GENERAL AMERICAN INVESTORS COMPANY, INC.
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450 Lexington Avenue New York N.Y. 10017
Notice of Annual Meeting of Stockholders
March 3, 2003
To the Stockholders of
GENERAL AMERICAN INVESTORS Company, Inc.
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of General
American Investors Company, Inc. will be held at The Century Association, 7 West
43rd Street, New York City, N.Y., on Wednesday, April 9, 2003 at 10:00 a.m., New
York Time, for the purpose of
(a) Electing directors, eight to be elected by the holders of both the
Company's Common Stock and its 7.20% Tax-Advantaged Cumulative
Preferred Stock ("Preferred Stock") voting together as a single class
and two to be elected only by the holders of the Company's Preferred
Stock, to hold office until the annual meeting of stockholders next
ensuing after their election and until their respective successors
are elected and shall have qualified; and
(b) Ratifying or rejecting the selection by the Board of Directors of the
Company of the firm of Ernst & Young LLP to be the auditors of the
Company for the year ending December 31, 2003; and
(c) Transacting any and all such other business as may properly come
before the meeting or any adjournment or adjournments thereof in
connection with the foregoing or otherwise.
The minute books of the Company, containing the minutes of all meetings of
the Board of Directors since the last annual meeting of the stockholders, will
be presented to the meeting and will be open to the inspection of the
stockholders.
The close of business on February 19, 2003 has been fixed as the record
date for the determination of the stockholders entitled to notice of, and to
vote at, the meeting.
This notice and related proxy material is expected to be mailed on or about
March 3, 2003.
By order of the Board of Directors,
CAROLE ANNE CLEMENTI
Secretary
If you do not expect to attend the meeting in person and wish your stock to be
voted, you are requested to fill in and sign the accompanying form of proxy and
return it in the accompanying envelope.
GENERAL AMERICAN INVESTORS COMPANY, INC.
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450 Lexington Avenue New York N.Y. 10017
PROXY STATEMENT
March 3, 2003
This statement is furnished in connection with the solicitation by the Board of
Directors of General American Investors Company, Inc. (hereinafter called the
"Company" or the "Corporation") of proxies to be used at the annual meeting of
stockholders of the Company, to be held at The Century Association, 7 West 43rd
Street, New York City, N.Y., on Wednesday, April 9, 2003 at 10:00 a.m. (and at
any adjournment or adjournments thereof) for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Stockholders who execute
proxies retain the right to revoke them at any time insofar as they have not
been exercised, by written notice to the Secretary of the Company or by
attendance at the Annual Meeting.
The close of business on February 19, 2003 has been fixed as the record date for
the determination of the stockholders entitled to notice of, and to vote at, the
meeting.
Proxies returned will be voted in accordance with the instructions thereon or,
if no instructions are indicated, in favor of the directors named herein and to
approve the appointment of Ernst & Young LLP as auditors.
As of February 19, 2003, the Company had outstanding 30,337,356 shares of Common
Stock, $1 par value, and 6,000,000 shares of 7.20% Tax-Advantaged Cumulative
Preferred Stock ("Preferred Stock"), $1 par value, each share carrying one vote.
The Annual Report of the Company, including audited financial statements for the
fiscal year ended December 31, 2002, has previously been furnished to all
stockholders of the Company. This proxy statement and form of proxy are first
being mailed to stockholders on or about March 3, 2003. The Company will
provide, without charge, additional copies of the Annual Report to any
stockholder upon request by calling Carole Anne Clementi, corporate secretary of
the Company, at 1-800-436-8401.
The Company intends to treat properly executed proxies that are marked "abstain"
or "withhold," including "broker non-votes" (that is, a proxy from a broker or
nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote shares on a particular matter
with respect to which the broker or nominee does not have discretionary power),
as present for purposes of determining the existence of a quorum for the
transaction of business. (A quorum will consist of a majority of the shares of
stock of the Company entitled to vote on a matter at the meeting, present in
person or represented by proxy.) The election of the Company's directors
requires a plurality of the votes of the shares present or represented by proxy
at the meeting and entitled to vote on the election. In the election of
directors, votes may be cast in favor of or withheld with respect to any or all
nominees; votes that are withheld will be excluded entirely from the vote and
will have no effect on the outcome of the vote. The affirmative vote of the
holders of a majority of the outstanding shares present in person or represented
by proxy and entitled to vote on the matter is required to ratify the
appointment of Ernst & Young LLP. In accordance with Delaware law, only votes
cast "for" a matter constitute affirmative votes. Accordingly, votes that are
withheld or abstentions from voting are not votes cast "for" a particular
matter, and such votes have the same effect as negative votes or votes "against"
a particular matter. Because of the routine nature of the items of business
presented in this proxy statement, the rules of The New York Stock Exchange,
Inc. permit member brokers who do not receive instructions from their customers
who are beneficial owners of the Company's shares to vote their customer's
shares on these items of business.
1
A. Respecting the Election of Directors
At the meeting, ten directors are to be elected to hold office until the
annual meeting of stockholders next ensuing after their election and until their
respective successors are elected and shall have qualified. Eight directors are
to be elected by the holders of both the Company's Common Stock and its
Preferred Stock, voting together as a single class, and two directors are to be
elected only by the holders of the Company's Preferred Stock. Directors are to
be elected by a plurality of the vote of shares present in person or represented
by proxy at the meeting and entitled to vote on Directors. Stockholders vote at
the meeting by casting ballots (in person or by proxy) which are tabulated by
one or two persons, appointed at the meeting, who serve as Inspectors of
Election at the meeting and who execute an oath to discharge their duties. It is
the intention of the persons named in the accompanying form of proxy to nominate
and to vote such proxy for the election of persons named below or, if any such
persons should be unable to serve, for the election of such other person or
persons as shall be determined by the persons named in the proxy in accordance
with their judgment. All of the persons named below are incumbent directors.
