<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MYR GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
MYR GROUP INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MYR LOGO
March 31, 1998
Dear Stockholder:
You are invited to attend the annual meeting of stockholders of MYR Group
Inc. on Wednesday, May 6, 1998, at 10:00 a.m. The meeting will be held at the
Meadows Corporate Center, 2850 West Golf Road, Rolling Meadows, Illinois in the
English Room. The purpose of the meeting is to consider and vote upon the
election of one Class III director.
The accompanying notice of meeting and proxy statement contains information
regarding the election of the director and other information about the meeting,
the Board of Directors, and the executive officers of the Company.
Whether or not you plan to attend the meeting it is important that your
shares are represented at this meeting. Accordingly, please complete sign, date
and return the enclosed form of proxy as soon as possible.
The Company appreciates your continuing interest in our business.
Sincerely
CHARLES M. BRENNAN III
Charles M. Brennan III
Chairman and Chief Executive Officer
<PAGE> 3
MYR GROUP INC.
THREE CONTINENTAL TOWERS
1701 WEST GOLF ROAD
SUITE 1012
ROLLING MEADOWS, ILLINOIS 60008-4007
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 6, 1998
The 1998 annual meeting of the stockholders of MYR Group Inc., a Delaware
corporation (the "Company"), will be held at the Meadows Corporate Center,
English Room, 2850 West Golf Road, Rolling Meadows, Illinois on Wednesday, May
6, 1998, commencing at 10:00 a.m., Chicago time, for the following purposes:
1. To elect one Class III director.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The close of business on March 23, 1998 has been fixed as the record date
for the meeting. Only stockholders of record at that date are entitled to notice
of and to vote at the meeting. A list of such stockholders will, for ten days
prior to the meeting, be open for examination by any stockholder, for any
purpose germane to the meeting, at the office of the Secretary of the Company,
Three Continental Towers, 1701 West Golf Road, Suite 1012, Rolling Meadows,
Illinois during regular business hours. You are cordially invited to attend the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Byron D. Nelson
Secretary
Rolling Meadows, Illinois
March 31, 1998
THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING.
<PAGE> 4
MYR GROUP INC.
THREE CONTINENTAL TOWERS
1701 WEST GOLF ROAD
SUITE 1012
ROLLING MEADOWS, ILLINOIS 60008-4007
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1998
This proxy statement is furnished to the stockholders of MYR Group Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors for use at the annual meeting of
stockholders (the "Annual Meeting") to be held at the Meadows Corporate Center,
English Room, 2850 West Golf Road, Rolling Meadows, Illinois on Wednesday, May
6, 1998, commencing at 10:00 a.m., Chicago time, and at any adjournment or
adjournments thereof.
This proxy statement and the accompanying form of proxy are first being
mailed to stockholders on or about March 31, 1998. Proxies will be solicited
principally by mail. Arrangements have been made with brokerage houses,
custodians, nominees and fiduciaries to forward the proxy materials to the
beneficial owners of common stock of the Company held of record by those firms.
The Company will reimburse banks, brokers or other nominees for the expenses
incurred in forwarding proxy material to beneficial owners. In addition, certain
directors and officers and other employees may solicit proxies, without
additional remuneration therefore, by personal contact, mail, telephone,
telegraph, or electronic communication. The Company will bear the cost of this
solicitation.
RECORD DATE, SHARES OUTSTANDING AND VOTING RIGHTS
The voting securities of the Company consist solely of its shares of common
stock, $1.00 par value ("Common Stock"), 5,591,598 of which were issued and
outstanding and entitled to vote at the close of business on March 23, 1998, the
record date for the Annual Meeting. Each holder of record of shares of Common
Stock at the record date is entitled to one vote for each share held on every
matter submitted to the Annual Meeting. The election of one Class III director
will be determined by a plurality of the shares represented and entitled to vote
at the Annual Meeting. Broker votes, absent directions to the contrary from
beneficial holders, will be voted for the election of the nominee of the Board
of Directors. Any other business properly brought before the Annual Meeting will
be determined by a majority of the shares represented and entitled to vote at
the Annual Meeting. An automated system administered by the Company's transfer
agent will be used to tabulate the votes. Broker non-votes will be counted for
purposes of determining whether a quorum is present for the meeting.
Shares of Common Stock cannot be voted at the Annual Meeting unless the
holder of record is represented by proxy or present at the meeting in person.
The enclosed proxy is a means by which a stockholder may authorize the voting of
his shares at the Annual Meeting. When the stockholder has properly executed and
delivered the proxy, the shares represented thereby will be voted in accordance
with the instructions thereon. The enclosed proxy may be revoked by the
stockholder giving it at any time before it is exercised, either in person at
the meeting, by written notice to the Secretary of the Company or by delivery of
any later-dated proxy.
