<PAGE> 1
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 240.14a-11(c) or 240.14a-12
MERCURY AIR GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
MERCURY AIR GROUP, INC.
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------
TO BE HELD DECEMBER 4, 1997
To the Shareholders of Mercury Air Group, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of the Shareholders (the
"Meeting") of Mercury Air Group, Inc. (the "Company") will be held on December
4, 1997 at 10:00 o'clock a.m. Pacific Standard Time at the principal office of
the Company located at 5456 McConnell Avenue, Suite 100, Los Angeles, California
90066, for the following purposes:
1. To elect six directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified.
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on October 24, 1997 which has been fixed as the record date for the
Meeting, shall be entitled to notice of and to vote at the Meeting and any
adjournment or postponement thereof.
Shareholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, please sign, date and return the
enclosed proxy to ensure that your shares are represented at the Meeting.
Shareholders who attend the Meeting may vote their shares personally even though
they have sent in their proxies.
Randolph E. Ajer
Secretary
Los Angeles, California
October 28, 1997
1
<PAGE> 3
MERCURY AIR GROUP, INC.
5456 MCCONNELL AVENUE
SUITE 100
LOS ANGELES, CALIFORNIA 90066
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 4, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mercury Air Group, Inc., a New York
corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
of the Company (the "Meeting") which will be held on December 4, 1997 at 10:00
o'clock a.m. Pacific Standard Time at the principal offices of the Company
located at 5456 McConnell Avenue, Suite 100, Los Angeles, California 90066, and
any adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this Proxy
Statement.
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this Proxy Statement,
the proxy and any additional information furnished to shareholders. Copies of
solicitation material will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward proxy materials to such beneficial owners. The Company may
reimburse persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
Proxies duly executed and received in time for the Meeting will be voted
at the Meeting in accordance with the instructions on the proxies. Unless
previously revoked or unless other instructions are on the proxy, proxies will
be voted at the Meeting: (a) for the six director nominees named herein, and (b)
as determined by the persons holding the proxies with regard to all other
matters which come before the Meeting.
The approximate date on which this Proxy Statement and accompanying
proxy will first be sent or given to shareholders is October 28, 1997.
VOTING SECURITIES
At the record date for the Meeting, the close of business on October 24,
1997 (the "Record Date"), the Company had outstanding 7,140,351 shares of common
stock, par value $0.01 ("Common Stock"). Each shareholder is entitled to one
vote for every share of Common Stock standing in his name as of the Record Date.
A shareholder who has given a proxy may revoke it at any time before it is
exercised at the Meeting by filing with the Secretary of the Company a written
notice of revocation, by executing and delivering a subsequent proxy bearing a
later date, or by attending the Meeting and voting in person. The presence at
the Meeting or any adjournments or postponements thereof, in person or by proxy,
of the holders of record of one-third of the shares of Common Stock will
constitute a quorum for the transaction of business. Shareholders who either (a)
specifically abstained from voting on one or more matters by so marking their
ballot or proxy card (abstentions) or (b) are nominees holding shares for
beneficial owners who, although they may have voted on certain matters at the
meeting pursuant to discretionary authority or instructions from the beneficial
owners, have not voted on the specific matter in question because they have not
received instructions from the beneficial owners with respect to such matter and
they do not have discretionary authority with respect thereto (broker non-votes)
will be considered as present at the Meeting for purposes of determining whether
a quorum exists with respect to all other matters considered at the Meeting. Mr.
Seymour Kahn, Chairman of the Board and Chief Executive Officer of the Company
and the beneficial owner of approximately 26.7% of the outstanding Common Stock,
has indicated that he intends to vote for the six director nominees named
herein.
<PAGE> 4
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors has nominated six individuals for election to the
Company's Board of Directors. The solicited proxies may be voted to fill only
the six vacancies on the Board of Directors for which nominees are named in this
Proxy Statement. Each director elected will hold office until the next annual
meeting of shareholders and until his successor is elected and qualified or
until the director's earlier death, resignation or removal. All of the nominees
are currently directors of the Company previously elected by the shareholders.
Unless otherwise indicated thereon, all proxies received will be voted
in favor of the election of the indicated six nominees of the Board of Directors
named below as directors of the Company. Should any of the nominees not remain a
candidate for election on the date of the Meeting (which contingency is not now
contemplated or foreseen by the Board of Directors), proxies solicited hereunder
may be voted for substitute nominees selected by the Board of Directors.
Directors shall be elected by a plurality of the votes cast by the Common Stock
at the Meeting.
INFORMATION REGARDING NOMINEES
Listed below are the persons who have been nominated to serve as
directors for the ensuing year, together with their ages and all Company
positions held by them.
<TABLE>
<CAPTION>
NAME Age Positions
- ---- --- ---------
<S> <C> <C>
Seymour Kahn 70 Chairman of the Board and Chief Executive
Officer of Mercury
Joseph A. Czyzyk 50 President, Chief Operating Officer and
Director of Mercury
Philip J. Fagan, Jr., M.D. 53 Director
Frederick H. Kopko, Jr. 42 Director
William G. Langton 50 Director
Robert L. List 60 Director
</TABLE>
Seymour Kahn served as President of Mercury from 1969 until 1989 and has
served as Chief Executive Officer and Chairman of the Board of Directors of
Mercury since 1974.
Joseph A. Czyzyk has been President, Chief Operating Officer and a
Director of Mercury since November 1994. Mr. Czyzyk also served as President of
Mercury Service, a division of Mercury which sells aviation fuel and provides
refueling services for commercial aircraft, from August 1985 until August 1988,
and President of Mercury Air Cargo, Inc. ("Mercury Air Cargo") from August 1988
until August 1997. Mr. Czyzyk served as an Executive Vice President of Mercury
from November 1990 through November 1994. Pursuant to his employment agreement,
the Board of Directors will continue to nominate Mr. Czyzyk as a candidate for
election to the Board of Directors while Mr. Czyzyk remains employed by Mercury.
