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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 (AMENDMENT NO. )
Filed by the registrant / /
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
THE METZLER GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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THE METZLER GROUP, INC.
520 LAKE COOK ROAD, SUITE 500
DEERFIELD, ILLINOIS 60015
April 28, 1997
Dear Stockholder:
It is my pleasure to invite you to the 1997 Annual Meeting of Stockholders
of The Metzler Group, Inc. The meeting will be held at 9:00 a.m. on Wednesday,
May 21, 1997, at The Mid-America Club, 200 E. Randolph Drive, Chicago, Illinois.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the items of business which will be discussed during the
meeting. It is important that you vote your shares whether or not you plan to
attend the meeting. To be sure your vote is counted, we urge you to carefully
review the Proxy Statement and to vote your choices. PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE.
If you attend the meeting and wish to vote in person, the ballot that you submit
at the meeting will supersede your proxy.
I look forward to seeing you at the meeting. On behalf of the management
and directors of The Metzler Group, Inc., I want to thank you in advance for
your continued support and confidence in 1997.
Sincerely,
/s/ ROBERT P.MAHER
ROBERT P. MAHER
Chairman of the Board, President and
Chief Executive Officer
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THE METZLER GROUP, INC.
520 LAKE COOK ROAD, SUITE 500
DEERFIELD, ILLINOIS 60015
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
To the Stockholders of The Metzler Group, Inc.:
The Annual Meeting of Stockholders of The Metzler Group, Inc., a Delaware
corporation (the "Company"), will be held at The Mid-America Club, 200 E.
Randolph Drive, Chicago, Illinois, on Wednesday, May 21, 1997, at 9:00 a.m.
local time for the following purposes, as more fully described in the
accompanying Proxy Statement:
1. To elect two directors for a term of three years;
2. To approve the adoption of The Metzler Group, Inc. Employee Stock
Purchase Plan;
3. To ratify the selection of KPMG Peat Marwick as independent auditors;
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record of the Company's common stock, par value $0.001 per
share, at the close of business on March 31, 1997, the record date fixed by the
Board of Directors, are entitled to notice of, and to vote at, the meeting, as
more fully described in the Proxy Statement. For ten days prior to the meeting,
a list of stockholders entitled to vote at the meeting with the address of and
number of shares held by each will be kept on file at the offices of the Company
at 520 Lake Cook Road, Suite 500, Deerfield, Illinois and at the offices of the
Company's transfer agent, Harris Trust and Savings Bank, located at 311 W.
Monroe Street, Chicago, Illinois, and will be subject to inspection by any
stockholder at any time during usual business hours. The list will also be
available for inspection by any stockholder during the meeting.
Stockholders who cannot attend are urged to sign, date and otherwise
complete the enclosed proxy card and return it promptly in the envelope
provided. Any stockholder giving a proxy has the right to revoke it at any time
before it is voted.
For the Board of Directors,
Barry S. Cain
BARRY S. CAIN
Assistant Secretary
Deerfield, Illinois
April 28, 1997
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THE METZLER GROUP, INC.
520 LAKE COOK ROAD, SUITE 500
DEERFIELD, ILLINOIS 60015
---------------------
PROXY STATEMENT
---------------------
The following information is provided in connection with the solicitation
of proxies for the 1997 Annual Meeting of Stockholders of The Metzler Group,
Inc., a Delaware corporation ("Metzler" or the "Company"), to be held on May 21,
1997, and adjournments thereof (the "Annual Meeting"), for the purposes stated
in the Notice of Annual Meeting of Stockholders preceding this Proxy Statement.
VOTING OF SHARES
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders, beginning on or about April 28, 1997, in connection with the
solicitation of proxies on behalf of the Board of Directors of Metzler (the
"Board") for the Annual Meeting. Proxies are solicited to give all stockholders
of record on March 31, 1997 (the "Record Date") an opportunity to vote on
matters to be presented at the Annual Meeting. Shares can be voted at the
meeting only if the stockholder is present or represented by proxy.
Each share of the Company's common stock, par value $0.001 per share (the
"Common Stock"), represented at the Annual Meeting is entitled to one vote on
each matter properly brought before the meeting. Please specify your choices by
marking the appropriate boxes on the enclosed proxy card and signing it.
Directors are elected by a plurality of the votes cast by the shares entitled to
vote at a meeting at which a quorum is present. A plurality means that the
nominees with the largest number of votes are elected as directors up to the
maximum number of directors to be chosen at the meeting. Any other matters that
may be submitted at the meeting shall be determined by a majority of the votes
cast. Shares represented by proxies that are marked "withhold authority" with
respect to the election of one or more nominees for election as directors, and
proxies which are marked to deny discretionary authority on other matters will
not be counted in determining whether a majority vote was obtained in such
matters. If no directions are given and the signed card is returned, the persons
named in the proxy card will vote the shares in favor of the election of all
listed nominees, and at their discretion on any other matter that may properly
come before the meeting in accordance with their best judgment. If a broker or
other nominee holding shares for a beneficial owner does not vote on a proposal
(broker non-votes), the shares will not be counted in determining the number of
votes cast. Stockholders voting by proxy may revoke that proxy at any time
before it is voted at the meeting by delivering to the Company a proxy bearing a
later date or by attending in person and casting a ballot.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD
PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE
MEETING IN PERSON.
As of the Record Date, 10,627,181 shares of Common Stock were issued and
outstanding.
BOARD OF DIRECTORS
GENERAL
The business affairs of the Company are managed under the direction of the
Board. Members of the Board are kept informed through various reports and
documents sent to them on a regular basis, through operating and financial
reports routinely presented at Board and committee meetings by the Chief
Executive Officer and other officers, and through other means.
Because The Metzler Group, Inc. was formed in mid-1996 and corporate
governance matters were handled by unanimous consent of directors, the Board had
no formal meetings in 1996.
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Biographical information on the director nominees and the directors serving
unexpired terms is set forth herein under the caption "Item No. 1 -- Election of
Directors."
COMMITTEES
During 1996, the Board created a Special Committee with authority to
authorize certain pricing matters in connection with the Company's initial
public offering. Robert P. Maher and Gerald R. Lanz were members of this
committee, which was abolished after one meeting that was attended by all
members. In January 1997, the Board formed the standing Audit Committee and the
Compensation Committee to assist the Board in carrying out its duties.
The AUDIT COMMITTEE has three members, two of whom are independent,
nonemployee directors. Members of this committee are Peter B. Pond, Mitchell H.
Saranow and Robert P. Maher, who is the President and Chief Executive Officer of
the Company. The Audit Committee considers the adequacy of the internal controls
of the Company and the objectivity and integrity of financial reporting and
meets with the independent certified public accountants and appropriate Company
financial personnel about these matters.
The COMPENSATION COMMITTEE has three members, two of whom are independent,
nonemployee directors. Members of the committee are Messrs. Pond, Saranow and
Maher. This committee monitors and makes recommendations to the Board with
respect to compensation programs for directors and officers, administers
compensation plans for executive officers, and provides oversight with respect
to employee benefit plans. Its Report on Executive Compensation is set forth
herein under the caption "Compensation Committee Report on Executive
Compensation."
