(File No. 811-04605)
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
(Amendment No. __)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
FIRST FINANCIAL FUND, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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FIRST FINANCIAL FUND, INC.
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102-4077
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------------
To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders or any
adjournments thereof ("Meeting") of First Financial Fund, Inc. ("Fund") will be
held on August 19, 2003 at [____].m., at Gateway Center Three, 100 Mulberry
Street, Newark, New Jersey 07102-4077 for the following purposes:
(1) To elect two Class I Directors and two Class II Directors;
(2) To vote on a proposal to amend Article III, Section 3 of the Fund's
By-laws; and
(3) To consider and act upon any other business as may properly come
before the Meeting or any adjournments thereof.
Only holders of common stock of record at the close of business on June 11,
2003 are entitled to notice of and to vote at the Meeting.
Enclosed is an Information Statement relating to this Meeting, which
provides certain information regarding the Fund, but which does not request your
vote. We understand that a stockholder of the Fund, the Ernest Horejsi Trust No.
1B, along with certain of its affiliated trusts (collectively, the "Horejsi
Group"), will provide you with a proxy statement (the "Horejsi Group Proxy
Statement") in order to solicit proxies for the election of its nominees as
Directors and for certain other matters. A copy of the Horejsi Group Proxy
Statement is expected to be mailed with this Information Statement.
The Horejsi Group Proxy Statement will be accompanied by a proxy card and
information on telephonic and Internet voting. As the Fund is not soliciting
votes for this Meeting, the only way you may vote is to return a signed and
dated proxy card provided to you by the Horejsi Group, to follow the
instructions in the Group's materials regarding telephonic and Internet voting
or to vote in-person at the Meeting. Please refer to the Horejsi Group Proxy
Statement for further information regarding its proxy solicitation.
The Fund has agreed with the Horejsi Group to a joint mailing of the Fund's
Notice of Meeting and Information Statement and the Horejsi Group's Proxy
Statement and Proxy Card. This agreement and the Horejsi Group's payment for the
mailing do not constitute and should not be viewed as an endorsement by the
Board of Directors of the Horejsi Group's nominees for election as Directors or
for its other proposals.
By order of the Board of Directors,
ARTHUR J. BROWN
SECRETARY
Dated: June [___], 2003
2
FIRST FINANCIAL FUND, INC.
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102-4077
----------------------------
INFORMATION STATEMENT
----------------------------
Annual Meeting of Stockholders
August 19, 2003
INTRODUCTION
This Information Statement is furnished to the stockholders of First
Financial Fund, Inc. ("Fund") by the Board of Directors of the Fund in
connection with the Annual Meeting of Stockholders or any adjournments thereof
("Meeting") to be held on August 19, 2003 at [____].m. at Gateway Center Three,
100 Mulberry Street, Newark, New Jersey 07102-4077. The matters to be acted upon
at the Meeting are set forth in the accompanying Notice of Annual Meeting.
WE ARE NOT ASKING FOR A PROXY. YOU ARE REQUESTED NOT TO SEND US A PROXY.
The close of business on June 11, 2003 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting ("Record Date"). On that date, the Fund had [_______] shares of common
stock outstanding and entitled to vote. Each share will be entitled to one vote
at the Meeting. It is expected that the Notice of Annual Meeting and Information
Statement first will be mailed to stockholders on or about June [___], 2003. We
understand that Fund stockholders will also receive a proxy statement and proxy
card from a group of affiliated stockholders advised by Stewart R. Horejsi (the
"Horejsi Group") asking for your vote for their four nominees for election as
Director and for certain other matters. Please refer to the Horejsi Group Proxy
Statement for further information about their nominees and proposal and
procedures for voting by proxy.
All expenses in connection with preparing and filing this Information
Statement and its enclosures will be borne by the Fund. The Horejsi Group has
agreed to pay the entire cost of a joint mailing of the Fund's Notice of Meeting
and Information Statement and the Horejsi Group's Proxy Statement and proxy
card.
