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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
STIFEL FINANCIAL CORP.
(Name of Registrant as Specified in Its Charter)
(Name of Person 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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
STIFEL FINANCIAL CORP.
501 NORTH BROADWAY
ST. LOUIS, MISSOURI 63102
(314) 342-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 2001
Dear Stockholder:
The Annual Meeting of Stockholders of Stifel Financial
Corp., a Delaware corporation (the "Company"), will be held in the Founders
Hall, 2nd Floor, One Financial Plaza, 501 North Broadway, St Louis,
Missouri, on Wednesday, April 25, 2001, at 11:00 a.m., for the following
purposes:
1. To elect four Class III directors to hold office
for a term of three years or until their
successors shall have been duly elected and
qualified;
2. To consider and act upon a proposal to approve
the 2001 Incentive Stock Plan;
3. To consider and vote upon an amendment of the
Restated Certificate of Incorporation of the
Company to increase the total number of
authorized shares of stock from 13,000,000 to
33,000,000 and to increase the authorized number
of shares of common stock, $0.15 par value per
share, from 10,000,000 to 30,000,000.
4. To ratify the appointment of Deloitte & Touche
LLP as independent auditors for the year ending
December 31, 2001; and
5. To consider and act upon such other business as
may properly come before the meeting and any
adjournment thereof.
The Company's Board of Directors has fixed the close of
business on March 7, 2001 as the record date for the determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting
and any adjournment thereof.
WE CORDIALLY INVITE YOU TO ATTEND THE ANNUAL MEETING. EVEN
IF YOU PLAN TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE REQUESTED TO
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED SO
THAT YOUR SHARES WILL BE REPRESENTED. THE MAILING OF AN EXECUTED PROXY CARD
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE ANNUAL MEETING.
By Order of the Board of Directors.
James M. Zemlyak, Secretary
March 26, 2001
St. Louis, Missouri
STIFEL FINANCIAL CORP.
501 NORTH BROADWAY
ST. LOUIS, MISSOURI 63102
(314) 342-2000
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON WEDNESDAY, APRIL 25, 2001
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Stifel Financial Corp.,
a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on Wednesday, April 25, 2001, at 11:00 a.m., in the
Founders Hall, 2nd Floor, One Financial Plaza, 501 North Broadway, St.
Louis, Missouri, and any adjournment thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement, the Notice of Annual Meeting and the
accompanying Proxy Card were first mailed to the stockholders of the Company
on March 26, 2001.
All proxies will be voted in accordance with the
instructions contained in the proxy. If no choice is specified, proxies will
be voted in favor of the election of each of the nominees for director
proposed by the Board of Directors in Proposal I, in favor of the approval
of the 2001 Incentive Stock Plan in Proposal II, in favor of the amendment
of the Restated Certificate of Incorporation of the Company to increase the
total number of authorized shares of stock from 13,000,000 to 33,000,000 and
to increase the number of authorized shares of common stock, $0.15 par value
("Common Stock"), from 10,000,000 to 30,000,000 in Proposal III and in favor
of the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 2001 in
Proposal IV, as recommended by the Board of Directors. A stockholder who
executes a proxy may revoke it at any time before it is voted by delivering
to the Company another proxy bearing a later date, by submitting written
notice of such revocation to the Secretary of the Company or by personally
appearing at the Annual Meeting and casting a contrary vote.
A plurality of the votes cast is required for the election
of directors, which means that the four nominees for director receiving the
highest vote totals will be elected as directors. As a result, a designation
on the proxy that the stockholder is "withholding authority" to vote for a
nominee or nominees and broker "non-votes" do not have an effect on the
results of the vote for the election of directors. There is no cumulative
voting in the election of directors.
The approval of the 2001 Incentive Stock Plan and the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors each require the affirmative vote of a majority of the
shares present and entitled to vote at the meeting. The amendment of the
Restated Certificate of Incorporation of the Company requires the
affirmative vote of a majority of the outstanding shares of Common Stock.
For the purpose of determining the vote required for the approval of a
matter to be voted on at the meeting, abstentions and broker "non-votes"
deemed to be present at the meeting will be treated as present and entitled
to vote on such matter. Therefore, abstentions and broker "non-votes" deemed
to be present at the meeting will have the same effect as a vote against
Proposals II, III and IV. Broker "non-votes" not deemed to be present at the
meeting will have no effect on the results of the vote on such matters.
Broker "non-votes" will be deemed to be present at the meeting to the extent
that such shares are voted on any matter presented at the meeting. A broker
"non-vote" occurs when a nominee
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holding shares for a beneficial owner does not vote a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The close of business on March 7, 2001 has been fixed as
the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. Each share of the Company's Common Stock
outstanding on the record date is entitled to one vote on each proposal
submitted, or director nominee presented, to the vote of stockholders. On
March 7, 2001, there were 7,388,130 shares of Common Stock outstanding and
entitled to vote.
OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth information regarding the
amount of Common Stock beneficially owned, as of March 7, 2001, by each
director of the Company, each nominee for election as a director of the
Company, the executive officers named in the Summary Compensation Table and
all directors and executive officers of the Company as a group:
PERCENT OF UNVESTED
NUMBER OF SHARES OUTSTANDING RESTRICTED
NAME BENEFICIALLY OWNED (1)(2) COMMON STOCK STOCK UNITS (3)
---- ------------------------- ------------ ---------------
George H. Walker III................ 547,950(4) 7.35% --
Ronald J. Kruszewski................ 331,243 4.34 74,076
Scott B. McCuaig.................... 137,504 1.85 47,035
James M. Zemlyak.................... 95,505 1.28 38,979
James M. Oates...................... 38,551 (5) --
Walter F. Imhoff.................... 33,963 (5) --
John J. Goebel...................... 29,394(4) (5) --
Charles A. Dill..................... 23,752 (5) --
Bruce A. Beda....................... 18,474 (5) --
Charles R. Hartman.................. 17,308 (5) --
Robert E. Lefton.................... 15,580 (5) --
Stuart I. Greenbaum................. 10,302 (5) --
Richard F. Ford..................... 9,293 (5) --
Directors and Executive Officers
as a Group (14 persons)........... 1,298,276 16.50% 160,942
<FN>
- ----------
(1) Except as otherwise indicated, each individual has sole voting and
investment power over the shares listed beside his name.
(2) Includes the following shares that such persons and group have the
right to acquire currently or within 60 days following March 7, 2001
upon the exercise of stock options: Mr. Walker - 59,457; Mr. Kruszewski
- 129,738; Mr. McCuaig - 32,038; Mr. Zemlyak - 19,022; Mr. Oates -
5,712; Mr. Goebel - 11,643; Mr. Dill - 11,788; Mr. Beda - 7,116; Mr.
Lefton - 10,154; Mr. Greenbaum - 7,917; Mr. Ford - 7,233; and directors
and executive officers as a group - 302,218. Also includes the
following shares allocated to such persons and group under the Stifel
Financial Corp. Stock Ownership Plan and Trust: Mr. Walker - 5,838; Mr.
Kruszewski - 136; Mr. McCuaig - 119; Mr. Zemlyak - 69; and directors
and executive officers as a group - 6,206. Also includes the following
shares allocated to such persons and group underlying restricted stock
units vested currently or within 60 days following March 7, 2001: Mr.
Kruszewski - 112,513; Mr. McCuaig - 28,781; Mr. Zemlyak - 28,107; Mr.
Oates - 839; Mr. Goebel - 682; Mr. Dill - 349; Mr. Beda - 803; Mr.
Lefton - 316; Mr. Greenbaum - 180; and directors and executive officers
as a group - 172,570. Also includes 3,279 and 451 shares held by Mr.
Walker and Mr. Zemlyak, respectively, pursuant to the Stifel, Nicolaus
& Company, Incorporated Profit Sharing 401(k) Plan.
(3) Includes shares underlying restricted stock units that such persons or
group hold but which are not subject to vesting within the 60-day
period after March 7, 2001 and, therefore, under the rules of the
Securities and Exchange Commission, are not
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deemed to be "beneficially owned" as of March 7, 2001. The restricted
stock units generally will vest over a three- to five-year period after
the date of grant contingent upon the holder's continued employment
with the Company.
(4) Includes 11,256 shares held by the George Herbert Walker Foundation as
to which Messrs. Walker and Goebel, as co-trustees, share voting power.
(5) Shares beneficially owned do not exceed one percent of the outstanding
shares of Common Stock.
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 7, 2001, the following persons were the only
persons known to the Company to be beneficial owners of more than five
percent of the Common Stock:
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME AND ADDRESS BENEFICIALLY OWNED COMMON STOCK
---------------- ------------------ ------------
The Western and Southern Life Insurance Co.................... 1,019,812(1) 13.80%
400 Broadway
Cincinnati, OH 45202
Del Mintz .................................................... 861,600(2) 11.66
22732 Rye Road
Shaker Heights, Ohio 44122
George H. Walker III ......................................... 547,950(3) 7.36
501 North Broadway
St. Louis, Missouri 63102
Stifel Financial Corp. Stock Ownership Plan and Trust......... 473,573(4) 6.41
501 North Broadway
St. Louis, Missouri 63102
Dimensional Fund Advisors Inc................................. 422,450(5) 5.72
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
<FN>
- --------------------------
(1) The information shown is based on a Schedule 13G, dated January 8,
1998, of The Western and Southern Life Insurance Company ("Western and
Southern"). The number of shares beneficially owned has been adjusted
to reflect the five percent stock dividends declared by the Company on
each of January 20, 1998 and January 27, 1999. The information in the
Schedule 13G indicates that Western and Southern has the sole power to
vote and dispose of such shares.
(2) The information shown is based on a Form 4, dated November 9, 1999, of
Mr. Mintz. Mr. Mintz has the sole power to vote and dispose of such
shares.
(3) See notes 1, 2 and 4 to the preceding table.
(4) With respect to 270,236 shares of Common Stock allocated to the Stifel
Financial Corp. Stock Ownership Plan and Trust (the "Stock Ownership
Plan"), each participant in the Stock Ownership Plan has the right to
instruct the trustee of the Stock Ownership Plan with respect to the
voting of Common Stock in such participant's account. The trustee is
authorized to vote any shares of Common Stock with respect to which the
trustee has not received timely directions as to the voting thereof. As
of December 31, 2000, the Company had 203,337 unallocated shares in the
Stock Ownership Plan. These unallocated shares will be released for
allocation to the participants based upon employer contributions to
fund an internal loan between the Company and the Stock Ownership Plan.
The trustee is authorized to vote these unallocated shares in the same
proportion as the trustee votes those shares for which the trustee has
received timely directions from the participants.
(5) The information shown is based on a Schedule 13G, dated February 2,
2001, of Dimensional Fund Advisors Inc. The information in the Schedule
13G indicates that Dimensional Fund Advisors Inc. has the sole power to
vote and dispose of such shares.
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PROPOSAL I.
ELECTION OF DIRECTORS
In accordance with the By-laws of the Company, the Board
of Directors has fixed the number of directors at eleven, divided into three
classes, with the terms of office of each class ending in successive years.