They have agreed to serve if elected. Information in the following table is as
of December 31, 2002.
Directors
Name, Address(1), Age,
Position(s) with Company and Principal Occupation(s)
Length of Time Served(2) During Past 5 Years Other Directorships and Affiliations
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Independent Directors
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Lawrence B. Buttenwieser (71) Counsel since 2002 and
Director since 1967 Partner (1966-2002),
Chairman since 1995 Katten Muchin Zavis Rosenman
and predecessor firms (lawyers)
Arthur G. Altschul, Jr.(3) (38) Managing Member, Delta Opportunity Fund, Ltd., Director
Director since 1995 Diaz & Altschul Capital Medicis Pharmaceutical Corporation, Director
Management, LLC The Overbrook Foundation, Trustee
(investments and securities)
Lewis B. Cullman (84) President, Chess-in-the-Schools, Chairman, Board of Trustees
Director since 1961 Cullman Ventures LLC Metropolitan Museum of Art, Honorary Trustee
(formerly Cullman Ventures, Inc.) Museum of Modern Art, Vice Chairman,
(catalogs) International Council and Honorary Trustee
Neurosciences Research Foundation, Vice Chairman,
Board of Trustees
The New York Botanical Garden, Senior Vice Chairman,
Board of Managers
Gerald M. Edelman (73) Member and Chairman of the Neurosciences Institute of the
Director since 1976 Department of Neurobiology, Neurosciences Research Foundation,
The Scripps Research Institute Director and President
John D. Gordan, III (57) Partner,
Director since 1986 Morgan, Lewis & Bockius LLP
(lawyers)
Sidney R. Knafel(3) (72) Managing Partner, BioReliance Corporation, Chairman, Board of Directors
Director since 1994 SRK Management Company IGENE Biotechnology, Inc., Director
(private investment company) Insight Communications Company, Inc.,
Chairman, Board of Directors
Richard R. Pivirotto (72) President, General Theological Seminary, Trustee
Director since 1971 Richard R. Pivirotto Co., Inc. The Gillette Company, Director
(self-employed consultant) The Greenwich Bank and Trust Company, Director
Greenwich Hospital Corporation, Trustee
Immunomedics, Inc., Director
New York Life Insurance Company, Director
Princeton University, Charter Trustee Emeritus
2 (continued on page 3)
Name, Address(1), Age,
Position(s) with Company and Principal Occupation(s)
Length of Time Served(2) During Past 5 Years Other Directorships and Affiliations
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Joseph T. Stewart, Jr. (73) Corporate director and trustee Foundation of the University of
Director since 1987 Executive Consultant, Medicine and Dentistry of New Jersey, Trustee
Johnson & Johnson Marine Biological Laboratory, Member,
(1990-1999) Advisory Council
United States Merchant Marine Academy, Trustee,
Board of Advisors
Raymond S. Troubh (76) Financial Consultant Ariad Pharmaceuticals, Inc., Director
Director since 1989 Diamond Offshore Drilling, Inc., Director
Enron Corp., Chairman, Board of Directors
Gentiva Health Services, Inc., Director
Hercules Incorporated, Director
Petrie Stores Liquidating Trust, Trustee
Triarc Companies, Inc., Director
WHX Corporation, Director
Interested Director
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Spencer Davidson(4) (60) President and Chief Executive Medicis Pharmaceutical Corporation, Director
Director, President and Chief Officer Neurosciences Research Foundation, Trustee
Executive Officer since 1995 General American Investors
Company, Inc.
1 The address of each director is: c/o General American Investors Company, Inc., 450 Lexington Avenue, Suite 3300, New York,
NY 10017.
2 Each director and officer is elected for a one year term of office.
3 Messrs. Altschul and Knafel have been designated as the Preferred Stock directors and are to be elected only by the holders of
the Company's Preferred Stock.
4 Mr. Davidson is an "Interested" director, as defined in the Investment Company Act of 1940, as amended, because he is an
officer of the Company.
Security Ownership of Management
The following table sets forth certain information as of December 31, 2002
with respect to the beneficial ownership of the Company's Common Stock and
Preferred Stock by each person who is known to the Company to have beneficial
ownership of more than 5% of the outstanding shares of Common Stock or Preferred
Stock, each director, each officer and all directors and officers of the Company
as a group.
Name of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership(1) Percent of Class
------------------------------------------------------------------------------------------------------------------
Common Stock Arthur G. Altschul, Jr. 578,032(2) 1.91%
Lawrence B. Buttenwieser 823,485(3) 2.71
Lewis B. Cullman 93,337(4) .31
Spencer Davidson 856,477(2) 2.82
Gerald M. Edelman 2,173 .01
John D. Gordan, III 324,485(5) 1.08
Sidney R. Knafel 45,899 .15
Richard R. Pivirotto 2,199 .01
Joseph T. Stewart, Jr. 17,213 .06
Raymond S. Troubh 31,280 .10
Eugene L. DeStaebler, Jr. 5,028(6) .02
Directors and Officers as a Group 2,352,784(7) 7.76
3 (continued on page 4)
Name of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership(1) Percent of Class
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Preferred Stock Arthur G. Altschul, Jr. 230,600(8) 3.84
