-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RE1B84YcXg/RTUMBDDCtYLfk34X+0xIy/nYR94YkT2XBZsdLoyLqWMvnuY4jwXJu n8wHQo3xrtrG4pM7AYxgkw== 0000950114-97-000243.txt : 19970513 0000950114-97-000243.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950114-97-000243 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970619 FILED AS OF DATE: 19970512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDWARDS A G INC CENTRAL INDEX KEY: 0000718482 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 431288229 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08527 FILM NUMBER: 97600427 BUSINESS ADDRESS: STREET 1: ONE N JEFFERSON AVE CITY: ST LOUIS STATE: MO ZIP: 63103 BUSINESS PHONE: 3142893000 DEF 14A 1 A.G. EDWARDS, INC. DEFINITIVE PROXY 1 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the /X/ Definitive Proxy Statement Commission Only (as permitted by / / Definitive Additional Materials Rule 14a-6(e)(2)) / / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12 A.G. Edwards, Inc. ---------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) ---------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No Fee required / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: --------------------------------------------------------------- 2 A.G. Edwards, Inc. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 19, 1997 The Annual Meeting of the Stockholders of A.G. Edwards, Inc. (the "Company") will be held at the home office of the Company, One North Jefferson Avenue, St. Louis, Missouri, on Thursday, June 19, 1997, at 10:00 a.m., local time, for the following purposes: 1. To elect 3 directors; 2. To ratify the appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending February 28, 1998; and 3. To transact such other business as may properly come before the annual meeting and any adjournments thereof. Only stockholders of the Company of record as of the close of business on May 1, 1997 will be entitled to notice of, and to vote at, the annual meeting and any adjournments thereof. If you do not expect to attend the meeting in person, please sign, date and return the accompanying proxy in the enclosed business reply envelope. If you later find that you can be present or for any other reason desire to revoke your proxy, you may do so at any time before the voting. DOUGLAS L. KELLY Secretary May 12, 1997 3 A.G. Edwards, Inc. PROXY STATEMENT GENERAL INFORMATION The enclosed form of proxy is solicited by and on behalf of the Board of Directors of A.G. Edwards, Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held on June 19, 1997 (the "1997 Annual Meeting") and at any adjournments thereof. The solicitation of proxies is being made primarily by the use of the mails. The cost of preparing and mailing this Proxy Statement and accompanying materials, and the cost of any supplementary solicitations, which may be made by mail, telephone, telegraph or personally by officers and employees of the Company and its subsidiaries, will be borne by the Company. The stockholder giving the proxy has the power to revoke it any time before it is exercised by notice in writing to the Secretary of the Company at the Company's principal executive offices at One North Jefferson Avenue, St. Louis, Missouri 63103, by properly submitting to the Company a duly executed proxy bearing a later date, or by attending the meeting and voting in person. The proxy will be voted as specified by the stockholder in the spaces provided therefor or, if no specification is made, it will be voted for Proposals 1 and 2. This Proxy Statement and form of proxy are first being mailed to the stockholders of the Company on or about May 12, 1997. Only stockholders of record at the close of business on May 1, 1997 are entitled to notice of, and to vote at, the 1997 Annual Meeting and any adjournments thereof. On May 1, 1997 the Company had outstanding 63,964,792 shares of Common Stock. Each outstanding share is entitled to one vote on each director position, and each other matter, to be voted on at the 1997 Annual Meeting. A majority of the outstanding shares of Common Stock present in person or by proxy will constitute a quorum for the transaction of business at the 1997 Annual Meeting. Votes cast by proxy or in person at the 1997 Annual Meeting will be tabulated by the inspectors of election appointed by the Board for the meeting. Shares which are entitled to vote but which are not voted at the direction of the beneficial owner ("abstentions") and shares represented by proxies or ballots which are marked "withhold authority" with respect to the election of any one or more nominees for election as directors will be counted for the purpose of determining whether there is a quorum for the transaction of business at the 1997 Annual Meeting. Abstentions may be specified on Proposal 2 to ratify the appointment of independent auditors, but not on Proposal 1 to elect directors. The affirmative vote of a plurality of the shares represented at the meeting is required to elect directors. "Plurality" means that the nominees who receive the largest number of votes cast are elected as directors up to the maximum number of directors to be elected at the 1997 Annual Meeting. Consequently, any shares represented at the 1997 Annual Meeting, but not voted for any reason, have no impact on the election of directors. 2 4 The affirmative vote of a majority of the shares represented at the meeting is required to ratify the appointment of the independent auditors. Votes withheld by brokers in the absence of instructions ("broker non-votes") will not be counted with respect to, and will have no effect on, whether the stockholders approve this proposal. Abstentions, however, are counted in determining whether the stockholders have approved this proposal and, thus, have the effect of a vote against the proposal. PROPOSAL 1: ELECTION OF DIRECTORS COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The business of the Company is under the general management of the Board of Directors as provided by the laws of Delaware, the state of incorporation. The Board of Directors generally meets at least quarterly and held four meetings during the 1997 fiscal year. Between Board meetings, Board responsibilities are delegated to the Executive Committee, comprised of five Board members. The Executive Committee did not meet during the 1997 fiscal year. The entire Board of Directors serves in the capacity of a Nominating Committee. The Board of Directors will accept recommendations for nominations as directors from stockholders. Stockholders wishing to propose nominees for consideration at the 1998 Annual Meeting must comply with a Bylaw provision dealing with nominations. For a discussion of the nominating procedures, see "Stockholder Proposals." The Company has a Compensation Committee comprised of four outside directors. The Compensation Committee held two meetings during the 1997 fiscal year. The Compensation Committee was responsible for establishing