<PAGE>
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
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
| | Preliminary Proxy Statement
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
| | Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
THE ASSOCIATED GROUP, INC.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
| | Fee paid previously with preliminary materials: N/A
| | 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>
THE ASSOCIATED GROUP, INC.
200 GATEWAY TOWERS
PITTSBURGH, PA 15222
(412) 281-1907
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1997
Dear Stockholder:
The annual meeting of stockholders of The Associated Group, Inc. (the
'Company') will be held at the Company's principal executive offices, 200
Gateway Towers, 320 Fort Duquesne Boulevard, Pittsburgh, Pennsylvania, on
Thursday, June 5, 1997 at 11:00 a.m., Pittsburgh time, for the following
purposes:
1. To elect one director, to hold office for a term of three years and
until his successor is elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 25, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, such meeting and any adjournment thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR
NOT YOU INTEND TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED FOR THE COMPANY'S CLASS A AND CLASS
B COMMON STOCK. THE BUSINESS TO BE CONSIDERED AT THE MEETING CANNOT BE
TRANSACTED UNLESS A MAJORITY OF THE TOTAL NUMBER OF VOTES ENTITLED TO BE CAST BY
HOLDERS OF THE COMPANY'S CLASS A AND CLASS B COMMON STOCK ARE REPRESENTED AT THE
MEETING.
SCOTT G. BRUCE
General Counsel and Secretary
Pittsburgh, Pennsylvania
April 30, 1997
<PAGE>
THE ASSOCIATED GROUP, INC.
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Associated Group, Inc. (the 'Company')
for use at the annual meeting of stockholders to be held at the Company's
principal executive offices, 200 Gateway Towers, 320 Fort Duquesne Boulevard,
Pittsburgh, Pennsylvania, on Thursday, June 5, 1997 at 11:00 a.m., Pittsburgh
time, and at any adjournment or postponement thereof. This proxy statement and
the enclosed proxy card, together with the Company's annual report to
stockholders for 1996, were first mailed to stockholders on or about April 30,
1997.
At the meeting, stockholders of the Company will be asked to elect one
director to hold office for a three-year term and until his successor is elected
and qualified (see 'ELECTION OF DIRECTOR').
Holders of record of shares of the Company's Class A Common Stock ('Class A
Common Stock') and Class B Common Stock ('Class B Common Stock') at the close of
business on April 25, 1997 will be entitled to vote at the meeting. On April 25,
1997 (the 'Record Date'), 9,382,962 shares of Class A Common Stock and 9,398,410
shares of Class B Common Stock were outstanding. As of the Record Date, holders
of Class A Common Stock were entitled to cast a total of 9,382,962 votes,
holders of Class B Common Stock were entitled to cast a total of 375,936 10/25
votes, and the two classes together represent a total of 9,758,898 10/25 votes.
Holders of Class A Common Stock and holders of Class B Common Stock will vote
together without regard to class upon the matters to come before the meeting.
Each stockholder is entitled to one vote for each share of Class A Common Stock
and one twenty-fifth ( 1/25) of a vote for each share of Class B Common Stock
held by such stockholder as of the Record Date. Holders of Class A Common Stock
and Class B Common Stock are not entitled to cumulative voting under the
Company's Restated Certificate of Incorporation, By-Laws or pursuant to
applicable state law. The presence at the meeting in person or by proxy of a
majority of the total number of votes entitled to be cast by holders of the
Class A Common Stock and Class B Common Stock will be necessary to constitute a
quorum.
Shares represented by the accompanying proxy card, unless the proxy is
previously revoked, will be voted at the meeting if the proxy is returned to the
Company properly executed and in sufficient time to permit the necessary
examination and tabulation of the proxy before a vote is taken. The proxy card
permits a specification as to whether shares represented by the proxy are to be
voted for the election of the director nominated by the Board of Directors as
set forth under the caption 'ELECTION OF DIRECTOR.' Any proxy given pursuant to
this solicitation may be revoked by the stockholder, at any time before it is
exercised, by giving written notice of revocation or submitting a later dated
proxy, provided said notice or later dated proxy is received prior to the taking
of the vote. Any stockholder attending the meeting may vote in person whether or
not he or she has previously submitted a proxy (although attendance at the
meeting will not, in and of itself, constitute a revocation of a proxy).
