<PAGE> 1
Schedule 14C Information
------------------------
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
/X/ Definitive Information Statement
(Name of Registrant as Specified in Charter)
Graybar Electric Company, Inc.
- ------------------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) 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 is 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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<PAGE> 2
GRAYBAR ELECTRIC COMPANY, INC.
34 NORTH MERAMEC AVENUE
P.O. BOX 7231
ST. LOUIS, MISSOURI 63177
--------------------
INFORMATION STATEMENT
--------------------
This Information Statement is furnished to each holder of Common Stock
of Graybar Electric Company, Inc. (the "Company") and each holder of a Voting
Trust Certificate issued under the Voting Trust Agreement referred to below
in connection with the Annual Meeting of Shareholders of the Company to be
held at 9:30 A.M. on June 11, 1998 at 8000 Forsyth Boulevard, Clayton,
Missouri 63105.
The record holders of Common Stock outstanding at the close of business
on April 22, 1998 will be entitled to attend and to vote at the meeting. On
April 22, 1998, there were outstanding 5,096,623 shares of Common Stock. Each
share is entitled to one vote.
As of April 22, 1998, 94% or 4,784,128 of the issued and outstanding
shares of Common Stock of the Company were held of record in the names of C.
L. Hall, R. H. Haney, G. W. Harper, R. L. Mygrant and R. D. Offenbacher, all of
34 North Meramec Avenue, St. Louis, Missouri 63105, as Voting Trustees under a
Voting Trust Agreement dated as of April 1, 1997, relating to the Common Stock
of the Company. The Voting Trustees as a group possess the voting power
associated with the shares held of record under the Voting Trust Agreement but
do not have the power of disposition as to such shares. Such voting power is
sufficient to assure election of the persons nominated by the Board of Directors
for election as directors, approval of the Common Stock Purchase Plan as
described herein, and approval of any other matters brought before the meeting.
The Voting Trustees have indicated as a group that they will vote the shares of
Common Stock held by them in favor of the persons nominated by the Board of
Directors for election as directors and for approval of the Common Stock
Purchase Plan. The Voting Trust Agreement terminates on March 31, 2007, unless
sooner terminated by the vote of a majority of the Voting Trustees or the vote
of the holders of Voting Trust Certificates representing at least seventy-five
percent of the number of shares of Common Stock deposited thereunder.
This Information Statement will be sent to holders of Common Stock and
holders of Voting Trust Certificates on or about May 13, 1998.
-------------------------------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
-------------------------------------------------
<PAGE> 3
DIRECTORS AND EXECUTIVE OFFICERS
NOMINEES FOR ELECTION AS DIRECTORS
Fifteen directors are to be elected to serve until the next Annual
Meeting of Shareholders and until their successors have been elected and
qualified. The persons nominated by the Board of Directors for election as
directors are, with the exception of W. L. King, presently directors of the
Company and are named in the table below. Certain additional information
concerning them is set forth in the table.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
STOCK
YEAR IN BENEFICIALLY
WHICH OWNED ON
BECAME A APRIL 22,
NAME AGE BUSINESS EXPERIENCE LAST FIVE YEARS DIRECTOR 1998<F1><F2>
- ---- --- ----------------------------------- -------- ------------
<S> <C> <C> <C> <C>
A. A. Brzoski, Jr. 61 Employed by Company in 1954, District Manager 1991 1996 8,197
to 1993, Vice President 1993 to present.
T. F. Dowd<F3> 54 Employed by Company in 1997, Vice President, 1997 0
Secretary and General Counsel September 1997 to present.
Partner, Bryan Cave (law firm) 1989-1997.
T. S. Gurganous 48 Employed by Company in 1973, District Manager 1990 to 1995 3,161
1995, District Vice President 1995 to present.
C. L. Hall 60 Employed by Company in 1959, District Manager 1981 to 1989 7,154
1994, Executive Vice President 1994 to 1995, President
1995 to present.
R. H. Haney 55 Employed by Company in 1962, District Manager 1985 to 1991 5,614
1995, Senior Vice President 1995 to present.
G. W. Harper 61 Employed by Company in 1957, Vice President, Operations 1990 6,024
1990 to present.
W. L. King 62 Employed by Company in 1958, District Manager 1989 to -- 5,525
1995, District Vice President 1995 to present.
2
<PAGE> 4
<CAPTION>
NUMBER OF
SHARES OF
COMMON
STOCK
YEAR IN BENEFICIALLY
WHICH OWNED ON
BECAME A APRIL 22,
NAME AGE BUSINESS EXPERIENCE LAST FIVE YEARS DIRECTOR 1998<F1><F2>
- ---- --- ----------------------------------- -------- ------------
<S> <C> <C> <C> <C>
G. J. McCrea 58 Employed by Company in 1963, District Manager 1987 to 1995 4,867
1995, District Vice President 1995 to present.
