LEHMAN BROTHERS HOLDINGS INC. PLAN TRUST - DEF 14A - 20020301 - DIRECTOR_COMPENSATION
COMPENSATION OF DIRECTORS
Non-employee Directors receive an annual cash retainer of $45,000 and are
reimbursed for reasonable travel and related expenses. The annual retainer is
paid quarterly; however, the fourth quarter payment will be withheld for failure
to attend 75% of the total number of meetings. In addition, each non-employee
Director who served as a chairman of a Committee of the Board of Directors
received an additional annual retainer of $15,000 per Committee, and each
non-employee Director who served as a Committee member received $1,500 per
Committee meeting or unanimous written consent.
RESTRICTED STOCK UNIT AND OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS. An
annual equity retainer in the form of a grant of 2,500 RSUs is made to each
non-employee Director on the day of the Company's Annual Meeting of
Stockholders. As of each date that a dividend is paid on Common Stock, each
non-employee Director holding RSUs is credited with a number of additional RSUs
equal to the product of (A) the dividend paid on one share of Common Stock,
multiplied by (B) the number of RSUs held by the non-employee Director, divided
by (C) the closing price of the Common Stock on the New York Stock Exchange on
such date. The RSUs vest immediately and are payable in Common Stock upon death,
disability or termination of service.
Alternatively, a non-employee Director may elect to receive an option to
purchase 7,500 shares of Common Stock, with an exercise price per share equal to
the closing price of the Common Stock on the New York Stock Exchange on the date
the award is made. Such option has a ten-year term, is not forfeitable, and
becomes exercisable in one-third increments on each of the first three
anniversaries of the award date or, if sooner, upon termination of service.
THE COMPANY'S DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS. The
Company's Deferred Compensation Plan for Non-employee Directors is a
nonqualified deferred compensation plan, which provides each non-employee
Director an opportunity to elect to defer receipt of cash compensation to be
earned for services on the Board of Directors. Each non-employee Director may
elect to defer all or a portion of his or her future cash compensation with
respect to one or more terms as Director. Such election can be revoked only by a
showing of financial hardship and with the consent of the Compensation
Committee. Amounts deferred are credited quarterly with interest, based upon the
average 30-day U.S. Treasury Bill rate, and compounded annually. Deferred
amounts will be paid in either a lump sum or in annual installments over a
period not to exceed ten years as elected by the non-employee Director. Payments
commence as the non-employee Director elects, at a specified date in the future
or upon termination of service as a non-employee Director.
THE COMPANY'S FROZEN RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS. Prior to
May 1994, the Company maintained the Company's Retirement Plan for Non-employee
Directors which was a nonqualified retirement plan which provided a limited
annual retirement benefit for non-employee Directors who had earned five or more
years of service as defined in the plan. Participation in this plan was frozen
on May 31, 1994. Any non-employee Director who had, on such date, completed at
least five years of service as a Director (determined in accordance with the
plan) has vested benefits under the plan. Any individual who was a non-employee
Director on such date, but had not completed five years of service as of such
date, acquired vested benefits under this plan at the time such individual
completed such five years of service as a Director. Any individual who became a
non-employee Director after such date was ineligible to participate in this
plan. Vested benefits under this plan will be paid after a participant ceases to
be a Director.
8
EXECUTIVE OFFICERS OF THE COMPANY
Biographies of the current Executive Officers of the Company (the "Executive
Officers") are set forth below, excluding Mr. Fuld's biography, which is
included above. Each Executive Officer serves at the discretion of the Board of
Directors.
DAVID GOLDFARB AGE: 44
CHIEF FINANCIAL OFFICER. Mr. Goldfarb has been the Chief Financial Officer
of the Company since April 2000 and is a member of the Firm's Operating
Committee. Mr. Goldfarb served as the Company's Controller from July 1995 to
April 2000. Mr. Goldfarb has been the Chief Financial Officer of LBI since
July 1998. Mr. Goldfarb joined the Firm in 1994; prior to that, Mr. Goldfarb was
a partner at Ernst & Young.
JOSEPH M. GREGORY AGE: 49
CHIEF ADMINISTRATIVE OFFICER. Mr. Gregory has been the Chief Administrative
Officer of the Company since April 2000. From 1996 to April 2000 Mr. Gregory was
Head of the Firm's Global Equities Division, in charge of the overall equities
business. Mr. Gregory is also a member of the Firm's Executive Committee and
Operating Committee. From 1994 to 1996 he was Head of the Firm's Fixed Income
Division. He was named Co-Head of the Fixed Income Division in 1991. From 1980
to 1991, he held various management positions in the Fixed Income Division,
including Head of the Firm's Mortgage Business. Mr. Gregory joined the Firm in
1974 as a commercial paper trader. Mr. Gregory is a member of the Board of
Directors of the Dorothy Rodbell Cohen Foundation.
JEREMY M. ISAACS AGE: 37
CHIEF EXECUTIVE OFFICER--EUROPE AND ASIA. Mr. Isaacs has been the Head of
the Firm's Asian operations since April 2000 and Head of the Firm's European
operations since December 1999. He is also a member of the Firm's Executive
Committee and Operating Committee. Mr. Isaacs joined the Firm in 1996 as
Co-Chief Operating Officer, European Equities, and later that year became Head
of the Firm's global equity derivatives activities. In 1997 he additionally
became Head of the Firm's overall equities activities in Europe. In March 1999
he was appointed Chief Operating Officer of European activities, and in
December 1999 was appointed Chief Executive of the Firm's European activities.
Prior to joining Lehman Brothers, Mr. Isaacs was an Executive Director at
Goldman Sachs, a firm he joined in 1989. Mr. Isaacs is a member of the Advisory
Board (Europe, Middle East and Asia Region) of Electronic Data Systems
Corporation.
BRADLEY H. JACK AGE: 43
HEAD OF INVESTMENT BANKING DIVISION. Mr. Jack has been the Head of the
Firm's Investment Banking business since 1996. Mr. Jack is also a member of the
Firm's Executive Committee and Operating Committee. From 1993 to 1996 he was a
Sector Head in Investment Banking, responsible for the Firm's businesses
involving Debt Capital Markets, Financial Services, Leveraged Finance and Real
Estate. Prior to that he was head of the Firm's Fixed-Income Global Syndicate
activities. Mr. Jack joined the Firm in 1984 as an associate in the Fixed Income
Division. Mr. Jack is a member of the Board of Directors of the Dorothy Rodbell
Cohen Foundation and a member of the Board of Trustees of the Juilliard School.