Solicitations of proxies are being made by the Board of Directors and the
cost thereof will be borne by the Company, including the expense of preparing,
printing and mailing this proxy material, as well as the cost of any required
solicitation. In addition to the solicitation of proxies by use of the mails,
the Company may use regular employees, without additional compensation, to
solicit proxies by telephone or otherwise. The Company may also reimburse
brokers and other persons holding stock in their names or in the names of their
nominees for their charges and expenses in forwarding proxies and other proxy
material to the beneficial owners of such stock.
On December 15, 1994, all of the Class A Common Stock and Class B Common
Stock was distributed as a dividend (the 'Distribution') to the stockholders of
Associated Communications Corporation ('Associated') immediately prior to the
merger (the 'Merger') of Associated and a wholly owned subsidiary of
Southwestern Bell Corporation (now known as SBC Communications Inc.), pursuant
to an Agreement and Plan of Merger and Reorganization, dated as of February 23,
1994 (the 'Merger Agreement'), among Associated, Southwestern Bell Corporation
and such subsidiary.
<PAGE>
ELECTION OF DIRECTOR
The Company's Restated Certificate of Incorporation specifies that the
number of directors shall be not less than three nor more than fifteen, with the
exact number to be determined from time to time by the Board of Directors. The
Restated Certificate of Incorporation also provides that the Board of Directors
shall be divided into three classes, each class to consist, as nearly as
possible, of one-third of the total number of directors.
One director is to be elected at the annual meeting to hold office until
the 2000 annual meeting of stockholders and until his successor is elected and
qualified. IT IS INTENDED THAT SHARES REPRESENTED BY THE ACCOMPANYING PROXY CARD
WILL BE VOTED FOR THE ELECTION OF THE NOMINEE NAMED BELOW UNLESS A CONTRARY
DIRECTION IS INDICATED. The Company's Restated Certificate of Incorporation
requires the affirmative vote of a plurality of the votes cast in order to elect
a director. Accordingly, assuming a quorum of 4,879,449 6/25 votes (the minimum
number of votes required to constitute a quorum), the nominee must receive at
least 2,439,724 16/25 votes to be elected. If the nominee fails to receive the
requisite number of votes, Donald H. Jones will continue to serve as a director
until his successor is elected and qualified.
In the event that the nominee becomes unavailable for election, proxies in
the form solicited will be voted for an alternate designated by the Board of
Directors. Information concerning the nominee for election is set forth below.
The nominee has furnished to the Company the information included with respect
to his beneficial ownership, as of April 25, 1997, of equity securities of the
Company and his principal occupation.
NOMINEE FOR DIRECTOR WHOSE TERM EXPIRES IN 2000
Donald H. Jones, age 60, has served as a director of the Company since the
Distribution. Prior to the Distribution, Mr. Jones served as a director of
Associated beginning in 1986, as well as a consultant to Associated beginning in
1982. From June 1996 to April 1997, Mr. Jones served as the Vice Chairman of
Nets Inc., formerly known as Industry.Net Corporation, a company engaged in
electronic database publishing, and from 1992 to June 1996, was its Chairman.
From 1989 to 1990, Mr. Jones served as President of DHJ Enterprises, a firm
engaged in the development of new business enterprises and investment
activities. Mr. Jones serves as a director of Sentient Systems Technology, an
electronics corporation engaged in the development and manufacturing of
electronic vocational and rehabilitation equipment, and serves as a director of
Respironics Inc., a corporation engaged in the development, manufacturing and
marketing of medical equipment.
CONTINUING DIRECTOR WHOSE TERM EXPIRES IN 1999
David J. Berkman, age 35, has served as a director and Executive Vice
President of the Company since the Distribution. Prior to the Distribution, Mr.
Berkman served as a director of Associated beginning in March 1993 and Executive
Vice President of Associated beginning in December 1992. Prior to that time, he
served Associated in various capacities beginning in August 1983. Mr. Berkman is
a member of the Board of Directors of Grupo Portatel, S.A. de C.V. and Vice
Chairman of Portatel del Sureste, S.A. de C.V. and is a former member of the
Board of Directors and the Executive Committee of the Cellular Telephone
Industry Association. He is also a member of the Board of Directors of Teletrac,
Inc., a company engaged in location and messaging services for vehicle and fleet
management.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1998
Myles P. Berkman, age 60, has served as President, Chief Executive Officer,
Treasurer and a director of the Company since the Distribution, and as Chairman
since November 1995. Prior to the Distribution, Mr. Berkman served as President,
Chief Operating Officer, Treasurer and a director of Associated beginning at its
inception in 1979. Until July 1996, Mr. Berkman was a member of the Board of
Directors of Nets Inc. Myles P. Berkman is the father of David J. Berkman.
