SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
META GROUP, 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 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
not applicable
_____________________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
not applicable
_____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
not applicable
_____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
not applicable
_____________________________________________________________________________
(5) Total fee paid:
not applicable
_____________________________________________________________________________
( ) 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:
not applicable
_____________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
not applicable
_____________________________________________________________________________
(3) Filing Party:
not applicable
_____________________________________________________________________________
(4) Date Filed:
not applicable
_____________________________________________________________________________
META GROUP, INC.
208 Harbor Drive
Stamford, Connecticut 06912-0061
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
_______________
To the Stockholders of META Group, Inc.:
The Annual Meeting of Stockholders of META Group, Inc., a Delaware
corporation (the "Corporation"), will be held on Wednesday, May 27, 1998 at
9:00 a.m., local time, at The Hyatt Regency Hotel, 1800 East Putnam Avenue,
Old Greenwich, CT 06870, for the following purposes:
(1) To elect two Class III Directors to serve for a three-year term
and until their successors have been duly elected and qualified.
(2) To approve the amendment and restatement of the Corporation's
1995 Stock Plan (the "Amended and Restated 1995 Plan") to
(i) increase the number of shares of Common Stock, par value $.01
per share, of the Corporation, issuable over the term of the Plan
by 1,500,000 shares to 3,000,000 shares in the aggregate and
(ii) extend the exercise period after death from 180 days to
one year for "incentive" stock options granted after the date the
stockholders of the Corporation approve the Amended and Restated
1995 Plan.
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 1, 1998 are
entitled to notice of and to vote at the meeting and at any adjournment or
postponement thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
By Order of the Board of Directors
Bernard F. Denoyer
Secretary
Stamford, Connecticut
April 13, 1998
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
STAMPED ENVELOPE BY RETURN MAIL PRIOR TO THE DATE OF THE ANNUAL MEETING OF
STOCKHOLDERS IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE 1>
META GROUP, INC.
208 Harbor Drive
Stamford, Connecticut 06912-0061
_________________
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 27, 1998
_________________
April 13, 1998
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of META Group, Inc., a Delaware corporation
(the "Corporation"), for use at the Annual Meeting of Stockholders to be held
on May 27, 1998, at 9:00 a.m., local time, at The Hyatt Regency Hotel,
1800 East Putnam Avenue, Old Greenwich, CT 06870 or at any adjournments or
postponements thereof (the "Annual Meeting"). An Annual Report to
Stockholders, containing financial statements for the fiscal year ended
December 31, 1997, is being mailed together with this proxy statement to all
stockholders entitled to vote. This proxy statement and the form of proxy
were first mailed to stockholders on or about April 13, 1998.
Only stockholders of record at the close of business on April 1, 1998
(the "Record Date") will be entitled to receive notice of and to vote at
the meeting and any adjournments or postponements thereof. As of that date,
7,463,241 shares of Common Stock, $.01 par value per share
(the "Common Stock"), of the Corporation were issued and outstanding. The
holders of Common Stock are entitled to one vote per share on any proposal
presented at the meeting. Stockholders may vote in person or by proxy.
Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. Any stockholder giving a proxy has
the right to revoke it (i) by filing a later-dated proxy or a written notice
of revocation with the Secretary of the Corporation at any time before it is
exercised or (ii) by voting in person at the Annual Meeting (although
attendance at the Annual Meeting will not, in itself, constitute revocation
of a proxy). Any written notice of revocation or subsequent proxy should be
sent so as to be delivered to META Group, Inc., 208 Harbor Drive, Stamford,
Connecticut, 06912-0061, Attention: Secretary, at or before the taking of
the vote at the Annual Meeting.
The representation in person or by proxy of at least a majority of the
outstanding Common Stock entitled to vote at the meeting is necessary to
constitute a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker "non-votes" are counted as present or
represented by proxy for purposes of determining the presence or absence of
a quorum for the meeting. A "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a proposal because, in respect of
such proposal, the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
In the election of the Class III Directors, the nominees receiving the
highest number of affirmative votes of the shares present or represented and
entitled to vote at the meeting shall be elected as Class III Directors. On
any other matter being submitted to stockholders, including the approval of
the Company's Amended and Restated 1995 Plan, an affirmative vote of a
majority of the shares present or represented and voting on each such matter
is required for approval. An automated system administered by the
Corporation's transfer agent tabulates the votes. The vote on each matter
submitted to stockholders is tabulated separately. Abstentions are included
in the number of shares present or represented and voting on each matter.
Broker "non-votes" are not so included.
The persons named as attorneys-in-fact in the proxies, Dale Kutnick and
Bernard F. Denoyer, are a director and officer and an officer of the
Corporation, respectively. All properly executed proxies returned in time to
be counted at the meeting will be voted. All proxies will be voted in
accordance with the stockholders' instructions, and, if no choice is
specified, the enclosed proxy card (or any signed and dated copy thereof)
<PAGE 2>
will be voted FOR the matters set forth in the accompanying Notice of
Meeting. Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy.
The Board of Directors of the Corporation knows of no other matters to be
presented at the meeting. If any other matter should be presented at the
meeting upon which a vote properly may be taken, shares represented by all
proxies received by the Board of Directors will be voted with respect
thereto in accordance with the judgment of the persons named as attorneys in
the proxies.
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of the Record Date (unless otherwise
indicated) certain information regarding the beneficial ownership of shares
of the Corporation's Common Stock by (i) each person who, to the knowledge
of the Corporation, owned beneficially more than 5% of the Common Stock of
the Corporation outstanding at the Record Date, (ii) each director or
nominee, (iii) each executive officer identified in the Summary Compensation
Table set forth below under "Compensation and Other Information Concerning
Directors and Officers," and (iv) all executive officers, directors and
nominees as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Beneficial Owner of Ownership (1) Class (2)
______________________________________________________________________________
<S> <C> <C>
Dale Kutnick (3) 1,007,159 13.5%
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Pilgrim Baxter & Associates, Ltd.(4) 795,600 10.7%
825 Duportail Road
Wayne, PA 19087
Marc Butlein (5) 694,160 9.3%
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
T. Rowe Price Associates, Inc.(6) 637,200 8.5%
100 East Pratt Street
Baltimore, MD 21202
<PAGE 3>
FMR Corp. (7) 552,200 7.4%
82 Devonshire Street
Boston, MA 02109
Massachusetts Financial Services Co. (8) 467,880 6.3%
500 Boylston Street
Boston, MA 02116
George McNamee (9) 159,666 2.1%
c/o First Albany Corporation
30 South Pearl Street
Albany, NY 12207
Joseph P. Gottlieb (10) 88,000 1.2%
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
<PAGE 3>
John Aaron Zornes (11) 62,075 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Daniel S. Fitzgerald (12) 27,933 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Michael Simmons (13) 25,000 *
c/o MS Associates
1865 West Union Avenue, Suite R
Englewood, CO 80110
Bernard F. Denoyer (14) 17,266 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Harry S. Gruner (15) 17,143 *
c/o JMI Equity Fund
1119 St. Paul Street
Baltimore, MD 21202
Francis J. Saldutti (16) 14,734 *
c/o Ardent Research Partners, L.P.
200 Park Avenue, 39th Floor
New York, NY 10166
All directors and executive officers 2,171,761 28.3%
as a group (11 persons)(17)
____________________________________
*Less than 1% (footnotes begin on next page)
</TABLE>
(1) Except as noted in the footnotes to this table, each person or entity
named in the table has sole voting and investment power with respect to
all shares of Common Stock owned, based upon information provided to the
Corporation by directors (and nominees), officers and principal
stockholders.
(2) Applicable percentage of ownership as of the Record Date is based upon
7,463,241 shares of Common Stock outstanding on that date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission (the "Commission"), and includes voting and investment
power with respect to shares. Common Stock subject to options currently
exercisable or exercisable within 60 days of the Record Date are deemed
outstanding for computing the percentage ownership of the person holding
such options, but are not deemed outstanding for computing the percentage
of any other person.
(3) Includes 15,000 shares of Common Stock issuable pursuant to stock options
exercisable within 60 days of the Record Date.
(4) These shares are owned by various individual and institutional investors,
to which Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") serves as
investment advisor with the power to direct investments and/or sole power
to vote the securities. Information included in this table regarding
Pilgrim Baxter was obtained from its Schedule 13-G filed with the
Commission on or about March 9, 1998.
(5) Includes 195,000 shares of Common Stock held by the Marc & Michaele
Butlein Charitable Remainder Unit Trust, of which Mr. Butlein is a
Trustee, 70,000 shares of Common Stock held by the Marc & Michaele
Butlein Family Limited Partnership, of which Mr. Butlein is a General
Partner, and 24,000 shares of Common Stock held by the Butlein Private
Family Foundation, of which Mr. Butlein is an officer. Mr. Butlein
disclaims beneficial ownership of all shares of Common Stock except for
the shares he holds of record.
<PAGE 4>
(6) These securities are owned by various individual and institutional
investors including the T. Rowe Price New Horizons Fund, Inc. (which owns
511,600 shares, representing 6.9% of the shares outstanding), to which
T. Rowe Price Associates, Inc. ("Price Associates") serves as investment
advisor with the power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, as amended, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
Information included in this table regarding Price Associates was obtained
from its Schedule 13-G filed with the Commission on or about February 12,
1998.
