SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. DEFR14A)
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T. Rowe Price Group, Inc.
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(Name of Registrant as Specified in its Charter)
T. Rowe Price Group, Inc.
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Barbara A. Van Horn
Secretary
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YOUR VOTE IS IMPORTANT!
Please execute and return the enclosed proxy promptly whether or not you
plan to attend the T. Rowe Price Group, Inc. Annual Meeting of Stockholders.
[GRAPHIC OMITTED]
T.ROWE PRICE GROUP, INC.
100 East Pratt
Street Baltimore, MD 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 26, 2005
We will hold the Annual Meeting of Stockholders of T. Rowe Price Group,
Inc. at the Baltimore Marriott Waterfront Hotel, 700 Aliceanna Street,
Baltimore, Maryland, 21202, on Tuesday, April 26, 2005, at 10:00 a.m. At this
Meeting, we will ask stockholders to:
1) elect a Board of 11 Directors;
2) ratify the appointment of KPMG LLP as Price Group's independent
accountant for the 2005 fiscal year; and
3) act upon any other business that properly comes before the Meeting.
Stockholders who owned shares of Price Group's common stock as of February
25, 2005, are entitled to attend and vote at the Meeting or any adjournments.
BY ORDER OF THE BOARD OF DIRECTORS
Barbara A. Van Horn
Secretary
Baltimore, Maryland
March 16, 2005
PROXY STATEMENT
TABLE OF CONTENTS
Introduction; Proxy Voting Information 1
Proposal 1: Election of Directors 2
The Nominees 3
The Board of Directors and Committees 5
Compensation Committee Interlocks and Insider Participation 5
Report of the Audit Committee 6
Audit Committee Pre-Approval Policies 7
Disclosure of Fees Charged by Independent Accountant 7
Proposal 2: Ratification of the Appointment of KPMG LLP as the
Company's Independent Accountant for the 2005 Fiscal Year 8
Recommendation of the Board of Directors; Vote Required 8
Compensation of Executive Officers and Directors 8
Summary Compensation Table 8
Option Grants in 2004 9
Aggregated Option Exercises in 2004 and Option Values at December 31, 2004 9
Equity Compensation Plan Information 10
Report of the Executive Compensation Committee 11
Report of the Nominating and Corporate Governance Committee 14
Stock Performance Chart 17
Certain Ownership of Price Group's Common Stock 17
Section 16(a) Beneficial Ownership Reporting Compliance 17
Stockholder Proposals for the 2006 Annual Meeting 18
Stockholder Communications With the Board of Directors 18
Other Matters 18
Terms used in this proxy statement:
o "We," "Our," "Company," and "Price Group" all refer to T. Rowe Price Group,
Inc. except in the Reports of the Audit Committee, Executive Compensation
Committee, and Nominating and Corporate Governance Committee. In these
reports, "we" refers to members of each respective committee.
o "Meeting" refers to the 2005 Annual Meeting of Stockholders.
o "Price fund" means any mutual fund company or trust organized by T. Rowe
Price Associates, Inc., or T. Rowe Price International, Inc., two of the
investment adviser subsidiaries of T. Rowe Price Group, Inc.
o "You" refers to the stockholders of Price Group.
o "Price Associates" refers to T. Rowe Price Associates, Inc., a wholly owned
subsidiary of Price Group. Price Associates organizes and serves as an
investment adviser to the Price funds.
PROXY STATEMENT
INTRODUCTION; PROXY VOTING INFORMATION
We are sending you this proxy statement and the accompanying proxy card in
connection with the solicitation of proxies by our Board of Directors for the
Meeting described in the notice and at any adjournments or postponements. The
purpose of the Meeting is to:
1) elect a Board of 11 Directors;
2) ratify the appointment of KPMG LLP as our independent accountant for
the 2005 fiscal year; and
3) act upon any other business that properly comes before the Meeting.
This proxy statement, proxy card, and our 2004 Annual Report to
Stockholders, containing our consolidated financial statements and other
financial information for the year ended December 31, 2004, form your Meeting
package. We sent you this package on or about March 16, 2005.
At the close of business on February 25, 2005, the record date of the
Meeting, 130,282,871 shares of our common stock, par value $.20 per share, were
outstanding and entitled to vote at the Meeting. We have approximately 4,100
stockholders of record. In electing directors, stockholders may cast one vote
per share owned for each director to be elected; stockholders cannot use
cumulative voting. If the number of votes present or represented at the Meeting
are sufficient to achieve a quorum, directors who receive a plurality of the
votes cast are elected to serve until the 2006 annual meeting or until their
successors are elected and qualify. To approve Proposal 2 (see page 8), on which
stockholders may cast one vote per share, a majority of the votes cast at the
Meeting must be voted in favor of the proposal. Under our charter, the "one
share: one vote" policy may be modified in the case of certain persons and
groups owning in excess of 15% of our common stock. We do not believe this
provision will apply to any stockholders voting at this Meeting. Abstentions and
broker non-votes are not considered votes cast and will have no effect on
voting.
We will pay for the costs of preparing materials for the Meeting and
soliciting proxies. We expect that solicitation will occur primarily through the
mail, but proxies also may be solicited personally or by telephone, telegram,
letter, or facsimile. To assist in soliciting proxies, we have retained
Georgeson Shareholder Communications Inc. for a fee of $6,000 plus reimbursement
for out-of-pocket expenses. We ask securities brokers, custodians, nominees, and
fiduciaries to forward materials for the Meeting to our beneficial stockholders
as of the record date, and will reimburse them for the reasonable out-of-pocket
expenses they incur. Directors, officers, and employees of Price Group and our
subsidiaries may solicit proxies personally or by other means, but will not
receive additional compensation.
The Board of Directors has selected James S. Riepe and George A. Roche to
act as proxies. When you sign and return your proxy card or vote your shares
using the telephone or Internet connections to Wells Fargo Bank, N.A., our
transfer agent and proxy tabulator, you appoint Messrs. Riepe and Roche as your
representatives at the Meeting. If you wish to change your vote before the
Meeting, deliver a letter revoking the proxy to our Secretary (Barbara A. Van
Horn, c/o T. Rowe Price Group, Inc., 100 East Pratt Street, Mail Code 5210,
Baltimore, MD 21202) or properly submit another proxy bearing a later date. Even
if you return your proxy before the Meeting, and if we are able to verify that
you are a stockholder of record, you may still attend the Meeting, file a notice
revoking the previously submitted proxy, and then vote again in person. The last
proxy properly submitted by you before voting is closed at the Meeting will be
counted. Only our stockholders as of the record date may attend the Meeting.
"Street name" stockholders must bring a copy of their brokerage statement
reflecting stock ownership as of the February 25, 2005, record date.
You will be able to vote your proxy in three ways:
1) by mail - complete the enclosed proxy card and return it in the
envelope provided;
2) by telephone - call 1-800-560-1965 and then follow the voice
instructions. Please have the last four digits of your Social Security
number and your proxy card available when you call; or
3) by using the Internet - as prompted by the menu found at
http://www.eproxy.com/trow/, follow the instructions to obtain your
records and create an electronic ballot. Please have the last four
digits of your Social Security number and your proxy card available
when you access this voting site.
Remember, no matter which voting method you use, you may revoke your proxy
and resubmit a new one by attending the Meeting and voting in person. If you
vote by telephone or access the Internet voting site, you may also revoke your
proxy by re-voting using the same procedure no later than noon Central Time on
Monday, April 25, 2005. Our counsel has advised us that these three voting
methods are permitted under the corporate law of Maryland, the state in which we
are incorporated.