Lawrence B. Buttenwieser - -
Lewis B. Cullman - -
Spencer Davidson 326,600(8) 5.44
Gerald M. Edelman - -
John D. Gordan, III 1,000 .02
Sidney R. Knafel - -
Richard R. Pivirotto - -
Joseph T. Stewart, Jr. 500(9) .01
Raymond S. Troubh - -
Carole Anne Clementi 100 .00
Peter P. Donnelly 360(10) .01
Diane G. Radosti 100 .00
Directors and Officers as a Group 450,260(11) 7.50
1 Unless otherwise indicated, the person holding the shares has sole voting and dispositive power over all shares shown.
2 Mr. Altschul has shared voting and dispositive power over 161,855 common shares (.53% of the class), including 157,816 common
shares (.52% of the class) over which Mr. Davidson also has shared voting and dispositive power. Mr. Altschul has shared
voting authority over 414,628 common shares (1.37% of the class), including 269,008 common shares (.89% of the class) over
which Mr. Davidson has shared voting and dispositive power.
3 Mr. Buttenwieser has shared voting and dispositive power over 436,353 common shares (1.44% of the class).
4 Mr. Cullman has shared voting and dispositive power over 88,385 common shares (.29% of the class); in addition, his holdings
include 1,630 common shares (.01% of the class) owned by Mr. Cullman's wife in which he disclaims any beneficial ownership.
5 Mr. Gordan has shared voting and dispositive power over 316,361 common shares (1.04% of the class). In addition, his holdings
include 1,703 common shares (.01% of the class) owned by Mr. Gordan's wife in an individual retirement account in which he
disclaims any beneficial ownership.
6 Includes 566 common shares (.00% of the class) owned by Mr. DeStaebler's wife in which he disclaims any beneficial ownership.
7 Excludes 426,824 common shares (1.41% of the class) over which both Mr. Altschul and Mr. Davidson share joint voting and/or
dispositive power.
8 Mr. Altschul has shared voting and dispositive power over 174,600 preferred shares (2.91% of the class), including 68,000
preferred shares (1.13% of the class) over which Mr. Davidson also has shared voting and dispositive power.
Mr. Altschul has shared voting authority over 56,000 preferred shares (.93% of the class), including 41,000 preferred shares
(.68% of the class) over which Mr. Davidson has shared voting and dispositive power.
9 Shares owned by Mr. Stewart's wife in which he disclaims any beneficial ownership.
10 Includes 180 preferred shares (.00% of the class) owned by Mr. Donnelly's wife in which he disclaims any beneficial ownership.
11 Excludes 109,000 preferred shares (1.82% of the class) over which both Mr. Altschul and Mr. Davidson share joint voting
and/or dispositive power.
In addition to the holdings reflected in the foregoing table, the Company has the power to vote 552,560 shares of Common Stock
(1.82% of the class) held by the trustee for the Company's Employees' Thrift Plan, as described below.
4
Director Share Ownership Table
The dollar range of the value of equity securities of the Company
beneficially owned by each Director as of December 31, 2002 is as follows:
Dollar Range of
Equity Securities
Name of Director in the Company
--------------------------------------------------
Independent Directors
---------------------
Arthur G. Altschul, Jr. Over $100,000
Lawrence B. Buttenwieser Over $100,000
Lewis B. Cullman Over $100,000
Gerald M. Edelman $50,001-$100,000
John D. Gordan, III Over $100,000
Sidney R. Knafel Over $100,000
Richard R. Pivirotto $50,001-$100,000
Joseph T. Stewart, Jr. Over $100,000
Raymond S. Troubh Over $100,000
Interested Director
-------------------
Spencer Davidson Over $100,000
Meetings of Committees of the Board of Directors
During 2002, the Company's Board of Directors held six meetings.
The Audit Committee consists of the following directors: Mr. Sidney R.
Knafel, Chairman, Mr. Arthur G. Altschul, Jr., Mr. Lawrence B. Buttenwieser, Mr.
Lewis B. Cullman, Mr. John D. Gordan, III and Mr. Raymond S. Troubh. These
directors are independent of management and the Company. Each of them is also
"independent" as such term is defined in The New York Stock Exchange listing
standards. The organization and responsibilities of the Audit Committee are set
forth in the Audit Committee Charter (Exhibit A), which has been reviewed by the
Audit Committee and approved and adopted by the Board of Directors. Generally,
the Audit Committee assists the Board of Directors in its oversight of the
Company's accounting and financial reporting and internal controls, the
independent audit of the Company's financial statements, the selection of the
independent auditors and the evaluation of the independence of the independent
auditors. The Report of the Audit Committee is set forth in Exhibit B. The Audit
Committee met twice during the fiscal year, on January 16 and December 11, 2002,
and once after the end of the fiscal year, on January 15, 2003.
The Compensation Committee consists of the following directors: Mr. Joseph
T. Stewart, Jr., Chairman, Mr. Arthur G. Altschul, Jr., Mr. Lawrence B.
Buttenwieser, Mr. Sidney R. Knafel, Mr. Richard R. Pivirotto and Mr. Raymond S.
Troubh; and Mr. Lewis B. Cullman and Dr. Gerald M. Edelman, alternates.
Generally, for the Company, the Compensation Committee reviews the operations of
the Company and performance and contributions made during each year by its
officers and employees, reviews management proposals for year-end supplemental
compensation and levels of compensation for the ensuing year, reviews comparable
operating and compensation data of other companies in the investment industry
including information and trends provided by an outside consulting firm, and
makes recommendations on matters of compensation to the Board of Directors. The
Committee met once during the fiscal year, on December 11, 2002.
The Executive Committee consists of the following directors: Mr. Richard R.