JEFFREY VANDERBEEK AGE: 44
HEAD OF CAPITAL MARKETS DIVISION. Mr. Vanderbeek is Head of the Firm's
Capital Markets Division and previously served as Co-Head of that Division. From
1996 to April 2000, Mr. Vanderbeek was Head of the Fixed Income Division, in
charge of the overall fixed income business. Mr. Vanderbeek is also a member of
the Firm's Executive Committee and Operating Committee. He became Chief
Operating Officer of the Fixed Income Government Department in May 1993 and
Chief Operating Officer of the Fixed Income Derivatives Department in
June 1993. Mr. Vanderbeek joined Lehman Brothers in February 1984 as Managing
Director and Chief Operating Officer in the Fixed Income Central Funding
Department. Mr. Vanderbeek is a member of the Board of Directors of the Dorothy
Rodbell Cohen Foundation.
9
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth beneficial ownership information as of
January 31, 2002 with respect to the Common Stock for each current Director of
the Company (including all nominees for Director), each Executive Officer named
in the tables set forth under "Compensation of Executive Officers" below and all
current Directors and Executive Officers as a group. Except as described below,
each of the persons listed below has sole voting and investment power with
respect to the shares shown. None of the Directors or Executive Officers
beneficially owned any of the Company's other outstanding equity securities as
of January 31, 2002.
NUMBER OF SHARES OF
COMMON STOCK WHICH MAY PERCENT OF
NUMBER OF SHARES BE ACQUIRED WITHIN 60 DAYS OUTSTANDING
BENEFICIAL OWNER OF COMMON STOCK (A) OF JANUARY 31, 2002 COMMON STOCK (B)
---------------- ------------------- -------------------------- ----------------
Michael L. Ainslie (c)............... 23,953 12,224 *
John F. Akers........................ 8,458 12,224 *
Roger S. Berlind (d)................. 291,456 12,224 *
Thomas H. Cruikshank................. 23,792 0 *
Richard S. Fuld, Jr.................. 4,239,658 2,456,640 2.71
Joseph M. Gregory.................... 1,982,840 1,900,000 1.58
Jeremy M. Isaacs..................... 444,651 921,142 *
Bradley H. Jack...................... 1,404,285 1,764,500 1.29
Henry Kaufman (e).................... 33,750 9,820 *
John D. Macomber..................... 59,456 12,224 *
Dina Merrill......................... 21,936 12,224 *
Jeffrey Vanderbeek................... 1,607,482 1,900,000 1.43
All current Directors and Executive
Officers as a group (13
individuals)....................... 10,279,421 9,021,078 7.62
* Less than one percent.
(a) Amounts include vested and unvested RSUs. RSUs are convertible on a
one-for-one basis into shares of Common Stock, but cannot be sold or
transferred until converted to Common Stock and, with respect to each person
identified in the table, are not convertible within 60 days following
January 31, 2002. A portion of the vested RSUs held by the Executive
Officers are subject to forfeiture for detrimental or competitive activity.
Nonetheless, an Executive Officer who holds RSUs will be entitled to direct
the Incentive Plans Trustee to vote a number of Trust Shares that is
proportionate to the number of RSUs held irrespective of vesting; such
number of Trust Shares will be calculated prior to the Annual Meeting and
will be determined by the number of Trust Shares held by the Incentive Plans
Trust on the Record Date and the extent to which Current Participants under
the Incentive Plans return voting instructions to the Incentive Plans
Trustee. See "Introduction--The Voting Stock."
(b) Percentages are calculated in accordance with applicable SEC rules and are
based on the number of shares issued and outstanding on the Record Date.
(c) Includes 3,500 shares held by Mr. Ainslie's private charitable foundation,
as to which Mr. Ainslie disclaims beneficial ownership.
(d) Includes 80,000 shares held by Mr. Berlind's wife, as to which Mr. Berlind
disclaims beneficial ownership.
(e) Includes 25,000 shares held by Dr. Kaufman's wife, as to which Dr. Kaufman
disclaims beneficial ownership.
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
The Compensation Committee oversees the compensation programs of the
Company, with particular attention to the compensation of the Company's Chief
Executive Officer and the other Executive Officers. The Compensation Committee
is comprised of Mr. Macomber, who chairs the Compensation Committee, Mr. Akers
and Ms. Merrill.
In making its decisions with respect to the compensation of Executive
Officers, the Compensation Committee has adopted the following philosophical
positions and policies:
- Deliver a significant portion of total compensation in equity-based
awards, thereby aligning the financial interest of Executive Officers with
stockholders and encouraging prudent long-term strategic decisions. Where
feasible, based on market conditions and other factors, shares will be
repurchased in the market to avoid stockholder dilution.
- Tie compensation for Executive Officers to both annual and long-term
performance goals, which further aligns the interests of Executive
Officers with those of stockholders and rewards Executive Officers for
achievements.
- Ensure that compensation opportunities are comparable with those at major
competitors, so that the Firm may recruit and retain talented Executive
Officers who are key to the Company's long-term success.
The elements and weightings of the compensation program at the Company are
comparable to those used in the investment banking industry, but are
considerably different from those of other major corporations operating in
different industries. The securities industry typically pays higher levels of
compensation than other industries, such as manufacturing, transportation,
utilities or retail. The nature of the securities industry requires that the
workforce consist of a large percentage of highly skilled professionals, who are
in great demand due to the revenue they can generate. Competitive pressure to
hire these professionals results in high levels of compensation in order to
attract and retain the talent needed to compete effectively.
Total compensation is comprised of base salary and both cash and noncash
incentive compensation. Base salaries are intended to make up a small portion of
total compensation. The greater part of total compensation is based on the
Company's financial performance and other factors and is delivered through a
combination of cash and equity-based awards. This approach results in overall
compensation levels which follow the financial performance of the Company.
As in years past, a key element of Executive Officer compensation for Fiscal
2001 was a pre-established compensation formula, which in Fiscal 2001 was based
on the Company's return on equity. The formulas were intended to provide a
specific amount of annual compensation, which is paid in cash and Restricted
Stock Units ("RSUs"). The RSUs are subject to significant vesting and forfeiture
restrictions, and cannot be sold or transferred until converted to Common Stock.
