Salomon IR 97 2 Q Page 2
Throughout this report, the terms "Swapco" and
"the Company" refer to Salomon Swapco Inc.
"Salomon" refers to Salomon Inc, Swapco's
ultimate parent, or to any of its affiliates other than
Swapco. "SBHC" refers to Salomon Brothers
Holding Company Inc, Swapco's immediate parent.
"Salomon Brothers Inc" or "SBI" refers to Salomon
Brothers Inc, the U.S. broker-dealer affiliate of
Swapco. "Salomon Brothers" refers to Salomon
Brothers Inc or other affiliates of SBHC.
Copyright Salomon Swapco Inc
1997
All Rights Reserved.
This interim report and more information about Swapco are
available on the Internet at www.salomon.com/Swapco
Salomon Swapco Inc
To Our Clients
July 25, 1997
Swapco welcomes Thomas J. McGuire to our
Board of Directors. Elected to the board - and
to the Audit Committee - at our quarterly
meeting on July 9, Tom brings the number of
independent directors to four.
Independent directors play an important role in
Swapco's governance. Our Certificate of
Incorporation requires us to have at least two
independent directors at all times (and at least
20% of the board if we expand it beyond ten
members). Each of those directors has an
effective veto over any board action that he
believes might result in a lowering of Swapco's
credit rating. Any such action requires
unanimous board approval. Independent
directors must also approve any decision to
dissolve or liquidate the Company, in whole or in
part, to file for bankruptcy, or to declare a
dividend which would reduce capital to less than
110% of our rating agency capital requirement.
In the event that Swapco does not have the
required number of independent directors, its
business activities become severely restricted.
These provisions are designed to protect
Swapco counterparties in circumstances where
their interests and the interests of Salomon
Brothers diverge. It is our intention to maintain
Swapco's triple-A rating permanently. The
presence of independent directors on our board
gives teeth to that intention.
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