(7) These securities are owned by various individual and institutional
investors including the Fidelity Export Fund and Multinational Fund
(which owns 412,200 shares, representing 5.5% of the shares outstanding),
to which FMR Corp. ("Fidelity") serves as investment advisor with the
power to direct investments, but not to vote securities, which power
resides with the Funds' Board of Trustees. Information included in this
table regarding Fidelity was obtained from its Schedule 13-G filed with
the Commission on or about February 14, 1998.
(8) Information included in this table regarding Massachusetts Financial
Services Company was obtained from its Schedule 13-G filed with the
Commission on or about February 12, 1998. Massachusetts Financial Services
Company has sole dispositive power of the securities listed but disclaims
sole voting power for a portion of the securities held.
(9) Consists of 153,000 shares of Common Stock owned by First Albany
Corporation and 6,666 shares issuable to Mr. McNamee pursuant to stock
options exercisable within 60 days of the Record Date. Mr. McNamee, a
director of the Corporation, is Chairman and Co-Chief Executive Officer of
First Albany Corporation, and may therefore be deemed to share voting and
investment power over the shares owned by First Albany Corporation.
Mr. McNamee disclaims beneficial ownership of the 153,000 shares owned by
First Albany Corporation, except to the extent of his pecuniary interest
therein.
(10) Includes 86,250 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(11) Includes 10,543 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(12) Includes 18,933 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date and 3,000 shares of
Common Stock held by family members, as to which Mr. Fitzgerald has
shared voting and investment power.
(13) Consists of 25,000 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(14) Includes 4,066 shares of Common Stock issuable pursuant to stock options
exercisable within 60 days of the Record Date and 500 shares of Common
Stock held by family members, as to which Mr. Denoyer has shared voting
and investment power.
(15) Includes 5,000 shares of Common Stock issuable pursuant to stock options
exercisable within 60 days of the Record Date.
(16) Consists of 14,734 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(17) Includes 219,817 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
<PAGE 5>
PROPOSAL I
ELECTION OF DIRECTORS
The Corporation's Board of Directors is currently fixed at six members.
The Corporation's By-laws divide the Board of Directors into three classes.
The members of each class of directors serve for staggered three-year terms.
Messrs. Dale Kutnick and Francis J. Saldutti are Class I Directors, Messrs.
Marc Butlein and Harry S. Gruner are Class II Directors, and Messrs. Michael
Simmons and George McNamee are Class III Directors. The Class III Directors'
terms will expire at the Annual Meeting.
The Board of Directors has nominated and recommended that Messrs. Simmons
and McNamee, who currently serve as Class III Directors, be reelected as
Class III Directors, to hold office until the Annual Meeting of Stockholders
for the fiscal year ending December 31, 2000, and until their successors have
been duly elected and qualified or until their earlier resignation or
removal. The Board of Directors knows of no reason why the nominees should
be unable or unwilling to serve, but if any nominee should for any reason be
unable or unwilling to serve, the proxies will be voted for the election of
such other person for the office of director as the Board of Directors may
recommend in the place of such nominee. Unless otherwise instructed, the
proxy holders will vote the proxies received by them FOR the election of
both nominees.
The following table sets forth the names of the nominees to be voted upon
at the meeting and each director whose term of office will extend beyond the
meeting, the year such nominee or director was first elected a director, the
positions currently held by the nominees and each director with the
Corporation, the year the nominee's or director's term will expire and class
of director of each nominee and each director.
Nominee's or Director's
Name and Year Nominee or Director Position(s) with Year Term Class of
First Became a Director the Corporation Will Expire Director
- --------------------------------- ---------------- ----------- --------
Nominees:
- ---------
Michael Simmons (1994) Director 2001 III
George McNamee (1996) Director 2001 III
Continuing Directors:
- ---------------------
Dale Kutnick (1989) President, Research 1999 I
Director, Chief Executive
Officer and Director
Francis J. Saldutti (1991) Director 1999 I
Marc Butlein (1989) Chairman of the 2000 II
Board of Directors
Harry S. Gruner (1994) Director 2000 II
<PAGE 6>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met six (6) times and took action by unanimous
written consent three (3) times during the fiscal year ended December 31,
1997. Each of the directors attended all of the meetings of the Board of
Directors during fiscal 1997. The Audit Committee of the Board of Directors,
of which Messrs. Gruner, Saldutti and Simmons are currently members, is
responsible for reviewing the results and scope of audits and other services
provided by the Corporation's independent auditors and reviewing the
Corporation's internal controls. The Audit Committee met once on February 7,
1997. The Compensation Committee, which consisted in fiscal 1997 of Messrs.
Gruner, Saldutti and Simmons, makes recommendations concerning the salaries
and incentive compensation of employees of, and consultants to, the
Corporation and oversees and administers the Corporation's stock plans. The
Compensation Committee met three (3) times during 1997 and took action by
unanimous written consent one (1) time. Mr. Gruner resigned from the
Compensation Committee in January 1998. The Board of Directors does not
currently have a standing nominating committee.
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the director nominees to be voted upon at
the meeting, the directors and the executive officers of the Corporation,
their ages and the positions currently held by each such person with the
Corporation.
Name Age Position
---- --- --------
Dale Kutnick 48 President, Research Director, Chief Executive
Officer and Director
Bernard F. Denoyer 50 Treasurer, Senior Vice President - Finance,
Secretary and Chief Financial Officer
Daniel S. Fitzgerald 33 Executive Vice President, Sales & Marketing
Joseph P. Gottlieb 31 Executive Vice President and Director,
Cross-Functional Research
James J. Harrison 30 Executive Vice President and Director,
New Business Development
John Aaron Zornes 44 Executive Vice President and Service Director,
Application Delivery Strategies
Marc Butlein 59 Chairman of the Board
Harry S. Gruner(1)(2) 38 Director
George McNamee 51 Director
Francis J. Saldutti(1) 50 Director
Michael Simmons(1) 59 Director
____________________
(1) Member of Compensation and Audit Committees during fiscal 1997.
(2) Mr. Gruner resigned from the Compensation Committee in January 1998.
Dale Kutnick, a co-founder of the Corporation, has served as President,
Research Director, Chief Executive Officer and a Director of the Corporation
since its inception in January 1989. Beyond his operational responsibilities,
Mr. Kutnick directs all of META Group's research and analytic activities. He
is also Executive Director of the META Executive Council, which prepares
customized research for CIOs. Prior to co-founding META Group, Mr. Kutnick
was Executive Vice President of Research at Gartner Group and an Executive
Vice President at Gartner Securities. Prior to his experience at Gartner
Group, he served as an Executive Director, Research Director and Principal
at Yankee Group and as a Principal at Battery Ventures, a venture capital
firm. Mr. Kutnick is a graduate of Yale University.
Bernard F. Denoyer has served as Senior Vice President - Finance since
January 1998. Mr. Denoyer joined the Corporation in October 1994 as Vice
<PAGE 7>
President - Finance and was elected Chief Financial Officer and Treasurer of
the Corporation in July 1995. In May 1996, the Board of Directors appointed
Mr. Denoyer Secretary of the Corporation. Prior to joining the Corporation,
Mr. Denoyer was an independent turnaround financial consultant from
December 1993 until September 1994, and Vice President and Chief Financial
Officer of Environetics, Inc. from May 1990 until November 1993, when
Environetics, Inc. merged with IDEXX Laboratories, Inc. Previously,
Mr. Denoyer served for three years as Vice President, Finance for Gartner
Group and held senior financial management positions with GTE Service Corp.
and the Bunker-Ramo Corp. Mr. Denoyer earned his CPA in 1975 while at
Ernst & Young. Mr. Denoyer has a MBA in Finance from the Columbia Business
School and a B.A. in Economics from Fairfield University.
Daniel S. Fitzgerald has served as Executive Vice President, Sales and
Marketing since January 1998. Previously, Mr. Fitzgerald held the positions
of Senior Vice President of Sales from January 1997 to December 1997,
Regional Vice President of Sales - East from January 1995 to December 1996
and District Sales Director from June 1994 to December 1994. Prior to joining
the Corporation in June 1994, Mr. Fitzgerald co-founded and served as
Vice President of Sales for Affinity Research Corporation, a research and
consulting firm, from May 1993 to June 1994. From June 1992 until April 1993,
Mr. Fitzgerald held the position of Product Marketing Manager and Sales
Director of New Science Associates (later acquired by Gartner Group).
Mr. Fitzgerald received a B.B.A in Marketing from the University of
Massachusetts.
Joseph P. Gottlieb has served as Executive Vice President and Director,
Cross-Functional Research since November 1997. Mr. Gottlieb also leads
META Group's Publications business unit and supervises the On Line Services
department. His previous experience within the Corporation has included
positions as Executive Vice President, Marketing and Distribution from
January 1997 to November 1997, Executive Vice President, Sales and Marketing
from January 1995 until January 1997, Vice President and Service Director of
the Corporation's Open Computing & Server Strategies service from November
1992 until January 1995, and Program Director of the Corporation's Global
Networking Strategies service from September 1991 until November 1992.
Prior to joining META Group in September 1991, Mr. Gottlieb was a Manager
with the Network Consulting Practice of Ernst & Young for four years; before
that, he was with Network Strategies, Inc. Mr. Gottlieb graduated from
Cornell University with a B.S. in Electrical Engineering.
