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 Section 240.14a-11(c) or Section
240.14a-12
JMC GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1)
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.
/ / 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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(4) Date Filed:
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[Logo of JMCG, Inc.]
JMC Group. Inc.
9710 Scranton Rd., Suite 100, San Diego, CA 92121
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 1998
To the Stockholders of JMC Group, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of JMC Group, Inc., a Delaware corporation (the "Company"),
will be held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo, Rancho
Santa Fe, California 92067 on Monday, August 31, 1998, at 10:00 a.m., Pacific
Daylight Savings Time, for the following purposes:
1. To elect two Directors of the Company to serve for three years or until
their successors shall be duly appointed or elected; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on July 6, 1998
will be entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend in person, to assure your
representation at the Annual Meeting, you are urged to mark, sign, date, and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope provided for that purpose. Any stockholder attending the meeting may
vote in person even if such stockholder returned a completed Proxy.
Requests for additional copies of proxy materials and other information
should be addressed to Investor Relations at the executive offices of the
Company, 9710 Scranton Road, Suite 100, San Diego, California 92121.
By Order of the Board of Directors of
JMC Group, Inc.
/s/ JAMES K. MITCHELL
-------------------------------------
James K. Mitchell
CHAIRMAN, PRESIDENT & CHIEF
EXECUTIVE OFFICER
San Diego, California
August 10, 1998
___________________
[Logo of JMCG, Inc.]
JMC Group. Inc.
9710 Scranton Rd., Suite 100, San Diego, CA 92121
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 31, 1998
GENERAL
The enclosed Proxy is solicited by the Board of Directors on behalf of
JMC Group, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on August
31, 1998 at 10:00 a.m., Pacific Daylight Savings Time, or at any
adjournment(s) or postponement(s) thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo,
Rancho Santa Fe, California 92067.
The Company's principal executive offices are located at 9710 Scranton
Road, Suite 100, San Diego, California 92121, and the Company's telephone
number is (619) 450-0055. These proxy solicitation materials were first
mailed on or about August 10, 1998 to all stockholders entitled to vote at
the Annual Meeting.
INFORMATION CONCERNING VOTING, SOLICITATION AND PROXIES
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on July 6, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, the Company had issued and outstanding approximately
6,166,451 shares of common stock, $0.01 par value (the "Common Stock"), and
no shares of preferred stock.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock
held by him.
Shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated thereon. In the absence of specific instructions
to the contrary, properly executed proxies will be voted FOR the election of
each person nominated by the Board of Directors for election as a Director.
The effect of an abstention or a broker nonvote on a proposal is the same as
that of a vote against such proposal. No business other than that set forth
in the accompanying Notice of Annual Meeting of Stockholders is expected to
come before the Annual Meeting. Should any other matter requiring a vote of
stockholders properly arise, the persons named in the enclosed form of proxy
(the "Proxy Holders") will have discretionary authority to vote such proxy in
accordance with their best judgment on such matter.
Directors are elected by a plurality vote.
1
The cost of this proxy solicitation will be paid by the Company. The
Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding soliciting
materials to such beneficial owners. Proxies may be solicited by certain of
the Company's Directors, officers, and regular employees, without additional
compensation, personally or by telephone or telegram.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person. Attending the Annual
Meeting in and of itself will not constitute a revocation of a proxy.
DEADLINES FOR RECEIPT OF STOCKHOLDER NOMINATIONS, PROPOSALS AND PROPOSALS FOR
INCLUSION IN THE PROXY STATEMENT FOR THE 1999 ANNUAL MEETING
Section 2.5 of the Company's Bylaws provides that nominations may be
made by the Board of Directors or by any stockholder entitled to vote in the
election of Directors generally, provided that all stockholders intending to
nominate Director candidates for election must deliver written notice thereof
to the Secretary of the Company, which notice must be received not less than
sixty nor more than ninety days prior to the meeting or, if less than seventy
days' notice or prior public disclosure of the date of the meeting is given
or made to stockholders, within ten days after the date on which notice of
such meeting is first given to stockholders. Such notice must set forth
certain information concerning such stockholder and his or her nominee(s),
including their names and addresses, such other information as would be
required to be in the proxy statement soliciting proxies for the election of
the nominees of such stockholder and the consent of each nominee to serve as
a Director of the Company if so elected. The chairman of the Annual Meeting
will refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
The Company's Bylaws also require that stockholders give advance notice
and follow certain other procedures with regard to business they wish to
bring before an annual meeting of stockholders. Section 2.6 of the Company's
Bylaws provides that all stockholders intending to bring business before the
meeting deliver written notice thereof to the Secretary of the Company in the
same manner and within the same periods as required for stockholder nominees
for the Board of Directors, as described in the preceding paragraph. Such
notice shall set forth certain information concerning such stockholder and
the proposed business, including any material interest of the stockholder in
such business. The chairman of the Annual Meeting will refuse to permit
business to be brought before the Annual Meeting if notice is not given in
compliance with the foregoing procedure.