See "Employment Agreements".
Philip J. Fagan, Jr., M.D. has been a director of Mercury since
September 1989. Dr. Fagan has been the Chief Executive Officer and President of
the Emergency Department Physicians Medical Group, Inc. since its inception in
1978. Dr. Fagan has also been President of Fagan Emergency Room Medical Group
since its inception in 1989. Both companies are currently located in Burbank,
California.
Frederick H. Kopko, Jr. has been a director of Mercury since October
1992. Mr. Kopko has been a partner in the law firm of McBreen, McBreen & Kopko
since January 1990. Mr. Kopko presently serves on the board of directors of
Butler International, Inc.
William G. Langton has been a director of Mercury since August 1993. Mr.
Langton has been President and Chief Operating Officer of Southern Air
Transport, a provider of a wide range of commercial and supplemental aviation
services, for over ten years.
2
<PAGE> 5
Robert L. List has been a director of Mercury since 1990. Since May
1997, Mr. List has been the President of Hammonds Candies and West Indies Candy
Company based in Denver, Colorado. From December 1989 to August 1992, Mr. List
was President of Yellowstone Environmental Services, Inc. of Phoenix, Arizona,
an environmental/engineering consulting firm. Mr. List serves on the board of
directors of Pancho's Mexican Buffet, Inc.
There were five meetings of the Board of Directors of the Company held
during fiscal 1997, the period from July 1, 1996 through June 30, 1997.
The Audit Committee reviews the internal controls of the Company and the
objectivity of its financial reporting and meets with appropriate Company
financial personnel and the Company's independent public accountants in
connection with these reviews. During fiscal 1997, the Audit Committee consisted
of Messrs. Kopko and List and Dr. Fagan. During fiscal 1997, the Audit Committee
met one time.
The Compensation Committee makes all decisions regarding cash and
non-cash compensation (excluding standard employee benefits) paid or given to
executive officers of the Company; administers the Company's non-cash employee
incentive plans, including stock purchase and stock option grants; negotiates
and approves all employment agreements with executive officers; and negotiates
and approves all transactions between the Company and its executive officers
(whether or not the primary purpose of such transactions are compensatory).
During fiscal 1997, the Compensation Committee consisted of Messrs. Kopko and
List and Dr. Fagan and met three times.
The Board does not have a nominating committee or any other committee
performing a similar function.
During fiscal 1997, each member of the Board of Directors attended at
least 75% of the Board meetings and committee meetings for the committees on
which he served.
In order to be elected, a nominee must receive the vote of a plurality
of the votes cast by the Common Stock at the meeting. Shares may be voted for or
withheld from each nominee. Shares that are withheld and broker non-votes will
have no effect on the outcome of the election because directors will be elected
by a plurality of the shares voted for directors.
THE MERCURY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF COMMON STOCK VOTE FOR THE ELECTION OF ALL NOMINEES.
3
<PAGE> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of October 24,
1997, with respect to the ownership of the Company's Common Stock by: (a) each
director or director nominee of the Company; (b) each executive officer named in
the Summary Compensation Table; (c) the directors, nominees and executive
officers of the Company, as a group; and (d) all persons known to the Company to
be the beneficial owners of more than five percent of its outstanding Common
Stock. As of October 24, 1997, there were 7,140,351 shares of Common Stock
outstanding.
The stock ownership information includes current shareholdings and shares with
respect to which the named individual has the right to acquire beneficial
ownership under options exercisable within 60 days.
<TABLE>
<CAPTION>
NAME AND ADDRESS (1) Shares of Common Percent
- -------------------- ---------------- -------
<S> <C> <C>
Seymour Kahn....................................... 1,957,093(2) 26.7%
Joseph A. Czyzyk................................... 539,448(3) 7.5%
Randolph E. Ajer................................... 190,125(4) 2.7%
Kevin J. Walsh..................................... 171,500(5) 2.4%
William L. Silva................................... 189,062(6) 2.6%
Robert L. List..................................... 30,250(7) *
2685 South Dayton Way #125
Denver, CO 80231
Philip J. Fagan, Jr., M.D.......................... 122,000(8) 1.7%
1130 West Olive Ave.
Burbank, CA 91506
Frederick H. Kopko, Jr............................. 82,500(9) 1.1%
20 North Wacker Drive, Suite 2520
Chicago, IL 60606
William G. Langton................................. 45,375(10) *
2255 Kimberly Parkway, East
Columbus, OH 43232
Heartland Advisors, Inc. .......................... 677,443(11) 8.8%
790 North Milwaukee Street
Milwaukee, WI 53202
FMR Corp........................................... 595,228(12) 7.7%
82 Devonshire Street
Boston, Massachusetts 02109
All directors and executive officers as a
group (9 persons)................................ 2,722,353(13) 35.2%
</TABLE>
- -----------
* Less than one percent.
4
<PAGE> 7
(1) Unless otherwise indicated in the table, the address for each of the
individuals named in the table is 5456 McConnell Avenue, Suite 100, Los Angeles,
California 90066.
(2) Includes 1,140,783 shares held of record by SK Acquisition, Inc., a Delaware
corporation wholly-owned by Mr. Kahn ("SKAI"). Also includes 605,000 shares
owned by four executive officers of Mercury which SKAI holds a proxy to vote and
which are subject to a security interest held by SKAI. See "Certain
Transactions." Includes 151,250 shares issuable to Mr. Kahn upon the exercise of
options exercisable within 60 days from the date hereof, and 45,375 shares
issuable to SKAI upon the exercise of options exercisable within 60 days from
the date hereof. Also includes 14,685 shares held of record by Mr. Kahn's wife,
as to which Mr. Kahn disclaims beneficial ownership.
