PROMPTLY USING THE [X]
ENCLOSED ENVELOPE. PLEASE INDICATE YOUR CHOICE BY MARKING
AN "X" IN EITHER BLACK OR BLUE INK.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR:
1. Election of seven directors - to be elected for a one-year term:
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] (*)EXCEPTION [ ]
listed below for all nominees listed below
Nominees: John P. Amboian, Willard L. Boyd, John L. Carl, W. John Driscoll, Duane R. Kullberg, Roderick A. Palmore, and
Timothy R. Schwertfeger.
(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
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FOR AGAINST ABSTAIN
2. Ratification of the selection of KPMG LLP as [ ] [ ] [ ]
independent auditors for 2004.
3. In their discretion, the proxies are authorized [ ] [ ] [ ]
to vote upon such other business as may
properly come before the meeting.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF ANNUAL MEETING AND PROXY STATEMENT.
To change your address, please mark this box. [ ]
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SCAN LINE
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Note: Please sign exactly as your name appears on this proxy. If signing for estates, trusts or corporations, title or capacity
should be stated. If shares are held jointly, each holder should sign.
Date Share Owner sign here Co-Owner sign here
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