<PAGE>
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
- --------------------------------------------------------------------------------
<PAGE>
(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
- --------------------------------------------------------------------------------
<PAGE>
META GROUP, INC.
208 Harbor Drive
Stamford, Connecticut 06912-0061
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
---------------
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 Thursday, May 20, 1999 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 I Directors to serve for a three-year term and
until their successors have been duly elected and qualified.
(2) 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, 1999 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 12, 1999
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>
META GROUP, INC.
208 Harbor Drive
Stamford, Connecticut 06912-0061
-----------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 20, 1999
-----------------
April 12, 1999
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
20, 1999, 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, 1998, 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 12, 1999.
Only stockholders of record at the close of business on April 1, 1999 (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, 11,937,047
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 I 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 I Directors. On any
other matter being submitted to stockholders, an affirmative vote of a majority
<PAGE> 2
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) 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.
On April 27, 1998, the Board of Directors of the Company declared a three for
two stock split effected through the issuance of a fifty percent stock dividend
payable on June 11, 1998 to shareholders of record on May 22, 1998. All share
and per share amounts affected by this split that are contained in this Proxy
Statement have been retroactively adjusted for all periods presented.
Name and Address Amount and Nature Percent of
of Beneficial Owner of Ownership (1) Class (2)
- --------------------------------------------------------------------------------
Dale Kutnick (3) 1,535,113 12.8%
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
T. Rowe Price Associates, Inc. (4) 1,134,450 9.5%
100 East Pratt Street
Baltimore, MD 21202
Marc Butlein (5) 1,000,240 8.4%
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
John Hancock Advisors, Inc. (6) 968,950 8.1%
101 Huntington Avenue
Boston, MA 02199
Massachusetts Financial Services Company (7) 758,371 6.4%
500 Boylston Street
Boston, MA 02116
George McNamee (8) 232,000 1.9%
c/o First Albany Corporation
30 South Pearl Street
Albany, NY 12207
John Aaron Zornes (9) 101,737 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Larry DeBoever (10) 61,875 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Michael Simmons (11) 45,000 *
c/o MS Associates
1865 West Union Avenue, Suite R
Englewood, CO 80110
Harry S. Gruner (12) 33,214 *
c/o JMI Equity Fund
1119 St. Paul Street
Baltimore, MD 21202
Bernard F. Denoyer (13) 23,475 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Peter Burris (14) 17,936 *
c/o META Group, Inc.
Harbor Plaza, 208 Harbor Drive
Stamford, CT 06912
Francis J. Saldutti (15) 9,601 *
c/o Ardent Research Partners, L.P.
200 Park Avenue, 39th Floor
New York, NY 10166
Howard A. Rubin (16) 5,750 *
c/o Rubin Systems, Inc.
450 Long Ridge Road
Pound Ridge, NY 10576
All directors and executive officers 3,218,752 26.2%
as a group (14 persons)(17)
- -------------------------------
*Less than 1% (footnotes begin on next page)
<PAGE> 4
(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
11,937,047 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 46,875 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(4) These securities are owned by various individual and institutional
investors, including the T. Rowe Price New Horizons Fund, Inc.
(which owns 800,000 shares, representing 6.7% of the shares
outstanding), for which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment advisor with 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
Amendment No. 2 to Schedule 13-G filed with the Commission on or about
February 12, 1999.
(5) Includes 275,250 shares of Common Stock held by the Marc & Michaele
Butlein Charitable Remainder Unit Trust, of which Mr. Butlein is a
trustee, 105,000 shares of Common Stock held by the Marc & Michaele
Butlein Family Limited Partnership, of which Mr. Butlein is a general
partner, and 31,000 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.
(6) Information included in this table regarding John Hancock Advisors,
Inc. was obtained from its Schedule 13-G filed with the Commission on
or about January 19, 1999.
(7) Information included in this table regarding Massachusetts Financial
Services Company was obtained from its Amendment No. 1 to Schedule 13-G
filed with the Commission on or about February 11, 1999. Massachusetts
Financial Services Company has sole dispositive power over the
securities listed but disclaims sole voting power for a portion of the
securities held.