The presence at the Meeting, in person or by proxy, of stockholders
entitled to cast a majority of the Fund's outstanding shares is required for a
quorum. The affirmative vote of a majority of the shares outstanding at the
Meeting is required to elect each Director if the Horejsi Group's anticipated
proposal to amend the Fund's By-laws is not approved by stockholders. If the
Fund's stockholders approve that proposal, however, then a plurality of the
votes cast at the Meeting will be required to elect each Director. The proposal
to amend the Fund's By-laws requires that affirmative vote of a majority of the
votes cast at the Meeting. Please refer to the Horejsi Group Proxy Statement for
more information on its nominees and its proposal to amend the Fund's By-laws.
If a quorum is not present at the Meeting or if a quorum is present at the
Meeting but sufficient votes to approve a proposed item are not received,
persons named as proxies may propose one or more adjournments of such Meeting to
permit further solicitation of proxies. Any such adjournments will require the
affirmative vote of a majority of those shares present at the Meeting or
represented by proxy, whether or not a quorum is present. A stockholder vote may
be taken on any item for consideration at the Meeting prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and with respect to which the broker does not
have discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present, but will not be considered as votes cast at the Meeting. Accordingly,
abstentions and broker non-votes effectively will be a vote against an
adjournment or the election of Directors (under the current voting standard for
the election of Directors), but will have no effect on the election of Directors
if stockholders approve the Horejsi Group's proposal to amend the Fund's By-laws
to elect Directors by a plurality of votes cast at the Meeting or on the
proposal to amend the Fund's By-laws.
STOCKHOLDERS MAY OBTAIN A FREE COPY OF THE FUND'S MOST RECENT ANNUAL REPORT
BY CALLING EQUISERVE TRUST COMPANY, N.A. TOLL-FREE AT (800) 451-6788 OR BY
MAILING A WRITTEN REQUEST TO EQUISERVE TRUST COMPANY, N.A., PO BOX 43011,
PROVIDENCE, RHODE ISLAND 02940-3011.
SHARE OWNERSHIP INFORMATION
Except as set forth below, as of June 11, 2002, the Fund does not know of
any other person who owns beneficially or of record 5% or more of the
outstanding common stock of the Fund.
STOCKHOLDER NUMBER OF SHARES OWNED PERCENTAGE OF SHARES
----------- ---------------------- --------------------
Ernest Horejsi Trust No. 1B+* 1,795,100++ [__]%++
Lola Brown Trust No. 1B+* 2,568,200++ [___]%++
Mildred B. Horejsi Trust+* 1,922,400++ [____]%++
Stewart R. Horejsi Trust No. 2+* 1,697,900++ [___]%++
Susan L. Ciciora Trust+* 1,359,800++ [____]%++
2
John S. Horejsi Trust+* 100++ [_____]%++
Badlands Trust Company+* 1,359,900++** [___]%++**
T. Rowe Price Associates, Inc.*** 555,400*** [5.5]%***
------------------
+ These stockholders, along with their investment adviser, Stewart R. Horejsi,
are considered by the Fund to be members of the Horejsi Group due to their
affiliations and common objectives with regard to the Fund.
++ This information is based solely on Amendment #34 to a joint Schedule 13D
filed May 5, 2003 by these entities along with Stewart R. Horejsi, reporting
aggregate holdings of [9,325,500] shares or [37.87]% of the Fund's outstanding
shares by these entities as of April 30, 2003 and indicating that, because of
the relationships between Mr. Horejsi and the entities, Mr. Horejsi may be
deemed to share indirect beneficial ownership of such shares. Because some of
the shares reported above may be deemed to be beneficially owned by more than
one entity within the Horejsi Group, the aggregate number and percentage of
shares owned are less than the sum total shown for each individual owner. No
subsequent amendment to the joint Schedule 13D of the Horejsi Group had been
received by the Fund through June 11, 2003.
* The address of each of these entities is c/o Badlands Trust Company, 614
Broadway, PO Box 801, Yankton, South Dakota 57078.
** According to the joint Schedule 13D of the Horejsi Group, Badlands Trust
Company has shared voting and shared dispositive power over the shares held by
the Susan L. Ciciora Trust and the John S. Horejsi Trust. Thus, Badlands Trust
Company may be considered the indirect beneficial owner of such shares. All
other shares reported in the table above are held directly with sole voting and
dispositive power by the entity indicated.