1
<PAGE> 5
ELECTION OF DIRECTOR
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, such classes to be as nearly
equal in number as possible. On January 3, 1995, in accordance with provisions
of the Agreement and Plan of Merger dated October 5, 1994 (as amended) (the
"Merger Agreement") by and among the Company, HMM Corporation (a wholly owned
subsidiary of the Company) and Harlan Electric Company ("Harlan"), the Board of
Directors amended the bylaws of the Company to provide that the number of
directors which shall constitute the whole Board of Directors be increased from
four to five and elected Mr. John M. Harlan as a Class I director to become the
fifth director of the Company. Mr. Harlan was re-elected by stockholders at the
1996 annual meeting of stockholders. The Board of Directors currently consists
of two Class I directors (whose terms expire at the 1999 annual meeting of
stockholders), two Class II directors (whose terms shall expire at the 2000
Annual Meeting) and one Class III director (whose term expires at the Annual
Meeting).
The Board of Directors has nominated Mr. Charles M. Brennan III for
election as a Class III director at the Annual Meeting. Mr. Brennan is the
incumbent Class III director. It is intended that shares represented by properly
executed proxies will be voted at the Annual Meeting, in the absence of contrary
instructions, for the election of Mr. Brennan as the Class III director. Should
Mr. Brennan be unavailable for election for any reason, such proxies will be
voted for a substitute nominated by the Board of Directors.
The following information is set forth below with respect to each nominee
and the incumbent directors: (i) his name, (ii) his age, (iii) all of his
positions and offices with the Company, (iv) his business experience during the
past five years, (v) his directorships in other publicly held companies, and
(vi) the period during which he has served as a director of the Company.
Class III Nominee -- Term expires 2001
CHARLES M. BRENNAN III (56) Director since 1986. Chairman (since 1988) and
Chief Executive Officer (since 1989) of the Company. Mr. Brennan is also a
director of ROHN Industries, Inc. and Control Devices, Inc.
Class II Directors -- Term Expires 2000
ALLAN E. BULLEY, JR. (65) Director since 1992. Chairman (since 1991) and
Chief Executive Officer (since 1970) of Bulley and Andrews, a general
construction firm, Chicago, Illinois.
BIDE L. THOMAS (62) Director since 1993. Former President and Chief
Operating Officer of Commonwealth Edison Company, an investor owned electric
utility, Chicago, Illinois. Mr. Thomas is also a director of Northern Trust
Corporation, The Northern Trust Company and R. R. Donnelley & Sons Company.
Class I Directors -- Term expires 1999
WILLIAM G. BROWN (55) Director since 1990. Partner in the law firm of Bell,
Boyd & Lloyd, Chicago, Illinois (since 1976). Mr. Brown is also a director of
Medicus Systems Corporation, Dovenmeuhle Mortgage, Inc., CFC International,
Inc., and Managed Care Solutions, Inc.
JOHN M. HARLAN (64) Director since 1995. Former Chairman and President of
Harlan Electric Company, an electrical construction firm (1963 - 1994).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF CHARLES M. BRENNAN III AS A CLASS III DIRECTOR OF THE COMPANY.
2
<PAGE> 6
GOVERNANCE OF THE COMPANY BY ITS BOARD OF DIRECTORS
The bylaws of the Company require the Board of Directors to have an Audit
Committee and permit the Board of Directors to designate, by resolution, other
committees of the Board to have and exercise certain of the powers of the Board
of Directors in the management of the business and affairs of the Company. The
primary functions of the Audit Committee are to review the Company's interim and
annual financial statements and the reports of its management and auditors
thereon, and to report its findings and recommendations to the Board of
Directors. The current members of the Audit Committee are Mr. Brown (Chairman),
Mr. Bulley, Mr. Harlan, Mr. Thomas and Mr. Brennan (ex-officio). The Board of
Directors has also established a Compensation Committee. The current members of
the Compensation Committee are Mr. Thomas (Chairman), Mr. Brown and Mr. Bulley.
The primary purposes of the Compensation Committee are to administer the
Company's stock option and restricted stock plans and management incentive plans
and to set the compensation of the Chief Executive Officer and other executive
officers. During 1997 the Board of Directors held four meetings, the Audit
Committee held two meetings and the Compensation Committee held three meetings.
During 1997, no director attended less than 75% of all meetings of the Board of
Directors and all meetings of committees of which he was a member.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries is paid a fee of $12,000 annually ("Annual Retainer") plus
$1,000 for each meeting of the Board of Directors or committee of the Board
which he attends, with a maximum of one meeting fee payable for any calendar
day.
Under the terms of the 1993 Non-Employee Directors' Stock Option Plan
("1993 Plan") each non-employee director, upon his or her first election to the
Board of Directors, receives an option to purchase 10,000 shares of Common Stock
(as adjusted as hereinafter described). The plan further provides that each
director shall receive an option to purchase an additional 1,000 shares of
Common Stock on the date each annual meeting of stockholders is held after the
year in which the non-employee director was first elected to Board of Directors.