(3) Includes 31,460 shares issuable upon exercise of options exercisable within
60 days from the date hereof. Includes 151,250 shares beneficially owned by Mr.
Czyzyk for which Mr. Czyzyk has granted a proxy to SKAI and which are subject to
pledges. See "Certain Transactions." Includes 5,376 shares held by Mr. Czyzyk,
as custodian for his children.
(4) Includes 23,750 shares issuable upon exercise of options exercisable within
60 days from the date hereof. Includes 151,250 shares beneficially owned by Mr.
Ajer for which Mr. Ajer has granted a proxy to SKAI and which are subject to
pledges. See "Certain Transactions."
(5) Includes 20,250 shares issuable upon exercise of options exercisable within
60 days from the date hereof. Includes 151,250 shares beneficially owned by Mr.
Walsh for which Mr. Walsh has granted a proxy to SKAI and which are subjected to
pledges. See "Certain Transactions."
(6) Includes 37,812 shares issuable upon exercise of options exercisable within
60 days from the date hereof. Includes 151,250 shares beneficially owned by Mr.
Silva which Mr. Silva has granted a proxy to SKAI and which are subject to
pledges. See "Certain Transactions."
(7) Consists of 30,250 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
(8) Includes 121,000 shares issuable upon exercise of options exercisable within
60 days from the date hereof.
(9) Consists of 82,500 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
(10) Consists of 45,375 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
(11) Based on publicly available information reported on February 12, 1997,
Heartland Advisors, Inc. ("Heartland") is beneficial owner of the 525,000 shares
and bonds convertible into 152,443 shares held in investment advisory accounts
("Advisory Accounts") of Heartland. Heartland has the sole power to vote and
dispose of the shares and bonds owned by the Advisory Accounts.
(12) Based on publicly available information reported on February 14, 1997,
Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary
of FMR Corp., is also a beneficial owner of the 595,228 shares as a result of
acting as an investment advisor to various investment companies (the "Funds").
In addition, FMR Corp., Edward C. Johnson 3d and the Funds, each has the sole
power to dispose of the 595,228 shares owned by the Funds. Through their
ownership of voting common stock and the execution of a shareholder's voting
agreement, Abigal P. Johnson and other members of the Johnson family may be
deemed to be a controlling group with respect to FMR Corp.
(13) Includes 589,022 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
5
<PAGE> 8
EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth in the table below are the names, ages and positions held by
all executive officers of the Company.
<TABLE>
<CAPTION>
NAME Age Positions
- ---- --- ---------
<S> <C> <C>
Seymour Kahn 70 Chairman of the Board and Chief Executive Officer
of Mercury
Joseph A. Czyzyk 50 President, Chief Operating Officer and Director of
Mercury
Randolph E. Ajer 44 Executive Vice President, Chief Financial Officer,
Secretary and Treasurer of Mercury
William L. Silva 47 Executive Vice President of Mercury and Executive
Vice President of Maytag Aircraft Corporation
("Maytag")
Kevin J. Walsh 47 Executive Vice President
</TABLE>
Executive officers of the Company are elected and serve at the
discretion of the Board of Directors. Set forth below is a brief description of
the business experience for the previous five years of all executive officers
other than Messrs. Kahn and Czyzyk, who are also directors and whose business
experiences are described above under the caption "Information Regarding
Nominees."
Randolph E. Ajer has been Chief Financial Officer of Mercury since 1987
and Secretary and Treasurer since May 1985. Mr. Ajer served as a director of
Mercury from September 1989 until December 1990. He was appointed an Executive
Vice President of Mercury in November 1990.
William L. Silva served as Director of Operations of Maytag from October
1982 to October 1987 and was appointed Vice President of Maytag in November
1987. Since June 1992, Mr. Silva has been an Executive Vice President of Maytag.
Mr. Silva became an Executive Vice President of Mercury in August 1993.
Kevin J. Walsh served as Vice President and then Senior Vice President
of Maytag from 1987 to April 1996. Since January 1992, Mr. Walsh has been
managing the Mercury Service division. Mr. Walsh was appointed an Executive Vice
President of Mercury in November 1990. Mr. Walsh has been employed by Mercury in
various capacities since 1972.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid or accrued by
the Company for the Chairman of the Board and Chief Executive Officer and for
each of the four additional most highly compensated executive officers
(collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
AWARDS PAYOUTS
------------------------
ANNUAL COMPENSATION SECURITIES LONG-TERM
FISCAL ----------------------- UNDERLYING COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY(2)($) (BONUS($) OPTIONS(#) PAYOUTS($) COMPENSATION(3)($)
- --------------------------- ------- ------------ --------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Seymour Kahn 1997 350,000 213,000 -0- -0- 11,871(4)
Chairman of the Board 1996 350,000 248,000 -0- -0- 15,737(5)
1995 300,000 408,000 -0- -0- 14,362
Joseph A. Czyzyk 1997 325,000 123,000 -0- -0- 557(6)
President 1996 325,000 99,500 -0- -0- 493(7)
1995 325,000 136,000 -0- -0- 2,030
Randolph E. Ajer 1997 186,825 131,000 -0- -0- 465(8)
Executive Vice President 1996 186,825 155,000 -0- -0- 407(9)
1995 184,000 258,000 -0- -0- 1,382
Kevin J. Walsh 1997 212,813 158,000 -0- -0- 260(10)
Executive Vice President 1996 212,813 -0- -0- -0- 248(11)
1995 210,000 40,000 -0- -0- 1,463
William L. Silva 1997 159,000 61,000 -0- -0- 475(12)
Executive Vice President 1996 105,000 -0- -0- -0- 425(13)
1995 102,917 37,000 -0- -0- 410
</TABLE>
- ------------
(1) The period July 1, 1994 through June 30, 1995 is referred to as Fiscal Year
1995; and the period July 1, 1995 through June 30, 1996 is referred to as Fiscal
Year 1996; and the period July 1, 1996 through June 30, 1997 is referred to as
Fiscal Year 1997.