DIRECTOR COMPENSATION
Directors who are not executive officers of the Company are paid a fee of
$1,000 for each Board meeting attended in person and all directors are
reimbursed for travel expenses incurred in connection with attending board and
committee meetings. Directors are not entitled to additional fees for serving on
committees of the Board of Directors. Pursuant to the terms of the formula
program of the Company's Long-Term Incentive Plan, each director of the Company
appointed after October 3, 1996 who is not otherwise employed by the Company
when he becomes a director automatically will be granted an option to purchase
3,000 shares of Common Stock for each year of the term to be served upon his
initial election or re-election to the Board of Directors. The options will have
an exercise price equal to the fair market value of the Common Stock on the date
of grant and will be exercisable in equal installments over the term to be
served beginning on the first anniversary of the date of grant. Messrs. Pond and
Saranow were each granted an option to purchase 3,000 shares of Common Stock,
all of which vests on November 5, 1997. These options are exercisable at $24.25
per share.
ITEM NO. 1 -- ELECTION OF DIRECTORS
The Board, pursuant to the Company's Certificate of Incorporation, has
determined that the number of directors of the Company shall be five. The three
employee directors on the Board are the Company's Chief Executive Officer, Chief
Operating Officer and a Senior Vice President of Metzler & Associates, Inc. The
Board is divided into three classes with staggered terms so that the term of one
class expires at each annual meeting of stockholders. Directors are elected by a
plurality of the votes cast.
The following nominees have been selected and approved by the Board for
submission to the stockholders: Peter B. Pond and Mitchell H. Saranow, each to
serve a three-year term expiring at the 2000 Annual Meeting. Except as otherwise
specified in the proxy, proxies will be voted for election of these nominees.
If a nominee becomes unable or unwilling to serve, proxies will be voted
for election of such person as shall be designated by the Board; however,
management knows of no reason why any nominee should be unable or unwilling to
serve.
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A brief listing of the principal occupation, other major affiliations and
age of each nominee and each director serving an unexpired term follows.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 2000:
PETER B. POND, Midwestern Head of Investment Banking for Donaldson, Lufkin
& Jenrette Securities Corporation. Director of the Company since November 1996.
Age 52.
MITCHELL H. SARANOW, Director of the Company since November 1996. Director
of Mid Atlantic CATV, Chairman of Gaming Investors, L.P. and Chairman of the
Saranow Group, L.L.C. Age 51.
THE BOARD RECOMMENDS A VOTE "FOR" THESE NOMINEES
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1998:
GERALD R. LANZ, Chief Operating Officer since June 1996. Director of the
Company since June 1996. Age 48.
JAMES T. RUPRECHT, Senior Vice President of Metzler & Associates, Inc.,
since January 1994. Director of the Company since December 1994. Age 37.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1999:
ROBERT P. MAHER, Chief Executive Officer and President since January 1996
and Chairman of the Board since June 1996. Director of the Company since April
1991. Age 47.
ITEM NO. 2 -- APPROVAL OF THE METZLER GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors adopted on March 14, 1997, subject to stockholder
approval, The Metzler Group, Inc. Employee Stock Purchase Plan (the "Plan"). In
the event that stockholder approval is received, the Plan shall read as set
forth in Appendix A.
DESCRIPTION OF PLAN
The purpose of the Plan is to enable eligible employees of the Company and
its subsidiaries to acquire a proprietary interest in the Company by purchasing
common stock through payroll deductions. The Plan authorizes the granting of
purchase rights ("Rights") to purchase up to 300,000 shares of the Company's
common stock. As of April 8, 1997, the market value of the 300,000 shares
reserved for issuance under the Plan was $6,806,250. The maximum number of
shares is subject to adjustment in the event of stock splits or dividends,
recapitalization and other similar changes affecting the Company's common stock.
In the event any Right granted under the Plan expires or terminates for any
reason without having been exercised in full or ceases for any reason to be
exercisable in whole or in part, the unpurchased shares subject thereto will
again be available for Rights to be granted under the Plan. Approximately 64
employees are eligible to participate in the Plan.
The Plan will be administered by a committee of the Board of Directors
consisting of two or more Board members (the "Committee"). The Committee will
have full power to construe and interpret the Plan and the Rights granted under
the Plan, and to establish and amend rules and regulations for its
administration. The Committee also will have full authority to correct any
defect or reconcile any inconsistency in the Plan, and its decisions shall be
final, conclusive and binding. The Committee will have the discretion to modify
the terms of the Plan with respect to participants who reside outside the United
States or who are employed by a subsidiary that has been formed under the laws
of any foreign country, if a modification is necessary to conform to the
requirements of local laws.
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All employees of the Company and, if designated by the Board of Directors,
its subsidiaries whose customary employment exceeds twenty (20) hours per week
are eligible to participate in the Plan. An employee may not be granted a Right
under the Plan if (i) he owns, immediately after the grant of the Right, 5% or
more of the combined voting power or value of all classes of stock of the
Company or any of its subsidiaries, or (ii) Rights under the Plan or any other
plans qualified under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), would result during any calendar year in the purchase of
shares having an aggregate fair market value of more than $25,000.
An eligible employee who is an employee of the Company or its designated
subsidiaries on the effective date of the Plan may participate in the Plan on
that date. Any other eligible employee may become a participant in the Plan on
the first to occur of (i) the Offering Date coincident with or next following
the employee's first day of employment or (ii) the first day of any calendar
month coincident with or next following the employee's first day of employment.
For purposes of the Plan, "Offering Date" is defined as the date on which the
Committee grants an eligible employee the right to purchase shares of common
stock. A request for payroll deductions or a request for a change in payroll
deductions by a participant will be effective the first day of the month
following the delivery of the authorization form to the Committee (or the next
Offering Date, if earlier), provided that if the authorization form is delivered
to the Committee less than 15 days prior to the end of any month (or Offering
Date, if applicable), it will become effective on the first day of the month
that is 15 or more days following delivery of the authorization form to the
Committee. A participant may elect to have deductions made from his or her pay
on each payday at a whole number percentage rate of from 1% to 15% of the
compensation that he or she is entitled to receive. The deduction rate may be
reduced at any time during any Offering Period (the period between the Offering
Date and the date on which the shares of common stock are to be purchased) by
filing an authorization form with the Committee. The participant may, once
during any Offering Period, increase the rate of his or her payroll deduction by
similarly filing an authorization form.
Unless the Committee otherwise determines, the amount withheld from the
compensation of each participant during any payroll period will be forwarded to
an agent appointed by the Committee. The agent will then purchase the Company's
common stock periodically, and any shares so purchased will be held by the
agent, subject to a participant's withdrawal or termination as discussed below.
Cash dividends that are paid on common stock held by the Plan will be used to
purchase additional shares of the Company's common stock. Any administrative or
commission expenses incurred, or fees charged, by the agent will be paid by the
Company. The purchase price of the common stock to be purchased with
participants' payroll deductions will be equal to 85% of the fair market value
of the common stock on the Offering Date (or, if later, on the date the
participant enrolls in the Plan) or on the date the common stock is purchased,
whichever value is less. The fair market value of the common stock on a given
date will be determined by the Committee based upon the reported closing sales
price of the common stock on the Nasdaq National Market on such date.
If the limit (300,000 shares) on the number of shares of common stock
available to be purchased under the Plan is reached, then the last purchase of
common stock will be allocated among the participants pro rata based upon the
number of shares that would have been purchased under the Plan without the
limitation.
A participant may elect to withdraw his or her shares or any cash credited
to his or her account at any time. All of the cash deposits returned to the
participant will be paid to him or her promptly after receipt of the notice of
the withdrawal, without interest. Shares of common stock to be delivered to the
participant will be registered in his or her name, or if the participant directs
in writing to the Committee, in the name of the participant and the person
designated by the participant, and will be delivered to the participant as soon
as practicable after the request for withdrawal. If the participant wishes to
sell shares of the common stock in his or her account, he or she may notify the
Committee to sell the same, in which event all commission costs incurred in
connection with the sale of the shares of common stock will be paid by the
participant.