the compensation of Benjamin F. Edwards III and the amount of awards to certain executives under the Performance Plan for Executives for the 1997 fiscal year. The Compensation Committee of A.G. Edwards & Sons, Inc., a wholly-owned subsidiary of the Company (the "Brokerage Company"), determined the compensation of all employees for the 1997 fiscal year, including officers of the Company, with the exception of Benjamin F. Edwards III and the award under the Performance Plan for Executives for Benjamin F. Edwards III, Robert G. Avis and Robert L. Bagby. (See "Joint Report of the Compensation Committees of the Brokerage Company and the Company.") The Audit Committee of the Board of Directors held three meetings during the 1997 fiscal year. The Audit Committee performed the following principal functions: (i) reviewed quarterly and year-end financial statements with the outside auditors, internal auditors and management; (ii) reviewed the scope of the external and internal audits and reports with the outside and internal auditors and management; (iii) reviewed the outside auditor's management letter and management's response thereto; (iv) recommended the selection of outside auditors; (v) reviewed the quality and depth of the Company's internal audit, accounting and financial staffs; and (vi) reviewed and approved the rendering of audit and nonaudit services by the outside auditors. During the 1997 fiscal year, all directors attended 89% or more of the aggregate meetings of the Board of Directors and the committees of the Board on which each served. 3 5 NOMINEES FOR DIRECTORS The Company's Certificate of Incorporation and Bylaws provide for a classified Board of Directors, with the Board divided into three classes whose terms expire at different times. The Company presently has nine directors. Three members are to be elected to the Board of Directors at the 1997 Annual Meeting, each to serve for a term of three years. One of the nominees is now a director of the Company. The persons named in the enclosed form of proxy intend to vote the proxies in favor of the election of the nominees listed below to serve as directors of the Company for terms expiring in 2000 or until the election and qualification of their successors, unless the stockholder indicates on the form of proxy that the vote should be withheld or contrary directions are indicated. If one or more nominees shall become unavailable for any reason, the Board of Directors, in its discretion, may, unless the Board of Directors provides by resolution for a lesser number of directors, designate one or more substitute nominees, in which case such proxies will be voted for such substituted nominees. The Board of Directors has no reason to doubt the availability of any of the nominees, and each has indicated a willingness to serve if elected.
YEAR FIRST ELECTED DIRECTOR OF THE PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP ------------ ---------------------------------- -------------------- NOMINEES FOR DIRECTORS TO BE ELECTED IN 1997 FOR TERMS EXPIRING IN 2000 Charmaine S. Chapman, 57 President of the United Way of St. Louis from February 1994 to present. President of the United Way of St. Paul, Minnesota from 1989 until January 1994. Dr. Louis Fernandez, 73 Chairman of the Board of Boehringer 1989 Ingelheim Corporation; Director of Member of the Petrolite Corporation. Chairman of the Audit Committee and Board, Celgene Corporation from June 1990 Compensation Committee to May 1992. President, Chief Executive Officer and Director, Celgene Corporation from August 1986 to June 1990. Chairman of the Board of Monsanto Company until March 1986. 4 6 YEAR FIRST ELECTED DIRECTOR OF THE PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP ------------ ---------------------------------- -------------------- Benjamin F. Edwards IV, 41 Executive Vice President of the Brokerage Company; Director of the Sales & Marketing Division of the Brokerage Company since March 1997. Regional Manager of the Brokerage Company from March 1995 to February 1997; Assistant Branch Manager of the Brokerage Company from April 1991 to February 1995; Investment Broker of the Brokerage Company from January 1986 to February 1995. Employee of the Brokerage Company for 19 years. Director of the Brokerage Company since 1994. DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AND WHOSE TERMS CONTINUE BEYOND 1997 DIRECTORS WITH TERMS EXPIRING 1998 Robert G. Avis, 65 Vice Chairman of the Board of the Company 1984 and Vice Chairman of the Board, Executive Member of the Vice President, Director of the Investment Executive Committee Banking Division since March 1989 and Director of the Sales and Marketing Division of the Brokerage Company from September 1984 to February 1997. Chairman of A.G. Edwards Trust Company since May 1987. Employee of the Brokerage Company for 31 years. Director of the Brokerage Company since 1970. Director of American Stock Exchange, Inc. and Director or Trustee of 16 funds of the Oppenheimer Funds Group and 7 funds of the Centennial Funds Group. Dr. E. Eugene Carter, 55 Trustee, Charlotte R. Boschan Trust. 1983 Research Fellow, Lincoln Institute of Land Member of the Policy. Director of the Brokerage Company Audit Committee and from 1976 to 1983. Compensation Committee 5 7 YEAR FIRST ELECTED DIRECTOR OF THE PRINCIPAL OCCUPATION FOR THE PAST COMPANY/CURRENT BOARD NAME AND AGE FIVE YEARS AND OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIP ------------ ---------------------------------- -------------------- Robert L. Bagby, 53 Vice Chairman of the Board of the Company 1995 and Vice Chairman of the Board of the Member of the Brokerage Company since March 1996; Executive Committee Executive Vice President and since March 1995 Director of the Branch Division of the Brokerage Company. Assistant Director of the Branch Division of the Brokerage Company from 1980 to 1995. Employee of the Brokerage Company for 22 years. Director of the Brokerage Company since 1979. DIRECTORS WITH TERMS EXPIRING 1999 Benjamin F. Edwards III, Chairman of the Board, President and Chief 1983 65 Executive Officer of the Company; Chairman Member of the of the Board, President and Chief Executive Executive Committee Officer of the Brokerage Company. Employee of the Brokerage Company for 40 years. Director of the Brokerage Company since 1967. Director of Heilig-Meyers Company and National Life Insurance Company of Vermont. Robert C. Dissett, 59 Executive Vice President of the Brokerage 1990 Company; Director of the Operations Member of the Division of the Brokerage Company. Employee Executive Committee of the Brokerage Company for 35 years. Director of the Brokerage Company since 1973. Samuel C. Hutchinson, Jr., 54 President, Interface Construction Corp. 1993 since 1978. Member of the Audit Committee and Compensation Committee - ------------ Benjamin F. Edwards III and Benjamin F. Edwards IV are father and son. Benjamin F. Edwards III and Robert G. Avis are stepbrothers.
