<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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MTL INC.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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
MTL INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of MTL Inc.:
The Annual Meeting of Shareholders of MTL Inc. (the "Company") will be
held at the offices of the Company located at 3108 Central Drive, Plant City,
Florida 33567 on May 16, 1997, at 9:00 a.m. for the following purposes:
1. To elect five directors to hold office until the 1998 Annual Meeting
of Shareholders and to hold office until their successors are duly
elected and qualified;
2. To adopt an amendment to the 1994 Incentive and Non-Statutory Stock
Option Plan to increase the maximum number of shares reserved for
issuance thereunder from 500,000 to 700,000.
3. To consider and act upon a proposal to ratify the appointment of
Arthur Andersen LLP as independent auditors of the Company for the
year ending December 31, 1997; and
4. To transact any other business as may properly come before the
meeting.
Shareholders of record as of the close of business on April 7, 1997, will
be entitled to vote at this meeting or any adjournment thereof. Information
relating to the matters to be considered and voted on at the Annual Meeting is
set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
/s/ Robert Kasak
------------------------------------
April 10, 1997 Robert Kasak, Secretary
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
VOTE ON THE MATTERS TO BE CONSIDERED AT THE MEETING BY
COMPLETING THE ENCLOSED PROXY AND MAILING IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
<PAGE> 3
MTL INC.
3108 CENTRAL DRIVE
PLANT CITY, FLORIDA 33567
(813) 754-4725
------------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of MTL Inc. (the "Company") for
the Annual Meeting of Shareholders to be held at the offices of the Company
located at 3108 Central Drive, Plant City, Florida 33567 on May 16, 1997, at
9:00 a.m., or any adjournment thereof.
If the accompanying proxy form is completed, signed and returned, the
shares represented thereby will be voted at the meeting. The giving of the proxy
does not affect the right to vote in person should the shareholder be able to
attend the meeting. The shareholder may revoke the proxy at any time prior to
the voting thereof.
The annual report of the Company for the year ended December 31, 1996,
is being mailed with this proxy statement to shareholders entitled to vote at
the meeting. The cost of the proxy solicitation will be paid by the Company.
SHAREHOLDERS ENTITLED TO VOTE
AND
PRINCIPAL SHAREHOLDERS
The only voting securities of the Company are common shares.
Shareholders of record as of the close of business on April 7, 1997, are
entitled to notice of and to vote at the Annual Meeting. At that date, there
were 4,523,739 shares of Common Stock outstanding, each share being entitled to
one vote.
The affirmative vote of the holders of a majority of the votes cast at
the meeting is necessary for the election of directors, the adoption of the
amendment to the Company's 1994 Incentive and Non-Statutory Stock Option Plan
and the ratification of the selection of auditors.
The following table sets forth certain information regarding those
persons known to management to hold beneficially at least 5% of the outstanding
shares of Common Stock of the Company and the ownership by all executive
officers and directors as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
---------------- ---------------------- --------
<S> <C> <C>
Elton Babbitt (2) 373,290 8.25%
3108 Central Drive
Plant City, Florida 33567
Gordon Babbitt (2) 756,980(3)(4) 16.73%
3106 Central Drive
Plant City, Florida 33567
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
---------------- ---------------------- --------
<S> <C> <C>
Gerald L. McCullough 337,940(3) 7.47%
c/o GLM Financial Group Ltd.
20855 No. Rand Road
Barrington, IL 60010
Fidelity Investments 337,000(5) 7.45%
82 Devonshire Street
Boston, MA 02109-3614
Dalton Greiner Hartman 246,100(5) 5.44%
565 Fifth Avenue, Suite 2101
New York, New York 10017
Lindner Growth Fund 337,500(5) 7.46%
c/o Ryback Management Corporation
7711 Carondelet Avenue, Suite 700
St. Louis, Missouri 63105
Heartland Advisors, Inc. 300,000(5) 6.63%
790 N. Milwaukee Street
Milwaukee, WI 53202
All executive officers and 878,933(6) 19.43%
directors as a group (6 persons)
</TABLE>
- -------------------------
(1) Includes shares underlying options which are exercisable or exercisable
within sixty (60) days from the date of this Proxy Statement.
(2) Mr. Gordon Babbitt is the son of Mr. Elton Babbitt.