(2) Includes and has been restated to include loan forgiveness with respect to
Mercury financed purchases of Common Stock. See "Certain Transactions."
(3) Amounts reflected include Mercury's contributions to a 401(k) Plan
maintained for the benefit of all employees and premiums paid for life insurance
policies to the extent such policies are for the benefit of an executive
officer's designated beneficiary.
(4) Consists of 401(k) contributions and life insurance premiums in the amounts
of $250 and $11,621, respectively.
(5) Consists of 401(k) contributions and life insurance premiums in the amounts
of $200 and $15,537, respectively.
(6) Consists of 401(k) contributions and life insurance premiums in the amounts
of $250 and $307, respectively.
(7) Consists of 401(k) contributions and life insurance in the amounts of $200
and $293, respectively.
(8) Consists of 401(k) contributions and life insurance premiums in the amounts
of $250 and $215, respectively.
(9) Consists of 401(k) contributions and life insurance premiums in the amounts
of $200 and $207, respectively.
(10) Consists of life insurance premiums.
(11) Consists of life insurance premiums.
(12) Consists of 401(k) contributions and life insurance premiums in the amounts
of $250 and $225, respectively.
(13) Consists of 401(k) contributions and life insurance premiums in the amounts
of $200 and $225, respectively.
7
<PAGE> 10
No named executive officer was granted options during fiscal 1997.
The following table sets forth information regarding option exercises
during fiscal 1997, as well as the number and total of in-the-money options at
June 30, 1997, for each of the named executive officers:
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(3)(4)
SHARES ------------------------- ------------------------
ACQUIRED ON
NAME EXERCISE(#) VALUE REALIZED($)(3)(3) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Seymour Kahn........ -0- -0- 196,625/-0-(5) 835,352/-0-(5)
Joseph A. Czyzyk.... -0- -0- 31,460/-0- 153,571/-0-
Randolph E. Ajer.... -0- -0- 23,750/-0- 113,770/-0-
Kevin J. Walsh...... 10,000 42,279 20,250/-0- 97,004/-0-
William L. Silva.... -0- -0- 37,812/-0- 161,022/-0-
</TABLE>
- -----------
(1) As adjusted for a 5-for-4 stock split effective April 11, 1997.
(2) In accordance with the rules of the Securities and Exchange Commission, the
amounts set forth in the "Value Realized" column of this table are calculated by
subtracting the exercise price from the fair market value of the underlying
Common Stock on the exercise date. The amounts reported thus reflect the
increase in the price of Mercury's common stock from the option grant date to
the option exercise date, but do not necessarily reflect actual proceeds
received upon option exercises.
(3) For purposes of this table, fair market value is deemed to be the average of
the high and low Common Stock price reported by the American Stock Exchange
Composite Transactions on the date indicated.
(4) Based upon a fair market value of $6.2813 per share at June 30, 1997.
(5) Includes 45,375 options issued to SKAI, a corporation wholly-owned by
Seymour Kahn.
EMPLOYMENT AGREEMENTS
Mr. Kahn has an employment agreement with Mercury dated as of December
1, 1993 pursuant to which Mercury will employ him as Chairman of the Board and
Chief Executive Officer for a three year period with automatic one year
extensions at the end of each year unless either party terminates the agreement
in writing prior to such renewal. Under the employment agreement, Mr. Kahn's
annual compensation is $367,500 per year.
If Mr. Kahn is disabled for more than six weeks while employed, his
compensation will be reduced by 50%. If Mr. Kahn is disabled for more than
twelve months, Mercury may terminate his employment with a severance payment
equal to his salary for the lesser of one year or the remaining term of the
employment agreement. If Mr. Kahn's employment is terminated without cause,
Mercury will be obligated to pay him all amounts which would otherwise be paid
to him over the remaining term of the employment agreement. Mr. Kahn may
voluntarily terminate the employment agreement and receive all amounts which
would otherwise be paid to him over the remaining term of the employment
agreement if any of the following events occurs without Mr. Kahn's written
consent, including: (i) any person gains sufficient control over the voting
stock of Mercury so as to control Mercury or the election of a majority of the
Board of Directors, (ii) Mercury is acquired by another entity, either through
the purchase of Mercury's assets or stock or a combination thereof, or (iii)
Mercury is merged or consolidated with another entity or reorganized, in a
manner in which Mercury's present status, business or methods are changed. If
Mr. Kahn dies during the term of the employment agreement, Mercury will pay to
Mr. Kahn's estate the compensation which would otherwise be paid to Mr. Kahn
through the end of the month in which he dies. In addition, Mercury will pay Mr.
Kahn's estate or other designated beneficiary $2,025,000 upon his death.
Relating to this obligation, Mercury has obtained a life insurance policy on Mr.
Kahn's life in the amount of $2,025,000 which designates Mr. Kahn's wife as
beneficiary to fund this payment.
8
<PAGE> 11
Mr. Kahn has agreed not to compete with Mercury within a radius of 300
miles from Mercury's present place of business for five years after the
termination of the employment agreement. Mercury must make the severance
payments required by the employment agreement for this non-competition agreement
to be effective.
Mr. Czyzyk has an employment agreement with Mercury, dated as of
November 15, 1994, pursuant to which Mercury will employ him as its
President/Chief Operating Officer for a term ending on November 15, 1997,
subject to automatic one-year extensions each successive November 15, unless
either party gives 30 days' notice of non-renewal. As of the date hereof,
neither Mr. Czyzyk nor Mercury has given notice of non-renewal. The agreement
provides that Mr. Czyzyk's tenure as President/Chief Operating Officer shall
serve as a period of training and evaluation for appointment as Chief Executive
Officer of Mercury, when and as such position may be vacated by Mr. Kahn,
subject to the sole discretion and judgment of the Board of Directors. The
agreement further provides for the continued nomination of Mr. Czyzyk to the
Board of Directors of Mercury, so long as Mr. Czyzyk continues to serve as
President/Chief Operating Officer.