The terms of the initial option grant and of each of the subsequent annual
grants are: (i) the option price shall be the average of the high and low prices
of a share of common stock on the New York Stock Exchange on the date of grant;
(ii) the option shall vest with respect to 25% of the shares six months after
the date of grant, with respect to an additional 25% of the shares one year
after the date of grant, with respect to an additional 25% of the shares two
years after the date of the grant, and with respect to the final 25% of the
shares three years after the date of the grant; (iii) the option shall expire
ten years after the date of the grant. On December 15, 1995, the Company paid a
stock dividend of one share of Common Stock for each three shares of Common
Stock held by stockholders as of the record date of December 1, 1995 (the "1995
Stock Dividend"). On December 15, 1997, the Company paid a stock dividend of two
shares of Common Stock for every three shares of Common Stock held by the
stockholders as of the record date of December 1, 1997 (the "1997 Stock
Dividend"). Under the terms of the Company's stock option plans the number of
shares subject to the plans and to options granted under the plans are
proportionately adjusted in the event of a stock dividend or other events
described in the plans. As a result of the 1995 and 1997 Stock Dividends the
number of shares covered by the initial stock option grants to Messrs. Brown,
Bulley, Harlan and Thomas were adjusted to 22,224 shares. The number of shares
covered by grants of option on the dates of annual meetings of stockholders are
adjusted to 2,223 shares.
Under the terms of the Company's 1996 Non-employee Director Stock Ownership
Plan ("1996 Plan") a non-employee Director may elect to receive his or her
Annual Retainer in shares of restricted Common Stock. The restrictions lapse on
the fifth anniversary date of award or the Director's earlier death, disability
or retirement Messrs. Brown and Bulley each elected to receive his Annual
Retainer in shares of restricted Common Stock under the 1996 Plan. The number of
restricted shares awarded to Mr. Brown and Mr. Bulley under the 1996 Plan
(adjusted for the 1997 Stock Dividend) on the date of the 1996 annual meeting of
stockholders were 1,891 shares and on the date of the 1997 annual meeting of
stockholders were 1,588 shares.
3
<PAGE> 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the year ended December 31, 1997, the Company paid legal fees to Bell,
Boyd & Lloyd in the amount of $469,189. Mr. Brown, a Director and member of the
Compensation Committee, is a partner in Bell, Boyd & Lloyd. A portion of these
fees and certain other fees incurred in prior years in the amount of
approximately $400,000 was recovered by the Company as a result of a settlement
of a judgment in favor of the Company in a lawsuit which was concluded in 1997.
The Company anticipates that Bell, Boyd & Lloyd will continue to provide legal
services to the Company in 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 3, 1995, the Company acquired all of the issued and outstanding
shares of capital stock of Harlan in accordance with the terms of the Merger
Agreement for a consideration consisting of cash and certain Escrow and
Non-Escrow Notes. The Escrow and Non-Escrow Notes provide that they may be
converted into shares of Common Stock at a conversion price of $12.6212. As a
result of the 1995 and 1997 Stock Dividends and in accordance with the terms of
the Escrow and Non-Escrow Notes the conversion price was decreased to $5.67954.
John M. Harlan and his five brothers and sisters (the "Noteholders") received
all of the Escrow and Non-Escrow notes. Both the Escrow and Non-Escrow Notes
bear interest at the rate of 7% and are for a term of seven years with interest
being paid semi-annually and the principal being repaid in three equal payments
on January 3, 2000, 2001 and 2002 respectively. The Escrow and the Non-Escrow
notes may be redeemed by the Company at any time after January 3, 2000 or at any
early time with the consent of the Noteholder. As a result of a settlement
between the Company and the Noteholders related to certain claims against the
Escrow Notes by the Company under the Merger Agreement, each of the Noteholders
has granted an option to the Company to purchase any and all shares into which
he or she elects to convert his or her Escrow Note and one of his or her two
Non-Escrow Notes at an exercise price of $5.67954 per share. In the case of Mr.
Harlan, he has granted an option to the Company to purchase any and all shares
into which he elects to convert his Escrow Note in the amount of $279,096 and
one of his two Non-Escrow Notes in the amount of $210,776. The other Non-Escrow
Note held by Mr. Harlan is in the amount of $326,322.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
POSITION(S) HELD OFFICER OF THE
NAME AGE WITH THE COMPANY COMPANY SINCE
---- --- ---------------- --------------
<S> <C> <C> <C>
Charles M. Brennan III............ 56 Chairman and Chief Executive Officer 1988
William S. Skibitsky(1)........... 48 President and Chief Operating Officer 1994
Elliott C. Robbins................ 51 Senior Vice President, Chief Financial
Officer and Treasurer 1984
Byron D. Nelson................... 51 Senior Vice President, General Counsel and
Secretary 1984
</TABLE>
- -------------------------
(1) Mr. Skibitsky was elected President and Chief Operating Officer of the
Company on July 23, 1996 and had been previously elected Executive Vice
President of the Company and President of The L.E. Myers Co. (a wholly owned
subsidiary of the Company) on May 12, 1994.