R. D. Offenbacher 47 Employed by Company in 1968, District Manager 1990 to 1994 3,971
1995, District Vice President 1995 to present.
I. Orloff 58 Employed by Company in 1972, Vice President 1991 to 1990 4,716
1996, District Vice President 1996 to present.
R. A. Reynolds, Jr. 49 Employed by Company in 1972, Vice President 1991 to 1993 4,048
1994, Senior Vice President 1995 to present.
J. R. Seaton 63 Employed by Company in 1982, Comptroller 1982 to 1982 7,150
present, Vice President 1985 to present.
C. R. Udell 53 Employed by Company in 1965, General Manager 1991 to 1996 4,731
1993, Vice President 1993 to present.
J. F. Van Pelt 59 Employed by Company in 1985, Vice President, Human 1986 4,697
Resources 1986 to present.
J. W. Wolf 58 Employed by Company in 1962, Vice President and 1989 7,010
Treasurer 1989 to present.
<FN>
- --------------------------
<F1> All the shares of Common Stock listed are held of record by the Voting
Trustees under the Voting Trust Agreement dated as of April 1, 1997.
No single director owned beneficially more than 1% of the outstanding
Common Stock or Voting Trust Certificates except for the Voting
Trustees who, as a group, possessed the voting power associated with
approximately 94% of the outstanding shares of Common Stock but who
possessed no power of disposition with respect to such shares.
<F2> As of April 22, 1998, all officers and directors as a group, including
those individuals listed above (32 persons), owned Voting Trust
Certificates representing 128,926 shares of Common Stock (approximately
3% of the outstanding). No officer or director owns shares of Common
Stock of record.
3
<PAGE> 5
<F3> The Corporation retained Bryan Cave in 1997 and will do so in 1998 to
render legal services in connection with specific matters.
</TABLE>
COMMITTEES
The Company has an Audit Committee, which met two times in 1997 and a
Compensation Committee, which met 13 times in 1997. Messrs. Gurganous,
McCrea, Offenbacher and Orloff are members of the Audit Committee. R. L.
Mygrant, who is not standing for re-election, was a member until May 1, 1998.
Generally, this Committee meets with the Company's internal auditors,
corporate officers and the Company's independent auditors on matters relating
to corporate financial reporting and accounting procedures and policies, the
adequacy of the Company's financial accounting and operating controls and
systems and the scope of the audits of both the independent auditors and
internal auditors. The Audit Committee reviews and reports to the Board of
Directors on the results of such audits and its recommendations relating to
financial reporting and accounting practices and policies. Messrs. Haney,
Harper, Reynolds, Seaton and Van Pelt serve on the Compensation Committee
which in consultation with independent compensation specialists reviews the
Company's compensation policy and makes recommendations to the President with
respect to program changes. The Company has no nominating committee.
BOARD AND COMMITTEE ATTENDANCE
The Board of Directors met four times in 1997. All incumbent directors
attended more than 75% of the total of all Board and committee meetings of
which they were members.
DIRECTOR COMPENSATION
Directors are paid a meeting fee of $300 for each Board meeting
attended. Four meetings of the Board occur each year.
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company for fiscal year 1997, as well as the total
compensation paid to each such individual for the Company's two previous
fiscal years.
4
<PAGE> 6
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Name and Principal ------------------------------------------ All Other<F3>
Position Year Salary<F1> Bonus<F1><F2> Compensation
- ------------------------ ---------- ------------------------------------------ -------------------
<S> <C> <C> <C> <C>
C. L. Hall, 1997 306,180 342,922 80,413
President and Chief 1996 278,340 289,474 62,434
Executive Officer 1995 217,800 241,942 38,439
J. R. Seaton, 1997 186,386 169,611 45,957
Vice President 1996 182,290 154,036 41,997
1995 176,700 167,688 41,088
R. H. Haney, 1997 160,666 146,206 38,833
Vice President 1996 150,282 126,988 33,692
1995 137,500 130,488 24,704
R. A. Reynolds, Jr., 1997 160,666 146,206 38,833
Vice President 1996 150,282 126,988 33,692
1995 137,500 130,488 27,847
J. W. Wolf, 1997 155,730 141,715 37,865
Vice President 1996 147,630 124,748 33,649
1995 139,914 132,780 32,381
<FN>
<F1> Includes amounts accrued and deferred pursuant to deferred compensation
agreements with certain employees who were not eligible to participate
in the employee contribution portion of the Profit Sharing and Savings
Plan. These agreements provide for deferral of from 2% to 10% of
salary in 1995; 2% to 15% of salary in 1996, 1997 and 1998; 2% to 10%
of bonus payments in 1995; and 2% to 25% of bonus payments in 1996,
1997 and 1998. Payment of sums deferred will generally be made in
five or ten annual installments commencing on retirement or in a lump
sum on termination of service other than by retirement. Interest is
credited to sums deferred at the rate applicable to the fixed income
account of the Profit Sharing and Savings Plan at the end of each
calendar quarter.
