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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. DEFR14A)
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[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
T. Rowe Price Group, Inc.
Barbara Van Horn
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(Name of Registrant as Specified in its Charter)
T. Rowe Price Group, Inc.
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Secretary
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YOUR VOTE IS IMPORTANT!
Please vote your proxy promptly by phone, on the Internet, or by mail,
whether or not you plan to attend the
T.Rowe Price Group, Inc. Annual Meeting of Stockholders.
LOGO
T. ROWE PRICE GROUP, INC.
100 East Pratt Street
Baltimore, MD 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 5, 2001
We will hold the Annual Meeting of Stockholders of T.oRowe Price Group,
Inc. at the Harbor Court Hotel, 550 Light Street, Baltimore, Maryland, 21202, on
Thursday, April 5, 2001, at 10:00 a.m. At this meeting, we will ask stockholders
to:
1) elect a Board of 14 Directors;
2) approve the proposed 2001 Stock Incentive Plan; and
3) vote on any other business that properly comes before the meeting.
Stockholders who owned shares of Price Group's common stock as of February
9, 2001, 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
February 26, 2001
PROXY STATEMENT
TABLE OF CONTENTS
Introduction; Proxy Voting Information..................................... 1
Proposal: Election of Directors ..................................... 2
The Nominees.......................................................... 2
The Board of Directors and Committees................................. 4
Compensation Committee Interlocks and Insider Participation................ 5
Report of the Audit Committee.............................................. 5
Compensation of Executive Officers and Directors ..................... 6
Summary Compensation Table ........................................... 6
Option Grants in 2000 ................................................ 7
2000 Option Grants - Potential Value Per Share ....................... 7
Aggregated Option Exercises in 2000 and Option Values
at December 31, 2000 ..................................................... 7
Report of the Executive Compensation Committee ............................ 8
Stock Performance Chart ................................................... 11
Proposal: 2001 Stock Incentive Plan.................................. 12
Summary of 2001 Stock Incentive Plan.................................. 12
Recommendation of the Board of Directors; Vote Required.................... 15
Certain Ownership of Price Group`s Stock .................................. 15
Compliance with Section 16(a) of the Securities Exchange Act of 1934 ...... 15
Selection of Independent Accountants ...................................... 15
Disclosure of Fees Charged by Independent Accountants...................... 15
Stockholder Proposals for the 2002 Annual Meeting ......................... 16
Other Matters ............................................................. 16
Exhibits
Exhibit A: Audit Committee Charter...................................A-1
Exhibit B: Proposed 2001 Stock Incentive Plan........................B-1
Terms used in this proxy statement:
o "We" and "Price Group" all refer to T. Rowe Price Group, Inc. except in the
Report of the Audit Committee and the Report of the Executive Compensation
Committee. In these reports, "we" refers to members of each respective
committee. Price Group is the holding company that succeeded T. Rowe Price
Associates, Inc. as the listed company on the Nasdaq National Market(R)
under a share exchange agreement that became effective upon the close of
business on December 28, 2000. Price Associates is now a wholly-owned
subsidiary of Price Group.
o "Meeting" refers to the 2001 Annual Meeting of Stockholders
o "Price fund" means any mutual fund company or trust organized by T. Rowe
Price Associates, Inc., a subsidiary 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., which, prior
to the share exchange with Price Group, was traded on the Nasdaq National
Market(R) from its initial public offering in April 1986 until the close of
business on December 28, 2000. Price Associates organizes and serves as an
investment adviser to the Price funds.
o "Price International" refers to T. Rowe Price International, Inc., formerly
Rowe Price-Fleming International, Inc., which is the investment adviser to
the Price international funds. Rowe Price-Fleming International, Inc. was
50% owned by each of Robert Fleming Holdings Ltd. and T. Rowe Price
Associates, Inc. until August 8, 2000, the date Price Associates purchased
Fleming's interest.
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 Price Group's Board of Directors
for the meeting just described in the notice and at any adjournments or
postponements. The purposes of the meeting are to:
1) elect a Board of 14 Directors;
2) approve the proposed 2001 Stock Incentive Plan; and
3) act upon any other business that properly comes before the meeting.
This proxy statement, proxy card, and our 2000 Annual Report to
Stockholders, containing Price Group's financial statements and other financial
information for the year ended December 31, 2000, form your meeting package. We
sent you this package on or about February 26, 2001.
At the close of business on February 9, 2001, the record date of the
meeting, 122,791,853 shares of Price Group's common stock, par value $.20 per
share, were outstanding and entitled to vote at the meeting. We have
approximately 4,000 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 these votes (excluding abstentions and broker non-votes) are
elected to serve until the 2002 annual meeting or until their successors are
elected and qualify. To approve the proposed 2001 Stock Incentive Plan, a
majority of the votes cast at the meeting must be voted in favor of the
proposal. Stockholders may cast one vote per share owned on this proposal. Under
Price Group's 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.
Price Group will pay for the costs of soliciting proxies and preparing the
meeting materials, and has retained Georgeson Shareholder Communications, Inc.
to assist us in soliciting proxies for a fee of $6,000 plus reimbursement for
out-of-pocket expenses. We ask securities brokers, custodians, nominees, and
fiduciaries to forward meeting materials to our beneficial stockholders as of
the record date, and we 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 telephone or telegram, but
will not receive additional compensation.
The Board of Directors has selected James S. Riepe, George A. Roche, and M.
David Testa 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
Shareowner Services, our transfer agent and proxy tabulator, you appoint Messrs.
Riepe, Roche, and Testa as your representatives at the meeting. If you wish to
change your vote before the meeting, deliver a letter revoking the proxy to
Price Group's Secretary (BarbaraoA. Van Horn, c/o T. Rowe Price Group, Inc., 100
East Pratt Street, Baltimore, MD 21202) or properly submit another proxy bearing
a later date. Even if you vote your proxy before the meeting, 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 the
voting is closed will be counted.
You will be able to vote your proxies in three ways:
1) by mail - complete the enclosed proxy card and return it in the
envelope provided;
2) by telephone - as prompted by the telephone voting menu, enter a
company number and control number, both of which are found on your
proxy card, to confirm your voting authority and instruct the proxies
on how to vote your shares; or
3) by the Internet - as prompted by the menu found at
http://www.eproxy.com/trow/, enter a company number and control number
to gain access to the voting site maintained by Wells Fargo.
Remember, no matter which voting method you use, you may revoke your proxy
and resubmit a new one at the meeting, or no later than noon Eastern Time on
April 4, 2001, if you vote by telephone or access Wells Fargo's Internet voting
site. Our counsel has advised us that these three voting methods are permitted
under the corporate law of Maryland, the state in which Price Group is
incorporated.
If your shares are held in a brokerage account, you will receive a full
meeting package including a proxy card to vote your shares. Your brokerage firm
may also permit you to vote your proxy by telephone or the Internet. Brokerage
firms have the authority under New York Stock Exchange rules to vote their
clients' unvoted shares on certain routine matters, one of which is the election
of directors. If you do not vote your proxy, your brokerage firm may choose to
vote for you or leave your shares unvoted. If, however, you want your shares to
be voted on the proposed 2001 Stock Incentive Plan, you must direct your broker
to vote on your behalf by returning your proxy card or using alternative voting
methods provided by the broker. We urge you to respond to your brokerage firm so
that your vote will be cast.
ELECTION OF DIRECTORS
Fifteen directors currently serve on our Board of Directors. The Board has
nominated 13 of the incumbent directors and D. William J. Garrett, a new nominee
for independent director, to hold office until the next annual meeting of
stockholders and until their respective successors are elected and qualify.
Two incumbent directors will retire from our Board this year and not stand
for re-election at the annual meeting. James E. Halbkat, Jr. has served as an
independent director since 1979. He was Chairman of the Audit Committee until
1997, and continues to serve on the Audit and Executive Compensation Committees.
Robert L. Strickland has been an independent member of our Board since 1991, and
is currently Chairman of the Executive Compensation Committee and a member of
the Executive Committee. We thank both of these esteemed gentlemen for their
loyal service and valuable contributions to our growth and success, and wish
them well.
All properly executed proxies received in time to be tabulated for the
meeting will be voted FOR the election of the nominees named below, 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 designated by the Board of Directors.