6 8 DIRECTOR COMPENSATION Directors, except those who are officers or employees of the Company or its subsidiaries, receive an annual fee of $10,000, a fee of $800 for each Company Board of Directors' meeting attended and a fee of $600 for each committee meeting or Brokerage Company Board of Directors meeting attended. Non-employee directors do not participate in any of the Company's employee benefit plans. OWNERSHIP OF THE COMPANY'S COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the beneficial ownership of the Company's Common Stock as of May 1, 1997 by (i) each director and nominee, (ii) each executive officer named in the Summary Compensation Table, and (iii) all directors and executive officers as a group:
NUMBER PERCENTAGE NAME OF SHARES OF CLASS ---- --------- ---------- Robert G. Avis 270,600 Robert L. Bagby 53,934 Dr. E. Eugene Carter 242,278 Charmaine S. Chapman 0 Robert C. Dissett 56,569 Benjamin F. Edwards III 654,247 1.02% Benjamin F. Edwards IV 38,994 Dr. Louis Fernandez 1,288 Alfred E. Goldman 29,042 Samuel C. Hutchinson, Jr. 1,164 David W. Mesker 576,660 Donna C. E. Williamson 3,334 All Directors and Executive Officers as a Group (16 persons) 2,219,566 3.47% - ----------- Includes restricted stock issued pursuant to the Company's 1988 Incentive Stock Plan (the "1988 Plan") as to which each recipient has sole voting power and no current investment power, as follows: Mr. Avis, 3,354 shares; Mr. Bagby, 10,380 shares; Mr. Dissett, 10,380 shares; Mr. Edwards III, 3,354 shares; Mr. Edwards IV, 8,436 shares; Mr. Goldman, 3,354 shares; other executive officers, 37,693 shares. Mr. Avis has shared voting and investment power over 45,689 shares held by him as a co-trustee of a trust. Percentages of less than 1% have been omitted. 7 9 Mr. Bagby has shared voting and investment power over 32,147 shares, including 116 shares owned by his wife and 32,031 shares held jointly with his wife. Mr. Dissett has shared voting and investment power over 46,092 shares held by him as a co-trustee of a trust. Includes shares subject to exercisable stock options under the 1988 Plan as follows: Mr. Edwards III, 4,418 shares; Mr. Mesker, 26,719 shares; other executive officers, 0 shares. Mr. Edwards III has shared voting and investment power over 294,579 shares, including 254,233 shares held by him as co-trustee of a trust and 40,346 shares held by his wife. Mr. Fernandez has shared voting and investment power over 1,288 shares held by him as a co-trustee of a trust. Includes 26,795 shares with shared voting and investment power in addition to those described for the named directors and executive officers.