(3) Includes 337,380 shares owned by trusts established for the grandchildren
for Mr. Elton Babbitt for which Mr. Gordon Babbitt and Gerald L.
McCullough act as co-trustees.
(4) Includes 7,500 shares owned by a company of which Mr. Babbitt is part
owner.
(5) Reported on Form 13-G, a copy of which was furnished to the Company
(6) Includes 104,994 shares owned by Richard J. Brandewie, Senior Vice
President and Chief Financial Officer. Of these shares, 55,746 are related
to options currently exercisable or exercisable within 60 days from the
date of this Proxy.
2
<PAGE> 5
ELECTION OF DIRECTORS
PROXIES IN THE ACCOMPANYING FORM WILL BE VOTED AT THE MEETING, UNLESS
AUTHORITY TO DO SO IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE
NOMINEES NAMED BELOW.
It is proposed that the shareholders elect five directors. The term of
each elected director will be until the next Annual Meeting of Shareholders or
until his successor is duly elected and qualified. It is intended that the
proxies will be voted for the nominees listed below and cannot be voted for more
than five nominees. Each nominee is at present available for election, but if
any nominee should become unavailable, the persons voting the accompanying proxy
may, at their discretion vote for a substitute. Certain information concerning
the nominees is set forth below.
<TABLE>
<CAPTION>
COMMON SHARES
SERVED BENEFICIALLY
AS OWNED AS OF
DIRECTOR APRIL 7, 1997
NAME AGE SINCE NO. SHARES (1) % SHARES
- ---- --- --------- -------------- --------
<S> <C> <C> <C> <C>
Elton E. "Buzz" Babbitt......... 64 1967 373,290 8.3%
John B. Bowron.................. 61 1995 560 0.0%
Donald W. Burton................ 52 1992 11,214 (3) 0.3%
Gerald L. McCullough............ 54 1995 337,940 (2) 7.5%
Charles J. O'Brien, Jr.......... 59 1989 50,935 (4) 1.3%
</TABLE>
(1) Includes shares underlying options which are exercisable or exercisable
within sixty (60) days from the date of this Proxy Statement.
(2) Includes 337,380 shares owned by trusts established for the grandchildren
of Mr. Elton Babbitt for which Gerald L. McCullough acts as one of two
trustees.
(3) Includes 3,830 shares underlying options currently exercisable.
(4) Includes 11,496 shares underlying options currently exercisable.
ELTON E. BABBITT has served as Chairman of the Board of Directors of
the Company since June 1987. From 1967 until 1987, he served as a director and
as President and Chief Executive Officer of the Company. Prior to his
association with the Company, he served as General Manager of MILK Transport, a
Minnesota- based tank truck carrier.
JOHN B. BOWRON has been senior vice president of Landstar Systems, Inc.
("Landstar"), a trucking company, since January 1993 and a director of such
company since 1991. From 1988 to 1993 he served in various executive capacities
with subsidiaries of Landstar. From 1987-1988 he was group Vice President of
Truckload Transportation for I U. International Corporation.
3
<PAGE> 6
DONALD W. BURTON is President of South Atlantic Capital Corporation and
Managing General Partner of the General Partner of South Atlantic Venture Fund,
Limited Partnership, South Atlantic Venture Fund II, Limited Partnership and
South Atlantic Venture Fund III, Limited Partnership. Mr. Burton is also a
director of The Heritage Group of Mutual Funds. He has been a director of the
Company since 1992.
GERALD L. MCCULLOUGH has served as President of the GLM Financial Group
since 1978. GLM is a provider of tax, accounting and planning services for
individuals and companies engaged in the trucking industry.
CHARLES J. O'BRIEN, JR. joined the Company in 1989 in connection with
the acquisition of Quality- O'Boyle, Inc. at which time he was appointed as the
Chief Operating Officer and elected to the Board of Directors. Since 1991, he
has served as the Company's President and Chief Executive Officer. Prior to
joining MTL, he served as Chairman, Chief Executive Officer and controlling
shareholder of Quality-O'Boyle, Inc. from January 1977 to February 1989. Prior
to his association with Quality-O'Boyle, Inc., he served as Chief Executive
Officer of Matlack, Inc., a trucking company, from 1969 to 1976 and served as a
director of Rollins International, Inc., Matlack's parent company.