(8) Includes 209,500 shares of Common Stock owned by First Albany
Corporation and 22,500 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 209,500
shares owned by First Albany Corporation, except to the extent of his
pecuniary interest therein.
(9) Includes 24,439 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(10) Consists of 61,875 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(11) Includes 25,000 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(12) Includes 15,000 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(13) Includes 12,375 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date and 750 shares
of Common Stock held by family members, as to which Mr. Denoyer has
shared voting and investment power.
(14) Consists of 17,936 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(15) Consists of 9,601 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(16) Includes 5,000 shares of Common Stock issuable pursuant to stock
options exercisable within 60 days of the Record Date.
(17) Includes 330,637 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 seven 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, George
McNamee and Howard Rubin are Class III Directors. The Class I Directors' terms
will expire at the Annual Meeting. On January 29, 1999, the Corporation's Board
of Directors, in accordance with the Corporation's By-laws, voted to enlarge the
Board of Directors from six members to seven members and to elect Howard Rubin
to the Board of Directors as a Class III director.
The Board of Directors has nominated and recommended that Messrs. Kutnick
and Saldutti, who currently serve as Class I Directors, be reelected as Class I
Directors, to hold office until the Annual Meeting of Stockholders for the
fiscal year ending December 31, 2001, 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:
- ---------
Dale Kutnick (1989) President, Co-Research 2002 I
Director, Chief Executive
Officer and Chairman of the
Board of Directors
Francis J. Saldutti (1991) Director 2002 I
Continuing Directors:
- ---------------------
Marc Butlein (1989) Director 2000 II
Harry S. Gruner (1994) Director 2000 II
Michael Simmons (1994) Director 2001 III
<PAGE> 6
George McNamee (1996) Director 2001 III
Howard Rubin (1999) Director 2001 III
<PAGE> 7
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met six times and took action by unanimous written
consent six times during the fiscal year ended December 31, 1998. 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 April 28, 1998, during the year ended December 31, 1998. The
Compensation Committee, which consisted in 1998 of Messrs. 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. Mr. Gruner resigned from the Compensation
Committee in January 1998 prior to the first meeting of the Compensation
Committee in 1998. The Compensation Committee met five times during 1998 and
took action by unanimous written consent once. 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 49 President, Co-Research Director, Chief
Executive Officer and Chairman of the Board
of Directors
Peter Burris 40 Senior Vice President - Publications & Co-
Research Director
Larry DeBoever 48 Senior Vice President - Executive Services
Bernard F. Denoyer 51 Senior Vice President - Finance, Chief
Financial Officer, Treasurer and Secretary
Daniel S. Fitzgerald 34 Executive Vice President, Sales
James J. Harrison 31 Executive Vice President and Director, New
Business Development
Michael Pedersen 38 Senior Vice President and Managing Director,
META Group Consulting
John Aaron Zornes 45 Executive Vice President and Service
Director, Application Delivery Strategies
Marc Butlein 60 Director
Harry S. Gruner (1) (2) 39 Director
George McNamee 52 Director
Howard A. Rubin 50 Director
Francis J. Saldutti (1) (3) 51 Director
Michael Simmons (1) (3) 60 Director
- ---------------------------
(1) Member of the Audit Committee during 1998.
(2) Mr. Gruner resigned from the Compensation Committee in January 1998 prior
to the first meeting of the Compensation Committee in 1998.
(3) Member of the Compensation Committee during 1998.
<PAGE> 8
Dale Kutnick, a co-founder of the Corporation, has served as President,
Chief Executive Officer and a Director of the Corporation since its inception in
January 1989. Mr. Kutnick was appointed Chairman of the Board of Directors in
May 1998. In addition, Mr. Kutnick served as Research Director from the
inception of the Corporation in January 1989 to June 1998 and serves as
Co-Research Director since July 1998. In addition to his operational
responsibilities, Mr. Kutnick co-directs all of META Group's research and
analytic activities. He is also a regular participant in the activities of
Executive Directions, a services that 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.