The Company intends to hold its next Annual Meeting of Stockholders on or
about May 17, 1999. Stockholders seeking to include a proposal in the Proxy
Statement for the Company's 1999 Annual Meeting must ensure that such proposal
is received at the executive offices of the Company on or before March 19, 1999.
Inclusion of any such proposal is subject to certain other requirements.
2
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth names and certain other information
concerning the Company's Directors and executive officers, as of July 6, 1998:
TERM OF
OFFICE AS
DIRECTOR
NAME AGE POSITION EXPIRES
---- --- -------- ---------
James K. Mitchell 59 Chairman, President and 1998
Chief Executive Officer
and Director
Edward J. Baran 62 Director 2000
Barton Beek 74 Director 1999
Charles H. Black 71 Director 2000
Robert G. Sharp 62 Director 1998
Information with respect to the principal occupation during the past
five years of each nominee, each current Director and each executive officer
is set forth below. There are no family relationships among Directors or
executive officers of the Company.
JAMES K. MITCHELL became a Director in October 1988 and became Chairman
and Chief Executive Officer of the Company on January 1, 1993 and assumed the
responsibilities of President of the Company as well on January 1, 1997. Mr.
Mitchell is the founder of the Company's principal subsidiary, James Mitchell
& Co. In 1973, Mr. Mitchell was a founding officer of Security First Group, a
financial services firm which pioneered the concept of marketing insurance
and annuity products through stock brokerage firms. Before joining that firm,
Mr. Mitchell served as Vice President of Marketing for the Variable Annuity
Life Insurance Company of Houston, Texas. He attended Portland State
University and is a registered Principal with the National Association of
Securities Dealers, Inc. (the "NASD").
EDWARD J. BARAN became a Director in August 1992. Mr. Baran, who has
spent more than thirty years in the insurance business, is currently Chairman
and Chief Executive Officer of BCS Financial Corporation, a financial
services holding company. Prior to joining BCS in November 1987, Mr. Baran
was Vice Chairman, President and Chief Executive Officer of Capitol Life
Insurance Company of Denver, Colorado. He is a graduate of Georgetown
University and a member of the Audit Committee of the Board of Directors. On
February 17, 1998, Mr. Baran became a member of the Compensation Committee as
well.
BARTON BEEK became a Director in January 1984. Mr. Beek is a senior
partner of O'Melveny & Myers, a law firm which he joined in 1955, with
offices worldwide. Mr. Beek is a graduate of the California Institute of
Technology, the Stanford University Graduate School of Business and Loyola
College of Law. Mr. Beek is a director of Wynns International, Inc. He is a
member of the Compensation Committee of the Board of Directors. On February
17, 1998, Mr. Beek became a member of the Audit Committee as well.
CHARLES H. BLACK became a Director in June, 1993. Mr. Black is currently
a private investor, having most recently served as Vice Chairman of Pertron
Controls Corporation. From 1982 to 1985, Mr. Black served as Executive Vice
President, Director and Chief Financial Officer of Kaiser Steel Corporation.
He served as Executive Vice President and Chief Financial Officer of Great
Western Financial Corporation and Great Western Savings and Loan from 1980 to
1982 after having spent over 20 years in various financial and management
positions with Litton Industries, Inc., the most recent being Corporate Vice
President and Treasurer. Mr. Black is a member of the Board of Governors of
the Pacific Exchange and serves as a director of Investment Company of
America, Fundamental Investors, Inc., and the American Variable Insurance
Series, all mutual funds. He also serves as a director of Wilshire
Technologies, Inc., a publicly-held company, and he is a director of a number
of privately-held corporations. Mr. Black is a graduate of the University of
Southern California. He is Chairman of the Audit Committee of the Board of
Directors. On February 17, 1998, Mr. Black became a member of the
Compensation Committee as well.