The Board of Directors held four meetings during the year ended
December 31, 1996. The current standing committees of the Board of Directors are
the Audit Committee and the Compensation Committee. The Audit Committee met two
times and the Compensation Committee met two times during the year ended
December 31, 1996. All directors attended all of the meetings held during the
year ended December 31, 1996.
COMMITTEES
The Company's non-employee directors make up the Compensation Committee
and Audit Committee.
The Compensation Committee approves standards for setting compensation
levels for Company executives and grants the specific awards made under the
Company's incentive compensation plans. It also reviews senior management
performance and development programs.
The function of the Audit Committee is to meet periodically with the
Company's independent auditors to review the scope and results of the audit and
to consider various accounting and auditing matters related to the Company,
including its internal control structure. The Committee annually reviews the
qualifications of the independent certified public accountants, makes
recommendations to the Board as to their selection reviews the scope, fees and
results of their audit and approves their non-audit services and related fees.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
by the Company for services rendered during the years ended December 31, 1996,
1995 and 1994, by the Chief Executive Officer of the Company and each of the
other most highly compensated executive officers of the Company whose total cash
compensation for the year ended December 31, 1996, exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL ------------------------------------ UNDERLYING
POSITION YEAR SALARY BONUS OTHER(1) OPTIONS
-------- ---- ------ ----- -------- -------
<S> <C> <C> <C> <C> <C>
Charles J. O'Brien, Jr. 1996 $188,262 $71,362 $9,913 -
President 1995 183,074 64,214 11,136 -
1994 169,180 68,947 8,235 28,740
Elton E. Babbitt 1996 $182,885 $71,093 $4,112 -
Chairman of the Board 1995 177,749 64,184 5,180 -
1994 147,390 67,082 6,360 -
Richard J. Brandewie 1996 $122,489 $44,187 $9,913 100,000
Senior Vice-President 1995 112,846 40,755 11,146 -
1994 104,039 43,759 6,562 14,365
</TABLE>
- --------------------
(1) Amount shown represents contributions by the Company to the Company's
Profit Sharing Plan on behalf of such officers. See "Profit Sharing Plan."
On February 23, 1989, the Company entered into a five year employment
agreement with Mr. O'Brien, subject to automatic one year renewals unless
otherwise terminated. The agreement provides for an initial base salary of
$150,000 per year plus a bonus or bonuses as determined by the Board of
Directors. The agreement further provides Mr. O'Brien with fringe benefits
including a split-dollar life insurance policy in the face amount of $500,000,
long term disability coverage, health, life and accident insurance and an
automobile expense allowance. The agreement has been automatically extended.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive a $1,000 attendance
fee for each meeting plus reimbursement for out-of-pocket expenses. In addition,
the Company has authorized the issuance to each non-employee board member
annually, shares of Common Stock having a market value of $10,000.
5
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
Since January 1, 1996 the Company has granted options to its executive
officers as follows:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL GRANT
UNDERLYING OPTIONS DATE
OPTIONS GRANTED TO EXERCISE EXPIRATION PRESENT
NAME GRANTED(#) EMPLOYEES PRICE(1) DATE VALUE(2)
---- ---------- --------- -------- ---- --------
<S> <C> <C> <C> <C> <C>
Richard J. Brandewie 100,000 31.24% 18.25 10/23/06 612,000
</TABLE>
(1) All options were granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. Options vest
at the rate of 20% per year for each of the first five years and
terminate ten years from the date of grant.
(2) In accordance with the Commission's rules, the Black-Scholes option
pricing model was chosen to estimate the grant date present value of
the options set forth in this table. The Company's use of the model
should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock
price. The real value of the options in this table depends upon the
actual performance of the Company's stock and overall market conditions
during the applicable period. The amounts reflected in this table may
not be achieved.
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTION
OPTION AT YEAR-END AT YEAR-END
------------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles J. O'Brien, Jr. 11,496 17,244 $ 60,354 $ 90,531
Richard J. Brandewie 45,746 118,619 $ 590,197 $ 577,035
</TABLE>
The Company has an incentive compensation plan for all full time
employees. Each year the Company establishes certain goals which include
revenues, operating ratio, profit before taxes and other financial goals.