Peter Burris has served as Senior Vice President - Publications and
Co-Research Director since July 1998. Previously, Mr. Burris held the position
of Vice President and Service Director of the Corporation's Open Computing &
Server Strategies service from April 1995 to June 1998. Prior to joining the
Corporation in April 1995, Mr. Burris served as Director of International Data
Corporation's Worldwide Systems & Servers Research Group. Mr. Burris is a
graduate of Yale University.
Larry DeBoever has served as Senior Vice President - Executive Services
since January 1999. Previously, Mr. DeBoever held the position of Senior Vice
President and Service Director of the Corporation's Enterprise Architecture
Strategies service from November 1996 to January 1999. Prior to joining the
Corporation in November 1996, Mr. DeBoever was the founder and president of
DeBoever Architectures, Inc. since 1993. META Group acquired DeBoever
Architectures, Inc. in October 1996. Mr. DeBoever received a M.S. from Purdue
University and a MPA from the University of Southern California. See "Employment
Agreement" and "Certain Relationships and Related Transactions."
Bernard F. Denoyer has served as Senior Vice President - Finance since
January 1998. Mr. Denoyer joined the Corporation in October 1994 as Vice
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. 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 since
January 1999. Previously, Mr. Fitzgerald held the positions of Executive Vice
President, Sales & Marketing from January 1998 to December 1998, 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. Mr. Fitzgerald received a B.B.A in Marketing from the University of
Massachusetts.
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
<PAGE> 9
from January 1995 to April 1996 and Vice President and Program Director of the
Global Networking Strategies service prior to January 1995. Mr. Harrison
received a B.S. in Electrical Engineering from the Massachusetts Institute of
Technology.
Michael Pedersen has served as Senior Vice President and Managing Director
- - META Group Consulting ("MGC") since September 1998. Previously, Mr. Pedersen
held the positions of Senior Vice President, MGC, from September 1997 to
September 1998; Vice President and Director, MGC, from September 1995 to August
1997; Director, MGC, from January 1995 to August 1995; and Manager, MGC, from
April 1994 to December 1994. Prior to joining the Corporation in April 1994, Mr.
Pedersen held technology planning positions at Ernst & Young and Booz-Allen &
Hamilton. He received a M.Sc. in Computer Science from Brooklyn Polytechnic
Institute and a B.Sc. in Physics from Clarkson College 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. 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 on 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.
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., and an affiliate of JMI Associates, a venture
capital firm, since 1992. From 1986 until joining JMI Equity Fund, L.P., Mr.
Gruner was at Alex Brown & Sons Incorporated, an investment banking firm. Mr.
Gruner also serves as a Director of Hyperion Solutions Corporation and Optika,
Inc., both of which are publicly traded corporations. See "Certain Relationships
and Related Transactions."
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. See "Certain Relationships and Related
Transactions."
Howard Rubin has served a Director of the Corporation since January 1999.
Dr. Rubin is a full tenured professor and Chair of the Department of Computer
Science of Hunter College in New York since September 1974. Dr. Rubin is also
the founder and Chief Executive Officer of Rubin Systems, Inc. since its
inception in January 1986.
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
<PAGE> 10
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> 11
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, 1996, 1997 and 1998 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 $100,000 in fiscal 1998 (collectively, the
"Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation (1) Compensation/Awards
----------------------- -------------------
(2)
---
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (# of shares) Compensation ($) (1)
- --------------------------- ---- ---------- --------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Dale Kutnick.................. 1998 $279,114 $349,556 37,500 $7,674 (3)
President, Co-Research 1997 $258,500 $249,580 30,000 $8,144 (3)
Director, Chief Executive 1996 $239,295 $204,447 30,000 $9,772 (3)
Officer and Chairman of the
Board of Directors
Peter Burris.................. 1998 $159,750 $141,825 6,000 $6,000 (4)
Senior Vice President - 1997 $143,750 $61,872 11,250
Publications and Co-Research 1996 $122,500 $97,230 3,750
Director
Larry DeBoever................ 1998 $175,000 $112,783 7,500
Senior Vice President - 1997 $160,000 $68,306 - - -
Executive Services 1996 $41,667 - - - 75,000
Bernard F. Denoyer............ 1998 $148,500 $161,800 9,000
Senior Vice President - 1997 $137,500 $92,170 9,000
Finance, Chief Financial 1996 $125,000 $72,200 7,500
Officer, Treasurer
and Secretary
John Aaron Zornes............. 1998 $200,000 $205,096 11,250
Executive Vice President and 1997 $185,000 $152,602 11,250
Service Director, Application 1996 $170,000 $195,385 12,000
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 $50,000 or 10% of any such officer's
aggregate salary and bonus disclosed in this table.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan payouts during
fiscal year 1998.