The Board of Directors has nominated Robert F. Lefton, James M. Oates,
George H. Walker III and Scott B. McCuaig for election as Class III directors
to hold office until the 2004 Annual Meeting of Stockholders or until their
respective successors are elected and qualified or until their earlier death,
resignation or removal.
Shares represented by your proxy will be voted in
accordance with your direction as to the election as directors of the
persons listed below as nominees. In the absence of direction, the shares
represented by your proxy will be voted FOR the election of each such
nominee. The four nominees receiving the highest number of votes cast at the
meeting will be elected as directors of the Company in Class III for the
term of such class. In the event any person listed as a nominee becomes
unavailable as a candidate for election, it is intended that the shares
represented by your proxy will be voted for the remaining nominees and any
substitute nominee recommended by the Board of Directors.
Certain information with respect to each of the nominees
and each of the continuing directors is set forth below, including any
positions they hold with the Company and its principal subsidiary, Stifel,
Nicolaus & Company, Incorporated ("Stifel, Nicolaus").
SERVED AS
DIRECTOR
POSITIONS OR OFFICES CONTINUOUSLY
NAME AGE WITH THE COMPANY AND STIFEL, NICOLAUS SINCE
---- --- ------------------------------------- -----
CLASS III-NOMINEES FOR TERMS ENDING IN 2004
Robert E. Lefton 69 None 1992
James M. Oates 54 None 1996
George H. Walker III 70 Chairman of the Board of Directors of the 1981
Company and Stifel, Nicolaus
Scott B. McCuaig 51 Vice President of the Company; Senior Vice N/A
President and President of the Private Client
Group of Stifel, Nicolaus
CLASS I-DIRECTORS WITH TERMS ENDING IN 2002
Bruce A. Beda 60 None 1997
Stuart I. Greenbaum 64 None 1997
Ronald J. Kruszewski 42 President and Chief Executive Officer of the 1997
Company and Stifel, Nicolaus
CLASS II-DIRECTORS WITH TERMS ENDING IN 2003
Charles A. Dill 61 None 1995
Richard F. Ford 64 None 1984
John J. Goebel 71 None 1987
Walter F. Imhoff 69 Managing Director of Stifel, Nicolaus 2000
The following are brief summaries of the business
experience during the past five years of each of the nominees for election
as a director of the Company and the other directors of the Company whose
terms of office as directors will continue after the Annual Meeting,
including, where applicable, information as to the other directorships held
by each of them.
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NOMINEES
Robert E. Lefton, Ph.D. has been President and Chief
Executive Officer of Psychological Associates, Inc., an international
training and consulting firm, since 1958. Dr. Lefton is a director of Allied
Healthcare Products, Inc. and Wave Technologies International, Inc.
James M. Oates has been Chairman of IBEX Capital Markets,
Inc., a financial service company, since 1996 and he has been Managing
Director of The Wydown Group, a consulting firm that specializes in
start-ups, turn-arounds and defining growth strategies, since 1994. Mr.
Oates is a director of Phoenix Investment Partners, Ltd., Phoenix Funds,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Aberdeen Series
Fund, AIB Govett, Inc., Emerson Investment Management, Inc., Investors
Financial Services Corporation, Investors Bank & Trust Co., Connecticut
River Bancorp., Inc., Plymouth Rubber Company and Command Systems.
George H. Walker III joined Stifel, Nicolaus in 1976,
became Chief Executive Officer of Stifel, Nicolaus in December 1978 and
became Chairman of Stifel, Nicolaus in July 1982. From the time of the
organization of the Company, Mr. Walker has served as its Chairman of the
Board and, until October 26, 1992, Mr. Walker served as its President and
Chief Executive Officer. Mr. Walker is a director of Western and Southern
Life Insurance Company, Laclede Steel Company, Laidlaw Corporation and
Macroeconomics Advisers, LLC. Mr. Walker is Chairman of the Advisory
Committee of Webster University Business School and is a member of the
National Counsel of Washington University Business School.
Scott B. McCuaig has been Vice President of the Company
and Senior Vice President and President of the Private Client Group of
Stifel, Nicolaus since January 1998. Prior thereto, Mr. McCuaig served as
Managing Director, head of marketing and regional sales manager of Robert W.
Baird & Co. Incorporated, a securities broker dealer, from June 1988 to
January 1998.
The Board of Directors recommends a vote "FOR" the
election of each of the nominees for director of the Company.
CONTINUING DIRECTORS
Charles A. Dill has been a General Partner of Gateway
Venture Partners, a private venture capital fund, since November 1995. From
1991 to 1995, Mr. Dill was the President, Chief Executive Officer and a
director of Bridge Information Systems, Inc., a company providing online
information and trading services. Mr. Dill is a director of Zoltek
Companies, Inc., TransAct Technologies Incorporated, DT Industries, Inc. and
Tanaka Funds Inc.
Richard F. Ford is a Managing General Partner of the
management companies which act as a General Partner of Gateway Mid-America
Partners, L.P., Gateway Venture Partners II, L.P., Gateway Venture Partners
III, L.P. and Gateway Partners, L.P., private venture capital funds formed
in 1984, 1987, 1990 and 1995, respectively. Mr. Ford is a director of
CompuCom Systems, Inc., D&K Healthcare Resources, Inc. and TALX Corporation.
John J. Goebel has been an attorney at the law firm of
Bryan Cave LLP since 1957.
Walter F. Imhoff has served as Managing Director of
Stifel, Nicolaus since January 12, 2000. Prior thereto, Mr. Imhoff served as
Chairman, President and Chief Executive Officer of Hanifen, Imhoff, Inc., a
regional broker dealer, from 1979 until it was merged into the Company on
January 12, 2000.
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Bruce A. Beda has been Chief Executive Officer of Orion
Partners, LLC, a private investment and consulting company, since February
1995. Mr. Beda is a director of ECC International Corp., Iwerks
Entertainment, Inc. and Natural Wonders, Inc.
Stuart I. Greenbaum has been the Dean of the John M. Olin
School of Business of Washington University since July 1995. Prior thereto,
Mr. Greenbaum was a professor and director of the Banking Research Center at
Northwestern University from 1976 to 1995. Mr. Greenbaum is a director of
First Oakbrook Bancshares, Inc., Reinsurance Group of America, Incorporated,
St. Louis Children's Hospital, Junior Achievement, Missouri Transportation
Finance Corporation and Banc One Equity Capital.
Ronald J. Kruszewski has been President and Chief
Executive Officer of the Company and Stifel, Nicolaus since September 1997.
Prior thereto, Mr. Kruszewski served as Managing Director and Chief
Financial Officer of Baird Financial Corporation and Managing Director of
Robert W. Baird & Co. Incorporated from 1993 to September 1997. Mr.
Kruszewski is a director of Intira Corporation (formerly digital broadcast
network corporation).
BOARD OF DIRECTORS AND COMMITTEES
During the year ended December 31, 2000, the Board of
Directors of the Company met four times, including both regularly scheduled
and special meetings. During such year, all of the incumbent directors
attended at least seventy-five percent of all meetings held by the Board of
Directors and all committees on which they serve.
The standing committees of the Board of Directors are the
Executive Committee, Audit Committee, Compensation Committee, Finance
Committee and Nominating Committee.
EXECUTIVE COMMITTEE. Messrs. Walker (Chairman), Goebel,
Kruszewski and Oates are the current members of the Executive Committee.
Except to the extent limited by law, the Executive Committee performs the
same functions and has all the authority of the Board of Directors. The
Executive Committee did not meet during the year ended December 31, 2000.
AUDIT COMMITTEE. Messrs. Dill (Chairman), Beda, Goebel and
Oates are the current members of the Audit Committee. The functions of the
Audit Committee are to monitor and assess the adequacy of systems and
procedures for providing reliable financial statements of the Company and
its subsidiaries, as well as suitable internal financial controls, to review
and approve the scope and performance of the independent external and
internal auditors' work and to make such recommendations as it deems
necessary to the Board of Directors regarding the Company's financial
statements, financial controls and related matters. The Audit Committee met
four times during the year ended December 31, 2000.
COMPENSATION COMMITTEE. Messrs. Lefton (Chairman), Beda,
Dill and Oates are the current members of the Compensation Committee. The
functions of the Compensation Committee are to recommend salary and bonus
levels for the senior officers of the Company and its subsidiaries and to
administer the Company's employee stock plans. The Compensation Committee
met four times during the year ended December 31, 2000.
FINANCE COMMITTEE. Messrs. Greenbaum (Chairman), Beda,
Ford and Oates are the current members of the Finance Committee. The
functions of the Finance Committee are to review and monitor the
consolidated financial condition of the Company. The Finance Committee met
four times during the year ended December 31, 2000.
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NOMINATING COMMITTEE. Messrs. Oates (Chairman), Goebel,
Kruszewski and Walker are the current members of the Nominating Committee.
The function of the Nominating Committee is to identify, evaluate and select
potential director nominees. The Committee will consider nominees
recommended by stockholders. Any stockholder wishing to nominate a candidate
for director at a stockholders' meeting must provide advance notice as
described under "Stockholder Proposals" below and must furnish certain
information about the proposed nominee. The Nominating Committee met one
time during the year ended December 31, 2000.
COMPENSATION OF DIRECTORS. Non-employee directors are paid
an annual retainer of $15,000 and are compensated $500 for each board
meeting and $300 for each committee meeting (or $350 if they are the Chairman
of the committee) they attend and are reimbursed for expenses incurred in
attending such meetings. Directors who are employees of the Company do not
receive any compensation for their service as directors, but the Company pays
their expenses for attendance at meetings of the Board of Directors. Pursuant
to the Equity Incentive Plan for Non-Employee Directors (the "Plan"), each new
non-employee director is granted options to purchase 5,000 shares of the
Company's Common Stock at the current market price on the date such
individual first becomes a director of the Company. Stock options to
purchase 1,000 shares of Common Stock shall be granted automatically to each
non-employee director each January 1st through 2009. A non-employee director
may defer all or any portion of his or her director fees under the Plan.
A non-employee director who elects to defer his or her director fees shall
receive a matching credit from the Company equal to twenty-five percent of
the total amount deferred by the director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 2000, the Compensation
Committee was composed of Messrs. Lefton, Dill, Beda and Oates, none of whom
have served as an officer or employee of the Company or any of its
subsidiaries.