*** This information is based solely on an initial Schedule 13G filed on January
30, 2003 reflecting holdings as of December 31, 2002 by T. Rowe Price
Associates, Inc., which is located at 100 East Pratt Street, Baltimore, Maryland
21202.
* * * * *
In addition, Directors and officers of the Fund, in the aggregate, owned
less than 1% of the Fund's outstanding common stock as of June 11, 2003.
BACKGROUND INFORMATION
In 2002, the Horejsi Group nominated two persons for election as Class I
Directors at the Fund's annual meeting. As part of its due diligence on the
Horejsi Group's candidates, the Committee reviewed the actions of the Horejsi
Group with two other closed-end funds, Boulder Total Return Fund and Boulder
Growth & Income Fund (the "Boulder Funds"). As with the Fund, the Horejsi Group
3
bought a substantial stake in each Boulder Fund and then sought to have its
nominees seated on their boards. In each case, once the Horejsi Group gained
control, the respective investment advisers of these funds were replaced with
one or more advisers affiliated with Stewart R. Horejsi and the Horejsi Group at
higher advisory fee rates. The Horejsi Group and its board nominees also
proposed and supported fundamental changes to each Boulder Fund's core
investment objectives, strategies and policies, which were implemented following
stockholder approval where required. After the Committee completed its due
diligence, the Committee and the Board decided to nominate the incumbents,
Messrs. Dorsey and La Blanc, for election as Directors at the Fund's 2002
meeting and to solicit proxies for these nominees. The Horejsi Group conducted
its own proxy solicitation to elect its candidates to the Board. During the
solicitation period, the Fund sent numerous letters to stockholders explaining
the reasoning behind its support of the incumbent Directors and its opposition
to the Horejsi Group candidates.
At the 2002 meeting of stockholders, no candidate received the required
vote of a majority of the Fund's outstanding shares, so no one was elected to
the Board. Instead, in accordance with Maryland law, the incumbent Directors
remained on the Board as "hold over" Directors until the next annual meeting.
The Horejsi Group filed suit against the Fund in U.S. District Court to
invalidate the Fund's By-law requiring the affirmative vote of a majority of the
Fund's outstanding shares to elect a Director and to unseat the "hold over"
Directors under Maryland law and the Investment Company Act of 1940. On appeal,
the U.S. Court of Appeals for the Fourth Circuit found the Fund's election
By-law and the tenure of the "hold over" Directors to be valid.
In the early spring of 2003, the Horejsi Group provided the Fund with
notice of its intention to nominate two persons to be elected as Class II
Directors and two persons to be elected as Class I Directors (replacing the
"hold over" Directors) of the Fund. The Horejsi Group also provided the Fund
notice of its intention to solicit proxies for three proposals to amend the
Fund's By-laws: (1) to change the election voting standard to a plurality of
votes cast at a meeting; (2) to add a By-law requiring any "hold over" Directors
to be less than 60 years old; and (3) to add a By-law requiring that the Fund
hold a special meeting of stockholders to elect Directors to replace any "hold
over" Directors resulting from a failed election within 60 days of the original
meeting. The Horejsi Group then sued the Fund in U.S. District Court to
invalidate the Fund's By-law requiring the affirmative vote of 80% of the Fund's
outstanding shares to amend certain other By-laws, including the By-law
requiring the election of Directors by a majority of the Fund's outstanding
shares. Based upon legal precedent that had been decided after the Fund's 80%
amendment By-law was instituted, the Fund consented to an order of the District
Court invalidating the 80% amendment By-law. The District Court issued that
order in April 2003, making the Fund's election of Directors By-law amendable by
a majority of the votes cast at a meeting.
During the spring of 2003, the Fund's Nominating Committee reviewed the
qualifications and backgrounds of the Horejsi Group's candidates, which included
in-person interviews with Susan Ciciora and Stephen Miller, the two candidates
who were first nominated by the Group this year and who would be considered
"interested persons" of the Fund as that term is defined in the Investment
Company Act of 1940 ("1940 Act"), and telephonic interviews with the two
candidates first nominated in 2002, Dean Jacobson and Joel Looney, who were
4
interviewed by the Committee in-person last year and who would be independent
Directors of the Fund. Once again, the Board reviewed the actions of the Horejsi
Group towards the Boulder Funds, especially in light of the fact that all of the
Group's candidates except Dr. Jacobson sit on the boards of these funds.