(3) Consists of premiums for term life insurance paid by the Corporation
for the benefit of the Named Executive Officer.
(4) Consists of reimbursement by the Corporation of relocation expenses
incurred by the Named Executive Officer.
<PAGE> 12
Option Grants in Fiscal Year 1998
The following table sets forth each grant of stock options made during the
year ended December 31, 1998 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Annual Rates of
Underlying Employees Exercise Stock Price Appreciation
Options in Fiscal Price Expiration for Option Term (2)
Name Granted (1) Year ($/Share) Date 5%($) 10%($)
- ---- ----------- ---------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Dale Kutnick 29,925 2% $15.5833 01/13/08 $293,273 $743,212
7,575 1% $17.1417 01/13/03 $62,433 $176,327
Peter Burris 6,000 1% $15.5833 01/13/08 $58,802 $149,015
Larry DeBoever 7,500 1% $15.5833 01/13/08 $73,502 $186,269
Bernard F. Denoyer 9,000 1% $15.5833 01/13/08 $88,202 $223,522
John Aaron Zornes (3) 11,250 1% $15.5833 01/13/08 $110,253 $279,403
- ----------------
</TABLE>
(1) All options reflected in the Summary Compensation Table were granted on
January 13, 1998 and vest one-fourth on January 13, 1999, an additional
one-fourth on January 13, 2000, an additional one-fourth on January 13,
2001 and fully on January 13, 2002. The exercise price of the options is
$15.58 per share, the fair market value of the Corporation's Common
Stock on the date of grant, except for the options to purchase 7,575
shares granted to Mr. Kutnick at a price of $17.14 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 parts: 8,400 option shares were
granted as Incentive Stock Options ("ISOs") and 2,850 option shares were
granted as Non-Qualified Stock Options in accordance with the $100,000
annual limitation on ISO vesting.
<PAGE> 14
Aggregate Option Exercises in Fiscal Year 1998 and Fiscal Year-End Values
The following table sets forth, for each of the Named Executive Officers,
information with respect to the exercise of stock options during the year ended
December 31, 1998 and the year-end value of unexercised options:
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired on Value Year-End Year-End ($) (2)
Name Exercise (#) Realized ($) (1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ---------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Dale Kutnick 22,500 / 75,000 $338,975 / $1,118,296
Peter Burris 7,000 $143,208 12,686 / 16,314 $290,846 / $264,008
Larry DeBoever 60,000 / 22,500 $785,000 / $302,500
Bernard F. Denoyer 10,500 $146,382 6,000 / 19,500 $95,938 / $304,063
John Aaron Zornes 15,814 / 25,688 $336,688 / $399,556
- -------------
</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 may 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, 1998, the fiscal year-end ($29.75 per
share), multiplied by the number of shares underlying the options.
Stock Plans
The Corporation currently maintains six employee stock plans: the Restated
and Amended 1989 Stock Option Plan, the 1993 Stock Option and Incentive Plan,
the Amended and Restated 1995 Stock Plan, the 1995 Non-Employee Director Stock
Option Plan, the Amended and Restated 1995 Employee Stock Purchase Plan and the
Amended and Restated 1996 Equity Compensation Plan of The Sentry Group, Inc.
(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 5,400,000 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, 1998, options to purchase a total of 281,000
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, 1998.
The 1993 Stock Option and Incentive Plan (the "1993 Plan") provides for the
issuance of a maximum of 2,400,000 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, 1998,
options to purchase a total of 382,033 shares of Common Stock were outstanding
under the 1993 Plan, all of which 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, 1998.