Mr. Czyzyk will receive an annual salary of $283,500 plus a bonus at the
end of each fiscal year based on the following: (i) for fiscal 1996, in the
event Mercury's operating income on a consolidated basis minus sales and general
administrative expense and depreciation (EBIT) for that year exceeds the average
of EBIT for fiscal 1994 and 1995, then Mr. Czyzyk shall be paid a bonus of 25%
of his base compensation, under Part I of the Bonus Plan and 2-1/2% of the
amount of which fiscal 1996 EBIT exceeds the average of EBIT for fiscal 1994 and
1995, under Part II of the Bonus Plan; and (ii) for fiscal years subsequent to
fiscal 1996, Part I and Part II of the Bonus Plan remain in effect except that
the threshold EBIT is based on a trailing average of EBIT for the prior three
(3) fiscal years.
In the event Mr. Czyzyk's employment is terminated for cause, Mr. Czyzyk
will not be entitled to receive or be paid a bonus. In the event Mr. Czyzyk's
employment is terminated without cause, Mercury will be obligated to pay Mr.
Czyzyk the lesser of one year's base compensation or the base compensation that
would otherwise be paid to him over the remaining term of the agreement, and a
bonus for the fiscal year of termination in an amount which would otherwise be
paid to him prorated over the days Mr. Czyzyk was employed by Mercury during the
fiscal year of termination. "Cause" is defined in the employment agreement as
misappropriation of corporate funds, negligence, Mr. Czyzyk's voluntary
abandonment of his job (other than following a Change in Control) or a breach of
the employment agreement. In the event of Mr. Czyzyk's death, Mr. Czyzyk's
estate or beneficiary will be entitled to receive the death benefits of a
$1,000,000 insurance policy, but all other obligations under his employment
agreement will terminate and Mercury's only obligation will be to pay Mr. Czyzyk
or his estate all accrued salary through the end of the month of his death. In
the event of Mr. Czyzyk's disability (as determined by the Chief Executive
Officer of Mercury), Mr. Czyzyk's base salary will be reduced by 50% during the
period of disability. If Mr. Czyzyk is disabled for a period of more than 12
months (as determined by the Chief Executive Officer of Mercury), Mercury will
be obligated to pay Mr. Czyzyk the same amount that would have been paid to Mr.
Czyzyk if his employment was terminated without cause, except that all amounts
paid to Mr. Czyzyk under any long-term disability insurance policy maintained by
Mercury will be credited as if paid by Mercury to Mr. Czyzyk and after giving
effect to any federal or state income tax savings resulting from the payment
under a disability policy (as opposed to taxable salary). The employment
agreement further provides that Mr. Czyzyk may terminate his employment
following a "Change in Control", in which event Mr. Czyzyk will be entitled to
be paid the lesser of one year's base compensation or the entire balance of his
base compensation remaining to be paid to Mr. Czyzyk over the remaining term of
the agreement. The agreement provides for a five-year post-employment,
non-competition covenant.
CERTAIN TRANSACTIONS
Pursuant to a Stock Purchase Agreement (the "First Stock Purchase
Agreement") dated December 10, 1990 between Mercury, SK Acquisition, Inc., a
Delaware corporation wholly-owned by Mr. Kahn ("SKAI"), Randolph E. Ajer, Kevin
J. Walsh, and Joseph A. Czyzyk (the "First Purchasers"), SKAI sold 151,250
shares of Common Stock (after adjustment for a 5-for-4 stock split effected on
April 11, 1997; amounts effected by the stock split are hereinafter stated as
"as adjusted") to each of Messrs. Ajer, Walsh and Czyzyk, at the price of $1.98
per share as adjusted, with each purchaser paying a purchase price of $300,000,
or an aggregate of $900,000. On December 10, 1990, the closing price of the
Common Stock on the American Stock Exchange was $1.98 per share as adjusted.
Pursuant to a
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<PAGE> 12
Stock Purchase Agreement (the "Second Stock Purchase Agreement", collectively,
the First and Second Stock Purchase Agreements are hereinafter referred to as
the "Stock Purchase Agreements") dated August 9, 1993 between Mercury, SKAI and
William L. Silva, SKAI sold 151,250 shares of Common Stock as adjusted to Mr.
Silva at a price of $1.98 per share as adjusted, with Mr. Silva paying a total
purchase price of $300,000. On August 9, 1993, the adjusted closing price of the
Common Stock on the American Stock Exchange was $2.06 per share as adjusted.
Each of the First Purchasers and Mr. Silva (collectively, the "Purchasers") paid
$30,000 cash at the closing of his purchase, or an aggregate of $120,000, and
agreed to pay the remaining $270,000, or an aggregate of $1,080,000, over a
period of five years from the date of purchase, together with interest at the
rate of 10% per annum on the outstanding balance. The purchase price owed to
SKAI is secured by a first security interest in the Common Stock sold to each
Purchaser and each such loan is non-recourse. Each Purchaser has given SKAI an
irrevocable proxy to vote the Common Stock purchased by him for all purposes
until the purchase price for his Common Stock has been paid in full.
As part of the Stock Purchase Agreement, Mercury has agreed to loan the
principal balance of the unpaid purchase price to each of the Purchasers during
the five-year payment period as each payment is required to be made on March 1,
June 1, September 1 and December 1 of each year until the principal amount owed
by each Purchaser is paid in full, which occurred in April, 1996, with respect
to the First Purchasers and will occur by the end of 1998, with respect to Mr.