<F2> Bonus paid on March 15th each year under the Company's Management
Incentive Plan with respect to services rendered during the prior
year. The Company's Management Incentive Plan covers all officers of
the Company and other management employees. In accordance with this
Plan, each participant has a guideline incentive, ranging from 20% to
80% of base salary. This guideline is subject to a year-end
adjustment based on performance against Plan goals. The adjustments
are based on objective measurements, such as sales and profits, but
may be varied at the discretion of the president and district vice
presidents. Participants may earn a maximum of 150% of the applicable
guideline.
<F3> Profit sharing contributions accrued for the years indicated. The
profit sharing contribution for 1995 was made on December 29, 1995.
The profit sharing contribution for 1996 was made on March 31, 1997
and the profit sharing contribution for 1997 was made on March 31,
1998. Contributions by the Company
5
<PAGE> 7
under the Profit Sharing and Savings Plan are made at the discretion
of the Board of Directors for eligible employees and, subject to certain
exceptions, are made in proportion to their annual compensation. Except
as otherwise provided in the Profit Sharing and Savings Plan and the
related Trust Agreement, the monies held in trust thereunder are paid to
employees upon termination of employment for any reason including their
retirement or, in the event of their death prior to the complete
distribution of their interests, are paid to their estates or designated
beneficiaries. In addition, the column headed "All Other Compensation"
also includes payments made to the deferred compensation accounts of the
respective individuals based on contribution limitations contained in
Section 401 and 415 of the Internal Revenue Code. In 1997, $44,910 was
credited to Mr. Hall's deferred compensation account in this regard.
Similarly, $15,384, $11,408, $9,694 and $10,585 were credited to the
deferred compensation accounts of Messrs. Seaton, Haney, Reynolds and
Wolf, respectively.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the members of the
Compensation Committee of the Board of Directors were Messrs. Haney, Harper,
Reynolds, Seaton and Van Pelt, all of whom were officers and employees of the
Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee establishes the general compensation
policies of the Company and makes specific recommendations to the Board of
Directors with respect to such compensation, including the chief executive
officer's salary.
The chief executive officer's salary and salary range, as well as the
salaries and ranges for all other employees, including those officers
identified in the Summary Compensation Table, are established in consultation
with retained professional compensation consultants after consideration of
data developed by the Company's Human Resources Department. The data examined
includes information collected from federal and state agencies, trade
associations, compensation specialists, employment consultants and
marketplace observations.
The chief executive officer's bonus, as well as bonuses for all other
exempt employees including those listed in the Summary Compensation Table,
are determined by reference to the Management Incentive Plan which has been
an integral part of the Company's compensation practice for over twenty
years. The Plan provides that employees can earn as much as 30% of salary as
a bonus at the lower end of the exempt salary scale to 120% of salary as a
bonus at the level of president and chief executive officer. The specific
bonus level is determined by each operating unit's performance measured
against objectives established at the beginning of each year. The chief
executive officer's bonus, as well as the bonuses of the other officers named
in the Summary Compensation Table, are determined by aggregating the
performance of each operating unit and measuring this total against the
aggregated objectives. Performance measures included in the Plan are a
percentage of budget attainment for sales and net profit and return on sales.
/s/ R. H. Haney J. R. Seaton
G. W. Harper J. F. Van Pelt
R. A. Reynolds, Jr.
6
<PAGE> 8
PENSION PLAN
The Company has a qualified defined benefit pension plan covering all
eligible full-time employees. Employees become fully vested after 5 years of
service. Generally, employees may retire and begin receiving pensions at the
age of 65, or earlier if they are at least age 60 with 20 years of credited
service. Prior to January 1, 1993, employees could retire and begin receiving
pensions at age 55 with 20 years or more of credited service, at age 50 with
25 years of credited service, or any age with 30 years of credited service
under the plan. Employees who had completed 15 years of service on December
31, 1992 may still retire and receive their entire benefit under the pre-1993
rule, but employees who had not completed 15 years of service on December 31,
1992 can receive only the benefit accrued on December 31, 1992 under the old
rule, and the benefit accrued after that date under the new rule.
The following table sets forth annual benefits which would become
payable under the Company's pension plan or supplemental benefits plan based
on certain assumptions as to covered compensation and years of credited
service without giving effect to any applicable Social Security offset.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
Covered --------------------------------------------------------------------------------
Compensation 20 25 30 35 40
- ------------ -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
$200,000 $ 40,000 $ 50,000 $ 60,000 $ 70,000 $ 80,000
$300,000 $ 60,000 $ 75,000 $ 90,000 $105,000 $120,000
$400,000 $ 80,000 $100,000 $120,000 $140,000 $160,000
$600,000 $120,000 $150,000 $180,000 $210,000 $240,000
$800,000 $160,000 $200,000 $240,000 $280,000 $320,000
</TABLE>
An employee's annual pension income is based on the employee's average
covered compensation during the sixty consecutive months preceding retirement
in which earnings were highest, multiplied by one percent for each year of
credited service and offset by an amount which cannot exceed limitations
imposed by the Internal Revenue Code. As of December 31, 1997, the years of
credited service for the executive officers named in the Summary Compensation
Table were as follows: C. L. Hall - 38, J. R. Seaton - 15, R. H. Haney - 35,
R. A. Reynolds, Jr. - 25, and J. W. Wolf - 35. The amounts of salary and
bonus in the Summary Compensation Table are substantially equivalent to
covered compensation under the plan. To the extent that annual benefits
exceed limitations imposed by the Internal Revenue Code of 1986, as amended,
such benefits will be paid out of the general revenues of the Company by
means of a supplemental benefits plan.