- 7 -
EXECUTIVE COMPENSATION
For the years ended December 31, 2000, 1999 and 1998, the
following table presents summary information concerning compensation awarded
or paid to, or earned by, the Chief Executive Officer and each of the other
four most highly compensated executive officers for the year ended December
31, 2000 for services rendered to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------------------ -------------------------
Bonus(1)
------------------- Restricted
Stock Stock All Other
Units Units Options Compensation
Name and Principal Position Year Salary($) Cash($) ($)(2) ($)(2)(3) (#)(4) ($)(5)
- --------------------------- ---- --------- ------- -------- ---------- -------- --------------
Ronald J. Kruszewski 2000 $200,000 $455,000 $195,000 -- 20,000 $ 2,197
President and Chief 1999 200,000 350,000 150,000 $ 37,500 12,600 12,923
Executive Officer 1998 200,000 285,000 100,000 25,000 -- 2,251
George H. Walker III 2000 175,000 75,000 -- -- -- 961
Chairman of the Board 1999 175,000 150,000 -- -- 3,150 767
1998 175,000 150,000 -- -- -- 631
Scott B. McCuaig(6) 2000 175,000 330,000 120,000 -- 12,000 62,197
Vice President 1999 175,000 227,500 149,700 24,375 8,400 2,312
1998 163,782 165,000 60,000 448,208 42,000(7) 9,913
James M. Zemlyak(8) 2000 175,000 265,000 135,000 -- 10,000 2,197
Vice President, Chief 1999 160,417 196,000 84,000 418,501(9) 42,000 12,534
Financial Officer, 1998 -- -- -- -- -- --
Treasurer and Secretary
Walter F. Imhoff (10) 2000 143,750 -- -- -- 8,000 390
Managing Director of 1999 -- -- -- -- -- --
Stifel, Nicolaus 1998 -- -- -- -- -- --
Charles R. Hartman(11) 2000 160,417 52,083 -- -- -- 500
Former Vice President 1999 175,000 205,000 -- -- 3,150 17,835
and Secretary 1998 175,000 195,000 -- -- -- 19,326
<FN>
- ---------
(1) Represents bonuses paid under the executive compensation plans
described in the section entitled "Compensation Committee Report on
Executive Compensation" of this Proxy Statement.
(2) Pursuant to the Stifel Financial Corp. 1997 Incentive Stock Plan,
participants in the plan may elect to receive stock units ("Elected
Units") in lieu of certain incentive compensation earned by such
individuals. Additionally, each individual participating receives
restricted stock units with a fair market value equal to twenty-five
percent of that portion of the incentive compensation that such
participant elected to take in Elected Units ("Matching Units").
Elected Units and Matching Units were issued to participants based upon
the fair market value of the Common Stock on the date of issuance.
Elected Units vest ratably over a three year period following the date
of issuance. Matching Units vest at the end of the three year period
following the date of issuance. Elected Units are reported under the
"Stock Units" column, while Matching Units are reported under the
"Restricted Stock Units" column.
(3) The restricted stock units holdings for the individuals named in the
Summary Compensation Table and the price per share of Common Stock have
been adjusted for the five percent stock dividends declared by the
Company on each of January 20, 1998 and January 27, 1999. The aggregate
value of restricted stock units holdings for the individuals named in
the Summary Compensation Table at December 31, 2000 was $2,122,450,
$862,407 and $763,103 for each of Messrs. Kruszewski, McCuaig and
Zemlyak, respectively, based upon a per share price of $11.3750 being
the last transaction price on December 31, 2000. The aggregate number
of shares of restricted stock units held by the individuals named in
the Summary Compensation Table at December 31, 2000 was 186,589, 75,816
and 67,086 for each of Messrs. Kruszewski, McCuaig and Zemlyak,
respectively.
(4) Each option has been adjusted to reflect the five percent stock
dividends declared by the Company on each of January 20, 1998 and
January 27, 1999.
(5) For the year ended December 31, 2000, the Company contributed $500 to
the Company's profit sharing plan for each of Messrs. Kruszewski,
Walker, McCuaig, Zemlyak and Hartman, $1,236 to the Stifel Financial
Corp. 1998 Employee Stock Purchase Plan for each of Messrs. Kruszewski,
McCuaig and Zemlyak and $461, $461, $461, $461 and $390 to the Stifel
Financial Corp. Employee Stock Ownership
- 8 -
Plan for Messrs. Kruszewski, Walker, McCuaig, Zemlyak and Imhoff,
respectively. In addition, with respect to Mr. McCuaig, the amount
disclosed includes $60,000 paid to Mr. McCuaig for club membership fees.
(6) Mr. McCuaig has served as Vice President of the Company since January
26, 1998. Prior thereto, Mr. McCuaig served as Managing Director of
Robert W. Baird & Co. Incorporated from 1988 to 1998.
(7) Mr. McCuaig's original compensation package included 42,000 restricted
shares of Common Stock (as adjusted for the five percent stock
dividends declared by the Company on each of January 20, 1998 and
January 27, 1999). Pursuant to the terms of that certain Stock Unit
Agreement, dated December 31, 1999, by and between the Company and Mr.
McCuaig (the "McCuaig Stock Unit Agreement"), Mr. McCuaig's original
compensation package was restructured. Mr. McCuaig surrendered 33,598
restricted shares of Common Stock in exchange for 33,598 restricted
stock units. The restricted stock units granted to Mr. McCuaig vest
with respect to 8,400, 8,400, 8,399 and 8,399 units on February 4,
2000, 2001, 2002 and 2003, respectively. Except as set forth below,
shares of Common Stock shall be distributed to Mr. McCuaig in annual
installments over a period of seven years beginning January 1, 2007.
The number of shares of Common Stock in each installment will be
determined under the declining balance accounting method, based on the
number of stock units credited to Mr. McCuaig's stock unit account as
of the beginning of each year in the installment payment period. In the
event of termination of Mr. McCuaig's employment as a result of death
or disability, a certain number of additional stock units will vest
based upon the portion of the year that Mr. McCuaig was employed by the
Company. In addition, all of the restricted stock units granted to Mr.
McCuaig will vest and be distributed (a) in the event of a Change of
Control (as defined in the McCuaig Stock Unit Agreement), (b) in the
event of termination of employment by the Company for a reason other
than a Good Cause Event (as defined in the McCuaig Stock Unit
Agreement) or (c) in the event of termination of employment by Mr.
McCuaig for Good Reason (as defined in the McCuaig Stock Unit
Agreement). Mr. McCuaig will receive dividend equivalents on his
restricted stock units to the same extent as other holders of Common
Stock. The amount shown represents the fair market value of the 33,598
restricted stock units granted to Mr. McCuaig pursuant to the McCuaig
Stock Unit Agreement, based upon a per share price of $9.875 being the
average price on December 31, 1999, and the fair market value of 1,575
Matching Units (see note 2 above) granted to Mr. McCuaig during 1998
(as adjusted for the five percent stock dividends declared by the
Company on each of January 20, 1998 and January 27, 1999), based upon a
per share price of $9.5238 being the closing price on December 14,
1998.
(8) Mr. Zemlyak has served as Vice President, Treasurer and Chief Financial
Officer of the Company since February 1, 1999. Prior thereto, Mr.
Zemlyak served as Managing Director and Chief Financial Officer of
Baird Financial Corporation from 1997 to 1999 and as Senior Vice
President - Chief Financial Officer of Robert W. Baird & Co.
Incorporated from 1994 to 1997.
(9) Pursuant to the terms of that certain Stock Unit Agreement, dated
February 1, 1999, by and between the Company and Mr. Zemlyak (the
"Zemlyak Stock Unit Agreement"), Mr. Zemlyak was awarded 42,000
restricted stock units (as adjusted for the five percent stock dividend
declared by the Company on January 27, 1999). The restricted stock
units granted to Mr. Zemlyak vest with respect to 8,400 units on each
of February 1, 2000, 2001, 2002, 2003 and 2004. Except as set forth
below, shares of Common Stock shall be distributed to Mr. Zemlyak in
annual installments over a period of seven years beginning February 1,
2007. The number of shares of Common Stock in each installment will be
determined under the declining balance accounting method. In the event
of termination of Mr. Zemlyak's employment as a result of death or
disability, a certain number of additional stock units will vest based
upon the portion of the year that Mr. Zemlyak was employed by the
Company. In addition, all of the restricted stock units granted to Mr.
Zemlyak will vest and be distributed (a) in the event of a Change of
Control (as defined in the Zemlyak Stock Unit Agreement), (b) in the
event of termination of employment by the Company for a reason other
than a Good Cause Event (as defined in the Zemlyak Stock Unit
Agreement) or (c) in the event of termination of employment by Mr.
Zemlyak for Good Reason (as defined in the Zemlyak Stock Unit
Agreement). Mr. Zemlyak will receive dividend equivalents on his
restricted stock units to the same extent as other holders of Common
Stock. The amount shown represents the fair market value of the 42,000
restricted stock units granted to Mr. Zemlyak, based upon a per share
price of $9.4643 being the average price on February 1, 1999, the fair
market value of 805 Matching Units (see note 2 above) granted to Mr.
Zemlyak on June 30, 1999, based upon a per share price of $9.3125 being
the closing price on June 30, 1999, and the fair market value of 1401
Matching Units granted to Mr. Zemlyak on December 31, 1999, based on a
per share price of $9.625 being the closing price on January 3, 2000.
(10) Mr. Imhoff has served as Managing Director of Stifel, Nicolaus since
January 12, 2000. Prior thereto, Mr. Imhoff served as Chairman,
President and Chief Executive Officer of Hanifen, Imhoff, Inc. from
1979 to 2000.
(11) Mr. Hartman's employment with the Company terminated on May 31, 2000.
- 9 -
OPTION GRANTS IN LAST YEAR
The following table sets forth information concerning
stock option grants made in the year ended December 31, 2000 to the
individuals named in the Summary Compensation Table.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------- VALUE AT
PERCENT OF ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (1)(#) FISCAL YEAR ($/SH)(2) DATE(3) 5%($) 10%($)
---- -------------- ----------- --------- ------- ----- ------
Ronald J. Kruszewski 20,000 3.8827 $10.4375 2/1/10 $131,282 $332,694
Scott B. McCuaig 12,000 2.3296 10.4375 2/1/10 78,769 199,616
James M. Zemlyak 10,000 1.9414 10.4375 2/1/10 65,641 166,347
Walter F. Imhoff 8,000 1.5531 10.3750 1/12/10 52,198 132,281
<FN>
- ---------
(1) Except as otherwise indicated, each option will be exercisable with
respect to twenty-five percent of the total number of shares underlying
the option on each of the first, second, third and fourth anniversaries
of the date of award.
(2) The exercise price may be paid in cash or, at the discretion of the
Board of Directors or the Compensation Committee of the Board of
Directors, by shares of Common Stock already owned by the participant
valued at fair market value on the date of exercise, or by a
combination of cash and Common Stock.
(3) The options terminate on the earlier of ten years after grant or,
generally, immediately upon termination for reasons other than
retirement, disability or death.
(4) The indicated five percent and ten percent rates of appreciation are
provided to comply with Securities and Exchange Commission regulations
and do not necessarily reflect the views of the Company as to the
likely trend in the Common Stock price. Actual gains, if any, on stock
option exercises and Common Stock holdings will be dependent on, among
other things, the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected
above will be achieved. Additionally, these values to not take into
consideration the provisions of the options providing for
nontransferability or delayed exercisability.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number of
exercisable and unexercisable stock options at December 31, 2000, as well as
the value of such stock options having an exercise price lower than the last
reported trading price on December 31, 2000 ("in-the-money" options) held by
the individuals named in the Summary Compensation Table.