4
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table, including footnotes, shows for the years 1997, 1996,
and 1995, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the named Executive Officers in
all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------
AWARDS
ANNUAL COMPENSATION -------------------- PAYOUTS
-------------------------------- RESTRICTED -------
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTION/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2)(3) (4) SAR(#) ($) ($)(5)(6)
------------------ ---- ------ ----- ------------ ---------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles M. Brennan.......... 1997 357,548 293,000 120,783 191,250 0
Chairman and Chief 1996 307,500 217,000 142,843 161,250 0
Executive Officer 1995 300,000 193,500 139,041 0 40,000 0
William S. Skibitsky........ 1997 232,885 187,000 21,693 143,438 0 34,153
President and Chief 1996 207,200 155,000 25,834 85,312 0 0
Operating Officer 1995 171,050 102,000 12,866 0 13,334 0
Elliott C. Robbins.......... 1997 168,750 115,000 25,833 76,500 0 4,937
Senior Vice President 1996 159,000 67,500 24,956 56,875 0 9,686
Treasurer and Chief 1995 156,000 76,000 20,664 0 16,667 10,059
Financial Officer
Byron D. Nelson............. 1997 168,750 115,000 25,833 76,500 0 4,973
Senior Vice President 1996 159,000 77,500 24,945 56,875 0 9,680
General Counsel and 1995 156,000 76,000 20,112 0 16,667 11,356
Secretary
</TABLE>
- -------------------------
(1) Includes amounts deferred at the election of the named executive officers
under the 401(k) feature of the Company's Profit Sharing and Thrift Plan and
automobile allowances of $600, $500, and $500 per month for Mssrs.
Skibitsky, Robbins, and Nelson respectively. Mr. Brennan is provided with an
automobile by the Company.
(2) Includes: (i) the vested portion of Company contributions to the Profit
Sharing and Thrift Plan and (ii) dividend equivalent payments under the
Company's Stock Option and Restricted Stock Plans on stock options held by
the named executive officers for all reported years. Effective with the
third quarter 1997, dividend the named executive officers are no longer
entitled to these dividend equivalent payments. Includes income related to
premium costs of group term life insurance in excess of $50,000 provided by
the Company for 1995.
(3) In 1991, in lieu of any other retirement benefit not available generally to
all employees, Mr. Brennan was granted an option to purchase 50,000 shares
of Common Stock and borrowed the exercise price from the Company to exercise
the option. Included in the amount set forth is a payment of $68,000 to Mr.
Brennan which is equal to the amount of principal payment payable to the
Company by Mr. Brennan on December 31, 1995, 1996 and 1997 under the terms
of the promissory note evidencing the loan. Upon receipt, Mr. Brennan
immediately paid these amounts to the Company as payment of the principal
due on the note. The amount does not include an additional payment of
$26,790 for 1997, $32,148 for 1996 and $37,506 for 1995, which is equal to
the amount of interest accrued on the promissory note at the applicable
Federal rate under Section 1274(d) of the Internal Revenue Code of 1986, as
amended. On December 31, 1997, December 31, 1996 and December 31, 1995
respectively, Mr. Brennan received payments equal to these amounts which he
immediately paid to the Company as payment of the interest amount due on the
note. There is no net income or expense effect from these interest payments
since the
5
<PAGE> 9
interest income earned by the Company offsets the payment expense. (See
Employment Agreement -- C. M. Brennan III)
(4) Amount is determined by multiplying the number of shares times the closing
price of a share of Common Stock on the NYSE on the date of grant. The
restrictions lapse on the 7th anniversary date of the date of grant or upon
the named executive officer's earlier death, disability or retirement.
(5) Includes amounts accrued by the Company as unfunded liabilities for Mr.
Robbins and Mr. Nelson pursuant to Supplemental Retirement and Death Benefit
Agreements (SRDB Agreements) entered into in 1984 between the Company and
each of them. Under the SRDB Agreements these named executive officers are
entitled, upon retirement or permanent disability, to an aggregate amount
equal to two times their highest base salary (Benefit Amount) payable in 120
equal monthly installments over a period of 10 years (or, in the event of
death, to their beneficiary over 15 years). The Benefit Amount is reduced by
15%, 25%, 33.3%, 40% and 45% in the event the named executive officer
retires at age 64, 63, 62, 61, or 60, respectively. No benefit shall be paid
in the event of the named executive officer's retirement prior to age 60.
(6) The amount included for Mr. Skibitsky represents reimbursement for certain
costs associated with the sale of his previous residence in Connecticut
which the Company had agreed to pay at the time Mr. Skibitsky was employed
by the Company.
STOCK OPTIONS
The following table contains information concerning the stock options
granted to, exercised by and held by the named executive officers in 1997. The
Value of Unexercised In-the-Money Options is calculated using the difference
between fair market value of the Common Stock at December 31, 1997 ($12.8125 per
share) and the exercise price of the options.
FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
NO. SHARES ------------- -------------
ACQUIRED DOLLAR VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Charles M. Brennan III................... 0 $0 E 397,225 3,801,652
U 155,556 986,389
William S. Skibitsky..................... 0 $0 E 52,778 391,584
U 25,003 177,068
Elliott C. Robbins....................... 0 $0 E 59,447 547,078
U 18,335 148,098
Byron D. Nelson.......................... 0 $0 E 59,447 547,078
U 18,335 148,098
</TABLE>
EMPLOYMENT AGREEMENT -- C. M. BRENNAN III
The Company and Charles M. Brennan III entered into an employment agreement
effective January 1, 1997 (the "Brennan Agreement") which replaced a prior
agreement between the Company and Mr. Brennan which expired December 31, 1996.
The initial term of the Brennan Agreement was from January 1, 1997 through
December 31, 1997 and the agreement provides that it will renew automatically
for successive one year terms thereafter unless terminated in accordance with
the terms of the agreement. The Brennan Agreement provides that the Company
shall employ Mr. Brennan as Chairman and Chief Executive Officer at a base
compensation per year of not less than $312,500. The Agreement provides that Mr.
Brennan is entitled
6
<PAGE> 10
to receive an incentive bonus in accordance with the terms of any incentive
compensation plan which may exist from time to time during the term of the
Brennan Agreement.
The Brennan Agreement further provides that, upon termination of employment
for certain defined reasons set forth in the Brennan Agreement, Mr. Brennan (or
his estate) will receive an amount equal to from one to two times his annual
base salary plus an amount equal to from one to two times his annual incentive
amount determined on the basis of the Company having achieved 100% of its
financial goals. The amounts of these payments are determined based upon the
reason for the termination of Mr. Brennan's employment. In addition, all stock
options and restricted stock grants to Mr. Brennan shall become fully vested and
the amount of remaining indebtedness, if any, of Mr. Brennan to the Company
described under the heading "Indebtedness of Management" shall be forgiven.
INDEBTEDNESS OF MANAGEMENT
During 1991, the Board of Directors granted to Mr. Brennan, in lieu of any
retirement benefit generally not available to all salaried employees, a stock
option to purchase 50,000 shares of Common Stock under the Company's 1990 Stock
Option Plan (the "Brennan Option") and the Board of Directors provided Mr.
Brennan a cash grant of $731,500 restricted in its use to the exercise of the
Brennan Option under the terms of an employment agreement between the Company
and Mr. Brennan. At the expiration of its term the employment agreement was
replaced with a new agreement. (See Employment Agreement -- C.M. Brennan III.)
As part of the employment agreement, the Company agreed to lend $680,000 to Mr.
Brennan and to provide him a cash grant of $51,500 upon his execution of the
agreement. Mr. Brennan used the proceeds of the loan and the $51,500 to return
to the Company the $731,500 previously received by him and used for the exercise
of the stock option. The loan of $680,000 is evidenced by a promissory note
delivered to the Company by Mr. Brennan and is payable in equal installments of
$68,000 (plus interest thereon at the applicable Federal rate under Section
1274(d) of the Internal Revenue Code of 1986) on December 31 of each year
commencing on December 31, 1992 and thereafter through December 31, 2001. The
promissory note is secured by shares of Common Stock. As of January 1, 1998, the
remaining principal on the note was $272,000. The Brennan Agreement provides
that Mr. Brennan is entitled to receive, on December 31 on each year covered by
the Brennan Agreement and its predecessor agreements, a payment in an amount
equal to the principal and interest payment due to the Company from Mr. Brennan
for such years under the above described promissory note. The Brennan Agreement
provides that, in the event Mr. Brennan's employment terminates as a result of
his death or disability, the Company will forgive all remaining unpaid principal
and interest under the promissory note described above.
On July 24, 1994, the Company made a loan to William S. Skibitsky and his
wife in the amount of $150,000 to assist them in the purchase of a home in the
Chicago area. The loan was evidenced by a promissory note dated July 24, 1994
executed by Mr. and Mrs. Skibitsky. On August 10, 1995 the promissory note was
replaced with a new promissory note secured by a second mortgage deed on real
property owned by Mr. and Mrs. Skibitsky in Avon, Connecticut. The loan was
repaid in 1997.
REPORT OF THE COMPENSATION COMMITTEE
In 1994, the Board of Directors established a Compensation Committee (the
"Committee") which consists of Mr. Thomas (Chairman), Mr. Brown and Mr. Bulley.
The Committee administers the Company's stock option and restricted stock plans
and the Company's management incentive plan (MIP). The Compensation Committee
also sets the compensation of the Chief Executive Officer and the other named
executive officers of the Company. The purpose of the overall compensation
program is to attract and incent key management personnel. The principal
components of the compensation of the Chief Executive Officer and the other
named executive officers are base salary, short term incentive awards under the
Company's MIP, and long term incentives under the Company's stock option and
restricted stock plans.