A participant may stop participating in the Plan at any time by notifying
the Committee. When the notice is received by the Committee, the participant
will receive a distribution of all of his or her accumulated payroll deductions,
without interest. If the participant stops participating in the Plan, no further
payroll deductions will be made on his or her behalf, except upon the filing of
a new authorization form. Upon ceasing
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participation in the Plan, a participant will not be permitted to reenter the
Plan until six months have passed from the date his or her cessation became
effective.
An employee must be employed by the Company or a subsidiary on the date the
common stock is purchased in order to participate in the purchase for that
Offering Period. If a participant becomes ineligible to participate in the Plan
at any time, all payroll deductions made on his or her behalf that have not been
used to purchase shares of common stock will be returned to the participant
within sixty (60) days after the Committee determines that the participant is
not eligible.
In the event the Company pays a stock dividend or makes a distribution of
shares, or splits up, combines, reclassifies or substitutes other securities for
its outstanding shares of common stock, the Committee will make an appropriate
adjustment to the number of shares subject to outstanding Rights and the
purchase prices thereof.
The Board of Directors may amend the Plan in any respect except that the
maximum number of shares available for purchase may not be increased (except
upon stock splits and dividends, combinations and similar events) and the class
of eligible employees and rate of compensation deductions may not be modified
without stockholder approval. The Board of Directors may terminate the Plan at
any time. However, no termination or amendment will affect the Rights of
participants previously granted without such participants' consent.
FEDERAL INCOME TAX CONSEQUENCES
The following provides a general summary of the federal income tax
consequences of the Plan. In order for transactions pursuant to the Plan to
qualify for the tax treatment discussed below, the Plan must be approved by the
Company's stockholders. Although the Company believes the following statements
are correct based on existing provisions of the Code and the legislative
history, and administrative and judicial interpretations thereof, no assurance
can be given that legislative, administrative, or judicial changes or
interpretations will not occur that would modify such statements.
The Plan is designed to qualify as an employee stock purchase plan under
the provisions of Sections 421 and 423 of the Code. Neither the grant nor the
purchase of Rights under the Plan will have a tax impact on the participant or
the Company. If an employee disposes of the common stock acquired upon the
purchase of a Right after at least two years from the date of grant and one year
from the date of purchase, then the employee must treat as ordinary income the
lesser of (i) the amount, if any, by which the fair market value of the common
stock at the time of disposition exceeds the purchase price paid, or (ii) the
amount, if any, by which the fair market value of the common stock at the date
of grant exceeds the purchase price paid. Such recognition of compensation
income upon disposition will have the effect of increasing the basis of the
shares in the employee's hands by an amount equal to the amount of compensation
income recognized. Any gain in addition to this amount will be treated as a
long-term capital gain. If an employee holds common stock at the time of his or
her death, the holding period requirements set forth above are automatically
deemed to have been satisfied and ordinary income will be realized by the
estate, in the amount discussed above, upon the sale or other disposition of the
common stock. The Company will not be allowed a deduction if the holding period
requirements are satisfied or deemed satisfied.
If an employee disposes of the common stock before the expiration of the
later of two years from the date of grant and one year from the date of
purchase, then the employee must treat as ordinary income the excess of the fair
market value of the common stock on the date of purchase over the purchase
price. Any additional gain will be treated as long-term or short-term capital
gain, depending upon whether the common stock was held for more than one year
after the date of purchase. The Company may deduct an amount equal to the
ordinary income recognized by the employee.
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RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of common
stock outstanding as of the Record Date and present in person or represented by
proxy at the meeting and entitled to vote thereon will be required to adopt the
Plan. If stockholders do not approve the Plan, it will be terminated.
THE BOARD RECOMMENDS A VOTE "FOR" THE PLAN
ITEM NO. 3 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The selection by the Board of the firm of KPMG Peat Marwick LLP ("KPMG Peat
Marwick") as the independent auditors for the Company for the year ending
December 31, 1997 is to be submitted for ratification by the stockholders at the
Meeting. The firm of KPMG Peat Marwick has served as independent auditors for
the Company since 1996, at which time it was engaged to audit the Company's
financial statements as of December 31, 1993, 1994 and 1995. The total fees paid
or accrued to KPMG Peat Marwick in connection with the 1996 audit was $75,000.
The independent auditors have advised the Company that they have no direct or
material indirect financial interest in the Company. Representatives of the firm
of KPMG Peat Marwick are not expected to be present at this year's Annual
Meeting of Stockholders.
The ratification of the selection of the independent accountants requires
the affirmative vote of a majority of the votes cast by stockholders present, in
person or by proxy, and eligible to vote at the meeting, a quorum being present.
Stockholder ratification of the selection of KPMG Peat Marwick as the
Company's independent auditors is not required by the By-Laws of the Company or
otherwise. The Board has elected to seek such ratification as a matter of good
corporate practice. Should the stockholders fail to ratify the selection of KPMG
Peat Marwick as independent auditors, the Board will consider whether to retain
that firm for the year ending December 31, 1997.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE BOARD'S SELECTION
OF KPMG PEAT MARWICK AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR 1997
OTHER MATTERS TO COME BEFORE MEETING
If any matter not described herein should properly come before the meeting,
the persons named in the proxy card will vote the shares in accordance with
their best judgment. At the same time this Proxy Statement went to press, the
Company knew of no other matters which might be presented for stockholder action
at the Annual Meeting.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
RESPONSIBILITIES AND COMPOSITION OF THE COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for (i) establishing compensation programs for
executive officers of the Company designed to attract, motivate and retain key
executives responsible for the Company's success; (ii) administering and
maintaining such programs in a manner that will benefit the long-term interests
of the Company and its stockholders; and (iii) determining the compensation of
the Company's Chief Executive Officer. The Committee is composed of two
directors who have never served as employees of the Company and the Company's
Chief Executive Officer. The Company's Chief Executive Officer does not vote on
matters relating to his own compensation.
This report is intended to clearly describe the philosophy that underlies
the cash and equity-based components of the Company's executive compensation
program. It also describes the details of each element of the program, as well
as the rationale for compensation paid to the Company's Chief Executive Officer
and its executive officers in general.
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COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that the Company's executive officer compensation
should be determined according to a competitive framework and based on overall
financial results, individual contributions and teamwork that help build value
for the Company's stockholders. Within this overall philosophy, the Committee
bases the compensation program on the following principles:
- Compensation levels for executive officers are benchmarked to the outside
market, utilizing information from proxy materials of companies included
in the performance graph contained in the Proxy Statement. Compensation
decisions are made by referring to information in this material regarding
two groups of companies: companies with annual revenues of $25 to $250
million, with which the Company is expected to compete for executive
talent; and the companies included in the performance graph, with which
the Company can expect to compete for investors.
- The total compensation opportunity is targeted to the upper-range of
these companies; incremental amounts may be earned above or below that
level depending upon corporate and individual performance. The Committee
considers it essential to the vitality of the Company that the total
compensation opportunity for executive officers remains competitive with
similar companies in order to attract and retain the talent needed to
manage and build the Company's business.
- Compensation is tied to performance. A significant part of the total
compensation opportunity is at risk, to be earned only if specific goals
are met.
- Incentive compensation is designed to reinforce the achievement of both
short- and long-term corporate objectives.
- Executives' interest in the business should be directly linked to the
interests and benefits received by the Company's stockholders.