Silva. Such loans are non-recourse, bear no interest, and are secured by a
second security interest in the purchased stock. The Purchasers have each agreed
to pay their own interest on the balance of the purchase price due SKAI from
personal funds. Commencing March 1, 1994, and annually thereafter, for each of
the First Purchasers who remain employed by Mercury, one-fifth of his loan will
be forgiven. For each First Purchaser who remains employed by Mercury through
March 1, 1998, his loan will be forgiven in full, his shares of Common Stock
will be owned without any further lien in favor of Mercury or SKAI and the proxy
granted to SKAI will expire by its terms. Commencing January 1, 1997, and
annually thereafter, for Mr. Silva if he remains employed by Mercury, one-fifth
of his loan will be forgiven. If Mr. Silva remains employed by Mercury through
January 1, 2001, his loans will be forgiven in full, his shares of Common Stock
will be owned without any further lien in favor of Mercury or SKAI and the proxy
granted to SKAI will expire by its terms.
During fiscal 1997, Mercury loaned an aggregate of $54,000 to Mr. Silva
which was used to make the four quarterly payments to SKAI. Amounts outstanding
on the loans made by the Company as of June 30, 1997 were as follows: Mr. Ajer
$54,000, Mr. Walsh $54,000, Mr. Czyzyk $54,000 and Mr. Silva $135,000. The
maximum amounts outstanding on the loans made by the Company during fiscal 1997
were as follows: Mr. Ajer $108,000, Mr. Walsh $108,000, Mr. Czyzyk $108,000 and
Mr. Silva $189,000. As of September 30, 1997, Mr. Silva's outstanding loan was
$148,500.
During fiscal 1997, Mercury loaned Mr. Ajer $27,403 and Mr. Walsh
$19,143, which was used to pay withholding taxes associated with the loan
forgiveness under the First Stock Purchase Agreement. Such loans bear no
interest and were repaid from year-end bonuses.
Mercury has Indemnity Agreements with each of its directors and
executive officers which require Mercury, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors, officers, employees or agents of Mercury, and, under certain
circumstances, to advance their expenses incurred as a result of proceedings
brought against them. In order to be entitled to indemnification, the executive
officer or director must have acted in a manner reasonably believed to be in, or
not opposed to, the best interests of Mercury and, with respect to a criminal
matter, in a manner which he had no reason to believe was illegal.
COMPENSATION OF DIRECTORS
During fiscal 1997, directors who were not employees of the Company were
paid $1,000 per meeting with an annual minimum of $7,500 in fees paid in advance
on the annual meeting date. Directors were also reimbursed for their travel,
meals, lodging and out-of-pocket expenses incurred in connection with attending
Board meetings. In addition, during fiscal 1997 and continuing through fiscal
1998, the law firm of McBreen, McBreen & Kopko, of which Mr. Kopko is a partner,
has been providing legal services to the Company at its standard billing rates.
See "Compensation Committee Interlocks and Insider Participation."
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. List and Kopko
and Dr. Fagan. During fiscal 1997, the Company paid $183,084 to the law firm of
McBreen, McBreen & Kopko for legal services.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
This report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing made by the Company under the Securities
Act of 1933 or under the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
Under the rules established by the Securities and Exchange Commission,
the Company is required to provide certain data and information regarding the
compensation and benefits provided to the Company's Chairman of the Board and
Chief Executive Officer, Mr. Kahn, and the four other most highly compensated
executive officers, Messrs. Czyzyk, Ajer, Walsh and Silva. The disclosure
requirements for the named executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
executive compensation decisions affecting those individuals. In fulfillment of
this requirement, the Compensation Committee, at the direction of the Board of
Directors, has prepared the following report for inclusion in this Proxy
Statement.
COMPENSATION PHILOSOPHY
This report reflects the Company's compensation philosophy as endorsed
by the Compensation Committee and resulting actions taken by the Company for the
reporting periods shown in the various compensation tables supporting this
report. The Compensation Committee determines salary and bonus amounts, other
award levels and benefits for all executive officers of the Company. In
connection with its decisions, the Compensation Committee reviews and considers
the written recommendations of the Company's Chairman of the Board and Chief
Executive Officer, Mr. Kahn. As described below, a large portion of Mr. Kahn's
compensation is based on the earnings of the Company and Mr. Kahn is a
significant shareholder of the Company. Accordingly, the Compensation Committee
believes that Mr. Kahn's recommendations are consistent with the Compensation
Committee's philosophy of encouraging earnings growth and strategic decisions
designed to maximize shareholder return.
The executive compensation programs of the Company have been designed
to:
o Embody a pay for performance policy where compensation amounts
are affected by corporate, operating unit and individual performance as measured
by earnings;
o Motivate key senior executives to achieve strategic business
initiatives and reward them for their achievements;
o Provide compensation opportunities which are, in the judgment of
the Compensation Committee, comparable to those offered by other leading
companies, thus allowing the Company to compete for and retain talented
executives who are critical to the Company's long-term success; and
o Align the interest of executives with long-term interests of the
shareholders through common stock ownership and stock option programs.
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COMPENSATION MECHANISMS
At present, the executive compensation program is comprised of salary,
annual cash bonus programs, long-term incentive opportunities in the form of
Company financed stock ownership opportunities and stock options and other
benefits typically provided to executives by major corporations.
Executive officer salaries are determined based on individual
performance, position, tenure, salary history, internal comparability
considerations and in some instances the results of arm's length negotiations in
connection with the start-up of a new operating unit. In determining salaries,
the Compensation Committee uses the personal knowledge of its members regarding
compensation levels for similar positions at other companies generally. No peer
group or other salary surveys were undertaken to determine salaries at
comparable companies. For each executive officer, a significant portion of total
compensation is a bonus based on the earnings of the Company or the specific
operating unit for which he has profit and loss statement responsibility. As a
result, an executive officer's compensation can vary substantially from
year-to-year based on the Company's or a specific operating unit's earnings
performance. For fiscal 1997 and 1998, the bonus for executive officers with
operating unit responsibility was/will be based on an individual's success in
exceeding the budgeted earnings for his operating unit. The budgeted earnings
for each unit are based on a comprehensive review of unit operations conducted
by Messrs. Kahn, Czyzyk, and Ajer and the responsible executive officer at the
start of each fiscal year and are subject to approval by the Board of Directors.