In making its decisions, the Nominating Committee and the Board also
reviewed the Horejsi Group's Schedule 13D filings with the Securities and
Exchange Commission ("SEC"), which indicated no current plan or intention to
change the Fund's investment adviser or its fundamental investment objective,
policies or strategies. Moreover, the Board reviewed the protection currently
provided in the Fund's Charter against changes to the Fund's investment program,
including that the affirmative vote of 66 2/3% of the Fund's outstanding shares
would be needed to (1) amend the Fund's investment objective or (2) change the
Fund's policy of concentrating its investments in the financial services
industry. In addition, the Board considered the recent statement by Mr. Horejsi
to the Board on behalf of the Horejsi Group that "We have been pleased with Nick
Adams management of the fund recently and have no present intentions of doing
anything to change that." Finally, the Board considered the substantial legal
and solicitation costs that the Fund had expended in 2002, the likelihood of
significant additional expenses if it were to solicit proxies for the incumbents
and the fact that an election in which no candidates were elected, as occurred
in 2002, would leave the Fund with a majority of "hold over" Directors and
significant uncertainty related to whether a court would order that the Fund be
liquidated under Maryland corporate law.
The Nominating Committee and the Board also noted that it was highly
unlikely that the incumbents could or would be elected at the Meeting regardless
of the vote required for election. Indeed, because the Horejsi Group almost
certainly would control a majority of the shares present at the Meeting, it was
almost inevitable that the Group's candidates would win the election. The
Committee decided to recommend to the Board that it not nominate anyone on
behalf of the Fund, but instead call the Meeting, prepare and file a Notice of
Meeting and Information Statement and let the Horejsi Group prepare and file its
own proxy statement and solicit proxies for its own nominees and proposals. The
Board approved that recommendation.
Messrs. Dorsey, La Blanc, Mooney and Whitehead intend to hold office until
their successors are elected and qualify. As Richard Barr, the only Fund
Director whose Board seat is not up for election in 2003, was proposed as a
nominee by the Horejsi Group in 2001, if the Horejsi Group nominees are elected,
all five Board seats would be held by persons proposed and supported by the
Horejsi Group. There is no current litigation between the Fund and the Horejsi
Group and none is anticipated; it is expected that the Horejsi Group and the
incumbent Directors will sign a mutual release of claims.
INFORMATION ON THE BOARD OF DIRECTORS
The Board of Directors is divided into three classes with members of each
class serving for a term of three years and until their successors are elected
and qualified. The current Class II Directors, Messrs. Whitehead and Mooney,
each have terms expiring in 2003. The terms of the current Class I Directors,
Messrs. Dorsey and La Blanc, expired in 2002, but they have remained on the
5
Board as "hold over" Directors because stockholders failed to elect any nominees
at the 2002 annual meeting. As noted above, the Board has decided not to
nominate any persons for election as Directors at this Meeting.
The following tables set forth certain information regarding each of the
current Directors of the Fund. Unless otherwise noted, each of the Directors has
engaged in the principal occupation listed in the following table for five years
or more.
Number and
Dollar Range
Name, Age, Position with Principal Occupation during the of Fund Shares
Fund, Tenure, Address* Past Five Years and Other as of June 11,
---------------------- Directorships** 2003
--------------- -------------
CLASS II
CLAY T. WHITEHEAD (64) President of National Exchange Inc. 2,000 shares
DIRECTOR SINCE 2000. (new business development firm)
(since May 1983); Director or $10,001-$50,000
Trustee of 91 portfolios within
the Prudential Fund Complex; and
Director of The High Yield Plus
Fund, Inc.
THOMAS T. MOONEY (61)*** Chief Executive Officer of The 3,000
DIRECTOR SINCE 1986. Rochester New York Business
ALSO CHAIRMAN OF THE BOARD Alliance; Director or Trustee of $10,001-$50,000
AND PRESIDENT. 95 portfolios within the Prudential
Fund Complex; President of The High
Yield Plus Fund, Inc.; Director of
Blue Cross of Rochester, Executive
Service Corps of Rochester and
Rural/Metro Medical Services, Inc.
(ambulance service); and former
Rochester City Manager (during
1973).