YEAR-END OPTION VALUE
SHARES UNDERLYING VALUE OF UNEXERCISED,
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS HELD AT
SHARES DECEMBER 29, 2000(#)(1) DECEMBER 29, 2000($)(2)
ACQUIRED ON VALUE ----------------------- -----------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Ronald J. Kruszewski -- -- 95,762 74,650 $56,340 $60,424
George H. Walker III -- -- 58,669 2,362 341,081 4,232
Scott B. McCuaig -- -- 19,257 43,143 3,763 22,538
James M. Zemlyak -- -- 8,400 43,600 16,050 73,575
Walter F. Imhoff -- -- -- 8,000 -- 8,000
Charles R. Hartman 37,294 191,607 -- -- -- --
<FN>
- ---------
(1) Each option has been adjusted to reflect the five percent stock
dividends declared by the Company on each of January 20, 1998 and
January 27, 1999.
(2) Based on a price per share of $11.3750, the last reported share price of
Common Stock on December 29, 2000.
- 10 -
EMPLOYMENT AGREEMENTS
The Company and George H. Walker III entered into an
Employment Agreement as of August 21, 1987 and a First Amendment to
Employment Agreement as of December 2, 1991 (collectively, the "Agreement"),
which provide for the employment of Mr. Walker by the Company at a base
salary as established from time to time by the Board of Directors, but not
less than $150,000 per annum. Mr. Walker is eligible to participate in all
incentive compensation plans and other employee benefits provided to senior
executive officers. The term of the Agreement is through April 30, 2001 and
also provides that Mr. Walker will provide consulting and advisory services
to the Company for a period of two years following the date of termination
for a fee of $75,000 per annum. The Agreement also provides that Mr. Walker
shall not compete with the Company during the consulting period and for one
year following the end of the consulting period.
The obligations of the Company under the Agreement will
terminate upon the death, disability or resignation (other than a
resignation within one year after a Change of Control (as defined below) of
the Company) of Mr. Walker or upon the occurrence of a Good Cause Event (as
defined in the Agreement), except that, if his employment is terminated by
reason of death or disability, payments will continue in accordance with the
Company's regular policies. If Mr. Walker's employment is terminated by the
Company for any other reason other than death, disability or a Good Cause
Event, or if he resigns within one year after a Change of Control, the
Company will (a) continue his insurance benefits for the period specified in
the Agreement and (b) pay him a lump-sum payment equal to the total of the
present value of monthly payments equaling 1/12 of his current compensation
(including bonus and incentive compensation payments) at the date of
termination plus the present value of the excess, if any, in retirement
benefits which would have been payable if Mr. Walker remained employed for
the entire term of the Agreement. Such payments are subject to reduction to
the extent they exceed the amounts deductible by the Company for federal
income tax purposes pursuant to Section 280G of the Internal Revenue Code of
1986, as amended.
"Change of Control" is defined in the Agreement as (a) the
acquisition, in one or a series of transactions by a person or group of
persons acting in concert, of beneficial ownership in more than twenty-five
percent of the outstanding voting stock of the Company, (b) the receipt of
proxies for the election of directors in opposition to management's nominees
that aggregate more than forty percent of the then outstanding voting stock
or (c) the sale or issuance of such number of shares of voting stock of the
Company for consideration other than cash in any transaction or series of
related transactions that constitutes more than twenty-five percent of the
outstanding voting power of the Company after giving effect to such issuance
or sale.
The Company and Ronald J. Kruszewski entered into an
Employment Letter, a Promissory Note, a Restricted Stock Agreement, an
Incentive Stock Option Agreement and a Nonqualified Stock Option Agreement,
each as of September 25, 1997, and an amended Incentive Stock Option
Agreement and Nonqualified Stock Option Agreement, each as of December 1,
1997 (collectively, the "Employment Terms"). Under the Employment Terms, Mr.
Kruszewski's annual salary shall be not less than $200,000 and he is
eligible to participate in the executive bonus pool and in all other
employee benefits of the Company provided to senior executive officers. Mr.
Kruszewski was granted options to purchase 125,000 shares (137,812 shares as
adjusted to reflect the five percent stock dividend declared by the Company
on each of January 20, 1998 and January 27, 1999) of Common Stock at the
fair market value of the shares on the date of the grant. Mr. Kruszewski
purchased 50,000 restricted shares (55,125 shares as adjusted to reflect the
five percent stock dividend declared by the Company on each of January 20,
1998 and January 27, 1999) of Common Stock with personal funds at a price
equal to $11.8375, a $0.10 discount to the market price of the Common Stock
on the date of grant, pursuant to the terms of the Restricted Stock
Agreement.
- 11 -
Pursuant to the Employment Terms, Mr. Kruszewski also
received a loan (the "Loan") from the Company in the amount of
$1,479,687.50, payable in installments with interest with the final
installment due January 1, 2003, which principal and interest of the Loan
would be forgiven over six years if he continued to be employed by the
Company. Mr. Kruszewski purchased 125,000 restricted shares (131,250 shares
as adjusted to reflect the five percent stock dividend declared by the
Company on January 20, 1998) of Common Stock with the proceeds of the Loan,
pursuant to the terms of the Restricted Stock Agreement. Pursuant to the
terms of that certain Stock Unit Agreement, dated December 21, 1998, by and
between the Company and Mr. Kruszewski (the "Kruszewski Stock Unit
Agreement"), Mr. Kruszewski's original compensation package was
restructured. Mr. Kruszewski repaid the Loan by surrendering 124,688
restricted shares of Common Stock and executing a second promissory note in
the amount of $143,237. In replacement of the restricted shares surrendered,
Mr. Kruszewski was awarded 124,688 restricted stock units of the Company
(130,922 restricted stock units as adjusted to reflect the five percent
stock dividend declared by the Company on January 27, 1999). The restricted
stock units granted to Mr. Kruszewski will vest, and the second promissory
note will be forgiven, over a period of five years ending in 2003,
contingent upon Mr. Kruszewski's continued employment with the Company.
Shares of Common Stock will be distributed to Mr. Kruszewski in annual
installments over a period of seven years beginning January 1, 2007 in
satisfaction of the restricted stock units. The number of shares of Common
Stock in each installment will be determined under the declining balance
accounting method, based on the number of stock units credited to Mr.
Kruszewski's stock unit account as of the beginning of each year in the
installment payment period. In the event of termination of Mr. Kruszewski's
employment as a result of death or disability, a certain number of
additional stock units will vest based upon the portion of the year that Mr.
Kruszewski was employed by the Company. All of the restricted stock units
granted to Mr. Kruszewski will vest and shares of Common Stock will be
distributed (a) in the event of a Change of Control (as defined in the
Kruszewski Stock Unit Agreement), (b) in the event of termination of
employment by the Company for a reason other than a Good Cause Event (as
defined in the Kruszewski Stock Unit Agreement) or (c) in the event of
termination of employment by Mr. Kruszewski for Good Reason (as defined in
the Kruszewski Stock Unit Agreement).
Stifel, Nicolaus and Scott B. McCuaig entered into an
arrangement on January 26, 1998 which provides for the employment of Mr.
McCuaig at a base salary of $175,000 per annum. Mr. McCuaig is eligible to
participate in the executive bonus pool of the Company and, for fiscal 1998,
1999 and 2000, his bonus payment was guaranteed to be no less than $125,000
(pro rated for that portion of each year actually employed). He also was
provided a relocation allowance of $9,467, a restricted stock award of
38,095 shares of Common Stock (42,000 shares as adjusted for the five
percent stock dividends declared by the Company on January 20, 1998 and
January 27, 1999) and options to purchase 38,095 shares of Common Stock
(42,000 shares as adjusted for such stock dividends). The options granted to
Mr. McCuaig will vest ratably over a five-year period. Mr. McCuaig also is
eligible to participate in all other employee benefits of the Company
provided to senior executive officers.
Pursuant to the terms of that certain Stock Unit
Agreement, dated December 31, 1999, by and between the Company and Mr.
McCuaig (the "McCuaig Stock Unit Agreement"), Mr. McCuaig's original
compensation package was restructured. Mr. McCuaig surrendered 33,598
restricted shares of Common Stock in exchange for 33,598 restricted stock
units. The restricted stock units granted to Mr. McCuaig will vest over a
period of four years ending in 2003, contingent upon Mr. McCuaig's continued
employment with the Company. Shares of Common Stock will be distributed to
Mr. McCuaig in annual installments over a period of seven years beginning
January 1, 2007. The number of shares of Common Stock in each installment
will be determined under the declining balance accounting method, based on
the number of stock units credited to Mr. McCuaig's stock unit account as of
the beginning of each year in the installment payment period. In the event
of termination of Mr. McCuaig's employment as a result of death or
disability, a certain number of additional stock units will vest based upon
the portion of the year that Mr. McCuaig was employed by the Company. In
addition, all of the restricted stock units granted to
- 12 -
Mr. McCuaig will vest and be distributed (a) in the event of a Change of
Control (as defined in the McCuaig Stock Unit Agreement), (b) in the event
of termination of employment by the Company for a reason other than a Good
Cause Event (as defined in the McCuaig Stock Unit Agreement) or (c) in the
event of termination of employment by Mr. McCuaig for Good Reason (as
defined in the McCuaig Stock Unit Agreement).
Stifel, Nicolaus and James M. Zemlyak entered into an
arrangement on February 1, 1999 which provides for the employment of Mr.
Zemlyak at a base salary of $175,000 per annum. Mr. Zemlyak is eligible to
participate in the executive bonus pool of the Company, and for fiscal 1999,
2000 and 2001, his bonus payment was guaranteed to be no less than $125,000
(pro rated for that portion of each year actually employed). He was also
provided $12,305 temporary living expenses, 40,000 restricted stock units
(42,000 restricted stock units as adjusted for the five percent stock
dividend declared on January 27, 1999) and options to purchase 40,000 shares
of Common Stock (42,000 shares as adjusted for such stock dividend). The
options granted to Mr. Zemlyak will vest ratably over a five-year period.
The restricted stock units granted to Mr. Zemlyak will vest over a period of
five years ending 2004, contingent upon Mr. Zemlyak's continued employment
with the Company. Shares of Common Stock shall be distributed to Mr. Zemlyak
in annual installments over a period of seven years beginning February 1,
2007. The number of shares of Common Stock in each installment will be
determined under the declining balance accounting method, based on the
number of stock units credited to Mr. Zemlyak's stock unit account as of the
beginning of each year in the installment payment period. In the event of
termination of Mr. Zemlyak's employment as a result of death or disability,
a certain number of additional stock units will vest based upon the portion
of the year that Mr. Zemlyak was employed by the Company. In addition, all
of the restricted stock units granted to Mr. Zemlyak will vest and be
distributed (a) in the event of a Change of Control (as defined in the
Zemlyak Stock Unit Agreement), (b) in the event of termination of employment
by the Company for a reason other than a Good Cause Event (as defined in the
Zemlyak Stock Unit Agreement) or (c) in the event of termination of
employment by Mr. Zemlyak for Good Reason (as defined in the Zemlyak Stock
Unit Agreement). Mr. Zemlyak also is eligible to participate in all other
employee benefits of the Company provided to senior executive officers.