Additionally, three (3) to five (5) specific goals are mutually agreed upon by
each individual employee and executive management. A maximum bonus amount is
established for each employee based on a percentage of such employee's base
salary. If both the Company's goals and the employee goals are achieved, the
maximum percent amount is paid to the employee as incentive compensation. If all
goals are not attained, the pay out is reduced accordingly. If the Company fails
to achieve its overall goals, likewise, incentive compensation is reduced.
During 1996, bonuses in the aggregate amount of $1,029,000 were earned by
employees, but not paid to them until 1997. The Plan is administered by the
Compensation Committee.
STOCK OPTION PLAN
On October 23, 1996 the Board of Directors amended the Company's Stock
Option Plan (the "Plan") to increase the number of shares covered thereby from
500,000 to 700,000. Such amendment is subject to shareholder approval. See
"Amendment to 1994 Incentive and Non-Statutory Stock Option Plan." The Plan
6
<PAGE> 9
is designed as a means to retain and motivate key employees. The outside
Directors administer and interpret the Plan. Options may be granted to all
eligible employees of the Company, including officers and non-employee
directors, and others who perform services for the Company. As of December 31,
1996, there were 577,062 shares underlying unexercised options granted under the
Plan, 8,106 options have been exercised, leaving 114,832 shares available for
future grant.
The Plan provides for the granting of both incentive stock options (as
defined in Section 422 of the Internal Revenue Code) and nonqualified stock
options. Options are granted under the Plan on such terms and at such prices as
determined by the Board of Directors, except that the per share exercise price
of incentive stock options cannot be less than the fair market value of the
Common Stock on the date of grant. Each option is exercisable after the period
or periods specified in the option agreement, but no option may be exercisable
after the expiration of ten years from the date of grant. Options granted under
the Plan are not transferable other than by will or by the laws of descent and
distribution.
PROFIT SHARING PLAN
The Company maintains a Profit Sharing Plan which is intended to be a
tax-qualified defined contribution plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Profit Sharing Plan includes
a "401(k)" arrangement pursuant to which participants may contribute, subject to
certain Code limitations, a percentage of their salary on a pre-tax basis.
Subject to certain Code limitations, the Company may make a matching
contribution with respect to the contributions of participants at a rate
determined by the Board of Directors of the Company each year. The Company may
also make an additional contribution to the Profit Sharing Plan each year at the
discretion of the Board of Directors. The Board of Directors approved the
contribution by the Company of $300,000 to the Profit Sharing Plan and $178,000
to the 401(k) Plan for 1996. In general, all full-time employees of the Company
who have completed one year of service and have attained age 21 are eligible to
participate.
A separate account is maintained for each participant in the Profit
Sharing Plan. The portion of a participant's account attributable to his own
contributions is always 100% vested. The portion of the account attributable to
Company contributions vests at a rate of 20% per year commencing with the second
year of service. Distributions from the Profit Sharing Plan are generally
payable to a participant following his termination of employment.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's Chairman
and Chief Executive Officer and certain other executive officers. The disclosure
requirements for the executive officers include the use of tables and a report
of the Committee responsible for compensation decisions for the named executive
officers, explaining the rationale and considerations that led to those
compensation decisions. Therefore, the Compensation Committee of the Board of
Directors has prepared the following report for inclusion in this Proxy
Statement.
COMPENSATION COMMITTEE ROLE
The Compensation Committee of the Board of Directors is responsible for
making recommendations to the Board of Directors concerning the salaries of
Executive Officers. The Committee is also responsible
7
<PAGE> 10
for overseeing other forms of compensation and benefits to other senior
officers. The Committee's responsibilities include the review of salaries,
benefits and other compensation of senior officers and making recommendations to
the full Board of Directors with respect to these matters.
COMPENSATION PHILOSOPHY
The compensation philosophy for Executive Officers conforms to the
compensation philosophy of the Company generally for all employees. The
Company's compensation is designed to:
- provide compensation comparable to that offered by companies with
similar businesses, allowing the Company to successfully attract and
retain the employees necessary to its long-term success;
- provide compensation which relates to the performance of the
individual and differentiates based upon individual performance;
- provide incentive compensation that varies directly with both
Company performance and individual contribution to that performance;
and
- provide an appropriate linkage between compensation and the creation
of shareholder value through awards tied to the Company's
performance and through facilitating employee stock ownership.