Additionally, Fiscal 2001 Executive Officer compensation included a
long-term incentive plan ("LTIP") as a component of total compensation. Whereas
the cash and RSU components of total compensation are based upon annual
performance goals, the LTIP awards Performance Stock Units ("PSUs") over a
longer period. Under the current LTIP, the Company's return on equity as well as
any price appreciation in the Common Stock over a three and one-half year period
which began June 1, 2000 will determine an award of RSUs which will vest in
one-third increments in 2006 through 2008. The performance component of the LTIP
seeks to further align executive performance with Stockholder interests. The
vesting component seeks to encourage the retention of talented executives,
particularly if the Company's return on equity and stock price result in a
meaningful award.
The Compensation Committee also utilized stock option awards in Fiscal 2001
to further encourage Executive Officers to strive for long-term Stockholder
value. The options were awarded with
11
exercise prices equal to fair market value on the date of the grant, and with
terms providing for exercisability in three years if the market price of the
Common Stock increases to a level well above the market price on the date of
grant. However, if the price targets are not achieved, exercisability for all or
a portion of the options is delayed until four and one-half years after the date
of grant. The Compensation Committee believes that options assist the Firm in
maintaining a competitive compensation program.
In determining overall Executive Officer compensation for Fiscal 2001, the
Compensation Committee also considered a number of business factors and
conditions. Despite the difficult economic and market conditions and the impact
of September 11, the Company reported its second best year ever in terms of
revenues and net income in Fiscal 2001. The Company has continued to deliver
strong performance in terms of return on equity relative to competitor firms. In
addition, the Compensation Committee reviewed compensation provided in the prior
year, along with estimates of compensation for the current year, for competitor
firms. In making its determinations, the Compensation Committee had available to
it third-party advisors knowledgeable about industry practices.
In establishing Fiscal 2001 compensation for Richard S. Fuld, Jr., the
Company's Chairman and Chief Executive Officer, the Compensation Committee
considered the following performance factors (to which it did not assign any
specific relative weights):
- Overseeing the strong financial results of the Company in a difficult
business environment.
- Gaining market share in most major product categories in investment
banking and capital markets.
- Fostering an environment that attracts and retains talented, high
potential individuals throughout the organization.
- Demonstrating extraordinary leadership and successfully managing the
Company's disaster recovery plan following the tragic events of
September 11.
On the general criteria of leadership, management and governance, it is the
Compensation Committee's judgment that Mr. Fuld's Fiscal 2001 performance was
exceptional. However, the actual financial results of the Company for Fiscal
2001 were lower than for 2000. Since the major portion of Mr. Fuld's
compensation is based on financial results, his Fiscal 2001 compensation
reflects a decrease from 2000.
Section 162(m) of the Internal Revenue Code limits the tax deductibility of
compensation in excess of $1 million unless the payments are made under
qualifying performance-based plans. For the compensation year ended
November 30, 2001, these procedures were adhered to. While the Compensation
Committee currently seeks to maximize the deductibility of compensation paid to
Executive Officers, it will maintain flexibility to take other actions which may
be based on considerations other than tax deductibility.
Compensation and Benefits Committee:
John D. Macomber, Chairman
John F. Akers
Dina Merrill
February 28, 2002
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, John D. Macomber, John F. Akers and
Dina Merrill served on the Compensation Committee. None of these individuals has
ever served as an officer or employee of the Firm.
12
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the years ended November 30, 2001, 2000 and
1999, as applicable, the cash and other compensation paid or accrued and certain
long-term awards made to the Chairman and Chief Executive Officer (the "CEO")
and to the Company's four most highly compensated executive officers other than
the CEO for services in all capacities. Mr. Isaacs became an Executive Officer
in Fiscal 2000. All such named Executive Officers, other than the CEO, received
the same total compensation, based on the same broad financial and other
performance goals. The Compensation Committee believes this compensation
structure will build a team/partnership approach at the most senior level of the
Firm.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------
NAME AND PRINCIPAL ------------------------------------- RESTRICTED SECURITIES
POSITION AT FISCAL OTHER ANNUAL STOCK UNIT UNDERLYING ALL OTHER
NOVEMBER 30, 2001 YEAR SALARY BONUS COMPENSATION AWARDS(A) OPTIONS COMPENSATION(B)
---------------------------------- -------- -------- ---------- ------------- ---------- ---------- ----------------
R. S. Fuld, Jr.................... 2001 $750,000 $4,000,000 $0 $6,785,299 450,000 $12,517
Chairman and Chief 2000 750,000 8,750,000 0 13,572,896 800,000 13,710
Executive Officer 1999 750,000 4,500,000 0 7,500,350 800,000 8,778
J. M. Gregory..................... 2001 $450,000 $2,800,000 $0 $4,642,616 350,000 $ 6,373
Chief Administrative 2000 450,000 8,050,000 0 7,857,992 600,000 5,339
Officer 1999 450,000 3,550,000 0 4,285,914 700,000 4,810
J.M. Isaacs....................... 2001 $450,000 $2,800,000 $0 $4,642,616 350,000 $ 9,499
Chief Executive Officer-- 2000 450,000 8,050,000 0 7,857,992 600,000 7,200
Europe and Asia
B. H. Jack........................ 2001 $450,000 $2,800,000 $0 $4,642,616 350,000 $ 0
Head of Investment 2000 450,000 8,050,000 0 7,857,992 600,000 0
Banking Division 1999 450,000 3,550,000 0 4,285,914 700,000 0
J. Vanderbeek..................... 2001 $450,000 $2,800,000 $0 $4,642,616 350,000 $ 904
Head of Capital Markets 2000 450,000 8,050,000 0 7,857,992 600,000 1,084
Division 1999 450,000 3,550,000 0 4,285,914 700,000 709
(a) The values indicated are calculated by multiplying the closing market price
of the Common Stock on the dates the awards were granted by the number of
shares awarded. RSUs are actually subject to significant vesting and
forfeiture restrictions and pursuant to the terms of the awards cannot be
sold or transferred until they convert to Common Stock on November 30, 2006.
Dividends are payable by the Company on all such holdings from their
respective dates of award, and are reinvested in additional RSUs. The total
number of RSUs granted for Fiscal 2001 that underlies the value shown for
each of Messrs. Fuld, Gregory, Isaacs, Jack and Vanderbeek was 145,482.39,
95,492.98, 95,492.98, 95,492.98 and 95,492.98, respectively. Of such RSUs,
35% will vest on November 30, 2004 and the balance will vest on
November 30, 2006. Notwithstanding the foregoing, RSUs may become vested
(and may convert to Common Stock) sooner upon certain termination events or
upon death or disability.