If you have selected a broker, bank, or other intermediary to hold your
shares rather than having them directly registered with our transfer agent,
Wells Fargo Bank, N.A., you still will receive a full Meeting package including
a proxy card to vote your shares. As a beneficial owner of our stock, you will
receive instructions from your broker, bank, or other intermediary on how you
can indicate the votes you wish to cast with respect to your shares. Your
brokerage firm also may permit you to vote your proxy by telephone or the
Internet. If you have previously chosen to vote your proxy through the Internet,
your Meeting materials may be accessed through that medium. Brokerage firms have
the authority under New York Stock Exchange rules to vote their clients' unvoted
shares on certain routine matters. If you do not vote your proxy, your brokerage
firm may choose to vote for you or leave your shares unvoted. Please be aware
that beneficial owners of shares held by banks, brokers, or other intermediaries
may not vote their shares in person at the Meeting unless they first obtain a
written authorization to do so from their broker, bank, or other intermediary
and can only change or revoke previously issued voting instructions pursuant to
instructions provided by their bank or broker. Since the ownership of shares
held in brokerage accounts cannot be verified at the Meeting, please allow
sufficient time for revised voting instructions to reach your intermediary and
for your proxy to be re-voted before the Meeting. We urge you to respond to your
broker, bank, or other intermediary.
PROPOSAL 1
ELECTION OF DIRECTORS
As of our 2004 Annual Meeting of Stockholders, there were 11 directors on
our Board of Directors. In September 2004, the Board increased its size to 12
members pursuant to authority under our By-Laws and elected J. Alfred Broaddus,
Jr., to fill the new Board seat until the Meeting. Due to the retirement of Mr.
Garrett, effective at the time of the Meeting, the number of Directors who serve
on our Board will be reduced to 11. All of the nominees listed in the table that
follows have been renominated, pursuant to the recommendation of the Nominating
and Corporate Governance Committee and approval of the Board of Directors, to
serve on the Board until the next Annual Meeting of Directors or until their
respective successors are elected and qualify.
As just noted, Mr. D. William J. Garrett, who has served on our Board since
2001, will retire as of the date of the Meeting. Mr. Garrett has been associated
with us for many years -- first from 1981-2000 as a Robert Fleming
representative on the Board of Directors of Rowe Price-Fleming International,
our former venture with the Robert Fleming organization, and then as a director
of Price Group. We have been the fortunate beneficiaries of Mr. Garrett's
international business expertise and value his contributions to our success. We
wish him well.
All properly executed proxies received in time to be tabulated for the
Meeting will be voted FOR the election of the nominees named in the following
table, unless otherwise specifically instructed. If any nominee becomes unable
or unwilling to serve between now and the Meeting, proxies will be voted FOR the
election of a replacement recommended by the Nominating and Corporate Governance
Committee and approved by the Board of Directors.
The Nominees
The following are brief biographical sketches of the 11 nominees. Unless
otherwise noted, all have been officers of the organizations named below as
their principal occupations or of affiliated organizations for more than five
years. Nominees who are employees of Price Group also may serve as directors or
officers of Price Associates or T. Rowe Price International, Inc., each of which
is an investment adviser to certain of the Price funds. Information regarding
committee membership(s), the number of shares of Price Group's common stock
beneficially owned by each nominee as of the record date, and the percent of
individual beneficial ownership if 1% or greater also is included. Unless
otherwise indicated in the footnotes that follow, the nominees have sole voting
and disposition powers over the shares beneficially owned by them.
The Board of Directors has considered the independence of members who are
not employed by Price Group and has concluded that Messrs. Brady, Broaddus,
Hebb, and Taylor, Dr. Sommer, and Mrs. Whittemore qualify as independent
directors within the meaning of the applicable rules of the National Association
of Securities Dealers, Inc. To our knowledge, there are no family relationships
among our directors or executive officers.
The Board of Directors recommends that you vote FOR all of the following
nominees:
Edward C. Bernard, age 49, has been a director of Price Group since 1999, a vice
president since 1989, and an employee since 1988.
665,261 shares(1)
James T. Brady, age 64, has been an independent director of Price Group since
2003, and is the chairman of the Audit Committee and a member of the Executive
Compensation Committee. He has been the managing director - Mid Atlantic,
Ballantrae International, Ltd., a management consulting firm, since 1999. Mr.
Brady is a director of Aether Systems, Inc., an owner and manager of mortgage
securities and government agency investments; Constellation Energy Group, a
diversified energy company; and McCormick & Company, Inc., a manufacturer,
marketer, and distributor of spices and seasonings.
10,000 shares(2)
J. Alfred Broaddus, Jr., age 65, has been an independent director of Price Group
since 2004, and is a member of the Executive Compensation Committee. He is the
immediate past president of the Federal Reserve Bank of Richmond from which he
retired in August 2004. Mr. Broaddus also is a director of Albemarle
Corporation, a manufacturer of specialty chemicals; Markel Corporation, a
specialty insurer; and Owens & Minor, Inc., a distributor of medical and
surgical supplies.
0 shares
Donald B. Hebb, Jr., age 62, has been an independent director of Price Group
since 1999, is the chairman of the Executive Compensation Committee, and serves
on the Nominating and Corporate Governance Committee. Mr. Hebb has been the
managing general partner of ABS Capital Partners, a private equity firm, since
1993. He serves as a director of SBA Communications Corporation, an owner and
operator of wireless communications infrastructure in the United States.
27,500 shares(3)
James A.C. Kennedy, age 51, has been a director of Price Group since 1996, the
director of the Equity Division of Price Associates since 1997, a vice president
since 1981, and an employee since 1978. He is a director or trustee of 23 of the
Price funds.
1,816,379 shares (1.39%)(4)
James S. Riepe, age 61, has been a director of Price Group since 1981, a vice
chairman since 1997, and the director of the Investment Services Division, a
vice president, and an employee since 1981. He is chairman of all of the 57
Price funds on which he serves as a director or trustee. Mr. Riepe is a member
of the Executive Committee. He also serves on the board of directors of The
Nasdaq Stock Market, Inc.
2,429,047 shares (1.86%)(5)
(see notes on page 4)
George A. Roche, age 63, has been a director of Price Group since 1980, the
chairman and president since 1997, the chief financial officer from 1984 to 1997
and interim chief financial officer from 2000-2001 and 2003-2004, a vice
president from 1973 to 1997, and an employee since 1968. He is the chairman of
the Executive Committee.
2,811,584 shares (2.16%)(6)
Brian C. Rogers, age 49, has been a director of Price Group since 1997, the
chief investment officer since 2004, a vice president since 1985, and an
employee since 1982. He is a member of the Executive Committee and is the
president of three Price funds.
1,470,667 shares (1.12%)(7)
Dr. Alfred Sommer, age 62, has been an independent director of Price Group since
2003 and serves on the Executive Compensation Committee. He is the dean of The
Johns Hopkins University Bloomberg School of Public Health and a professor of
Epidemiology, Ophthalmology, and International Health at the school. Dr. Sommer
also is a director of Becton Dickinson and Company, a medical technology
company.
10,000 shares(8)
Dwight S. Taylor, age 60, has been an independent director of Price Group since
2004, and serves on both the Audit Committee and Executive Compensation
Committee. He is the President of Corporate Development Services, LLC, a
commercial real estate developer which is a subsidiary of Corporate Office
Properties Trust. Mr. Taylor also is a director of MICROS Systems, Inc., a
provider of information technology for the hospitality and retail industry.
10,300 shares(9)
Anne Marie Whittemore, age 58, has been an independent director of Price Group
since 1995, is the chairman of the Nominating and Corporate Governance
Committee, and serves on the Executive and Executive Compensation Committees.
She is a partner in the law firm of McGuireWoods LLP, and is a director of
Albemarle Corporation, a manufacturer of specialty chemicals, and Owens & Minor,
Inc., a distributor of medical and surgical supplies.
33,800 shares(10)
Beneficial ownership of common stock
by all directors and executive officers
as a group (20 persons) 12,981,365 shares
(9.94%)(11)
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(1) Includes 431,704 shares that may be acquired by Mr. Bernard within 60
days upon the exercise of stock options. Also includes 24,000 shares
owned by a member of Mr. Bernard's family. Mr. Bernard disclaims
beneficial ownership of the shares identified in the preceding
sentence.