Joseph A. Katarincic, age 65, has served as a director of the Company since
the Distribution. Prior to the Distribution, Mr. Katarincic served as a director
of Associated beginning in 1988. He is currently an attorney admitted to
practice in Pennsylvania, Texas and West Virginia. Since 1989, Mr. Katarincic
has been a partner in the law firm of Katarincic & Salmon, specializing in
business litigation with an emphasis on corporate restructuring, antitrust and
securities litigation. Mr. Katarincic formerly served as Senior Counsel to
Allegheny County, Pennsylvania. He is a director of Duquesne University, a
member of the Board of Visitors of the University of Pittsburgh School of Law
and the Chairman of The Allegheny County Sanitary Authority.
2
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held three meetings during 1996 and each of the
directors attended or participated in all meetings.
Messrs. Jones and Katarincic are members of the Audit Committee of the
Board of Directors. The Audit Committee is charged both with selecting and
engaging, on behalf of the Company, independent public accountants to audit the
books of account and other corporate records of the Company and with conferring
with the accountants and officers of the Company for purposes of reviewing
internal controls, accounting practices, financial structure and financial
reporting of the Company. The Audit Committee held one meeting in 1996. The
Company has no standing nominating or compensation committee of the Board of
Directors or committees performing similar functions. Messrs. Jones and
Katarincic also constitute a committee which administers the Company's 1994
Stock Option and Incentive Award Plan (the '1994 Plan').
EXECUTIVE OFFICERS
In addition to the directors set forth above who are executive officers of
the Company, set forth below is certain information concerning non-director
employees who serve as executive officers of the Company:
Richard I. Goldstein, age 36, has served as a Vice President of the Company
since the Distribution. Prior to the Distribution, Mr. Goldstein served as Vice
President, Cellular of Associated beginning in December 1992. From March 1991
through December 1992, Mr. Goldstein was Regional General Manager of
Associated's upstate New York cellular telephone systems. He was employed by
AT&T Corporation from June 1983 to March 1991 as a Management and Marketing
Executive.
Scott G. Bruce, age 35, has served as General Counsel and Secretary of the
Company since December 1995 and, prior to that time, served as Counsel and
Assistant Secretary of the Company since the Distribution. Prior to the
Distribution, Mr. Bruce served as Counsel and Assistant Secretary of Associated
beginning in 1992. Prior to 1992, Mr. Bruce was a corporate attorney at Wolf,
Block, Schorr and Solis-Cohen in Philadelphia, Pennsylvania, specializing in
mergers and acquisitions and securities law.
Keith C. Hartman, age 39, has served as Controller and Assistant Secretary
of the Company since the Distribution. Prior to the Distribution, Mr. Hartman
served as Controller and Assistant Secretary of Associated beginning in 1986.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of each class of common stock of the Company as of April 25, 1997 by
(i) each person known by the Company to own more than five percent of either
class of the outstanding common stock of the Company, (ii) each director of the
Company, (iii) each of the named executive officers of the Company and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
noted, the persons in the table have sole voting and investment power with
respect to all shares of the common stock of the Company shown as beneficially
owned by them.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES OUTSTANDING
BENEFICIALLY OWNED SHARES PERCENT OF
------------------------ ------------------ OUTSTANDING
BENEFICIAL OWNER CLASS A CLASS B CLASS A CLASS B VOTING POWER
- ------------------------------------------------ --------- --------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Estate of Jack N. Berkman(1) ................... 1,166,208 1,205,133 12.4 12.8 12.4
c/o Myles P. Berkman
The Associated Group, Inc.
