GENERAL AMERICAN INVESTORS COMPANY, INC.
--------------------------------------------------------------------------------
450 Lexington Avenue New York N.Y. 10017
Notice of Annual Meeting of Stockholders
March 1, 2002
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 10, 2002 at 10:00 a.m.,
New York Time, for the purpose of
(a) Electing directors, nine 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, 2002; and
(c) Transacting any and all such other business as may properly come
before the meeting or any adjustment 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 20, 2002 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 1, 2002.
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 1, 2002
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 10, 2002 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 20, 2002 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 20, 2002, the Company had outstanding 31,231,563 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, 2001, 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 1, 2002. 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, eleven 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. Nine 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.
Shares Beneficially Owned Dec. 31, 2001(2)
--------------------------------------------
Principal Became Common Percent Preferred Percent
Name Age Occupation1 Director Stock of Class Stock of Class
------------------------------------------------------------------------------------------------------------------------------------
Arthur G. Altschul, Jr. 37 Managing Member 1995 84,944 .27 4,000 .07
Diaz & Altschul Group, LLC
(investments and securities)
950 Third Avenue, 16th Floor
New York, NY 10022
Mr. Altschul has been managing member of Diaz & Altschul Group, LLC since it was
founded in May 1996. From 1992 to May 1996, he was employed by SUGEN, Inc.
(biopharmaceuticals), Redwood City, CA, most recently as Senior Director of
Corporate Affairs. He was Assistant Secretary of SUGEN from May 1992 to May
1996. Mr. Altschul has been managing general partner of Altschul Investment
Group, L.P. (a private investment partnership), New York, NY since 1988. He is a
director of Delta Opportunity Fund, Ltd., Hamilton, Bermuda; Medicis
Pharmaceutical Corporation, Phoenix, AZ; and several privately owned companies.
Lawrence B. Buttenwieser 70 Partner, Rosenman & Colin LLP 1967 884,796 2.83 -- --
(lawyers)
575 Madison Avenue
New York, NY 10022
Mr. Buttenwieser has been the Chairman of the Board of Directors of the Company
since May 1995 and a director of the Company since 1967.
Lewis B. Cullman 83 President, Cullman Ventures LLC 1961 4,891 .02 -- --
(catalogs)
767 Third Avenue
New York, NY 10017
Mr. Cullman has been president of Cullman Ventures LLC (formerly Cullman
Ventures, Inc.) since 1968. He is chairman and a trustee of Chess-in-the-Schools
(charitable organization), New York, NY. Mr. Cullman is a trustee of the
Metropolitan Museum of Art, New York, NY; and the Neurosciences Research
Foundation (scientific research foundation), San Diego, CA. He is senior vice
chairman of the New York Botanical Garden, Bronx, NY and vice chairman of the
international council and an honorary trustee of the Museum of Modern Art, New
York, NY.
2 (continued on page 3)
Shares Beneficially Owned Dec. 31, 2001(2)
--------------------------------------------
Principal Became Common Percent Preferred Percent
Name Age Occupation1 Director Stock of Class Stock of Class
------------------------------------------------------------------------------------------------------------------------------------
Spencer Davidson* 59 President and Chief Executive Officer 1995 424,318 1.36 113,200 1.89
of the Company
450 Lexington Avenue
New York, NY 10017
Mr. Davidson has been President and Chief Executive Officer of the Company since
August 1995; prior thereto, he was senior investment counselor since joining the
Company in 1994. He was elected a Director of the Company in September 1995.
Before joining General American, Mr. Davidson was the General Partner of The
Hudson Partnership (a private investment partnership), New York, NY. He is a
director of Medicis Pharmaceutical Corporation, Phoenix, AZ; and a trustee of
the Innisfree Foundation, Inc. (not-for-profit foundation), Millbrook, NY and of
the Neurosciences Research Foundation (scientific research foundation), San
Diego, CA.