The Nominees
The following are brief biographical sketches of the 14 nominees. Unless
otherwise noted, they 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 may also serve as directors or
officers of Price Associates or Price International, each of which is an
investment adviser to certain of the Price funds. Information regarding
committee membership, the number of shares of Price Group's common stock owned
by each nominee as of the record date, and the percent of individual beneficial
ownership if 1% or greater is also noted. 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 recommends that you vote FOR all of the following
nominees:
Edward C. Bernard, age 44, has been a director of Price Group since 1999, a
managing director since 1995, a vice president between 1989 and 1995, and an
employee since 1988.
383,045 shares (1)
D. William J. Garrett, age 55, nominated to serve as a new independent director
of Price Group, was the Group Chief Executive of Robert Fleming Holdings Limited
from 1997 until 2000 when the company was acquired by the Chase Manhattan
Corporation. He also served as a director of Rowe Price-Fleming International,
Inc. (now Price International) from 1981 until 2000.
0 shares
Donald B. Hebb, Jr., age 58, has been an independent director of Price Group
since 1999 and is a member of both the Audit and Executive Compensation
Committees. He has been the managing general partner of ABS Capital Partners, a
private equity firm, since 1993. He also s erves on the Board of Directors of
SBA Communications Corporation, an owner and operator of wireless communications
infrastructure in the United States, and OTG Software, Inc., a provider of
online data storage management and data access software.
6,500 shares (2)
Henry H. Hopkins, age 58, has been a director of Price Group since 1987, a
managing director since 1989, a vice president between 1976 and 1989, and an
employee since 1972.
1,250,414 shares (1.02%) (3)
James A.C. Kennedy, age 47, has been a director of Price Group since 1996, the
director of the Equity Division of Price Associates since 1997, a managing
director since 1990, a vice president between 1981 and 1990, and an employee
since 1978. He is a director or trustee of 17 equity funds within the Price
funds.
1,625,299 shares (1.32%) (4)
John H. Laporte, age 55, has been a director of Price Group since 1996, a
managing director since 1989, a vice president between 1978 and 1989, and an
employee since 1976. He is a director or trustee of 10 equity funds within the
Price funds, and serves as president of three.
2,276,614 shares (1.85%) (5)
Richard L. Menschel, age 67, has been an independent director of Price Group
since 1995 and serves on the Executive Compensation and Nominating Committees.
He is a senior director of Goldman Sachs, an investment banking firm.
40,000 shares (6)
William T. Reynolds, age 52, has been a director of Price Group since 1996,
director of the Fixed Income Division since 1994, a managing director since
1990, a vice president between 1983 and 1990, and an employee since 1981. He is
a director or trustee of 18 fixed income funds within the Price funds, serves as
chairman of 15 of these funds, and is president of two funds.
1,132,350 shares (7)
James S. Riepe, age 57, has been a director of Price Group since 1981, vice
chairman since 1997, a managing director since 1989, a vice president between
1981 and 1989, and director of the Investment Services Division and an employee
since 1981. He is chairman of one of the 49 Price funds on which he serves as a
director or trustee, and is president of one fund. He is also a member of the
Executive Committee.
2,957,160 shares (2.40%) (8)
George A. Roche, age 59, has been a director of Price Group since 1980, chairman
and president since 1997, chief financial officer between 1984 and 1997, a
managing director since 1989, a vice president between 1973 and 1989, and an
employee since 1968. He is chairman of the Executive and Nominating Committees.
3,463,584 shares (2.81%) (9)
Brian C. Rogers, age 45, has been a director of Price Group since 1997, a
managing director since 1991, a vice president between 1985 and 1991, and an
employee since 1982. He is president of two Price funds.
1,202,327 shares (10)
M. David Testa, age 56, has been a director of Price Group since 1981, a vice
chairman and the chief investment officer since 1997, a managing director since
1989, a vice president between 1976 and 1989, and an employee since 1972. Mr.
Testa also served as chairman o f Price International from 1982 until 2000. He
is a director or trustee of 52 equity or fixed income funds within the Price
funds, serves as chairman of one of these funds and is the president of two
funds. Mr. Testa is a member of the Executive and Nominating Committees.
2,435,583 shares (1.96%) (11)
Martin G. Wade, age 57, has been a director of Price Group since April 2000. He
is also the chairman of Price International, a director of four of Price's
international funds, and chairman of three of these funds.
444,000 shares (12)
Anne Marie Whittemore, age 54, has been an independent director of Price Group
since 1995. She is a partner in the law firm of McGuireWoods LLP and serves as a
director of Owens & Minor, Inc., a distributor of medical and surgical supplies,
and Albemarle Corporation, a man ufacturer of specialty chemicals.
Mrs.oWhittemore is the chairman of the Audit Committee and a member of the
Executive Compensation and Nominating Committees.
40,800 shares (13)
Beneficial ownership of common stock by
all directors and executive officers as
a group (21 persons)
18,949,195 shares
(14.71%) (14)
(1) Includes 218,196 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 6,000 shares that may be acquired by Mr. Hebb within 60 days upon
the exercise of stock options.
(3) Includes 118,058 shares that may be acquired by Mr. Hopkins within 60 days
upon the exercise of stock options.
(4) Includes 430,829 shares that may be acquired by Mr. Kennedy within 60 days
upon the exercise of stock options.
(5) Includes 498,800 shares that may be acquired by Mr. Laporte within 60 days
upon the exercise of stock options. Also includes 353,984 shares held by,
or in trusts for, members of Mr.Laporte's family. Mr. Laporte disclaims
beneficial ownership of the shares identified in the preceding sentence.
(6) Includes 40,000 shares that may be acquired by Mr. Menschel within 60 days
upon the exercise of stock options.
(7) Includes 395,899 shares that may be acquired by Mr. Reynolds within 60 days
upon the exercise of stock options. Also includes 10,800 shares owned by a
member of Mr.Reynolds' family. Mr.Reynolds disclaims beneficial ownership
of the shares identified in the preceding sentence.
(8) Includes 517,236 shares that may be acquired by Mr. Riepe within 60 days
upon the exercise of stock options. Also includes 140,000 shares held in a
charitable foundation for which Mr.Riepe has voting and disposition power,
and 330,000 shares held by, or in trusts for, members of Mr. Riepe's
family. Mr.oRiepe disclaims beneficial ownership of the shares held by, or
in trusts for, family members.
(9) Includes 614,000 shares that may be acquired by Mr.Roche within 60 days
upon the exercise of stock options, and 800,000 shares held by, or in
trusts for, members of Mr.Roche's family. Mr. Roche disclaims beneficial
ownership of shares held by, or in trust for, family members.
(10) Includes 562,000 shares that may be acquired by Mr. Rogers within 60 days
upon the exercise of stock options.
(11) Includes 1,166,800 shares that may be acquired by Mr. Testa within 60 days
upon the exercise of stock options, and 80,000 shares held in trusts for
members of Mr.Testa's family. Mr. Testa disclaims beneficial ownership of
shares held in trusts for family members.
(12) Includes 424,000 shares that may be acquired by Mr.Wade within 60 days
upon the exercise of stock options.
(13) Includes 40,000 shares that may be acquired by Mrs. Whittemore within 60
days upon the exercise of stock options.
(14) Includes 6,044,090 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 2000, there were seven 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, Executive Committee, Executive Compensation
Committee, and a Nominating Committee.
The Audit Committee, which met four times during 2000, is composed of three
non-employee directors who meet the independence criteria established by the
National Association of Securities Dealers, Inc. The report of the Audit
Committee describes the scope of authority of the committee and may be found on
page 5. The committee's charter is included as Exhibit A.
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 approved five matters by unanimous
written consents in lieu of meetings during 2000.
As will be further described in the Report of the Executive Compensation
Committee, this committee establishes the compensation for certain executive
officers and generally reviews benefits and compensation for all officers and
employees. It also administers our stock incentive and stock purchase plans and
the Executive Incentive Compensation Plan. The committee met eight times during
2000.
The Nominating Committee advises the Board of Directors on the selection and
nomination of individuals to serve as directors of Price Associates. Nominations
for director submitted to the committee by stockholders are evaluated according
to our needs and the nominee's knowledge, experience, and background. The
Nominating Committee met three times during 2000.
Compensation Committee Interlocks and Insider Participation
None of our directors or other executive officers served as a director or
executive officer for another corporation that has a director or executive
officer serving on our Board of Directors.
As previously stated, Mr. Menschel is a senior director of Goldman Sachs, an
investment banking firm. During 2000, an affiliate of Goldman Sachs performed
services for Price Group, including securities brokerage services. Mr. Menschel
did not share in any payment for these services.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees Price Group's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the systems of
internal controls. Our committee held four meetings during fiscal 2000.