200 Gateway Towers
Pittsburgh, PA 15222
The Louis Berkman Company(2) ................... 750,000 750,000 8.0 8.0 8.0
330 North 7th Street
Steubenville, OH 43952
Allen H. Berkman(3) ............................ 527,154 527,154 5.6 5.6 5.6
1500 Oliver Building
Pittsburgh, PA 15222
Myles P. Berkman ............................... 339,453(4) 628,703(4) 3.6 6.5 3.7
c/o The Associated Group, Inc.
200 Gateway Towers
Pittsburgh, PA 15222
David J. Berkman................................ 6,813(5) 218,213(5) * 2.3 *
Donald H. Jones................................. 40,311 65,621(6) * * *
Joseph A. Katarincic............................ 13,250 38,560(7) * * *
Keith C. Hartman................................ 3,794(8) 50,569(8) * * *
Richard I. Goldstein............................ -- 34,495(9) * * *
Scott G. Bruce.................................. -- 14,963(10) * * *
All directors and executive officers ........... 1,931,666 2,660,944(11) 20.6 26.4 20.8
as a group (11 persons)
</TABLE>
- ------------------
* Less than 1%
(1) Myles P. Berkman, Donald H. Jones and Lillian R. Berkman (Jack N. Berkman's
wife) are the co-executors of Mr. Berkman's estate.
(2) Louis Berkman is President and the principal stockholder of The Louis
Berkman Company. Louis Berkman is the uncle of Myles P. Berkman.
(3) Allen H. Berkman is the uncle of Myles P. Berkman.
(4) Excludes 513 shares of each class owned of record by Myles P. Berkman's
wife. Includes 4,725 shares of each class held of record jointly with Mr.
Berkman's wife. The shares of Class B Common Stock include 289,250 shares
underlying stock options exercisable within 60 days.
(5) Excludes 450 shares of each class owned of record by David J. Berkman's
wife. The shares of Class B Common Stock include 211,400 shares underlying
stock options exercisable within 60 days.
(6) Includes 25,310 shares of Class B Common Stock underlying stock options
exercisable within 60 days.
(7) Includes 25,310 shares of Class B Common Stock underlying stock options
exercisable within 60 days.
(8) Includes 3,757 shares of each class held of record jointly with Mr.
Hartman's wife and 37 shares of each class held of record jointly with Mr.
Hartman's mother. The shares of Class B Common Stock include 46,775 shares
of Class B Common Stock underlying stock options exercisable within 60
days.
(9) Comprised of 34,495 shares of Class B Common Stock underlying stock options
exercisable within 60 days.
(10) Comprised of 14,963 shares of Class B Common Stock underlying stock options
exercisable within 60 days.
(11) Includes 690,353 shares of Class B Common Stock underlying stock options
exercisable within 60 days.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the summary of all compensation earned by
the Chief Executive Officer and the four other most highly compensated executive
officers for the fiscal years ended 1996, 1995 and 1994. Because the
Distribution occurred on December 15, 1994, compensation information for 1994
includes compensation earned by the listed individuals as employees of
Associated through December 15, 1994 and as employees of the Company from
December 16, 1994 through December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
FISCAL -------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS COMPENSATION
- -------------------------------------------- ------ -------- -------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Myles P. Berkman ........................... 1996 $700,000 $150,000 20,000(1) $ 47,276(2)
Chairman, President, Chief Executive 1995 700,000 100,000 160,000(3) 37,200(4)
Officer and Treasurer 1994 700,000 100,000 139,250(5) 33,094(6)(7)
David J. Berkman ........................... 1996 300,000 150,000 25,000(1) 4,500(8)
Executive Vice President 1995 275,000 100,000 110,000(3) 4,500(8)
1994 278,323 100,000 111,400(5) 4,500(7)(9)
Richard I. Goldstein ....................... 1996 232,800 115,000 25,000(1) 4,500(8)
Vice President 1995 207,800 100,000 82,500(3) 59,061(10)
1994 197,800 350,000 19,495(5) 4,500(9)
Scott G. Bruce ............................. 1996 138,600 75,000 20,000(1) 4,500(8)
General Counsel and Secretary 1995 113,600 50,000 47,500(3) 4,500(8)
1994 103,600 260,000 6,963(5) 4,500(9)
Keith C. Hartman ........................... 1996 188,600 50,000 5,000(1) 4,500(8)
Controller and Assistant Secretary 1995 188,600 50,000 30,000(3) 4,500(8)
1994 188,600 100,000 41,775(5) 4,500(9)
</TABLE>
- ------------------
(1) Consists of options to purchase shares of Microwave Services, Inc., a
wholly owned subsidiary of the Company, granted under the Microwave
Services, Inc. 1996 Stock Incentive Plan.