Gerald M. Edelman 72 Member and Chairman of the 1976 2,147 .01 -- --
Department of Neurobiology
The Scripps Research Institute
10666 North Torrey Pines Rd.
La Jolla, CA 92037
Dr. Edelman has been a member and the chairman of the Department of Neurobiology
of The Scripps Research Institute since July 1992; prior thereto, he was Vincent
Astor Professor of The Rockefeller University, New York, NY. Dr. Edelman is
director and president of the Neurosciences Institute of the Neurosciences
Research Foundation (scientific research foundation), San Diego, CA; president
and a director of the Neurosciences Support Corporation (scientific research
support foundation), San Diego, CA; and a member emeritus of the board of
governors of the Weizmann Institute of Science, Rehovot, Israel.
John D. Gordan, III 56 Partner 1986 8,082 .03 1,000 .02
Morgan, Lewis & Bockius LLP
(lawyers)
101 Park Avenue
New York, NY 10178
Mr. Gordan has been a partner of Morgan, Lewis & Bockius LLP since October 1994;
prior thereto, he was a partner of Lord Day & Lord, Barrett Smith and
predecessor firm from 1979.
Bill Green** 72 Corporate director and trustee 1993 2,310 .01 7,000 .12
14 E. 60th Street - Suite 702
New York, NY 10022
Mr. Green represented the 15th New York Congressional District (east side of
Manhattan) in the U.S. House of Representatives from 1978 through 1992. He is a
director of ClientSoft, Inc., Miami, FL; Comcap Holdings Corp., New York, NY;
Commercial Capital Corp., New York, NY; and Energy Answers Corporation, Albany,
NY. He is also a member and vice chair of the New York City Housing Development
Corporation, New York, NY.
Sidney R. Knafel** 71 Managing Partner 1994 28,809 .09 -- --
SRK Management Company
(private investment company)
810 Seventh Avenue
New York, NY 10019
Mr. Knafel has been managing partner of SRK Management Company since 1981. He is
chairman of the board of directors of BioReliance Corporation, Rockville, MD and
Insight Communications Company, Inc, New York, NY. Mr. Knafel is a director of
IGENE Biotechnology, Inc, Columbia, MD; NTL Incorporated, New York, NY; Source
Media, Inc., Dallas, TX; and several privately owned companies.
(continued on page 4) 3
Shares Beneficially Owned Dec. 31, 2001(2)
--------------------------------------------
Principal Became Common Percent Preferred Percent
Name Age Occupation1 Director Stock of Class Stock of Class
------------------------------------------------------------------------------------------------------------------------------------
Richard R. Pivirotto 71 President, Richard R. 1971 2,172 .01 -- --
Pivirotto Co., Inc.
(self-employed consultant)
111 Clapboard Ridge Road
Greenwich, CT 06830
Mr. Pivirotto was chairman of the board of directors of Associated Dry Goods
Corporation, New York, NY from 1976 until his retirement in 1981. He is a
director of The Gillette Company, Boston, MA; Greenwich Bank and Trust Company,
Greenwich, CT; Immunomedics, Inc. (biopharmaceuticals), Morris Plains, NJ; and
New York Life Insurance Company, New York, NY. He is a trustee of General
Theological Seminary, New York, NY; and Greenwich Hospital Corporation,
Greenwich, CT; and a charter trustee emeritus of Princeton University,
Princeton, NJ.
Joseph T. Stewart, Jr. 72 Corporate Director and Trustee 1987 18,463 .06 -- --
147 Rolling Hill Road
Skillman, NJ 08558
Mr. Stewart was an executive consultant to Johnson & Johnson, New Brunswick, NJ
from 1990 to 1999; prior thereto, he was a consultant to Bristol-Myers Squibb
Company from January 1990 to March 1990. Mr. Stewart was senior vice president,
corporate affairs of Squibb Corporation from 1982 until he retired in January
1990. He was a director of Squibb Corporation from 1984 until its merger into
Bristol-Myers Squibb Company in 1989. He is a trustee of the Foundation of the
University of Medicine and Dentistry of New Jersey, Newark, NJ, and a member of
the advisory council to the Marine Biological Laboratory, Woods Hole, MA.