CLASS I (TERM EXPIRED IN
2002--CURRENTLY SEATED AS
"HOLD OVER" DIRECTORS)
EUGENE C. DORSEY (76) Retired. Director of The High 633 shares
DIRECTOR SINCE 1996. Yield Plus Fund, Inc.; formerly
President, Chief Executive Officer $1-$10,000
and Trustee, Gannett Foundation
(now Freedom Forum) (1981-1989);
former publisher of four Gannett
newspapers and Vice President of
Gannett Co., Inc. (publishing)
(1978-1981); past Chairman,
6
Independent Sector, Washington,
D.C. (national coalition of
philanthropic organizations)
(1989-1992); former Chairman of the
American Council for the Arts; and
former Director, Advisory Board of
Chase Manhattan Bank of Rochester.
ROBERT E. LA BLANC (69) President of Robert E. La Blanc 2,000 shares
DIRECTOR SINCE 1999. Associates, Inc. (information
technologies consulting) (since $10,001-$50,000
1981); Director or Trustee of 74
portfolios within the Prudential
Fund Complex; Director of The High
Yield Plus Fund, Inc., Computer
Associate International, Inc.
(software), Storage Technology
Corp. (computer equipment), Titan
Corp. (electronics), and Chartered
Semiconductor Manufacturing, Ltd.
(semiconductors); Trustee of
Manhattan College; formerly Vice
Chairman of Continental Telecom,
Inc. (1979-1981); and formerly
General Partner at Salomon Brothers
(1969-1979).
CLASS III (TERM EXPIRING IN
2004)
RICHARD I. BARR (65) Retired. Director of Boulder Total 100 shares
DIRECTOR SINCE 2001. Return Fund, Inc. (since 1999) and
6831 EAST SOLANO DRIVE Boulder Growth & Income Fund, Inc. $1-$10,000
PHOENIX, ARIZONA 85061 (since 2002); formerly President
and Director of Advantage Sales and
Marketing (1997-1999); formerly
President and Chief Executive Officer
of CBS Marketing (1976-1997); former
President, Arizona Food Brokers
Association (1996); former Director,
Association of Sales and Marketing
Companies (formerly National Food
Brokers Association) (1992-1998);
former Director, St. Mary's Food
Bank (1990-1996), and currently
advisory board member of Kansas
University Business School and
Arizona State University.
7
* The address for each Director is c/o the Fund, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102.
** Messrs. Mooney, Whitehead and La Blanc oversee 4 other portfolios within the
Fund's "Fund Complex," Mr. Dorsey oversees one other portfolio with the Fund's
"Fund Complex" and Mr. Barr oversees no other portfolios within the Fund's "Fund
Complex." The Fund's Fund Complex , as defined under SEC rules, consists of a
group of investment companies and series of investment companies that are
advised or sub-advised by Wellington Management Company, LLP, the Fund's
investment adviser ("Investment Adviser").
*** Indicates an "interested person" of the Fund, as defined in the 1940 Act.
Mr. Mooney is deemed to be an "interested person" by reason of his service as an
officer of the Fund.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors met eleven times during the Fund's fiscal year ended
March 31, 2003, and each Director attended at least 75% of the total number of
meetings of the Board and of any committee of which he was a member during that
year. The Board of Directors has an Audit Committee and a Nominating Committee.
The Audit Committee acts pursuant to a written charter adopted by the Board
of Directors and is responsible for assisting the Board to oversee the Fund's
independent accountants, accounting policies and procedures and other areas
relating to the Fund's accounting, auditing and internal controls. The Audit
Committee currently consists of Messrs. Dorsey, La Blanc and Whitehead, all of
whom are independent and financially literate, as defined in Section 303 of the
listing standards of the New York Stock Exchange. The Board has also determined
in accordance with Section 303 that at least one member of the Audit Committee
possesses accounting or related financial management expertise. The Audit
Committee met once during the fiscal year ended March 31, 2003. Each member of
the Committee attended that meeting. In addition, the Committee met on May 28,
2003 to review the Fund's audited financial statements. All members of the
Committee attended that meeting. Attached as Appendix A is a copy of the Audit
Committee's Report with respect to the Fund's audited financial statements.