James J. Harrison has served as Executive Vice President and Director,
New Business Development since August 1997. His previous experience within
the Corporation has included positions as Senior Vice President and Service
Director of META Metrix from September 1996 to July 1997, Senior Vice
President of New Product Development from January 1997 to June 1997, Vice
President and Service Director of the Corporation's Services & Systems
Management Strategies service from January 1995 to April 1996 and Vice
President and Program Director of the Global Networking Strategies service
prior to January 1995. Prior to joining META Group in September 1990,
Mr. Harrison was a Manager with the Technology Consulting Practice of Ernst
& Young; before that, he was with Network Strategies, Inc. and Comcept
Associates. Mr. Harrison received a B.S. in Electrical Engineering from the
Massachusetts Institute of Technology.
John Aaron Zornes has served as Executive Vice President and Service
Director of the Corporation's Application Delivery Strategies service since
January 1996. From October 1990 until December 1995, he held the position of
Vice President and Service Director of the Application Development Strategy
service. Prior to joining META Group in October 1990, Mr. Zornes held
executive and managerial positions at Ingres Corporation, Wang Laboratories,
Inc., Software AG of North America and Cincom Systems, Inc. Mr. Zornes
received his M.S. in Management Information Systems from the University of
Arizona.
Marc Butlein, a co-founder of the Corporation, currently serves as Chairman
of the Board of Directors. Mr. Butlein held the office of Secretary of the
Corporation from January 1989 until May 1996, Executive Director of the META
Executive Council from January 1994 until June 1996 and Senior Executive
Vice President from July 1995 until his retirement as an officer of the
Corporation in December 1996. From January 1989 to April 1993, he served as
Vice President and Director of the Enterprise Data Center Strategies service.
Prior to co-founding META Group, Mr. Butlein spent three and one-half years
with Gartner Group and 19 years with International Business Machines
Corporation, where he held various marketing, development and corporate
positions.
<PAGE 8>
Harry S. Gruner has served as a Director of the Corporation since July 1994.
Mr. Gruner has been a general partner of JMI Partners, L.P., the general
partner of JMI Equity Fund, L.P., a venture capital firm, since 1992. From
1986 until joining JMI Equity Fund, L.P., Mr. Gruner was a Principal at Alex
Brown & Sons Incorporated, an investment banking firm. Mr. Gruner also
serves as a Director of Hyperion Software Corporation, Optika Imaging
Systems, Inc. and V-ONE Corporation, all of which are publicly traded
corporations.
George McNamee has served as a Director of the Corporation since August 1996.
Since 1984, Mr. McNamee has been the Chairman of First Albany Companies Inc.,
a publicly traded holding company, and Chairman, Co-Chief Executive Officer
and Director of First Albany Corporation, which is the primary subsidiary of
First Albany Companies Inc. Mr. McNamee also serves as a Director of Map
Info Corporation and Chairman of Mechanical Technology Inc., both of which
are publicly traded companies.
Francis J. Saldutti has served as a Director of the Corporation since
November 1991. Mr. Saldutti has been a general partner of Ardent Research
Partners, L.P., a technology focused money management partnership, since
April 1992 and was a senior technology analyst at Amerindo Investment
Advisors, an investment firm, from October, 1989 through February 1995.
Prior to October 1989, Mr. Saldutti was Senior Vice President and Director
of Research for Gartner Securities, Director of Technology Research for
LF Rothschild, Unterberg, Towbin, an investment banking firm, and senior
technology analyst for Merrill Lynch Asset Management's Science/Technology
Fund.
Michael Simmons has served as a Director of the Corporation since September
1994. Mr. Simmons serves as Principal and President of M.S. Associates, a
technology management and operations consulting firm founded by him in
October 1993. Mr. Simmons also served as the Chief Administrative Officer of
Security Capital Group, a real estate investment firm, from June 1995 to
March 1997. In 1993 and 1994, Mr. Simmons worked as an independent management
consultant, and from 1990 through 1993, Mr. Simmons was an Executive Vice
President at the Bank of Boston.
Executive officers of the Corporation are elected by the Board of
Directors on an annual basis and serve until their successors have been duly
elected and qualified or their earlier resignation or removal. There are no
family relationships among any of the executive officers or directors of the
Corporation.
<PAGE 9>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation Summary
The following table sets forth summary information concerning the
compensation paid or earned for services rendered to the Corporation in all
capacities during the fiscal years ended December 31, 1995, 1996 and 1997 to
(i) the Corporation's Chief Executive Officer and (ii) each of the four other
most highly compensated executive officers of the Corporation who received
total annual salary and bonus in excess of $100,000 in fiscal 1997
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation/Awards(2)
Securities Underlying All Other
Name and Principal Position(1) Year Salary Bonus($) Options (# of shares) Compensation
- ----------------------------- ---- ------ -------- ---------------------- ------------
($)(1)(3)
<S> <C> <C> <C> <C> <C>
Dale Kutnick 1997 $258,500 $249,580 20,000 $8,144
President, Research Director, 1996 $239,295 $204,447 20,000 $9,772
Chief Executive Officer and 1995 $225,750 $125,000 $7,330
Director
Bernard F. Denoyer 1997 $137,500 $92,170 6,000
Senior Vice President-Finance, 1996 $125,000 $72,200 5,000
Chief Financial Officer, 1995 $110,000 $40,000 1,600
Treasurer and Secretary
Daniel S. Fitzgerald 1997 $130,000 $152,265(4) 12,000
Executive Vice President, 1996 $92,000 $102,902(4) 4,000
Sales & Marketing 1995 $85,000 $198,251(4) 11,400
Joseph P. Gottlieb 1997 $185,000 $95,100 7,000
Executive Vice President and 1996 $175,000 $185,047 15,000
Director, Cross-Functional 1995 $150,000 $104,000 30,000
Research
John Aaron Zornes 1997 $185,000 $152,602 7,500
Executive Vice President and 1996 $170,000 $195,385 8,000
Service Director, Application 1995 $156,525 $144,565 2,000
Delivery Strategies
______________________________
</TABLE>
(1) The compensation described in this table does not include medical,
group life insurance or other benefits received by the Named Executive
Officers which are available generally to all salaried employees of the
Corporation and certain perquisites and other personal benefits,
securities or property received by the Named Executive Officers which do
not exceed the lesser of $50,000 or 10% of any such officer's aggregate
salary and bonus disclosed in this table.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan payouts during
fiscal year 1997.
(3) Consists of premiums for term life insurance paid by the Corporation for
the benefit of the Named Executive Officer.
(4) Includes sales commissions and bonus dollars earned by Mr. Fitzgerald
based on achievement of sales performance objectives.
<PAGE 10>
Option Grants in Fiscal Year 1997
The following table sets forth each grant of stock options made during
the year ended December 31, 1997 to each of the Named Executive Officers:
Individual Grants
------------------------------------------
<TABLE>
<CAPTION> Potential Realizable
Number % of Total Value at Assumed
of Options Annual Rates of
Securities Granted to Stock Price
Underlying Employees Exercise Appreciation
Options in Fiscal Price Expiration for Option Term (2)
Name Granted(1) Year ($/Share) Date 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C>
Dale Kutnick 15,000 3% $17.75 04/03/07 $167,443 $424,334
5,000 1% $19.525 04/03/02 $15,645 $45,308
Bernard F. Denoyer 6,000 1% $17.75 04/03/07 $66,977 $169,734
Daniel S. Fitzgerald 12,000 3% $17.75 04/03/07 $133,955 $339,467
Joseph P. Gottlieb(3) 7,000 2% $17.75 04/03/07 $78,140 $198,023
John Aaron Zornes 7,500 2% $17.75 04/03/07 $83,722 $212,167
_______________
</TABLE>
(1) All options reflected in the Summary Compensation Table were granted on
April 3, 1997 and vest one-fourth on April 3, 1998, an additional
one-fourth on April 3, 1999, an additional one-fourth on April 3, 2000
and fully on April 3, 2001. The exercise price of the options is $17.75
per share, the fair market value of the Corporation's Common Stock on the
date of grant, except for the options to purchase 5,000 shares granted to
Mr. Kutnick at a price of $19.525 per share, which was 110% of the fair
market value of the Corporation's Common Stock on the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the market value of the Corporation's Common Stock over the term of
the options. These numbers are calculated based on rules promulgated by
the Commission and do not reflect the Corporation's estimate of future
stock price growth. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the timing of such exercises and
the future performance of the Corporation's Common Stock. There can be
no assurance that the rates of appreciation assumed in this table can be
achieved or that the amounts reflected will be received by the individuals.
(3) These options were granted in two equal parts: 3,500 option shares were
granted as Incentive Stock Options ("ISOs") and 3,500 option shares were
granted as Non-Qualified Stock Options in accordance with the $100,000
annual limitation on ISO vesting.
<PAGE 11>
Aggregate Option Exercises in Fiscal Year 1997 and Fiscal Year-End Values
The following table sets forth, for each of the Named Executive Officers,
information with respect to the exercise of stock options during the year
ended December 31, 1997 and the year-end value of unexercised options:
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised In-the-
Shares Underlying Unexercised Money Options at
Acquired on Value Options at Year-End Year-End($)(2)
Name Exercise(#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
____ ___________ ______________ _________________________ _________________________
<S> <C> <C> <C> <C>
Dale Kutnick 400,000 $7,140,000 5,000 / 35,000 0 / $49,500
Bernard F. Denoyer 7,716 / 10,284 $126,389 / $34,712
Daniel S. Fitzgerald 11,599 / 18,801 $201,082 / $121,568
Joseph P. Gottlieb 70,750 / 28,250 $1,347,550 / $217,250
John Aaron Zornes 51,532 $934,505 6,001 / 14,167 $79,186 / $44,381
______________
</TABLE>
(1) Amounts disclosed in this column were calculated based on the difference
between the fair market value of the Corporation's Common Stock on the
date of exercise and the exercise price of the options in accordance with
regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and do not reflect amounts actually
received by the named officers.
