Big prizes at T. Rowe Price Bonanza: T. Rowe Price executives were rewarded for the company's strong performance in 1995 with bonuses that totaled $6.5 million.


March 12, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

T. Rowe Price Associates Inc. had such a good year in 1995 that it paid $6.5 million in bonuses to its top five executives, according to the company's latest proxy statement.

Each received a bonus of $1.3 million on top of annual salaries ranging from $250,000 to $325,000.

The bonuses come on the heels of a spectacular year for the Baltimore-based mutual fund company, which experienced record revenues and earnings in 1995.

In addition, its stock price has nearly doubled since Dec. 30, 1994, when it was $30 a share. T. Rowe's stock closed yesterday at $57.375, up 62.5 cents.

The bonuses are "well deserved," said Richard Strauss an analyst with Goldman, Sachs & Co. "They have shown great growth and very strong performance in terms of pretax margins and returns on equity."

Bonuses went to George J. Collins, president and chief executive; James S. Riepe, managing director; George A. Roche, chief financial officer; M. David Testa, managing director; and John H. Laporte, managing director.

The bonuses increased by 12 percent over 1994.

"We had record assets under management, record revenues and record earnings," Mr. Roche said. "The increase was a reflection of the fact that everything else was up a lot more."

Mr. Riepe and Mr. Roche were each awarded options for 100,000 shares, and Mr. Laporte received options for 25,000 shares. Assuming T. Rowe's stock price appreciates at a 10 percent rate over the next 10 years, Mr. Riepe and Mr. Roche's options would be worth $8.3 million, while Mr. Laporte's would be worth $2.1 million.

Mr. Laporte reached a milestone last year when he was named domestic stock fund manager of the year by Morningstar Mutual Funds, a respected industry newsletter. The 50-year-old fund manager was selected over thousands of other candidates after his New Horizons Fund chalked up a 55.44 percent return for 1995.

Neither Mr. Laporte, nor members of T. Rowe Price's compensation committee could be reached for comment.

Mr. Laporte's bonus was based on the performance of New Horizons and other funds that come under his authority, the proxy said.

T. Rowe's compensation committee said it could have paid the executives higher bonuses, but decided to hold back because it wanted to save money for future years when performance might not be as robust.

This way, bonuses can be paid in down times to keep the executives from leaving the company, the proxy said.

The company, which holds its annual meeting April 12, plans to name to its board Mr. Laporte; William T. Reynolds, director of the fixed-income division; and James A. C. Kennedy, director of equity research.

Managing directors and longtime employees Carter O. Hoffman and Thomas H. Broadus Jr. are retiring from the board.

At the annual meeting, the company will seek shareholder approval for a 2-for-1 stock split of its outstanding common stock, and a proportional increase in the authorized shares of common stock from 100 million to 200 million shares.

The additional shares could be used to raise capital to support expansion, possibly though acquisitions. Mr. Roche said "absolutely nothing is in the works" in terms of acquisitions.

T. Rowe could also issue shares to make it more difficult for another firm to take over the company.

"Such shares could be privately placed with purchasers favorable to the board of directors in opposing such action," the proxy said.

Pub Date: 3/12/96

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