In fulfilling our oversight responsibilities, we reviewed the audited financial
statements in the 2000 Annual Report to Stockholders with management. In
addition, we reviewed with our independent accountants, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of Price Group's accounting principles and
such other matters as are required to be discussed with the committee under
generally accepted auditing standards. We also have discussed with the
independent accountants their independence from management and Price Group
including the matters in the written disclosures from the independent
accountants required by the Independence Standards Board. We further considered
whether the provision by the independent accountants of the non-audit services
described elsewhere in this proxy statement is compatible with maintaining their
independence. Finally, we recommended, and the Board of Directors approved, the
selection of PricewaterhouseCoopers LLP as Price Group's independent accountants
for 2000.
We have also discussed with Price Group's internal auditors and independent
accountants the overall scope and plans for their respective audits. We meet
with the internal auditors and independent accountants, with and without
management present, to discuss the results of their examinations, their
evaluations of Price Group's internal controls, and the overall quality of
financial reporting.
In reliance on 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 Formo10-K for the year
ended Decembero31, 2000 for filing with the Securities and
Exchange Commission.
Anne Marie Whittemore, Chairman
James E. Halbkat, Jr.
Donald B. Hebb, Jr.
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 2000.
Summary Compensation Table
Long-Term
Compensation All Other
Annual Compensation (1) Awards Compensation(3)
- --------------------------------------------------------------------------------
Securities
Underlying
Name and Options
Principal Position Year Salary Bonus (2) Granted
- ------------------ ----- -------- ---------- -----------
George A. Roche 2000 $300,000 $2,500,000 50,000 $25,033
Chairman and 1999 300,000 2,500,000 50,000 25,100
President 1998 287,500 2,250,000 50,000 24,022
James S. Riepe 2000 300,000 2,500,000 56,986 23,533
Vice Chairman 1999 300,000 2,500,000 52,373 23,600
1998 287,500 2,250,000 52,977 22,522
M. David Testa 2000 300,000 2,500,000 50,000 28,033
Vice Chairman 1999 300,000 2,500,000 50,000 28,100
1998 287,500 2,250,000 50,000 26,835
James A.C. Kennedy 2000 300,000 2,000,000 80,000 28,308
Managing Director 1999 300,000 1,750,000 80,000 54,872
1998 275,000 1,600,000 110,304 61,729
William T. Reynolds 2000 300,000 1,650,000 60,000 28,071
Managing Director 1999 300,000 1,500,000 80,000 54,208
1998 275,000 1,400,000 83,899 62,176
(1) No officer named in this table received any perquisites or other personal
benefits, securities or property whose total value exceeded the lesser of
either $50,000 or 10% of his total 2000 salary and bonus reported above,
except as described in Noteo3.
(2) Bonuses for 2000, 1999, and 1998 were paid under the Executive Incentive
Compensation Plan. Bonuses may vary significantly from year to year and
among eligible employees. See "Report of the Executive Compensation
Committee."
(3) The following types of compensation are included in other compensation:
a. Contributions made under our Basic and 401(k) Plus Retirement Plans.
These plans provide retirement benefits based on the investment
performance of each plan participant's account.
b. Directors' fees paid by a wholly-owned subsidiary of Price Group.
c. Matching contributions paid under our Employee Stock Purchase Plan.
d. The appraised fair market value of interests in limited liability
companies formed by Price Associates to hold certain venture capital
funds and be distributed to certain officers and key employees.
e. Additional cash compensation in an amount that could not be credited
to the officer's 401(k) Plus Retirement Plan due to contribution
limits imposed under Section 415 of the Internal Revenue Code.
Option Grants Table. The following table shows the number of stock options
granted in 2000 to the executive officers named in the Summary Compensation
Table and other information regarding their grants. Stock options 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. There is a provision in all existing option agreements under our 1993 and
1996 Stock Incentive Plans that may accelerate the vesting of currently
outstanding but unexercisable options or future option grants 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 2000
Individual Grants
Percent
of
Total Potential Realizable
Options Value at Assumed
Number of Granted Annual Rates
Securities to Exer- of Stock Price
Underlying Employ- cise Appreciation for
Options ees in Price Expira- Option Term (3)
Granted Fiscal (Per tion
Name (1)(2) Year Share) Date 5% 10%
- --------------------------------------------------------------------------------
George A. Roche 50,000 1.02 $39.00 11/20/10 $1,226,344 $3,107,798
James S. Riepe 50,000 1.02 39.00 11/20/10 1,226,344 3,107,798
3,933(R) .08 41.2969 10/26/03 27,725 58,555
3,053(R) .06 41.2969 10/16/02 14,305 29,453
M. David Testa 50,000 1.02 39.00 11/20/10 1,226,344 3,107,798
James A.C. Kennedy 80,000 1.63 39.00 11/20/10 1,962,151 4,972,476
William T. Reynolds 60,000 1.22 39.00 11/20/10 1,471,613 3,729,357
(1) These options contain option replenishment features that allow an
option holder to receive additional options if a non-qualified stock
option is exercised by relinquishing shares already owned. These new
options are granted at the fair market value on the date of exercise
and may be exercised until the expiration date of the related option.
The new options, which are equal in number to the shares relinquished,
are exercisable immediately.
(2) "R" denotes replenishment grant.
(3) 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 2000. Based upon these rates of stock price appreciation,
the prices per share of Price Group's common stock at the end of each
option grant term are shown in the table that follows. If the price of
our common stock does not appreciate, 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 on the price of our common stock. Federal or state income
tax consequences relating to stock option transactions have not been
taken into account.
2000 Option Grants
Potential Value Per Share
2000 Option Potential Per Share
Grant Exercise Remainder of Value of Common Stock
Price Per Grant Term at Assumed Rates of Stock Price
Share (Years) Appreciation for Option Term
-----------------------------------------------------------------------
5% 10%
------ ------
$39.00 10.00 $63.53 $101.16
41.2969 3.22 48.35 56.18
41.2969 2.19 45.98 50.94
Aggregated Option Exercises and Option Values Table. The following table shows
2000 stock option exercises and the value of unexercised options for those
executive officers named in the Summary Compensation Table. In the case of
exercised options, value 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 2000. An "In-the-Money" option is an option for which
the option price of the underlying stock is less than $42.2656, the closing
market price of Price Group's common stock on the last trading day of the year.
The following values resulted from appreciation of the stock price since the
options were granted.
Aggregated Option Exercises in 2000
and Option Values at December 31, 2000
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 2000 at December 31, 2000
Shares Acquired Value (Exercisable/ (Exercisable/
Name Upon Exercise Realized Unexercisable) Unexercisable)
- ------------------------------------------------------------------------------------------------------------
George A. Roche 7,600 $ 207,100 614,000/120,000 $18,731,028/$819,372
James S. Riepe 50,000 1,776,329 517,236/120,000 14,640,604/819,372
M. David Testa 105,600 4,023,072 1,216,800/120,000 40,837,707/819,372
James A.C. Kennedy 51,075 1,780,614 430,829/248,000 11,283,144/2,135,869
William T. Reynolds 36,400 1,334,122 395,899/216,000 10,095,256/1,992,370
Compensation of Directors. Directors who are also officers of Price Group do not
receive separate fees as directors of Price Group. Each non-employee director
received a $50,000 retainer for service in 2000 on the Board of Directors and
its committees. In addition, in recognition of Mr. Halbkat's retirement this
year from our Board of Directors after 22 years of service as a director of
Price Group and nine years of service as a director of the Price funds, we will
pay him $50,000 in 2002 and expect to ask the Executive Committee to approve a
similar payment in each of the next three years.
Pursuant to the 1998 Director Stock Option Plan approved by stockholders on
Aprilo16, 1998, each non-employee director (Messrs. Halbkat, Hebb, Menschel, and
Strickland, and Mrs. Whittemore) received options to purchase 3,000 shares of
Price Group's common stock at $37.4375, the fair market value of a share of
stock on April 27, 2000, the date of grant. Price Group also matches amounts
contributed by directors to charity, up to $15,000 in the case of each director
who is also an officer of Price Group, and $7,500 in the case of each
non-employee director.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
Robert Strickland, James Halbkat, Donald Hebb, Richard Menschel, and Anne
Marie Whittemore are all of the members of the Executive Compensation Committee
and independent members of the Board of Directors. In this report, the term "we"
refers to members of the committee. Our report on executive compensation for
2000 follows.