(2) Includes 10,000 shares that may be acquired by Mr. Brady within 60
days upon the exercise of stock options.
(3) Includes 24,000 shares that may be acquired by Mr. Hebb within 60 days
upon the exercise of stock options.
(4) Includes 458,683 shares that may be acquired by Mr. Kennedy within 60
days upon the exercise of stock options.
(5) Includes 400,375 shares that may be acquired by Mr. Riepe within 60
days upon the exercise of stock options. Also includes 125,000 shares
held in a charitable foundation for which Mr. Riepe has voting and
disposition power, 269,000 shares held by, or in trusts for, members
of Mr. Riepe's family, and 500 shares held on behalf of an estate of a
deceased family member for which Mr. Riepe serves as the co-executor
and has joint voting and disposition power. Mr. Riepe disclaims
beneficial ownership of the shares held by or in trusts for family
members, and the shares held in the estate.
(6) Includes 136,500 shares that may be acquired by Mr. Roche within 60
days upon the exercise of stock options. Also includes 800,000 shares
held by, or in trusts for, members of Mr. Roche's family. Mr. Roche
disclaims beneficial ownership of the shares identified in the
preceding sentence.
(7) Includes 608,006 shares that may be acquired by Mr. Rogers within 60
days upon the exercise of stock options.
(8) Includes 10,000 shares that may be acquired by Dr. Sommer within 60
days upon the exercise of stock options.
(9) Includes 10,000 shares that may be acquired by Mr. Taylor within 60
days upon the exercise of stock options.
(10) Includes 30,439 shares that may be acquired by Mrs. Whittemore within
60 days upon the exercise of stock options.
(11) Includes shares beneficially owned by Mr. Garrett, who will retire
from our Board on the day of the Meeting. As of February 25, 2005, Mr.
Garrett owned 18,000 shares of our common stock, all of which are
shares that may be acquired within 60 days upon the exercise of stock
options. Also includes 3,542,544 shares that may be acquired by all
directors and executive officers as a group within 60 days upon the
exercise of stock options.
The Board of Directors and Committees
During 2004, there were six meetings of the Board of Directors. Each
director attended at least 75% of the combined total number of meetings of the
Board and Board committees of which he or she was a member. The Board of
Directors of Price Group has an Audit Committee, an Executive Committee, an
Executive Compensation Committee, and a Nominating and Corporate Governance
Committee. All Board committees, with the exception of the Executive Committee,
are comprised solely of independent directors. Price Group has no specific
policy with respect to director attendance at its annual meetings; however, all
nominees for director submitted to the stockholders for approval at last year's
April 8 annual meeting attended that meeting.
All three current members of the Audit Committee, which met eight times
during 2004, are independent directors. The Board of Directors has determined
that each of Mr. Brady, Mr. Garrett, and Mr. Taylor meet the independence and
financial literacy criteria of the National Association of Securities Dealers,
Inc. The Board also has concluded that Mr. Brady, who is the chairman of the
audit committee of each of the three other public companies on which he serves
as a director and was a managing partner of Arthur Andersen LLP from 1978 to
1995, meets the criteria for an "audit committee financial expert" as
established by the Securities and Exchange Commission. The Board of Directors
has adopted a written charter for the Audit Committee which was included as
Exhibit A to the proxy statement for our 2004 annual meeting. The report of the
Audit Committee describes the scope of authority of the committee and may be
found on page 6.
The Executive Committee functions between meetings of the Board of
Directors. It possesses the authority to exercise all the powers of the Board
except as limited by Maryland law. If the committee acts on matters requiring
formal Board action, those acts are reported to the Board of Directors at its
next meeting for ratification. The Executive Committee acted on three such
matters during 2004.
As will be further described in the Report of the Executive Compensation
Committee beginning on page 11, this committee establishes the compensation of
our executive officers and generally reviews benefits and compensation for other
officers and key employees. It also administers our stock incentive and stock
purchase plans and the Annual Incentive Compensation Pool. The committee met
five times during 2004.
The Nominating and Corporate Governance Committee has the responsibility
and authority to supervise and review the affairs of Price Group as they relate
to the nomination of directors and corporate governance matters, and advise the
entire Board of Directors accordingly. Nominations for director submitted to the
committee by stockholders are evaluated according to our needs and the nominee's
knowledge, experience, and background. The committee, comprised of two
independent directors, met on three occasions in 2004. The Board of Directors
has adopted a written charter for the Nominating and Corporate Governance
Committee, which was included as Exhibit D to the proxy statement for our 2004
annual meeting. A report on the Committee's responsibilities and activities may
be found on page 14.
We plan to make the written charters of the Audit Committee, the Executive
Compensation Committee, and the Nominating and Corporate Governance Committee,
as well as our Corporate Governance Guidelines and other corporate governance
materials, available at www.troweprice.com.
Compensation Committee Interlocks and Insider Participation
During 2004, Messrs. Brady, Broaddus, Garrett, Hebb, and Taylor, Dr.
Sommer, and Mrs. Whittemore served on our Executive Compensation Committee. None
of these directors has ever been an officer or employee of Price Group or its
subsidiaries.
None of our executive officers served as a director of another corporation
that had an executive officer serving on our Board of Directors.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees Price Group's financial reporting process on
behalf of the Board of Directors. Our committee held eight meetings during 2004.
Management has the primary responsibility for the financial statements and the
reporting process, including internal control over financial reporting. The
independent accountant is responsible for expressing an opinion on the
conformity of Price Group's audited financial statements with generally accepted
accounting principles and an opinion on the effectiveness of Price Group's
internal control over financial reporting and management's assessment thereof.
We appointed KPMG LLP as Price Group's independent accountant for 2004 after
reviewing that firm's performance and independence from management. We expect to
reappoint KPMG LLP as Price Group's independent accountant for fiscal year 2005
at our meeting scheduled in April 2005.
In fulfilling our oversight responsibilities, we reviewed with management
the audited financial statements prior to their issuance and publication in the
2004 Annual Report to Stockholders. We reviewed with Price Group's independent
accountant its judgments as to the quality, not just the acceptability, of Price
Group's accounting principles and discussed with its representatives other
matters required to be discussed under generally accepted auditing standards,
including matters required to be discussed in accordance with the Statement on
Auditing Standards No. 61 (Communication with Audit Committees) of the Auditing
Standards Board of the American Institute of Certified Public Accountants. We
also discussed with the independent accountant its independence from management
and Price Group, and received its written disclosures pursuant to Independence
Standards Board Standard No. 1. We further considered whether the non-audit
services described elsewhere in this proxy statement provided by the independent
accountant are compatible with maintaining the accountant's independence.
We also discussed with management their evaluation of the effectiveness of
Price Group's internal control over financial reporting as of December 31, 2004.
We discussed with the independent accountant its evaluation of the effectiveness
of Price Group's internal control over financial reporting and of management's
own assessment thereof.
We further discussed with Price Group's internal auditors and independent
accountant the overall scope and plans for their respective audits. We met with
the internal auditors and independent accountant, with and without management
present, to discuss the results of their examinations and their evaluations of
Price Group's internal controls.
In reliance upon the reviews and discussions referred to above, we
recommended to the Board of Directors, and the Board approved, the inclusion of
the audited financial statements in the Annual Report on Form 10-K for the year
ended December 31, 2004, for filing with the Securities and Exchange Commission.