The Committee bases its decisions regarding compensation of the Chief
Executive Officer on the philosophy that a significant portion of his
compensation must be determined by the performance of the Company against its
business plan. It believes generally that base salaries should be competitive
within the
7
<PAGE> 11
industries in which the Company conducts its business and should be within the
range of mean and mid-points for comparable positions as determined by various
industry compensation analysts and studies. In addition, incentive compensation
awards, stock options and restricted stock grants should provide an opportunity
based upon performance for the Chief Executive Officer, the other named
executive officers and other key management personnel to earn additional
compensation which would place them in the upper half of compensation ranges for
comparable positions as set forth in such studies.
The MIP, adopted by the Board of Directors in 1995, provides that the Chief
Executive Officer, the other named executive officers, and certain other key
management personnel are eligible for an award for each calendar year in which
the Company achieves at least 75% of its planned earnings per share goal for the
year. This minimum performance requirement may be amended, from time to time, by
the Board of Directors. Awards may be granted to all, some, or none of the
aforementioned eligible participants and may vary from 10% to 150% of the
individual's base salary. The amount of the award for the Chief Executive
Officer is determined by the Committee based upon an evaluation of the Company's
performance against its business plan and the Committee's overall evaluation of
the Chief Executive Officer's performance against objectives. In addition to the
evaluation of the Company's overall performance against plan, the amount of the
awards for the other named executive officers who are responsible for divisions
of the Company's operations are determined by the Committee based upon an
evaluation of each such executive officer's division's performance compared to
its business plan revenues, contract margins and operating income. The Committee
also considers in its determination of awards, (i) the evaluation of performance
against certain other specific goals, such as safety, an element of which is
measured by a reduction in lost time accidents, established at the time the
business plans for the year are finalized, and (ii) the evaluation of the
executive officer's overall performance in his position. Awards for executive
officers who are not responsible for division operations are determined by the
Committee based upon the Company's overall financial performance against its
business plan in the same manner as for the Chief Executive Officer and an
evaluation of such executive officer's overall performance in his or her
position, considering the responsibilities of such executive officer. The Board
of Directors may grant discretionary awards notwithstanding the terms of the
MIP. Awards to the named executive officers under the MIP for 1995, 1996, and
1997 are set forth in the Summary Compensation Table.
The Company utilizes stock option and restricted stock grants as longer
term compensation vehicles. The Committee believes that significant linkage
between the compensation of the Chief Executive Officer, the named executive
officers and key management personnel and the maximization of stockholder wealth
through appreciation in the value of Common Stock is created through the use of
stock option and restricted stock grants. Options are generally priced at the
fair market value of the underlying stock on the date of the grant and vest
incrementally over four to five years. Restricted stock grants vest on a
schedule determined by the Committee. In 1997 restricted stock grants totaled
25,500 shares to the named executive officers. The restrictions lapse seven
years from the date of grant. Of this total, Mr. Brennan was granted 10,000
shares of restricted stock. The Committee believes the incremental vesting of
options and extended periods for restrictions to lapse on grants of restricted
stock provide a longer term incentive to its executive officers thereby
providing a compensation vehicle by which to retain successful managers.
COMPENSATION COMMITTEE
Bide L. Thomas, Chairman
William G. Brown
Allan E. Bulley, Jr.
8
<PAGE> 12
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MYR GROUP INC., THE NYSE MARKET INDEX
AND THE DOW JONES HEAVY CONSTRUCTION INDUSTRY GROUP INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
COMPANY 1992 1993 1994 1995 1996 1997
------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MYR Group, Inc................................. 100 72.15 74.51 101.01 126.32 214.26
DJHCI Index.................................... 100 108.13 85.29 91.39 96.63 79.57
NYSE Market Index.............................. 100 113.54 111.33 144.36 173.90 228.78
</TABLE>
The above graph compares the performance of MYR Group Inc. with that of the
New York Stock Exchange Market Index and the Dow Jones Heavy Construction
Industry Group Index (DJHCI) which is a published industry index. The companies
which comprise the Dow Jones Heavy Construction Industry Group are: Abrams
Industries, Inc.; Ameron International Corp.; Astec Industries; BFC Construction
Corp.; Bufete Industrial; Costa Rica International Inc.; Devcon International
CP; Dycom Industries Inc.; Emcor Group Inc.; Empresas ICA Sociedad; Fluor
Corporation; Foster Wheeler Corporation; Gencor Industries Inc.; Gibbs
Construction, Inc.; Goldfield Corporation; Graham Corporation; Granite
Construction Inc.; Grupo Mex Desarrollo B; Grupo Mex Desarrollo L.; Grupo
Tribasa AS DE CV; Guy F. Atkinson Co. of CA; Huntway Partners (L.P.); Insituform
East, Inc.; Insituform Technologies CL (A); Jacobs Engineering Group; Meadow
Valley Corporation; Morrison Knudsen Corporation; MYR Group Inc.; OLS Asia
Holding Ltd. ADR; Randers Group Inc.; Rexworks Inc.; Robertson-CECO Corporation;
Salient 3 Comm, Inc, CL A; Sawako Corporation ADR; Specialty Teleconstruct;
Stone and Webster; STV Group; Thermo Ecotek Corporation; TRC Companies, Inc.;
Turner Corporation; U.S. Bridge Construction; U.S. Bridge Corp. and Zurn
Industries.