(2) Value is based on the difference between the option exercise price and
the fair market value at December 31, 1997, the fiscal year-end ($22.00
per share), multiplied by the number of shares underlying the options.
Stock Plans
The Corporation currently maintains five employee stock plans: the
Restated and Amended 1989 Stock Option Plan, the 1993 Stock Option and
Incentive Plan, the 1995 Stock Plan, the 1995 Non-Employee Director Stock
Option Plan and the 1995 Employee Stock Purchase Plan (collectively, the
"Stock Plans"). Following is a summary of the material features of the
Stock Plans.
The Restated and Amended 1989 Stock Option Plan (the "1989 Plan") provides
for the issuance of a maximum of 3,600,000 shares of Common Stock pursuant
to the grant of ISOs to employees and non-qualified stock options ("NQSOs")
to employees, consultants, directors and officers of the Corporation. The
terms of such options, including number of shares, exercise price, duration
and vesting, are generally determined by the Compensation Committee of the
Board of Directors. As of December 31, 1997, options to purchase a total of
222,500 shares of Common Stock were outstanding under the 1989 Plan, all of
which were then exercisable. The Corporation's Board of Directors resolved
on March 3, 1993 that after that date, no further options may be granted or
issued under the 1989 Plan. Accordingly, no options were granted under the
1989 Plan during the fiscal year ended December 31, 1997.
The 1993 Stock Option and Incentive Plan (the "1993 Plan") provides for
the issuance of a maximum of 1,600,000 shares of Common Stock pursuant to
the grant of ISOs to employees and the grant of NQSOs to employees,
consultants, directors and officers of the Corporation. The terms of such
options, including number of shares, exercise price, duration and vesting,
are generally determined by the Compensation Committee of the Board of
Directors. As of December 31, 1997, options to purchase a total of 378,097
shares of Common Stock were outstanding under the 1993 Plan, of which options
for 305,604 shares were then exercisable. The Corporation's Board of
Directors resolved on October 2, 1995 that after November 30, 1995 no further
options may be granted or issued under the 1993 Plan. Accordingly, no options
were granted under the 1993 Plan during the fiscal year ended December 31,
1997.
<PAGE 12>
The 1995 Stock Plan (the "1995 Plan") provides for the issuance of a
maximum of 1,500,000 shares of Common Stock pursuant to the grant of ISOs to
employees and the grant of NQSOs, stock awards and opportunities to make
direct purchases of stock to employees, consultants, directors and officers
of the Corporation. The terms of such options, including number of shares,
exercise price, duration and vesting, are generally determined by the
Compensation Committee of the Board of Directors. As of December 31, 1997,
options to purchase a total of 751,544 shares of Common Stock were
outstanding under the 1995 Plan, of which options for 117,906 shares were
then exercisable. Shares available for future stock option grants at
December 31, 1997 totaled 746,356 shares. During 1997, ISOs to purchase
387,500 shares of Common Stock and NQSOs to purchase 72,925 shares of Common
Stock were granted under the 1995 Plan. The Board of Directors has adopted,
subject to stockholder approval, the Amended and Restated 1995 Plan to
(i) increase the number of shares issuable over the term of the Plan by
1,500,000 shares to 3,000,000 shares in the aggregate and (ii) extend the
exercise period after death from 180 days to one year for ISOs granted after
the date of stockholder approval. See Proposal II.
The 1995 Non-Employee Director Stock Option Plan (the "Director Plan")
provides for the grant of options to purchase a maximum of 150,000 shares of
Common Stock to non-employee directors of the Corporation. The Director Plan
authorizes the automatic grant of stock options only to members of the Board
of Directors who are neither employees nor officers of the Corporation
(individually, a "Non-Employee Director" and collectively, the "Non-Employee
Directors"). The Director Plan is administered by the Compensation Committee.
The Director Plan authorizes the grant (a) to each Non-Employee Director who
is first elected to the Board after December 1, 1995, on the date such person
is first elected to the Board of Directors without further action by the
Board of Directors, of an option to purchase 10,000 shares of Common Stock
and (b) to each person who is a Non-Employee Director on each successive
one-year anniversary of the date such person was first elected to the Board
of Directors, during the term of the Director Plan, of an option to purchase
5,000 shares of Common Stock. Options granted to newly elected Non-Employee
Directors as described in part (a) of the preceding sentence vest 33 1/3% on
the date of grant and an additional 33 1/3% on each successive one-year
anniversary, and options granted as described in part (b) of the preceding
sentence vest in full on the one-year anniversary of the date of grant. The
exercise price per share for all options granted under the Director Plan is
equal to 100% of the fair market value per share of the Common Stock on the
date of grant. The term of each option is for a period of ten years from the
date of grant. As of December 31, 1997, options to purchase a total of
45,000 shares of Common Stock were outstanding under the Director Plan,
of which options for 21,666 shares were then exercisable. Shares available
for future stock option grants at December 31, 1997 totaled 105,000 shares.
During 1997, NQSOs to purchase 20,000 shares of Common Stock were granted
under the Director Plan.
The 1995 Employee Stock Purchase Plan (the "Purchase Plan") provides for
the issuance of a maximum of 250,000 shares of Common Stock pursuant to the
exercise of non-transferable options granted to participating employees.
To participate in the Purchase Plan, an eligible employee must authorize the
Corporation to make payroll deductions in an amount not less than 1% of the
employee's base pay or salary but not more than 15% of the employee's total
compensation during the six month periods beginning January 1 and July 1
(the "Payment Periods"). On the first business day of each Payment Period,
the Corporation grants to each eligible employee participating in the
Purchase Plan, an option to purchase on the last day of such Payment Period
a maximum of 500 shares of Common Stock provided that such employee remains
eligible to participate in the Plan throughout such Payment Period. The
exercise price of options is the lesser of (i) 85% of the average market
price of the Common Stock on the first business day of such Payment Period
or (ii) 85% of the average market price of the Common Stock on the last
business day of such Payment Period. The employee is entitled to exercise
such option only to the extent of the employee's accumulated payroll
deductions on the last day of such Payment Period. The Purchase Plan is
administered by the Compensation Committee of the Board of Directors. As
of December 31, 1997, options to purchase 29,252 shares of Common Stock
were exercised under the Purchase Plan.
<PAGE 13>
Compensation Committee Interlocks and Insider Participation
The Corporation's Board of Directors has established a Compensation
Committee, which consisted in 1997 of Messrs. Gruner, Saldutti and Simmons
during the fiscal year ended December 31, 1997. Mr. Gruner resigned from the
Compensation Committee in January 1998. The Compensation Committee currently
consists solely of Messrs. Saldutti and Simmons. No members of the
Compensation Committee were officers, employees or former officers of the
Company. During the fiscal year ended December 31, 1997, the Board of
Directors performed certain functions of the Compensation Committee. During
this period, Mr. Kutnick, the Corporation's President, Research Director,
Chief Executive Officer and a Director, and Mr. Butlein, the Corporation's
Chairman of the Board, participated in deliberations of the Corporation's
Board of Directors concerning the compensation of executive officers. As
noted below, however, all executive compensation for 1997 was reviewed,
approved and confirmed by the Compensation Committee. No executive officer
of the Corporation served as a member of the compensation committee or board
of directors of another entity (or other committee of the Board of Directors
performing equivalent functions or, in the absence of any such committee,
the entire Board of Directors), one of whose executive officers served as a
director of the Corporation.
Compensation of Directors
Directors do not receive any cash compensation for their services,
although directors are reimbursed for their reasonable out-of-pocket expenses
incurred in attending meetings. Non-employee directors are also eligible to
participate in the Director Plan, as described above.
Compensation Committee Report on Executive Compensation
This report is submitted by the Corporation's Compensation Committee
(the "Committee"), which consisted in 1997 of Messrs. Gruner, Saldutti and
Simmons, each of whom is an independent, non-employee director of the
Corporation. The Committee, pursuant to authority delegated by the Board of
Directors, is responsible for the development and administration of the
Corporation's executive compensation policies and the administration of the
1989 Plan, the 1993 Plan, the 1995 Plan, the Director Plan and the Purchase
Plan. The Committee also oversees the compensation structure of the
Corporation's senior management and other employees.
The Corporation's executive compensation program for fiscal year 1997 was
initially established by the Corporation's Board of Directors and
subsequently reviewed, confirmed and approved by the Compensation Committee.
The executive compensation program is designed to provide a compensation
package that will attract, motivate, retain and reward highly qualified
executive officers while providing incentives for executives to maximize the
Corporation's financial results for the benefit of the Corporation's
stockholders.
The executive compensation program is designed to achieve the above goals
through a combination of base salary, cash bonuses and long-term incentive
compensation in the form of stock options.
Base salary compensation levels for each of the Corporation's executive
officers are determined annually by the Committee by evaluating the
individual officer's responsibilities, experience and performance, as well
as generally available information regarding salaries paid to executive
officers with comparable qualifications at companies in businesses comparable
to the Corporation.
Cash bonuses are determined annually at the beginning of each year. In
early 1997, the Committee set target bonus amounts for each executive
officer. Such amounts were tied to the attainment of certain financial
objectives by the Corporation determined by the Committee to be applicable
to such executive officer's area or areas of responsibility. For certain
executive officers, the Committee set multiple target bonus amounts, which
amounts increased with improvement in the Corporation's performance.
