Original GBL Prospectus - Gabelli

accepted accounting principles (before consideration of this fee or the $50 million deferred payment described
below or any employment taxes thereon) so long as he is an executive of the Company and devoting the
substantial majority of his working time to its business. This incentive-based management fee will be subject
to review at least annually by an independent committee of the Board for compliance with the terms hereof.
Mr. Gabelli has agreed that while he is employed by the Company or for Ñve years from the consummation of
the OÅering, whichever is longer, he will not provide investment management services outside of the
Company, except for the Permissible Accounts. Pursuant to the Employment Agreement, Mr. Gabelli will
also receive a deferred payment of $50 million on January 2, 2002, plus interest payable quarterly at an annual
rate of 6%. Because these compensation arrangements will be in existence before the completion of the
OÅering, the $1.0 million deductibility limit of Section 162(m) is generally not expected to apply to the
payments until the Ñrst meeting of the Company's shareholders at which directors will be elected after the
close of the third calendar year following the calendar year in which the OÅering occurs. Thereafter, while no
assurance can be given, the Company believes that it will be able to take steps to allow for the continued
deductibility of these payments pursuant to the Employment Agreement. The Employment Agreement may
not be amended without the approval of an independent committee of the Board.
The Company has also entered into employment agreements and other arrangements with several of its
other key investment professionals which are designed to retain them through variable compensation, equity
ownership, stock options, other incentives and non-solicitation or non-compete provisions. For example, three
of the Company's portfolio managers have employment agreements with terms extending beyond January
2000 setting forth their compensation and incentive arrangements and including certain restrictive covenants.
1999 Stock Award and Incentive Plan
In General
The Company has adopted the Gabelli Asset Management Inc. 1999 Stock Award and Incentive Plan
(the ""Plan''). A maximum of 1,500,000 shares of Class A Common Stock has been reserved for issuance
under the Plan, generally subject to equitable adjustment upon the occurrence of any stock dividend or other
distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-oÅ, combination,
share repurchase or exchange, or other similar corporate transaction or event.
Pursuant to the Plan, there may be granted stock options (including ""incentive stock options'' and
""nonqualiÑed stock options''), stock appreciation rights (either in connection with stock options granted under
the Plan or independent of options), restricted stock, restricted stock units, dividend equivalents and other
stock- or cash-based awards (""Awards''). After the consummation of the OÅering, the Plan is intended to
satisfy any applicable requirements of Rule 16b-3 (""Rule 16b-3'') promulgated under Section 16 of the
Exchange Act and the deductions for amounts paid under the Plan are not expected to be limited by
Section 162(m) for federal income tax purposes.
The Plan will be administered by a committee established by the Board of Directors, consisting of two or
more persons each of whom is a ""nonemployee director'' within the meaning of Rule 16b-3 (the ""Committee'').
The Committee shall have full authority, subject to the provisions of the Plan, to, among other things,
determine the persons to whom Awards will be granted, determine the terms and conditions (including any
applicable performance criteria and the circumstances in which Awards may be cancelled or forfeited) of such
Awards, and prescribe, amend and rescind rules and regulations relating to the Plan.
Grants of Awards may be made under the Plan to selected employees, independent contractors and
directors of the Company and its present or future aÇliates, at the discretion of the Committee.
Stock Options and Appreciation Rights
Stock options may be either ""incentive stock options,'' as such term is deÑned in Section 422 of the Code,
or nonqualiÑed stock options. The exercise price of a nonqualiÑed stock option may be above, at or below the
fair market value per share of Class A Common Stock on the date of grant; the exercise price of an incentive
stock option may not be less than the fair market value per share of Class A Common Stock on the date of
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