James T. Brady, Chairman
D. William J. Garrett
Dwight S. Taylor
AUDIT COMMITTEE PRE-APPROVAL POLICIES
The Audit Committee has adopted policies and procedures which set forth the
manner in which the committee will review and approve all audit and non-audit
services to be provided by KPMG LLP before that firm is retained for such
services. The pre-approval policies and procedures are as follows:
o Any audit or non-audit service to be provided to Price Group by the
independent accountant must be submitted to the Audit Committee for
review and approval. The proposed services are submitted on the Audit
Committee's "Independent Accountant Audit and Non-Audit Services
Request Form" with a description of the services to be performed, fees
to be charged, and affirmation that the services are not prohibited
under Section 201 of the Sarbanes-Oxley Act of 2002. The form must be
approved by Price Group's chief executive officer, chief financial
officer, or director of Internal Audit prior to submission to the
Audit Committee.
o The Audit Committee in its sole discretion then approves or
disapproves the proposed services and documents such approval, if
given, by signing the approval form. Pre-approval actions taken during
Audit Committee meetings are recorded in the minutes of the meetings.
o Any audit or non-audit service to be provided to Price Group which is
proposed between meetings of the Audit Committee will be submitted to
the Audit Committee chairman on a properly completed "Independent
Accountant Audit and Non-Audit Services Request Form" for the
chairman's review and pre-approval and will be included as an agenda
item at the next scheduled Audit Committee meeting.
DISCLOSURE OF FEES CHARGED BY THE INDEPENDENT ACCOUNTANT
The following table summarizes the fees charged by KPMG LLP for certain
services rendered to Price Group and its subsidiaries during 2003 and 2004. All
of the services described below were approved by the Audit Committee pursuant to
the pre-approval procedures described above.
Amount Billed and Paid
-------------------------------------
Type of Fee Fiscal Year 2003 Fiscal Year 2004
- --------------------------------------------------------------------------------
Audit(1) $ 213,000 $ 737,000
Audit Related(2) 115,000 51,300
Tax(3) 255,000 324,180
All Other(4) 2,490 94,462
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$ 585,490 $ 1,206,942
(1) Audit Fees - aggregate fees charged by KPMG LLP in 2003 and 2004 for
annual audits and quarterly reviews. In 2004, these fees included the
report of the independent registered accounting firm on internal
control over financial reporting as of December 31, 2004.
(2) Audit-Related Fees - aggregate fees charged by KPMG LLP for assurance
and related services that are reasonably related to the performance of
the audit and are not reported as Audit Fees. These services included
audits of several affiliated entities such as corporate retirement
plans and accounting consultations regarding new accounting
requirements. In 2004, these fees also included the issuance of the
accountant's consent on various Forms S-8 filed by Price Group related
to our stock-based compensation plans.
(3) Tax Fees - aggregate fees charged by KPMG LLP for professional
services for tax compliance, tax preparation, tax consulting, and tax
planning with respect to our U.S. and foreign operations in 2003. In
2004, only aggregate fees for tax compliance and tax preparation are
included.
(4) All Other Fees - aggregate fees charged by KPMG LLP for products and
services other than those services previously reported. In 2003 the
services included participation at a KPMG LLP executive education
program. In 2004, the fees relate to tax consulting and planning.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANT FOR THE 2005 FISCAL YEAR
The Audit Committee expects to appoint the accounting firm of KPMG LLP as
Price Group's independent accountant for fiscal year 2005 at its meeting
scheduled in April 2005, and the Board of Directors intends to ratify and affirm
that reappointment subject to ratification by our stockholders. KPMG LLP was
first appointed to serve as our independent accountant on September 6, 2001.
Representatives of KPMG are expected to be present at the Meeting and will
have the opportunity to make a statement and respond to appropriate questions
from stockholders.
Recommendation of the Board of Directors; Vote Required
We recommend that you vote FOR Proposal 2, the ratification of KPMG LLP as
our independent accountant for fiscal year 2005. Proxies solicited by the Board
of Directors will be voted FOR Proposal 2 unless otherwise specified. In order
to be adopted at the Meeting, Proposal 2 must be approved by the affirmative
vote of a majority of the votes cast at the Meeting. Abstentions and broker
non-votes will not be considered to be votes cast and will have no effect on the
outcome of the vote.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table summarizes the compensation of
certain of our executive officers who received the highest compensation during
2004.
Summary Compensation Table
Long-Term All Other
Annual Compensation Compensation
Compensation Awards (2)
- --------------------------------------------------------------------------------
Securities
Name and Underlying
Principal Position Year Salary Bonus(1) Options (#)
---- ------ ------- ---------
George A. Roche 2004 $ 300,000 $2,500,000 0(3) $ 32,350
Chairman and 2003 300,000 2,000,000 10,306 27,585
President 2002 300,000 1,600,000 0 26,480
James S. Riepe 2004 300,000 2,500,000 17,751(3) 27,955
Vice Chairman 2003 300,000 2,000,000 40,007 26,085
2002 300,000 1,600,000 8,674 24,980
Brian C. Rogers 2004 300,000 2,800,000 108,593(3) 32,080
Vice President and 2003 300,000 2,100,000 103,052 30,585
Chief Investment
Officer 2002 300,000 1,800,000 80,000 28,730
James A.C. Kennedy 2004 300,000 2,400,000 61,018(3) 32,830
Vice President and 2003 300,000 1,900,000 62,061 30,960
Director, Equity
Division 2002 300,000 1,500,000 50,000 29,855
Edward C. Bernard 2004 300,000 1,800,000 80,472(3) 35,725
Vice President 2003 300,000 1,400,000 78,487 30,960
2002 300,000 1,100,000 80,000 29,855
(1) Bonuses for 2004 were paid to each of the named executive officers
under the Annual Incentive Compensation Pool approved by stockholders
at the 2003 annual meeting. Bonuses for 2003 and 2002 were paid under
the Executive Incentive Compensation Plan which terminated on December
31, 2003, except for Mr. Rogers' 2002 bonus which was paid under our
discretionary bonus pool for executives who did not participate in the
Executive Incentive Compensation Plan. Bonuses may vary significantly
from year to year and among eligible employees. See "Report of the
Executive Compensation Committee."
(2) The following types of compensation are included in "all other
compensation":
a. Contributions made under the T. Rowe Price U.S. Retirement
Program. This plan provides retirement benefits based on the
investment performance of each plan participant's account. Each
of Messrs. Kennedy, Riepe, and Rogers received a contribution of
$27,955 in 2004. Messrs. Bernard and Roche each received a
contribution of $30,850 for the same period.
b. Directors' fees paid by a wholly owned subsidiary of Price Group.
Mr. Roche was paid $1,500 in directors' fees in 2004.
c. Matching contributions paid under our Employee Stock Purchase
Plan. Matching contributions were paid to the following named
officers in 2004: Mr. Bernard - $4,875; Mr. Kennedy -$4,875; and
Mr. Rogers - $4,125.
(3) See the following table entitled "Option Grants in 2004" for detail on
the character of option grants not made through the annual employee
stock option program.
Option Grants Table. The following table shows the number of stock options
granted in 2004 to the executive officers named in the Summary Compensation
Table and other information regarding their grants. Stock options under our
annual award program are granted at 100% of fair market value on the date of
grant and generally become exercisable in five equal increments on the first
through fifth anniversaries of the grant date. Replenishment grants allow an
option holder to receive additional options if a non-qualified stock option is
exercised by relinquishing shares already owned in payment of the exercise
price. The replenishment options are granted at fair market value on the date of
exercise of the option giving rise to the replenishment grant and may themselves
be exercised until the expiration date of the related option. The replenishment
options, which are equal in number to the shares relinquished, are exercisable
immediately. There is a provision in all existing option agreements under our
2001 and 2004 Stock Incentive Plans that may accelerate the vesting of currently
outstanding but unexercisable options so that all options will become
exercisable for the one-year period following a change in control of Price
Group. The Executive Compensation Committee may modify or rescind this
provision, or make other provisions for accelerating the ability to exercise
options.
Option Grants in 2004
Individual Grants
--------------------------------------------------
Potential
Realizable Value
Number of Percent of at Assumed Annual
Securities Total Options Rates of Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expiration Option Term(2)
Name Granted Fiscal Year (Per Share) Date 5% 10%
- --------------------------------------------------------------------------------
George
A. Roche 0 0.00% N/A N/A N/A N/A
James S.