Financial objectives included total revenues, operating margins, expenses,
<PAGE 14>
and in certain cases, revenues and expenses in an executive's specific
area or areas of responsibility, and various combinations of the above.
In fiscal 1997, the Corporation met or exceeded each financial objective
(and in cases where multiple targets were set, the highest such objective)
upon which these target bonuses were based.
Long-term incentive compensation in the form of stock option grants is
designed to align the interests of executive officers more closely with
those of the Corporation's stockholders by allowing those officers to share
in the long-term appreciation in the value of the Corporation's Common Stock.
It is the Corporation's policy to grant stock options to executive officers
at the time they join the Corporation in an amount consistent with the
employee's position and level of seniority. In addition, the Committee
generally makes annual performance-based option grants. In making such
performance-based grants, the Committee considers both individual and
general corporate performance, recommendations of the Chief Executive
Officer, existing levels of officer stock ownership, previous option grants
and the current stock price. For additional information regarding the grant
of options in 1997, see the table under the heading "Option Grants in Fiscal
Year 1997."
Compensation for the Corporation's President, Research Director and Chief
Executive Officer, Dale Kutnick, is determined in accordance with the
policies applicable to other executive officers of the Corporation described
above. In 1997, Mr. Kutnick received base salary and cash bonus totaling
$508,080. Mr. Kutnick's base salary of $258,500 represented an increase of
$19,205, or 8%, over 1996. In addition to the achievement of performance
targets in accordance with the Corporation's executive compensation policies,
the Committee determined that Mr. Kutnick's 1997 compensation was justified
by the Corporation's strong financial performance in 1997, a year in which
the Corporation reported continued profitability in each quarter. For
additional information regarding Mr. Kutnick's 1997 compensation, see the
table under the heading "Summary Compensation Table."
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Corporation cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code and the regulations promulgated
thereunder. The Committee has considered the limitations on deductions
imposed by Section 162(m) of the Code, and it is the Committee's present
intention that, for so long as it is consistent with its overall compensation
objective, substantially all tax deductions attributable to executive
compensation will not be subject to the deduction limitations of
Section 162(m) of the Code.
The Compensation Committee:
Harry S. Gruner
Francis J. Saldutti
Michael Simmons
<PAGE 15>
Stock Performance Graph
The following graph compares the yearly change in the cumulative total
stockholder return on the Corporation's Common Stock during the period from
the Corporation's initial public offering on December 1, 1995 through
December 31, 1997, with the cumulative total return on the Media General
Market Weighted Nasdaq Index Return ("Nasdaq Market Index") and the Media
General Industry Group 094 - Other Business Services Index ("MG Group Index").
The comparison assumes $100 was invested on December 1, 1995 in the
Corporation's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends, if any.
Comparison of Five Year(1)(2) Cumulative Total Return Among
META Group, Inc., Nasdaq Market Index
and MG Group Index
<TABLE>
<CAPTION>
December 1, December 31, December 31, December 31,
1995 1995 1996 1997
% % % %
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
META Group, Inc. Common Stock 100.00 120.10 105.88 86.27
MG Group Index 100.00 102.33 123.09 144.58
Nasdaq Market Index 100.00 99.63 123.81 151.45
</TABLE>
_____________
(1) Prior to December 1, 1995 the Corporation's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph
was obtained from Media General Financial Services, a source believed to
be reliable, but the Corporation is not responsible for any errors or
omissions in such information.
<PAGE 17>
PROPOSAL II
PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1995 PLAN
Amendment and Restatement of the 1995 Plan
The 1995 Plan was adopted by the Corporation's Board of Directors on
October 2, 1995 and approved by the Corporation's stockholders on
October 4, 1995. A maximum of 1,500,000 shares of Common Stock are currently
reserved for issuance under the 1995 Plan upon the exercise of options or in
connection with awards of stock of the Corporation ("Awards") or the
opportunity to make direct stock purchases of shares of the Corporation
("Purchases"). The Board of Directors has approved, and recommended to the
stockholders that they approve, an amendment and restatement of the 1995
Plan to (i) increase the number of shares authorized for issuance pursuant
to the 1995 Plan to 3,000,000 shares and (ii) extend the exercise period
after death from 180 days to one year for ISOs granted after the date of
stockholder approval.
Increase in Number of Shares Reserved Under the 1995 Plan
The Corporation's management relies on stock options as essential parts
of the compensation packages necessary for the Corporation to attract and
retain experienced officers and employees. The Board of Directors of the
Corporation believes that the proposed increase in the number of shares
available under the 1995 Plan is essential to permit its Compensation
Committee and the Corporation's management to continue to provide long-term,
equity-based incentives to present and future key employees.
Since the 1995 Plan's inception in October 1995, the Corporation granted
options under the 1995 Plan with fair market value exercise prices (or, in
the case of Mr. Kutnick, 110% of the fair market value) as follows: to the
Named Executive Officers, Mr. Kutnick, 65,000 shares; Mr. Denoyer, 17,000
shares; Mr. Fitzgerald, 28,500 shares; Mr. Gottlieb 25,500 shares; and
Mr. Zornes, 23,000 shares; all current executive officers as a group, 173,000
shares; current non-employee directors, 0 shares; and all other employees,
1,197,046 shares.
As of April 1, 1998, approximately 1,489,048 shares remained authorized
for issuance under the 1995 Plan of which approximately 1,200,631 were
already reserved for outstanding options, such that only approximately
288,417 were available for new grants of options, Awards or Purchases.
If the increase in the number of shares authorized for issuance under the
1995 Plan is not approved, the Corporation may be unable to continue to
provide suitable long-term equity based incentives to present and future
employees. If the proposed increase in the number of shares of Common Stock
issuable under the 1995 Plan from 1,500,000 to 3,000,000 is not approved by
the stockholders, the Corporation will not grant options, awards, or
opportunities to purchase shares under the 1995 Plan in excess of that
number of shares of Common Stock remaining available under the existing
1995 Plan. The Corporation has not at the present time determined who will
receive the remaining shares of Common Stock that will be authorized for
issuance under the 1995 Plan if the proposed amendment and restatement of
the 1995 Plan is approved.
Extension of Exercise Period After Death to One Year
The Board of Directors has also approved an extension of the period
during which an estate (or representative or beneficiary) of an ISO holder
under the 1995 Plan is permitted to exercise such holder's ISOs from 180 days
to one year after the death of such holder. Such extension shall only be
applicable to ISO grants made after the date the stockholders of the
Corporation approve the Amended and Restated 1995 Plan. All ISO grants under
the 1995 Plan made on or prior to such date shall be exercisable by an
estate within the 180-day period after the optionee's death. No option,
however, may be exercised after its specified expiration date. All exercises
shall be otherwise made in accordance with the terms and provisions of the
1995 Plan.
<PAGE 17>
The Board of Directors believes that the proposed extension of exercise
period is an important change to the 1995 Plan and will enable the
Corporation to offer an additional benefit to optionees under the 1995 Plan.
As discussed above, options granted under the 1995 Plan are a critical part
of the total benefits package offered to each employee of the Corporation.
Such options motivate employees and enable the Corporation to attract and
retain qualified personnel. The proposed extension will enhance the
Corporation's ability to offer attractive benefits packages.
More specifically, the one year period of exercise will give ISO holders
more flexibility in their estate planning because their descendants will
have a full year in which to determine whether to exercise the decedent's
ISOs, provided that the ISO does not, by its terms, expire earlier.
Description of the 1995 Plan
The purpose of the 1995 Plan is to provide incentives to key employees
and other individuals who render services to the Corporation by providing
them with opportunities to purchase stock of the Corporation. The text of
the 1995 Plan, amended and restated as proposed above, is attached to this
proxy statement as Appendix A. The following is a summary of the 1995
Plan and should be read together with the full 1995 Plan text.
Under the 1995 Plan, employees of the Corporation may be awarded incentive
stock options ("ISO" or "ISOs"), as defined in Section 422(b) of the Code,
and directors, officers, employees and consultants of the Corporation may be
granted (i) options which do not qualify as ISOs ("Non-Qualified Option" or
"Non-Qualified Options"), (ii) awards of stock in the Corporation ("Awards")
and (iii) opportunities to make direct purchases of stock in the Corporation
("Purchases"). ISOs, Non-Qualified Options, Awards and Purchases are sometimes
collectively referred to as "Stock Rights" and ISOs and Non-Qualified Options
are sometimes collectively referred to as "Options."
The 1995 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors. Subject to the terms of the 1995
Plan, the Committee has authority to determine, among other things, the
persons to whom Stock Rights are granted, the number of shares covered by
each Stock Right, the exercise price per share and other terms and provisions
governing the Stock Rights, including restrictions, if any, applicable to the
shares of Common Stock issuable upon exercise of Stock Rights. As of
April 1, 1998 approximately 350 persons were eligible to participate in the
1995 Plan.
Stock Rights may be granted under the 1995 Plan at any time prior to
October 3, 2005. The exercise price per share of Non-Qualified Options
granted under the 1995 Plan cannot be less than the minimum legal
consideration required under applicable state law. The exercise price per
share of ISOs cannot be less than the fair market value of the Common Stock
on the date of grant (or, in the case of ISOs granted to employees holding
more than 10% of the total combined voting power of all classes of stock of
the Corporation, 110% of the fair market value of the Common Stock on the
date of grant). The 1995 Plan provides that each option shall expire on the
date specified by the Committee, but not more than ten years from its date of
grant in the case of Options generally, and five years in the case of ISOs
granted to an employee holding more than 10% of the total combined voting
power of all classes of stock of the Corporation. Options are subject to
early termination in certain circumstances.