- 13 -
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Compensation Committee") furnishes the following report:
COMPENSATION PHILOSOPHY
The Compensation Committee approves the policies for and
structure and amount of compensation of the senior executive officers of the
Company (the "Executive Officers"), including the Chief Executive Officer
and the other executive officers of the Company named in the Summary
Compensation Table. The Compensation Committee's goal is to establish
compensation programs that will attract and retain highly qualified
executives and provide an incentive to such executives to focus their
efforts on the Company's strategic goals by aligning their financial
interests closely with stockholder interests. The Compensation Committee is
composed entirely of independent directors.
A significant component of the Company's Executive Officer
compensation program is cash remuneration in the form of base salaries and
annual incentive bonuses. Bonuses are determined based upon the performance
of the Company, the individual executive and his operating unit during the
fiscal year. In evaluating performance, financial, non-financial and
strategic objectives are considered. Base salaries generally represent a
relatively small portion of the Executive Officers' total cash compensation
and are average relative to comparable firms in the industry. Bonuses make
up a significant portion of the Executive Officers' total compensation (as
much as seventy-six percent for 2000). The Compensation Committee believes
that basing a substantial portion of an Executive Officer's compensation on
performance motivates the executive to perform at the highest possible
level.
As another component of the Company's Executive Officer
compensation program, the Compensation Committee may award Executive
Officers options to acquire shares of Common Stock. The Compensation
Committee believes that stock options provide a highly efficient form of
compensation from both a cost and an accounting perspective, and that such
awards provide an incentive to achieve the Company's longer-term strategic
goals by aligning the long-term financial interests of the Executive
Officers with those of the Company's stockholders.
In addition, the Compensation Committee is implementing a
deferred compensation program whereby a portion of each Executive Officer's
annual bonus will be deferred, on a mandatory basis, into restricted stock
units. The Executive Officer may also defer on an elective basis an
additional portion of his annual bonus into restricted stock units. The
percentages of the mandatory and elective deferrals will be set annually by
the Compensation Committee. The mandatory and elective deferrals are matched
by the Company in restricted stock units equal to twenty-five percent of the
amount of the combined deferral. The mandatory and matching portion of the
restricted stock unit award will vest over a three- to five-year period.
The Compensation Committee believes that the stock option
and deferred compensation components of the Company's Executive Officer
compensation program over time will increase the levels of beneficial
ownership of the Company's Executive Officers. This aligns the interests of
those persons who have the greatest ability to affect the Company's
financial results closely with the interests of the Company's stockholders.
The Compensation Committee also believes that significant levels of
beneficial ownership and ownership potential will assist the Company in
retaining the services of the Executive Officers.
- 14 -
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Kruszewski became President and Chief Executive
Officer of the Company and Stifel, Nicolaus on September 25, 1997 pursuant
to the employment terms described above under "Executive Compensation -
Employment Agreements." The Compensation Committee approved the employment
terms based upon Mr. Kruszewski's expertise and years of experience in the
industry, as well as the Compensation Committee's review of cash and other
compensation paid to the chief executive officers of securities firms
comparable to the Company. All such firms, as well as others, are included
in the Regional Sub-Index of the Financial Service Analytics Brokerage Stock
Price Index used in the Performance Graph set forth in this Proxy Statement.
For 2000 bonus purposes, the Compensation Committee
considered the achievement of certain objectives set by management and the
Board of Directors at the beginning of the year. The Compensation Committee
also considered the overall profitability of the Company during 2000. Based
upon the consideration of all of the above financial and non-financial
performance factors, the Compensation Committee, in its discretion,
determined the amount of Mr. Kruszewski's annual bonus for 2000. Thirty percent
of Mr. Kruszewski's bonus for 2000 was deferred and invested in stock units of
the Company. In keeping with the Company's philosophy of incentive-based
compensation, Mr. Kruszewski's base salary was not adjusted for 2000.
COMPENSATION OF OTHER SENIOR EXECUTIVES
The Compensation Committee approved individual salary
levels and bonus amounts for each Executive Officer other than Mr.
Kruszewski following a presentation by Mr. Kruszewski of his evaluation of
each Executive Officer's individual and business unit performance and his
bonus recommendation for such Executive Officer. Mr. Kruszewski also
summarized for the Compensation Committee the performance of each Executive
Officer relative to the financial and non-financial objectives established
for such Executive Officer at the beginning of the year. In his presentation
to the Compensation Committee, Mr. Kruszewski utilized historical
compensation information prepared by a third-party organization for a group
of approximately 12 regional brokerage firms, including the group of
comparable publicly held regional firms referred to above, for background on
competitive salary levels within the industry.
The Compensation Committee also reviewed and approved the
terms of specific compensation arrangements entered into by the Company with
certain Executive Officers. The Compensation Committee believes that such
arrangements were evaluated and approved on a basis consistent with the
Company's overall compensation philosophy.
CONCLUSION
Through the program described above, a significant portion
of the Company's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. The Committee intends to
continue the policy of linking executive compensation to individual and
corporate performance and returns to stockholders, recognizing that the
business cycle from time to time may result in an imbalance for a particular
period.
2000 COMPENSATION COMMITTEE
Robert E. Lefton, Chairman
Bruce A. Beda
Charles A. Dill
James M. Oates
March 26, 2001
- 15 -
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative stockholder
returns, including the reinvestment of dividends of Stifel Financial Corp.
Common Stock on an indexed basis with the FSA Regional Index and the
Standard and Poors 500 ("S&P 500") Index for the period beginning December
31, 1995 and ending December 31, 2000:
Comparison of Five-Year Cumulative Total Return Among Stifel Financial Corp.,
FSA Regional Index and S&P 500 Index
[GRAPH]
Assumes $100 Invested on December 31, 1995 in Stifel Financial Corp.,
FSA Regional Index and S&P 500 Index
- ---------------------------------------------------------------------------------------------------------------
Dec. 1995 Dec. 1996 Dec. 1997 Dec. 1998 Dec. 1999 Dec. 2000
- ---------------------------------------------------------------------------------------------------------------
Stifel Financial Corp 100 141 290 190 192 223
- ---------------------------------------------------------------------------------------------------------------
FSA Regional Index 100 142 291 236 251 439
- ---------------------------------------------------------------------------------------------------------------
S&P 500 Index 100 123 164 211 255 233
- ---------------------------------------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain officers, directors and nominees for director of
the Company maintain margin accounts with Stifel, Nicolaus pursuant to which
Stifel, Nicolaus may make loans for the purchase of securities. All margin
loans are made in the ordinary course of business on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and do not involve more
than normal risk of collectability or present other unfavorable features.
Richard F. Ford and Charles A. Dill, directors of the
Company, are General Partners of the management companies that act as the
General Partner of Gateway Mid-America Partners, L.P.,
- 16 -
Gateway Venture Partners II, L.P., Gateway Venture Partners III, L.P. and
Gateway Partners, L.P. The Company and Stifel Venture Corp., a subsidiary of
the Company, are also General Partners of the management companies. At
December 31, 2000, the Company's carrying value of these investments was
approximately $1,023,676. Additionally, at December 31, 2000, the Company had
a receivable of $335,000 which was advanced for organizational costs of
Gateway Partners, L.P.
John J. Goebel, a director of the Company, is an attorney
in the law firm Bryan Cave LLP, which rendered legal services to the Company
and its subsidiaries during 2000 and is providing legal services to the
Company and its subsidiaries during 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that the Company's officers and directors, and persons who
own more than ten percent of the Company's outstanding stock, file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. To the knowledge of the Company, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with during the year ended December
31, 2000, with the exception of Scott B. McCuaig who filed one late report
with respect to one transaction.
PROPOSAL II.
APPROVAL OF THE 2001 INCENTIVE STOCK PLAN
The Board of Directors has adopted, subject to approval by
the stockholders, the Stifel Financial Corp. 2001 Incentive Stock Plan,
which provides for the granting of stock options and other stock-based
awards. The Board of Directors believes that the plan will advance the
interests of the Company and the stockholders by encouraging key employees
of the Company and its subsidiaries to acquire Common Stock or to receive
monetary payments based on the value of Common Stock upon the achievement of
certain goals that are mutually advantageous to the Company and its
stockholders, on the one hand, and the participating employees, on the
other.
The total number of shares of Common Stock initially
reserved for issuance under the plan is 1,000,000 shares, subject to
adjustment in the event of any change in the outstanding shares of Common
Stock without new consideration to the Company (such as by reason of a stock
dividend or stock split). For each calendar year in the ten-year period
commencing January 1, 2001, the number of shares reserved for issuance under
the plan shall automatically increase by 100,000 shares; provided that, such
additional shares may be applied only to the grant of stock units awarded
pursuant to the plan in lieu of cash compensation that would otherwise have
been paid currently to the participant where the value of the shares of
Common Stock underlying such stock units, determined as of the date of
grant, does not exceed the amount of such cash by more than twenty-five
percent.
The plan will be administered by either the Board of
Directors or the Compensation Committee currently consisting of four
directors of the Company, each of whom is a non-employee director of the
Company (the group administering the plan is referred to as the
"Administrator"). The Administrator, by majority action thereof, or any
member of the Compensation Committee upon a specific recommendation from the
Executive Committee of Stifel, Nicolaus, is authorized to determine the
individuals to whom the benefits will be granted, the type and amount of
such benefits and the terms of the benefit grants. The Administrator shall
have the exclusive authority to interpret and administer the plan, to
establish rules relating to the plan, to delegate some or all of its
authority under the plan and to take such other steps and make such other
determinations as it may deem necessary or advisable.
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The complete plan is set forth in Appendix A to this proxy
statement. The following summary of certain provisions of the plan is
qualified in its entirety by reference to the full text of the plan.
DESCRIPTION OF PLAN
Under the terms of the plan, key employees of the Company
and its subsidiaries as determined in the sole discretion of the
Administrator will be eligible to receive (a) stock appreciation rights
("SARs"), (b) restricted shares of Common Stock ("Restricted Stock"), (c)
performance awards ("Performance Awards"), (d) stock options ("Stock
Options") exercisable into shares of Common Stock which may or may not
qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (options so qualifying are hereinafter referred
to as "Incentive Stock Options") and (e) stock units ("Stock Units").
STOCK APPRECIATION RIGHTS. The Administrator may grant
SARs giving the holder thereof a right to receive, at the time of surrender,
a payment equal to the difference between the fair market value of such
stock on the date of surrender of the SAR and the exercise price of the SAR
established by the Administrator at the time of grant, subject to any
limitation imposed by the Administrator in its sole discretion. In the
Administrator's discretion, the value of a SAR may be paid in cash or Common
Stock, or a combination thereof. A SAR may be granted either independent of,
or in conjunction with, any Stock Option. If granted in conjunction with a
Stock Option, at the discretion of the Administrator, a SAR may either be
surrendered (a) in lieu of the exercise of such Stock Option, (b) in
conjunction with the exercise of such Stock Option or (c) upon expiration of
such Stock Option. The term of any SAR shall be established by the
Administrator, but in no event shall a SAR be exercisable after ten years
from the date of grant.
RESTRICTED STOCK. The Administrator may issue shares of
Common Stock either as a stock bonus or at a purchase price of less than
fair market value, subject to the restrictions or conditions specified by
the Administrator at the time of grant. During the period of restriction,
holders of Restricted Stock shall be entitled to receive all dividends and
other distributions made in respect of such stock and to vote such stock
without limitation.