The comparison of total return on investment based upon the changes in year
end price plus reinvested dividends for each period is calculated assuming $100
was invested on January 1, 1993 in MYR Group Inc., the companies which comprise
the NYSE Market Index and the companies which comprise the DJHCI. For the NYSE
and the DJHCI comparison, the assumed investment is based upon a market weighted
calculation.
- -------------------------
In accordance with the rules of the Securities and Exchange Commission, the
information included under the captions "Report of the Compensation Committee"
and "Performance Graph" will not be deemed to be filed or to be proxy soliciting
material or incorporated by reference in any prior or future filings by the
Company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended.
9
<PAGE> 13
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF MANAGEMENT
The table set forth below, including the footnotes, contains information as
of March 1, 1998 concerning beneficial ownership of Common Stock by directors,
named executive officers, all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES EXCERCISABLE PERCENTAGE
BENEFICIALLY STOCK OF THE SHARES
OWNED OPTIONS OUTSTANDING
------------ ------------ -------------
<S> <C> <C> <C>
Charles M. Brennan III(1)................................... 926,221 413,891 22.3
William G. Brown............................................ 113,519 27,784 2.5
Allan E. Bulley, Jr. ....................................... 30,146 27,784 1.0
John M. Harlan(2)........................................... 0 81,347 1.4
Bide L. Thomas.............................................. 3,333 27,784 0.5
William S. Skibitsky(1)..................................... 45,000 52,778 1.7
Elliott C. Robbins(1)....................................... 50,498 59,447 1.9
Byron D. Nelson(1).......................................... 50,276 59,447 1.9
All Dir. & Exec. Officers................................... 1,218,993 750,262 31.1
</TABLE>
- -------------------------
(1) Includes shares of restricted stock awarded to the named individuals the
restrictions on which have not expired.
(2) Includes a conversion right for 57,455 shares under the non-escrow notes
described in "Certain Relationships and Related Transactions".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table set forth below, including the footnotes on the following page,
contains information as of December 31, 1997 concerning other principal
stockholders known to the Company to own beneficially more than five percent of
the Company's outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY OF THE SHARES
OWNED OUTSTANDING
------------ -------------
<S> <C> <C>
Heartland Advisors, Inc. ................................... 754,788 13.7
790 N. Milwaukee St.
Milwaukee WI 53202
T. Rowe Price Associates, Inc.(1)........................... 433,333 7.8
PO Box 89000
Baltimore MD 21289-1009
FMR Corp. .................................................. 542,998 9.8
82 Devonshire Street
Boston MA 02109
Dimensional Fund Advisors Inc.(2)........................... 328,471 5.9
1299 Ocean Avenue
Santa Monica CA 90401
Kennedy Capital Management, Inc............................. 296,608 5.4
10829 Olive Blvd.
St. Louis MO 63141-7739
</TABLE>
- -------------------------
(1) These securities are owned by various individual and institutional investors
including T. R. Price Small Cap Value Fund, Inc. (which owns 433,333,
representing 8.0% of the shares outstanding) which T. Rowe Price Associates,
Inc. (Price Associates) serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates disclaims that it is, in fact, the beneficial owner of such
securities.
10
<PAGE> 14
(2) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 328,471 shares of MYR
Group Inc. stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or the DFA Group Trust a Delaware business trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
OTHER INFORMATION
FINANCIAL STATEMENTS AND AUDITORS
Stockholders are referred to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 for financial and other information about the
Company, but the report is not incorporated in this statement and is not deemed
to be a part of the proxy soliciting material.
Deloitte & Touche LLP was the Company's auditor for 1997. The Board of
Directors has not selected the Company's auditors for 1998. Auditors will be
selected by the Board upon a recommendation by the Audit Committee. A
representative of Deloitte & Touche LLP will be present at the Annual Meeting.
He will have the opportunity to make a statement, if he desires to do so, and
will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals specified in the Company's proxy materials. Any proposal which a
stockholder wishes to have considered by the Company for inclusion in the proxy
materials of the Board of Directors for the 1999 annual meeting of stockholders
should be sent to the Secretary of the Company in writing and must be received
before December 31, 1998.
Proposals otherwise properly brought before a meeting. Stockholders wishing
to present proposals for action at a meeting of the Company's stockholders must
do so in accordance with the Company's bylaws. A stockholder must give timely
notice of the proposed business to the Secretary of the Company. To be timely, a
stockholder's notice must be in writing, delivered to or mailed, postage
prepaid, to and received by the Secretary of the Company not less than 45 days
nor more than 60 days prior to the meeting, provided, however, that if less than
50 days' notice or prior public disclosure of the date of the meeting is given
to stockholders, notice by the stockholder, to be timely, must be received by
the Secretary not later than the close of business on the seventh day following
the day on which notice of the date of the meeting was mailed or public
disclosure was made. For each matter the stockholder proposes to bring before
the meeting, the notice to the Secretary must include: (i) a brief description
of the business desired to be brought before the meeting; (ii) the name and
address of the stockholder proposing the business; (iii) the class and number of
shares of the Company which are beneficially owned by the stockholder; and (iv)
any material interest of the stockholder in such business.