Each Option granted under the 1995 Plan may either be fully exercisable
at the time of grant or may become exercisable in such installments as the
Committee may specify. Each Option may be exercised from time to time, in
whole or in part, up to the total number of shares with respect to which it
is then exercisable. The Committee has the right to accelerate the date of
exercise of any installment of any option (subject to the $100,000 per year
limitation on the fair market value of stock subject to ISOs granted to any
employee which become exercisable in any calendar year).
Payment of the exercise price of an Option granted under the 1995 Plan
may be made in cash or by check or, at the discretion of the Committee, by
<PAGE 18>
tendering Common Stock of the Corporation, by delivery of the grantee's
personal recourse note or through delivery of an assignment of proceeds from
the sale of the underlying Common Stock (or any combination thereof). In the
case of ISOs, any Committee authorization of a non-cash method of payment
shall be evidenced in writing at the time of the grant. The 1995 Plan
contains terms providing for the exercise of Options by or on behalf of
former and deceased employees, respectively, as described below.
During the lifetime of the grantee, only the grantee may exercise a Stock
Right; no assignment or transfer is permitted except by will or by the laws
of descent and distribution (or, in the case of Non-Qualified Options only,
pursuant to a valid domestic relations order).
If an ISO optionee ceases to be employed by the Corporation other than by
reason of death or disability, no further installments of his or her ISOs
will become exercisable, and the ISOs shall terminate after the passage of
90 days from the date of termination of employment (but no later than their
specified expiration dates), except to the extent that such ISOs shall have
been converted into Non-Qualified Options. If an optionee is disabled or
dies, any ISO held by the optionee may be exercised, to the extent
exercisable on the date of disability or death, by the optionee or the
optionee's estate, personal representative or beneficiary, at any time
within 180 days from the date of the optionee's disability or death (but not
later than the specified expiration date of the ISO). Non-Qualified Options
are subject to such termination and cancellation provisions as may be
determined by the Committee. As discussed above, the Board of Directors of
the Corporation has approved, and submitted for stockholder approval, an
Amended and Restated 1995 Stock Plan to, among other things, extend the
exercise period after death from 180 days to one year for ISOs granted after
the date of stockholder approval of the Amended and Restated 1995 Plan.
Option holders are protected against dilution in the event of a stock
dividend, recapitalization, stock split, merger or similar transaction.
The Board of Directors may from time to time adopt amendments to the 1995
Plan, certain of which are subject to stockholder approval, and may terminate
the 1995 Plan, at any time (although such action shall not affect Options
previously granted). Any shares subject to an Option granted under the 1995
Plan, which for any reason expire or terminate unexercised, may again be
available for future Option grants. Unless terminated sooner, the 1995 Plan
will terminate at the end of the day on October 2, 2005.
Federal Tax Considerations
The following discussion of United States federal income tax consequences
of the issuance and exercise of Options, Awards and Purchases granted under
the 1995 Plan is based upon the provisions of the Code as in effect on the
date of this Proxy Statement, current regulations, and existing
administrative rulings of the Internal Revenue Service. It is not intended
to be a complete discussion of all of the United States federal income tax
consequences of the 1995 Plan or of the requirements that must be met in
order to qualify for the described tax treatment. In addition, there may be
foreign, state, and local tax consequences that are not discussed herein.
The following general rules are applicable under current federal income
tax law to ISOs under the 1995 Plan:
1. In general, no taxable income results to the optionee upon the grant
of an ISO or upon the issuance of shares to him or her upon the exercise of
the ISO, and no tax deduction is allowed to the Corporation upon either grant
or exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years following the date the option was granted or (ii) one year
following the date the shares are issued to the optionee pursuant to the ISO
exercise (the "Holding Periods"), the difference between the amount realized
on any subsequent disposition of the shares and the exercise price will
generally be treated as capital gain or loss to the optionee.
<PAGE 19>
3. If shares acquired upon exercise of an ISO are disposed of and the
optionee does not satisfy the requisite Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition will be treated as
compensation to the optionee and will be taxed as ordinary income in the year
of such disposition.
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Corporation generally should be entitled to a corresponding deduction for
income tax purposes.
5. Any excess of the amount realized by the optionee as the result of
a Disqualifying Disposition over the sum of (i) the exercise price and (ii)
the amount of ordinary income recognized under the above rules will be
treated as capital gain.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's holding
period for the shares exceeds one year. If the optionee's holding period for
the shares exceeds eighteen months, the optionee may be entitled to a reduced
long-term capital gains rate.
7. An optionee may be entitled to exercise an ISO by delivering shares
of the Corporation's Common Stock to the Corporation in payment of the
exercise price, if the optionee's ISO agreement so provides. If an optionee
exercises an ISO in such a manner, special rules will apply.
8. In addition to the tax consequences described above, the exercise
of ISOs may result in a further "alternative minimum tax" under the Code.
The Code provides that an "alternative minimum tax"(at a maximum rate of 28%)
will be applied against a taxable base which is equal to "alternative minimum
taxable income," reduced by a statutory exemption. In general, the amount by
which the value of the Common Stock received upon exercise of the ISO exceeds
the exercise price is included in the optionee's alternative minimum taxable
income. A taxpayer is required to pay the higher of his regular tax liability
or the alternative minimum tax. A taxpayer who pays alternative minimum tax
attributable to the exercise of an ISO may be entitled to a tax credit
against his or her regular tax liability in later years.
9. Special rules apply if the Common Stock acquired through the
exercise of an ISO is subject to vesting, or is subject to certain
restrictions on resale under federal securities laws applicable to directors,
officers or 10% shareholders.
The following general rules are applicable under current federal income
tax law to Non-Qualified Options under the 1995 Plan:
1. The optionee generally does not realize any taxable income upon
the grant of a Non-Qualified Option, and the Corporation is not allowed a
federal income tax deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income
at the time of exercise of the Non-Qualified Option in an amount equal to
the excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price. The Corporation may be required to withhold
income tax on this amount.
3. When the optionee sells the shares acquired through the exercise of
a Non-Qualified Option, he or she generally will recognize a capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of the shares and his or her basis in the stock (generally, the
exercise price plus the amount taxed to the optionee as ordinary income).
If the optionee's holding period for the shares exceeds one year, such gain
or loss will be a long-term capital gain or loss. If the optionee's holding
period for the shares exceeds eighteen months, the employee may be entitled
to a reduced long-term capital gains rate.
<PAGE 20>
4. The Corporation generally should be entitled to a federal income
tax deduction when ordinary income is recognized by the optionee.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Corporation's Common Stock to the Corporation in
payment of the exercise price. If an optionee exercises a Non-Qualified
Option in such fashion, special rules will apply.
6. Special rules apply if the Common Stock acquired through the
exercise of a Non-Qualified Option is subject to vesting, or is subject to
certain restrictions on resale under federal securities laws applicable to
directors, officers or 10% shareholders.
The following general rules are applicable under current federal income
tax law to the grant of Awards and Purchases under the 1995 Plan:
Under current federal income tax law, persons receiving Common Stock
pursuant to an award of Common Stock ("Award") or a grant of an opportunity
to purchase Common Stock ("Purchase") generally recognize ordinary income
equal to the fair market value of the shares received, reduced by any
purchase price paid. The Corporation generally will be entitled to a
corresponding federal income tax deduction. When such stock is sold, the
seller generally will recognize capital gain or loss. Special rules apply if
the stock acquired is subject to vesting, or is subject to certain
restrictions on resale under federal securities laws applicable to directors,
officers or 10% stockholders.
Votes Required for Approval
The proposal to approve the amendment and restatement of the 1995 Plan
requires approval by an affirmative vote of the holders of a majority of the
Corporation's stock present, or represented, and entitled to vote at the
Annual Meeting.
The Board of Directors recommends a vote FOR Proposal II to approve the
Corporation's Amended and Restated 1995 Plan, which (i) increases
to 3,000,000 the number of shares authorized for issuance thereunder and
(ii) extends the exercise period after death from 180 days to one year for
ISOs granted after the date of stockholder approval of the Amended and
Restated 1995 Plan.
<PAGE 21>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1997, the Corporation received $616,500 from First Albany Corporation
in consideration of the exclusive right to distribute the Corporation's
written research and analysis to certain financial services customers of
First Albany Corporation. See Note 12 of Notes to Financial Statements in
the Annual Report for a more detailed description of this strategic alliance.
As noted elsewhere in this Proxy Statement, Mr. McNamee, a director of the
Corporation, is also the Chairman and Co-Chief Executive Officer of First
Albany Corporation. Mr. McNamee does not have any direct material interest
in relation to this transaction.
AUDITORS FOR FISCAL 1998
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, to serve as auditors for the
fiscal year ending December 31, 1998. Deloitte & Touche LLP has served as
the Corporation's auditors since fiscal 1992. It is expected that a member
of Deloitte & Touche LLP will be present at the Annual Meeting with the
opportunity to make a statement if so desired and will be available to
respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Corporation's directors,
executive officers and holders of more than 10% of the Corporation's Common
Stock (collectively, "Reporting Persons") to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock of
the Corporation. Such persons are required by regulations of the Commission
to furnish the Corporation with copies of all such filings. Based on its
review of the copies of such filings received by it with respect to the
fiscal year ended December 31, 1997 and written representations from certain
Reporting Persons, the Corporation believes that all Reporting Persons
complied with all Section 16(a) filing requirements in the fiscal year ended
December 31, 1997.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next Annual
Meeting of Stockholders of the Corporation must be received at the
Corporation's principal executive offices not later than December 11, 1998.