PERFORMANCE AWARDS. The Administrator may grant
Performance Awards consisting of shares of Common Stock, monetary units
payable in cash or a combination thereof. These grants would result in the
issuance, without payment therefor, of Common Stock or the payment of cash
upon the achievement of certain pre-established performance goals, such as
return on average total capital employed, earnings per share or increases in
share price, during a specified performance period not to exceed five years.
The participating employee will have no right to receive dividends on or to
vote any shares subject to Performance Awards until the goals are achieved
and the shares are issued.
STOCK OPTIONS. Stock Options granted under the plan shall
entitle the holder to purchase Common Stock at a purchase price established
by the Administrator, which price shall not be less than the fair market
value of Common Stock on the date of grant in the case of Incentive Stock
Options and at any price determined by the Administrator in the case of all
other options. The Administrator shall determine the term of such Stock
Options and the times at, and conditions under which, such Stock Options
will become exercisable. Stock Options will generally not be exercisable
after ten years from the date of the grant.
There is no maximum or minimum number of shares for which
a Stock Option may be granted; however, for any employee, the aggregate fair
market value of Common Stock subject to
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qualifying Incentive Stock Options that are exercisable for the first time
in any calendar year may not exceed $100,000.
STOCK UNITS. The Administrator may issue Stock Units
representing the right to receive shares of Common Stock at a designated
time in the future, subject to the terms and conditions as established by
the Administrator in its sole discretion. A holder of Stock Units generally
does not have the rights of a stockholder until receipt of the Common Stock,
but, in the Administrator's sole discretion, may receive payments in cash or
adjustments in the number of Stock Units equivalent to the dividends the
holder would have received if the holder had been the owner of shares of
Common Stock instead of Stock Units.
In the event of a "Change of Control" (as defined in the
plan) of the Company, the vesting of all outstanding SARS, shares of
Restricted Stock, Stock Options and Stock Units shall be accelerated only to
the extent set forth in the applicable agreement established by the
Administrator.
The Board may terminate the plan at any time and from time
to time and may amend or modify the plan; provided, however, that no such
action of the Board may, without the approval of the stockholders of the
Company: (a) increase the total amount of stock or the amount or type of
benefit that may be issued under the plan; (b) modify the requirements as to
eligibility for benefits; or (c) reduce the amount of any existing benefit
or change the terms or conditions thereof without the participating
employee's consent.
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by a participating officer or
employee on the grant of an Incentive Stock Option or a Stock Option which
is not an incentive stock option ("non-qualified option"), the grant of a
SAR, the award of Restricted Stock or the award of Stock Units, and the
Company will not be entitled to a deduction at such time. If a holder
exercises an Incentive Stock Option and does not dispose of the shares
acquired within two years from the date of the grant, or within one year
from the date of exercise of the option, no income will be realized by the
holder at the time of exercise. The Company will not be entitled to a
deduction by reason of the exercise. If a holder disposes of the shares
acquired pursuant to an Incentive Stock Option within two years from the
date of grant of the option or within one year from the date of exercise of
the option, the holder will realize ordinary income at the time of
disposition equal to the excess, if any, of the lesser of (a) the amount
realized on the disposition or (b) the fair market value of the shares on
the date of exercise, over the holder's basis in the shares. The Company
generally will be entitled to a deduction in an amount equal to such income
in the year of the disqualifying disposition.
Upon the exercise of a non-qualified Stock Option or the
surrender of a SAR, the excess, if any, of the fair market value of the
stock on the date of exercise over the purchase price or base price, as the
case may be, is ordinary income to the holder as of the date of exercise.
The Company generally will be entitled to a deduction equal to such excess
amount in the year of exercise.
Subject to a voluntary election by the holder under
Section 83(b) of the Code, a holder will realize income as a result of the
award of Restricted Stock at the time the restrictions expire on such
shares. An election pursuant to Section 83(b) of the Internal Revenue Code
of 1986 would have the effect of causing the holder to realize income in the
year in which such award was granted. The amount of income realized will be
the difference between the fair market value of the shares on the date such
restrictions expire (or on the date of issuance of the shares, in the event of
a Section 83(b) election) over the purchase price, if any, of such
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shares. The Company generally will be entitled to a deduction equal to the
income realized in the year in which the holder is required to report such
income.
An employee will realize income as a result of a
Performance Award at the time the award is issued or paid. The amount of
income realized by the participant will be equal to the fair market value of
the shares on the date of issuance, in the case of a stock award, and to the
amount of the cash paid, in the event of a cash award. The Company will be
entitled to a corresponding deduction equal to the income realized in the
year of such issuance or payment.
An employee will realize income as a result of an award of
Stock Units at the time shares of Common Stock are issued in an amount equal
to the fair market value of such shares at that time. The Company will be
entitled to a corresponding deduction equal to the income realized in the
year of such issuance.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present
and entitled to vote at the meeting will constitute approval of the adoption
of the plan. The Board of Directors recommends a vote "FOR" the approval of
the Stifel Financial Corp. 2001 Incentive Stock Plan.
PROPOSAL III.
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE TOTAL NUMBER OF AUTHORIZED SHARES OF STOCK AND TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Board of Directors recently approved a proposal to
amend the fourth article of the Company's Certificate of Incorporation, as
amended (the "Restated Certificate"), to increase the total number of shares
of stock authorized thereunder from 13,000,000 to 33,000,000 and to increase
the number of shares of Common Stock authorized thereunder from 10,000,000
to 30,000,000, and has directed that the proposal be submitted to the vote
of the stockholders at the Annual Meeting.
On March 7, 2001, the record date for the Annual Meeting,
7,388,130 shares of the Company's Common Stock were issued and outstanding.
The Board of Directors of the Company believes that it is in the best
interests of the Company and its stockholders to increase the number of
authorized but unissued shares of its Common Stock. An increase in the
number of authorized shares of Common Stock will require a corresponding
increase in the total number of authorized shares of stock. The increase
will provide a reserve of shares available for issuance upon authorization
of the Board for any corporate purpose, including, without limitation, stock
dividends and/or stock splits, financing transactions, acquisitions and
employee benefit plans, without the necessity of soliciting further
stockholder approval, subject to applicable stockholder vote requirements of
Delaware corporation law and the New York Stock Exchange.
The additional shares of Common Stock for which
authorization is sought herein would be identical to the shares of Common
Stock now authorized under the Restated Certificate. The amendment to
increase the number of authorized shares will have no affect on the legal
rights of the holders of the existing shares of Common Stock.
Adoption of the proposed amendment could render more
difficult any attempted takeover of the Company that is opposed by the
Company's Board of Directors. The Board of Directors may issue, without
further action or approval of the shareholders, additional shares of Common
Stock to the
- 20 -
public, thereby increasing the number of shares that would have to be
acquired to effect a change in control of the Company.
The complete text of the fourth article of the Restated
Certificate as proposed to be amended is set forth in Appendix B to this
Proxy Statement.
The affirmative vote of a majority of the outstanding
shares of Common Stock is required to amend the Restated Certificate. The
Board of Directors recommends a vote "FOR" the amendment to the Restated
Certificate.
PROPOSAL IV.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its
Audit Committee, has appointed Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2001. A resolution
will be presented at the meeting to ratify the appointment of Deloitte &
Touche LLP.
The fees paid by the Company to Deloitte & Touche LLP for
the year ended December 31, 2000 are as follows:
AUDIT FEES. The Company paid Deloitte & Touche LLP
$163,000 for the audit and review of the Company's financial statements
included in its Forms 10-K and 10-Q during the year ended December 31, 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES. The Company did not pay any fees to Deloitte & Touche LLP during the
year ended December 31, 2000 for services relating to financial information
system design and implementation.
ALL OTHER FEES. The Company paid Deloitte & Touche LLP
$63,100 for all other non-audit services.
The Audit Committee has considered whether Deloitte &
Touche LLP's provision of non-audit services was compatible with maintaining
the independence of Deloitte & Touche LLP.
The Company has been advised that a representative of
Deloitte & Touche LLP will be present at the meeting with an opportunity to
make a statement if such representative desires and will be available to
respond to questions of the stockholders.
The affirmative vote of a majority of the shares present
and entitled to vote at the meeting is required to ratify the appointment
of Deloitte & Touche LLP as the Company's independent auditors for the year
ending December 31, 2001. The Board of Directors recommends a vote "FOR"
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2001.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors oversees the
Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and
the reporting process, including the systems of internal controls. The Audit
Committee operates pursuant to a written charter which was approved and
adopted by the Board of Directors. A copy of the Audit Committee charter is
attached to this Proxy Statement as Appendix C. The Board of Directors has
determined that each of the members of the Audit Committee is independent
- 21 -
with the meaning of the listing standards of the New York Stock Exchange.
The Company's independent accountants, Deloitte & Touche LLP, are
responsible for expressing an opinion on the conformity of the Company's
audited financial statements to generally accepted accounting principles.
In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Company's Annual
Report on Form 10-K with management. In connection with its review of the
Company's financial statements, the Audit Committee discussed with
management the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
The Audit Committee meets with the independent
accountants, with and without management present, to discuss the scope and
plans for the audit, results of their examinations, their evaluations of the
Company's internal controls and the overall quality of the Company's
financial reporting. The Audit Committee reviewed with the independent
accountants the acceptability of the Company's accounting principles and
such other matters as are required to be discussed with the Audit Committee
under generally accepted auditing standards, including, but not limited to,
those matters under SAS 61 (Codification of Statements on Auditing
Standards). The Audit Committee has received from the independent auditors
the written disclosure and the letter required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees). In
connection with this disclosure, the Audit Committee has discussed with the
independent auditors the auditors' independence from management and the
Company.
In reliance on the reviews and discussions referred to
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Annual Report on Form 10-K
for the year ended December 31, 2000 for filing with the Securities and
Exchange Commission.
2000 AUDIT COMMITTEE
Charles A. Dill, Chairman
Bruce A. Beda
John J. Goebel
James M. Oates
March 19, 2001
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the
2002 Annual Meeting of Stockholders must be received by the Company by
December 2, 2001 for inclusion in the Company's Proxy Statement and proxy
relating to that meeting. Upon receipt of any such proposal, the Company
will determine whether or not to include such proposal in the Proxy
Statement and proxy in accordance with regulations governing the
solicitation of proxies. Under the Company's By-Laws, stockholder proposals,
including nominations of directors, which do not appear in the Proxy
Statement may be considered at a meeting of stockholders only if they
involve a matter proper for stockholder action and written notice of the
proposal is received by the Secretary of the Company not less than 60 days
nor more than 90 days prior to the meeting; provided that if less than 70
days' notice or prior public disclosure of the date of a stockholders'
meeting is given by the Company, notice must be timely received not later
than the close of business on the tenth day following the earlier of (a) the
day on which notice of the meeting was mailed or (b) the day on which public
disclosure was made. The notice must contain the name and address and
beneficial ownership of the stockholder, a brief description of the proposal
to be brought or the name, age, address, business history, beneficial
ownership and written consent to being named of any proposed nominee, any
material interest of the stockholder in the proposal or any
- 22 -
arrangement or understanding between the stockholder and the proposed
nominee required to be disclosed under the proxy regulations, and the number
of shares known by such stockholder to be supporting the proposal on the
date notice is given.