3
ROBERT G. SHARP became a Director in May 1995. Mr. Sharp retired from
his position as President and Chief Executive Officer of Keyport Life
Insurance Company in February 1992 after having served in that position since
1979. Mr. Sharp is the past chairman of the National Association for Variable
Annuities and a former director of the National Association of Life
Companies. Mr. Sharp is a graduate of the California State University at
Sacramento and is a registered Principal with the NASD. Mr. Sharp is a
member of the Audit Committee and Chairman of the Compensation Committee of
the Board of Directors.
BOARD MEETINGS AND COMMITTEES
The business affairs of the Company are managed by or under the
direction of the Board of Directors, although it is not involved in
day-to-day operations. During the year ended December 31, 1997, the Board of
Directors met four times.
The Board of Directors of the Company has standing Audit and
Compensation Committees. During 1997, the Board of Directors had a standing
Nominating Committee as well, which was dissolved transferring all decision
making powers and duties to the full Board as of February 17, 1998.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the appointment of the firm selected to be independent public
accountants for the Company and monitors and evaluates the performance of
such firm; reviews and approves the scope of the annual audit and evaluates
with the independent public accountants the Company's annual audit and annual
consolidated financial statements; reviews the Company's financial reporting
policies and practices; reviews with management the status of internal audit
and control procedures, adequacies of financial staff and other matters and
makes such recommendations to the Board of Directors as may be appropriate;
evaluates matters having a potential financial impact on the Company which
may be brought to its attention by management, the independent public
accountants or the Board of Directors; and reviews all public financial
reporting documents of the Company. The members of the Audit Committee
during 1997 were Messrs. Baran, Black and Sharp. Mr. Beek joined the Audit
Committee February 17, 1998. Mr. Black continues as the Chairman. The Audit
Committee held two meetings during fiscal 1997.
COMPENSATION COMMITTEE. The Compensation Committee, reviews and makes
recommendations to the full Board of Directors with respect to the specific
compensation to be paid or provided to executive officers and was responsible
during 1997 for administering the Company's 1993 Executive Stock Option Plan.
(All 1993 Employee and Executive Stock Option Plan administrative functions
and decisions are now performed by the entire Board.) The members of the
Compensation Committee during 1997 were Mr. Beek, Herbert Kawahara and Donald
Weeden. Mr. Kawahara was the Chairman. The current members are Mssrs. Baran,
Beek, Black and Sharp with Mr. Sharp as Chairman. The Compensation Committee
held one meeting during fiscal 1997.
NOMINATING COMMITTEE. The Nominating Committee recommended and nominated
those who would stand for election or reelection during the Annual Meeting of
Shareholders. All nominating decisions are now performed by the full Board of
Directors. The members of the Nominating Committee during 1997 were Messrs.
Sharp, Beek and Black. The Nominating Committee held one meeting during
fiscal 1997.
During the fiscal year ended December 31, 1997, each of the Directors of
the Company attended at least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors and (2) the total number of meetings of
the committee(s) of the Board on which he served during the period he served
in such capacities.
4
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and the three highest paid executive
officers of the Company (the "named executive officers") (1):
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES ALL OTHER
ANNUAL COMPENSATION UNDERLYING COMPENSATION
-------------------- OPTIONS/ ------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#)(2) ($)
--------------------------- ---- --------- -------- ---------- ------------
James K. Mitchell, Chairman and 1997 239,087 -- 100,000 7,811(3)
Chief Executive Officer 1996 291,627 -- -- 9,579(3)
1995 248,664 -- -- 9,449(3)
Daniel M. Harkins, Senior Vice 1997 128,364 -- 25,000 1,913(4)
President, General Counsel, 1996 -- -- -- --
Chief Financial Officer 1995 -- -- -- --
and Secretary
Stanley J. Mensing, Senior 1997 117,716 -- 25,000 3,844(4)
Vice President and Chief 1996 -- -- -- --
Marketing Officer 1995 -- -- -- --
William L. Webster, 1997 112,878 -- 25,000 3,709(4)
Senior Vice President and 1996 127,462 -- -- 3,823(4)
Chief Administrative Officer 1995 112,880 -- 20,000 3,694(4)
- ----------------------
(1) Although SEC regulations require four highest paid executive officers in
the classification of the "named executive officers" (other than the Chief
Executive Officer), no other officer of the Company qualifies for this
specification under Regulation S-K, Item 402a(3). Stanley J. Mensing and
Daniel M. Harkins became named executive officers in 1997, therefore no
compensation disclosure is required for the years 1996 and 1995. Messrs.