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for the Company, the Standard & Poor's Composite Index of 500 Stocks
and the Standard & Poor's Electrical Equipment Index. The companies included
in the Electrical Equipment Index are AMP Incorporated, Emerson Electric Co.,
General Electric Company, General Signal Corp., Honeywell Inc., Raychem
Corporation, Rockwell International Corp. and Thomas & Betts Corp. The
market value of Graybar stock, in the absence of a
7
<PAGE> 9
public market, assumes continuation of the Company's practice of repurchasing
offered securities at $20.00 per share.
[GRAPH]
<TABLE>
<CAPTION>
===============================================================================================================
1992 1993 1994 1995 1996 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Graybar Electric Co., Inc. $100.00 115.55 127.48 148.97 164.34 189.89
- ---------------------------------------------------------------------------------------------------------------
Electrical Equipment-500 $100.00 120.65 122.06 171.29 235.24 331.52
- ---------------------------------------------------------------------------------------------------------------
S&P 500 Index $100.00 110.08 111.53 153.45 188.68 251.63
===============================================================================================================
</TABLE>
Assumes $100 invested on December 31, 1992 and reinvestment of
dividends (including the $1.10 cash dividend paid by the Company on January
4, 1993).
APPROVAL OF COMMON STOCK PURCHASE PLAN
The Board of Directors will submit to the Annual Meeting of
Shareholders for shareholder approval the Common Stock Purchase Plan (the
"Plan") pursuant to which the Company proposes to offer to eligible
employees, including officers, of the Company the right to subscribe for up
to 1,000,000 shares of Common Stock of the Company at a price of $20 per
share. The offering will afford an opportunity to eligible employees of the
Company to purchase shares of Common Stock in accordance with the policy
formulated when the Company became an employee-owned company through
acquisition by its then employees of all of its Common Stock from Western
Electric Company, Incorporated. Because holders of Common Stock or
8
<PAGE> 10
Voting Trust Certificates who are not active employees of the Company will not
be entitled to participate in the Plan, with the exception of employees who
retire on a pension (except a deferred pension) on or after March 31, 1998
and prior to September 30, 1998, the percentage of the outstanding shares of
Common Stock of the Company beneficially owned by retired employees will
decrease as a result of the Plan.
It is presently contemplated that the subscription period under the
Plan will run from October 12, 1998 to December 11, 1998. Subscribers will
have the option of paying in full on or before January 22, 1999 for all
shares subscribed for, or agreeing to make payments for all or a portion of
the shares subscribed for in monthly installments through payroll deductions
(or direct monthly payments in certain cases where subscribers are no longer
on the Company's regular payroll) over a 34-month period. Shares paid for in
full will be issued as of January 22, 1999. Shares paid for in installments
will be issued quarterly to the extent they have been fully paid for.
Details with respect to the terms of the offering and the number of
shares for which each eligible employee of the Company is entitled to
subscribe are set forth in the Plan, a copy of which is annexed to this
Information Statement as Exhibit A. The Plan was unanimously approved by the
Board of Directors of the Company on March 12, 1998.
Shares of Common Stock which are subscribed for by eligible employees
pursuant to the terms of the Plan will upon issuance be deposited in the
Voting Trust established by the Voting Trust Agreement and Voting Trust
Certificates will be issued in respect thereof, except that eligible
employees who are shareholders and who have not elected to participate in the
Voting Trust Agreement will receive stock certificates representing the
shares for which they subscribed.
All shares of Common Stock of the Company will be issued and held
subject to all the terms, provisions, restrictions and qualifications set
forth in the Restated Certificate of Incorporation of the Company, as
amended, which provides, among other things, for options to the Company to
repurchase shares of its Common Stock at the price at which such shares were
issued, with appropriate adjustment for current dividends, in the event any
holder of Common Stock shall desire to sell, transfer or otherwise dispose of
any of his shares of such Common Stock, or in the event of his death or in
the event of termination of his employment other than by retirement on a
pension (except a deferred pension). The Voting Trust Certificates issued
and to be issued under the Voting Trust Agreement provide, in substance, that
every Voting Trust Certificate is issued and held upon and subject to the
same terms and conditions upon which Common Stock of the Company is issued
and held. Each subscriber by executing a Subscription Agreement will
specifically agree to be bound by the provisions of the Restated Certificate
of Incorporation and will agree that all Common Stock or Voting Trust
Certificates held by such subscriber shall be subject to such provisions.