PROCESS AND COMPENSATION COMPONENTS
The process utilized by the Committee in determining chief executive
officer compensation levels for all of these components is based upon the
Committee's subjective judgment and takes into account both qualitative and
quantitative factors. No weights are assigned to such factors with respect to
any compensation component. The Chief Executive Officer makes the compensation
decisions for the Company's other key executive officers. However, the Committee
may make recommendations concerning such officers.
In making compensation decisions, the Committee considers compensation
practices and financial performance of companies in similar businesses (the
"Peer Group"). This information provides guidance to the Committee, but the
Committee does not target total executive compensation or any component thereof
to any particular point within, or outside, the range of Peer Group results.
However, the Committee believes that compensation competitive with the Peer
Group for base salaries and for total cash compensation and long-term incentive
awards is generally appropriate for the Committee to use as a framework for
compensation decisions. Specific compensation for individual officers will vary
as the result of subjective factors considered by the Committee unrelated to
compensation practices of the Peer Group. (See "Compensation Philosophy and
Objectives" above.)
The Peer Group is comprised of the following companies: American Management
Systems, Cambridge Technology Partners, Inc., Ciber Inc., Claremont Technology
Group, Inc., Computer Horizons Corp., Computer Management SCI, Gartner Group
Inc., Keane Inc., META Group Inc., Renaissance Solutions, Inc., Sapient
Corporation, Technology Solutions Co., and Whittman Hart, Inc. The Committee
selects various groupings of these companies as it deems appropriate for
different compensation and financial performance comparisons. All of these
companies are included in the performance peer group used for the stockholder
return performance graph set forth below.
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The compensation program has three elements: annual base salary; annual
bonuses, which are based on the Company attaining certain performance
objectives; and awards under a long-term incentive compensation plan, which are
based on both Company performance and individual performance. The Committee has
approved these elements of compensation to ensure the Company's total
compensation program is comparable to and competitive with that of other
companies of similar size.
Annual Compensation
Base Salary. Base salaries for executive officers are established at
levels considered appropriate in light of the scope of the duties and
responsibilities of each officer's position and taking into account Peer Group
compensation practices. The base salary of each executive officer is adjusted in
or around April of each year.
Annual Bonuses. In July 1996, the Board approved a new compensation
program for Named Executive Officers based on certain financial performance
criteria, including revenue growth, profitability and percentage performance of
target goals. Named Executive Officers have an annual bonus opportunity equal to
between 0% to 125% of their respective base salaries. The bonus payable, if any,
is contingent upon the attainment of objectives determined by the Committee.
Other senior managers have similar bonus arrangements.
Payment of any bonus will be in cash as soon as determinable after year end
of the calendar year in which it was earned, but prior to March 15. The bonus is
forfeited if employment is terminated before the last day of the calendar year
in which it was earned.
POLICY ON DEDUCTIBILITY OF COMPENSATION
It is the responsibility of the Committee to address the provisions of
Section 162(m) of the Internal Revenue Code which, except in the case of
"performance-based compensation" and certain other types of compensation, limit
to $1,000,000 the amount of the Company's federal income tax deduction for
compensation paid to each of the Chief Executive Officer and the other four most
highly paid executive officers. In that regard, the Committee must determine
whether any actions with respect to Section 162(m) should be taken by the
Company. At this time, the Committee has determined that the Section 162(m)
deduction limitation will not apply in 1996 because the Company falls within the
extended reliance period for corporations that become publicly held in
connection with an initial public offering. The Committee will continue to
monitor the reliance period and will take appropriate action when it is
warranted in the future.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's salary, bonus and long-term awards follow the
policies set forth above. For the 1996 fiscal year, Mr. Maher received $281,000
in base salary payments. Mr. Maher was not awarded a bonus. He also received
$15,648 in matching payments and profit sharing under the Company's 401(k) Plan.
Mr. Maher did not receive grants of any restricted stock, stock appreciation
rights or any payout under the Long-Term Plan.
The Committee also approved the compensation of the Company's other
executive officers for 1996, following the principles and procedures outlined in
this report.(1)
COMPENSATION COMMITTEE
Robert P. Maher
Peter B. Pond
Mitchell H. Saranow
- ---------------
(1) Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "SEC"), neither the "Compensation Committee
Report on Executive Compensation" nor the material under the caption
"Stockholder Return Performance Graph" shall be deemed to be filed with the
SEC for purposes of the Securities Exchange Act, as amended (the "Exchange
Act"), nor shall such report or such material be deemed to be incorporated
by reference in any past or future filing by the Company under the Exchange
Act or the Securities Act of 1933, as amended (the "Securities Act").
8
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee in 1996. Accordingly, the
following individuals, who served as both directors and executive officers
during 1996, had responsibility for all decisions with respect to executive
officer compensation: Robert P. Maher, Gerald R. Lanz, James T. Ruprecht, James
R. Blomberg, David J. Donovan, Stephen R. Goldfield, and Richard J. Metzler.
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against The
Nasdaq Stock Market U.S. Index (the "Nasdaq Index") and the Peer Group, which
consists of companies in related consulting businesses. The graph assumes that
$100 was invested on October 4, 1996 (the effective date of the Company's
initial public offering) at the initial public offering price of $16.00 per
share, in each of the Company's Common Stock, the Nasdaq Index and the Peer
Group Index, and that all dividends were reinvested.
Note: The stock price performance shown below is not necessarily indicative of
future price performance.
COMPARISON OF THREE-MONTH CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR THE METZLER GROUP, INC.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE METZLER
(FISCAL YEAR COVERED) GROUP, INC. PEER GROUP NASDAQ INDEX
<S> <C> <C> <C>
10/04/96 100.00 100.00 100.00
12/31/96 158.75 105.82 104.71
</TABLE>
9
<PAGE> 13
EXECUTIVE OFFICERS
The Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Robert P. Maher............................ 47 Chairman of the Board, President, Chief
Executive Officer and Director
Gerald R. Lanz............................. 48 Chief Operating Officer and Director
James F. Hillman........................... 39 Chief Financial Officer and Treasurer
</TABLE>
Robert P. Maher has served as a Director of the Company since April 1991.
He has served as Chief Executive Officer and President since January 1996 and as
Chairman of the Board since June 1996. From August 1990 to December 1995, Mr.
Maher held various positions with the Company, most recently as a Senior Vice
President working primarily in the information technology area. From 1988 to
August 1990, he was a principal with the consulting practice of Ernst & Young
LLP where he organized and directed information technology engagements for the
regulated segment of the communications industry practice.
Gerald R. Lanz has served as a Director of the Company since January 1996
and as Chief Operating Officer since June 1996. From December 1994 to June 1996,
Mr. Lanz held various management positions with the Company, most recently as a
Senior Vice President working in the area of strategic and business practices.
From July 1989 to June 1994, he was employed by Ameritech Corporation in a
series of management positions, most recently as Vice President of Marketing and
Business Development for its Small Business Services division.
James F. Hillman has served as the Chief Financial Officer and Treasurer
since June 1996. From April 1996 to June 1996, Mr. Hillman served as a Principal
Associate of the Company. From July 1988 to March 1996, he was employed by
Ameritech Corporation, most recently as the Chief Financial Officer of Ameritech
Monitoring Services, Inc.