EXECUTIVE OFFICERS' COMPENSATION PROGRAM
The Company's Executive Officers' compensation program is comprised of
base salary, annual incentive bonus plan compensation and long-term incentive
compensation in the form of stock options. In addition, the Company's Executive
Officers receive various other benefits, including medical benefits,
participation in an employee stock ownership plan and a retirement savings plan,
which are all generally available to all employees of the Company.
BASE SALARY
The Compensation Committee reviewed the salaries of the Executive
Officers of the Company in August 1996. The Committee made salary decisions
about the Executive Officers based upon a variety of considerations in
conformance with the compensation philosophy stated above. First, salaries are
competitively set relative to companies in the trucking industry. Second, the
Committee considered the performance of the individual Executive Officer with
respect to the areas under his or her responsibility, including an assessment of
the value of each to the Company. Third, internal equity among employees was
factored into the decision. Finally, the Compensation Committee considered the
Company's financial performance and its ability to absorb any increases in
salaries.
Based upon the overall success of the Company and his significant
contributions to its success, the Committee set the base salary of its Chief
Executive Officer, Charles J. O'Brien, Jr., within the middle range of published
data available from the American Trucking Association. The Compensation
Committee established targets for the annual base salary and cash bonus awards
for Mr. O'Brien based upon his responsibilities compared to the revenue size,
profitability level, and other factors compared to chief executive
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<PAGE> 11
officers of companies within the tank truck segment of the trucking industry.
The Committee split such targeted annual earnings between base salary and cash
bonus awards with Mr. O'Brien having the opportunity to earn up to 42% of his
base salary based on achieving certain quantitative objectives, primarily
revenue growth, operating profit levels and earnings per share. The other four
of the highest compensated officers of the Company were compensated in a similar
manner, with the proportion of total compensation based on a cash bonus award
varying with the individual.
INCENTIVE BONUS PLAN
Each executive officer, including the Chief Executive Officer, is
eligible to receive an annual cash bonus award. These cash bonuses generally are
paid pursuant to a Goal Oriented Compensation Achievement Plan established
during the year. Each year the Company establishes certain goals which include
revenues, operating ratio, profit before taxes and other financial goals.
Additionally, three to five (3-5) specific goals are mutually agreed upon by
each executive and the Company. A maximum bonus is established for each
executive based on a percentage of the executive's base salary. If both the
Company's goals and the executive's goals are achieved, the maximum percent
amount is paid to the executive as incentive compensation. If all goals are not
met, the payout is reduced accordingly. If the Company fails to achieve its
overall goals, likewise, incentive compensation is reduced.
STOCK OPTION AWARDS
The Company maintains Stock Option Plans which are designed to align
Executive Officers' and shareholders' interests in the enhancement of
shareholder value. Stock options are granted under these plans by the
disinterested members of the Board. Executive Officers are eligible to receive
options under these plans. The Compensation Committee strongly believes that the
interests of shareholders and executives become more closely aligned when such
executives are provided an opportunity to acquire a proprietary interest in the
Company through ownership of the Company's Common Stock. Accordingly, key
employees of the Company, including Executive Officers, as part of their overall
compensation package, are eligible for participation in the Company's Stock
Option Plans, whereby they are granted at no less than fair market value on the
date of grant. Because no benefit is received unless the Company's stock price
performs favorably, awards under the Stock Option Plans are intended to provide
incentives for Executive Officers to enhance long-term Company performance, as
reflected in stock price appreciation, thereby increasing shareholder value.
The amount of the grants are principally based on overall consolidated
results of the Company, achievement of Company objectives, individual
performance, including managerial effectiveness, initiative and team work, and
are in such amounts that reflect what the Committee believes are necessary to
attract, retain and motivate senior management and other key employees. The
Compensation Committee believes that stock option awards are rewards for past
growth and the incentive for continued growth.