In order to curtail controversy as to the date on which a proposal was
received by the Corporation, it is suggested that proponents submit their
proposals by Certified Mail, Return Receipt Requested to META Group, Inc.,
208 Harbor Drive, Stamford, Connecticut 06912-0061, Attention: Secretary.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting stockholders by mail through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the
Corporation may also be made of some stockholders in person or by mail,
telephone or telegraph following the original solicitation.
The Board of Directors of the Corporation has approved the contents and
the sending of this proxy statement.
<PAGE 22>
APPENDIX A
META GROUP, INC.
AMENDED AND RESTATED 1995 STOCK PLAN
------------------------------------
1. Purpose. The purpose of the META Group, Inc. Amended and Restated
1995 Stock Plan (the "Plan") is to encourage key employees of META Group,
Inc. (the "Company") and of any present or future parent or subsidiary of
the Company (collectively, "Related Corporations") and other individuals who
render services to the Company or a Related Corporation, by providing
opportunities to participate in the ownership of the Company and its future
growth through (a) the grant of options which qualify as "incentive stock
options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986,
as amended (the "Code"); (b) the grant of options which do not qualify as
ISOs ("Non-Qualified Options"); (c) awards of stock in the Company
("Awards"); and (d) opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options."
Options, Awards and authorizations to make Purchases are referred to
hereafter collectively as "Stock Rights." As used herein, the terms "parent"
and "subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall be
administered by the Board of Directors of the Company (the "Board") or by a
committee appointed by the Board (the "Committee"); provided that the Plan
shall be administered: (i) to the extent required by applicable regulations
under Section 162(m) of the Code, by two or more "outside directors"
(as defined in applicable regulations thereunder) and (ii) to the extent
required by Rule 16b-3 promulgated under the Securities Exchange Act of 1934
or any successor provision ("Rule 16b-3"), by a disinterested administrator
or administrators within the meaning of Rule 16b-3. Hereinafter, all references
in this Plan to the "Committee" shall mean the Board if no Committee has
been appointed. Subject to ratification of the grant or authorization of
each Stock Right by the Board (if so required by applicable state law), and
subject to the terms of the Plan, the Committee shall have the authority to
(i) determine to whom (from among the class of employees eligible under
paragraph 3 to receive ISOs) ISOs shall be granted, and to whom (from
among the class of individuals and entities eligible under paragraph 3 to
receive Non-Qualified Options and Awards and to make Purchases) Non-Qualified
Options, Awards and authorizations to make Purchases may be granted;
(ii) determine the time or times at which Options or Awards shall be
granted or Purchases made; (iii) determine the purchase price of shares
subject to each Option or Purchase, which prices shall not be less than the
minimum price specified in paragraph 6; (iv) determine whether each Option
granted shall be an ISO or a Non-Qualified Option; (v) determine (subject to
paragraph 7) the time or times when each Option shall become exercisable and
the duration of the exercise period; (vi) extend the period during which
outstanding Options may be exercised; (vii) determine whether restrictions
such as repurchase options are to be imposed on shares subject to Options,
Awards and Purchases and the nature of such restrictions, if any, and
(viii) interpret the Plan and prescribe and rescind rules and regulations
relating to it. If the Committee determines to issue a Non-Qualified Option,
it shall take whatever actions it deems necessary, under Section 422 of the
Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the
Committee of any provisions of the Plan or of any Stock Right granted under
it shall be final unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for carrying out the
Plan as it may deem advisable. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Stock Right granted under it.
B. Committee Actions. The Committee may select one of its members
as its chairman, and shall hold meetings at such time and places as it may
<PAGE 23>
determine. A majority of the Committee shall constitute a quorum and acts of
a majority of the members of the Committee at a meeting at which a quorum is
present, or acts reduced to or approved in writing by all the members
of the Committee (if consistent with applicable state law), shall be the
valid acts of the Committee. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor,
fill vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
C. Grant of Stock Rights to Board Members. Subject to the
provisions of the first sentence of paragraph 2(A) above, if applicable,
Stock Rights may be granted to members of the Board. All grants of Stock
Rights to members of the Board shall in all other respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Consistent with the provisions of the first sentence of Paragraph
2(A) above, members of the Board who either (i) are eligible to receive
grants of Stock Rights pursuant to the Plan or (ii) have been granted Stock
Rights may vote on any matters affecting the administration of the Plan or
the grant of any Stock Rights pursuant to the Plan, except that no such
member shall act upon the granting to himself or herself of Stock Rights,
but any such member may be counted in determining the existence of a quorum
at any meeting of the Board during which action is taken with respect to
the granting to such member of Stock Rights.
3. Eligible Employees and Others. ISOs may be granted only to
employees of the Company or any Related Corporation. Non-Qualified Options,
Awards and authorizations to make Purchases may be granted to any employee,
officer or director (whether or not also an employee) or consultant of the
Company or any Related Corporation. The Committee may take into consideration
a recipient's individual circumstances in determining whether to grant a
Stock Right. The granting of any Stock Right to any individual or entity
shall neither entitle that individual or entity to, nor disqualify such
individual or entity from, participation in any other grant of Stock Rights.
4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $0.01 per share
(the "Common Stock"), or shares of Common Stock reacquired by the Company in
any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 3,000,000, subject to adjustment as provided in paragraph 13.
If any Stock Right granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to
be exercisable in whole or in part or shall be repurchased by the Company,
the shares of Common Stock subject to such Stock Right shall again be
available for grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 500,000 of shares of Common
Stock under the Plan during any one fiscal year. If any Option granted under
the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the shares subject to such
Option shall be included in the determination of the aggregate number of
shares of Common Stock deemed to have been granted to such employee under the
Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the
Plan at any time on or after October 2, 1995 and prior to October 3, 2005.
The date of grant of a Stock Right under the Plan will be the date specified
by the Committee at the time it grants the Stock Right; provided, however,
that such date shall not be prior to the date on which the Committee acts to
approve the grant. Options granted under the Plan are intended to qualify as
performance-based compensation to the extent required under Proposed Treasury
Regulation Section 1.162-27.
<PAGE 24>
6. Minimum Option Price; ISO Limitations.
A. Price for Non-Qualified Options, Awards and Purchases. The
exercise price per share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per share of stock
granted in any Award or authorized as a Purchase, under the Plan shall in
no event be less than the minimum legal consideration required therefor
under the laws of any jurisdiction in which the Company or its successors
in interest may be organized.
B. Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than
the fair market value per share of Common Stock on the date of such grant.
In the case of an ISO to be granted to an employee owning stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any Related Corporation, the price per share
specified in the agreement relating to such ISO shall not be less than one
hundred ten percent (110%) of the fair market value per share of Common Stock
on the date of grant. For purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code shall apply.
C. $100,000 Annual Limitation on ISO Vesting. Each eligible
employee may be granted Options treated as ISOs only to the extent that, in
the aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for the
first time by such employee during any calendar year with respect to stock
having a fair market value (determined at the time the ISOs were granted) in
excess of $100,000. The Company intends to designate any Options granted in
excess of such limitation as Non-Qualified Options.
D. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date,
the last business day for which such prices or quotes are available prior
to the date of grant and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then
traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq National Market, if
the Common Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities,
if the Common Stock is not reported on the Nasdaq National Market. If the
Common Stock is not publicly traded at the time an Option is granted under
the Plan, "fair market value" shall mean the fair value of the Common Stock
as determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at
arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than
(i) ten years from the date of grant in the case of Options generally and
(ii) five years from the date of grant in the case of ISOs granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, as determined under paragraph 6(B). Subject to earlier
termination as provided in paragraphs 9 and 10, the term of each ISO shall
be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.
<PAGE 25>
8. Exercise of Option. Subject to the provisions of paragraphs
9 through 12, each Option granted under the Plan shall be exercisable as
follows:
A. Vesting. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such installments as
the Committee may specify.
B. Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option
granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to paragraph 16) if such acceleration would
violate the annual vesting limitation contained in Section 422(d) of the
Code, as described in paragraph 6(C).
9. Termination of Employment. Unless otherwise specified in the
agreement relating to such ISO, if an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his or her
ISOs shall become exercisable, and his or her ISOs shall terminate on the
earlier of (a) ninety (90) days after the date of termination of his or her
employment, or (b) their specified expiration dates, except to the extent
that such ISOs (or unexercised installments thereof) have been converted
into Non-Qualified Options pursuant to paragraph 16. For purposes of this
paragraph 9, employment shall be considered as continuing uninterrupted
during any bona fide leave of absence (such as those attributable to illness,
military obligations or governmental service) provided that the period of
such leave does not exceed 90 days or, if longer, any period during which
such optionee's right to reemployment is guaranteed by statute. A bona fide
leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under this paragraph 9, provided
that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the optionee after the
approved period of absence. ISOs granted under the Plan shall not be affected
by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to
give any grantee of any Stock Right the right to be retained in employment
or other service by the Company or any Related Corporation for any period of
time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her death, any ISO owned by
such optionee may be exercised, to the extent otherwise exercisable on the
date of death, by the estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, until
the earlier of (i) the specified expiration date of the ISO or (ii) (a) in
the case of ISOs granted on or prior to the date this Plan was amended and
restated by approval of the stockholders of the Company, 180 days from the
date of the optionee's death or (b) in the case of ISOs granted after the
date this Plan was amended and restated by approval of the stockholders of
the Company, one year from the date of the optionee's death.