The Nominating Committee's primary responsibility is to recommend nominees
for election as Fund Director to the full Board of Directors. The Nominating
Committee currently consists of Messrs. Dorsey, La Blanc and Whitehead. The
Nominating Committee met twice during the fiscal year ended March 31, 2003.
Messrs. Whitehead and La Blanc attended each of these meetings and Mr. Dorsey
attended one of these meetings. The Committee will consider nominees recommended
by stockholders if such proposed nominations are submitted to the Fund in
writing. Formal nominations by stockholders must be made in accordance with the
Fund's By-Laws.
The Board of Directors does not have a standing compensation committee.
8
EXECUTIVE OFFICERS OF THE FUND
The officers of the Fund are elected annually by the Board of Directors.
The officers of the Fund, other than Mr. Mooney, who also serves as a Director,
are:
Name, Age, Position with Principal Occupation during the
Fund, Tenure, Address Past Five Years
--------------------- ---------------
ARTHUR J. BROWN (54) Partner, Kirkpatrick & Lockhart LLP
SECRETARY SINCE 1986. (law firm and counsel to the Fund).
1800 Massachusetts Avenue, NW
Washington, D.C. 20036
Partner, Kirkpatrick & Lockhart LLP.
R. CHARLES MILLER (45)
ASSISTANT SECRETARY SINCE 1999.
1800 Massachusetts
Avenue, NW Washington, D.C. 20036
GRACE TORRES (43) Senior Vice President (since January
TREASURER SINCE 2002. 2000) of Prudential Investments LLC;
Gateway Center Three formerly First Vice President of
100 Mulberry Street Prudential Investments LLC (December
Newark, New Jersey 07012 1996-January 2000) and First Vice
President of Prudential Securities
(March 1993-1999).
COMPENSATION OF DIRECTORS
The Fund pays each Director an annual fee of $5,000, plus travel and other
out-of-pocket expenses incurred by the Directors in attending Board meetings.
Directors also receive $500 for each committee meeting they attend held on the
same day as a Board meeting, $500 for each telephonic Board or committee meeting
they attend and $1,000 for each in-person special Board or committee meeting
they attend. Due to his additional duties as Chairman of the Board, Mr. Mooney
receives an additional annual fee of $4,000 from the Fund. The table below
includes certain information relating to the compensation of the Fund's
Directors paid by the Fund for the fiscal year ended March 31, 2003, as well as
information regarding compensation from the Fund's Fund Complex for the year
ended December 31, 2002. Annual Board fees may be reviewed periodically and
changed by the Fund's Board.
9
COMPENSATION TABLE
------------------
Pension or Total
Retirement Estimated Compensation
Benefits Annual From the Fund
Aggregate Accrued as Benefits and the Fund
Compensation Part of the Upon Complex Paid
Name of Director From the Fund Fund's Expenses Retirement to Directors
---------------- ------------- --------------- ---------- ------------
Richard I. Barr N/A N/A
Eugene C. Dorsey* N/A N/A (2)**
Robert E. La Blanc N/A N/A (5)**
Thomas T. Mooney N/A N/A (5)**
Clay T. Whitehead N/A N/A (5)**
* All compensation from the Fund and Fund Complex for the calendar year ended
December 31, 2002 represents deferred compensation. Mr. Dorsey received
aggregate compensation for that period from the Fund and the Fund Complex,
including accrued interest, in the amounts of $[_______] and $[________],
respectively.
** Parenthetical indicates number of funds (including the Fund) in the Fund
Complex to which aggregate compensation relates.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
("1934 Act"), Section 30(f) of the 1940 Act and Securities and Exchange
Commission ("SEC") regulations thereunder, the Fund's officers and Directors,
persons owning more than 10% of the Fund's common stock and certain personnel of
the Investment Adviser are required to report their transactions in the Fund's
common stock to the SEC, the New York Stock Exchange and the Fund. Based solely
on the Fund's review of the copies of such reports that it has received, the
Fund believes that, during its fiscal year ended March 31, 2003, all filing
requirements applicable to its Directors and officers were satisfied, except as
noted below. Grace C. Torres, the Fund's Treasurer, who was appointed as
Treasurer of the Fund in 2002, filed a Form 3 (Initial Statement of Beneficial
Ownership) reporting her appointment during the Fund's most recent fiscal year,
but later than required under law.