COMPENSATION COMMITTEE
Date: March 22, 1997 Donald W. Burton
John B. Bowron
Gerald McCullough
9
<PAGE> 12
The 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 under the Securities Act of 1933 or under
the Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholders' return on the Company's Common Stock with the Nasdaq Stock Market
(U.S.) Index and the CRSP Trucking and Transportation Index since the Company's
initial public offering which was consummated on June 17, 1994. This graph
assumes that $100 was invested on June 17, 1994, the date of the Company's
initial public offering, in the Company's Common Stock and in the other indices,
and that all dividends were reinvested. The stock price performance shown below
is not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
June 17, 1994 December 31, 1994 December 31, 1995 December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MTL INC. $100.00 $ 75.00 $ 93.29 $134.96
- -----------------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market (U.S.) Index $100.00 $105.05 $148.45 $182.74
- -----------------------------------------------------------------------------------------------------------------------------
CRSP Trucking and Transportation $100.00 $ 96.10 $112.06 $123.67
Index
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
10
<PAGE> 13
CERTAIN TRANSACTIONS
A company owned by the children of Elton Babbitt, the Company's
Chairman of the Board (the "Related Corporation") entered into a service
agreement with the Company, pursuant to which the Related Corporation agreed to
supply design, engineering, transloading, intermodal and other services to the
Company for a monthly fee of $11,670 per month. Because of their specialized
nature, these are services the Company would be unable to provide to its
customers on its own. The agreement expires on April 1, 1997, and is
automatically renewable for one year terms unless canceled by either party.
Management believes that the terms of this service agreement are no less
favorable than could be obtained from unaffiliated parties.
During 1996, the Company purchased $5.2 million worth of trailer
equipment from the Related Corporation. The Related Corporation performed repair
and maintenance services for the Company totaling $432,000 during 1996.
Management believes that the purchase price for the trailers and cost of the
repair services are no greater than those charged by the Related Parties to
non-affiliated purchasers and users.
In addition to the purchase of trailers and repair work, the Company
and the Related Corporation have engaged in various transactions involving (1)
tire purchases and (2) facility rentals. Because of its ability to buy tires in
volume, the Company included in its purchase orders tires on behalf of the
Related Corporation. The Related Corporation leases a manufacturing and repair
facility from the Company for a monthly rental of $5,000. The lease expires on
April 1, 1999. As a result of these transactions, during the year ended December
31, 1996, the amount owed to the Company by the Related Corporation ranged from
a high of $15,975 in May to a low of $0 in December. At December 31, 1996, there
were no amounts owed to the Company by the Related Corporation.
In March 1994, the Company entered into a Limited Partnership with Mr.
Gordon Babbitt and two unaffiliated corporations. The purpose of the Limited
Partnership is to provide transportation services for bulk liquid commodities
between Florida and Puerto Rico. The Company, Mr. Gordon Babbitt and an
unaffiliated corporation have each contributed $4,950 to the Limited Partnership
for a 33% partnership interest. Another corporation owned by an individual
employed by the Related Corporation holds the remaining 1% partnership interest
and acts as the general partner. The three limited partners financed, on a loan
basis, $1,675,000 of the initial operations of the Limited Partnership. The
Company financed up to $800,000 of the $1,675,000 with cash or equipment. Such
amount financed by the Company, in excess of the amounts financed by the other
limited partners, was secured by the equipment owned by the Limited Partnership
and guaranteed by the other limited partners. Distributions to the partners is
made in accordance with their ownership interest in the Limited Partnership once
all loans have been repaid to the limited partners. In 1996, $262,930 was repaid
to the Company by the limited partnership.
A corporation owned by Mr. Charles J. O'Brien, III, son of Charles J.
O'Brien, Jr., President and Chief Executive Officer of the Company is an
Affiliate operating terminals. The terms of the agreement with this corporation
are the same as those entered into with other Affiliates. Additionally, Mr.
O'Brien, III, owns a company which provides administrative services to the
Company. The total paid for such administrative services in 1996 was $104,608.