Harkins, Mensing and Webster have all left the Company subsequent to
year-end.
(2) The Company does not have any outstanding Stock Appreciation Rights
("SARs").
(3) Amounts reported for Mr. Mitchell in the "All Other Compensation" column
include $2,982, $4,750 and $4,620, respectively, for 1997, 1996 and 1995,
representing the Company's contributions to its 401(k) Savings Plan on his
behalf and $4,829 for 1997, $4,829 for 1996 and $4,829 for 1995,
representing life insurance premiums advanced by the Company pursuant to a
split dollar insurance agreement.
(4) Represents the Company's contributions to its 401(k) Savings Plan on behalf
of the named executive officer.
5
OPTION GRANTS
The following table provides information related to grants of options to
purchase Common Stock to the named executive officers during the 1997 fiscal
year:
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
PERCENT OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS/SARS VALUE AT ASSUMED
SECURITIES GRANTED TO ALL ANNUAL RATE OF
UNDERLYING EMPLOYEES EXERCISE PRICE STOCK PRICE
OPTIONS/SARS DURING FISCAL OR BASE PRICE EXPIRATION APPRECIATION FOR
NAME GRANTED (1) YEAR (1) ($/SH) DATE (2) OPTION TERM (3)
---- ------------ ---------------- -------------- ---------- -------------------
5%($) 10%($)
----- ------
James K. Mitchell 100,000 32.72% $1.375 2/10/02 $159,535.20 $201,313.76
Stanley J. Mensing 25,000 8.00% $1.250 2/10/02 N/A N/A
Daniel M. Harkins 25,000 8.00% $1.250 2/10/02 N/A N/A
William L. Webster 25,000 8.00% $1.250 2/10/02 N/A N/A
- --------------------------
(1) The Company does not have any outstanding SARs. Each of the options for
Messrs. Mensing, Harkins and Webster were scheduled to vest in annual
installments of 8,334, 8,333 and 8,333 shares beginning December 31, 1997.
On December 30, 1997, the Board decided to amend these schedules and Mr.
Mensing's options were 100% vested on December 31, 1997, Mr. Webster's
options were 100% vested on January 31, 1998 and Mr. Harkins' Options were
100% vested on February 28, 1998. Mr. Mitchell's options vest in three
annual installments of 33,334, 33,333 and 33,333 shares beginning December
31, 1997.
(2) Dates shown are the original expiration dates for each option. However,
due to restructuring, Mr. Webster's option to purchase 20,000 shares lapsed
on May 1, 1998 and Mr. Harkins' options lapsed on May 29, 1998.
(3) The 5% and 10% assumed rates of appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. The potential
realizable value was calculated using the closing price of the Common Stock
on February 10, 1997 of $1.25 per share. The exercise price was determined
by using the same closing price. Mr. Mitchell's exercise price was 10%
higher due to his ownership of 10% or more of the outstanding Common Stock,
in accordance with the terms of the 1993 Executive Stock Option Plan.
However, as stated above, due to restructuring, Mr. Webster's option to
purchase 20,000 shares lapsed on May 1, 1998 and Mr. Harkins' options
lapsed on May 29, 1998. Mr. Mensing exercised his options in a cashless
transaction and realized an actual value of $3,125.00. Mr. Webster
exercised 5,000 shares of his option in a cashless transaction and realized
an actual value of $626.00.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to options exercised
by the named executive officers during the 1997 fiscal year and the number
and value of options held at fiscal year-end.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END(#)(1) SARS AT FY-END($)(1)(2)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
James K. Mitchell 0 0 108,334 66,666 0 0
Stanley J. Mensing 0 0 55,000 0 0 0
Daniel M. Harkins 0 0 11,668 23,332 0 0
William L. Webster 0 0 38,334 16,666 0 0
- --------------------------
(1) The Company does not have any outstanding SARs. See Note 3 above regarding
exercise and lapse of options subsequent to year-end.
(2) The closing price for the Common Stock on December 31, 1997, as reported by
the NASDAQ National Market System, was $0.656. All of the named executive
officers' outstanding options were exercisable for a price greater than
$0.656 at fiscal year end.