Pivirotto, Chairman, Mr. Lawrence B. Buttenwieser, Mr. Spencer Davidson (an
"interested person" of the Company), Dr. Gerald M. Edelman, and Mr. Joseph T.
Stewart, Jr.; and Mr. John D. Gordan, III, alternate. The Executive Committee
has the authority to exercise the powers of the Board of Directors in the
management of the business and affairs of the Company when the Board is not in
session. The Committee did not meet during the fiscal year.
The Nominating Committee consists of the following directors (all of the
Company's independent directors): Mr. Richard R. Pivirotto, Chairman, Mr. Arthur
G. Altschul, Jr., Mr. Lawrence B. Buttenwieser, Mr. Lewis B. Cullman, Dr. Gerald
M. Edelman, Mr. John D. Gordan, III, Mr. Sidney R. Knafel, Mr. Joseph T.
Stewart, Jr. and Mr. Raymond S. Troubh. The Nominating Committee is responsible
for directing the process whereby individuals are selected and nominated to
serve as directors of the Company. This includes canvassing, recruiting,
interviewing and soliciting independent director candidates and making
recommendations to the Board with respect to individuals to be nominated to
serve as directors. In addition, the Committee will consider nominees
recommended by, and respond to related inquiries received from, shareholders.
Recommendations of nominees should be submitted in writing to the Chairman of
the Nominating Committee, Mr. Richard R. Pivirotto, at the office of the
Company. The Committee met once during the fiscal year, on December 11, 2002.
5
The Pension Committee consists of the following directors: Mr. John D.
Gordan, III, Chairman, Mr. Lewis B. Cullman, Dr. Gerald M. Edelman, Mr. Richard
R. Pivirotto, and Mr. Raymond S. Troubh; and Mr. Sidney R. Knafel and Mr. Joseph
T. Stewart, Jr., alternates. The Pension Committee is responsible for the
general administration of the Company's Employees' Retirement Plan and
establishes and carries out a funding policy and method consistent with the
objectives of the Plan. The Committee met once during the fiscal year, on July
10, 2002.
Each Director attended at least seventy-five percent of the aggregate
number of meetings of the Board of Directors and of the committee(s) on which he
serves.
Beneficial Ownership Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and certain other persons to file timely
certain reports regarding ownership of, and transactions in, the Company's
securities with the Securities and Exchange Commission. Copies of the required
filings must also be furnished to the Company.
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that during
2002 all applicable Section 16(a) filing requirements were met, except that Form
4s required to be filed by Lawrence B. Buttenwieser for transactions in April
and June 2002 and on September 5 and 25, 2002 were filed late and Form 4s
required to be filed by Arthur G. Altschul, Jr. for transactions on December 11
and 12, 2002 were filed late.
Officers
In addition to Mr. Spencer Davidson, President and Chief Executive Officer
of the Company, information with respect to whom is set forth above, the
officers of the Company include the following. (Officers are elected each year
by the Board of Directors at its annual organization meeting in April.) The
address of each officer is: c/o General American Investors Company, Inc., 450
Lexington Avenue, Suite 3300, New York, NY 10017.
Mr. Andrew V. Vindigni, 43, Vice President since September 1995 and, prior
thereto, Assistant Vice-President from January 1991, has been a security analyst
with the Company since 1988. Mr. Vindigni is principally responsible for
securities in the financial services industry.
Mr. Eugene L. DeStaebler, Jr., 64, has been Vice-President, Administration
since 1978 and was appointed Principal Financial Officer in 2002. Mr. DeStaebler
is a director and a member of the executive committee of the Closed-End Fund
Association, Inc., Kansas City, MO.
Mr. Peter P. Donnelly, 54, Vice-President since January 1991 and, prior
thereto, Assistant Vice-President from January 1984, has been the securities
trader for the Company since 1974.
Mrs. Diane G. Radosti, 50, Treasurer since January 1990, has been an
employee of the Company since 1980.
Ms. Carole Anne Clementi, 56, Secretary since October 1994 and, prior
thereto, Assistant Secretary from July 1993, has been an employee of the Company
since 1982.
6
Executive Compensation
The following table sets forth the compensation received during 2002 from
the Company by its three highest-paid officers and by its directors.
Pension or
retirement
Aggregate benefits accrued
Name of individual Position compensation during 2002(1)
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Spencer Davidson President and Chief Executive Officer, Director (C) $2,200,000 $72,000
Andrew V. Vindigni Vice-President 1,100,000 48,000
Eugene L. DeStaebler, Jr. Vice-President, Administration 500,000 36,000
Arthur G. Altschul, Jr. Director (A)(B)(D) 15,000 -
Lawrence B. Buttenwieser Director, Chairman of the Board (A)(B)(C)(D) 15,000 -
Lewis B. Cullman Director (A)(D)(E) 15,000 -
Gerald M. Edelman Director (C)(D)(E) 14,000 -
John D. Gordan, III Director (A)(D)(E) 15,000 -
Bill Green (a) Director (A)(B)(D) 10,000 -
Sidney R. Knafel Director (A)(B)(D) 15,000 -
Richard R. Pivirotto Director (B)(C)(D)(E) 14,000 -
Joseph T. Stewart, Jr. Director (B)(C)(D) 14,000 -
Raymond S. Troubh Director (A)(B)(D)(E) 15,000 -
(a) Mr. Green served as a director through the date of his death, October 14,
2002.