Including the RSUs described immediately above, as of November 30, 2001, the
total number of RSUs held by Messrs. Fuld, Gregory, Isaacs, Jack and
Vanderbeek was 2,644,127.92, 1,763,779.83, 371,900.72, 1,294,738.02 and
1,294,738.02, respectively. The value of these holdings at the November 30,
2001 closing price per share of Common Stock of $66.15 was $174,909,062,
$116,674,036, $24,601,233, $85,646,920 and $85,646,920, respectively.
Included in the total number of RSUs for Messrs. Fuld, Gregory, Jack and
Vanderbeek are the following amounts of RSUs based on 1996 PSU awards:
441,505.30, 331,128.98, 220,752.63 and 220,752.63, respectively. Also
included in the total number of RSUs for Messrs. Fuld, Gregory, Jack and
Vanderbeek are the following amounts of RSUs based on 1997 PSU awards:
525,389.68, 346,755.99, 262,692.84 and 262,692.84, respectively.
(FOOTNOTES CONTINUED NEXT PAGE)
13
(b) The amount reported under "All Other Compensation" for Mr. Isaacs represents
the Firm's contribution under its U.K. defined contribution pension plan.
The other amounts reported under "All Other Compensation" for Fiscal 2001
consist of the dollar value of above-market earnings on deferred
compensation. Included are credits to compensation deferred pursuant to the
Executive and Select Employees Plan, which was established in 1985, and the
Lehman Brothers Kuhn Loeb Deferred Compensation Plans, which were
established in 1977 and 1980.
The following table contains information concerning the grant of
nonqualified stock options in Fiscal 2001 to the named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES OR BASE PRICE EXPIRATION PRESENT
NAME GRANTED (A) IN FISCAL YEAR PER SHARE DATE VALUE (B)
---- ----------- -------------- ------------- ---------- ----------
R. S. Fuld, Jr.................... 450,000 2.1 $51.125 11/30/2005 $4,500,000
J. M. Gregory..................... 350,000 1.7 51.125 11/30/2005 3,500,000
J. M. Isaacs...................... 350,000 1.7 51.125 11/30/2005 3,500,000
B. H. Jack........................ 350,000 1.7 51.125 11/30/2005 3,500,000
J. Vanderbeek..................... 350,000 1.7 51.125 11/30/2005 3,500,000
(a) Five-year nonqualified stock options were granted on December 1, 2000 with
terms providing for exercisability in four and one-half years and for
accelerated exercisability, to no earlier than the third anniversary of the
grant date, in one-third increments if the closing price of the Common Stock
on the New York Stock Exchange (the "NYSE") reaches $70.00, $80.00 and
$90.00, respectively, for 15 out of 20 consecutive trading days. The price
of the Common Stock increased during Fiscal 2001 such that exercisability is
accelerated for one-third of such options. Notwithstanding the foregoing,
the options may become exercisable without regard to the three-year holding
period upon certain termination events occurring after May 1, 2002, and
without regard to either the holding period or the stock price thresholds
upon death or disability.
(b) These values were calculated using the Black-Scholes option pricing model as
of the grant date. The Black-Scholes model is a mathematical formula that is
widely used and accepted for valuing traded stock options. The model is
premised on immediate exercisability and transferability of the options,
neither of which was true for the options granted to the named Executive
Officers at the time of grant. Therefore, certain discounting assumptions
about the time of exercise and risk of forfeiture were applied, as indicated
below. These hypothetical present values are presented pursuant to SEC rules
even though there is no assurance that such values will ever be realized.
The actual amount, if any, realized upon the exercise of stock options would
depend upon the market price of Common Stock relative to the exercise price
per share of the stock option at the time the stock option is exercised.
The following assumptions were used in employing the Black-Scholes option
pricing model: an exercise price equal to the closing price of the Common
Stock on the date of grant; an expected option life of two and one-half
years; a dividend rate of $0.22 per share; a risk-free rate of return equal
to the yield for the U.S. Treasury Strip security with a maturity date
closest to the expected option life of the grant; an expected Common Stock
price volatility rate of 40% per annum; and a 10% per annum adjustment for
nontransferability or risk of forfeiture.
14
The following table sets forth information concerning the exercise of stock
options during Fiscal 2001 by each of the named Executive Officers and the
fiscal year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END AT FISCAL YEAR END (A)
SHARES ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ------------ -------------
R. S. Fuld, Jr........... 1,440,000 $93,648,100 2,456,640 450,000 $100,650,066 $6,761,250
J. M. Gregory............ 622,348 36,950,799 1,900,000 350,000 76,034,970 5,258,750
J. M. Isaacs............. 0 0 921,143 389,265 33,688,999 7,053,651
B. H. Jack............... 369,236 20,030,406 1,764,500 350,000 70,361,761 5,258,750
J. Vanderbeek............ 354,000 22,125,000 1,900,000 350,000 76,034,970 5,258,750
(a) Aggregate values shown above represent the excess of $66.15 per share, the
closing price of the Common Stock on November 30, 2001 on the NYSE, over the
respective exercise prices of the options. The actual amount, if any,
realized upon exercise of stock options will depend upon the market price of
the Common Stock relative to the exercise price per share of the stock
option at the time the stock option is exercised. There is no assurance that
the values of unexercised in-the-money options reflected above will be
realized.
PENSION BENEFITS
The Lehman Brothers Holdings Inc. Retirement Plan (the "U.S. Pension Plan")
is a funded, qualified, noncontributory, integrated, defined benefit pension
plan covering eligible U.S. employees.
All U.S. employees of the Company or a designated subsidiary who have
attained the age of 21 and completed one year of service are generally eligible
to participate in the U.S. Pension Plan. The U.S. Pension Plan formula provides
for an annual retirement benefit payable at age 65, calculated as a straight
life annuity. Pensionable earnings are total Form W-2 earnings (plus elective
deferrals under the Lehman Brothers Savings Plan and certain other health plan
deferral amounts) up to the applicable Internal Revenue Service maximum. For
each year of plan participation prior to 1989, the annual accrual was based on
percentages of pensionable earnings up to and in excess of the social security
taxable wage base. After 1988 the annual accrual is equal to one percent of
pensionable earnings up to the average Social Security taxable wage base plus
1.65% of pensionable earnings in excess of the average taxable wage base.