11
<PAGE> 14
AMENDMENT TO 1994 INCENTIVE AND
NON-STATUTORY STOCK OPTION PLAN
The Company maintains a stock option plan (the "Plan") to assist the
Company in attracting, maintaining and developing management by encouraging
ownership of the Company's Common Stock by key employees and others, Incentive
("ISO") and Non-Statutory ("NSO"). Stock options may be granted to employees,
directors and others providing services to the Company. On October 23, 1996 the
Board of Directors amended the Company's Stock Option Plan (the "Plan") to
increase the number of shares covered thereby from 500,000 to 700,000. Such
amendment is subject to shareholder approval. At December 31, 1996 there were
577,062 shares of Common Stock underlying unexercised options granted under the
Plan; 8,106 options have been exercised leaving 114,832 shares available for
future grant. In view of the limited number of options available for issuance
under the Plan, management is of the opinion that the additional options are
needed not only to provide for those recently granted but for possible future
issuances. Stock options may be granted to employees, directors and others
providing services to the Company.
On October 23, 1996 the board of directors, by written unanimous consent,
authorized the granting of 100,000 options each to Richard Brandewie, Sr. Vice
President of the Company, and Marvin "Buddy" Sexton, President of Montgomery
Tank Lines, Inc., a subsidiary of the Company. The options are for five years,
exercisable at 20% per year commencing in October 1997 at $18.25, the market
value of the Common Stock on the date of grant. If the amendment to the Plan is
approved such options will be incentive options granted under the Plan. If the
amendment is not approved, the options will be a non-statutory option granted
outside the Plan.
On October 23, 1996, the Board of Directors approved and recommends to the
shareholders that they approve a proposal to amend the Plan to increase the
number of shares of Common Stock available for grant from 500,000 to 700,000
shares of Common Stock. The text of the proposed amendment to the Plan is as
follows:
2.1 Shares Subject to Plan. The stock subject to the options granted
under the Plan shall be shares of the Company's authorized but unissued
common stock, par value $.01 per share ("Common Stock"). The total number
of shares that may be issued pursuant to options granted under the Plan
shall not exceed an aggregate of 700,000 shares of Common Stock.
The proposed amendment to the Plan will be adopted upon receiving the
affirmative vote of holders of a majority of the shares present or represented
by proxy at the meeting. Proxies will be voted in accordance with the
specifications marked thereon and, if no specification is made, will be voted
"FOR" adoption of the proposed amendment to the Plan.
Except for such amendment, if approved by holders of a majority of the
shares present in person or represented by proxy at the annual meeting, the Plan
will remain unchanged. The following is a summary of the provisions of the Plan.
This summary is qualified in its entirety by reference to such Plan.
SUMMARY DESCRIPTION OF THE STOCK OPTION PLAN. The Plan is administered by
the Option Committee (the "Committee") which is authorized to grant incentive
stock options to officers and other key executive and management employees of
the Company. The current members of the Committee appointed by the Board of
Directors are Donald W. Burton, John B. Bowron and Gerald McCullough. The
Committee establishes rules
12
<PAGE> 15
and regulations for the operation of the Plan, selects persons to receive
options, determines the option price for shares subject to each option, and
determines the number of shares subject to grants.
If there is a stock split, stock dividend, or other relevant change
affecting the Company's shares, appropriate adjustments would be made in the
number of shares that could be issued in the future and in the number of shares
and price under all outstanding grants made before the event. Future options may
also cover such shares as may cease to be under option by reason of total or
partial expiration, termination or voluntary surrender of an option.
The aggregate fair market value (determined at the time an option is
granted) of the Common Stock with respect to which ISO's are exercisable for the
first time by any person during any calendar year under the Plan shall not
exceed $100,000.
The vesting period for options granted under the Plan shall be set forth
in an option agreement entered into with the optionee. ISO's granted to an
optionee terminate ninety (90) days after termination of employment. In the
event of death or disability, all vested options expire one year from the date
of death and one (1) year from date of termination due to permanent disability.
Unless otherwise provided in any option, each outstanding option shall
become immediately fully exercisable in the event of: (i) change of control of
the Company, (ii) a merger, consolidation, reorganization or dissolution in
which the Company does not survive, or (iii) the sale, lease, exchange or
disposition of substantially all of the property and assets of the Company.
The Committee can grant options qualifying as ISO's under the Internal
Revenue Code of 1986, as amended or NQO's. The Committee determines the duration
of each option; however, the term of an option cannot exceed ten (10) years from
the date of grant. The option price for an option granted under the Plan is the
fair market value of a share of the Company's Common Stock on the date of grant.