(A) Member of Audit Committee
(B) Member of Compensation Committee
(C) Member of Executive Committee
(D) Member of Nominating Committee
(E) Member of Pension Committee
1 The amounts shown in this column represent the Company's payments made during
2002 to the trustee of the Company's Employees' Thrift Plan, as described
below, or accounting reserves established during 2002 under the
Company's Excess Contribution Plan, as described below, on behalf of
the respective individuals.
During 2002, each director who was not a paid officer of the Company
received a fee of $10,000 as an annual retainer, a fee of $500 for attendance at
each Directors' meeting and $500 for each Committee meeting which he attended in
his capacity as a Director.
With respect to the Company's Employees' Thrift Plan, the Company matches
150% of an employee's contributions up to 8% of basic salary to the plan.
Company contributions are invested in shares of the Company's common stock. An
employee's interest in Company contributions to his account is fully vested
after six years of service. Partial vesting begins after two years of
participation in the plan. All employees, including officers, are eligible to
participate in the Thrift Plan after six months of service with the Company.
Employees whose annual compensation exceeds $150,000 are required to invest
their future contributions to the plan in shares of the Company's common stock,
and their existing plan balances will be converted into the Company's common
stock over the three years next succeeding the attainment of that compensation
level.
The Company has an Employees' Retirement Plan which is broadly
characterized as a defined benefit plan. The Company contributes to the trustee
for the plan annual costs which include actuarially determined current service
costs and amortization of prior service costs. Retirement benefits are based on
final average earnings (basic salary and, beginning in 2000, bonuses, but only
for non-highly compensated employees, exclusive of bonuses for highly
compensated employees, overtime, commissions, pension, retainer fees, fees under
contracts or any other forms of additional or special compensation, for the five
consecutive years in which the participant had the highest basic salary during
the last ten years of service) and years of credited service, less an offset for
social security covered compensation, plus an additional amount equal to $50 for
each year of credited service. All employees, including officers, over age 21
commence participation in the plan after one year of service and are fully
vested after six years of service. Partial vesting begins after two years of
service. Participants are eligible to receive normal retirement benefits at age
65. In certain instances, a reduced benefit may begin upon retirement between
ages 55 and 65.
The following table shows the estimated annual retirement benefits
(including amounts attributable to the Company's Excess Benefit Plan, as
described below), which are subject to a deduction based on a portion of social
security covered compensation, payable on a straight life annuity basis, at
normal retirement date to all eligible employees, including officers, in
specified compensation and years-of-service classifications:
7
Estimated Annual Benefits Based Upon Years of Credited Service
------------------------------------------------------------------------------------------------------------
Final Average 10 20 30 40
Earnings
$100,000 $16,830 $33,665 $50,495 $61,900
200,000 33,120 66,245 99,365 121,630
300,000 49,410 98,825 148,235 181,360
400,000 65,700 131,405 197,105 241,090
500,000 81,990 163,985 245,975 300,820
600,000 98,280 196,565 294,845 360,550
For each of the officers of the Company listed in the compensation table on
page 7, the following indicates his years of credited service in the Company's
Retirement Plan and basic salary for 2002. Spencer Davidson (8) $600,000, Andrew
V. Vindigni (14) $400,000 and Eugene L. DeStaebler, Jr. (26) $300,000.
The Company also has Excess Contribution and Excess Benefit Plans. Under
such plans, the Company may establish accounting reserves and make payments
directly to selected participants in the Company's Thrift and Retirement Plans,
respectively, to the extent the levels of contributions or benefits for such
participants under such plans are limited by sections 415, 416 and/or 401(a)(17)
of the Internal Revenue Code. Such benefits commence at the time benefits
commence under the related tax-qualified plan. Messrs. Davidson, Vindigni and
DeStaebler are participants in both the Excess Contribution and Excess Benefit
Plans.
B. Respecting the Ratification and Approval of Appointment of Auditors by the
Board of Directors
Proposal (b) set forth in the accompanying Notice of Annual Meeting of
Stockholders is the ratification or rejection of the action taken in the
following resolutions unanimously adopted by the Board of Directors (a majority
of non-interested directors voting in person) appointing the firm of Ernst &
Young LLP to be the auditors of the Company for the fiscal year ending December
31, 2003.
"RESOLVED, that the firm of Ernst & Young LLP be and they hereby are
appointed the auditors of the Company with respect to its operations for
the year 2003; and further
"RESOLVED, that such auditors be and they hereby are authorized and
instructed to conduct an audit, in accordance with auditing standards
generally accepted in the United States, of the financial statements of the
Company as of and for the year ending December 31, 2003; and further
"RESOLVED, that such auditors be and they hereby are authorized and
instructed to conduct a review, in accordance with standards established by
the American Institute of Certified Public Accountants, of the interim
financial statements of the Company as of and for the six months ending
June 30, 2003; and further
"RESOLVED, that such appointment shall terminate (without penalty to
the Company) in the event that it shall be rejected at the annual meeting
of the stockholders of the Company in 2003; and further
"RESOLVED, that such appointment shall terminate (without penalty to
the Company) if a majority (as defined in the Investment Company Act of
1940) of the outstanding voting securities of the Company at any meeting
called for the purpose shall vote to terminate such appointment; and
further
"RESOLVED, that the report of such auditors expressing their opinion
with respect to the financial statements above described and the report of
such auditors with respect to the review above described shall be addressed
to the Board of Directors of the Company and to the stockholders thereof."
Audit Fees
The aggregate fees paid and accrued by the Company for professional
services rendered by its independent auditors, Ernst & Young LLP, for the audit
of the Company's annual financial statements and the review of the Company's
semi-annual financial statements for 2002 was $57,500.
Financial Information Systems Design and Implementation Fees
No such fees were billed to the Company by its auditors for 2002.