10
<PAGE> 14
MANAGEMENT COMPENSATION
GENERAL
The following table sets forth compensation awarded or earned by the
Company's President and Chief Executive Officer and the four other most highly
paid executive officers during the year ended December 31, 1996 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------ ---------------
FISCAL OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) (NO. OF SHARES) COMPENSATION(2)
- --------------------------- ------ ---------- -------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Maher............ 1995 $ 182,333 $414,505 $ 9,636 -- $ --
President and Chief 1996 281,000 -- 15,648 -- 859,961
Executive Officer
Gerald R. Lanz............. 1995 175,000 599,230 -- -- --
Chief Operating Officer 1996 200,000 -- 15,648 -- 859,961
James T. Ruprecht.......... 1995 175,000 864,205 11,136 -- --
Senior Vice President 1996 200,000 -- 15,648 -- 859,961
Richard J. Metzler......... 1995 1,050,776 412,938 11,136 -- --
Senior Vice President 1996 200,000 -- 15,648 -- 859,961
James F. Hillman........... 1995 -- -- -- -- --
Chief Financial 1996 118,750 -- -- 77,000 --
Officer(3)
</TABLE>
- ---------------
(1) Represents matching payments and profit sharing under the Company's 401(k)
Plan.
(2) Represents the proportionate share of the Company's net income for the
period January 1, 1996 through October 3, 1996. Prior to January 1, 1996,
the Company had operated as a C-corporation. Effective January 1, 1996, the
stockholders of the Company elected to be taxed under Subchapter S of the
Internal Revenue Code. As an S-corporation, the Company's profits are
distributed to stockholders and the Company is not subject to federal (and
some state) income taxes. The S-corporation election terminated in
connection with the consummation of the initial public offering of the
Company's common stock on October 4, 1996.
(3) Mr. Hillman began his employment with the Company on April 15, 1996.
EXECUTIVE OPTION GRANTS
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers in 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS EXERCISE GRANT
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION DATE
NAME GRANTED(1) IN FISCAL 1996 PER SHARE DATE VALUE(2)
- ---- ---------- -------------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
James F. Hillman..................... 77,000 16% $12.00 6/30/06 $300,000
</TABLE>
- ---------------
(1) The options were granted on June 30, 1996 with an exercise price of $12.00
per share, which was equal to the estimated fair market value of common
stock at that date. As of December 31, 1996, no options were exercisable.
The options are exercisable in three annual installments commencing on the
second anniversary of the date of grant.
11
<PAGE> 15
(2) The fair value of the option grant is estimated as of the date of grant
using the Black-Scholes option pricing model. The following assumptions were
used:
<TABLE>
<S> <C>
Expected Volatility......................................... 40%
Risk-free interest rate..................................... 6.5%
Dividend yield.............................................. 0%
Expected life............................................... 3 years
</TABLE>
EMPLOYMENT AGREEMENTS
Effective as of July 1, 1996, the Board of Directors, which consisted
solely of the three employee directors of the Company, approved a new
compensation program for the Named Executive Officers. The program provides for
initial annual base salaries ranging from $175,000 to $375,000. In addition to
the base salaries, a bonus structure was established under which bonuses ranging
from 0% to 125% of the Named Executive Officer's annual base salary will be
awarded based on the attainment of certain financial performance criteria. The
independent members of the Board of Directors, who comprise the majority of the
Compensation Committee, ratified this compensation plan on January 8, 1997. The
Company has no written employment contracts with any of its executive officers.
In the future, the Company's Compensation Committee will determine the terms of
employment for executive officers on an annual basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During January 1996, the Company entered into note payable agreements with
two officers. The notes, each with a principal amount of $500,000, bore interest
at a rate of 10%. The notes matured on December 31, 1996 and were repaid on
January 2, 1997.
In May 1996, the Company made an advance of $725,000 to an officer as part
of an employment agreement and entered into a note receivable agreement with the
officer. The note receivable bore interest at a rate of 6%. The note, plus
accrued interest, was repaid on November 8, 1996.
During July 1996, the Company entered into an agreement with its founding
shareholder, who, at that time, was the beneficial owner of 15% of the Company's
common stock, to redeem 1,714,285 shares of the shareholder's common stock in
exchange for a promissory note in the amount of $7,975,000. The redemption value
per share was negotiated by the Company's other executive officers, who
collectively owned the remaining 85% of the Company's common stock at the time
of the agreement. The Company redeemed the stock on October 4, 1996 in
accordance with the agreement and repaid the promissory note within 30 days of
the redemption.
12
<PAGE> 16
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND PRINCIPAL HOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 31, 1997 by: (i) each person known by the
Company to own beneficially more than five percent of the outstanding shares of
Common Stock; (ii) each of the Company's directors; (iii) each of the Named
Executive Officers; and (iv) all directors and executive officers of the Company
as a group. (Each person named below has an address in care of the Company's
principal executive offices.) The Company believes that each person named below
has sole voting and investment power with respect to all shares of Common Stock
shown as beneficial owned by such holder, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ --------- -------
<S> <C> <C>
OFFICERS, DIRECTORS AND 5% STOCKHOLDERS
David J. Donovan............................................ 1,060,000 9.97%
Stephen R. Goldfield........................................ 1,060,000 9.97%
Gerald R. Lanz.............................................. 1,060,000 9.97%
James T. Ruprecht........................................... 1,060,000 9.97%
Robert P. Maher............................................. 943,429 8.88%
James R. Blomberg........................................... 660,000 6.21%
Richard J. Metzler(2)....................................... 600,000 5.65%
James F. Hillman............................................ -- --
Peter B. Pond............................................... -- --
Mitchell H. Saranow......................................... -- --
All Directors and Executive Officers as a group (6
persons).................................................. 3,063,429 28.83%
</TABLE>
- ---------------
(1) Applicable percentage of ownership as of March 31, 1997 is based upon
10,627,181 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to the
shares shown as beneficially owned.
(2) Mr. Metzler maintains control over 250,000 shares held of record by Metzler
Family Investments, L.P., in his capacity as general partner.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act requires the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1996, all such Section
16(a) filing requirements were complied with except that Mr. Pond and Mr.
Saranow inadvertently failed to file Form 3 reports, which were subsequently
filed six weeks later.
STOCKHOLDER PROPOSALS FOR THE 1998 PROXY STATEMENT
Any stockholder satisfying the SEC requirements and wishing to submit a
proposal to be included in the Proxy Statement for the 1997 Annual Meeting of
Stockholders should submit the proposal in writing to Secretary, The Metzler
Group, Inc., 520 Lake Cook Road, Suite 500, Deerfield, Illinois, 60015. The
Company must receive a proposal by December 20, 1997 in order to consider it for
inclusion in the Proxy Statement for the 1997 Annual Meeting of Stockholders.
13
<PAGE> 17
VOTING PROCEDURES
Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business at the
Annual Meeting of Stockholders. With regard to the election of directors, votes
may be cast in favor or withheld. Votes that are withheld and broker non-votes
will be excluded entirely from the vote and will have no effect on the outcome.
OTHER INFORMATION
A COPY OF THE ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SEC FOR THE YEAR
1996 (EXCLUDING EXHIBITS) WILL BE FURNISHED, WITHOUT CHARGE, BY WRITING TO JOEY
FABERE, INVESTOR RELATIONS, THE METZLER GROUP, INC., 520 LAKE COOK ROAD, SUITE
500, DEERFIELD, ILLINOIS, 60015.
SOLICITATION OF PROXIES
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. Solicitation may be made personally, or by telephone,
telegraph or mail, by one or more employees of the Company, without additional
compensation. The Company will reimburse brokerage houses and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred in
forwarding copies of solicitation material to beneficial owners of Common Stock
held of record by such persons.