(2) Includes $42,776 paid by the Company for premiums attributable to the term
life insurance portion of split dollar life insurance policies, and $4,500
of contributions by the Company to the Company's 401(k) Savings Plan.
(3) Includes options to purchase shares of Associated RT, Inc., a wholly owned
subsidiary of the Company, granted under the Associated RT, Inc. 1995 Stock
Incentive Plan, in the following amounts: Myles P. Berkman (10,000), David
J. Berkman (10,000), Richard I. Goldstein (7,500), Scott G. Bruce (7,500)
and Keith C. Hartman (5,000).
(4) Includes $32,700 paid by the Company for premiums attributable to the term
life insurance portion of a split dollar life insurance policy, and $4,500
of contributions by the Company to the Company's 401(k) Savings Plan.
(5) Comprised of options to purchase Class B Common Stock issued pursuant to
the 'rollover' in connection with the Distribution and Merger of options to
purchase common stock of Associated Communications Resources, Inc., a
wholly owned subsidiary of Associated, which was merged into the Company
immediately prior to the Distribution.
(6) Includes $28,594 paid by the Company for premiums attributable to the term
life insurance portion of a split dollar life insurance policy, and $4,500
of contributions by Associated to Associated's 401(k) Savings Plan.
(7) Excludes cash amounts ($2,079,972 and $712,026 in the case of Myles P.
Berkman and David J. Berkman, respectively) received from Associated at the
time of the Merger as contemplated by the Merger Agreement, pursuant to the
severance provisions of pre-existing employment agreements between such
individuals and Associated.
(8) Reflects contributions by the Company to the Company's 401(k) Savings Plan.
(9) Reflects contributions by Associated to Associated's 401(k) Savings Plan.
(10) Includes $54,561 of relocation costs paid to Mr. Goldstein and $4,500 of
contributions by the Company to the Company's 401(k) Savings Plan.
5
<PAGE>
STOCK OPTIONS
No stock options were granted pursuant to the 1994 Plan to any of the named
executive officers during the fiscal year ended December 31, 1996. The following
table sets forth information concerning the grant of stock options to the named
executive officers during the fiscal year ended December 31, 1996 pursuant to
the Microwave Services, Inc. 1996 Stock Incentive Plan (the 'Microwave Services
Plan'), including the potential realizable value of such grants (on a pre-tax
basis) determined in accordance with Securities and Exchange Commission rules.
The information in this table shows how much the named executive officers may
eventually realize under two hypothetical situations: where the stock underlying
the options gains 5% in value per year or 10% in value per year, in either case
compounded over the life of the options. These are assumed rates of appreciation
and are not intended to forecast future appreciation of the underlying stock.
OPTION GRANTS IN LAST FISCAL YEAR
MICROWAVE SERVICES, INC.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------ -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------- ----------- ------------ --------- ---------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Myles P. Berkman........ 20,000 10.9% $ 25.00 4/11/06 $314,500 $797,000
David J. Berkman........ 25,000 13.6% 25.00 4/11/06 393,125 996,250
Richard I. Goldstein.... 25,000 13.6% 25.00 4/11/06 393,125 996,250
Scott G. Bruce.......... 20,000 10.9% 25.00 4/11/06 314,500 797,000
Keith C. Hartman........ 5,000 2.7% 25.00 4/11/06 78,625 199,250
</TABLE>
EXERCISE OF STOCK OPTIONS
No stock options were exercised by any of the named executive officers
during the fiscal year ended December 31, 1996. The following tables set forth
information regarding the value at December 31, 1996 of any unexercised stock
options granted under the 1994 Plan, the Microwave Services Plan and the
Associated RT, Inc. 1995 Stock Incentive Plan (the 'Associated RT Plan'):
FISCAL YEAR END OPTION VALUES
THE ASSOCIATED GROUP, INC.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
------------------------------------------- ------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------------- -------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Myles P. Berkman.............. 289,250 -- $6,004,863 $ --
David J. Berkman.............. 211,400 -- 4,538,890 --
Richard I. Goldstein.......... 34,495 60,000 761,181 795,000
Scott G. Bruce................ 14,963 32,000 306,883 424,000
Keith C. Hartman.............. 46,775 20,000 1,271,459 265,000
</TABLE>
- ------------------
(1) The closing stock price of the Class B Common Stock was $29.75 on December
31, 1996.