We are responsible to the Board of Directors, and ultimately to the
stockholders of Price Group, for:
1) determining the compensation of the chief executive officer and other
officers who sit on Price Group's Board of Directors;
2) overseeing the administration of Price Group's Executive Incentive
Compensation Plan, stock incentive plans, and employee stock purchase
plan; and
3) reviewing and approving the compensation policies and general
compensation levels for the rest of Price Group's managing directors
and other key employees.
The Management Compensation Committee makes compensation decisions for
officers not included in these categories.
We have recognized since the inception of this committee that the
investment management and securities industries are highly competitive and that
experienced professionals have significant career mobility. We believe that the
ability to attract, retain, and provide appropriate incentives for the highest
quality professional personnel is essential to maintain Price Group's
competitive position in the investment management and financial services
industries, as well as to provide for the long-term success of Price Group.
We believe that Price Group must pay competitive levels of cash
compensation and offer appropriate equity and other incentive programs. These
programs must always be consistent with stockholder interests. We think these
programs are necessary to motivate and retain Price Group's professional
personnel. These compensation programs are keyed to achieve short- and long-term
performance goals that our committee and the Board determine. We believe that
these compensation policies are consistent with those of our competitors in the
investment management and financial services industries.
During 2000, base salaries for each of the individuals named in the Summary
Compensation Table on page 6 were unchanged from the prior year. Price Group's
policy is that base salaries for these executives should form a relatively low
percentage (substantially below 50%) of their total cash compensation
opportunity, and that the major portion of cash compensation should be
performance based, and derived from payments made under the Executive Incentive
Compensation Plan. We will authorize payments from this plan only if Price Group
meets the performance goals established under the plan.
Price Group's Board of Directors and stockholders approved the Executive
Incentive Compensation Plan in 1995. It establishes a pool that relates
incentives to Price Group's income before income taxes and minority interests
for the year (which we call adjusted earnings), subject to Price Group meeting a
return on equity target. The pool, assuming adjusted earnings exceed $50
million, is $3,000,000 plus 8% of adjusted earnings over $50,000,000. The
minimum return on equity to permit full payments under the plan is 20%. If the
return on equity is less than 20% but at least 10%, for each full percentage
point shortfall below 20%, the maximum pool is reduced by 5%. If the return on
equity falls below 10%, no bonus payment will be made under the plan for that
year.
At the beginning of 2000, we designated the executive officers named in the
Summary Compensation Table on page 6 as participants in the Executive Incentive
Compensation Plan. We also determined that each participant would be eligible to
receive a specified maximum percentage of the available pool. The percentages
varied among the participants. At the end of 2000, we reviewed the requirements
established by the plan for determining incentive awards and also determined and
certified that each of the plan's performance goals had been satisfied before we
approved and permitted payment of bonuses pursuant to the plan. We expect that
all payments pursuant to the plan will be deductible under Section 162(m) of the
Internal Revenue Code of 1986, and that all compensation payable to these
individuals for 2000 performance similarly will be deductible.
We considered various factors in determining the amount of incentive
compensation awarded to Mr. Roche, Mr. Riepe, and Mr. Testa in 2000. In making
these determinations, we noted that Price Group had achieved record revenues,
earnings, and earnings per share, and had attained a return on equity
substantially in excess of the plan's requirement, resulting in a substantial
increase in equity. We also considered specific, qualitative performance factors
that we believe reflect these individuals' perform ances but were not precisely
measurable. These factors included investment performance, marketing
effectiveness, international expansion, customer service, technology deployment,
management of corporate assets, financial performance, and corporate
infrastructure development. We also took into account the fact that Mr. Roche,
Mr. Riepe, and Mr. Testa during 2000 had broad company-wide management
responsibilities as well as line operating responsibilities. We viewed each as
making generally equivalent company-wide contributions to 2000 performance and
determined that each of these individuals had demonstrated strong management
performance over an extended timeframe.
In the cases of Mr. Kennedy and Mr. Reynolds, we took into consideration
their respective contributions as heads of Price Associates' Equity and Fixed
Income Divisions. We noted that many Price Associates investment professionals,
including certain senior portfolio managers whom we did not designate as
participants in the plan for 2000 and are compensated under other incentive
compensation programs and arrangements, also were significant contributors to
2000 performance.
The incentive compensation awarded to each of the named executives was less
than the maximum amount permitted by the Executive Incentive Compensation Plan.
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 executive incentive compensation pool in a
year when Price Group's financial performance might not be as strong as it has
been in recent years in order to maintain a competitive compensation structure
and thus retain key personnel.
In 2000, we awarded to each of Messrs. Roche, Riepe, and Testa options to
purchase 50,000 shares of common stock, to Mr. Reynolds options to purchase
60,000 shares of common stock, and to Mr. Kennedy options to purchase 80,000
shares of stock, all at a n exercise price of $39.00 per share. These grants
accounted for about 6% of the total option awards, as we and senior management
sought to make additional stock options available to a significant number of
other employees. We made relatively smaller option grants to Messrs. Roche,
Riepe, and Testa than to Messrs. Reynolds and Kennedy and certain other key
employees because we believe that officers other than our three most senior
executives should have a greater opportunity through incentives such as option
awards to participate in the future appreciation in the value of Price Group's
common stock. We are confident 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.
We have compared compensation levels of top management of Price Group to
relevant publicly available data for the investment management, securities, and
other financial services industries and have found these compensation levels to
be competitive. Certain of these companies are included in the CRSP Total Return
Index for Nasdaq Financial Stocks shown in the Stock Performance Chart that
follows this report.
We believe that Price Group competes for executive talent with a large
number of investment management, securities, and other financial services
companies. Some of our competitors are privately owned and others have
significantly larger market capitalizations than Price Group. The practice of
Price Group and our committee is to review available compensation data from a
large universe of financial services companies. We receive the assistance of an
independent compensation consulting firm, selected by our committee and not by
management, in comparing the executive compensation and compensation policies of
Price Group with those of other public companies, including companies which
compete with Price Group for talent. We reiterate that our goal is to maintain
compensation programs that are competitive within the investment management and
financial services industries, and, therefore, in stockholders' continuing best
interests.
We believe that the 2000 compensation levels disclosed in this proxy
statement are reasonable and appropriate in light of Price Group's strong
performance.
Robert L. Strickland, Chairman
James E. Halbkat,
Jr.Donald B. Hebb, Jr.
Richard L. Menschel
Anne Marie Whittemore
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, 2000 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 that included our stock in 2000.
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 Decembero31, 1995, 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 on either the annual or cumulative return on our common
stock or any of the indices represented.
1995 1996 1997 1998 1999 2000
T. Rowe Price Group, Inc $100 $179 $262 $288 $315 $364
CRSP Total Return Index for
Nasdaq Financial Stocks (1) 100 128 196 191 189 207
S&P 500 Index (2) 100 123 164 212 257 234
(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 Marketsm, and represents SIC Codes 60
through 67. Price Group's Secretary will provide the names of companies
included in this index upon receipt of a stockholder's written request.
This index was prepared for Nasdaq by the Center for Research in Securities
Prices ("CRSP") at the University of Chicago. We have not verified these
values independently. Price Group's common stock is included in this index.
(2) Total return performance for the S&P 500 Index also was 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.
PROPOSED 2001 STOCK INCENTIVE PLAN
Our proposed 2001 Stock Incentive Plan (the "2001 Plan") was recommended by
the Executive Compensation Committee (the "Committee") and approved by the Board
of Directors on February 8, 2001. We believe that the 2001 Plan is critical to
our ability to continue to attract, retain, and motivate our key personnel. It
will enable us to provide incentives to our employees and to encourage capital
accumulation and stock ownership by key personnel in order to increase their
proprietary interest in our success.
No stock options or other awards have been granted under the 2001 Plan. For
information concerning 2000 grants under our 1993 and 1996 Stock Incentive
Plans, which are similar to the proposed 2001 Plan, see the Option Grants Table
on page 7. The Committee has not considered what awards will be made under the
2001 Plan, and, consequently, the number of shares that will be covered by any
such awards or the persons to whom awards will be made cannot be determined.
Currently, approximately 600,000 and 5,200,000 shares of common stock
remain available for award under our 1993 and 1996 Stock Incentive Plans,
respectively. Information concerning outstanding grants under these and prior
plans is contained in our 2000 Annual Report to Stockholders. Our proposal, upon
approval by the stockholders, will eliminate the 1993 and the 1996 plans and
make unused shares under those plans available for award under the new plan. We
think it is beneficial to have a single unified plan rather than multiple plans.