Raymond S. Troubh 75 Financial Consultant 1989 30,893 .10 -- --
10 Rockefeller Plaza - Suite 712
New York, NY 10020
Mr. Troubh has been a financial consultant since 1974. He is a director of Ariad
Pharmaceuticals, Inc., Cambridge, MA; Diamond Offshore Drilling, Inc., Houston,
TX; Enron Corp., Houston, TX; Gentiva Health Services, Inc., Melville, NY;
Health Net, Inc., Woodland Hills, CA; Hercules Incorporated, Wilmington, DE;
Triarc Companies, Inc., New York, NY; and WHX Corporation, New York, NY. He is a
trustee of Petrie Stores Liquidating Trust, Secaucus, NJ; and Starwood Hotels &
Resorts, White Plains, NY.
1 If the principal occupation shown has been held for less than five years,
additional background information relating to the director's principal
occupation is included in the supplemental paragraph below his name, together
with his other directorships.
2 This information has been furnished by each director. In addition to shares
owned beneficially, shares as to which directors have or share the power to
vote or dispose are as follows:
Common Percent Preferred Percent
Name Shares of Class Shares of Class
------------------------------------------------------------------------------------------------------------------------------------
Arthur G. Altschul, Jr. 154,250 .49 73,700 1.23
Arthur G. Altschul, Jr. and
Spencer Davidson 477,732 1.53 105,000 1.75
Lewis B. Cullman 95,385 .31 -- --
Spencer Davidson -- -- 10,000 .17
John D. Gordan, III 317,480 1.02 -- --
Sidney R. Knafel 16,523 .05 -- --
* Mr. Davidson is an "interested person" of the Company, as defined under
Section 2(a)(19) of the Investment Company Act of 1940, as amended, by reason of
his being an officer of the Company.
** Messrs. Green 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 (continued on page 5)
In addition to the holdings of Spencer Davidson, which are reflected in the
foregoing table, the other executive officers of the Company owned beneficially
as of December 31, 2001, in the aggregate, 4,966 shares of Common Stock (.02% of
the class) and 560 shares of Preferred Stock (.01% of the class). As of December
31, 2001, the directors and officers as a group owned beneficially or have or
share the power to vote or dispose of an aggregate 2,558,161 shares of Common
Stock (8.19% of the class) and 314,460 shares of Preferred Stock (5.24% of the
class). In addition, the Company has the power to vote 526,711 shares of Common
Stock (1.69% of the class) held by the trustee for the Company's Employees'
Thrift Plan, as described below. The Company knows of no person who was the
beneficial owner as of December 31, 2001 of more than 5% of the shares of the
Company's Common Stock or Preferred Stock.
Meetings of Committees of the Board of Directors
During 2001, 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, Mr. Bill Green and Mr. Raymond S.
Troubh. These directors are independent of management and the Company. 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 17 and December 12, 2001, and once after the
end of the fiscal year, on January 16, 2002.
The Compensation Committee consists of the following directors: Mr. Bill
Green, Chairman, Mr. Arthur G. Altschul, Jr., Mr. Lawrence B. Buttenwieser, Mr.
Sidney R. Knafel, Mr. Richard R. Pivirotto, Mr. Joseph T. Stewart, Jr. 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, and makes recommendations on matters of compensation to the
Board of Directors. The Committee met once during the fiscal year, on December
12, 2001.
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, and Mr. Bill Green, alternates. 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. Bill Green, 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 12, 2001.
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
11, 2001.
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.
5
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
2001 all applicable Section 16(a) filing requirements were met.
Executive 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
executive officers of the Company include the following. (Officers are elected
each year by the Board of Directors at its annual organization meeting in
April.)
Mr. Andrew V. Vindigni, 42, 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., 63, has been Vice-President, Administration
since January 1978. 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, 53, 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, 49, Treasurer since January 1990, has been an
employee of the Company since 1980.