Riepe 17,751(1) .42% $55.19 11/1/2005 $100,417 $205,732
Brian C.
Rogers 18,352(1) .44% 49.04 11/18/2006 92,248 188,996
16,891(1) .40% 53.28 11/18/2006 141,855 297,884
13,350(1) .32% 60.67 11/18/2006 83,019 170,088
60,000 1.43% 61.55 12/20/2014 2,322,508 5,885,691
James A.C.
Kennedy 1,948(1) .05% 49.61 11/01/2005 4,832 9,664
9,070(1) .22% 49.61 11/18/2006 46,121 94,492
50,000 1.19% 61.55 12/20/2014 1,935,423 4,904,742
Edward C.
Bernard 20,472(1) .49% 53.28 11/18/2006 171,929 361,038
60,000 1.43% 61.55 12/20/2014 2,322,508 5,885,691
(1) Replenishment grant.
(2) We are required by the Securities and Exchange Commission to use a 5%
and 10% assumed rate of appreciation over the terms of stock options
granted in 2004. If the price of our common stock does not appreciate
over the exercise price, the option holders will receive no benefit
from the stock option grants. The appreciated stock prices used in
these calculations do not represent Price Group's projections or
estimates of the price of our common stock. Federal or state income
tax consequences relating to stock option transactions have not been
taken into account.
Aggregated Option Exercises and Option Values Table. The following table
shows 2004 stock option exercises and the value as of December 31, 2004, of
unexercised options for those executive officers named in the Summary
Compensation Table on page 8. In the case of exercised options, "value realized"
is considered to be the difference between the exercise price and the market
price on the date of exercise. In the case of unexercised options, value is
considered to be the difference between the exercise price and market price at
the end of 2004. An "In-the-Money" option is an option for which the exercise
price of the underlying stock is less than $62.20, the closing market price of
Price Group's common stock on December 31, 2004. The following values resulted
from appreciation of the stock price since the options were granted.
Aggregated Option Exercises in 2004
and Option Values at December 31, 2004
Value of
Number of Unexercised
Securities Underlying "In-the-Money"
Unexercised Options at Options at
December 31, 2004 December 31, 2004
Shares Acquired Value (Exercisable/ (Exercisable/
Name Upon Exercise Realized Unexercisable) Unexercisable)
- --------------------------------------------------------------------------------
George A.
Roche 173,500(1) $7,502,425 351,300/10,000(1) $14,267,660/$232,000
James S.
Riepe 75,000 3,159,562 400,375/10,000 14,991,930/232,000
Brian C.
Rogers 174,239(2) 5,789,118 608,006/204,000 17,238,156/4,151,480
James A.C.
Kennedy 38,700 1,262,820 458,683/168,000 13,775,401/3,367,500
Edward C.
Bernard 76,629 2,533,024 431,704/208,000 12,098,179/4,244,280
(1) Includes shares acquired or held through limited liability companies
or trusts controlled by Mr. Roche.
(2) Includes 15,139 replenishment options.
Equity Compensation Plan Information. The following table sets forth information
regarding outstanding options and shares reserved for future issuance under our
equity compensation plans as of December 31, 2004. None of the plans have
outstanding warrants or rights other than options. All plans have been approved
by our stockholders.
Equity Compensation Plan Information
Number of Securities
Number of Securities Remaining Available
to be Issued Upon Weighted Average for Future Issuance
Exercise of Out- Exercise Price of Under Equity
Plan Category Standing Options Outstanding Options Compensation Plans
- --------------------------------------------------------------------------------
Equity
Compensation
Plans Approved
by Stockholders 24,130,402 $36.65 13,542,393(1)
(1) Includes 11,862,393 shares that may be issued under our 2001 Stock
Incentive Plan, 2004 Stock Incentive Plan, and 1998 Director Stock
Option Plan, and 1,680,000 shares that may be issued under our 1986
Employee Stock Purchase Plan. No shares have been issued under the
Employee Stock Purchase Plan since its inception; all plan shares have
been purchased in the open market. The number of shares available for
future issuance will increase under the terms of the 2004 Stock
Incentive Plan as a result of all future common stock repurchases that
we make from proceeds generated by stock option exercises that have
occurred since the inception of the 2004 Plan.
Compensation of Directors. Directors who are also officers of Price Group do not
receive separate directors' fees. Each non-employee director, with the exception
of Mr. Broaddus, received a $50,000 retainer for his or her 2004 service on the
Board of Directors. The chairman of the Audit Committee and members of the
committee received additional fees of $10,000 and $5,000, respectively. After
joining the Board of Directors on September 9, 2004, Mr. Broaddus received
$25,000 for his service in 2004.
Pursuant to the 1998 Director Stock Option Plan approved by stockholders on
April 16, 1998, and amended by the Board of Directors on April 7, 2004, the
following stock options were awarded to our independent directors who served on
the Board of Directors in 2004:
1) Each of Messrs. Brady, Garrett, and Hebb, Dr. Sommer, and Mrs.
Whittemore received options to purchase 2,500 shares of Price Group's
common stock at $51.28 per share, the fair market value of a share of
stock on April 30, 2004, and 2,500 shares at $55.77 each, the fair
market value of a share of stock on October 29, 2004.
2) Mr. Taylor received options to purchase 10,000 shares of Price Group's
common stock at $53.52 per share, the fair market value of a share of
stock on April 8, 2004, the day he was elected to the Board of
Directors.
3) Mr. Broaddus received options to purchase 10,000 shares of Price
Group's common stock at $49.63 per share, the fair market value of a
share of stock on September 9, 2004, the day he was elected to the
Board of Directors.
4) Mrs. Whittemore also received replenishment options to purchase 439
shares of Price Group's common stock at $52.08 per share, the fair
market value of a share of stock on March 26, 2004, the date of the
replenishment grant.
On December 16, 2004, the Board of Directors approved a revised schedule of
compensation for non-employee directors. Effective January 1, 2005, their annual
cash retainer fee was increased to $75,000 per year, and new $5,000 annual cash
fees were implemented for the chairperson of our Executive Compensation
Committee and our Nominating and Corporate Governance Committee. Each committee
member also will receive $1,500 for each meeting attended. Non-employee
directors will be entitled to an initial option grant of 8,000 shares upon
election to the Board, and semiannual option grants of 2,000 shares for the
duration of their service. All such options will be granted pursuant to our 1998
Director Stock Option Plan, will have an exercise price set at fair market value
on the grant date, will vest in one full year after the grant date, and will
have a 10-year term.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The members of the Executive Compensation Committee are listed at the end
of this report. The Board has determined that each of them is independent as
defined by Nasdaq listing standards. In this report, the terms "we" and "our"
refer to members of this committee. We held five meetings during 2004.
Committee Responsibilities
The Executive Compensation Committee is responsible to the Board, and
ultimately to Price Group stockholders, for:
o determining the compensation of the chief executive officer and other
executive officers;
o overseeing the administration of Price Group's Annual Incentive
Compensation Pool, stock incentive plans, and employee stock purchase
plan; and
o reviewing and approving general salary and compensation policies for
the rest of Price Group's senior officers.
The Management Compensation Committee, a committee comprised of Price Group
senior officers, recommends compensation policies not included in these
categories, including individual compensation decisions for non-executive
officers.
Executive Compensation Principles
The investment management, financial services, and securities industries in
which Price Group operates demand experienced executives with extensive training
and specific expertise. At the same time, many firms like Price Group are
actively competing to attract and retain a small number of highly qualified
executives who enjoy multiple career opportunities. Some of Price Group's
competitors are privately owned and others have significantly larger market
capitalizations, giving them in some cases an advantage in compensation
alternatives. Price Group has developed a highly qualified, experienced, and
complementary management group, and we believe that Price Group's continued
success depends upon its ability to retain and motivate its executives and
investment professionals. As a result, we believe that Price Group must offer
competitive cash and equity compensation and other incentive programs. We
continue to monitor the relative mix of cash, equity, and other compensation
paid to our executive officers in light of the competitive environment for top
talent.