The grantee can pay the option price in cash, or if permitted, by delivering to
the Company shares of Common Stock owned by the grantee that have a fair market
value equal to the option price. Shares cannot be issued or transferred upon the
exercise of an option until the option price is paid in full.
At April 1, 1997, the closing market value per share of Common Stock was
$24 1/4.
FEDERAL INCOME TAX CONSEQUENCES. An optionee does not realize taxable
income upon the grant of an ISO.
The holder of an ISO does not realize taxable income upon exercise of the
option (although the option spread is an item of tax preference income
potentially subject to the alternative minimum tax). If the stock acquired upon
exercise of the option is sold or otherwise disposed of within two years from
the option grant date or within one year from the exercise date then, in
general, gain realized on the sale is treated as ordinary income to the extent
of the option spread at the exercise date, and the Company receives a
corresponding deduction. Any remaining gain is treated as capital gain. If the
stock is held for at least two years from the grant date and one year from the
exercise date. then gain or loss realized upon the sale will be capital gain or
loss and the Company will not be entitled to a deduction. A special basis
adjustment applies to reduce the gain for alternative minimum tax purposes.
An optionee does not realize taxable income upon the grant of an NQO as
long as the exercise price is equal to the fair market value. An optionee who
receives an NQO realizes income upon exercise of the NQO
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<PAGE> 16
in an amount equal to the difference between the exercise price and the market
value on the date of exercise. The Company is entitled to a deduction at the
same time and in a corresponding amount.
In general, if an optionee delivers previously-owned shares in payment
of the exercise price of an option, no gain or loss will be recognized on the
exchange of the previously-owned shares for an equivalent number of newly issued
shares. However, if the previously-owned shares delivered in payment of the
exercise price were acquired pursuant to the exercise of an ISO and if the
requisite option holding periods are not satisfied (see above), then the
optionee will realize ordinary income on the delivery of the previously-owned
shares as in the case of any other "early" disposition of option-acquired
shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND
THE 1994 INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AVAILABLE FOR GRANT.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as independent accountants
of the Company since the year ended December 31, 1992. A representative of
Arthur Andersen LLP will be present at the annual meeting of shareholders. Such
representative will be available to respond to appropriate questions and may
make a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 1997.
SHAREHOLDER PROPOSALS
Proposals which shareholders intend to present at the 1998 Annual
Meeting of Shareholders must be received by the Company no later than January
10, 1998, to be eligible for inclusion in the proxy material for that meeting.
OTHER MATTERS
Management knows of no matter to be brought before the meeting which is
not referred to in the Notice of Meeting. If any other matters properly come
before the meeting, it is intended that the shares represented by proxy will be
voted with respect thereto in accordance with the judgment of the persons voting
them.
By Order of the Board of Directors,
/s/ Robert Kasak
Robert Kasak, Secretary
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<PAGE> 17
APPENDIX
MTL INC.
3108 CENTRAL DRIVE
PLANT CITY, FLORIDA 33567
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles J. O'Brien, Jr. or Richard J.
Brandewie with the power to appoint their substitute, and hereby authorizes them
to represent and vote, as designated below, all the shares of common stock of
MTL Inc. held of record by the undersigned as of April 7, 1997 at the Annual
Meeting of Shareholders to be held on May 16, 1997 or any adjournment thereof.
1. To elect five Directors to hold office until the next Annual Meeting
of Shareholders.
<TABLE>
<S> <C>
----- -----
FOR all nominees listed below WITHHOLD AUTHORITY to vote for
----- (except as marked to the ------all nominees listed below
contrary below)
Elton E. "Buzz" Babbitt Gerald L. McCullough
John B. Bowron Charles J. O'Brien, Jr.
Donald W. Burton
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided.
----------------------
2. To adopt an amendment to the 1994 Incentive and Non-Statutory
Stock Option Plan to increase the maximum number of shares
reserved for issuance thereunder from 500,000 to 700,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify of reappointment of Arthur Andersen LLP as the
Company's independent accountants for 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the holders of this Proxy are authorized
to vote upon such other business as may properly come before
the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted for Proposals 1 and 2.
(Continued, and to be signed on next page)
<PAGE> 18
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator
or trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- -----------------------------
Signature
- ----------------------------
Signature, if held jointly
DATED: , 1997
------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