During the budget process, Messrs. Kahn, Czyzyk, and Ajer focus on challenging
each executive officer to attain revenue growth and cost savings for his
operating unit. As described below, the bonus plan for Messrs. Kahn, Czyzyk, and
Ajer is based on exceeding the Company's average earnings for the prior three
years, encouraging Messrs. Kahn, Czyzyk, and Ajer to budget for aggressive
growth. The Compensation Committee also retains discretion to reward exceptional
achievement through discretionary bonuses. During fiscal 1997, the Compensation
Committee did not award any discretionary bonuses.
Each of the Company's executive officers is also compensated in part
through Company financed common stock ownership and stock options. The Company
currently has in place the 1990 Long-Term Incentive Plan which provides for
stock option grants to key employees (other than Mr. Kahn) at the current fair
market value on the date of grant. Each of the Company's executive officers
currently holds options granted under the plan. Option awards to each executive
officer have been based on the executive's level of responsibility, past
performance and internal comparability considerations. In addition, the Company
is currently financing the purchase of 151,250 shares of Common Stock at $1.98
per share for each executive officer (other than Mr. Kahn). The shares are being
or were purchased from SKAI, a corporation wholly-owned by Mr. Kahn. Subject to
continued employment, each executive officer will have fully-paid for the Common
Stock and all loans made by the Company to facilitate the stock purchase will be
forgiven seven years from the date of the purchase. In addition to serving as a
compensation device, the stock purchase program was designed to insure an
orderly transition in control of the Company, to avoid excessive dilution and to
some degree to maintain internal comparability in officer compensation. As a
result of the stock options and company financed stock purchases, each executive
officer has a strong incentive to continue his association with the Company and
to enhance the value of the Company's equity securities in the long-term.
During fiscal 1997, the executive officers requested assistance in
paying taxes associated with the annual forgiveness of the stock purchase loans.
The Compensation Committee determined that each executive vice president should
invest in his own future and the Company by personally bearing the taxes
associated with the loan forgiveness. The Compensation Committee agreed,
however, to somewhat mitigate the cash flow effects of the withholding for taxes
by providing annual, interest-free loans to be paid back from bonus or payroll
deductions. See "Certain Transactions."
COMPENSATION DECISIONS FOR THE CHAIRMAN OF THE BOARD
Mr. Kahn has an employment agreement with the Company dated as of
December 1, 1993 pursuant to which Mercury will employ him as Chairman of the
Board and Chief Executive Officer for a three year period with automatic one
year extensions at the end of each year unless either party terminates the
agreement in writing prior to such renewal. For fiscal 1998, Mr. Kahn's annual
compensation has been set by the Compensation Committee at $367,500 per year, a
5% raise from fiscal 1997 in recognition of a general increase in the cost of
living.
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<PAGE> 15
A cash bonus plan for Mr. Kahn was approved by the Board of Directors in
November 1990 (commencing fiscal 1991). The Compensation Committee continued the
bonus plan during fiscal 1997 and will continue the bonus plan during fiscal
1998. The two-part bonus plan is based on earnings before interest and taxes
("EBIT") of the Company for the year in which the bonus is calculated. Under
Part I of the bonus plan, if the bonus year's EBIT meets or exceeds the trailing
three-year EBIT average, Mr. Kahn is entitled to a bonus equal to 25% of his
salary. For years where EBIT falls below the trailing three-year average, any
bonus paid to Mr. Kahn is solely at the discretion of the Compensation
Committee. Under Part II of the bonus plan, an additional bonus is paid to Mr.
Kahn in an amount equal to 6.67% of any increase in the bonus year's EBIT level
over the trailing three-year average EBIT level.
For fiscal 1997, Mr. Kahn earned a bonus in the amount of $237,000 under
the bonus plan. At Mr. Kahn's request, the Compensation Committee, however, re-
allocated $24,000 of Mr. Kahn's earned bonus, as a special bonus for Mr. Ajer,
and paid Mr. Kahn a bonus of $213,000. Mr. Kahn made this request based on his
personal appreciation of Mr. Ajer's over-all contribution to the Company. The
Compensation Committee felt Mr. Kahn's perceptions regarding merit and personal
generosity should be respected.
OTHER EXECUTIVE OFFICER COMPENSATION
Mr. Czyzyk is compensated pursuant to an employment agreement described
under "Employment Agreements." A cash bonus plan for Mr. Ajer was approved by
the Board of Directors in November 1990 (commencing fiscal 1991). The
Compensation Committee continued the bonus plan during fiscal 1997 and will
continue the bonus plan during fiscal 1998. As with Mr. Kahn, the two-part bonus
plan is based on EBIT of the Company for the year in which the bonus is
calculated. Under Part I of the bonus plan, if the bonus year's EBIT meets or
exceeds the trailing three-year EBIT average, Mr. Ajer is entitled to a bonus
equal to 25% of his salary. For years where EBIT falls below the trailing
three-year average, any bonus paid to Mr. Ajer is solely at the discretion of
the Compensation Committee. Under Part II of the bonus plan, an additional bonus
is paid to Mr. Ajer in an amount equal to 3.33% of any increase in the bonus
year's EBIT level over the trailing three-year average EBIT level. For fiscal
1997, Mr. Ajer earned a bonus in the amount of $107,000 under the bonus plan.