6
COMPENSATION OF EXECUTIVES
Effective January 1, 1998, the Company reinstated a prior employment
contract with the President and Chief Executive Officer which had originally
expired on January 1, 1996. The reinstated contract provides for a base
salary of $225,000 per year plus basic company benefits for a three-year
term, subject to a provision that if the Board should decide to liquidate the
Company, the employment contract will terminate six months thereafter and
also subject to a provision that if there is a change in control of the
Company in a transaction not approved by the Board, Mr. Mitchell may
terminate his duties under the contract but will be entitled to receive
compensation and benefits under the contract for its stated term.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not full-time employees of
the Company are entitled to receive reimbursement for out-of-pocket expenses
they incur in attending Board meetings and otherwise performing their duties
and receive fees of $1,000 for each meeting of the Board of Directors which
they attend. Members of committees additionally receive $500 per committee
meeting held on the same day as a Board of Directors' meeting, or $1,000 per
committee meeting if held on a different day. Non-employee Directors receive
formula grants of non-qualified stock options under the Company's 1993
Executive Stock Option Plan. Options to acquire 12,000 shares of Common Stock
are to be granted within six months after an individual takes office as a
Director and options to acquire an additional 12,000 shares are to be granted
within six months after every third anniversary of such Director's taking
office. On February 17, 1998, the outside Directors of the Company were each
granted stock options to purchase 25,000 shares of Common Stock at a price
equal to $1.125 per share, the closing price for the Common Stock on June 30,
1998, in addition to their regular formula grants. Officers of the Company
are not compensated for their services as Directors or committee members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors served
as an officer or employee of the Company or its subsidiaries. No executive
officers of the Company served during fiscal 1997 on the board of directors
of any company which had a representative on the Company's Board of
Directors. No member of the Company's Board of Directors served during 1997
as an executive officer of a company whose board of directors had a
representative from the Company or the Company's Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1997, executive compensation policy was recommended by a
Compensation Committee (the "Committee") which was composed entirely of
independent members of the Board of Directors (the "Board"). This Committee
met once on February 10, 1997. The Committee is responsible for recommending
executive compensation policy and practice to the Board of Directors and was
responsible for administering the Company's 1993 Executive Stock Option Plan.
The Board of Directors did not modify or reject in any material way any
action or recommendation of the Committee during fiscal year 1997.
The Board's compensation policy with regards to the Company's executive
officers has been to provide these officers, in aggregate, with salary and
incentive compensation competitive with the marketplace. Compensation has
primarily consisted of salaries, stock options and cash bonuses based upon
the Company's pre-tax earnings. For 1997, no executive was a party to an
employment contract. However, on February 17, 1998, the Board elected to
reinstate the employment contract of the President and CEO, effective as of
January 1, 1998, which had originally expired January 1, 1996. The reinstated
contract provides for a base salary of $225,000 per year plus basic company
benefits for a three-year term, subject to certain provisions described
above. See "Compensation of Executives" under this Item, above.
On December 31, 1996, the President, Brian J. Finneran, resigned and the
Chief Executive Officer, James K. Mitchell, assumed this title and
responsibility on January 1, 1997. He notified the Committee during the
February 10, 1997 Board meeting that he would voluntarily reduce his salary
20% to $225,000 per year, effective April 1, 1997.
The Board, at its February 17, 1998 meeting, considered the operating
results for 1997 and although the Committee felt that management during the
year had acted appropriately in a very difficult environment and was
continuing to maintain energy and creativity in its search for new sources of
revenue for the Company, it decided not to award any cash bonuses to the
Chief Executive Officer or the other executive officers.
While there is no established policy with respect to the frequency or
amount of option grants, the Board desires that the executive officers own
Company stock to both provide incentive compensation based on performance
factors deemed important to the Company's stockholders and to provide an
element of downside risk to more closely align the interests of executives
with the interests
7
of the stockholders. The Board considers the granting of stock options
annually and, in reviewing the Chief Executive Officer's recommendation,
considers the individual executive officer's contributions to the Company and
the amount and terms of existing options. As previously reported, at the
February 10, 1997 meeting, upon the recommendation of the Chief Executive
Officer, and in recognition of the fact that they would not be getting salary
increases or bonuses, the Compensation Committee unanimously decided to grant
options to three Senior Vice Presidents of the Company totaling 75,000 shares
at a purchase price of $1.25 per share, the fair market value of the
Company's Common Stock at the closing on February 10, 1997. Likewise, the
Committee decided to grant the Chief Executive Officer options to purchase
100,000 shares of Common Stock at a price of $1.375 per share. (The higher
exercise price was in accordance with the 1993 Executive Stock Option Plan
which requires grants to owners of more than 10% of the outstanding Common
Stock to pay a price of 10% above the fair market value on the date of
grant.) The options granted to the three Senior Vice Presidents and the Chief
Executive Officer represented less than three percent of the outstanding
Common Stock and all of such options granted to Senior Vice Presidents have
been exercised or have lapsed subsequent to year-end.