The above Notice of Annual Meeting and Proxy Statement are sent by order of
the Company's Board of Directors.
Barry S. Cain
BARRY S. CAIN
Assistant Secretary
Deerfield, Illinois
April 28, 1997
14
<PAGE> 18
APPENDIX A
THE METZLER GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE
The purpose of The Metzler Group, Inc. Employee Stock Purchase Plan is to
provide eligible Employees of The Metzler Group, Inc. and its Affiliates with an
opportunity to acquire a proprietary interest in the Company through the
purchase of Common Stock of the Company on a payroll deduction basis. It is
believed that participation in the ownership of the Company will be to the
mutual benefit of the eligible Employees and the Company. It is intended that
this Plan shall constitute an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986, as amended. The provisions
of the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of Code Section 423.
II. DEFINITIONS
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Plan, have the following meanings. Wherever
appropriate, words used in the singular shall be deemed to include the plural
and vice versa, and the masculine gender shall be deemed to include the feminine
gender.
A. Account means the funds accumulated with respect to an Employee as
a result of deductions from his paycheck for the purpose of purchasing
Common Stock under the Plan. The funds allocated to an Employee's Account
shall remain the property of the Employee at all times prior to the
purchase of the Common Stock, but may be commingled with the assets of the
Company and used for general corporate purposes. No interest shall be paid
or accrued on any funds accumulated in the Accounts of Employees.
B. Affiliate means a corporation, as defined in Section 424(f) of the
Code, that is a parent or subsidiary of the Company, direct or indirect.
C. Board means the Board of Directors of the Company.
D. Code means the Internal Revenue Code of 1986, as amended.
E. Committee means the committee to which the Board delegates the
power to act under or pursuant to the provisions of the Plan, or the Board
if no committee is selected.
F. Common Stock means the shares of common stock of the Company, $.001
par value.
G. Company means The Metzler Group, Inc., a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of the Company.
H. Compensation means the compensation paid to an Employee by the
Company during a payroll period for federal income tax purposes, as
reported on an Employee's Form W-2 (or comparable reporting form) for
income tax withholding purposes.
I. Effective Date means the date the Plan is adopted by, and made
effective by, the Board, subject to the limitations of Section 16.
J. Employee means any person who is employed by the Company or an
Affiliate on a regular full-time basis. A person shall be considered
employed on a regular full-time basis if he is customarily employed for
more than twenty (20) hours per week.
K. Offering Date means the date on which the Committee grants
Employees the option to purchase shares of Common Stock.
L. Offering Period means the period between the Offering Date and the
Purchase Date.
15
<PAGE> 19
M. Purchase Date means the date on which the Committee purchases the
shares of Common Stock, which date shall be the last day of an Offering
Period.
N. Participant means an Employee who elects to participate in the
Plan.
O. Plan means The Metzler Group, Inc. Employee Stock Purchase Plan.
III. ELIGIBILITY
All Employees of the Company and, if designated by the Board, any
Affiliate, who are employed by the Company and/or such designated Affiliate on
the Effective Date, shall be eligible to participate in the Plan on the
Effective Date. Subject to the enrollment limitations of Section 6, each other
Employee of the Company and/or a designated Affiliate shall be eligible to
participate on the first to occur of (i) the Offering Date coincident with or
next following the Employee's first day of employment, or (ii) the first day of
any calendar month coincident with or next following the Employee's first day of
employment.
IV. ADMINISTRATION
The Plan shall be administered by the Committee, which shall consist of not
less than two (2) members of the Board. Subject to the provisions of the Plan,
the Committee shall be vested with full authority to make, administer, and
interpret such rules and regulations as it deems necessary to administer the
Plan, and any determination, decision, or action of the Committee in connection
with the construction, interpretation, administration, and application of the
Plan shall be final, conclusive, and binding upon all Participants and any and
all persons claiming under or through any Participant. Notwithstanding anything
to the contrary in the Plan, the Committee shall have the discretion to modify
the terms of the Plan with respect to Participants who reside outside of the
United States or who are employed by a subsidiary of the Company that has been
formed under the laws of any foreign country, if such modification is necessary
in order to conform such terms to the requirements of local laws.
V. STOCK
A. The Common Stock to be sold to Participants under the Plan may, at the
election of the Company, be either treasury shares, shares acquired on the open
market, and/or shares originally issued for such purpose. The aggregate number
of shares of Common Stock that shall be made available for purchase under the
Plan shall not exceed three hundred thousand (300,000) shares, subject to
adjustment upon changes in capitalization of the Company as provided in
subparagraph (b) below. If the total number of shares that otherwise would have
been acquired under the Plan on any Purchase Date exceeds the number of shares
of Common Stock then available under the Plan, the Company shall make a pro rata
allocation of the shares remaining available in as nearly a uniform manner as
shall be practicable and as it shall determine to be equitable. In such event,
the payroll deductions to be made pursuant to the Participants' authorizations
shall be reduced accordingly, or refunded to the Participants, as the case may
be, and the Company shall give written notice of such reduction or refund to
each affected Participant.
B. Appropriate adjustments in the aggregate number of shares of Common
Stock that shall be made available for purchase under the Plan shall be made to
give effect to any mergers, consolidations, acquisitions, reorganizations, stock
splits, stock dividends, or other relevant changes in the capitalization of the
Company occurring after the Effective Date. The establishment of the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell, or otherwise
transfer all or any part of its business or assets. Adjustments under this
Section 5 shall be made in the sole discretion of the Committee, and its
decision shall be binding and conclusive.
C. A Participant shall not have any interest in shares covered by his
authorized payroll deduction until shares of Common Stock are acquired for his
Account.
16
<PAGE> 20
VI. PARTICIPATION
A. Each Employee may become a Participant in the Plan by authorizing a
payroll deduction on a form provided by the Committee. Such authorization shall
become effective on the first day of the month (or the next Offering Date, if
earlier) following the delivery of the authorization form to the Committee;
provided (i) that the Employee is eligible under Section 3 to participate in the
Plan on such day and (ii) that if the authorization form is delivered to the
Committee less than fifteen (15) days prior to the end of any month (or prior to
an Offering Date, if applicable), it shall become effective on the first day of
the month that is fifteen (15) or more days following delivery of the
authorization form to the Committee.
B. At the time an Employee files his authorization for a payroll deduction,
he shall elect to have deductions made from each paycheck that he receives, such
deductions to continue until the Participant withdraws from the Plan or
otherwise becomes ineligible to participate in the Plan. Authorized payroll
deductions shall be for a minimum of one percent (1%) and a maximum of fifteen
percent (15%) of the Participant's Compensation. The deduction rate so
authorized shall continue in effect through the Offering Period and each
succeeding Offering Period, except to the extent such rate is changed in
accordance with the following guidelines:
1. The Participant may, at any time during any Offering Period, reduce
his rate of payroll deduction by filing an authorization form with the
Company; and
2. The Participant may, at any time during any Offering Period,
increase the rate of his payroll deduction by filing an authorization form
with the Committee. The Participant may not, however, effect more than one
(1) such increase per Offering Period.
New deduction rates shall become effective as soon as practicable after the
authorization form is filed with the Committee.
C. All Compensation deductions made for a Participant shall be credited to
his Account. Except as may otherwise be provided by the Committee under Section
4, a Participant may not make any separate cash payment into his Account.