All Other Fees
The aggregate fees paid or accrued by the Company for non-audit services by
Ernst & Young LLP for 2002 was $42,500. Such services included: quarterly
reports on the Company's calculations under the rating agency's guidelines
applicable to the Preferred Stock ($16,000), quarterly reports on the
application of agreed upon procedures relating to employee transaction reports
($12,000), and tax-related services ($11,000). The Audit Committee has
considered whether the provision of the non-audit services by the auditors is
compatible with maintaining the auditors' independence.
8
A representative of Ernst & Young LLP will attend the Annual Meeting to
respond to appropriate questions and will have the opportunity to make a
statement. Stockholders who wish to submit questions in advance to the auditors
may do so in writing to Mr. Michael D. DiLecce, Partner, Ernst & Young LLP, 5
Times Square, New York, NY 10036.
C. Respecting Other Matters Which May Come Before the Meeting
The Board of Directors of the Company does not know of any other matters
which may come before the meeting. However, if any other matters, of which the
Board of Directors is not now aware, are properly presented for action before
the meeting, including any questions as to the adjournment of the meeting, it is
the intention of the persons named in the accompanying form of proxy to vote
such proxy in accordance with their judgment on such matters.
D. Allocation of Portfolio Brokerage
Brokerage commissions paid by the Company during 2002 were $1,096,080.
The Company's general policy regarding the execution of securities
transactions is to select brokers and dealers on the basis of the most favorable
markets, prices and execution of orders. A certain amount of the Company's
securities transactions are placed with brokers and dealers who provide
brokerage and research services and in these circumstances the commissions paid
may be higher than those which might otherwise have been paid to another broker
or dealer if those services had not been provided.
Research services generally include receipt of written reports, attendance
at meetings or participation in discussions with respect to specific subjects,
such as a company, an industry or the economic outlook. Block availability is
also a consideration in determining the selection of brokers.
In negotiating brokerage commissions on securities transactions, the
Company's trader, with his awareness of competitive rates, negotiates the most
favorable commission to effect a particular transaction. Size of order and
difficulty of execution are considerations in the negotiation. All transactions,
including the commission factor, are subject to supervision and review by the
Company's officers.
E. Portfolio Turnover Rate
The annual rate of the total portfolio turnover for the fiscal year ended
December 31, 2002 was 22.67%.
F. Stockholder Proposals
In order for a stockholder proposal to be considered for inclusion in the
Company's proxy material relating to its 2004 annual meeting of stockholders,
the stockholder proposal must be received by the Company no later than November
4, 2003, and must comply with certain other rules and regulations promulgated by
the Securities and Exchange Commission.
The persons named as appointees for the 2004 annual meeting of stockholders
will have discretionary authority to vote on any matter presented by a
stockholder for action at that meeting unless the Company receives notice of the
matter by January 18, 2004, in which case these persons will not have
discretionary voting authority except as provided in the Securities and Exchange
Commission's rules governing stockholder proposals.
-------------------------
The expense of the solicitation of proxies for this meeting will be borne
by the Company. In addition to mailing copies of this material to stockholders,
the Company will request persons who hold stock for others, in their names or
custody or in the names of nominees, to forward copies of such material to those
persons for whom they hold stock of the Company and to request authority for the
execution of the proxies. The Company may reimburse such persons for their
out-of-pocket expenses incurred in connection therewith.
It is important that proxies be returned promptly. Therefore, stockholders
who do not expect to attend in person and who wish their stock to be voted are
urged to fill in, sign and return the accompanying form of proxy in the enclosed
envelope.
9
EXHIBIT A
Charter of the Audit Committee of
the Board of Directors of General American Investors Company, Inc.
I. Composition of the Audit Committee:
-----------------------------------
The Audit Committee shall be comprised of at least three directors, each of
whom: (i) shall not be an "interested person," as defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended, of the Company, (ii) shall be
financially literate and (iii) shall have no relationship to the Company that
may interfere with the exercise of his or her independence from management and
the Company and, as to his or her relationship to the Company, shall otherwise
satisfy the applicable membership requirements under the rules of the New York
Stock Exchange, Inc., as such requirements are interpreted by the Board of
Directors in its business judgment. In addition, at least one member of the
Audit Committee shall have accounting or related financial management expertise,
as such qualification is interpreted by the Board of Directors in its business
judgment.
II. Purposes of the Audit Committee:
--------------------------------
The purposes of the Audit Committee are to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial reporting
principles and policies and internal controls and procedures;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting, evaluating and, where deemed appropriate, replacing
the outside auditors (or nominating the outside auditors to be proposed
for shareholder approval in any proxy statement); and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity of the
Company's financial statements. Management is responsible for maintaining
appropriate accounting and financial reporting principles and policies and
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The outside auditors are
responsible for planning and carrying out proper audits and reviews of the
Company's financial statements. In fulfilling their responsibilities hereunder,
it is recognized that members of the Audit Committee are not full-time employees
of the Company and are not, and do not represent themselves to be, accountants
or auditors by profession or experts in the fields of accounting or auditing
including in respect of auditor independence. As such, it is not the duty or
responsibility of the Audit Committee or its members to conduct "field work" or
other types of auditing or accounting reviews or procedures or to set auditor
independence standards, and each member of the Audit Committee shall be entitled
to rely on (i) the integrity of those persons and organizations within and
outside the Company from whom it receives information, (ii) the accuracy of the
financial and other information provided to the Audit Committee by such persons
or organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Board of Directors) and (iii) representations made by
management as to any information technology, internal audit and other non-audit
services provided by the auditors to the Company.