James K. Mitchell, who became Chief Executive Officer of the Company
effective January 1, 1993, received a total of $239,087 in salary for fiscal
1997. This compares to $291,627 in salary for fiscal 1996. This also
compares to $248,664 salary in 1995. All salary totals are exclusive of
standard benefits. At the close of 1997, Mr. Mitchell was the largest
stockholder of the Company with a total of 713,179 shares beneficially owned
and vested options to purchase 75,000 shares of Common Stock at a price of
$4.40 per share and 33,334 shares at a price of $1.375 per share.
The report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation Committee of the
Board of Directors of JMC Group, Inc.:
Robert G. Sharp, Chairman
Edward J. Baran
Barton Beek
Charles H. Black
8
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the
cumulative total stockholder return on the Common Stock during the five
fiscal years ended December 31, 1997 with the cumulative total return on the
S&P 500 Index and the NASDAQ Financial Stocks Industry Index.
Assumes $100 invested on December 31, 1992 in JMC Group, Inc., S&P 500
Index and NASDAQ Financial Stock Industry Index.
PERFORMANCE 1992 1993 1994 1995 1996 1997
NASDAQ 100 116.23 116.50 169.67 217.50 333.81
S&P 500 100 104.464 111.834 110.113 147.673 240.624
JMCG 100 138 25.008 14.496 15.504 10.496
The foregoing information shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
9
SECURITY OWNERSHIP
Unless otherwise noted below, the following table presents certain
information with respect to the ownership of the Common Stock as of July 6,
1998 by each person known by the Company to own beneficially more than 5% of
the Common Stock, by each person who is a Director or nominee for Director of
the Company, by each named executive officer and by all executive officers
and Directors of the Company as a group:
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
AS OF JULY 6, 1998 (1)
------------------------
NAME NUMBER(2)(3) %
---- ------------ -----
James K. Mitchell 822,577 13.02
JMC Group, Inc.
9710 Scranton Road, Suite 100
San Diego, CA 92121
Robert London (4) 498,500 7.89
Cruttendon Roth Incorporated
809 Presidio Avenue
Santa Barbara, CA 93101
Stanley J. Mensing (5) 45,446 *
William L. Webster (5) 0 -
Daniel M. Harkins (5) 7,040 *
Charles H. Black (6) 253,031 4.00
Robert G. Sharp 57,000 *
Barton Beek 36,000 *
Edward J. Baran 12,000 *
All Executive Officers and
Directors as a group
(8 persons) 1,233,095 19.51
Total outstanding shares (7) 6,318,785
- ---------------------
* Less than 1%
(1) All ownership figures include options to purchase shares of Common Stock
exercisable within 60 days of July 6, 1998, as set forth below. Except as
otherwise noted below, each individual, directly or indirectly, has sole or
shared voting and investment power with respect to the shares listed.
(2) Includes 15,017, 12,429, 4,040 and 31,486 vested shares of Common Stock
contributed by the Company to the Company's 401(k) Savings Plan for Messrs.
Mitchell, Mensing, and Harkins and for all executive officers and Directors
as a group, respectively.
(3) Includes options to purchase 108,334, 12,000, 12,000, 8,000, 12,000 and
152,334 shares of Common Stock for Messrs. Mitchell, Baran, Beek, Black,
Sharp and for all executive officers and Directors as a group,
respectively.
(4) Mr. London filed a Schedule 13D on November 25, 1997 for 423,500 shares of
Common Stock and an amended Schedule 13D on December 23, 1997 for an
additional 75,000 shares of Common Stock.
(5) Messrs. Mensing, Webster and Harkins have all left the Company subsequent
to year-end.
10
(6) Includes 22,800 shares held by the Charles H. Black Pension Trust and
10,000 shares held by Mr. Black as trustee for the benefit of Charles H.