Generally, participants have a nonforfeitable right to their accrued benefits
upon completing five years of vesting service. As of January 31, 2002, the
estimated annual projected benefits payable upon retirement at a normal
retirement age of 65 for Messrs. Fuld, Gregory, Jack and Vanderbeek are
approximately $103,228, $113,065, $103,097 and $110,735, respectively.
Mr. Isaacs is a participant in the Lehman Brothers Pension Scheme (the "U.K.
Pension Plan"), a defined contribution plan covering all U.K. employees of
Lehman Brothers Ltd. who have completed one year of service, attained the age of
25 and are under 60 years of age. The Firm's contribution under the U.K. Pension
Plan for Fiscal 2001 for Mr. Isaacs is reported in the Summary Compensation
Table above.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has adopted a nonqualified, noncontributory Supplemental
Retirement Plan (the "SRP") covering the Executive Officers, with benefits
payable to those who upon retirement are at least age 60 and who have completed
at least five years of service, or whose age plus years of service equals or
exceeds the sum of 85. The SRP is a defined benefit plan, and also provides for
the payment of reduced benefits payable at age 60 if upon retirement the
participant is above age 45 or has
15
completed five years of service. Benefits are not payable in cases of
termination by the Company or employment by a competitor. In addition, in
Mr. Isaacs' case eligibility for SRP benefits is subject to continued employment
through December 1, 2004. As of January 31, 2002, the estimated annual projected
benefits payable upon retirement at age 60 for Mr. Fuld are $1.25 million, and
for each of Messrs. Gregory, Isaacs, Jack and Vanderbeek are $700,000. In the
event of a change in control, vesting is accelerated.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
Pursuant to its authority to accelerate vesting and waive the transfer
restrictions for grants of RSUs, in 1994 the Compensation Committee determined
to provide for the acceleration of vesting and the waiver of transfer
restrictions of the RSUs received by the Executive Officers (and made comparable
provisions for all other employees) in the event of a hostile change of control,
which generally means a tender offer, acquisition of 20% of the Company's voting
securities or a change of a majority of the incumbent Board of Directors, in
each case without the prior approval of a majority of the independent members of
the incumbent Board of Directors. To the extent there is a change of control
which is not hostile, then the RSUs would be paid out but the difference between
the acquisition price and the RSU value at grant would be deferred for the
shorter of two years or the term of any remaining restrictions and the
conditions of the original RSU grant would govern the deferred amounts.
Comparable arrangements were implemented for options held by the Executive
Officers and all other employees. In the case of 1996 PSU award grants and 1997
PSU award grants, an additional number of RSUs would be payable following a
change of control equal to approximately 90% and 160%, respectively, of the
number of RSUs otherwise payable (which aggregate payouts, upon a change of
control, would represent the full awards earned pursuant to the performance
formula). In addition, under a Cash Awards Plan, if a change of control occurs
within six months after a grant of RSUs, then the Chief Executive Officer
receives a payment equal to 350% of his previous annual cash compensation, the
Chief Administrative Officer shall receive 300% and the other participants shall
receive from 200% to 300%.
PERFORMANCE GRAPH
The performance graph below illustrating cumulative stockholder return
compares the performance of the Common Stock, measured at each of the Company's
last five fiscal year-ends, with that of (1) an index (the "Peer Group Index")
originally comprised of the common stocks of The Bear Stearns Companies Inc.,
Donaldson, Lufkin & Jenrette, Inc., J.P. Morgan & Co. Incorporated and Paine
Webber Group, Inc., (2) the S&P 500 Index and (3) the S&P Financial Index.
The Peer Group Index includes the common stocks of Donaldson, Lufkin &
Jenrette, Inc., Paine Webber Group, Inc. and J.P. Morgan & Co. Incorporated only
through October 31, 2000, October 31, 2000 and December 31, 2000 (each a "Peer
Group Change Date"), respectively, the last month-ends preceding the dates that
such companies ceased to be publicly traded as a result of being acquired by
other entities. These acquisitions have resulted in a Peer Group Index that is
based on the performance of a single entity since January 1, 2001. Therefore,
the Company has elected to replace the Peer Group Index with the S&P Financial
Index, and will omit the Peer Group Index results from its future proxy
statement performance graphs.
The graph assumes $100 was invested in the Common Stock and each index on
November 30, 1996, and that all dividends were reinvested in full. The
investment in the stocks comprising the Peer Group Index has been weighted at
the beginning of each measurement period and also following each Peer Group
Change Date according to the issuing companies' market capitalizations, in
accordance with SEC rules.
16
CUMULATIVE TOTAL RETURN
FOR LEHMAN BROTHERS HOLDINGS INC. COMMON STOCK,
A PEER GROUP INDEX, THE S & P 500 INDEX AND THE S & P FINANCIAL INDEX
[Graphic Omitted]
CUMULATIVE TOTAL RETURN (IN DOLLARS)
---------------------------------------------------------------
11/30/96 11/29/97 11/28/98 11/30/99 11/30/00 11/30/01
-------- -------- -------- -------- -------- --------
Lehman Brothers Holdings Inc....................... 100.00 174.68 173.69 266.97 348.24 466.58
Peer Group......................................... 100.00 128.31 150.82 183.66 167.70 195.88
S & P 500 Index.................................... 100.00 128.51 158.92 192.13 184.02 161.53
S & P Financial Index.............................. 100.00 135.96 155.88 168.72 191.24 185.80
17
CERTAIN TRANSACTIONS AND AGREEMENTS
WITH DIRECTORS AND EXECUTIVE OFFICERS
In the ordinary course of business, the Firm from time to time engages in
transactions with other corporations or financial institutions whose officers or
directors are also Executive Officers or Directors of the Company. Transactions
with such corporations and financial institutions are conducted on an
arm's-length basis and may not come to the attention of the Directors or
Executive Officers of the Company or those of the other corporations or
financial institutions involved.