OWNERSHIP BY CERTAIN OTHER PERSONS To the knowledge of the Company, no person is the beneficial owner of more than five percent of the Common Stock of the Company. EXECUTIVE COMPENSATION The table on the next page sets forth the compensation of the Company's Chief Executive Officer and its other four most highly compensated executive officers (the "Named Executive Officers") for each of the Company's last three fiscal years. 8 10 SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ----------------------------- AWARDS ----------------------------- NUMBER OF ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER FISCAL -------------------- STOCK AWARDS UNDERLYING COMPENSA- NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS TION --------------------------- ------ ------ ----- ---------------- ----------- --------- Benjamin F. Edwards III, 1997 $401,630 $1,190,021 $111,577 0 $100,000 Chairman of the Board, President 1996 386,787 926,119 99,721 0 100,000 and Chief Executive Officer of the 1995 372,840 702,682 70,796 0 70,000 Company; Chairman of the Board, President and Chief Executive Officer of the Brokerage Company Robert G. Avis, 1997 $268,630 $ 920,107 $111,577 0 $100,000 Vice Chairman of the Board of the 1996 258,787 715,526 99,721 0 100,000 Company; Vice Chairman of the 1995 248,840 539,618 70,796 0 70,000 Board, Executive Vice President, Director of the Investment Banking Division and, until February 1997, Director of the Sales and Marketing Division of the Brokerage Company Robert L. Bagby, 1997 $216,630 $ 824,351 $111,577 0 $100,000 Vice Chairman of the Board of the 1996 206,787 640,129 99,721 0 83,945 Company; Vice Chairman of the 1995 191,840 426,153 70,796 0 70,000 Board, Executive Vice President and Director of the Branch Division of the Brokerage Company Robert C. Dissett, 1997 $179,630 $ 696,217 $111,577 0 $ 96,170 Executive Vice President and 1996 178,287 538,805 99,721 0 77,036 Director of the Operations Division 1995 171,840 403,884 70,796 0 70,000 of the Brokerage Company Alfred E. Goldman 1997 $179,630 $ 696,217 $111,577 0 $ 95,151 Corporate Vice President and 1996 173,814 532,281 99,721 0 75,794 Director of Technical Market 1995 167,840 399,431 70,796 0 70,000 Analysis of the Brokerage Company - --------- Amounts shown include both Restricted Share and "Phantom Stock Credit" awards, which are valued based on the closing prices of Common Stock on the Consolidated Transaction Reporting System on the dates of grant of such awards. The awards are made as of the end of the fiscal year for which they are awarded for service during that fiscal year. Restricted Shares can be awarded to participants in the 1988 Plan who are under age 60. The restrictions on Restricted Shares lapse three years after their award date. Participants who are 60 years of age or older ("Over 60 Participants") do not receive Restricted Shares. Instead, they are awarded "Phantom Stock Credits" which serve as the basis for an award of Restricted Shares two years after their award date ("Deferred Award Date"), with each Phantom Stock Credit representing the right to receive one Restricted Share. The number of Phantom Stock Credits awarded to an Over 60 Participant is adjusted to reflect dividends on the Common Stock. Restricted Shares awarded as of any Deferred Award Date are subject to all of the terms and restrictions applicable to other Restricted Shares, except the restrictions last for only nine months. 9 11 The awards of Restricted Shares, Phantom Stock Credits and Options contain provisions for the accelerated lapsing of the restrictions for Restricted Shares (including those issued based on Phantom Stock Credits) and the accelerated exercisability of Options in the event of a merger, consolidation, acquisition, sale or transfer of assets, tender, or exchange offer or other reorganization in which the Company does not survive as an independent, publicly-owned company. The aggregate number and value of Restricted Shares and Phantom Stock Credits held by the persons named in the table as of February 28, 1997, are as follows: Mr. Edwards III, 3,354 shares and 7,249 credits--$376,406; Mr. Avis, 3,354 shares and 7,249 credits--$376,406; Mr. Bagby, 10,380 shares and 0 credits--$368,490; Mr. Dissett, 10,380 shares and 0 credits--$368,490, and Mr. Goldman, 3,354 shares and 7,249 cred- its--$376,406. Dividends are paid on unvested Restricted Shares and adjustments are made to Phantom Stock Credits for dividends as discussed in Note 1 to this table above; such dividends and adjustments are equal in amount to the dividends paid on shares of Common Stock. Amounts shown consist of the following: (i) amounts set aside under the Company's Retirement and Profit Sharing Plan for the 1995, 1996 and 1997 fiscal years, respectively--Mr. Edwards III, $15,273, $17,634 and $17,552; Mr. Avis, $15,273, $17,634 and $17,552; Mr. Bagby, $15,273, $17,634 and $17,552; Mr. Dissett, $15,273, $17,634 and $17,552; and Mr. Goldman, $15,273, $17,634 and $17,552; and (ii) amounts credited to accounts under the Company's Excess Profit Sharing Deferred Compensation Plan for the 1995, 1996 and 1997 fiscal years, respectively--Mr. Edwards III, $54,727, $82,366 and $82,448; Mr. Avis, $54,727, $82,366 and $82,448; Mr. Bagby, $54,727, $66,311 and $82,448; Mr. Dissett, $54,727, $59,402 and $78,618; and Mr. Goldman, $54,727, $58,160 and $77,599.
The following table sets forth certain information regarding the exercise of options to purchase Company Common Stock during the Company's 1997 fiscal year by the Named Executive Officers and the unexercised options to purchase Company Common Stock held by such persons on February 28, 1997: AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN- NUMBER OF OPTIONS AT FISCAL YEAR-END THE-MONEY OPTIONS AT SHARES ---------------------------- FISCAL YEAR-END ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE ----------------------------- NAME EXERCISE REALIZED (SHARES) (SHARES) EXERCISABLE UNEXERCISABLE ---- ----------- -------- ----------- ------------- ------------ -------------- Benjamin F. Edwards III -- $ 0 4,418 -- $69,363 $0 Robert G. Avis 4,846 143,296 -- -- 0 0 Robert L. Bagby -- 0 -- -- 0 0 Robert C. Dissett 4,257 106,723 -- -- 0 0 Alfred E. Goldman -- 0 -- -- 0 0 - --------- Options become exercisable three years after they are awarded, and must be exercised no later than eight years after they are awarded.