In addition, we are asking the stockholders to approve an additional 8,000,000
shares to be made available for award under the new plan. Given the nature of
our business and the importance of our professional and other employees, stock
option grants have been routinely and broadly distributed to our key employees.
Based on the level of stock option grants made in recent years and expectations
given the continued expansion of our work force, options available for award
under our existing plans will provide sufficient award capacity for only the
next year or two. The proposed addition of 8,000,000 shares will extend the
likely life of the available pool an additional two years, which we think is
reasonable under the circumstances.
In addition, the new plan eliminates or modifies certain terms of the old
plans in a way we think is preferable. We simplified the 2001 Plan as compared
to our prior plans and updated it by:
1) eliminating the ability to reprice stock options granted under the
plan without prior stockholder approval:
2) eliminating the ability to grant stock awards or discounted stock
options except as to 1,000,000 shares in the aggregate;
3) modifying the maximum limit on the number of shares that any one
person may be awarded under the plan to 1,000,000 shares per year,
computed on a cumulative basis; and
4) expanding eligibility to include non-employee service providers and
employees of unaffiliated entities that provide services to us.
The 2001 Plan, if approved by the stockholders, will be effective April 5,
2001, and will remain in effect until February 7, 2011, unless it is terminated
by the Board at an earlier date.
A copy of the 2001 Plan is attached as Exhibit B. The following summary
description is qualified by reference to the 2001 Plan.
Summary of 2001 Stock Incentive Plan
Number of Shares
The number of shares available for issuance under the 2001 Plan includes
approximately 5,800,000 shares carried over from the 1993 and 1996 Stock
Incentive Plans, 8,000,000 new shares to be added to the reserve, and any shares
that are represented by awards under any of our prior plans that are forfeited,
expire, or are canceled without the delivery of shares of our common stock or
that result in the forfeiture of shares of our common stock back to us. Any
shares of our common stock covered by an award (or portion of an award) granted
under the 2001 Plan or any prior plan that are forfeited or canceled, expire, or
are settled in cash, or which are tendered to us as full or partial payment of
the exercise price or related tax withholding obligations, will again be
available for award under the 2001 Plan. If we acquire another entity through a
merger or similar transaction and issue replacement awards under the 2001 Plan
to employees, officers and directors of the acquired entity, those awards, to
the extent permitted under applicable laws and exchange rules, will be above and
beyond, and will not reduce, the share pool otherwise reserved for the
2001 Plan.
The following additional maximums are imposed under the 2001 Plan. The
maximum number of shares of our common stock that may be issued in connection
with incentive stock options intended to qualify under Internal Revenue Code
sectiono422 is 8,000,000. The maximum number of shares of our common stock that
may be issued in conjunction with stock awards (including discounted stock
options) under the 2001 Plan is 1,000,000. The maximum number of shares of our
common stock subject to awards of any combination that may be granted under the
2001 Plan during any calendar year to any one person is 1,000,000; but to the
extent the maximum permissible award is not made in a year, such amount may be
carried over to subsequent years.
The number of shares reserved for issuance under the 2001 Plan, and the
limits on the number of awards that may be granted under the plan to any one
participant or of a particular type, as described above, are subject to
adjustment to reflect certain subsequent capital adjustments such as stock
splits, stock dividends, and share exchanges.
Administration; Eligibility
The selection of the participants in the 2001 Plan and the term of awards
granted to each participant will be determined by the Committee, which may
delegate authority to make awards to persons who are not subject to Sectiono16
of the Securities Exchange Act of 1934 to a committee of officers. Key
employees, including those who are officers and directors of the Company and its
subsidiaries, are eligible to be selected to receive awards under the 2001 Plan,
as are non-employee service providers and employees of unaffiliated entities
that provide services to us. We estimate that approximately 300 employees
presently are eligible to receive awards under the 2001 Plan.
Types of Awards
The 2001 Plan allows for the grant of stock options, stock appreciation
rights, and stock awards in any combination, separately or in tandem. We may
make or guarantee loans to participants to assist them in exercising awards and
satisfying their withholding tax obligations. The Committee will determine the
terms and conditions of awards granted under the 2001 Plan, including the times
when awards vest and their exercise periods following certain events such as
termination of employment. Unless the Committee determines otherwise, all awards
granted under the 2001 Plan will fully vest and remain exercisable for a
one-year period following a change in control of Price Group.
Stock Options. The Committee may grant either incentive stock options
qualified with respect to Internal Revenue Code sectiono422 or options not
qualified under any section of the Internal Revenue Code ("non-qualified
options"). All stock options granted under the 2001 Plan must have an exercise
price at least as great as the fair market value of our underlying common stock
on the grant date. As of February 20, 2001, the fair market value of a share of
our common stock, determined by the last reported sale price per share of our
common stock on that date as quoted on the Nasdaq National Market(R), was
$36.5625. No stock option granted under the 2001Plan may have a term longer
than 10 years. The exercise price of stock options may be paid in cash, or, if
the Committee permits, by tendering shares of common stock, or by any other
means the Committee approves.
Stock Appreciation Rights. The Committee may grant stock appreciation
rights which provide the grantee the right to receive a payment (in cash, common
stock, or a combination of both) equal to the difference between the fair market
value of a specific number of shares of our common stock on the grant date and
the fair market value of such shares on the date of exercise. Although stock
appreciation rights have been available for grant under our prior plans, the
Committee has never granted this type of award.
Stock Awards. Awards of shares of common stock may be issued with or
without payment of consideration by the participant. An award of stock may be
denominated in shares of stock or other securities, stock-equivalent units,
securities or debentures convertible into our common stock, or in any
combination of the foregoing, and may be paid in cash, our common stock or other
securities, or a combination thereof. All or part of any stock award may be
subject to conditions and restrictions, which the Committee will specify. Unless
the Committee determines otherwise, there will be a restriction period of at
least 3 years' duration on stock awards.
Amendments
The Committee may alter, amend, suspend, or discontinue the 2001 Plan or
any portion of the plan at any time, but no such action may be taken without
stockholder approval if it materially increases the benefits to participants,
including modifying the minimum exercise prices or maximum term of stock
options, or increases the number of shares of our common stock that may be
issued under the plan. The Committee may alter or amend awards under the 2001
Plan, but no such action may be taken without the consent of the participant if
it would materially adversely affect an outstanding award, and no such action
may be taken without prior stockholder approval if it would result in repricing
a stock option to a lower exercise price other than to reflect a capital
adjustment of the Company, such as a stock split.
Federal Income Tax Consequences
The following is a general summary of the federal income tax treatment of
incentive stock options and non-qualified stock options, which are authorized
for grant under the 2001 Plan, based upon the current provisions of the Internal
Revenue Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the 2001 Plan are
intended to meet the requirements of Internal Revenue Code sectiono422. There
are no tax consequences that result from the grant of an option. If an option
holder acquires stock upon the exercise, no income will be recognized by the
option holder for ordinary income tax purposes (although the difference between
the option exercise price and the fair market value of the stock subject to the
option may result in alternative minimum tax liability to the option holder) and
we will be allowed no deduction as a result of such exercise, if the following
conditions are met: (a)oat all times during the period beginning with the date
of the granting of the option and ending on the day three months before the date
of such exercise, the option holder is an employee of the Company or of a
subsidiary; and (b)othe option holder makes no disposition of the stock within
two years from the date the option is granted nor within one year after the
stock is transferred to the option holder. If the option holder sells the stock
after complying with these conditions, any gain realized over the price paid for
the stock will ordinarily be treated as long-term capital gain, and any loss
will be treated as long-term capital loss, in the year of the sale.
If the option holder fails to comply with the employment requirements, the
tax consequences will be substantially the same as for a non-qualified option,
discussed below. If the option holder fails to comply with the holding period
requirements, the option holder will recognize ordinary income in an amount
equal to the lesser of: (a)othe excess of the fair market value of the stock on
the date the option was exercised over the exercise price; or (b)othe excess of
the amount realized upon such disposition over the adjusted tax basis of the
stock. Any additional gain ordinarily will be recognized by the option holder as
capital gain, either long-term or short-term, depending on the holding period of
the shares. If the option holder is treated as having received ordinary income
because of his or her failure to comply with either condition above, we will be
allowed an equivalent deduction in the same year.
Non-Qualified Stock Options. There are no tax consequences that result from
the grant of an option. An option holder who exercises a non-qualified stock
option will generally realize compensation taxable as ordinary income in an
amount equal to the difference between the exercise price and the fair market
value of the shares on the date of exercise, and we will be entitled to a
deduction from income in the same amount. Any subsequent gain or loss will be a
capital transaction.