From time to time, Executive Officers and Directors of the Company and their
associates may be indebted to the Company or its subsidiaries under lending
arrangements offered by those companies to the public. For example, such persons
may be indebted to LBI, as customers, in connection with margin account loans,
revolving lines of credit and other extensions of credit. Such indebtedness is
in the ordinary course of business, is substantially on the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and does not involve a more than
normal risk of collectibility or present other unfavorable features. In
addition, such Executive Officers, Directors and associates may engage in
transactions in the ordinary course of business involving other goods and
services provided by the Firm, such as investment services, limited partnership
investments and financial counseling, on terms similar to those extended to
employees of the Company generally. From time to time since the beginning of
Fiscal 2001, the Company, through certain of its subsidiaries, in the ordinary
course of business has provided investment, financial advisory and other
services to certain corporations and entities with which certain of its
Directors and prior Directors are affiliated.
Throughout Fiscal 2001 the Company was party to a consulting agreement with
Henry Kaufman & Company, Inc. ("HK Company") pursuant to which HK Company will
provide, upon request, advice to the Firm on global initiatives, economic
forecasts and other matters. HK Company receives a consulting fee of $12,500 per
month. Henry Kaufman, a Director of the Company, is a principal of HK Company.
The contract expires in April 2002, subject to renewal by agreement of the
parties.
Lehman Brothers Real Estate Capital Partners I, L.P. ("Real Estate I") is a
limited partnership established in 2001 to provide senior officers and other
employees, directors and consultants of the Firm with the opportunity to invest
in a private equity fund. Real Estate I will co-invest with a Lehman Brothers
subsidiary and with the Lehman Brothers Real Estate Fund, a private equity fund
organized by the Company for third party investors, generally in proportions
based upon the respective outstanding capital commitments of the investing
entities. A subsidiary of the Company acts as general partner for Real Estate I.
The investment objective of Real Estate I is to seek substantial capital
appreciation through real estate investments. Real Estate I has capital
commitments of $120 million from the limited partners and $1.2 million from the
general partner. Each of the Company's Executive Officers except for
Mr. Isaacs, and in addition Mr. Stephen Lessing, Senior Client Relationship
Manager and Head of Private Client Group, are limited partners in Real Estate I.
Distributions of investment proceeds in respect of a real estate investment
generally will be made to the limited partners and the general partner pro rata
in proportion to each of their capital contributions until their capital is
returned, and any subsequent profits generally will be divided 90% to the
limited partners and 10% to the general partner.
Lehman Brothers Venture Capital Partners II, L.P. ("Venture Capital II") is
a limited partnership established in 2001 to provide senior officers and other
employees, directors and consultants of the Firm with the opportunity to invest
in a private equity fund. Venture Capital II will co-invest with a Lehman
Brothers subsidiary and with the Lehman Brothers Venture Capital II Fund, a
private equity fund organized by the Company for third party investors,
generally in proportions based upon the respective outstanding capital
commitments of the investing entities. A subsidiary of the Company acts as
general partner for Venture Capital II. The investment objective of Venture
Capital II is to seek substantial capital appreciation through venture capital
investments. Venture Capital II has capital
18
commitments of $60 million from the limited partners and $0.6 million from the
general partner. Mr. Berlind, each of the Company's Executive Officers and
Mr. Lessing are limited partners in Venture Capital II. Distributions of
investment proceeds in respect of a venture capital investment generally will be
made to the limited partners and the general partner pro rata in proportion to
each of their capital contributions until their capital is returned, and any
subsequent profits generally will be divided 90% to the limited partners and 10%
to the general partner.
Lehman Brothers Capital Partners III, L.P. ("Capital Partners III") is a
limited partnership established in 1995 to provide senior officers and other
employees, directors and consultants of the Firm with the opportunity to invest
in a portfolio of investment opportunities. Capital Partners III enters into
high-risk investment opportunities of all kinds in all markets globally. Each of
the Executive Officers and Messrs. Berlind and Kaufman are limited partners in
Capital Partners III. As of January 31, 2002, the Company as general partner has
made capital contributions to Capital Partners III of $149.1 million and the
limited partners have contributed an aggregate of $18.6 million. The amount of
the general partner's capital contribution, together with a fixed return
thereon, will generally be distributed to the general partner before any
distributions are made to the limited partners. After the general partner has
received back its capital contribution and fixed return, the limited partners
receive back their respective capital contributions; thereafter, any subsequent
profits are allocated 90% to the limited partners and 10% to the general
partner. During Fiscal 2001, Messrs. Berlind, Kaufman, Fuld, Goldfarb, Gregory,
Jack, Vanderbeek and Lessing, received $274,038 and 3,264 shares of common stock
of L-3 Communications Holdings, Inc. (such stock, the "L-3 Common Shares"),
$274,038 and 3,264 L-3 Common Shares, $959,133 and 11,424 L-3 Common Shares,
$66,145 and 816 L-3 Common Shares, $685,095 and 8,160 L-3 Common Shares,
$274,038 and 3,264 L-3 Common Shares, $342,547 and 4,080 L-3 Common Shares, and
$548,076 and 6,528 L-3 Common Shares, respectively, in distributions as limited
partners of Capital Partners III.
CERTAIN TRANSACTIONS AND AGREEMENTS WITH
AMERICAN EXPRESS AND SUBSIDIARIES
Until January 2001 Lehman Brothers Financial Resource Accounts included, as
one of the features of the integrated financial services accounts, the Gold Card
issued by American Express Travel Related Services Company, Inc. ("TRS"), for
which LBI paid TRS a portion of the fees received from the holders. TRS also
provides the Corporate Card to employees of the Firm, for which TRS has waived
all annual fees. In January 1994, the Company agreed to consolidate all of the
Firm's domestically initiated business travel reservations through the TRS
Travel Center in Omaha. Such arrangements with respect to the Corporate Card and
travel services continue to be in effect.
In August 1990, American Express agreed to guarantee certain payments to
employees who were then active employees of the Company under certain deferred
compensation programs. As of January 31, 2002, deferred compensation with an
aggregate balance of approximately $62 million was covered by this guarantee.
The Company pays American Express an annual fee equal to 0.625% on approximately
60% of the outstanding balance under such deferred compensation plans, in
consideration of American Express maintaining the guarantee.
On June 28, 1991, the Company sold its subsidiary, The Balcor Company, to a
wholly owned subsidiary of American Express. In connection therewith, an
interest bearing note in the principal amount of approximately $88.4 million was
repaid to the Company by American Express in December 2000.