ANNUAL REPORT
The Annual Report to Stockholders for the year ended
December 31, 2000 has simultaneously been mailed to the stockholders of the
Company.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (EXCLUDING EXHIBITS), MAY BE OBTAINED BY ANY STOCKHOLDER, WITHOUT
CHARGE, UPON WRITTEN REQUEST TO JAMES M. ZEMLYAK, STIFEL FINANCIAL CORP.,
501 NORTH BROADWAY, ST. LOUIS, MO 63102.
MISCELLANEOUS
The Company will bear the cost of solicitation of proxies.
Proxies will be solicited by mail. They also may be solicited by officers
and regular employees of the Company and its subsidiaries personally or by
telephone, but such persons will not be specifically compensated for such
services. Brokerage houses, custodians, nominees and fiduciaries will be
requested to forward the soliciting material to the beneficial owners of
stock held of record by such persons and will be reimbursed for their
reasonable expenses incurred in connection therewith.
Management knows of no business to be brought before the
Annual Meeting of Stockholders other than that set forth herein. However, if
any other matters properly come before the meeting, it is the intention of
the persons named in the proxy to vote such proxy in accordance with their
judgment on such matters. Even if you plan to attend the meeting in person,
please execute, date and return the enclosed proxy promptly. Should you
attend the meeting, you may revoke the proxy by voting in person. A
postage-paid, return-addressed envelope is enclosed for your convenience.
Your cooperation in giving this your prompt attention will be appreciated.
By Order of the Board of Directors,
James M. Zemlyak, Secretary
March 26, 2001
St. Louis, Missouri
- 23 -
APPENDIX A
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STIFEL FINANCIAL CORP.
2001 INCENTIVE STOCK PLAN
1. PURPOSE. The purpose of the 2001 Stifel Financial Corp.
Incentive Stock Plan is to encourage key employees of Stifel Financial Corp.
(the "Corporation") and such subsidiaries of the Corporation as the
Administrator designates, to acquire shares of common stock of the
Corporation ("Common Stock") or to receive monetary payments based on the
value of such stock or based upon achieving certain goals on a basis
mutually advantageous to such employees and the Corporation and thus provide
an incentive for employees to contribute to the success of the Corporation
and align the interests of key employees with the interests of the
shareholders of the Corporation.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Corporation or the Compensation Committee of the Board of
Directors (the "Administrator").
The authority to select persons eligible to participate in the
Plan, to grant benefits in accordance with the Plan, and to establish the
timing, pricing, amount and other terms and conditions of such grants (which
need not be uniform with respect to the various participants or with respect
to different grants to the same participant), may be exercised by the
Administrator in its sole discretion, or by any member of the Compensation
Committee of the Board of Directors upon a specific recommendation from the
Executive Committee of Stifel, Nicolaus & Company.
Subject to the provisions of the Plan, the Administrator shall have
exclusive authority to interpret and administer the Plan, to establish
appropriate rules relating to the Plan, to delegate some or all of its
authority under the Plan and to take all such steps and make all such
determinations in connection with the Plan and the benefits granted pursuant
to the Plan as it may deem necessary or advisable.
The Board of Directors in its discretion may delegate and assign
specified duties and authority of the Administrator to any other committee
and retain the other duties and authority of the Administrator to itself.
Also, the Board of Directors in its discretion may appoint a separate
committee of outside directors to make awards that satisfy the requirements
of Section 162(m) of the Internal Revenue Code.
3. SHARES RESERVED UNDER THE PLAN. Subject to the provisions of
Section 12 (relating to adjustment for changes in capital stock) the Plan
initially reserves for issuance under the Plan an aggregate of 1,000,000
shares of Common Stock of the Corporation, which may be authorized but
unissued or treasury shares. In addition to such 1,000,000 shares of Common
Stock, which may be awarded pursuant to any of the types of benefits
described in Section 5, for each calendar year in the ten-year period
commencing January 1, 2001, the number of shares reserved for issuance under
the Plan shall automatically increase by an additional 100,000 shares;
provided that, such additional shares may be applied only to the grant of
Stock Units awarded pursuant to the Plan in lieu of cash compensation that
would otherwise have been paid currently to the participant where the value
of the shares of Common Stock underlying such Stock Units, determined as of
the date of grant, does not exceed the amount of such cash by more than
twenty-five percent.
As used in this Section 3, the term "Plan Maximum" shall refer to
the number of shares of Common Stock of the Corporation that are available
for grant of awards pursuant to the Plan. Stock underlying outstanding
options, stock appreciation rights, or performance awards will reduce the
Plan Maximum while such options, stock appreciation rights or performance
awards are outstanding. Shares underlying expired, canceled or forfeited
options, stock appreciation rights or performance awards shall be added back
to the Plan Maximum. When the exercise price of stock options is paid by
delivery of shares of Common Stock of the Corporation, or if the
Administrator approves the withholding of shares
from a distribution in payment of the exercise price, the Plan Maximum shall
be reduced by the net (rather than the gross) number of shares issued
pursuant to such exercise, regardless of the number of shares surrendered or
withheld in payment. If the Administrator approves the payment of cash to an
optionee equal to the difference between the fair market value and the
exercise price of stock subject to an option, or if a stock appreciation
right is exercised for cash or a performance award is paid in cash, the Plan
Maximum shall be increased by the number of shares with respect to which
such payment is applicable. Restricted stock issued pursuant to the Plan
will reduce the Plan Maximum while outstanding even while subject to
restrictions. Shares of restricted stock shall be added back to the Plan
Maximum if such restricted stock is forfeited or is returned to the
Corporation as part of a restructuring of benefits granted pursuant to this
Plan.
Notwithstanding the above, the maximum number of shares subject to
stock options that may be awarded in any calendar year to any individual
shall not exceed 100,000 shares (as adjusted in accordance with Section 11).
4. PARTICIPANTS. Participants will consist of such officers and key
employees of the Corporation or any designated subsidiary as the
Administrator in its sole discretion shall determine. Designation of a
participant in any year shall not require the Administrator to designate
such person to receive a benefit in any other year or to receive the same
type or amount of benefit as granted to the participant in any other year or
as granted to any other participant in any year. The Administrator shall
consider such factors as it deems pertinent in selecting participants and in
determining the type and amount of their respective benefits.
5. TYPES OF BENEFITS. The following benefits may be granted under
the Plan: (a) stock appreciation rights ("SARs"); (b) restricted stock
("Restricted Stock"); (c) performance awards ("Performance Awards"); (d)
incentive stock options ("ISOs"); (e) nonqualified stock options ("NQSOs");
and (f) Stock Units, all as described below.
6. STOCK APPRECIATION RIGHTS. A SAR is the right to receive all or
a portion of the difference between the fair market value of a share of
Common Stock at the time of exercise of the SAR and the exercise price of
the SAR established by the Administrator, subject to such terms and
conditions set forth in a SAR agreement as may be established by the
Administrator in its sole discretion. At the discretion of the
Administrator, SARs may be exercised (a) in lieu of exercise of an option,
(b) in conjunction with the exercise of an option, (c) upon lapse of an
option, (d) independent of an option or (e) each of the above in connection
with a previously awarded option under the Plan. If the option referred to
in (a), (b) or (c) above qualified as an ISO pursuant to Section 422 of the
Internal Revenue Code of 1986 ("Code"), the related SAR shall comply with
the applicable provisions of the Code and the regulations issued thereunder.
At the time of grant, the Administrator may establish, in its sole
discretion, a maximum amount per share which will be payable upon exercise
of a SAR, and may impose conditions on exercise of a SAR. At the discretion
of the Administrator, payment for SARs may be made in cash or shares of
Common Stock of the Corporation, or in a combination thereof. SARs will be
exercisable not later than ten years after the date they are granted and
will expire in accordance with the terms established by the Administrator.
7. RESTRICTED STOCK. Restricted Stock is Common Stock of the
Corporation issued or transferred under the Plan (other than upon exercise
of stock options or as Performance Awards) at any purchase price less than
the fair market value thereof on the date of issuance or transfer, or as a
bonus, subject to such terms and conditions set forth in a Restricted Stock
agreement as may be established by the Administrator in its sole discretion.
In the case of any Restricted Stock:
(a) The purchase price, if any, will be determined by the
Administrator.
A-2
(b) The period of restriction shall be established by the
Administrator for any grants of Restricted Stock;
(c) Restricted Stock may be subject to (i) restrictions on
the sale or other disposition thereof; (ii) rights of the
Corporation to reacquire such Restricted Stock at the purchase
price, if any, originally paid therefor upon termination of the
employee's employment within specified periods; (iii)
representation by the employee that he or she intends to acquire
Restricted Stock for investment and not for resale; and (iv) such
other restrictions, conditions and terms as the Administrator deems
appropriate.
(d) The participant shall be entitled to all dividends paid
with respect to Restricted Stock during the period of restriction
and shall not be required to return any such dividends to the
Corporation in the event of the forfeiture of the Restricted Stock.
(e) The participant shall be entitled to vote the Restricted
Stock during the period of restriction.
(f) The Administrator shall determine whether Restricted
Stock is to be delivered to the participant with an appropriate
legend imprinted on the certificate or if the shares are to be
issued in the name of a nominee or deposited in escrow pending
removal of the restrictions.
8. PERFORMANCE AWARDS. Performance Awards are Common Stock of the
Corporation, monetary units or some combination thereof, to be issued
without any payment therefor, in the event that certain performance goals
established by the Administrator are achieved over a period of time
designated by the Administrator, but not in any event more than five years.
The goals established by the Administrator may include return on average
total capital employed, earnings per share, increases in share price or such
other goals as may be established by the Administrator. In the event the
minimum corporate goal is not achieved at the conclusion of the period, no
payment shall be made to the participant. Actual payment of the award earned
shall be in cash or in Common Stock of the Corporation or in a combination
of both, as the Administrator in its sole discretion determines. If Common
Stock of the Corporation is used, the participant shall not have the right
to vote and receive dividends until the goals are achieved and the actual
shares are issued.
9. INCENTIVE STOCK OPTIONS. ISOs are stock options to purchase
shares of Common Stock at not less than 100% of the fair market value of the
shares on the date the option is granted, subject to such terms and
conditions set forth in an option agreement as may be established by the
Administrator in its sole discretion that conform to the requirements of
Section 422 of the Code. Said purchase price may be paid (a) by check or
(b), in the discretion of the Administrator, by the delivery of shares of
Common Stock of the Corporation owned by the participant for at least six
months, or (c), in the discretion of the Administrator, by a combination of
any of the foregoing, in the manner provided in the option agreement. The
aggregate fair market value (determined as of the time an option is granted)
of the stock with respect to which ISOs are exercisable for the first time
by an optionee during any calendar year (under all option plans of the
Corporation and its subsidiary corporations) shall not exceed $100,000.