Ms. Carole Anne Clementi, 55, Secretary since October 1994 and, prior
thereto, Assistant Secretary from July 1993, has been an employee of the Company
since 1982.
Executive Compensation
The following table sets forth the compensation received during 2001 from
the Company by its three highest-paid executive officers and by its directors.
Pension or
retirement
Aggregate benefits accrued
Name of individual Position compensation during 2001(1)
------------------------------------------------------------------------------------------------------------------------------------
Spencer Davidson President and Chief Executive Officer, Director (C) $3,100,000 $72,000
Andrew V. Vindigni Vice-President 1,100,000 42,000
Eugene L. DeStaebler, Jr. Vice-President, Administration 500,000 33,000
Arthur G. Altschul, Jr. Director (A)(B)(D) 14,500 -
Lawrence B. Buttenwieser Director, Chairman of the Board (A)(B)(C)(D) 14,500 -
Lewis B. Cullman Director (A)(D)(E) 15,000 -
Gerald M. Edelman Director (C)(D)(E) 13,000 -
John D. Gordan, III Director (A)(D)(E) 14,500 -
Bill Green Director (A)(B)(D) 15,000 -
Sidney R. Knafel Director (A)(B)(D) 15,000 -
Richard R. Pivirotto Director (B)(C)(D)(E) 13,500 -
Joseph T. Stewart, Jr. Director (B)(C)(D) 14,000 -
Raymond S. Troubh Director (A)(B)(D)(E) 15,000 -
(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
2001 to the trustee of the Company's Employees' Thrift Plan, as described
below, or accounting reserves established during 2001 under the Company's
Excess Contribution Plan, as described below, on behalf of the respective
individuals.
6
During 2001, 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:
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 6, the following indicates his years of credited service in the Company's
Retirement Plan and basic salary for 2001. Spencer Davidson (7) $600,000, Andrew
V. Vindigni (13) $350,000 and Eugene L. DeStaebler, Jr. (25) $275,000.
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, 2002.
7
"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 2002; and further
"RESOLVED, that such auditors be and they hereby are authorized and
instructed to conduct an audit, in accordance with generally accepted
auditing standards, of the financial statements of the Company as of and
for the year ending December 31, 2002; 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, 2002; 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 2002; 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."
Ernst & Young LLP were the auditors for the Company for 2001. During the
fiscal year, fees for the annual audit were $43,100 and fees for nonaudit
services amounted to $53,500, which included $39,000 related to the review of
the Company's semi-annual financial statements, quarterly reports on the
Company's calculations under the rating agency guidelines applicable to the
Preferred Stock and tax services. 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, 787 Seventh Avenue, New York, NY 10019.
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 2001 were $620,552.
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.
8
E. Portfolio Turnover Rate
The annual rate of the total portfolio turnover for the fiscal year ended
December 31, 2001 was 23.81%.
F. Stockholder Proposals
In order for a stockholder proposal to be considered for inclusion in the
Company's proxy material relating to its 2003 annual meeting of stockholders,
the stockholder proposal must be received by the Company no later than November
1, 2002, and must comply with certain other rules and regulations promulgated by
the Securities and Exchange Commission.
The persons named as appointees for the 2003 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 15, 2003, 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, 2001 included in the Company's Annual Report for the year
ended December 31, 2001 (the "Annual Report"), at a meeting held on January 16,
2002, 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
generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles 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
Bill Green
Raymond S. Troubh
January 16, 2002
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
10, 2002, 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.
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:
Mr. Altschul, Mr. Buttenwieser, Mr. Cullman, Mr. Davidson, Dr. Edelman,
Mr. Gordan, Mr. Pivirotto, Mr. Stewart and 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 10, 2002, 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.
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:
Mr. Altschul, Mr. Buttenwieser, Mr. Cullman, Mr. Davidson, Dr. Edelman,
Mr. Gordan, Mr. Green, Mr. Knafel, Mr. Pivirotto, Mr. Stewart and 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.