VII. PURCHASE OF SHARES
A. On the date when a Participant's authorization form for a deduction
becomes effective, and on each Offering Date thereafter, he shall be deemed to
have been granted an option to purchase as many full shares of Common Stock as
he will be able to purchase with the Compensation deductions credited to his
Account during the payroll periods within the applicable Offering Period for
which the Compensation deductions are made. In addition to the foregoing, any
cash dividends paid on shares of Common Stock held in his Account shall be added
to the Account, and used to purchase Common Stock as otherwise provided herein.
B. The purchase price for the shares of Common Stock to be purchased with
payroll deductions from the Participant shall be equal to eighty-five percent
(85%) of (i) the "fair market value" of a share of Common Stock on the Offering
Date (or, if later, on the date the Participant's authorization form becomes
effective, as set forth in Section 6), or (ii) the "fair market value" of a
share on the Purchase Date. However, if a Participant enters the Plan on other
than the Offering Date, the clause (i) amount shall in no event be less than the
fair market value per share of Common Stock on the Offering Date. Fair market
value shall be defined as the closing sales price of the Common Stock on the
largest national securities exchange on which such Common Stock is listed at the
time the Common Stock is to be valued. If the Common Stock is not then listed on
any such exchange, the fair market value shall be the closing sales price if
such is reported or otherwise the mean between the closing "Bid" and the closing
"Ask" prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of valuation, or if
none, on the most recent trade date thirty (30) days or less prior to the date
of valuation for which such quotations are reported. If the Common Stock is not
then listed on any such exchange or quoted in NASDAQ, the fair market value
shall be the mean between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation Service for the date
of valuation, or, if none, for the most recent trade date thirty (30) days or
less prior to the date of valuation for which such quotations
17
<PAGE> 21
are reported. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the Committee.
VIII. TIME OF PURCHASE
From time to time, the Committee shall grant to each Participant an option
to purchase shares of Common Stock in an amount equal to the number of shares of
Common Stock that the accumulated payroll deductions to be credited to his
Account during the Offering Period may purchase at the applicable purchase
price. Each Offering Period shall be for a specified period of time to be fixed
by the Committee and shall be for no less than one month and no more than
twenty-seven (27) months' duration. Each Participant who elects to purchase
shares of Common Stock hereunder shall be deemed to have exercised his option
automatically on such date of purchase. Administrative and commission costs on
purchases shall be paid by the Company. The Committee shall cause to be
delivered periodically to each Participant a statement showing the aggregate
number of shares of Common Stock in his Account, the number of shares of Common
Stock purchased for him in the preceding Offering Period, his aggregate
Compensation deductions for the preceding Offering Period, the price per share
paid for the shares of Common Stock purchased for him during the preceding
Offering Period, and the amount of cash, if any, remaining in his Account at the
end of the preceding Offering Period.
A Participant may request delivery to him of the cash in his Account or of
the shares of Common Stock held in his Account at any time (subject to any
limitations imposed by Section 16(b) of the Securities Exchange Act of 1934),
and the delivery thereof shall be made at such regular time as the Company or
its transfer agent shall determine. If such delivery is required at a time other
than the normal transfer date set by the Company or its transfer agent, the
Participant requesting such transfer shall pay the costs thereof. All of the
cash deposits in his Account shall be paid to him promptly after receipt of
notice of withdrawal, without interest. Shares of Common Stock to be delivered
to a Participant under the Plan shall be registered in the name of the
Participant or, if the Participant so directs in writing to the Committee, in
the name of the Participant and such person(s) as may be designated by the
Participant, to the extent permitted by applicable law, and delivered to the
Participant as soon as practicable after the request for a withdrawal. If a
Participant wishes to sell the shares of Common Stock in his Account, he may
notify the Committee to sell the same, in lieu of a distribution of such shares,
in which event all commission costs incurred in connection with the sale of the
shares of Common Stock shall be borne by the Participant. The Company shall pay
administrative costs associated therewith other than costs arising from a sale
occurring at a time different from the prearranged dates set by the Company or
its transfer agent for making such sales.
IX. CESSATION OF PARTICIPATION
A Participant may cease participation in the Plan at any time by notifying
the Committee in writing of his intent to cease his participation. If such
notice is received by the Committee the Company shall distribute to the
Participant all of his accumulated payroll deductions, without interest. If any
Participant ceases participation in the Plan, no further Compensation deductions
shall be made on his behalf after the effective date of his cessation, except in
accordance with a new authorization form filed with the Committee as provided in
Section 6. Upon ceasing participation in the Plan, a Participant shall not be
permitted to reenter the Plan until six (6) months have elapsed from the date
his cessation becomes effective.
X. INELIGIBILITY
An Employee must be employed by the Company or an Affiliate on the Purchase
Date in order to participate in the purchase for that Offering Period. If an
option expires without first having been exercised, all funds credited to the
Participant's Account shall be refunded without interest. If a Participant
becomes ineligible to participate in the Plan at any time, all Compensation
deductions made on behalf of the Participant that have not been used to purchase
shares of Common Stock shall be paid to the Participant within sixty (60) days
after the Committee determines that the Participant is not eligible to
participate in the Plan.
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<PAGE> 22
XI. DESIGNATION OF BENEFICIARY
A Participant may file a written designation of a beneficiary who shall
receive any shares of Common Stock (or remaining Compensation deductions)
credited to the Participant's Account under the Plan in the event of such
Participant's death prior to delivery to him of the certificates for such shares
(or remaining Compensation deductions). The designation of a beneficiary may be
changed by the Participant at any time by written notice given in accordance
with rules and procedures established by the Committee. Upon the death of a
Participant, and upon receipt by the Company of proof of the identity and
existence, at the Participant's death, of a beneficiary validly designated by
him under the Plan, the Company shall deliver such shares of Common Stock (or
remaining Compensation deductions) to such beneficiary. In the event of the
death of the Participant, and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver such shares (or remaining Compensation deductions) to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed, the Company, in its sole
discretion, may deliver such shares (or remaining Compensation deductions) to
the Participant's spouse or to any one or more dependents or relatives of the
Participant, or to such other person or persons as the Company may designate on
behalf of the estate of such deceased Participant.
XII. TRANSFERABILITY
Neither Compensation deductions credited to a Participant's Account nor any
rights with regard to Plan participation or the right to purchase shares of
Common Stock under the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way by a Participant other than by will or the laws of
descent and distribution; provided, however, that shares of Common Stock
purchased on behalf of a Participant and left in his Account shall be subject to
his absolute control. Any attempted assignment, transfer, pledge, or other
disposition shall be void and without effect.
XIII. AMENDMENT OR TERMINATION
The Board may, without further action on the part of the stockholders of
the Company, at any time amend the Plan in any respect, or terminate the Plan,
except that the Board may not, without consent of the stockholders:
A. Permit the sale of more shares of Common Stock than are authorized
under Section 5;
B. Permit Compensation deductions at a rate in excess of the rate set
forth herein;
C. Change the class of Affiliates to whose Employees are eligible to
participate in the Plan; or
D. Effect a change inconsistent with Section 423 of the Code or the
regulations issued thereunder.
XIV. NOTICES
All notices or other communications by a Participant under or in connection
with the Plan shall be deemed to have been duly given when received in writing
by the Chief Financial Officer of the Company or when received in the form
specified by the Committee at the location and by the person designated by the
Committee for the receipt thereof.
XV. LIMITATIONS
Notwithstanding any other provisions of the Plan:
A. The Company intends that this Plan shall constitute an employee
stock purchase plan within the meaning of Section 423 of the Code. Any
provisions required to be included in the Plan under said Section, and
under regulations issued thereunder, are hereby included as though set
forth in the Plan at length.