Disallowance of Deductions. The Internal Revenue Code disallows deductions
for publicly held corporations with respect to compensation in excess of
$1,000,000 paid to the corporation's chief executive officer and its four other
most highly compensated officers. However, compensation payable solely on
account of attainment of one or more performance goals is not subject to this
deduction limitation if certain statutory requirements are satisfied. Under this
exception, the deduction limitation does not apply with respect to compensation
otherwise deductible on account of stock options and stock appreciation rights
granted at fair market value under a plan, such as the 2001 Plan, that limits
the number of shares that may be issued to any individual and which is approved
by the company's stockholders.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends that you approve the 2001 Plan. Approval
requires the affirmative vote of a majority of the votes cast, in person or by
proxy, 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 matter. Proxies
solicited by the Board of Directors will be voted FOR approval of the 2001 Plan
unless otherwise specified.
CERTAIN OWNERSHIP OF PRICE GROUP'S STOCK
We have no knowledge at this time of any individual or entity owning,
beneficially or otherwise, 5% or more of the outstanding common stock of Price
Group.
COMPLIANCE WITH SECTION 16(a) OF THESECURITIES EXCHANGE ACT OF 1934
We believe that our directors and executive officers and other stockholders
who may own 10% or more of Price Group's common stock have complied with
requirements of the Securities and Exchange Commission to report ownership, and
transactions which change ownership, on time with one exception. Mr. Michael
Goff reported two transactions which occurred in the same month after the
applicable due date.
SELECTION OF INDEPENDENT ACCOUNTANTS
In September 2000, the Audit Committee considered and recommended, and
Price Group's Board of Directors approved, the selection of
PricewaterhouseCoopers LLP to be our independent accountants for the year ended
December 31, 2000. This firm or its predecessor, Price Waterhouse LLP, has
served as our independent accountants since 1985. Representatives of this firm
will be present at the annual meeting. They will have the opportunity to make a
statement and respond to appropriate questions from stockholders.
DISCLOSURE OF FEES CHARGED BY INDEPENDENT ACCOUNTANTS
The following information summarizes the fees charged by
PricewaterhouseCoopers LLP for certain services rendered to Price Group, its
subsidiaries, the Price funds and other sponsored investment products during
2000.
Audit Fees. Fees for the calendar year audit and the reviews of Forms 10-Q
are $137,000 of which an aggregate amount of $94,800 has been billed through
December 31, 2000.
Fees for Financial Information Systems Design and Implementation. None.
All Other Fees. All other fees billed to Price Group through December 31,
2000 totaled $780,853 which represented fees for tax planning and compliance
services, attestation reports, agreed-upon procedures, SAS 70 engagements, and
assistance in connection with filings under the Securities Act of 1933. Fees
billed directly to the Price funds and Price-sponsored investment products for
audit and tax compliance services totaled $1,481,243.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Qualified stockholders who want to have proposals presented at the 2002
annual meeting must deliver them to Price Group by October 29, 2001, in order to
be considered for inclusion in next year's proxy statement and proxy.
OTHER MATTERS
We know of no other business to be presented to you at the meeting other
than the election of directors and approval of the proposed 2001 Plan Incentive
Plan. 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.
Exhibit A
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of T.oRowe Price Group, Inc. (the "Corporation") will have the
oversight responsibility, authority and duties described in this Charter.
Purpose
The primary purpose of the Committee is to assist the Board in fulfilling
its oversight responsibilities with respect to (i)othe annual financial
information to be provided to shareholders and the Securities and Exchange
Commission (the "SEC"); (ii)othe system of internal accounting and financial
controls that management has established; and (iii)othe internal and external
audit process. In addition, the Committee provides an avenue for communication
between the internal auditors, the independent accountants, financial management
and the Board. The Committee's responsibility is one of oversight, recognizing
that the Corporation's management is responsible for preparing the Corporation's
financial statements and that the independent accountants are responsible for
auditing those financial statements. The independent accountants are ultimately
accountable to the Committee and the Board for such accountants' audit of the
financial statements of the Corporation.
Composition
The Committee shall be appointed annually by the Board and shall comprise
at least three directors, each of whom shall meet the independence and financial
literacy requirements of the National Association of Securities Dealers (the
"NASD"). In addition, at least one member of the Committee will possess
accounting or financial management expertise as defined by the NASD. The Board
shall designate one member as Chair of the Committee.
Meetings
The Committee shall hold meetings as deemed necessary or desirable by the
Chair of the Committee. In addition to such meetings of the Committee as may be
required to perform the functions described under "Duties and Powers" below, the
Committee shall meet at least annually with the chief financial officer, the
internal auditors and the independent accountants to discuss any matters that
the Committee or any of these persons or firms believe should be discussed. The
Committee may, at its discretion, meet in executive session with or without the
presence of the independent accountants, internal auditors or corporate
officers.
Duties and Powers
The following shall be the principal recurring functions of the Committee
in carrying out its oversight responsibilities. The functions are set forth as a
guide with the understanding that the Committee may modify or supplement them as
appropriate:
Independent Accountants
1) Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination
of the independent accountants.
2) Ensure that the independent accountants prepare and deliver at least
annually a formal written statement delineating all relationships
between the independent accountants and the Corporation addressing at
least the matters set forth in Independence Standards Board, Standard
No. 1, Independence Discussions with Audit Committees, as amended.
3) Discuss with the independent accountants any disclosed relationships
or services that may impact the objectivity and independence of the
independent accountants and recommend that the Board take appropriate
action in response to the independent accountants' report to satisfy
itself of the independent accountants' independence.
4) Obtain from the independent accountants assurance that the audit was
conducted in accordance with auditing standards generally accepted in
the United States and rules and regulations set forth in Sectiono10A
of the Securities Exchange Act of 1934, as amended.
5) Review the fees charged by the independent accountants.
Internal Auditors
6) Consult with management before the appointment or replacement of the
Director of Internal Audit.
7) Review with the Director of Internal Audit the significant reports to
management prepared by the internal auditors and management's
responses thereto, and also such other reports or matters as the
Director of Internal Audit deems necessary or desirable.
Compliance
8) Periodically review with the director of compliance the status of the
Corporation's compliance programs.
Financial Statement and Reports
9) Receive and review from management and the independent accountants a
timely analysis of significant financial reporting issues and
practices.
10) Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications
--------------
with Audit Committees, as amended.
---------------------
11) Meet with management, the head of the internal auditors and/or the
independent accountants to:
a) review the respective annual audit plans of the independent
accountants and internal auditors;
b) discuss the annual consolidated financial statements;
c) discuss any significant matters arising from any audit or report
or communication referred to in items 7, 8 or 9 above relating to
the consolidated financial statements;
d) discuss significant proposed or contemplated changes to the
Corporation's accounting principles, policies, controls,
procedures, practices and auditing plans; and
e) inquire about significant risks and exposures, if any, and the
steps taken to monitor and minimize such risks.
12) Review the Corporation's quarterly consolidated financial statements
with management prior to the filing of the Corporation's Quarterly
Report on Form 10-Q, and review with the independent accountants any
items identified by them for discussion with the Committee. The Chair
of the Committee may represent the entire Committee for purposes of
this review.
Reporting and Recommendations
13) Determine, based on the reviews and discussions noted above, whether
to recommend to the Board that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K for filing
with the SEC.
14) Prepare any report, including any recommendation of the Committee,
required by the rules of the SEC to be included in the Corporation's
annual proxy statement.
15) Maintain minutes or other records of meetings and activities of the
Committee.
16) Report its activities to the Board on a regular basis and make such
recommendations with respect to the above and other matters and take
such other actions as the Committee or the Board may deem necessary or
appropriate.
Resources and Authority
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to engage independent
accountants for special audits, review and other procedures and to retain
special counsel and other experts or consultants.
Annual Review
The Committee shall review, on at least an annual basis, this Charter and
the scope of the responsibilities of this Committee. Any proposed changes, where
indicated, shall be referred to the Board for appropriate action.