B. Disability. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her disability,
such optionee shall have the right to exercise any ISO held by him or her on
the date of termination of employment, for the number of shares for which he
or she could have exercised it on that date, until the earlier of (i) the
specified expiration date of the ISO or (ii) 180 days from the date of the
termination of the optionee's employment. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or any successor statute.
<PAGE 26>
11. Assignability. No Stock Right shall be assignable or transferable
by the grantee except by will, by the laws of descent and distribution or,
in the case of Non-Qualified Options only, pursuant to a valid domestic
relations order. Except as set forth in the previous sentence, during the
lifetime of a grantee each Stock Right shall be exercisable only by such
grantee.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein
with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to
time confer authority and responsibility on one or more of its own members
and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed
to take any and all action necessary or advisable from time to time to carry
out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events,
an optionee's rights with respect to Options granted to such optionee
hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in the written agreement between the optionee and
the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or
if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased
or decreased proportionately, and appropriate adjustments shall be made in
the purchase price per share to reflect such subdivision, combination or
stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially
all of the Company's assets or otherwise (an "Acquisition"), the Committee
or the board of directors of any entity assuming the obligations of the
Company hereunder (the "Successor Board"), shall, as to outstanding Options,
either (i) make appropriate provision for the continuation of such Options
by substituting on an equitable basis for the shares then subject to such
Options either (a) the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Acquisition, (b) shares
of stock of the surviving corporation or (c) such other securities as the
Successor Board deems appropriate, the fair market value of which shall not
materially exceed the fair market value of the shares of Common Stock subject
to such Options immediately preceding the Acquisition; or (ii) upon written
notice to the optionees, provide that all Options must be exercised, to the
extent then exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or
(iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options
(to the extent then exercisable) over the exercise price thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the outstanding
shares of Common Stock, an optionee upon exercising an Option shall be
entitled to receive for the purchase price paid upon such exercise the
securities he or she would have received if he or she had exercised such
Option prior to such recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
<PAGE 27>
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect to
ISOs would constitute a modification of such ISOs or would cause adverse tax
consequences to the holders, it may refrain from making such adjustments.
E. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. Issuances of Securities. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. Fractional Shares. No fractional shares shall be issued under
the Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. Adjustments. Upon the happening of any of the events described
in subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments
to be made under this paragraph 13 and, subject to paragraph 2, its
determination shall be conclusive.
14. Means of Exercising Options. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify
the number of shares as to which such Option is being exercised, accompanied
by full payment of the purchase price therefor either (a) in United States
dollars in cash or by check, (b) at the discretion of the Committee, through
delivery of shares of Common Stock having a fair market value equal as of
the date of the exercise to the cash exercise price of the Option, (c) at
the discretion of the Committee, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no less
than 100% of the lowest applicable Federal rate, as defined in Section
1274(d) of the Code, (d) at the discretion of the Committee and consistent
with applicable law, through the delivery of an assignment to the Company of
a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Option and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise, or (e) at the discretion of
the Committee, by any combination of (a), (b), (c) and (d) above. If the
Committee exercises its discretion to permit payment of the exercise price
of an ISO by means of the methods set forth in clauses (b), (c), (d) or (e)
of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall
not have the rights of a shareholder with respect to the shares covered by
such Option until the date of issuance of a stock certificate to such holder
for such shares. Except as expressly provided above in paragraph 13 with
respect to changes in capitalization and stock dividends, no adjustment
shall be made for dividends or similar rights for which the record date is
before the date such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was originally adopted by
the Board on October 2, 1995, approved by the stockholders of the Company on
October 4, 1995, and amended and restated by Board approval, subject to
stockholders' approval, on March 30, 1998. The Plan shall expire at the end
of the day on October 2, 2005(except as to Options outstanding on that date).
Subject to the provisions of paragraph 5 above, Options may be granted under
the Plan prior to the date of the original stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months
before or after the Board adopts a resolution authorizing any of the
following actions: (a) the total number of shares that may be issued under
<PAGE 28>
the Plan may not be increased (except by adjustment pursuant to
paragraph 13); (b) the benefits accruing to participants under the Plan
may not be materially increased; (c) the requirements as to eligibility
for participation in the Plan may not be materially modified; (d) the
provisions of paragraph 3 regarding eligibility for grants of ISOs may
not be modified; (e) the provisions of paragraph 6(B) regarding the exercise
price at which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to paragraph 13); (f) the expiration date of
the Plan may not be extended; and (g) the Board may not take any action
which would cause the Plan to fail to comply with Rule 16b-3. Except as
otherwise provided in this paragraph 15, in no event may action of the
Board or stockholders alter or impair the rights of a grantee, without such
grantee's consent, under any Option previously granted to such grantee.
16. Conversion of ISOs into Non-Qualified Options. The Committee,
at the written request or with the written consent of any optionee, may in
its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof)
that have not been exercised on the date of conversion into Non-Qualified
Options at any time prior to the expiration of such ISOs, regardless of
whether the optionee is an employee of the Company or a Related Corporation
at the time of such conversion. Such actions may include, but shall not be
limited to, extending the exercise period or reducing the exercise price of
the appropriate installments of such ISOs. At the time of such conversion,
the Committee (with the consent of the optionee) may impose such conditions
on the exercise of the resulting Non-Qualified Options as the Committee in
its discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee
takes appropriate action.
17. Application Of Funds. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.
18. Notice to Company of Disqualifying Disposition. By accepting an
ISO granted under the Plan, each optionee agrees to notify the Company in
writing immediately after such optionee makes a Disqualifying Disposition
(as described in Sections 421, 422 and 424 of the Code and regulations
thereunder) of any stock acquired pursuant to the exercise of ISOs granted
under the Plan. A Disqualifying Disposition is generally any disposition
occurring on or before the later of (a) the date two years following the date
the ISO was granted or (b) the date one year following the date the ISO was
exercised.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 18), the vesting or
transfer of restricted stock or securities acquired on the exercise of an
Option hereunder, or the making of a distribution or other payment with
respect to such stock or securities, the Company may withhold taxes in
respect of amounts that constitute compensation includable in gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock
for less than its fair market value, or (iv) the vesting or transferability
of restricted stock or securities acquired by exercising an Option, on the
grantee's making satisfactory arrangement for such withholding. Such
arrangement may include payment by the grantee in cash or by check of the
amount of the withholding taxes or, at the discretion of the Committee, by
the grantee's delivery of previously held shares of Common Stock or the
withholding from the shares of Common Stock otherwise deliverable upon
exercise of a Option shares having an aggregate fair market value equal to
the amount of such withholding taxes.
20. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval
of any governmental authority required in connection with the authorization,
issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required
<PAGE 29>
to send tax information statements to employees and former employees that
exercise ISOs under the Plan, and the Company may be required to file tax
information returns reporting the income received by grantees of Options in
connection with the Plan.
21. Governing Law. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the State of
Delaware, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
Date Approved by the Board of Directors of the Company: March 30, 1998
------------------------------------------------
META GROUP, INC.
Proxy for Annual Meeting of Stockholders
May 27, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
of META GROUP, INC.
The undersigned, revoking all prior proxies, hereby appoints Dale Kutnick
and Bernard F. Denoyer, and each of them alone, proxies, with full power of
substituion, to vote all shares of Common Stock, par value $.01 per share, of
META Group, Inc. (the "Corporation") that the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Corporation, to be held on
Wednesday, May 27, 1998, at 9:00 a.m., Connecticut time, at The Hyatt Regency
Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870, and at any
adjournments or postponements thereof, with all powers the undersigned would
possess if present, upon the matters set forth in the Notice of Annual
Meeting of Stockholders and related Proxy Statement dated April 13, 1998, a
copy of which has been received by the undersigned, and in their discretion
upon any other business that may properly come before the meeting or any
adjournments or postponements thereof. Attendance of the undersigned at the
meeting or at any adjourned or postponed session thereof will not be deemed
to revoke this proxy unless the undersigned affirmatively indicates at the
meeting the intention of the undersigned to vote said shares in person.
- -----------------------------------------------------------------------------
Please mark
your votes as (X)
indicated in
this example
1. To elect (2) Class III directors to serve for a three-year term
and until their sucessors have been fully elected and qualified.
FOR all nominees WITHHOLD Nominees: Michael Simmons and
listed to the right AUTHORITY George McNamee
(except as marked to to vote for all nominee
the contrary) listed to the right INSTRUCTIONS: To withhold
authority to vote for any
( ) ( ) individual nominee, write that
nominee's name in the space
provided below:
-------------------------------
2. To approve the amendment and 3. To transact such other business as may
restatement of the Corporation's properly come before the meeting or any
1995 Stock Plan adjournments or postponements thereof.
FOR AGAINST ABSTAIN
( ) ( ) ( ) THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR
PROPOSALS 1 AND 2, AND DISCRETIONARY
AUTHORITY WILL BE DEEMED GRANTED
UNDER PROPOSAL 3.
Dated:________________________, 1998
____________________________________
Signature(s) of Stockholder(s)
_____________________________________
Please Print Name Exactly As It
Appears on Books of the Corporation:
(If signing as attorney, executor,
trustee or guardian, please give
your full title as such. If stock
is held jointly, each owner should
sign.)
________________________________________________________________________________