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of Directors,
with the assistance of the Audit Committee, has the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the outside
auditors (or to nominate the outside auditors to be proposed for shareholder
approval in the proxy statement).
The outside auditors shall submit to the Company annually a formal written
statement delineating all relationships between the outside auditors and the
Company ("Statement as to Independence"), addressing at least the matters set
forth in Independence Standards Board Standard No. 1.
The outside auditors shall submit to the Company annually a formal written
statement of the fees billed for each of the following categories of services
rendered by the outside auditors: (i) the audit of the Company's annual
financial statements for the most recent fiscal year; (ii) the reviews(s) of the
Company's interim financial statements during the fiscal year, (iii) information
technology consulting services for the most recent fiscal year, in the aggregate
and by each service (and separately identifying fees for such services relating
to financial information systems design and implementation); and (iv) all other
services rendered by the outside auditors for the most recent fiscal year, in
the aggregate and by each service.
A - 1
III. Meetings of the Audit Committee:
--------------------------------
The Audit Committee shall meet as often as may be required to discuss the
matters set forth in Article IV. In addition, the Audit Committee should meet
separately at least annually with management and the outside auditors to discuss
any matters that the Audit Committee or any of these persons or firms believe
should be discussed privately. The Audit Committee may request any officer or
employee of the Company or the Company's outside counsel or outside auditors to
attend a meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee. Members of the Audit Committee may
participate in a meeting of the Audit Committee by means of conference call or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.
IV. Duties and Powers of the Audit Committee:
----------------------------------------
To carry out its purposes, the Audit Committee shall have the following duties
and powers:
1. with respect to the outside auditor,
(i) to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;
(ii) to review the fees charged by the outside auditors for audit and
nonaudit services;
(iii) to ensure that the outside auditors prepare and deliver annually a
Statement as to Independence (it being understood that the outside
auditors are responsible for the accuracy and completeness of this
Statement), to discuss with the outside auditors any relationships
or services disclosed in this Statement that may impact the
objectivity and independence of the Company's outside auditors and
to recommend that the Board of Directors take appropriate action in
response to this Statement to satisfy itself of the outside
auditors' independence;
(iv) if applicable, to consider whether the outside auditors' provision
of (a) information technology consulting services relating to
financial information systems design and implementation and
(b) other non-audit services to the Company is compatible with
maintaining the independence of the outside auditors; and
(v) to instruct the outside auditors that the outside auditors are
ultimately accountable to the Board of Directors and Audit
Committee;
2. with respect to financial reporting principles and policies and
internal controls and procedures,
(i) to advise management and the outside auditors that they are
expected to provide to the Audit Committee a timely analysis of
significant financial reporting issues and practices;
(ii) to consider any reports or communications (and management's
responses thereto) submitted to the Audit Committee by the outside
auditors required by or referred to in SAS 61 (as codified by AU
Section 380), as may be modified or supplemented, including reports
and communications related to:
- deficiencies noted in the audit in the design or operation of
internal controls;
- consideration of fraud in a financial statement audit;
- detection of illegal acts;
- the outside auditor's responsibility under generally
accepted auditing standards;
- significant accounting policies;
- management judgments and accounting estimates;
- adjustments arising from the audit;
- the responsibility of the outside auditor for other
information in documents containing audited financial
statements;
- disagreements with management;
- consultation by management with other accountants;
- major issues discussed with management prior to retention of
the outside auditor;
- difficulties encountered with management in performing the
audit;
- the outside auditor's judgments about the quality of the
entity's accounting principles; and
- reviews of interim financial statements conducted by the
outside auditor;
(iii) to meet with management and/or the outside auditors:
- to discuss the scope of the annual audit;
- to discuss the audited financial statements;
A - 2
- to discuss the report of the outside auditors on the
Company's system of internal control required to be filed
with the Company's Form N-SAR;
- to discuss any significant matters arising from any audit or
report or communication referred to in item 2(ii) above,
whether raised by management or the outside auditors,
relating to the Company's financial statements;
- to review the form of opinion the outside auditors propose to
render to the Board of Directors and shareholders;
- to discuss the Company's compliance with Subchapter M of the
Internal Revenue Code of 1986, as amended;
- to discuss with management and the outside auditors their
respective procedures to assess the representativeness of
securities prices provided by external pricing services;
- to discuss with outside auditors their conclusions as to
the reasonableness of procedures employed to determine the
fair value of securities for which readily available market
quotations are not available, management's adherence to such
procedures and the adequacy of supporting documentation;
- to discuss significant changes to the Company's auditing and
accounting principles, policies, controls, procedures and
practices proposed or contemplated by the outside auditors
or management; and
- to inquire about significant risks and exposures, if any, and
the steps taken to monitor and minimize such risks; and
(iv) to discuss with the Company's legal advisors any significant legal
matters that may have a material effect on the financial
statements; and
3. with respect to reporting and recommendations,
(i) to provide advice to the Board of Directors in selecting the
principal accounting officer of the Company;
(ii) to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules of
the Securities and Exchange Commission to be included in the
Company's annual proxy statement;
(iii) to review this Charter at least annually and recommend any
changes to the full Board of Directors; and
(iv) to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the
above and other matters as the Audit Committee may deem necessary
or appropriate.
V. Resources and Authority of the Audit Committee:
-----------------------------------------------
The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to engage outside
auditors for special audits, reviews and other procedures and to retain special
counsel and other experts or consultants.
A - 3
EXHIBIT B
Report of the Audit Committee of
The Board of Directors of General American Investors Company, Inc.