Exhibit B
T. ROWE PRICE GROUP, INC.2001 STOCK INCENTIVE PLAN
1. Establishment, Purpose and Types of Awards
T. ROWE PRICE GROUP, INC., a Maryland corporation (the "Company"), hereby
establishes the T. ROWE PRICE GROUP, INC. 2001 STOCK INCENTIVE PLAN (the
"Plan"). The purpose of the Plan is to promote the long-term growth and
profitability of the Company by (i) providing key people with incentives to
improve stockholder value and to contribute to the growth and financial success
of the Company, and (ii) enabling the Company and its affiliated companies to
attract, retain and reward the best-available persons.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options), stock
appreciation rights, and stock awards, or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Administrator" shall mean the Board, the ECC, the ECC's delegate, and
the committee of Non-Employee Directors who administer the Plan in
accordance with Section 3 hereof.
(b) "Affiliate" shall mean any entity, whether now or hereafter existing,
in which the Company has a proprietary interest by reason of stock
ownership or otherwise (including, but not limited to, joint ventures,
limited liability companies, and partnerships) or any entity that
provides services to the Company or a subsidiary or affiliated entity
of the Company.
(c) "Approval Date" shall mean the date of the approval by the Board of an
agreement providing for a merger, consolidation, sale or disposition
of all or substantially all of the assets of the Company, or other
form of extraordinary business combination as a result of the
consummation of which stockholders of the Company immediately before
the Approval Date will own less than a majority of the outstanding
voting stock of the resulting organization.
(d) "Award" shall mean any stock option, stock appreciation right, or
stock award.
(e) "Board" shall mean the Board of Directors of the Company.
(f) A "Change of Control" shall be deemed to have taken place on the date
of the earlier to occur of either of the following events: (i) a third
party, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of 25%
or more of the Company's outstanding Common Stock, or (ii) as the
result of, or in connection with, any cash tender or exchange offer,
merger, consolidation or other business combination, sale or
disposition of all or substantially all of the Company's assets, or
contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company
immediately before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to
the Company or the persons who were stockholders of the Company
immediately before the Transaction shall cease to own at least a
majority of the outstanding voting stock of the Company or any
successor to the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
(h) "Common Stock" shall mean shares of common stock of the Company, par
value twenty cents ($0.20) per share.
(i) "ECC" shall mean the Executive Compensation Committee of the Board.
(j) "Effective Date" shall mean the date on which a Change of Control
occurs.
(k) "Fair Market Value" shall mean, with respect to a share of the
Company's Common Stock for any purpose on a particular date, as
applicable, (i) either the closing price or the average of the high
and low sale price on the relevant date, as determined in the
Administrator's discretion, quoted on the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market(R); (ii) the
last sale price on the relevant date quoted on the Nasdaq SmallCap
MarketSM; (iii) the average of the high bid and low asked prices on
the relevant date quoted on the Nasdaq OTC Bulletin Board Service or
by the National Quotation Bureau, Inc., or a comparable service as
determined in the Administrator's discretion; or (iv) if the Common
Stock is not quoted by any of the above, the average of the closing
bid and asked prices on the relevant date furnished by a professional
market maker for the Common Stock, or by such other source, selected
by the Administrator. If no public trading of the Common Stock occurs
on the relevant date but the Common Stock is then listed for trading
on a national exchange or market, then Fair Market Value shall be
determined as of the next preceding date on which trading of the
Common Stock does occur. If the Common Stock is not listed for trading
on a national exchange or market, "Fair Market Value" shall mean the
value determined by the Administrator in good faith. For all purposes
under this Plan, the term "relevant date" as used in this Section 2(k)
shall mean either the date as of which Fair Market Value is to be
determined or the next preceding date on which public trading of the
Common Stock occurs, as determined in the Administrator's discretion.
(l) "Grant Agreement" shall mean a written document memorializing the
terms and conditions of an Award granted pursuant to the Plan and
shall incorporate the terms of the Plan.
(m) "Prior Plans" shall mean the Company's 1990 Stock Incentive Plan, 1993
Stock Incentive Plan and 1996 Stock Incentive Plan.
3. Administration
(a) Administration of the Plan. Unless determined otherwise by the Board,
the Plan shall be administered by the ECC. The ECC may delegate to a
committee of officers of the Company any or all of its duties under
the Plan pursuant to such conditions or limitations as the ECC may
establish, but all grants of Awards subject to Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), shall be
made by the Board or a committee appointed by the Board that is
comprised of two or more "Non-Employee Directors" within the meaning
of Rule 16b-3 of the 1934 Act or any successor provision, which
committee may be the ECC or a subcommittee thereof.
(b) Powers of the Administrator. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Awards under
the Plan, prescribe Grant Agreements evidencing such Awards and
establish programs for granting Awards.
The Administrator shall have full power and authority to take all
other actions necessary to carry out the purpose and intent of the
Plan, including, but not limited to, the authority to: (i) determine
the eligible persons to whom, and the time or times at which Awards
shall be granted; (ii) determine the types of Awards to be granted;
(iii) determine the number of shares to be covered by or used for
reference purposes for each Award; (iv) impose such terms,
limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or
renew outstanding Awards, or accept the surrender of outstanding
Awards and substitute new Awards (provided, however, that, except as
provided in Section 7(c) of the Plan, any modification that would
materially adversely affect any outstanding Award shall not be made
without the consent of the holder, and provided, further, that no
modification, amendment or substitution that results in repricing a
stock option to a lower exercise price, other than to reflect an
adjustment made pursuant to Section 7(c)(i), shall be made without
prior stockholder approval); and (vi) accelerate or otherwise change
the time in which an Award may be exercised or becomes payable and
waive or accelerate the lapse, in whole or in part, of any restriction
or condition with respect to such Award, including, but not limited
to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's
employment or other relationship with the Company or an Affiliate.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and Grant
Agreements issued thereunder and to adopt and interpret such rules,
regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) Non-Uniform Determinations. The Administrator's determinations under
the Plan (including without limitation, determinations of the persons
to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the Grant Agreements
evidencing such Awards) need not be uniform and may be made by the
Administrator selectively among persons who receive, or are eligible
to receive, Awards under the Plan, whether or not such persons are
similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member
of the Administrator shall be liable for any action taken or decision
made in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law, by the
Company's charter and by-laws, and by any directors' and officers'
liability insurance coverage which may be in effect from time to time,
the members of the Administrator shall be indemnified and reimbursed
by the Company in respect of all their activities under the Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions
and determinations made by the Administrator on all matters relating
to the Plan pursuant to the powers vested in it hereunder shall be in
the Administrator's sole and absolute discretion and shall be
conclusive and binding on all parties concerned, including the
Company, its stockholders, any participants in the Plan and any other
employee, consultant, or director of the Company, and their respective
successors in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 7(c) of the Plan, the maximum
number of shares of Common Stock that may be delivered to participants under the
Plan shall be equal to the sum of (i) 8,000,000; (ii) any shares available for
future awards under the Prior Plans as of the effective date of this Plan; and
(iii) any shares that are represented by awards under the Prior Plans that are
forfeited, expire or are canceled without the delivery of shares of Common Stock
or that result in the forfeiture of shares of Common Stock back to the Company.
In addition, any shares of Common Stock delivered under the Plan or any Prior
Plan of the Company which are forfeited back to the Company because of the
failure to meet an award contingency or condition shall again be available for
delivery pursuant to new Awards granted under the Plan.
Any shares of Common Stock covered by an award (or portion of an award)
granted under the Plan or a Prior Plan that is forfeited or canceled, expires or
is settled in cash, including the settlement of tax withholding obligations
using shares, shall be deemed not to have been delivered for purposes of
determining the maximum number of shares available for delivery under the Plan.
Likewise, if any stock option granted under the Plan or a Prior Plan is
exercised by tendering shares of Common Stock, either actually or by
attestation, to the Company as full or partial payment for such exercise under
this Plan or a Prior Plan, only the number of shares issued net of the shares
tendered shall be deemed delivered for purposes of determining the maximum
number of shares available for delivery under the Plan.
Subject to adjustment as provided in Section 7(c), the following additional
maximums are imposed under the Plan. The maximum number of shares of Common
Stock that may be issued in connection with incentive stock options intended to
qualify under Code section 422 shall be 8,000,000. The maximum number of shares
of Common Stock that may be issued in conjunction with stock awards (including
options) under Section 6(d) of the Plan shall be 1,000,000. The maximum number
of shares of Common Stock subject to Awards of any combination that may be
granted during any calendar year under the Plan to any one person is 1,000,000;
provided, however, that to the extent the maximum permissible award is not made
in a year, such amount may be carried over to subsequent years. Such
per-individual limit shall not be adjusted to effect a restoration of shares of
Common Stock with respect to which the related Award is terminated, surrendered
or canceled.