Due to reallocation of $24,000 of Mr. Kahn's bonus, as described above, Mr. Ajer
was paid a total bonus of $131,000.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, generally disallows a tax
deduction to public companies for annual compensation over $1 million paid to a
corporation's chief executive officer and four other most highly compensated
individuals. Qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. Because the current
compensation levels of the Company's executive officers are well below the $1
million threshold, the Compensation Committee has not determined what steps are
required to structure qualifying performance-based compensation and whether or
not the required steps would be in the best interest of the Company.
Compensation Committee Members
Robert L. List
Frederick H. Kopko, Jr.
Dr. Philip J. Fagan, Jr.
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<PAGE> 16
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing made by the Company under the Securities
Act of 1933 or under the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
The graph below compares cumulative total return of Mercury Air Group,
Inc., the AMEX Market Value and the S & P Transportation Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MERCURY AIR GROUP, INC., THE AMEX MARKET VALUE INDEX
AND THE S&P TRANSPORTATION INDEX
6/92 6/93 6/94 6/95 6/96 6/97
Mercury Air Group, Inc. 100 185 331 568 600 596
AMEX Market Value 100 114 112 132 152 168
S&P Transportation 100 114 118 130 163 204
* $100 INVESTED ON 6/30/92 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
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<PAGE> 17
SECTION 16 DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the American Stock Exchange. Based solely
on its review of the copies of such forms received by it, or written
representations from certain reporting persons that no annual corrective filings
were required for those persons, the Company believes that all filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with except that Mr. Joseph A. Czyzyk filed a
Form 4 one month after the applicable deadline.
INFORMATION RELATING TO INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for fiscal year 1997 were
Deloitte & Touche and the Board of Directors of the Company has selected
Deloitte & Touche as the Company's independent public accountants for fiscal
year 1998. Representatives of Deloitte & Touche are expected to be present at
the Meeting and will have an opportunity to respond to appropriate questions and
to make a statement if they desire to do so.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 1997, including a complete copy of the Company's Annual
Report on Form 10-K for the period (the "10-K"), has been mailed to each
shareholder of record as of October 24, 1997. Any such shareholder may request
copies of the exhibits to the 10-K by mailing such request to Randolph E. Ajer,
Secretary, Mercury Air Group, Inc., 5456 McConnell Avenue, Suite 100, Los
Angeles, California 90066. Such request must indicate the name of the
shareholder, the shareholder's telephone number, the amount of shares held on
October 24, 1997, the specific exhibits requested and the address to which the
exhibits are to be sent. The Company reserves the right to charge for its
copying expenses before providing any requested exhibits.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder proposal intended to be presented at the Company's next
annual meeting must be received by Randolph E. Ajer, the Secretary of the
Company, at 5456 McConnell Avenue, Suite 100, Los Angeles, California 90066, no
later than June 30, 1998 in order to be considered for inclusion in the proxy
statement and form of proxy for such meeting.
OTHER MATTERS
Management knows of no other matter to be presented at the Meeting which
are proper subjects for action by the shareholders. However, if any other
matters should properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted thereon in accordance with the judgment of
the person or persons voting such proxies.
The Annual Report to Shareholders of the Company for the fiscal year
ended June 30, 1997 has been mailed to the shareholders of the Company with this
Proxy Statement. Except to the extent that portions of such report are
specifically referenced in this Proxy Statement, such report is not to be
regarded as proxy soliciting material and is not incorporated in this Proxy
Statement.
By Order of the Board of Directors
Los Angeles, California Randolph E. Ajer
October 28, 1997 Secretary
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<PAGE> 18
MERCURY AIR GROUP, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Mercury Air Group, Inc., a New York
corporation (the "Company"), acting under the New York General Corporation law,
hereby constitutes and appoints Seymour Kahn and Randolph E. Ajer, and each of
them the attorneys and proxies of the undersigned, each with the power of
substitution, to attend and act of the undersigned at the Annual Meeting of
Shareholders of the Company (the "Meeting") to be held on December 4, 1997 at
10:00 a.m., Pacific Standard Time, at the Company's headquarters located at 5456
McConnell Avenue, Suite 100, Los Angeles, California 90066 and at any
adjournments thereof, and in connection therewith to vote and represent all of
the shares of Common Stock of the Company which the undersigned would be
entitled to vote, as specified on the reverse side.
Said attorney and proxies, and each of them, shall have all the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at the Meeting and hereby ratifies and confirms
that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to matters incident to the solicitation of this Proxy; and with respect
to the election of any person as a director if a bona fide nominee for that
office is named in the Proxy Statement and such nominee is unable to serve or
for good cause will not serve.
Important - Please sign on the Other Side
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C>
A [X] Please mark your vote as in this example.
FOR WITHHOLD
all nominees AUTHORITY
(except as to vote for
marked to the all nominees
PROPOSAL 1. contrary below).
Election of [ ] [ ] Nominees: Seymour Kahn A majority of the names proxies
Directors: Joseph A. Czyzyk present at the Meeting, either in
Dr. Philip J. Fagan, Jr. person or by substitute (or if only
Frederick H. Kopke, Jr. one thereof shall be present and
William G. Langton act, that one), shall have and
Robert L. List exercise all the powers of said
proxies hereunder. This proxy will
be voted in accordance with the
choices specified by this
undersigned below. IF NO
INSTRUCTIONS TO THE CONTRARY ARE
INDICATED HEREON, THIS PROXY WILL
BE TREATED AS A GRANT OF AUTHORITY
FOR THE BOARD OF DIRECTORS NAMED AT
LEFT.
The undersigned hereby acknowledges
receipt of a copy of the Notice of
Annual Meeting and Proxy Statement
and a copy of the Company's Annual
Report to Shareholders for the year
ended June 30, 1997.
Instruction: To withhold authority to vote for any
nominee, write that nominee's name in the space provided
- --------------------------------------------------------
Shareholder's Signature(s) ________________________________ __________________________________ DATE _____________
IMPORTANT Sign your name or names on the signature line in the same way it is
stenciled on this proxy.
</TABLE>