10 12 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION All of the members of the Compensation Committee of the Brokerage Company (as named on page 15) are officers of the Company or one of its subsidiaries. Messrs. Avis, Bagby, Dissett, and Edwards III are all directors of the Company and are officers of the Company or one of its subsidiaries. JOINT REPORT OF THE COMPENSATION COMMITTEES OF THE BROKERAGE COMPANY AND THE COMPANY The Compensation Committee of the Brokerage Company (the "Brokerage Committee") determined the compensation for the fiscal year ended February 28, 1997 (the "1997 fiscal year") of all officers of the Company with the exception of Benjamin F. Edwards III and with the exception of certain performance-based compensation of certain other executives. The Compensation Committee of the Company (the "Company Committee") determined the compensation of Benjamin F. Edwards III and certain performance-based compensation of certain other executives. It is the policy of the Company to have a substantial portion of each officer's annual compensation directly related to the performance of the Company. The policy is applied consistently to all the Named Executive Officers, including Mr. Edwards III. For the 1997 fiscal year, the annual compensation of the Named Executive Officers had seven components. The Company seeks to structure compensation for its executive officers so that all of the compensation is deductible by the Company for federal income tax purposes, including meeting the requirements of Section 162(m) of the Internal Revenue Code for deductibility of compensation in excess of a certain amount. However, if the Company is not able to structure compensation for its executive officers so that all such compensation is deductible, the Board of Directors of the Company, the Company Committee or the Brokerage Committee, as appropriate, will make a determination in its business judgment as to the appropriate compensation for such executives considering the benefits and the costs to the Company, including in its considerations the additional costs arising from the inability to deduct part or all of the compensation. Base Salary. A base salary was set prior to the beginning of the 1997 fiscal year by the Brokerage Committee for each Named Executive Officer other than Mr. Edwards III and by the Company Committee for Mr. Edwards III. Base salaries are intended to be relatively moderate, but competitive, for the Company's industry. The increase in the Base Salary for Mr. Edwards III of 3.9% for the 1997 fiscal year was established consistent with the guidelines used for increases for other officers of the Brokerage Company and after consideration by the Company Committee of a recommendation by the Brokerage Committee (determined without Mr. Edwards III). Executive Bonus Plan. The Executive Bonus Plan is designed to provide certain officers and key employees of the Company and its subsidiaries with direct participation in the profitability of the Company. Unless the Company has a specified minimum of pre-tax earnings ($2,500,000 in the 1997 fiscal year), no payment is made under the Plan. Awards under the Plan are based on prescribed formulae that take into account the employee's position with the Company, individual performance, and the Company's earnings. The formula for bonus accrual (the "bonus pool") is 11 13 determined prior to the beginning of each fiscal year by the Board of Directors based on (i) the Company's consolidated earnings before provision for income taxes, certain employee bonuses, and discretionary Profit Sharing Plan contributions, (ii) certain branch office profits, and (iii) the net revenues of certain departments. The formula for accrual for the 1997 fiscal year was the same as for the prior fiscal year. Eligible officers are assigned "shares" in the bonus pool prior to the beginning of the fiscal year. Such shares are assigned based on the officer's position and responsibility with the Company and individual performance. Eligible officers, other than Mr. Edwards III, were assigned shares for the 1997 fiscal year by the Brokerage Committee. The Company Committee assigned 100 shares to Mr. Edwards III for the 1997 fiscal year, the same number of shares he had for the prior fiscal year. No officer has ever received more than 100 shares. During the 1997 fiscal year, 12 officers, including all of the Named Executive Officers and Mr. Edwards III, had 100 shares. Since the Executive Bonus Plan was adopted in 1979, Mr. Edwards III has received the maximum number of shares assigned to any individual under the plan each year. At the beginning of the 1997 fiscal year, a total of 11,309 shares were assigned to 371 eligible officers. Under the Executive Bonus Plan, after the end of the fiscal year, the accrued bonus pool is mathematically divided into two separate portions, consisting of two-thirds and one-third, respectively. The two-thirds portion is distributed in accordance with the number of shares previously assigned to each participant. The one-third portion is distributed based on a formula which weights each participant's shares by the participant's base salary. The sum of the two portions is each participant's total Executive Bonus for the fiscal year, and is paid after the end of the fiscal year. The Executive Bonus Plan limits the amount that can be paid to individual participants so that all compensation paid under the Executive Bonus Plan is tax deductible by the Company. To the extent amounts may not be paid under the Executive Bonus Plan to individual participants because of the tax limitation, the amounts may be paid under the Performance Plan for Executives (the "Performance Plan") if the conditions of the Performance Plan are met. Performance Plan for Executives. The Performance Plan was adopted solely in response to the enactment of the Section 162(m) of the Internal Revenue Code in 1993. Section 162(m) requires conditions to be met for certain compensation of specified executive officers to be deductible. In order to meet the conditions of Section 162(m) with no significant change in the compensation structure of the Company, the Executive Bonus Plan was amended to limit compensation which would otherwise be payable under the Executive Bonus Plan and the Performance Plan for Executives was adopted in order to pay the compensation which, but for the limitation, would have been payable under the Executive Bonus Plan. The Company's intent and the provisions of the Plans are drafted to provide that the combined plans will operate in the same manner as the Executive Bonus Plan operated prior to the enactment of Section 162(m), subject only to certain limitations on payments. 