Black, Jr. and Mr. Black in which Mr. Black has a 1/2 beneficial ownership
interest. Also includes 36,200 shares owned individually by Mr. Black's
wife as to which he disclaims beneficial ownership.
(7) Includes 152,334 shares issuable upon exercise of stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REGARDING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission, NASDAQ and the Pacific Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Executive officers,
Directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file.
Specific due dates for these reports have been established and the
Company is required to identify those persons who failed to timely file these
reports. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31, 1997,
all Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than 10% beneficial owners were complied with, except
for two Forms 4 filings which were due on August 10, 1997 and October 10,
1997 and were not made. As reported in the Company's Annual Report on Form
10-K, these filings were regarding purchases of a total of 45,000 shares of
Common Stock by Robert G. Sharp in three transactions during July and
September of 1997 and were reported on a subsequent Form 5 for the year
ending December 31, 1997.
ELECTION OF DIRECTORS
NOMINEES
Two of the Company's total of five Directors are to be elected at the
Annual Meeting. The Board of Directors of the Company has authorized the
nomination at the Annual Meeting of the persons named below as candidates.
Unless otherwise directed, the Proxy Holders will vote the proxies received
by them for the two nominees named below. In the event that any such nominee
is unable or declines to serve as a Director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the existing Board of Directors to fill the vacancy. It is not expected that
any nominee will be unable or will decline to serve as a Director.
Information with respect to the nominees to the Board of Directors is
set forth above in "Directors and Executive Officers." The names of the
nominees are as follows:
James K. Mitchell
Robert G. Sharp
The Directors elected at this Annual Meeting will serve a three-year
term, until the annual meeting of stockholders in 2001, or until their
successors are duly elected.
REQUIRED VOTE
The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy and entitled to vote is required
for the election of each Director nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH PERSON
NOMINATED FOR ELECTION AS A DIRECTOR.
INDEPENDENT AUDITORS
Deloitte & Touche LLP has audited the financial statements of the
Company and its subsidiaries for fiscal year 1997 and will audit the
financial statements for fiscal 1998. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting with the opportunity to
make a statement, if they desire to do so, and will be available to respond
to appropriate questions.
11
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form
will be voted in respect thereof in accordance with the judgments of the
persons voting the proxies. It is important that your shares be represented
at the meeting, regardless of the number of shares which you hold. WHETHER OR
NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, SIGN, AND RETURN YOUR PROXY PROMPTLY.
By Order of the Board of Directors of
JMC Group, Inc.
/s/ JAMES K. MITCHELL
-------------------------------------
James K. Mitchell
CHAIRMAN, PRESIDENT & CHIEF
EXECUTIVE OFFICER
Dated: August 10, 1998
12
- --------------------------------------------------------------------------------
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JMC GROUP, INC.
Form of Proxy For Annual Meeting of Stockholders, August 31, 1998
The undersigned hereby appoints James K. Mitchell and Robert E. Jeffords,
and each of them, as his agents and proxies with full power of substitution
to vote any and all shares of Common Stock of JMC GROUP, INC. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of said
Company to be held August 31, 1998, or any adjournment or postponement
thereof, as specified below (with reference to the Notice of Annual Meeting
of Stockholders and the accompanying Proxy Statement for further information
regarding each item).
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
triangle FOLD AND DETACH HERE triangle
Please mark
your votes as /X/
indicated in
this example
WITHHELD
FOR FOR ALL
1. Election of the / / / / 2. As they shall in
following nominees their sole judgment
as directors: determine on any other
matter that may
properly come before
the Annual Meeting or
James K. Mitchell and any adjournment or
Robert G. Sharp postponement thereof.
WITHHELD FOR: (Write
that nominee's name
in the space provided
below).
- ----------------------
This proxy will be
____ voted as you
| specify. UNLESS
| OTHERWISE MARKED,
THIS PROXY WILL BE
VOTED FOR THE
ELECTION OF ALL OF
THE PERSONS NAMED IN
PROPOSAL 1, ALL OF
WHOM WILL BE
NOMINATED BY THE
BOARD OF DIRECTORS
OF JMC GROUP, INC.
FOR ELECTION AS
DIRECTORS.
Signature(s) Date
------------------------------------------------ -------------
NOTE: Sign exactly as name appears hereon. Give your full title if signing in
other than an individual capacity. All joint owners should sign.
- --------------------------------------------------------------------------------
triangle FOLD AND DETACH HERE triangle