The Chairman of the meeting may, if the facts warrant, determine and
declare that business was not properly brought before the meeting in accordance
with the Company's bylaws. If the Chairman does so, the business shall not be
transacted.
STOCKHOLDER NOMINATIONS FOR DIRECTOR
Nominations specified in the Company's proxy materials. The Board of
Directors will consider any candidate recommended by a stockholder of the
Company for nomination as a director for election at the 1999 annual meeting of
stockholders provided that written notice of such recommendation is received by
the Secretary of the Company before December 31, 1998. The notice is required to
set forth: (i) the name and address of the stockholder making the
recommendation; (ii) the name, age, business address and, if known, residence
address of each proposed nominee; (iii) the principal occupation or employment
of each proposed nominee and other relevant biographical information concerning
the proposed nominee; (iv) a detailed statement of the proposed nominee's
qualifications; (v) the number of shares of stock of the Company which
11
<PAGE> 15
are beneficially owned by each proposed nominee and by the stockholder making
the recommendation; (vi) a description of all arrangements or understandings
between the stockholder making the recommendation and each proposed nominee and
any other person or persons (naming such person or persons) pursuant to which
the proposed nomination or nominations are to be made; (vii) any other
information concerning the proposed nominee that must be disclosed with respect
to nominees in proxy solicitations pursuant to Regulation 14A of the Securities
Exchange Act of 1934; and (viii) the executed consent of each proposed nominee
to serve as a director of the Company if nominated and elected.
Nominations to be made directly by a stockholder at a meeting. In
accordance with the Company's bylaws, stockholders wishing to directly nominate
candidates for the Board of Directors must do so in writing, delivered to or
mailed, postage prepaid, to and received by the Secretary of the Company not
less than 45 days or more than 60 days prior to any meeting of stockholders
called for the election of directors, provided, however, that if less than 50
days' notice or prior public disclosure of the date of the meeting is given to
stockholders, the nomination must be received by the Secretary not later than
the close of business on the seventh day following the day on which the notice
of the meeting was mailed. The notice is required to set forth: (i) the name and
address of the stockholder who intends to make the nomination; (ii) the name,
age, business address and, if known, residence address of each nominee; (iii)
the principal occupation or employment of each nominee; (iv) the number of
shares of stock of the Company which are beneficially owned by each nominee and
by the nominating stockholder; (v) a description of all arrangements or
understandings between the nominating stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made; (vi) any other information concerning
the nominee that must be disclosed with respect to nominees in proxy
solicitations pursuant to Regulation 14A of the Securities Exchange Act of 1934;
and (vii) the executed consent of each nominee to serve as a director of the
Company if elected.
The Chairman of the meeting of stockholders may, if the facts warrant,
determine that a nomination was not made in accordance with the proper
procedures. If the Chairman does so, the Chairman shall so declare to the
meeting and the defective nomination shall be disregarded.
BY ORDER OF THE BOARD OF DIRECTORS
Byron D. Nelson
Secretary
Three Continental Towers
1701 West Golf Road, Suite 1012
Rolling Meadows, Illinois 60008
12
<PAGE> 16
PROXY MYR GROUP INC. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - MAY 6, 1998
The stockholder(s) of MYR Group Inc. signing and dating such signature(s) on
the reverse side hereof (the "STOCKHOLDER(S)") hereby appoint Charles M.
Brennan III, Byron D. Nelson and Elliott C. Robbins proxies, with full
authority, which may be exercised by any one or more of them, with power of
substitution, to vote and act for the STOCKHOLDER(S) at the Annual Meeting of
Stockholders to be held at the Meadows Corporate Center, English Room, 2850
West Goll Road, Rolling Meadows, Illinois, 60008 at 10:00 a.m. on Wednesday,
May 6, 1998, and at any adjournment thereof, as designated on the reverse side
hereof, and in their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
[ ] Check here for address change [ ] Check here if you plan to attend
the meeting
New Address ______________________
______________________
______________________
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
MYR GROUP INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
For Withheld
1. ELECTION OF CLASS III DIRECTOR.
Nominee: CHARLES M. BRENNAN III / / / /
THE BOARD OF DIRECTORS RECOMMENDS
VOTING FOR THE ELECTION OF
MR. BRENNAN.
The undersigned acknowledges
receipt of the Notice of Annual Meeting
of Stockholders and the Proxy
Statement.
Dated: ____________, 1998
______________________________
______________________________
______________________________
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS. JOINT OWNERS SHOULD EACH
SIGN PERSONALLY. WHERE APPLICABLE,
INDICATE YOUR OFFICIAL POSITION OR
REPRESENTATION CAPACITY.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