In addition, during prior fiscal years, the Investment Adviser did not file
the following reports on a timely basis: Nicholas C. Adams (Partner and
Portfolio Manager, Investment Adviser) did not file timely twelve Form 4
(Statement of Changes of Beneficial Ownership of Securities) reports involving
twelve purchases or acquisitions of Fund shares between March 26, 1999 and
December 29, 2000 and twenty-three sales of Fund shares between July 2, 2001 and
March 22, 2002; Duncan M. McFarland (Managing Partner, Investment Adviser) filed
two late Form 4 reports involving one purchase of Fund shares on June 28, 1999
and one sale of Fund shares on March 6, 2002; and Laurie A. Gabriel (Managing
Partner, Investment Adviser), John R. Ryan (Managing Partner, Investment
Adviser) and Wellington Luxemburg SCA (affiliate of Investment Adviser) did not
file Form 3 reports on a timely basis.
10
INFORMATION ON THE FUND'S INDEPENDENT ACCOUNTANTS
The Fund's financial statements for the fiscal year ended March 31, 2003
were audited by PricewaterhouseCoopers LLP ("PwC"). The Board of Directors of
the Fund has selected PwC as the independent accountants for the Fund for the
fiscal year ending March 31, 2004. PwC has been the Fund's independent
accountants since February 18, 1997. PwC has informed the Fund that it has no
material direct or indirect financial interest in the Fund.
Representatives of PwC are not expected to be present at the Meeting but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.
AUDIT FEES
The aggregate fees billed by PwC for professional services rendered for the
audit of the Fund's annual financial statements for the fiscal year ended March
31, 2003 and the review of the financial statements included in the Fund's
annual report to stockholders were $26,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PwC billed no fees for professional services rendered to the Fund for
information technology services relating to financial information systems design
and implementation for the Fund's fiscal year ended March 31, 2003. Similarly,
PwC billed [no] fees for professional services rendered to the Fund's Investment
Adviser for information technology services relating to financial information
systems design and implementation for the calendar year ended December 31, 2002.
ALL OTHER FEES
There were no fees billed by PwC for the fiscal year ended March 31, 2003
for other services provided to the Fund and approximately $[____] in fees billed
by PwC during the same period for other services provided to the Investment
Adviser.
The Fund's Audit Committee believes that the provision of services by PwC
that are noted above is compatible with maintaining PwC's independence with
respect to the Fund.
OTHER MATTERS
As summarized above, in addition to the election of Directors, the Ernest
Horejsi Trust No. 1B, a member of the Horejsi Group, gave advance notice to the
Fund of its intention to move the following proposal to amend the Fund's By-laws
at the Meeting:
Resolved, that Article III, Section 3 of the bylaws is hereby amended
and restated in its entirety, with such action to be effective with
respect to any election of directors at the meeting in which the
Corporation's stockholders approve such repeal and thereafter.
11
Section 3. Election. Directors shall be elected by vote of a plurality
of all the votes cast at a meeting at which a quorum is present. This
Section 3 of Article III shall be amended only by a vote of the
Corporation's stockholders.
The Horejsi Group initially gave the Fund advance notice that it would move
three proposals to amend the Fund's By-laws at the Meeting. Subsequently,
however, counsel to the Horejsi Group informally indicated to the Fund that the
Horejsi Group intended to solicit proxies for only one of the proposals, which
is noted above. The Fund intends to allow the Horejsi Group to move this
proposal for consideration at the Meeting. No other business is expected to come
before the Meeting.
WELLINGTON MANAGEMENT COMPANY, LLP
Wellington Management Company, LLP, 75 State Street, Boston, Massachusetts
02109, is the Fund's Investment Adviser. The Investment Adviser is a
Massachusetts limited liability partnership of which the following persons are
managing partners: Laurie Gabriel, Duncan M. McFarland and John R. Ryan. The
Investment Adviser is a professional investment-counseling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of March 31, 2003,
the Investment Adviser held discretionary investment authority over
approximately $301 billion of assets. The Investment Adviser and its predecessor
organizations have provided investment advisory services to investment companies
since 1933 and to investment-counseling clients since 1960. The Investment
Adviser is not affiliated with the Administrator, Prudential Investments Fund
Management LLC, which is located at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102-4077.