We recognize that any executive compensation program must be consistent
with stockholder interests. Our overall goal is to design compensation packages
that reward executives for both long-term growth and short-term performance. We
discuss and set corporate objectives at the beginning of each year and monitor
performance against them during the course of the year. We describe our
incentive compensation policies in greater detail below.
In connection with our compensation decisions in 2004, we compared the
compensation packages of senior management at Price Group with relevant publicly
available data for the investment management, securities, and other financial
services industries. We retained an independent compensation consultant to
assist us in this review and in comparing Price Group's compensation policies to
those of similarly situated public companies.
Compensation of Price Group's Chief Executive Officer and Other Senior Executive
Officers
We did not increase the base salary of any of the executives listed on the
Summary Compensation table on page 8 (Messrs. Roche, Riepe, Rogers, Kennedy, and
Bernard) in 2004 or 2003. Our policy is to maintain base salaries for Price
Group executives at substantially below 50% of their total cash compensation,
and for their remaining cash compensation to be dependent in large measure on
Price Group's performance.
The base salary for the executives listed on the Summary Compensation Table
was increased to $350,000 effective January 1, 2005.
Annual Incentive Compensation Pool
At Price Group's 2003 annual meeting, stockholders approved the Annual
Incentive Compensation Pool (the "Incentive Pool" or "pool"). The Incentive Pool
is designed to provide performance-based cash bonuses to executive officers of
Price Group and its affiliated companies. This committee has sole discretion
over eligibility for participation in the pool. In early 2004 we designated
Messrs. Roche, Riepe, Rogers, Kennedy, and Bernard as eligible pool
participants, and set 20% as the maximum percentage share of the Incentive Pool
which each such participant could be awarded.
The Annual Incentive Compensation Pool provides for an Incentive Pool based
on income before income taxes and minority interests as reflected in the
Company's audited consolidated statement of income, adjusted in accordance with
the terms applicable to the Incentive Pool to exclude: (1) certain
extraordinary, unusual, or nonrecurring items; (2) charges relating to goodwill;
and (3) the effect of changes in accounting policy. The Incentive Pool is
comprised of: (1) for adjusted earnings up to $50 million, 6% of adjusted
earnings; and (2) for adjusted earnings above $50 million, an additional 8% of
adjusted earnings, establishing a maximum cumulative Incentive Pool of
$3,000,000 plus 8% of adjusted earnings over $50 million. For 2004, we approved
the payment of bonuses totaling $12 million out of the Incentive Pool,
consisting of $2.8 million in the case of Mr. Rogers, $2.5 million in each of
the cases of Messrs. Riepe and Roche, $2.4 million in the case of Mr. Kennedy,
and $1.8 million in the case of Mr. Bernard. We expect that all payments
pursuant to the Incentive Pool will be deductible under Section 162(m) of the
Internal Revenue Code of 1986.
We considered many qualitative and quantitative factors in determining the
amount of incentive compensation awarded to Price Group's senior executives in
2004, including strong investment performance relative to comparable mutual
funds and market indices, marketing effectiveness resulting in substantially
increased fund cash flows, continued high quality customer service,
international expansion, continuing significant improvement in Price Group's
financial condition and operating performance, favorable compliance record,
effective management of corporate assets, and corporate infrastructure
development. We noted particularly that in 2004, Price Group enjoyed strong
investment and marketing results and maintained high client service standards.
We considered these factors and executive compensation levels in light of
Price Group's historical compensation policies and publicly available data for
the investment management, securities, and other financial services industries.
In the cases of Messrs. Roche and Riepe, we considered their strong management
performance over an extended time frame, as well as the substantially improved
performance of the Company during 2004. In the case of Mr. Rogers, we considered
his membership on the Management Committee, as well as his assumption of
responsibility as the Chief Investment Officer of the Company and the strong
relative investment performance of the Price funds. In setting the bonuses for
Mr. Kennedy and Mr. Bernard, we considered their respective contributions as
members of the Management Committee, Mr. Kennedy's senior executive
responsibility with respect to our Equity Division, and Mr. Bernard's
responsibility for our marketing and fund distribution programs.
The incentive compensation awarded to each of the named executives was
considerably less than the maximum amount permitted by the Incentive Pool. The
awards were based upon our consideration of the various factors described above,
as well as Price Group's historical compensation policies and financial industry
compensation trends. We could determine in the future to award payment of a
greater portion or all of the Incentive Pool in order to maintain a competitive
compensation structure and thus retain key personnel.
We also point out that many of Price Associates' investment professionals,
including certain senior portfolio managers whom we did not designate as
participants in the 2004 Incentive Pool and are compensated under other
incentive compensation programs and arrangements, also were significant
contributors to Price Group's success in 2004.
Equity Compensation Awards
Consistent with recent practice, we made no grants in 2004 to Messrs. Roche
and Riepe in order to focus more of the annual option grants on other officers
and key employees who do not already have as significant an ownership interest
in Price Group. We believe that our option program, particularly as it relates
to other key employees, plays an important role in our ability to attract and
retain our senior executives and key employees. In 2004 we awarded options to
Mr. Kennedy to purchase 50,000 shares of common stock, and to Mr. Rogers and to
Mr. Bernard to purchase 60,000 shares of common stock, all at an exercise price
of $61.55 per share. These grants accounted in aggregate for approximately 4% of
the total option awards in 2004, as we and senior management sought to continue
to make additional stock options available to a significant number of other
employees. The foregoing excludes replenishment options which automatically are
granted under certain circumstances upon the exercise of outstanding options.
We believe that the 2004 compensation levels disclosed in this proxy
statement are reasonable and appropriate in light of the objectives of our
compensation system, Price Group's performance, and the other factors described
above.
Donald B. Hebb, Jr., Chairman
James T. Brady
J. Alfred Broaddus, Jr.
D. William J. Garrett
Dr. Alfred Sommer
Dwight S. Taylor
Anne Marie Whittemore
REPORT OF THE NOMINATING AND
CORPORATE GOVERNANCE COMMITTEE
The members of the Nominating and Corporate Governance Committee are Anne
Marie Whittemore and Donald B. Hebb, Jr. The Board has determined that each of
them is independent as defined by Nasdaq. In this report, the term "we" refers
to members of this committee. Our committee held three meetings in 2004.
Overview
The fundamental purpose and goal of the Nominating and Corporate Governance
Committee is to assure the effectiveness of Price Group's Board of Directors.
Our primary responsibilities include:
o monitoring the composition of the Board and its Committees;
o recommending to the Board the characteristics required of Board
members;
o identifying and evaluating director candidates;
o supervising procedures for the receipt and consideration of director
nominations;
o recommending compensation for independent directors;
o administering procedures for the receipt of stockholder communications
to the Board;
o reviewing, and monitoring compliance with, Price Group's Corporate
Governance Guidelines;
o designing and managing annual evaluations of the Board and its
Committees; and
o implementing and monitoring compliance with corporate governance
initiatives.
2004 Highlights
Additional Independent Director
During 2004 the Board, pursuant to Price Group's By-Laws, created an
additional Board seat in order to facilitate the appointment of an additional
independent director. After a comprehensive search, we recommended and the Board
approved the appointment of J. Alfred Broaddus, Jr., former president of the
Federal Reserve Bank of Richmond, to fill the new Board seat and to serve on the
Executive Compensation Committee. We are delighted to have Mr. Broaddus as a
member of Price Group's Board. We will continue to identify independent director
candidates.
Board and Committee Evaluations
A major initiative during 2004 was the implementation of the Board
evaluation program. Thanks to the enthusiastic and conscientious participation
of all Board members, the initial evaluation process provided constructive and
insightful feedback. We are pleased to report that overall the evaluations were
positive and reflected a commitment to sound corporate governance by all Board
members. We expect to conduct Board and Committee evaluations at least once each
year.