The Firm, from time to time, provides investment banking, commercial paper
placement, brokerage and various other financial services such as repurchase
transactions, investment advisory, strategic advisory and derivative products to
American Express and its subsidiaries, including acting as placement agent for
medium-term notes, dealer for commercial paper and advisor regarding certain
dispositions. The Firm, American Express and its subsidiaries also engage in the
ordinary course of
19
business in various trading and short-term funding transactions, including
foreign exchange and precious metals transactions. In addition to the services
referred to above, American Express and its subsidiaries provide banking and
other financial services to the Firm. All of these transactions are done on an
arm's-length basis with customary fees.
The Company and American Express entered into an Agreement dated May 26,
1994 (the "Tax Allocation Agreement"), which provided for the allocation,
settlement and payment of the Company's federal, state and local income tax
liabilities for the years during which the Company and any of its subsidiaries
were included in the American Express consolidated Federal income tax return or
any combined or unitary state and local tax returns. Under the terms of the Tax
Allocation Agreement, American Express retained significant control and
discretion over issues relating to the allocation, settlement and payment of the
covered tax liabilities, including the resolution of proposed audit adjustments.
For income tax filings relating to periods commencing on or after June 1, 1994
(the date of the Company's spin-off from American Express), the Company files
its own consolidated Federal income tax return and applicable state and city
filings.
The Company, LBI and Lehman Commercial Paper Inc. (collectively, the "LB
Co-tenants") are co-tenants together with American Express and certain of its
subsidiaries (the "AXP Co-tenants" and, together with the LB Co-tenants, the
"Co-tenants") of the leasehold interest in 3 World Financial Center in New York
City (the "Property"). The Co-tenants' relationship with respect to the Property
is governed by an Agreement of Tenants-In-Common. The agreement provides, among
other things, that each Co-tenant is obligated to pay its proportionate share of
all Property obligations and limits the actions that may be taken by individual
Co-tenants. The AXP Co-tenants and LB Co-tenants were liable, on a limited
recourse basis, for their proportionate share of the debt (zero-coupon notes
which matured in December 2000) issued by the Co-tenants to finance the
Property. The LB Co-tenants' share of such debt as of December 12, 2000, the
date such notes were repaid, amounted to approximately $223.2 million and until
repayment had been guaranteed by American Express.
PROPOSAL 2
RATIFICATION OF THE COMPANY'S SELECTION OF ITS AUDITORS
The Board of Directors recommends to the Stockholders that they ratify the
selection of Ernst & Young LLP, independent auditors, to audit the accounts of
the Firm for the fiscal year ending November 30, 2002.
The affirmative vote of the majority of Voting Stock present in person or by
proxy at the meeting is required to ratify the selection of auditors.
In the event that the Stockholders fail to ratify the appointment, the Board
of Directors will consider it a direction to select other auditors for the
subsequent year. Even if the selection is ratified, the Board of Directors, in
its discretion, may direct the appointment of a new independent accounting firm
at any time during the year if the Board feels that such a change would be in
the best interests of the Company and its Stockholders.
A representative of Ernst & Young LLP will be present at the Annual Meeting
and will have the opportunity to make a statement if he or she desires to do so
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
20
ERNST & YOUNG LLP FEES FOR FISCAL 2001
AUDIT FEES. Audit fees billed to the Company by Ernst & Young LLP with
respect to the Fiscal 2001 financial statements were $5,750,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. No services
were performed by, or fees incurred to, Ernst & Young LLP in connection with
financial information systems design and implementation projects for Fiscal
2001.
ALL OTHER FEES. All other fees billed by Ernst & Young LLP with respect to
Fiscal 2001 were $7,700,000, including audit related services of $6,100,000 and
other non-audit services of $1,600,000. Audit related services generally include
fees for statutory and employee benefit plan audits, other attest services for
certain subsidiary companies, accounting consultations, due diligence work on
certain assets acquired by the Company and work on SEC registration statements.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining Ernst & Young's
independence.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of three
non-employee Directors and operates under a written charter adopted by the Board
of Directors. The Audit Committee recommends to the Board of Directors the
selection of the Company's independent auditors.
Management is responsible for the Company's internal controls, the financial
reporting process and preparation of the consolidated financial statements of
the Company. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes. It should be noted that the Committee members are not professionally
engaged in the practice of accounting or auditing and are not experts in the
fields of accounting or auditing, including with respect to auditor
independence. The Committee members rely, without independent verification, on
the information provided to them and on the representations made by management
and the independent auditors.
In this context, the Committee has met and held discussions with management
and the independent auditors. Management represented to the Audit Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles. The Audit Committee reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The Audit Committee further discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees) as amended.
The Company's independent auditors also provided to the Audit Committee the
written disclosures and letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent auditors that firm's independence.
Based upon the Audit Committee's discussions with management and the
independent auditors and the Audit Committee's review of the representations of
management and the report and letter of the independent auditors provided to the
Audit Committee, the Audit Committee recommended to the Board of Directors that
the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended November 30, 2001 for filing with
the Securities and Exchange Commission.
Audit Committee:
Roger S. Berlind, Chairman
Michael L. Ainslie
Thomas H. Cruikshank
February 28, 2002
21
OTHER MATTERS
Management does not know of any business to be transacted at the meeting
other than as indicated herein. Should any such matter properly come before the
meeting for a vote, the persons designated as proxies will vote thereon in
accordance with their best judgment.
You are urged to sign, date and return the enclosed proxy card as promptly
as possible, using the prepaid envelope provided for such purpose, or to vote
online or by telephone according to the instructions on the proxy. It is hoped
that registered Stockholders will give us advance notice of their plans to
attend the Annual Meeting by marking the box provided on the proxy card or by
registering their intention when voting online or by telephone.
If you will need special assistance at the Annual Meeting because of a
disability, please contact the Corporate Secretary of the Company, Mr. Jeffrey
A. Welikson, at (212) 526-0858 or at jwelikso@lehman.com. Directions to the
meeting are on the last page of this Proxy Statement.
HOUSEHOLDING. In accordance with a notice sent previously to certain
beneficial owners holding shares in street name (for example, through a bank,
broker or other holder of record) and who share a single address with other
similar holders, only one annual report and proxy statement is being sent to
that address unless contrary instructions were received from any shareholder at
that address. This practice, known as "householding," is designed to reduce
printing and postage costs. Any of such beneficial owners may discontinue
householding by writing to the address or calling the telephone number provided
for such purpose by their holder of record. Any such shareholder may also
request prompt delivery of a copy of the annual report or proxy statement by
contacting the Company at (212) 526-0858 or by writing to the Corporate
Secretary, Lehman Brothers Holdings Inc., 399 Park Avenue, 11th Floor, New York,
New York 10022.