The entire consideration to be received for the shares of Common Stock
sold pursuant to the Plan is to be credited to the treasury stock account in
the case of shares held in the treasury of the Company and to the common
stock account in the case of unissued shares. As and when payments are made
under subscriptions, they will be placed in the general funds of the Company.
The Plan provides that no corporate action which would result in a
distribution of Common Stock or other assets of the Company to its
shareholders (except the payment of cash dividends or the issuance of
9
<PAGE> 11
shares of Common Stock pursuant to the installment payment method) will be taken
after January 22, 1999 without first giving notice of such proposed action to
subscribers who shall not then have completed their installment payments on
the Common Stock for which they have subscribed. Such subscribers shall
thereupon have 20 days to accelerate their payments on such Common Stock in
order that they may obtain the benefits of such action. Subscribers who have
not completed their installment payments have the right at any time (except
during the first ten days of March, June, September and December) to pay the
full amount due, and upon any such accelerated payment certificates will be
issued representing the fully paid shares.
It is anticipated that each of the nominees will acquire a beneficial
interest in all or a part of the shares of the Common Stock of the Company
for which he will be entitled to subscribe pursuant to the Plan. The number
of shares for which each of the nominees and all nominees and officers as a
group will be entitled to subscribe under the Plan will not exceed the
following to any significant degree.
<TABLE>
<CAPTION>
NUMBER NUMBER
OF OF
NAME SHARES NAME SHARES
- ---- ------ ---- ------
<C> <C> <C> <C>
A. A. Brzoski, Jr. 1,080 I. Orloff 1,023
T. F. Dowd 1,224 R. A. Reynolds, Jr. 1,536
T. S. Gurganous 864 J. R. Seaton 1,617
C. L. Hall 2,748 C. R. Udell 1,056
R. H. Haney 1,536 J. F. Van Pelt 1,386
G. W. Harper 1,290 J. W. Wolf 1,365
W. L. King 984
G. J. McCrea 894 All directors, nominees and officers
R. D. Offenbacher 960 as a group (31 Persons) 33,056
</TABLE>
The last Common Stock Purchase Plan of the Company, in connection with
which 450,402 shares of Common Stock were subscribed for, ran from October 9,
1995 to December 8, 1995. Under such plan, each of the nominees who were
entitled to participate in such plan and all nominees and officers as a group
who were so entitled purchased the number of shares set forth below:
<TABLE>
<CAPTION>
NUMBER NUMBER
OF OF
NAME SHARES NAME SHARES
- ---- ------ ---- ------
<C> <C> <C> <C>
A. A. Brzoski, Jr. 825 I. Orloff 897
T. S. Gurganous 618 R. A. Reynolds, Jr. 900
C. L. Hall 1,278 J. R. Seaton 1,332
R. H. Haney 990 C. R. Udell 792
G. W. Harper 954 J. F. Van Pelt 1,068
W. L. King 750 J. W. Wolf 1,023
G. J. McCrea 723 All directors, nominees and officers
R. D. Offenbacher 693 as a group (30 Persons) 22,091
</TABLE>
10
<PAGE> 12
The affirmative vote of the holders of at least a majority of the
issued and outstanding shares of Common Stock is required to approve the
Plan. The Voting Trustees have indicated they will vote the shares of Common
Stock held by them in favor of, and thereby approve, the Plan. Upon
shareholder approval, the Company and the Voting Trustees intend to file a
Registration Statement with the Securities and Exchange Commission with
respect to the shares of Common Stock to be offered under the Plan and the
Voting Trust Certificates to be issued in respect thereof. The offering will
be made pursuant to such Registration Statement, as amended, after it has
been declared effective by the Commission. The expenses of the offering will
be paid by the Company.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young audited the financial statements of the Company and its
subsidiaries in 1997 and will be considered for reappointment by the Board of
Directors in June 1998. A representative of Ernst & Young is not expected to
be present at the Annual Meeting of Shareholders.
MISCELLANEOUS
Effective October 1, 1997, the Company renewed insurance from the
Federal Insurance Company (a member of the Chubb Group), a portion of which
insures employees including directors and officers against liabilities
imposed on them as a result of their employment with the Company at an annual
cost to the Company through September 30, 1998 of $69,388.
The management of the Company knows of no other matters to be brought
before the meeting.
By Order of the Board of Directors
THOMAS F. DOWD
Secretary
May 13, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE YEAR 1997 WILL BE MADE AVAILABLE UPON WRITTEN
REQUEST ADDRESSED TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICES.