STOCKHOLDER PROPOSALS
The Fund's By-Laws require stockholders wishing to nominate Directors or
make proposals to be voted on at the Fund's annual meeting to provide notice to
the Secretary of the Fund at least 90 days in advance of the anniversary of the
date that the Fund's Proxy Statement for its previous year's annual meeting was
first released to stockholders (or, in 2003 only, the date of the release of the
Fund's Information Statement).. Accordingly, if a stockholder intends to present
a proposal at the Fund's annual meeting of stockholders in 2004 and desires to
have the proposal included in the Fund's Proxy Statement and form of proxy for
that meeting, the stockholder must deliver the proposal to the offices of the
Fund at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey,
07102-4077 by March [___], 2004. The notice must contain information sufficient
to identify the nominee(s) or proposal and to establish that the stockholder
beneficially owns shares that would be entitled to vote on the nomination or
proposal. Stockholder nominations and proposals that are submitted in a timely
manner will not necessarily be included in the Fund's proxy materials. Inclusion
of such nomination or proposal is subject to limitation under the federal
securities laws. Stockholder nominations or proposals not received by March
[_____], 2004 will not be considered "timely" within the meaning of Rule
14a-4(c) of the 1934 Act.
12
NOTICE TO BANKS, BROKER-DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102-4077, whether other persons are beneficial owners of
shares who should receive copies of this Information Statement and, if so, the
number of copies of the Information Statement you wish to receive in order to
supply copies to such beneficial owners of shares.
By order of the Board of Directors,
ARTHUR J. BROWN
Secretary
Dated: June [___], 2003
13
First Financial Fund, Inc.
FIRST FINANCIAL FUND, INC.
NOTICE OF ANNUAL MEETING
TO BE HELD ON
AUGUST 19, 2003
AND
INFORMATION STATEMENT
INFORMATION STATEMENT
APPENDIX A
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AUDIT COMMITTEE REPORT
FIRST FINANCIAL FUND, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of First Financial Fund, Inc.
(the "Fund") met on May 28, 2003 to review the Fund's audited financial
statements for the fiscal year ended March 31, 2003. The Audit Committee
operates pursuant to a Charter, which sets forth the roles of the Fund's
management, independent accountants, the Board of Directors and the Audit
Committee in the Fund's financial reporting process. Pursuant to the Charter,
the Fund's management is responsible for the preparation, presentation and
integrity of the Fund's financial statements, and for the procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent accountants for the Fund are responsible for planning and
carrying out proper audits and reviews. The role of the Audit Committee is to
assist the Board of Directors in its oversight of the financial reporting
process by, among other things, reviewing the scope and results of the Fund's
annual audit with the Fund's independent accountants and recommending the
initial and ongoing engagement of such accountants.
In performing this oversight function, the Audit Committee has reviewed and
discussed the audited financial statements with the Fund's management and its
independent accountants, PricewaterhouseCoopers LLP ("PwC"). The Audit Committee
has discussed with PwC the matters required to be discussed by Statement on
Auditing Standards No. 61, and has received the written disclosures and the
letter from PwC required by Independence Standards Board Standard No. 1. The
Audit Committee also has discussed the independence of PwC with PwC.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting, are not experts in the fields of auditing or
accounting and are not employed by the Fund for accounting, financial management
or internal control purposes. Members of the Audit Committee rely without
independent verification on the information provided and the representations
made to them by management and PwC. 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 appropriate internal controls and procedures designed to ensure
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not guarantee that the audit of the Fund's financial statements has
been carried out in accordance with generally accepted accounting principles or
that PwC is in fact "independent."
Based upon this review and related discussions, and subject to the
limitation on the role and responsibilities of the Audit Committee set forth
above and in the Charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Fund's Annual
Report to Shareholders for the fiscal year ended March 31, 2003.
A-1
APPENDIX A
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This report has been approved by all of the members of the Audit Committee
(whose names are listed below), each of whom has been determined to be
independent pursuant to New York Stock Exchange Rule 303.01.
Eugene C. Dorsey
Robert E. La Blanc
Clay T. Whitehead
May 28, 2003
A-2