The Amended and Restated 1995 Stock Plan (the "1995 Plan") provides for the
issuance of a maximum of 4,500,000 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, 1998,
options to purchase a total of 1,878,514 shares of Common Stock were outstanding
under the 1995 Plan, of which options for 391,335 shares were then exercisable.
Shares available for future stock option grants at December 31, 1998 totaled
2,532,785 shares. During 1998, ISOs to purchase 781,386 shares of Common Stock
and NQSOs to purchase 170,989 shares of Common Stock were granted under the 1995
Plan.
The 1995 Non-Employee Director Stock Option Plan (the "Director Plan")
provides for the grant of options to purchase a maximum of 225,000 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 15,000 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 7,500 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, 1998, options to purchase a total of 92,101 shares of Common Stock were
outstanding under the Director Plan, of which options for 62,101 shares were
then exercisable. Shares available for future stock option grants at December
31, 1998 totaled 127,500 shares. During 1998, NQSOs to purchase 30,000 shares of
Common Stock were granted under the Director Plan.
The Amended and Restated 1995 Employee Stock Purchase Plan (the "Purchase
Plan") provides for the issuance of a maximum of 375,000 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 750
shares of Common Stock provided that such employee remains eligible to
<PAGE> 15
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, 1998, options to purchase 65,464 shares
of Common Stock were exercised under the Purchase Plan.
The Amended and Restated 1996 Equity Compensation Plan of The Sentry Group,
Inc. (the "Sentry Plan") was assumed by the Corporation pursuant to the
acquisition by the Corporation of all of the capital stock of The Sentry Group,
Inc. on October 20, 1998. The Sentry Plan provides for the issuance of a maximum
of 359,500 shares of Common Stock of the Corporation 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, 1998, options to
purchase a total of 306,625 shares of Common Stock were outstanding under the
Sentry Plan, of which options for 7,032 shares were then exercisable. Shares
available for future stock option grants at December 31, 1998 totaled 52,875
shares. During 1998, no ISOs and NQSOs to purchase 350,624 shares of Common
Stock were granted under the Sentry Plan.
Long Term Incentive Plan
The META Group, Inc./JMI Long Term Incentive Compensation Plan (the "Long
Term Plan") was adopted by the Corporation in July 1998. The Long Term Plan
provides for the issuance of a maximum of 1,000 units to key officers of the
Corporation. The total number of units to be granted, selection of key officers
for participation in the Long Term Plan, the number of units to be granted to
each participant, the vesting period and the determination of the value of each
participant's units are generally determined by the Compensation Committee of
the Board of Directors. As of December 31, 1998, a total of 280 units were
granted to key officers of the Corporation and 720 units were available for
future grants. See "Certain Relationships and Related Transactions."
Employment Agreement
The Corporation has an employment agreement with Larry DeBoever, Senior
Vice President - Executive Services of the Corporation. The term of Mr.
DeBoever's employment agreement expires no later than December 31, 1999. Under
the employment agreement, Mr. DeBoever's base salary is $160,000. Such amount,
however, may be increased at the discretion of the Board of Directors of the
Corporation. See "Executive Compensation Summary - Summary Compensation Table."
Pursuant to the employment agreement, the Corporation granted Mr. DeBoever a
non-qualified stock option to purchase an aggregate of 75,000 shares of the
Corporation's Common Stock at an exercise price of $16.6667 per share under the
1995 Plan. The employment agreement also provided for the Corporation to loan
$500,000 to Mr. DeBoever pursuant to a Promissory Note and Pledge and Security
Agreement. See "Certain Relationships and Related Transactions."
Compensation Committee Interlocks and Insider Participation
The Corporation's Board of Directors has established a Compensation
Committee, which consisted in 1998 of Messrs. Saldutti and Simmons. Mr. Gruner
resigned from the Compensation Committee in January 1998 prior to the first
<PAGE> 16
meeting of the Compensation Committee in 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, 1998, the Board of Directors
performed certain functions of the Compensation Committee. During this period,
Mr. Kutnick, the Corporation's President, Co-Research Director, Chief Executive
Officer and Chairman of the Board, and Mr. Butlein, a Director and former
officer of the Corporation, participated in deliberations of the Corporation's
Board of Directors concerning the compensation of executive officers. As noted
below, however, all executive compensation for 1998 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
Commencing with the April 27, 1998 meeting of the Board of Directors, each
non-employee director was either paid a stipend of $2,000 for each scheduled
meeting of the Board of Directors attended in person, in addition to reasonable
out-of-pocket expenses incurred in attending the meeting, or a stipend of $1,000
for each scheduled meeting of the Board of Directors attended by telephone.