11
<PAGE> 13
EXHIBIT A
COMMON STOCK PURCHASE PLAN
DATED AS OF OCTOBER 12, 1998
RELATING TO SHARES OF COMMON STOCK OF
GRAYBAR ELECTRIC COMPANY, INC.
---------------------------
1. EMPLOYEES ENTITLED TO SUBSCRIBE.
Each person who on September 30, 1998 was an employee of Graybar
Electric Company, Inc. (the "Company") who had been employed by the Company
since March 31, 1998, and each person who on March 31, 1998 was an employee
of the Company and who retired on a pension (except a deferred pension) on or
after March 31, 1998 and prior to September 30, 1998, is entitled to
subscribe for the number of shares of the Company's common stock, par value
$1.00 per share with a stated value of $20.00 per share (the "Common Stock"),
determined pursuant to Section 3, at the price of $20.00 per share. Such
persons are sometimes referred to as "eligible employees" and after executing
a Subscription Agreement are referred to as "subscribers"; provided, however,
that the term "eligible employees" shall not be deemed to include: (a) those
who receive pensions (other than persons who on March 31, 1998 were employees
who retired on a pension (except a deferred pension) on or after March 31,
1998 and prior to September 30, 1998), or retainers, whether or not currently
employed, (b) those who are employed solely on a contract basis or who by
written agreement have released all stock subscription rights, or (c) those
included in a collective bargaining unit represented by a labor organization
where the agreement between the Company and the labor organization excludes
such persons from subscribing for Common Stock of the Company.
2. PERIOD FOR AND METHOD OF MAKING SUBSCRIPTION.
Any eligible employee desiring to subscribe for shares of Common Stock
shall sign a Subscription Agreement in the form approved for such purpose and
file it, on or before December 11, 1998, with the Secretary at the executive
offices of the Company, P.O. Box 7231, St. Louis, Missouri 63177. No
subscription shall be effective and binding unless and until accepted by the
Company at its executive offices. No subscription will be accepted after the
close of business on December 11, 1998.
3. DETERMINATION OF NUMBER OF SHARES FOR WHICH AN ELIGIBLE EMPLOYEE IS
ENTITLED TO SUBSCRIBE.
The maximum number of shares for which an eligible employee may
subscribe shall be determined as hereinafter provided:
3.1. The Subscription Right of each eligible employee, subject to
increase as provided in Section 3.2 and reduction as provided in Section 3.3,
shall be one share for each $350 of his annual salary rate in effect on March
31, 1998; fractional shares resulting from this computation shall be
disregarded.
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<PAGE> 14
3.2. The number of shares determined in accordance with Section 3.1
shall, in the case of eligible employees who on March 31, 1998 were in the
grade classifications listed below, be increased by the following
percentages:
3.2.1. Eligible Employees in Grade 20 or above--200%;
3.2.2. Eligible Employees in Grades 17, 18 and 19--150%;
3.2.3. Eligible Employees in Grades 15 and 16 and Grade
N--125%;
3.2.4. Eligible Employees in Grade 14 or below who are
covered either by the Management Incentive Plan or the Sales Incentive Plan
and Eligible Employees in Grades J, K, L and M --75%; and
3.2.5. All other Eligible Employees--25%.
Fractional shares resulting from the above computations shall be disregarded.
3.3 In the event the aggregate number of shares subscribed for by all
eligible employees exceeds 1,000,000, the number of shares which each
eligible employee will be entitled to purchase shall be reduced to a number
determined by multiplying the number of shares such eligible employee has
subscribed for (but in no event more than the number to which such employee
is entitled to subscribe under this Section) by a fraction, the numerator of
which is 1,000,000 and the denominator of which is the aggregate number of
shares subscribed for by all eligible employees. Fractional shares resulting
from such computation shall be disregarded.
4. PAYMENTS FOR ISSUANCE OF STOCK.
Payments for shares subscribed for may be made pursuant to either or
both of the following methods:
4.1. Method A--payment in full on or before January 22, 1999 for all
or a portion of the shares subscribed for, in which case the shares paid for
will be issued as of January 22, 1999.
4.2. Method B--payments in monthly installments, at the rate of $.59
for each share subscribed for and paid for under Method B in each of the 33
months commencing January 1999, and at the rate of $.53 for each such share
in the 34th month, in which case the Company shall issue as of the tenth day
of March, June, September and December of each year, beginning in March 1999,
a share certificate to the Voting Trustees or Non-Participating Shareholders
(as such terms are defined in Section 5.2), whichever is appropriate, for
such number of full shares of Common Stock as have been fully paid for as of
the last day of the preceding month.
4.2.1. Payments under Method B shall be made, in the case of
a subscriber on the Company's payroll, through payroll deductions authorized
by the subscriber and, in the case of a subscriber
A-2
<PAGE> 15
who is no longer on the Company's payroll but whose subscription has not been
cancelled in accordance with Section 5.4, through pension deductions authorized
by the subscriber or monthly payments made directly by such person to the
Treasurer of the Company on or before the last day of each month. Except as
provided in Section 5.4, subscriptions made under Method B and the obligations
of subscribers to make full payment for all shares subscribed for (including any
authorization to the Company to make payroll deductions) shall be irrevocable.