ASSOCIATED RT, INC.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (#)(1) AT FISCAL YEAR END ($)
------------------------------------------- ------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------------- -------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Myles P. Berkman.............. 10,000 -- * *
David J. Berkman.............. 10,000 -- * *
Richard I. Goldstein.......... 1,500 6,000 * *
Scott G. Bruce................ 1,500 6,000 * *
Keith C. Hartman.............. 1,500 4,000 * *
</TABLE>
- ------------------
(1) Represents options to purchase shares of the common stock of Associated RT,
Inc., a wholly-owned subsidiary of the Company, pursuant to the Associated
RT Plan.
* There is currently no trading market for the shares of common stock of
Associated RT, Inc. Accordingly, the fair market value of the Associated RT,
Inc. options cannot practicably be determined.
6
<PAGE>
MICROWAVE SERVICES, INC.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (#)(1) AT FISCAL YEAR END ($)
------------------------------------------- ------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------------- -------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Myles P. Berkman.............. -- 20,000 * *
David J. Berkman.............. -- 25,000 * *
Richard I. Goldstein.......... -- 25,000 * *
Scott G. Bruce................ -- 20,000 * *
Keith C. Hartman.............. -- 5,000 * *
</TABLE>
- ------------------
(1) Represents options to purchase shares of the common stock of Microwave
Services, Inc., a wholly-owned subsidiary of the Company, pursuant to the
Microwave Services Plan.
* There is currently no trading market for the shares of common stock of
Microwave Services, Inc. Accordingly, the fair market value of the Microwave
Services, Inc. options cannot practicably be determined.
LONG-TERM INCENTIVE PLAN AWARDS
The following table sets forth information concerning awards made to the
named executive officers during the fiscal year ended December 31, 1996 pursuant
to the Associated Communications, L.L.C. Long-Term Incentive Compensation Plan
(the 'Associated Communications Plan').
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
ASSOCIATED COMMUNICATIONS, L.L.C.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD UNTIL ----------------------------------
SHARES, UNITS OR MATURATION OR THRESHOLD TARGET MAXIMUM
NAME OTHER RIGHTS (#) PAYOUT ($ OR #) ($ OR #) ($ OR #)
- --------------------------------------- ---------------- ------------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Myles P. Berkman....................... -- -- -- -- --
David J. Berkman....................... 150,000(1) 11/26/06(2) (1) (1) (1)
Richard I. Goldstein................... -- -- -- -- --
Scott G. Bruce......................... -- -- -- -- --
Keith C. Hartman....................... -- -- -- -- --
</TABLE>
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(1) Each unit pursuant to the Associated Communications Plan (a 'Unit')
represents a right to receive consideration equal to .00001% of the
appreciation in the value of Associated Communications, L.L.C., a subsidiary
of the Company ('ACOM'), from and after the date of grant of the Unit until
the settlement date. There are no minimum or maximum amounts payable
pursuant to the Associated Communications Plan and no specified performance
targets need to be reached.
(2) The settlement date for each Unit is the earlier of ten years from the date
of grant or the time the participant ceases to be employed by, or to act as
a director or consultant for, ACOM.
COMPENSATION COMMITTEE REPORT
The Company has no standing compensation committee, and all decisions
regarding compensation for fiscal year 1996 were made by the Company's entire
Board of Directors, except that the compensation for Myles P. Berkman was
determined by Messrs. Jones and Katarincic, who are outside directors of the
Company, and except that David J. Berkman did not participate in decisions
regarding the determination of his compensation.
In awarding executive compensation, the Company seeks to attract and retain
the most qualified personnel for meeting the needs and objectives of the Company
and to motivate such individuals to achieve the Company's
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goals. Accordingly, the Company's executive compensation strategy is to reward
executives for both their individual contributions and the Company's overall
results. The key elements of the Company's executive compensation system include
base salary, annual bonus and equity-based compensation. Base salaries are
generally determined by evaluating each individual's responsibilities and
relative experience, including a comparison of base salaries for comparable
positions at other companies. Annual bonuses are determined by evaluating both
the performance of the Company and the individual officers, including, if
applicable, the addition of new responsibilities and both their and the
Company's performance. The financial performance of definable business units or
markets is considered as to executives with responsibility for such units or
markets.