12 14 The participants in the Performance Plan are those employees of the Company who are: (i) "covered employees" under Section 162(m) of the Internal Revenue Code, (ii) designated individually or by class description to be "Covered Employees" under the Performance Plan by the Company Committee, and (iii) participants under the Executive Bonus Plan. The Company Committee has designated all executive officers of the Company to be Covered Employees, and all of the executive officers of the Company are participants in the Executive Bonus Plan. Section 162(m), however, limits "covered employees" to only the Chief Executive Officer of the Company and the four highest compensated officers of the Company (other than the Chief Executive Officer), so, in any fiscal year, there can be no more than five participants. The performance goals for the Performance Plan were approved by the stockholders in 1994 and are the same as for the Executive Bonus Plan. The actual amount payable to a Covered Employee in a fiscal year under the Performance Plan is the lesser of: (i) the amount of reduction in payments to the Covered Employee as a participant under the Executive Bonus Plan for that fiscal year as a result of Section 162(m), (ii) the Covered Employee's Initial Bonus Amount for that fiscal year, and (iii) the Maximum Bonus Amount for that fiscal year. A Covered Employee's Initial Bonus Amount each fiscal year is equal to the amount that the Covered Employee would be prohibited from receiving under the Executive Bonus Plan as a result of Section 162(m) as determined solely from fixed assumptions contained in the Performance Plan and information known as of the beginning of the fiscal year. The Maximum Bonus Amount for each Covered Employee was $2,420,000 for fiscal year 1997. The Maximum Bonus Amount increases each fiscal year by 10% over the prior fiscal year. Before any amount can be paid under the Performance Plan, the Company Committee must certify in writing that the performance goals and the material terms of the Performance Plan were satisfied. The Company Committee certified that the performance goals and material terms were satisfied for the 1997 fiscal year and the amounts paid to Mr. Edwards III, Mr. Avis and Mr. Bagby are included in the Summary Compensation Table. Discretionary Bonus. Mr. Edwards III may award a discretionary bonus to any officer other than himself and the Company Committee may award a discretionary bonus to Mr. Edwards III. The discretionary bonus is intended to reward efforts or results by an individual which are not recognized or compensated by other compensation. No objective standards, criteria or established targets are used to determine the amount of the discretionary bonuses. For the 1997 fiscal year, the Company Committee determined at the end of the year to make an award of $85,000 to Mr. Edwards III in recognition of the results for the year by the Company under his leadership, in recognition of the extra efforts made by him in the Company and in the community which benefit the Company, and in recognition that his compensation is moderate for the industry. Four other executive officers received discretionary bonuses totaling $230,000 for the 1997 fiscal year. 1988 Incentive Stock Plan. The 1988 Plan is designed to motivate employees of the Company and its subsidiaries through the incentives inherent in stock ownership by providing the opportunity to obtain or increase a proprietary interest in the Company on a favorable basis. The 1988 Plan provides for the granting of Options or Restricted Shares, or both. If Options are granted, the participant receives an option to purchase 2.5 times the number of shares that would have been granted as Restricted Shares. The Named Executive Officers, including Mr. Edwards III, are 13 15 awarded an amount equal to 25% of each such officer's Executive Bonus and Performance Plan Bonus (as described above); provided, in no event can the award amount for any participant exceed an amount set by the 1988 Plan, $100,000 in the 1997 fiscal year. Accordingly, the awards of Options and Restricted Shares are related to the profitability of the Company in substantially the same manner as the awards under the Executive Bonus Plan and the Performance Plan. The Options provide for the purchase of shares of Common Stock at market value on the determination date and do not become exercisable until three years after the date of award. Because the value of the Options is dependent on the increase of the market value of the Common Stock over at least a three year period, the Options provide a long-term incentive for the executives to stay with the Company and to increase the market value of the Common Stock. Restricted Shares are also awarded based on the market value of the Common Stock on the determination date (participants 60 years of age and over on the date Restricted Shares are awarded receive Phantom Stock Credits, in lieu of Restricted Shares, which serve as the basis for an award of Restricted Shares two years after the award date). The Restricted Shares are subject to restrictions for three years after their award except those shares converted from Phantom Stock Credits are subject to a nine month restricted period after conversion. Again, by an award of Restricted Shares, the executives are encouraged to remain with the Company and to increase the market value of the Common Stock. The 1988 Plan also has an Employee Stock Purchase Plan portion to authorize the award of options qualified under Section 423 of the Internal Revenue Code to qualified employees. The qualified employees include most of the full-time and part-time employees of the Company and its subsidiaries. Participation in the Employee Stock Purchase Plan is not based upon the performance of the Company; employees elect to use a portion of their compensation to buy Common Stock under the plan. The Employee Stock Purchase Plan is intended to encourage the employees of the Company to obtain or increase a proprietary interest in the Company on a favorable basis by offering Common Stock at below market value. Shares under the Employee Stock Purchase Plan are issued at a price based upon a formula which is at least 15% below market at the sale date. Retirement and Profit Sharing Plan. The Company maintains a Retirement and Profit Sharing Plan (the "Profit Sharing Plan"), which is qualified under Section 401 of the Internal Revenue Code of 1986 (the "Code"). In addition to certain required matching and non-matching contributions, the Company may make a discretionary contribution as determined each year by the Board of Directors of the Company. On February 23, 1996, the Board of Directors of the Company approved an accrual formula for the discretionary contribution to the Profit Sharing Plan for the 1997 fiscal year in an amount not less than 8% and not more than 10% of the Company's earnings on a consolidated basis and before certain bonuses, Company discretionary Profit Sharing Plan contributions and taxes on income. The maximum total Company and employee contribution allowable with respect to any employee under the Profit Sharing Plan in the last fiscal year was $30,000; however, because of the contribution rate and other limitations on recognized compensation in the Profit Sharing Plan, the actual maximum Company contribution with respect to any employee was less than that amount. 