4.2.2. No interest shall be paid on amounts deducted from a
participant's salary or pension or paid directly to the Treasurer under
Method B.
4.2.3. A subscriber under Method B, at his option exercised
at any time except during the first ten days of March, June, September or
December, may pay the balance due on all or any portion of the number of
shares subscribed for pursuant to Method B, and upon such payment a share
certificate shall be issued for the number of shares for which payment is so
made.
5. CONDITIONS OF SUBSCRIPTION.
Each subscription for shares of Common Stock hereunder is expressly
conditioned, among other things, upon the following terms, to all of which
every subscriber by executing a Subscription Agreement agrees:
5.1. Right to receive stock not transferable.
No subscriber may sell, pledge or in any manner alienate or suffer to
be alienated his right to receive Voting Trust Certificates or stock
certificates representing the shares of Common Stock subscribed for by him. A
violation of this provision shall constitute a withdrawal by the subscriber
from his Subscription Agreement, in which event the only right of the
subscriber or his assignee shall be to have the Company return to the person
entitled thereto the total amount paid under said Subscription Agreement.
Such return shall operate as a cancellation and satisfaction of all rights
under the Subscription Agreement.
5.2. Issuance of stock certificates and Voting Trust Certificates.
A stock certificate or certificates representing the shares subscribed
for and purchased pursuant to this Plan by subscribers who are or who, upon
executing a Subscription Agreement, become parties to the Voting Trust
Agreement (the "Voting Trust Agreement") dated as of April 1, 1997, relating
to shares of Common Stock of the Company, shall be issued to, and deposited
by the Company with, the Voting Trustees thereunder (the "Voting Trustees")
in accordance with the provisions of Section 4.05 of the Voting Trust
Agreement. The Voting Trustees will issue Voting Trust Certificates to such
subscribers representing the number of shares subscribed for and purchased by
them. Stock certificates representing the shares subscribed for and purchased
pursuant to this Plan by subscribers who are shareholders prior to such
subscription and who are not parties to the Voting Trust Agreement
("Non-Participating Shareholders") shall be issued and delivered directly to
such subscribers.
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<PAGE> 16
5.3. Subscribers bound by provisions in Restated Certificate of
Incorporation, as amended.
All shares of Common Stock subscribed for shall be issued and held
subject to all the terms, provisions, restrictions and qualifications set
forth in the Restated Certificate of Incorporation, as amended, of the
Company, which provides, among other things, that the Company has the option
to repurchase outstanding shares of Common Stock at the price at which such
shares were issued with appropriate adjustment for current dividends in the
event any shareholder shall desire to sell, transfer or otherwise dispose of
any of his shares, or in the event of his death (in which case the option is
exercisable beginning one year after the date of death) or in the event of
termination of his employment other than by retirement on a pension.
Eligibility for or entitlement to a deferred pension under the Company's
"Plan for Employees' Pensions, Disability Benefits and Death Benefits" does
not constitute a retirement on a pension for purposes of this Section 5.3 or
for purposes of the Restated Certificate of Incorporation. The Voting Trust
Certificates issued and to be issued under the Voting Trust Agreement
provide, in substance, that every Voting Trust Certificate is issued and held
upon and subject to the same terms and conditions upon which shares of Common
Stock are issued and held. Each subscriber by executing a Subscription
Agreement specifically agrees to be bound by all provisions of this Section
5.3 and agrees that all stock certificates or Voting Trust Certificates owned
by such subscriber shall be subject to such provisions.
5.4. Cancellation of subscription on termination of employment.
In the event of the death of a subscriber or the termination of his
employment other than by retirement on a pension (except a deferred pension)
before any or all of the shares of Common Stock subscribed for by him are
issued, his subscription shall be cancelled as to shares not then issued, and
he or his estate shall be entitled to receive the total amount of the
purchase price, if any, then held by the Company for his account for unissued
shares under this Plan, without interest. Payment of such amount by the
Company shall operate as a cancellation and satisfaction of all rights under
his Subscription Agreement. Refund of any balance due employees who terminate
service shall be made in the quarter following termination. Eligibility for
or entitlement to a deferred pension under the Company's "Plan for Employees'
Pensions, Disability Benefits and Death Benefits" does not constitute a
retirement on a pension for purposes of this Section 5.4.
5.5. Determination of Board of Directors to control.
The determination of the Board of Directors of the Company upon any
question concerning the application or interpretation of any of the
provisions of this Plan or of the Subscription Agreement shall be final, and
no director shall incur any responsibility by reason of any error of fact or
of law or of any matter or thing done or suffered or omitted to be done in
connection with any such determination or interpretation or otherwise, except
for his own willful misconduct.