Non-employee directors were not paid any additional amounts for participation on
committees of the Board of Directors or special assignments. Non-employee
directors are also eligible to participate in the Director Plan, as described
above. Directors who were employed by the Corporation received no fees or
expense reimbursements for attending meetings of the Board of Directors.
Compensation Committee Report on Executive Compensation
This report is submitted by the Corporation's Compensation Committee (the
"Committee"), which consisted in 1998 of Messrs. Saldutti and Simmons, each of
whom is an independent, non-employee director of the Corporation. Mr. Gruner
resigned from the Compensation Committee in January 1998 prior to the first
meeting of the Compensation Committee in 1998. 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, the Purchase Plan, the Sentry Plan and the Long Term 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 1998 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 and Long Term Plan units.
Base salary compensation levels for each of the Corporation's executive
officers are determined annually by the Committee by evaluating the individual
<PAGE>17
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 1998, 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, and in certain cases, revenues and
expenses in an executive's specific area or areas of responsibility, and various
combinations of the above.
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 1998, see the table under the
heading "Option Grants in Fiscal Year 1998."
Long-term incentive compensation in the form of units awarded under the
Long Term Plan is designed to motivate and retain key officers of the
Corporation by rewarding the performance of those officers based upon the
long-term appreciation in the value of the Corporation's limited partnership
interest in the JMI Equity Side Fund, L.P. (the "JMI Fund"). See "Certain
Relationships and Related Transactions." Upon adoption of the Long Term Plan in
July 1998, the Corporation awarded an equal number of units to each executive
officer and certain other management employees. It is the Corporation's policy
to award Long Term Plan units to key management personnel in an amount
consistent with the employee's position and level of seniority either at the
time they join the Corporation or upon promotion to a management level meriting
such a grant. See "Long Term Incentive Plan."
Compensation for the Corporation's President, Co-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 1998, Mr. Kutnick received base salary and cash bonus totaling
$628,670. Mr. Kutnick's base salary of $279,114 represented an increase of
$20,614, or 8%, over 1997. In 1998, Mr. Kutnick was also granted ten Long Term
Plan units. In addition to the achievement of performance targets in accordance
with the Corporation's executive compensation policies, the Committee determined
that Mr. Kutnick's 1998 compensation was justified by the Corporation's strong
financial performance in 1998, a year in which the Corporation reported
continued profitability in each quarter. For additional information regarding
Mr. Kutnick's 1998 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
<PAGE> 19
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:
Francis J. Saldutti
Michael Simmons
<PAGE> 20
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,
1998, with the cumulative total return on the Media General Market Weighted
Nasdaq Index Return ("Nasdaq Market Index") and the Media General Industry Group
076 - 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, December 31,
1995 1995 1996 1997 1998
% % % % %
--------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
META Group, Inc. Common Stock 100.00 120.10 105.88 86.27 174.91
MG Group Index 100.00 102.02 119.51 147.06 141.89
Nasdaq Market Index 100.00 99.63 123.81 151.45 213.61
</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> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1996, the Corporation acquired all of the assets of DeBoever
Architectures, Inc. (the "DeBoever Acquisition"), an IT architecture planning
and implementation advisory services firm wholly owned and managed by Larry
DeBoever. The business of DeBoever Architectures, Inc. was merged into the
Corporation's portfolio of Continuous Services. In connection with the DeBoever
Acquisition, in November 1996 the Corporation loaned $500,000 to Mr. DeBoever
pursuant to a Promissory Note and Pledge and Security Agreement. Under the terms
of the Promissory Note, the principal balance of $500,000, plus 9% interest per
annum, is payable on October 31, 1999. In September 1996, Mr. DeBoever was
granted a non-qualified stock option to purchase 75,000 shares of Common Stock
of the Corporation, at an exercise price of $16.6667 per share, which he pledged
as collateral for the loan pursuant to the terms of the Pledge and Security
Agreement. See "Employment Agreement."