Other beneficial owners holding shares in street name may be able to
initiate householding if their holder of record has chosen to offer such
service, by following the instructions provided by the record holder.
DEADLINE FOR SUBMITTING PROPOSALS FOR NEXT YEAR'S MEETING. Stockholders who
intend to present proposals for inclusion in the proxy material to be
distributed by the Company in connection with the Company's 2003 Annual Meeting
of Stockholders must submit their proposals to the Corporate Secretary of the
Company on or before October 31, 2002.
In addition, in accordance with Article II, Section 9 of the Company's
By-Laws, in order to be properly brought before the 2003 Annual Meeting by a
Stockholder, notice of a matter must be received by the Company no later than
January 9, 2003.
Jeffrey A. Welikson
Secretary
New York, New York
February 28, 2002
22
DIRECTIONS TO THE LEHMAN BROTHERS HOLDINGS INC.
2002 ANNUAL MEETING OF STOCKHOLDERS
The 2002 Annual Meeting of Stockholders will be held at 399 Park Avenue, on
the east side of midtown Manhattan, between 53rd and 54th Streets and Park and
Lexington Avenues. The building is in the vicinity of several subway lines, and
is also readily accessed by bus, taxicab or automobile. PERSONS ATTENDING THE
ANNUAL MEETING MUST ENTER THE 399 PARK AVENUE BUILDING THROUGH ITS LEXINGTON
AVENUE ENTRANCE. ALL PERSONS WISHING TO BE ADMITTED MUST PRESENT PHOTO
IDENTIFICATION.
23
LEHMAN BROTHERS HOLDINGS INC.
Proxy for Annual Meeting of Stockholders
This proxy is solicited by the Board of Directors
Joseph Polizzotto, Thomas A. Russo and Jeffrey A. Welikson or each of
them (with full power to act without the others and with full power of
substitution) are hereby appointed attorneys and proxies to attend the
Annual Meeting of Stockholders to be held on April 9, 2002, and any
adjournment thereof, and to vote and act for the undersigned on the matters
listed on the reverse side hereof, which are set forth in detail in the
accompanying Proxy Statement.
This proxy revokes all previous proxies. UNLESS SPECIFIED TO THE
CONTRARY, IT WILL BE VOTED FOR ALL NOMINEES AND PROPOSALS. In their discretion,
the proxies are authorized to vote upon any other business which may properly
come before the Annual Meeting or any adjournment thereof.
(Continued, and to be signed and dated, on the reverse side.)
LEHMAN BROTHERS HOLDINGS INC.
P.O. BOX 11034
NEW YORK, N.Y. 10203-0034
[ ] Mark here if you plan to attend the meeting.
[ ] To change your address, please mark this box.
LEHMAN BROTHERS VOTE BY TELEPHONE OR INTERNET
LEHMAN BROTHERS HOLDINGS INC. 24 HOURS A DAY, 7 DAYS A WEEK
745 SEVENTH AVENUE
NEW YORK, NY 10019
TELEPHONE
1-888-216-1290
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below; then just follow the simple directions.
INTERNET
https://www.proxyvotenow.com/leh
Use the internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your control number, located
in the box below; then just follow the simple directions.
MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided.
Your telephone or internet vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed and returned
the proxy card.
If you have submitted your proxy by
telephone or the internet there is no
need for you to mail back your proxy.
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET
The Board of Directors recommends a vote FOR all nominees and
FOR proposal 2.
1. Election of Class I Directors
Nominees: 01-Michael L. Ainslie, 02-John F. Akers, 03-Richard S. Fuld, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
2. Ratification of Ernst & Young LLP as independent auditors for the fiscal
year 2002. FOR AGAINST ABSTAIN
3. To act on any other business which may properly come before the Annual
Meeting or any adjournment thereof.
IMPORTANT: Please sign exactly as
your name or names appear hereon and
when signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
the signature is by a corporation, a
duly authorized officer should sign
in full corporate name. Dated
Share Owner sign here _______________
Co-Owner sign here _______________
PLEASE SIGN, DATE AND MAIL YOUR PROXY VOTES MUST BE INDICATED
CARD PROMPTLY IN THE ENCLOSED ENVELOPE (X) IN BLACK OR BLUE INK. X
UNLESS YOU HAVE VOTED BY TELEPHONE OR
INTERNET.
Dear Incentive Plans Participant:
The Annual Meeting of Stockholders of Lehman Brothers Holdings Inc. will be held
on April 9, 2002. State Street Bank and Trust Company, as Trustee of the 1997
Trust under Lehman Brothers Holdings Inc. Incentive Plans, will vote the shares
held in the Trust as directed by Participants who have Voting Awards allocated
to their accounts.
Enclosed in this package are the following materials:
- Chairman's letter, notice of 2002 Annual Meeting of Stockholders and Proxy
Statement explaining the matters to be voted on by stockholders at the
meeting
- Proxy voting instruction card
- Postage paid return envelope
As a Participant holding Voting Awards under the Plans, you may direct the
Trustee how to vote the number of shares of Lehman Brothers Holdings Inc. held
in the Trust equivalent to the Voting Awards allocated to you, according to the
formula described below. To do so, please place an X in the appropriate boxes on
your proxy card, sign and date the card, and return it in the enclosed postage
paid envelope. Alternatively, you may direct the Trustee how to vote your shares
by telephone or online according to the instructions on the proxy card. Your
votes with respect to the matters set forth in the Proxy Statement will not be
confidential.
Participants' number of votes will be determined by multiplying the total number
of Trust shares existing on the Record Date by a number determined by dividing
the number of Voting Awards you own by the total number of Voting Awards voted.
For example: if the Trust holds 1,000 shares on the Record Date, you hold 50
Voting Awards, and 600 Awards vote, the vote allocated to you would equal
1,000 X 50/600 or 83.33 votes.
BECAUSE YOUR VOTE IS IMPORTANT, YOU ARE STRONGLY ENCOURAGED TO PROVIDE YOUR
VOTING INSTRUCTIONS TO THE TRUSTEE AS SOON AS POSSIBLE.
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