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<PAGE> 17
6. CERTAIN CORPORATE ACTION NOT TO BE TAKEN WITHOUT NOTICE.
The Company will not take any action after January 22, 1999 which would
result in a distribution to its shareholders of shares of Common Stock or
other assets (except the payment of cash dividends on shares of Common Stock
or the issuance of shares of Common Stock pursuant to installment payments
made under Section 4.2) without first giving notice of such proposed action
to all subscribers who shall not then have paid their subscriptions in full
and granting such subscribers an opportunity within such time (not to be less
than 20 days) and in such manner as the Board of Directors may determine to
be reasonable, to complete their payments on all shares subscribed for by
them and thereby to become shareholders entitled to the benefit of and
subject to such action.
7. RIGHT OF THE COMPANY TO ISSUE AND SELL ADDITIONAL SHARES OF COMMON
STOCK.
Nothing in this Plan shall be construed to limit or restrict in any way
the right of the Company from time to time hereafter to sell any of the
shares offered pursuant to this Plan and not issued pursuant to subscriptions
made hereunder or any shares that may now or hereafter be authorized or may
now or hereafter be reacquired by the Company upon exercise of the repurchase
option described in Section 5.3 or otherwise.
A-5
<PAGE> 18
Set forth below is the form of the Subscription Agreement approved for
use in connection with the Plan:
SUBSCRIPTION AGREEMENT
1. I hereby subscribe to purchase ------ shares of common stock, par
value $1.00 per share with a stated value of $20.00 per share (the "Common
Stock"), of Graybar Electric Company, Inc., a New York corporation (the
"Company"), under and pursuant to the terms and conditions stated below and
of the Common Stock Purchase Plan dated as of October 12, 1998 of the Company
(the "Plan"). I agree to pay $20.00 for each such share as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Method A -- Payment in full on or before January 22, 1999 ----------------
Method B -- Payment in monthly installments. Upon acceptance of this
subscription, (i) I direct that, during such time as I
shall be on the Company's payroll, periodic deductions
shall be made from my salary in accordance with the Plan
and applied to the purchase price of the shares subscribed
for until such shares are fully paid for or until my
subscription is cancelled in accordance with Section 5.4
of the Plan; and (ii) I promise that during such time as I
shall no longer be on the Company's payroll I will make
monthly payments either through authorized pension
deductions or directly to the Treasurer of the Company in
accordance with the Plan, to be applied to the purchase
price of the shares subscribed for by me, until such
shares are fully paid for or until my subscription is
cancelled in accordance with Section 5.4 of the Plan ----------------
Total shares subscribed for ================
</TABLE>
2. I understand that the number of shares I hereby subscribe for may
be reduced as provided in Section 3.3 of the Plan.
3. If I am a party to the Voting Trust Agreement dated as of April
1, 1997 (the "Voting Trust Agreement") relating to shares of Common Stock of
the Company, or if I become a party to the Voting Trust Agreement pursuant to
Section 4 of this Subscription Agreement, I agree and direct that
certificates for the shares of Common Stock purchased by me pursuant hereto,
when issuable pursuant to the Plan, be issued to and deposited with the
Voting Trustees under the Voting Trust Agreement who will issue Voting Trust
Certificates in my name for the certificates so deposited.
A-6
<PAGE> 19
4. This provision does not apply to subscribers who presently are
parties to the Voting Trust Agreement or to subscribers who presently are
shareholders of record of Common Stock and are not parties to the Voting
Trust Agreement.
(a) I hereby represent and warrant that I have received a copy of the
Voting Trust Agreement, that I am familiar with its terms and
provisions and that I desire to become a party to the Voting Trust
Agreement and be bound thereby.
(b) I hereby authorize J. H. Kipper or C. B. Temple as my attorney-
in-fact, both with full power of substitution, to execute and deliver
the Voting Trust Agreement on my behalf.
(c) I recognize that this power of attorney constitutes an election
to participate in the Voting Trust Agreement, which is given in
consideration of a similar election made by other employees of the
Company and is therefore irrevocable.
5. I have read the Plan and, for the considerations stated therein
and for the privilege of subscribing for such shares of Common Stock, I agree
to be bound by all of the provisions of the Plan, including without
limitation the provisions of Section 5 of the Plan.
6. I request and direct that any Voting Trust Certificates or stock
certificates issued in my name pursuant to this subscription be issued as
follows:
-----------------------------------------
(PLEASE PRINT OR TYPE FIRST NAME IN FULL,
MIDDLE INITIAL AND SURNAME)
-----------------------------------------
SIGNATURE OF SUBSCRIBER
Dated , 1998
----------------------
A-7
<PAGE> 20
---------
G R A Y B A R
ELECTRIC COMPANY, INC.
INFORMATION STATEMENT
MAY 13, 1998
<PAGE> 21
APPENDIX
Page 8 of the printed information statement contains a Total Shareholders
Returns graph. The information contained within the graph is restated in the
table immediately following the graph.