14 16 Excess Profit Sharing Deferred Compensation Plan. The Company has established the Excess Profit Sharing Deferred Compensation Plan (the "Excess Benefit Plan") to provide deferred compensation to certain participants in the Profit Sharing Plan whose benefit in the Profit Sharing Plan is subject to limitations imposed by the Code. Contributions to the Excess Benefit Plan are based on the same basic formula as the Profit Sharing Plan, but without regard to certain limitations imposed by the Code on the benefits of highly compensated employees. The maximum aggregate contribution by the employer under both the Profit Sharing Plan and the Excess Benefit Plan in the last fiscal year was $100,000; accordingly, the maximum benefit with respect to any employee under the Excess Benefit Plan was the difference between $100,000 and the Profit Sharing Plan Company contribution with respect to such employee. Procedures for Compensation of Mr. Edwards III. Prior to the beginning of the 1997 fiscal year, the Company Committee considered the compensation of Mr. Edwards III. The Company Committee reviewed the seven components of the compensation structure of the Company, the historical performance of the structure, the consistency of the compensation components for Mr. Edwards III with the components for other officers, the guidelines used for determining the base salaries of other officers, the recommendation of the Brokerage Committee (determined without Mr. Edwards III) that the increase for Mr. Edwards III should be consistent with the guidelines for other officers and the compensation of officers in other companies in the industry. Based on the review, the Company Committee determined the increase in the base salary for Mr. Edwards III should be 3.9% and that the other components of his compensation should not be changed from the prior year. At the end of the 1997 fiscal year, the Company Committee reviewed the components of the compensation of Mr. Edwards III, the performance of the Company for the 1997 fiscal year and information concerning compensation at other companies in the industry. Based on the review discussed above under "Discretionary Bonus," the Company Committee determined that a discretionary bonus should be paid to Mr. Edwards III for the 1997 fiscal year in the amount of $85,000.
MEMBERS OF THE COMPENSATION MEMBERS OF THE COMPENSATION COMMITTEE COMMITTEE OF THE BROKERAGE OF THE COMPANY ("COMPANY COMMITTEE") COMPANY ("BROKERAGE COMMITTEE") - ------------------------------------- ------------------------------- Dr. E. Eugene Carter Robert G. Avis Dr. Louis Fernandez, Chairman Robert L. Bagby Samuel C. Hutchinson, Jr. Donnis L. Casey Donna C. E. Williamson Robert C. Dissett Benjamin F. Edwards III, Chairman Douglas L. Kelly Robert L. Proost
15 17 PERFORMANCE GRAPH The following graph compares the Company's cumulative total stockholder return on its Common Stock for a five year period (February 29, 1992 to February 28, 1997) with the cumulative total return of the Standard & Poor's 500 Stock Index, and a peer group index consisting of nine companies: The Bear Stearns Companies, Inc., The Charles Schwab Corporation, Dean Witter, Discover & Co., J.P. Morgan & Co. Incorporated, Lehman Brothers Holdings Inc., Merrill Lynch & Co., Inc., Morgan Stanley Group Inc., PaineWebber Group Inc., and Salomon Inc. The graph assumes that the value of the investment in Common Stock and each index was $100 at February 29, 1992, and that all dividends were reinvested. Stock price performances shown on the graph are not necessarily indicative of future price performances. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN [GRAPH]
1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---- A.G. Edwards, Inc. 100 97 109 114 126 188 Peer Group 100 130 133 141 195 236 S&P 500 Index 100 111 120 129 173 219
16 18 CERTAIN TRANSACTIONS Directors and executive officers of the Company have been clients of and have had brokerage transactions with the Company in the ordinary course of business. Included in such transactions are the maintenance of margin accounts and the extension of credit under Federal Reserve Regulation T. Such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other people and did not and do not involve more than normal risk of collectibility or present other unfavorable features. PROPOSAL 2: APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors, on recommendation of the Audit Committee, has appointed Deloitte & Touche LLP, Certified Public Accountants, as independent auditors of the Company for the fiscal year ending February 28, 1998. Deloitte & Touche LLP or its predecessor, Touche Ross & Co., has served as the independent auditors of the Company since its incorporation in 1983 and of the Brokerage Company for more than fifty years. A representative of Deloitte & Touche LLP will be present at the annual meeting, will have the opportunity to make a statement if he or she desires, and will be available to respond to appropriate questions. Although this appointment is not required to be submitted to a vote of stockholders, the Board of Directors believes it is appropriate to request that the stockholders ratify the appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending February 28, 1998. If the stockholders do not ratify, the Audit Committee will investigate the reasons for stockholder rejection and the Board of Directors will reconsider the appointment. The Board of Directors recommends a vote "FOR" the ratification of the appointment of Deloitte & Touche LLP as independent auditors. STOCKHOLDER PROPOSALS Any stockholder proposals to be presented at the 1998 annual meeting of stockholders must be received by the Company no later than January 