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<PAGE> 23
B. No Employee shall be entitled to participate in the Plan if,
immediately after the grant of an option hereunder, the Employee would own
stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or an Affiliate. For
purposes of this Section 15, stock ownership shall be determined under the
rules of Section 424(d) of the Code and stock that the Employee may
purchase under outstanding options shall be treated as stock owned by the
Employee.
C. No Employee shall be permitted to purchase Common Stock hereunder
if his right and option to purchase Common Stock under this Plan and under
all other employee stock purchase plans (as defined in Section 423 of the
Code) of the Company or any Affiliates would result in an entitlement to
purchase Common Stock in any one (1) calendar year in excess of a fair
market value of $25,000 (determined at the time of grant).
D. All Employees shall have the same rights and privileges under the
Plan, except that the amount of Common Stock that may be purchased pursuant
to the Plan shall bear a uniform relationship to an Employee's
Compensation. All rules and determinations of the Committee shall be
uniformly and consistently applied to all persons in similar circumstances.
E. Nothing in the Plan shall confer upon any Employee the right to
continue in the employment of the Company or any Affiliate or affect the
right that the Company or any Affiliate may have to terminate the
employment of such Employee.
F. No Participant shall have any right as a stockholder unless and
until certificates for shares of Common Stock are issued to him or
allocated to his Account.
G. If under any provision of the Plan that requires a computation of
the number of shares of Common Stock to be purchased, the number so
computed is not a whole number of shares of Common Stock, such number of
shares of Common Stock shall be rounded down to the next whole number.
H. The Plan is intended to provide shares of Common Stock for
investment and not for resale. The Company does not, however, intend to
restrict or influence any Participant in the conduct of his own affairs. A
Participant, therefore, may sell shares of Common Stock purchased under the
Plan at any time he chooses, subject to compliance with any applicable
federal or state securities laws or any applicable Company restriction
periods; provided, however, that because of certain federal tax
requirements, each Participant shall agree, by entering the Plan:
1. promptly to give the Company notice of any shares of Common
Stock disposed of within two (2) years after the date of grant of the
applicable option, or within one (1) year of the Purchase Date, and the
number of such shares disposed of (a "disqualifying disposition");
2. that the Company may withhold, pursuant to Code sec.sec. 3102,
3301, and 3402, from his wages and other cash compensation paid to him
in all payroll periods following in the same calendar year, any
additional taxes the Company may become liable for in respect of amounts
includable in his income as additional compensation as a result of a
disqualifying disposition of Common Stock acquired under the Plan, or as
a result of the acquisition of Common Stock under the Plan; and
3. that he shall repay the Company any amount of additional taxes
the Company may become liable for in respect of amounts includable in
his income as additional compensation as a result of a disqualifying
disposition of Common Stock acquired under the Plan, or as a result of
the acquisition of Common Stock under the Plan, that cannot be satisfied
by withholding from the wages and other cash compensation paid to him by
the Company.
I. This Plan is intended to comply in all respects with applicable law
and regulations, including with respect to Participants who are officers or
directors for purposes of Section 16 of the Securities Exchange Act of
1934, as amended from time to time, Rule 16b-3 of the Securities and
Exchange Commission. In case any one or more provisions of this Plan shall
be held invalid, illegal, or unenforceable in any respect under applicable
law and regulation (including Rule 16b-3), the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalid, illegal, or
20
<PAGE> 24
unenforceable provision shall be deemed null and void; however, to the
extent permitted by law, any provision that could be deemed null and void
shall first be construed, interpreted, or revised retroactively to permit
this Plan to be construed in compliance with all applicable law (including
Rule 16b-3), so as to further the intent of this Plan. Notwithstanding
anything herein to the contrary, with respect to Participants who are
officers and directors for purposes of Section 16(b) of the Securities
Exchange Act of 1934, as amended from time to time, and if required to
comply with the rules promulgated thereunder, such Participants shall not
be permitted to direct the sale of any Common Stock purchased hereunder
until at least six (6) months have elapsed from the date of a purchase
hereunder, unless the Committee determines that the sale of the Common
Stock otherwise satisfies the then current Rule 16b-3 requirements.
XVI. EFFECTIVE DATE AND APPROVALS
The Plan shall become effective at a time when:
A. the Plan has been adopted by the Board; and
B. a registration statement on Form S-8 under the Securities Act of
1933, as amended, has become effective with respect to the Plan; and
C. the Committee has notified the eligible Employees that they may
commence participation in the Plan; and
D. the Plan is approved by the holders of a majority of the
outstanding shares of Common Stock of the Company, which approval must
occur within the period ending twelve (12) months after the date the Plan
is adopted by the Board. In the event such stockholder approval is not
obtained, the Plan shall terminate and have no further force or effect, and
all amounts collected from the Participants during any initial Offering
Period(s) hereunder shall be refunded.
Unless sooner terminated by the Board, or as set forth above, the Plan
shall terminate upon the earlier of (i) the tenth (10th) anniversary of the
adoption of the Plan by the Board, or (ii) the date on which all shares
available for issuance under the Plan shall have been sold under the Plan.
XVII. APPLICABLE LAW
All questions pertaining to the validity, construction, and administration
of the Plan shall be determined in conformity with the laws of Illinois, to the
extent not inconsistent with Section 423 of the Code and the regulations
thereunder.
Dated this 14th day of March, 1997.
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<PAGE> 25
PROXY THE METZLER GROUP, INC. PROXY
520 LAKE COOK ROAD, SUITE 500, DEERFIELD, ILLINOIS 60015
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert P. Maher and Gerald R. Lanz, and each
of them, as the undersigned's proxies, each with full power of substitution, to
represent and to vote, as designated below, all of the undersigned's Common
Stock in The Metzler Group, Inc. at the annual meeting of stockholders of The
Metzler Group, Inc. to be held on Wednesday, May 21, 1997, and at any
adjournment thereof, with the same authority as if the undersigned were
personally present.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholders.
If no specific direction is made, this proxy will be voted FOR the election
of the nominated Directors. The Directors favor a vote "FOR" the election of
the nominated Directors.
If no specific direction is made, this proxy will be voted FOR the approval
of The Metzler Group, Inc.'s Employee Stock Purchase Plan. The Directors favor
a vote "FOR" the approval of The Metzler Group, Inc.'s Employee Stock Purchase
Plan.
If no specific direction is made, this proxy will be voted FOR the
ratification of the selection of KPMG Peat Marwick LLP as independent auditors
for The Metzler Group, Inc. for the year 1997. The Directors favor a vote
"FOR" the ratification of the selection of KPMG Peat Marwick LLP as independent
auditors for The Metzler Group, Inc. for the year 1997.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE RETURN ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
THE METZLER GROUP, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
[ ]
<TABLE>
<Y> <C> <C> <C>
PETER B. POND FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS FOR WITHHOLD 2. APPROVAL OF / / / / / /
PETER B. POND / / / / EMPLOYEE STOCK
MITCHELL H. SARANOW MITCHELL H. SARANOW PURCHASE PLAN
FOR WITHHOLD FOR AGAINST ABSTAIN
/ / / / 3. RATIFICATION OF / / / / / /
KPMG PEAT MARWICK
LLP AS INDEPENDENT
AUDITORS
4. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come
before the meeting
---------------------------------------------------------------
Signature
---------------------------------------------------------------
Signature (if held jointly)
Dated: , 1997
-----------------------------
Please sign exactly as name appears hereon. For joint accounts, all
tenants should sign. Executors, Administrators, Trustee, etc.
should so indicate when signing.
</TABLE>