Corporate Governance Guidelines
During 2004 we presented to the Board a set of Corporate Governance
Guidelines which relate to Board and Committee composition, procedures, and
governance. The Board adopted the Corporate Governance Guidelines on December
16, 2004. This committee is responsible for reviewing the Corporate Governance
Guidelines on an annual basis and for recommending improvements to the Board as
appropriate. Among other initiatives, the Corporate Governance Guidelines:
o Create the position of Lead Director, to be appointed annually by the
independent directors to lead executive sessions of independent Board
members and facilitate communication between independent directors and
management. The Lead Director will be elected by the independent
directors following the annual meeting.
o Require that the independent directors meet at least twice each year
in executive session, without management being present.
o Set the Board's expectations regarding attendance at and preparation
for Board and stockholder meetings.
We plan to make the written charters of the Audit Committee, the Executive
Compensation Committee, and the Nominating and Corporate Governance Committee,
as well as our Corporate Governance Guidelines and other corporate governance
materials, available at www.troweprice.com.
Director Qualifications and the Nominations Process
This committee supervises the nomination process for directors. We consider
the performance, independence, experience, and other characteristics of our
incumbent directors, including their willingness to serve for an additional
term, in considering their re-nomination each year. In the event that a vacancy
exists, we identify, interview and examine, and make recommendations to the
Board regarding, appropriate candidates.
We identify potential candidates principally through suggestions from
directors and senior management of Price Group. The chief executive officer of
Price Group and Board members may seek candidates through informal discussions
with third parties. The only nominee for election to Price Group's Board this
year who has not previously served as a Price Group director is Mr. Broaddus.
Mr. Broaddus was initially brought to the attention of the committee by an
independent director.
In evaluating potential candidates, we consider independence from
management, experience, expertise, commitment, diversity, age, number of other
public board seats held, potential conflicts of interest, and other factors, and
take into account the composition of the Board at the time of the assessment.
All candidates for nomination must:
o demonstrate unimpeachable character and integrity;
o have sufficient time to carry out their duties;
o have experience at senior levels in areas of expertise helpful to
Price Group and consistent with the objective of having a diverse and
well-rounded Board; and
o have the willingness and commitment to assume the responsibilities
required of a Price Group director.
In addition, candidates expected to serve on the Audit Committee must meet
the financial literacy qualifications imposed by Nasdaq and by the Securities
and Exchange Commission and other applicable law, and candidates expected to
serve on the Executive Compensation Committee may be required to meet additional
independence tests. Our evaluations of potential directors include, among other
things, an assessment of a candidate's background and credentials, personal
interviews, and discussions with appropriate references. Once we have selected
appropriate candidates, we present them to the full Board for election if a
vacancy occurs during the course of the year or for nomination if the director
is to be first elected by stockholders. All directors serve for one-year terms,
and must stand for re-election annually.
Policy for the Consideration of Director Candidates Recommended by Stockholders
Section 1.11 of Price Group's Amended and Restated By-Laws sets out the
procedures a stockholder must follow in order to nominate a candidate for Board
membership. Candidates properly nominated in accordance with such procedures
will be evaluated in the same manner as candidates from other sources. For these
requirements, please refer to the Amended and Restated By-Laws, which were filed
with the Securities and Exchange Commission on March 6, 2003, as Exhibit 3(ii)
to Price Group's Annual Report on Form 10-K.
To be eligible to nominate a Board candidate, you must be a Price Group
stockholder at the time you submit your nomination and on the record date for
the appropriate stockholder meeting. Your notice of nomination must be received
by Price Group's Secretary at the principal executive offices not less than 90
days, but not more than 120 days, prior to the first anniversary of the
preceding year's annual meeting. In the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
the anniversary date of the preceding year's annual meeting, your notice must be
delivered not earlier than 90 days before the meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the tenth day following public announcement of the date of such annual meeting.
In the case of a special meeting of stockholders called for the purpose of
electing directors, the Secretary must receive your nomination notice not later
than the close of business on the tenth day following the day Price Group gives
notice of the date of such special meeting.
Your notice must be in writing and must include specific information about
you and about the nominee:
Regarding each person you wish to nominate for election as a director:
o name, age, and address;
o principal occupation or employment;
o the class and number of Price Group shares which are beneficially
owned by such person; and
o any other information relating to such person which is required to be
disclosed in solicitations for proxies for election of directors
pursuant to Regulation 14A under the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder.
Regarding the stockholder giving the notice:
o your name and address as they appear on Price Group's books and, if
different, the name and address of the beneficial owner on whose
behalf the nomination is made;
o the class and number of Price Group shares which you own beneficially
or of record;
o a description of all arrangements or understandings between you and
each proposed nominee and any other person or persons (including their
names) pursuant to which nomination(s) are to be made by you;
o a representation that you intend to appear in person or by proxy at
the meeting to nominate the persons named in your notice; and
o any other information relating to you which is required to be
disclosed in solicitations for proxies for election of directors
pursuant to Regulation 14A under the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder.
The notice must be accompanied by a written consent of the proposed
nominee(s) to be named as a nominee and to serve as a director if elected.
Code of Ethics
The Board has adopted a Code of Ethics for its Principal Executive and
Senior Financial Officers. This Code supplements Price Group's Code of Ethics
and Conduct applicable to all employees and directors and is intended to promote
honest and ethical conduct, full and accurate reporting, and compliance with
laws as well as other matters. A copy of the Code of Ethics for Principal
Executive and Senior Financial Officers is filed as an exhibit to Price Group's
Annual Report on Form 10-K.
Anne Marie Whittemore, Chairman
Donald B. Hebb, Jr.
STOCK PERFORMANCE CHART
We are required by the Securities and Exchange Commission to provide you
with a five-year comparison of the cumulative total return on our common stock
as of December 31, 2004, with that of a broad equity market index and either a
published industry index or a peer group index selected by us. We have chosen to
use broad market and published industry indices which included our stock in
2004.
The following chart compares the yearly change in the cumulative return on
our common stock with the cumulative total return on the CRSP Total Return Index
for NASDAQ Financial Stocks and the S&P 500 Index. The comparison assumes that
$100 was invested in Price Group's common stock and in each of the named indices
on December 31, 1999, and that all dividends were reinvested.
Since we do not make or endorse any predictions as to future stock
performance, the values in the following columns do not represent our
projections or estimates of either the annual or cumulative return on our common
stock or any of the indices represented.
[GRAPHIC OMITTED]
1999 2000 2001 2002 2003 2004
T. Rowe Price
Group, Inc. $ 100 $ 116 $ 97 $ 78 $ 138 $ 184
CRSP Total
Return Index
for NASDAQ
Financial
Stocks(1) 100 108 119 122 165 193
S&P 500 Index(2) 100 91 80 63 81 89
(1) The CRSP Total Return Index for NASDAQ Financial Stocks is an index
comprised of all financial company American Depository Receipts,
domestic common shares, and foreign common shares traded on the NASDAQ
National Market(R) and the NASDAQ SmallCap Market(SM), and represents
SIC Codes 60 through 67. We have not verified these values
independently. Price Group's common stock is included in this index.
Price Group's Secretary will provide the names of companies included
in this index upon receipt of a stockholder's written request.
(Source: CRSP, Center for Research in Security Prices. Graduate School
of Business, The University of Chicago [2004]. Used with permission.
All rights reserved. www.crsp.uchicago.edu)
(2) Total return performance for the S&P 500 Index also has been provided
by CRSP. This index has consistently been presented in prior years as
a broad market index. Price Group's common stock has been included in
this index since October 13, 1999.
CERTAIN OWNERSHIP OF PRICE GROUP'S COMMON STOCK
We have no knowledge at this time of any individual or entity owning,
beneficially or otherwise, 5% or more of our outstanding common stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that in 2004, our directors and officers timely complied with
the requirements of Section 16(a) of the Securities Exchange Act to report
ownership and transactions which change ownership.
STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING
Qualified stockholders who wish to have proposals presented at the 2006
annual meeting of stockholders must deliver them to Price Group by November 16,
2005, in order to be considered for inclusion in next year's proxy statement and
proxy pursuant to Rule 14a-8 under the Securities Exchange Act of 1934.
Any stockholder proposal or director nomination for our 2006 annual
meeting that is submitted outside the processes of Rule 14a-8 will be considered
"untimely" if we receive it before December 27, 2005, or after January 26, 2006.
Such proposals and nominations must be made in accordance with the Amended and
Restated By-Laws of Price Group. An untimely proposal may be excluded from
consideration at our 2006 annual meeting. All proposals and nominations must be
delivered to Price Group's Secretary at 100 E. Pratt Street, Mail Code 5210,
Baltimore, MD 21202.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The following procedures have been established by the Nominating and
Corporate Governance Committee in order to facilitate communications between our
stockholders and our Board of Directors:
1) Stockholders may send correspondence, which should indicate that the
sender is a stockholder, to our Board of Directors or to any
individual director by mail to T. Rowe Price Group, Inc., c/o Chief
Legal Officer, P.O. Box 17134, Baltimore, MD 21297-1134, or by e-mail
to stockholdercommunications@troweprice.com.
2) Our Chief Legal Officer will be responsible for the first review and
logging of this correspondence. The officer will forward the
communication to the director or directors to whom it is addressed
unless it is a type of correspondence which the Nominating and
Corporate Governance Committee has identified as correspondence which
may be retained in our files and not sent to directors.
The Nominating and Corporate Governance Committee has authorized the
Chief Legal Officer to retain and not send to directors communications
that: (a) are advertising or promotional in nature (offering goods or
services), (b) solely relate to complaints by clients with respect to
ordinary course of business customer service and satisfaction issues,
or (c) clearly are unrelated to our business, industry, management, or
Board or committee matters. These types of communications will be
logged and filed but not circulated to directors. Except as set forth
in the preceding sentence, the Chief Legal Officer will not screen
communications sent to directors.
3) The log of stockholder correspondence will be available to members of
the Nominating and Corporate Governance Committee for inspection. At
least once each year, the Chief Legal Officer will provide to the
Nominating and Corporate Governance Committee a summary of the
communications received from stockholders, including the
communications not sent to directors in accordance with screening
procedures approved by the Nominating and Corporate Governance
Committee.
OTHER MATTERS
We know of no other matters to be presented to you at the Meeting. As
stated in an earlier section, if other matters are considered at the Meeting,
the proxies will vote on these matters in accordance with their judgment of the
best interests of Price Group.
T. ROWE PRICE GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 26, 2005
10:00 a.m.
BALTIMORE MARRIOTT WATERFRONT HOTEL
700 Aliceanna Street
Baltimore, Maryland 21202
DIRECTIONS TO THE ANNUAL MEETING OF STOCKHOLDERS
The Baltimore Marriott Waterfront Hotel at 700 Aliceanna Street is located
southwest of the intersection of President and Fleet Streets on the eastern side
of Baltimore's Inner Harbor.
From the south: Take I-95 north to I-395 (downtown) directly into Baltimore
City. Turn right (east) onto Pratt Street, right (south) onto President Street
(stay in the right hand lane after passing Eastern Avenue), continue straight
towards the Katyn Memorial, and then right (west) after entering the traffic
circle onto Aliceanna Street. You may park in the parking garage adjacent to the
hotel or on the metered lot opposite the hotel.
From the north: Take I-83 (Jones Falls Expressway) south until it turns into
President Street (at Fayette Street). Continue south on President Street (stay
in the right hand lane after passing Eastern Avenue), and proceed straight
towards the Katyn Memorial and then right (west) after entering the traffic
circle onto Aliceanna Street. You may park in the parking garage adjacent to the
hotel or on the metered lot opposite the hotel.
From the west: Take Route 40 (Baltimore National Pike) east directly into
Baltimore City (Edmondson Avenue to Mulberry Street). Turn right (south) onto
Martin Luther King Boulevard; proceed south for approximately 1/2 mile and then
turn left (east) onto Pratt Street. Proceed east on Pratt Street, right (south)
onto President Street (stay in the right hand lane after passing Eastern
Avenue), continue straight towards the Katyn Memorial, and then right (west)
after entering the traffic circle onto Aliceanna Street. You may park in the
parking garage adjacent to the hotel or on the metered lot opposite the hotel.
From the east/northeast: Take I-95 south through the Fort McHenry Tunnel to
I-395 (downtown) directly into Baltimore City. Turn right (east) onto Pratt
Street, right (south) onto President Street (stay in the right hand lane after
passing Eastern Avenue), continue straight towards the Katyn Memorial, and then
right (west) after entering the traffic circle onto Aliceanna Street. You may
park in the parking garage adjacent to the hotel or on the metered lot opposite
the hotel.
- --------------------------------------------------------------------------------
T. ROWE PRICE GROUP, INC.
2005 Proxy
Revocable Proxy Solicited on Behalf of the Board of Directors
I hereby appoint James S. Riepe and George A. Roche, together and separately, as
proxies to vote all shares of common stock which I have power to vote at the
annual meeting of stockholders to be held on Tuesday, April 26, 2005, at 10:00
a.m., at the Baltimore Marriott Waterfront Hotel, 700 Aliceanna Street,
Baltimore, Maryland 21202, and at any adjournments thereof in accordance with
the instructions on the reverse side of this proxy card and as if I were present
in person and voting such shares. The proxies are authorized in their discretion
to vote upon such other business as may properly come before the meeting and
they may name others to take their place. I also hereby acknowledge receipt of
the Notice of Annual Meeting and Proxy Statement, dated March 16, 2005, and
Price Group's 2004 Annual Report to Stockholders.
This proxy, when properly completed and returned, will be voted in the manner
directed herein by the stockholder named on the reverse side. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES AND OTHER PROPOSALS LISTED ON
THE REVERSE SIDE, AND, IN THE DISCRETION OF THE PROXYHOLDER, ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND AT ANY ADJOURNMENTS AND
POSTPONEMENTS THEREOF.
PLEASE VOTE YOUR PROXY PROMPTLY.
See reverse side for voting instructions.
[GRAPHIC OMITTED]
Company #
THERE ARE THREE WAYS TO VOTE YOUR PROXY.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY TELEPHONE - TOLL FREE - 1-800-560-1965 - QUICK *** EASY *** IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week, until 12:00 p.m. (Central Time) on April 25, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available.
o Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/trow/ - QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. (Central Time) on April 25, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available.
o Follow the simple instructions to obtain your records and create an
electronic ballot.
VOTE BY MAIL
o Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to T. Rowe Price Group, Inc., c/o
Shareowner Services(SM), P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by phone or the Internet, please do not mail your Proxy Card.
(arrow graphic) Please detach here (arrow graphic)
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR all nominees listed in Item 1, and
FOR Items 2 and 3.
1. Election of directors:
01 Edward C. Bernard 05 James A.C. Kennedy 09 Dr. Alfred Sommer
02 James T. Brady 06 James S. Riepe 10 Dwight S. Taylor
03 J. Alfred Broaddus, Jr. 07 George A. Roche 11 Anne Marie Whittemore
04 Donald B. Hebb, Jr. 08 Brian C. Rogers
[ ]Vote FOR all nominees [ ]Vote WITHHELD
(except as marked) from all nominees
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. Ratification of the appointment of KPMG LLP as Price Group's independent
accountant for fiscal year 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business and further business as may properly come before the meeting or
any adjournments and postponements thereof.
[ ] FOR [ ] WITHHOLD
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1, AND FOR ITEMS 2 AND
3.
Address Change? Mark Box [ ] Indicate changes below:
Date: _________________________________
Signature(s) in Box If you are voting by mail, please date and
sign exactly as your name appears to the left. When signing as a
fiduciary, representative or corporate officer, give full title
as such. If you receive more than one proxy card, please vote the
shares represented by each card separately.