5. Participation
Participation in the Plan shall be open to all employees and officers of,
and other individuals, excluding non-employee directors, providing bona fide
services to or for, the Company or of any Affiliate of the Company, as may be
selected by the Administrator from time to time. The Administrator may also
grant Awards to individuals in connection with hiring, retention or otherwise,
prior to the date the individual first performs services for the Company or an
Affiliate; provided, however, that such Awards shall not become vested or
exercisable prior to the date the individual first commences performance of such
services.
6. Awards
(a) Awards, In General. The Administrator, in its sole discretion, shall
establish the terms of all Awards granted under the Plan. Awards may
be granted individually or in tandem with other types of Awards. All
Awards are subject to the terms and conditions provided in the Grant
Agreement. The Administrator may permit or require a recipient of an
Award to defer such individual's receipt of the payment of cash or the
delivery of Common Stock that would otherwise be due to such
individual by virtue of the exercise of, payment of, or lapse or
waiver of restrictions respecting, any Award. If any such payment
deferral is required or permitted, the Administrator shall, in its
sole discretion, establish rules and procedures for such payment
deferrals.
(b) Stock Options. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term
is defined in Code section 422 or nonqualified stock options;
provided, however, that Awards of incentive stock options shall be
limited to employees of the Company or of any current or hereafter
existing "parent corporation" or "subsidiary corporation," as defined
in Code sections 424(e) and (f), respectively, of the Company. No
Award shall be an incentive stock option unless so designated by the
Administrator at the time of grant or in the Grant Agreement
evidencing such Award. No stock option Award granted under the Plan
shall have a term in excess of 10 years. Except as provided in Section
6(d), the exercise price of all stock option Awards granted under this
Plan shall be at least equal to Fair Market Value as of the date of
grant. The Company or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any
withholding tax obligations.
(c) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of stock appreciation rights
("SAR"). An SAR entitles the grantee to receive, subject to the
provisions of the Plan and the Grant Agreement, a payment having an
aggregate value equal to the product of (i) the excess of (A) the Fair
Market Value on the exercise date of one share of Common Stock over
(B) the base price per share specified in the Grant Agreement, which
shall not be less than the Fair Market Value on the grant date, times
(ii) the number of shares specified by the SAR, or portion thereof,
which is exercised. Payment by the Company of the amount receivable
upon any exercise of an SAR may be made by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. If upon
settlement of the exercise of an SAR a grantee is to receive a portion
of such payment in shares of Common Stock, the number of shares shall
be determined by dividing such portion by the Fair Market Value of a
share of Common Stock on the exercise date. No fractional shares shall
be issued for such payment and the Administrator shall determine
whether cash shall be given in lieu of such fractional shares or
whether such fractional shares shall be eliminated.
(d) Stock Awards. The Administrator may from time to time grant stock
awards to eligible participants in such amounts, on such terms and
conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall
determine. A stock award may be denominated in Common Stock or other
securities, stock-equivalent units, securities or debentures
convertible into Common Stock, or any combination of the foregoing and
may be paid in Common Stock or other securities, in cash, or in a
combination of Common Stock or other securities and cash, all as
determined in the sole discretion of the Administrator. Unless the
Administrator determines otherwise, the restriction period of stock
awards shall be of at least three years' duration. For purposes of the
foregoing, stock awards may include stock option grants at less than
Fair Market Value on the date of grant.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Company or its Affiliate, or make provision satisfactory to the
Administrator for payment of, any taxes required to be withheld in
respect of Awards under the Plan no later than the date of the event
creating the tax liability. The Company or its Affiliate may, to the
extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the grantee or holder of an
Award. In the event that payment to the Company or its Affiliate of
such tax obligations is made in shares of Common Stock, such shares
shall be valued at Fair Market Value on the applicable date for such
purposes and shall not exceed the statutory minimum tax withholding
requirement.
(b) Transferability. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option,
no Award granted under the Plan shall be transferable by a grantee
otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accordance with the
provisions of the immediately preceding sentence, an Award may be
exercised during the lifetime of the grantee, only by the grantee or,
during the period the grantee is under a legal disability, by the
grantee's guardian or legal representative.
(c) Adjustments for Corporate Transactions and Other Events.
(i) Capital Adjustments, Stock Dividend. The aggregate number of
shares of Common Stock on which Awards under the Plan may be
granted to persons participating under the Plan, the number of
shares thereof covered by each Award, the price per share thereof
in each Award, and any numerical limitations contained herein
relating to Awards shall all be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend or other increase or decrease in such
shares, effected without receipt of consideration by the Company;
provided, however, that any fractional shares resulting from any
such adjustment shall be eliminated. In the case of other changes
in the Company's capitalization, adjustments shall be made to the
extent determined by the Administrator as necessary or
appropriate to reflect the transaction.
(ii) Merger, Consolidation, other Events. If the Company shall be the
surviving or resulting corporation in any merger or
consolidation, any Award granted hereunder shall pertain to and
apply to the securities to which a holder of the number of shares
of Common Stock subject to the Award would have been entitled.
Unless the Administrator determines otherwise, all Awards
outstanding under the Plan shall terminate upon the dissolution
or liquidation of the Company. Unless the Administrator shall
have otherwise determined within the limits specified in this
paragraph, all Awards outstanding under the Plan shall become
fully vested and exercisable and shall remain exercisable for a
one-year period (i) following the Effective Date, or (ii)
commencing on the Approval Date. After the expiration of any such
one-year period, the Awards shall remain exercisable only to the
extent, if any, provided in the applicable Grant Agreement
without taking into consideration the effect of this paragraph.
The Administrator's discretion to revoke or limit the
acceleration contemplated by this paragraph may be exercised at
any time before or within 20 business days after the Effective
Date or the Approval Date referred to in the foregoing clauses
(i) or (ii). In the event the Approval Date and an Effective Date
arise from substantially identical facts and circumstances (as
determined by the Administrator in its sole discretion) and
unless the Administrator shall have determined to limit the
effect of this sentence, such one-year period (and the 20-day
period referred to in the immediately preceding sentence) shall
commence only once and upon the first to occur of the Approval
Date or the Effective Date.
(iii) Other. In the event of a change in the Company's Common Stock
which is limited to a change in the designation thereof to
"Capital Stock" or other similar designation, or to a change in
the par value thereof, or from par value to no par value, without
increase in the number of issued shares, the shares resulting
from any such change shall be deemed to be Common Stock within
the meaning of the Plan.
(d) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for awards
held by employees, officers, consultants or directors of entities who
become or are about to become employees, officers, consultants or
directors of the Company or an Affiliate as the result of a merger or
consolidation of the employing entity with the Company or an
Affiliate, or the acquisition by the Company or an Affiliate of the
assets or stock of the employing entity. The terms and conditions of
any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems
appropriate at the time of grant to conform the substitute Awards to
the provisions of the awards for which they are substituted. To the
extent permitted by applicable law and exchange rules, any Awards
granted pursuant to this Section 7(d) shall not reduce the number of
shares available for delivery pursuant to Section 4.
(e) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any
time; provided, however, that the share limitations set forth in
Section 4 may not be increased, the minimum exercise prices and
maximum term of stock options set forth in Section 6 may not be
modified, and no other amendment or modification that materially
increases the benefits to participants may be made without prior
stockholder approval.
(f) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to
continue in the service of the Company or shall interfere in any way
with the right of the Company to terminate such service at any time
with or without cause or notice and whether or not such termination
results in (i) the failure of any Award to vest; (ii) the forfeiture
of any unvested or vested portion of any Award; and/or (iii) any other
adverse effect on the individual's interests under the Plan.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and a grantee or any other
person. To the extent that any grantee or other person acquires a
right to receive payments from the Company pursuant to an Award, such
right shall be no greater than the right of any unsecured general
creditor of the Company.
(h) Application of Funds. The proceeds received by the Company from the
issuance of Common Stock pursuant to Awards under the Plan will be
used for general corporate purposes.
(i) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator
relating to the Plan or such Grant Agreements, and the rights of any
and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with
applicable federal laws and the laws of the State of Maryland, without
regard to its conflict of laws principles.
(j) Effective Date; Termination Date. The Plan shall become effective on
the date it receives approval by the affirmative vote of a majority of
the votes cast in person or by proxy at a meeting of the stockholders
of the Company duly held in accordance with applicable law. No award
shall be granted pursuant to this Plan after February 7, 2011. Subject
to other applicable provisions of the Plan, all Awards made under the
Plan on or before February 7, 2011, or such earlier termination of the
Plan shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such Awards.