The purposes of the Company's Audit Committee are set forth in the
Committee's Charter included as Exhibit A. The purposes include assisting the
Board of Directors in its oversight of the Company's financial reporting process
and internal controls, the Company's financial statements and the selection of
the Company's independent auditors. Management, however, is responsible for the
preparation, presentation and integrity of the Company's financial statements,
and the independent auditors are responsible for planning and carrying out
proper audits and reviews.
In connection with the audited financial statements as of and for the year
ended December 31, 2002 included in the Company's Annual Report for the year
ended December 31, 2002 (the "Annual Report"), at a meeting held on January 15,
2003, the Audit Committee considered and discussed the audited financial
statements with management and the independent auditors, and discussed the audit
of such financial statements with the independent auditors.
In addition, the Audit Committee discussed with the independent auditors
the quality, and not just the acceptability under generally accepted accounting
principles, of the accounting principles applied by the Company, and such other
matters brought to the attention of the Audit Committee by the independent
auditors required by Statement of Auditing Standards No. 61, as currently
modified or supplemented. The Audit Committee also received from the independent
auditors the written statement regarding independence as required by
Independence Standards Board Standard No. 1, considered whether the provision of
nonaudit services by the independent auditors is compatible with maintaining the
auditors' independence and discussed with the auditors the auditors'
independence.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including in respect of auditor independence. Moreover,
the Committee relies on and makes no independent verification of the facts
presented to it or representations made by management or the independent
auditors. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles and policies, or internal controls
and procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Company's financial statements has been carried out in accordance with
auditing standards generally accepted in the United States, that the financial
statements are presented in accordance with accounting principles generally
accepted in the United States or that the Company's auditors are in fact
"independent."
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent auditors and
subject to the limitations on the responsibilities and role of the Audit
Committee set forth in the Committee's Charter and those discussed above, the
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report. The Committee and the
Board have also recommended, subject to shareholder approval, the selection of
the Company's independent auditors.
Sidney R. Knafel, Chairman
Arthur G. Altschul, Jr.
Lawrence B. Buttenwieser
Lewis B. Cullman
John D. Gordan, III
Raymond S. Troubh
January 15, 2003
B - 1
COMMON STOCK COMMON STOCK
GENERAL AMERICAN INVESTORS COMPANY, INC.
450 Lexington Avenue
New York, NY 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence B. Buttenwieser, Spencer Davidson
and Eugene L. DeStaebler, Jr. as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all shares of Common Stock of the above Company which the
undersigned is entitled to vote, at the annual meeting of stockholders on April
9, 2003, and at any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR all nominees" in item A and "FOR" item B.
(Continued and to be signed on reverse side)
Please mark your votes as indicated in this example [X]
COMMON STOCK
The Board of Directors recommends a vote "FOR ALL NOMINEES" in Item A and "FOR"
Item B.
A. Election of the following nominees as Directors:
01 Mr. Buttenwieser, 02 Mr. Cullman, 03 Mr. Davidson,
04 Dr. Edelman, 05 Mr. Gordan, 06 Mr. Pivirotto,
07 Mr. Stewart and 08 Mr. Troubh
[ ] FOR all nominees except any indicated
[ ] WITHHOLD AUTHORITY to vote for all listed nominees
(Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name on the line below)
_________________________________________________________________________
B. Ratification of the selection of Ernst & Young LLP as auditors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
C. In their discretion, the appointees are authorized to vote upon any other
matters which may properly come before the meeting or any adjournments
thereof.
Signature __________________________________________
Signature __________________________________________
Date______________________
Please date and sign your name as it appears above and return in the enclosed
envelope. When signing as an attorney, executor, administrator, trustee, or
guardian, please give title as such. If a signer is a corporation, please sign
full corporate name by authorized officer and attach corporate seal. For joint
accounts, each joint owner should sign.
PREFERRED STOCK PREFERRED STOCK
GENERAL AMERICAN INVESTORS COMPANY, INC.
450 Lexington Avenue
New York, NY 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence B. Buttenwieser, Spencer Davidson
and Eugene L. DeStaebler, Jr. as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all shares of 7.20% Tax-Advantaged Cumulative Preferred Stock
of the above Company which the undersigned is entitled to vote, at the annual
meeting of stockholders on April 9, 2003, and at any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR all nominees" in item A and "FOR" item B.
(Continued and to be signed on reverse side)
Please mark your votes as indicated in this example [X]
PREFERRED STOCK
The Board of Directors recommends a vote "FOR ALL NOMINEES" in item A and "FOR"
item B.
A. Election of the following nominees as Directors:
01 Mr. Altschul, 02 Mr. Buttenwieser, 03 Mr. Cullman,
04 Mr. Davidson, 05 Dr. Edelman, 06 Mr. Gordan,
07 Mr. Knafel, 08 Mr. Pivirotto, 09 Mr. Stewart and
10 Mr. Troubh
[ ] FOR all nominees except any indicated
[ ] WITHHOLD AUTHORITY to vote for all listed nominees
(Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name on the line below)
_________________________________________________________________________
B. Ratification of the selection of Ernst & Young LLP as auditors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
C. In their discretion, the appointees are authorized to vote upon any other
matters which may properly come before the meeting or any adjournments
thereof.
Signature __________________________________________
Signature __________________________________________
Date______________________
Please date and sign your name as it appears above and return in the enclosed
envelope. When signing as an attorney, executor, administrator, trustee, or
guardian, please give title as such. If a signer is a corporation, please sign
full corporate name by authorized officer and attach corporate seal. For joint
accounts, each joint owner should sign.