The base salary of Myles P. Berkman, President and Chief Executive Officer,
for the 1996 fiscal year was based primarily on his employment contract with the
Company, which requires the base salary for any fiscal year to be equal to or
greater than the base salary for the immediately preceding fiscal year. In
determining the compensation (including base salary and bonus) of Myles P.
Berkman, the outside directors of the Company took into account the growth in
the Company's assets and businesses, the appreciation in the market value of the
Company's Class A Common Stock and Class B Common Stock, a comparison of the
base salaries of chief executive and operating officers of other companies and
Mr. Berkman's individual performance.
The deductibility for corporate tax purposes of compensation paid to
individual executive officers of the Company may be restricted. The Company's
policy regarding compensation for executive officers is to maximize, to the
extent possible, the deductibility of such compensation. However, where it is
deemed necessary, in the best interests of the Company, to continue to attract
and retain the most qualified personnel and to motivate such executives to
achieve the Company's goals, the Board may pay to executive officers
compensation that exceeds applicable limits of deductibility.
The Board of Directors,
MYLES P. BERKMAN
DONALD H. JONES
JOSEPH A. KATARINCIC
DAVID J. BERKMAN
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As stated above, during the 1996 fiscal year, the Company had no standing
compensation committee, and all decisions regarding compensation were made by
the entire Board of Directors, except that the compensation of Myles P. Berkman
was determined by Messrs. Jones and Katarincic, who are outside directors of the
Company, and except that David J. Berkman did not participate in decisions
regarding the determination of his compensation. Of the directors serving during
fiscal year 1996, Myles P. Berkman and David J. Berkman were both executive
officers of the Company.
Myles P. Berkman, an executive officer of the Company, served as a director
of Nets Inc. until July 1996. Donald H. Jones, a director of the Company, served
as Vice Chairman of Nets Inc. from June 1996 to April 1997. As a director of the
Company, Mr. Jones participates in the determination of the compensation of
executive officers of the Company, including Myles P. Berkman.
Joseph A. Katarincic is a member of the law firm of Katarincic & Salmon,
which performed services for the Company in fiscal year 1996. The aggregate
amount of fees paid by the Company to Katarincic & Salmon was less than 5% of
the law firm's gross revenues for the last fiscal year. The Company believes
that the billing rates of Katarincic & Salmon for the foregoing legal services
were no less favorable to the Company than could have been obtained from
unaffiliated parties for comparable services.
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STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage change in
cumulative stockholder return on the Class A Common Stock and the Class B Common
Stock. Such shares began regular trading on The Nasdaq National
Market ('Nasdaq') on December 22, 1994.
[GRAPH]
Stock Price Performance Graph
1994 1995 1996
---- ---- ----
AGRPA $ 100.00 $ 75.50 $ 130.85
AGRPB 100.00 76.32 126.60
TELECOM 100.00 123.63 133.85
NASDAQ 100.00 129.29 173.96
Note: Reflects performance of a $100 investment made on December 31, 1994
(i) in the Class A Common Stock (symbol: AGRPA) and Class B Common Stock
(symbol: AGRPB), (ii) based on the Center for Research in Securities Prices
('CRSP') Total Return Index for Nasdaq Telecommunications Stocks and (iii) based
on the CRSP Total Return Index for The Nasdaq Stock Market (US Companies).
COMPENSATION OF DIRECTORS
Myles P. Berkman and David J. Berkman receive no director's fees. Messrs.
Jones and Katarincic are compensated for their service as directors at the rate
of $1,000 per month. Pursuant to the 1994 Plan, directors who are not employees
of the Company were granted a one-time non-discretionary option for 2,500 shares
of Class B Common Stock upon effectiveness of the 1994 Plan, and are awarded a
non-discretionary option of 2,500 shares of Class B Common Stock at each annual
meeting of the Company's stockholders. All options granted to non-employee
directors pursuant to the 1994 Plan vest in two equal annual installments
following the date of grant.