10. NONQUALIFIED STOCK OPTIONS. NQSOs are nonqualified stock
options to purchase shares of Common Stock at purchase prices established by
the Administrator on the date the options are granted, subject to such terms
and conditions set forth in an option agreement as may be established by the
Administrator in its sole discretion. The purchase price may be paid (a) by
check or (b), in the discretion of the Administrator, by the delivery of
shares of Common Stock of the Corporation owned by the participant for at
least six months, or (c), in the discretion of the Administrator, by a
combination of any
A-3
of the foregoing, in the manner provided in the option agreement. NQSOs
granted after the date of shareholder approval of the Plan shall be
exercisable no later than ten years after the date they are granted.
11. STOCK UNITS. A Stock Unit represents the right to receive a
share of Common Stock from the Corporation at a designated time in the
future, subject to such terms and conditions set forth in a Stock Unit
agreement as may be established by the Administrator in its sole discretion.
The participant generally does not have the rights of a shareholder until
receipt of the Common Stock. The Administrator may in its discretion provide
for payments in cash, or adjustment in the number of Stock Units, equivalent
to the dividends the participant would have received if the participant had
been the owner of shares of Common Stock instead of the Stock Units.
12. ADJUSTMENT PROVISIONS.
(a) If the Corporation shall at any time change the number of
issued shares of Common Stock without new consideration to the
Corporation (such as by stock dividends or stock splits), the total
number of shares reserved for issuance under this Plan and the
number of shares covered by each outstanding benefit shall be
adjusted so that the aggregate consideration payable to the
Corporation, if any, and the value of each such benefit shall not
be changed. Benefits may also contain provisions for their
continuation or for other equitable adjustments after changes in
the Common Stock resulting from reorganization, sale, merger,
consolidation, issuance of stock rights or warrants, or similar
occurrence.
(b) Notwithstanding any other provision of this Plan, and
without affecting the number of shares reserved or available
hereunder, the Board of Directors may authorize the issuance or
assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization
upon such terms and conditions as it may deem appropriate.
13. CHANGE IN CONTROL. In the event of a Change in Control of the
Corporation, as defined below, the vesting of all outstanding SARs, shares
of Restricted Stock, ISOs, NQSOs and Stock Units shall be accelerated only
to the extent set forth in the applicable agreement established by the
Administrator in its sole discretion.
"Change in Control" means:
(a) The acquisition by any individual, entity or group, or a
Person (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of ownership of 15% or more of either (i) the then
outstanding shares of Common Stock of the Corporation ("Outstanding
Corporation Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors ("Outstanding
Corporation Voting Securities"); provided, however, such an
acquisition of ownership of 15% or more but less than 25% of
Outstanding Corporation Common Stock or Outstanding Corporation
Voting Securities with the prior approval of the Board of Directors
of the Corporation shall not result in a Change in Control within
the meaning of this subparagraph (a);
(b) Individuals who, as of the date of approval of the Plan
by the Board of Directors of the Corporation, constitute the Board
of Directors of the Corporation ("Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Corporation's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual
A-4
were a member of the Incumbent Board, but excluding, as a member of
the Incumbent Board, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more
than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation, in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (ii) no Person beneficially owns,
directly or indirectly, 15% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such
corporation, entitled to vote generally in the election of
directors (provided, however, such 15% threshold may be increased
up to 25% by the Board of Directors of the Corporation prior to
such approval by the stockholders) and (iii) at least a majority of
the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of
the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the stockholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) the
sale or other disposition of all or substantially all of the assets
of the Corporation, other than to a corporation, with respect to
which following such sale or other disposition, (1) more than 50%
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election for directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (2)
no person beneficially owns, directly or indirectly, 15% or more
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors (provided, however, such 15%
threshold may be increased up to 25% by the Board of Directors of
the Corporation prior to such approval by the stockholders) and (3)
at least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Corporation.
14. NONTRANSFERABILITY. Each benefit granted under the Plan to an
employee shall not be transferable otherwise than by will or the laws of
descent and distribution; provided, however, NQSOs granted under the Plan
may be transferred, without consideration, to a Permitted Transferee (as
defined
A-5
below). Benefits granted under the Plan shall be exercisable, during the
participant's lifetime, only by the participant or a Permitted Transferee.
In the event of the death of a participant, exercise or payment shall be
made only:
(a) By or to the Permitted Transferee, executor or
administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant's rights under
the benefit shall pass by will or the laws of descent and
distribution; and
(b) To the extent that the deceased participant or the
Permitted Transferee, as the case may be, was entitled thereto at
the date of his death.
For purposes of this Section 14, "Permitted Transferee" shall include (i)
one or more members of the participant's family, (ii) one or more trusts for
the benefit of the participant and/or one or more members of the
participant's family, or (iii) one or more partnerships (general or
limited), corporations, limited liability companies or other entities in
which the aggregate interests of the participant and members of the
participant's family exceed 80% of all interests. For this purpose, the
participant's family shall include only the participant's spouse, children
and grandchildren.
15. TAXES. The Corporation shall be entitled to withhold the amount
of any tax attributable to any amounts payable or shares deliverable under
the Plan after giving the person entitled to receive such payment or
delivery notice as far in advance as practicable, and the Corporation may
defer making payment or delivery as to any benefit if any such tax is
payable until indemnified to its satisfaction. The person entitled to any
such delivery may, by notice to the Corporation at the time the requirement
for such delivery is first established, elect to have such withholding
satisfied by a reduction of the number of shares otherwise so deliverable,
such reduction to be calculated based on a closing market price on the date
of such notice.
16. TENURE. A participant's right, if any, to continue to serve the
Corporation and its subsidiaries as an officer, employee, or otherwise,
shall not be enlarged or otherwise affected by his or her designation as a
participant under the Plan.
17. DURATION, INTERPRETATION, AMENDMENT AND TERMINATION. No benefit
shall be granted more than ten years after the date of adoption of this
Plan; provided, however, that the terms and conditions applicable to any
benefit granted within such period may thereafter be amended or modified by
mutual agreement between the Corporation and the participant or such other
person as may then have an interest therein. Also, by mutual agreement
between the Corporation and a participant hereunder, stock options or other
benefits may be granted to such participant in substitution and exchange
for, and in cancellation of, any benefits previously granted such
participant under this Plan. To the extent that any stock options or other
benefits which may be granted within the terms of the Plan would qualify
under present or future laws for tax treatment that is beneficial to a
recipient, then any such beneficial treatment shall be considered within the
intent, purpose and operational purview of the Plan and the discretion of
the Administrator, and to the extent that any such stock options or other
benefits would so qualify within the terms of the Plan, the Administrator
shall have full and complete authority to grant stock options or other
benefits that so qualify (including the authority to grant, simultaneously
or otherwise, stock options or other benefits which do not so qualify) and
to prescribe the terms and conditions (which need not be identical as among
recipients) in respect to the grant or exercise of any such stock option or
other benefits under the Plan. The Board of Directors may amend the Plan
from time to time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any existing benefit
or change the terms and conditions thereof without the participant's
consent. No amendment of the Plan shall, without approval of the
stockholders of the Corporation, (a) increase the total number of
A-6
shares which may be issued under the Plan or increase the amount or type of
benefits that may be granted under the Plan; or (b) modify the requirements
as to eligibility for benefits under the Plan.
18. EFFECTIVE DATE. This 2001 Stifel Financial Corp. Incentive
Stock Plan shall become effective as of the date it is adopted by the Board
of Directors of the Corporation subject only to approval by the holders of a
majority of the outstanding voting stock of the Corporation within twelve
months before or after the adoption of the Plan by the Board of Directors.
A-7
APPENDIX B
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RESOLUTION TO AMEND THE RESTATED CERTIFICATE
OF INCORPORATION, AS AMENDED, OF STIFEL FINANCIAL CORP.
The following amendment to the Restated Certificate of
Incorporation, as amended, of Stifel Financial Corp (the "Company") shall be
put to a vote of the stockholders of the Company at the Annual Meeting of
Stockholders to be held April 25, 2001.
RESOLVED, that the fourth article of the Certificate of Incorporation
of the Company shall be amended to increase the total number of shares of
stock authorized for issuance from 13,000,000 to 33,000,000 and to increase
the number of shares of common stock, $.15 par value per share, authorized
for issuance from 10,000,000 to 30,000,000, by deleting the first paragraph
of the fourth article in its entirety and replacing it with the following:
A. The aggregate shares of all classes of stock which the
Corporation shall have authority to issue is Thirty-Three Million
(33,000,000) shares, consisting of Three Million (3,000,000) shares
of preferred stock of the par value of One Dollar ($1.00) each
(hereinafter called the "Preferred Stock") and Thirty Million
(30,000,000) shares of common stock of the par value of Fifteen
Cents ($0.15) each (hereinafter called the "Common Stock").
B-1
APPENDIX C
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STIFEL FINANCIAL CORP.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
[TO BE INCLUDED IN DEFINITIVE PROXY STATEMENT.]
C-1
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates, constitutes and appoints George
H. Walker III and James M. Zemlyak (or such other person as is designated by
the Board of Directors of Stifel Financial Corp. ("Stifel")) (the
"Proxies"), or either of them (with full power to act alone), true and
lawful attorney(s), with full power of substitution, for the undersigned and
in the name, place and stead of the undersigned to vote as designated below
all of the shares of common stock, $0.15 par value, of Stifel entitled to be
voted by the undersigned at the Annual Meeting of Stockholders to be held on
April 25, 2001 and at any adjournments or postponements thereof.
THE BOARD OF DIRECTORS HAS PROPOSED AND RECOMMENDS A VOTE "FOR" THE FOLLOWING:
1. ELECTION OF DIRECTORS:
| | FOR all nominees listed below (except as marked below)
| | WITHHOLD AUTHORITY to vote for all nominees listed below
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
FOR TERM EXPIRING IN 2004:
Robert E. Lefton
Scott B. McCuaig
James M. Oates
George H. Walker III
2. PROPOSAL TO APPROVE THE ADOPTION OF THE 2001 INCENTIVE STOCK PLAN:
| | For | | Against | |Abstain
3. PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF STOCK FROM
13,000,000 TO 33,000,000 AND TO INCREASE THE AUTHORIZED SHARES OF
COMMON STOCK FROM 10,000,000 TO 30,000,000.
| | For | | Against | |Abstain
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP, as independent
public auditors of the Company:
| | For | | Against | |Abstain
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" ALL THE NAMED NOMINEES FOR DIRECTOR AND "FOR"
PROPOSALS 2, 3 AND 4.
The undersigned acknowledges receipt of the 2000 Annual Report to
Stockholders and the Notice of the Annual Meeting and the Proxy Statement.
Please mark, sign, date and return the proxy card promptly using the
enclosed envelope.
| | PLEASE CHECK THIS BOX IF YOU PLAN TO
ATTEND THE MEETING IN PERSON.
SIGN HERE
---------------------------------------------
(Please sign exactly as name appears at left)
SIGN HERE
---------------------------------------------
Executors, administrators, trustees, etc.
should indicate when signing
DATED
---------------------------------------------
APPENDIX
Page 16 of the printed proxy contains a Stockholder Return Performance
Graph. The information contained in the graph is restated in a tabular format
immediately following the graph.