In 1998, the Corporation received $750,000 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 11 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.
Concurrently with the adoption of the Long Term Plan in July 1998, the
Corporation subscribed for up to four million dollars in limited partnership
interests in the JMI Fund, a venture capital fund managed by JMI Side
Associates, L.L.C. ("JMI Associates"). Certain executive officers and directors
of the Corporation also subscribed for limited partnership interests in the JMI
Fund in July 1998. The JMI Fund will co-invest along with other funds affiliated
with JMI Associates. The Corporation has agreed to use the potential returns on
the Corporation's investment in the JMI Fund to fund payouts under the Long Term
Plan to key management employees. Contemporaneously with the Corporation's
subscription to the JMI Fund, JMI Partners, L.P., an affiliate of the JMI Fund,
became a full-service client of the Corporation (the "Purchase Transaction"). In
1998, the Corporation received $125,000 from JMI Partners, L.P. in consideration
of services and consulting pursuant to the Purchase Transaction. As noted
elsewhere in this Proxy Statement, Mr. Gruner, a director of the Corporation, is
also a general partner of JMI Partners, L.P., the general partner of JMI Equity
Fund, L.P. and an affiliate of JMI Associates. Mr. Gruner does not have a direct
material interest in the Purchase Transaction and does not have a direct
material interest in the JMI Fund.
INDEPENDENT AUDITORS FOR 1999
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, to serve as auditors for the year
ending December 31, 1999. Deloitte & Touche LLP has served as the Corporation's
auditors since 1992. It is expected that a representative 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.
<PAGE> 22
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, 1998 and written representations from certain Reporting Persons,
the Corporation believes that all Reporting Persons, other than George McNamee,
complied with all Section 16(a) filing requirements in the fiscal year ended
December 31, 1998. Mr. McNamee failed to file a Statement of Changes In
Beneficial Ownership of Securities on Form 4 during December 1998 for one
transaction and subsequently filed a Form 5.
STOCKHOLDER PROPOSALS
The Corporation's By-laws establish an advance notice procedure with regard
to stockholder proposals not included in the Corporation's proxy statement. In
general, 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, 1999 nor earlier than
November 11, 1999. If a stockholder who wishes to present a proposal fails to
notify the Corporation by December 11, 1999, the stockholder would not be
entitled to present the proposal at the meeting. If, however, notwithstanding
the requirements of the Corporation's By-laws, the proposal is brought before
the meeting, then under the Commission's rules the proxies solicited by
management with respect to the next Annual Meeting of Stockholders will confer
discretionary voting authority with respect to the stockholder's proposal on the
persons selected by management to vote the proxies. If a stockholder makes a
timely notification, the persons selected by management to vote the proxies may
still exercise discretionary voting authority under circumstances consistent
with the Commission's rules. 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>
Please mark (X)
your votes as
indicated in
this example
1. To elect (2) Class I directors to serve for a three-year term and until
their successors have been duly elected and qualified.
FOR all nominees WITHHOLD AUTHORITY Nominees: Dale Kutnick and Frances J.
listed to the right to vote for all Saldutti.
(except as marked to nominees listed Instructions: To withhold authority
the contrary) to the right to vote for any individual
( ) ( ) nominee, write that
nominee's name in the space
provided below:
_____________________________________
2. To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS DIRECTED OR ,IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR THE NOMINEES
LISTED ABOVE FOR ELECTION AS DIRECTORS
AND DISCRETIONARY AUTHORITY WILL BE
DEEMED GRANTED UNDER PROPOSAL 2.
Dated:_____________________________, 1999
_________________________________________
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.)
FOLD AND DETACH HERE
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META GROUP, INC.
Proxy for Annual Meeting of Stockholders
May 20, 1999
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
substitution, 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 Thursday,
May 20, 1999, 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 12, 1999, 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.
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FOLD AND DETACH HERE