11, 1998 at its principal executive office at One North Jefferson Avenue, St. Louis, Missouri 63103 in order to be considered for inclusion in the Company's proxy statement and proxy relating to that meeting. Stockholders wishing to nominate one or more candidates for election to the Board of Directors, or propose any other business to be considered at any stockholder meeting, must comply with a Bylaw provision dealing with such matters. Pursuant to the Company's Bylaw provision, any stockholder of the Company eligible to vote in an election of directors may nominate one or more candidates for election to the Board of Directors, or propose business to be brought before a stockholder meeting, by giving written notice to the Company not less than 60 nor more than 90 days prior to the date of the meeting (if the Company gives less than 70 days notice or prior public disclosure of the date of the meeting, then the notice by the stockholder 17 19 must be received by the Company not later than the close of business on the tenth day following the date on which the Company mailed the notice of the meeting or the date on which public disclosure was made). The notice by the stockholder should be sent to the Secretary of the Company at the address stated in the preceding paragraph. The notice by the stockholder to the Company must contain: (1) the name and address of the stockholder who intends to make the nomination(s) or propose the business, (2) the name and address of the candidate(s) to be nominated (if applicable), (3) a written statement from any proposed nominee that the nominee consents to be named as a nominee and to serve as a director of the Company if elected (if applicable), (4) a representation that the stockholder is a holder of record of Company stock entitled to vote at the meeting and whether the stockholder intends to appear in person or by proxy at the meeting, (5) a description of all arrangements or understandings, if any, between the stockholder and each nominee and any other person(s) pursuant to which any nomination(s) are to be made by the stockholder (if applicable), and (6) such other information regarding each nominee or each matter of business to be proposed as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or the matter been proposed, by the Board of Directors. At any stockholder meeting, the Chairman of the meeting may refuse to acknowledge the nomination of any person, or the proposal of any business, not made in compliance with the Bylaws. The foregoing requirements are separate from and in addition to the requirements a stockholder must meet to have a proposal included in the Company's proxy statement for any meeting. Any stockholder desiring a copy of the Company's Bylaws will be furnished one without charge upon written request sent to the Secretary of the Company at the address stated above. OTHER MATTERS The Board of Directors knows of no other business to be brought before the meeting. If any other matters properly come before the meeting, the proxies will be voted on such matters in accordance with the judgment of the persons named as proxies therein, or their substitutes, present and acting at the meeting. May 12, 1997 18 20 ---------------------------------------- Proxy Statement and Notice of the Annual Meeting of Stockholders to be held June 19, 1997 A.G. Edwards, Inc. One North Jefferson Avenue St. Louis, Missouri 63103 ---------------------------------------- 21 A.G. EDWARDS, INC. May 12, 1997 Dear Stockholder: The 1997 Annual Meeting of Stockholders of A.G. Edwards, Inc. will be held at the home office of the Company, One North Jefferson Avenue, St. Louis, Missouri, on Thursday, June 19, 1997, at 10:00 a.m. local time. At the meeting, stockholders will elect three directors, act on a proposal to ratify the appointment of the independent auditors of the Company for the fiscal year ending February 28, 1998, and transact such other business as may properly come before the meeting. It is important that your shares be represented at the meeting. Whether or not you plan on attending the meeting, please review the enclosed proxy materials, complete the proxy form attached below and promptly return the proxy form in the envelope provided. PLEASE DETACH AND MARK THE PROXY, SIGN IT ON THE REVERSE SIDE, AND RETURN IT BEFORE THE MEETING. (Detach Proxy Form Here) - ------------------------------------------------------------------------------- PROXY SOLICITED BY THE BOARD OF DIRECTORS OF A.G. EDWARDS, INC. The undersigned stockholder of A.G. Edwards, Inc., a Delaware corporation (the "Company"), hereby appoints Benjamin F. Edwards III and Douglas L. Kelly, or either of them, each with full power of substitution, proxies or proxy of the undersigned, to vote all the shares of Common Stock of the Company that the undersigned would be entitled to vote if personally present at the meeting of the stockholders of the Company, to be held on Thursday, June 19, 1997, at 10:00 a.m., local time, at the home office of the Company, One North Jefferson Avenue, St. Louis, Missouri, and at any adjournments thereof, hereby revoking any proxy heretofore given: 1. ELECTION OF FOR / / all nominees WITHHOLD AUTHORITY DIRECTORS listed below / / to vote (except as marked for all nominees to the contrary listed below below) Dr. Louis Fernandez, Benjamin F. Edwards IV and Charmaine S. Chapman (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below) - ------------------------------------------------------------------------------- 2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY. / / FOR / / AGAINST / / ABSTAIN 3. In their sole discretion on such other matters as may properly come before such meeting and any adjournment or adjournments thereof; 22 (Detach Proxy Form Here) - ------------------------------------------------------------------------------- all as described in the Notice of Annual Meeting of Stockholders and accompanying Proxy Statement for such meeting, the receipt of which is hereby acknowledged. THIS PROXY WILL BE VOTED AS SPECIFIED IN THE SPACES PROVIDED THEREFOR OR, IF NO SUCH SPECIFICATION IS MADE, IT WILL BE VOTED "FOR" PROPOSALS 1 AND 2. Dated: , 1997 --------------------------- Sign here:------------------------- (Please sign exactly as name appears hereon. Administrators, trustees, etc., should so indicate when signing.) PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PRIOR TO THE MEETING. 23 APPENDIX Printed page 16 contains a Performance Graph. The data contained in the graph is depicted in the table that immediately follows the graph. -----END PRIVACY-ENHANCED MESSAGE-----