EMPLOYMENT AGREEMENTS OF MYLES P. BERKMAN AND DAVID J. BERKMAN
The Company has entered into employment agreements with Myles P. Berkman
and David J. Berkman for retention of their services as executive officers
during the original or extended term of such agreements. These employment
agreements are intended to help assure that these officers will continue to act
in the interests of stockholders rather than be affected by personal uncertainty
during any attempt to effect a change in control of the Company. Capitalized
terms used and not defined in the following description of the employment
agreements shall have the meanings ascribed to them in the employment
agreements.
Each agreement provides that in the event of a Change of Control of the
Company during the original or extended term of the agreement, the agreement
will be extended for an additional 36 months beyond the month in which it would
otherwise have terminated. Additionally, if, following a Change of Control, the
Company terminates (except for Cause or Disability) the executive's employment
or the executive voluntarily terminates his employment for Good Reason, the
executive will be entitled to lump sum Severance Payments. Such Severance
Payments are equal to the sum of (i) three times the total of the executive's
base salary immediately prior to the events giving rise to the termination plus
incentive and bonus compensation paid in the immediately preceding year, (ii)
incentive and bonus compensation already allocated to the executive which has
not yet been paid and a pro rata portion to the Date of Termination of all
incentive and bonus compensation awards made to the executive for all
uncompleted periods and (iii) in lieu of shares of common stock issuable upon
exercise of outstanding options (other than incentive stock options granted
prior to the date of the employment agreements) an amount in cash equal to the
difference between the per share market price of the common stock and the
exercise price of each of the executive's outstanding stock options multiplied
by the number of shares covered by
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each such option. If any payment or benefit to be received by the executive
following a Change of Control is not deductible (in whole or in part) by the
Company as a result of Section 280G of the Internal Revenue Code of 1986, as
amended, the Severance Payments to that executive will be reduced until no part
of the payments is not deductible or such Severance Payments are reduced to
zero. Under the agreements, each executive agrees to remain in the employ of the
Company in the event of a 'potential change of control' (as defined in the
agreements) for at least six months, unless there is a breach of the agreement
or an actual Change of Control or his health becomes seriously impaired.
Each agreement also provides that, in the event of the termination of the
agreement due to the disability or death of the executive, he, his designated
beneficiaries or his estate will be paid during the remaining term of the
agreements one-half of his annual base salary at the rate in effect immediately
prior to such termination. Any payments made to the executive during a
disability period must be reduced by the sum of the amounts, if any, payable to
the executive for such disability at or prior to the time of any such payment
under disability benefit plans of the Company or under the Social Security
disability insurance program. In addition, the agreements also provide that the
Company may terminate the executive's employment for Cause (as defined). If an
executive's employment is terminated by the Company for Cause, the Company must
pay the executive his full base salary through the Date of Termination,
relieving the Company of further obligations to such executive under his
employment agreement.
The employment agreements were executed on December 15, 1994 and provide
for initial ten year terms. The agreements also provide that, commencing on
January 1, 1995 and each January 1 thereafter, the term of each executive's
employment will automatically be extended for one additional year, unless, not
later than June 30 of the preceding year, the Company gives written notice to
the executive that it does not wish to extend his agreement. Accordingly, the
term of employment of each of Myles P. Berkman and David J. Berkman under the
agreements presently extends to December 31, 2006.
APPOINTMENT OF AUDITORS
The firm of Ernst & Young LLP serves as independent auditors for the
Company, and has been appointed by the Audit Committee of the Board of Directors
as the Company's independent auditors for the fiscal year 1997. Representatives
of Ernst & Young LLP are expected to be available at the annual meeting to
respond to appropriate questions from stockholders and will have the opportunity
to make a statement if they so desire.
OTHER BUSINESS
The Board of Directors does not intend to present to the annual meeting any
business other than as described in this proxy statement, and, at the time this
proxy statement was printed, was not aware of any other matters that properly
might be presented to the annual meeting. If any other business not described
herein properly should come before the annual meeting, the persons named in the
enclosed proxy card or their substitute will vote the shares represented by them
in accordance with their best judgment. Discretionary authority for them to do
so is contained in the proxy card.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange Commission,
stockholder proposals intended to be presented at the Company's 1998 annual
meeting must be received by the Company at its principal executive offices no
later than December 30, 1997 to be considered for inclusion in the Company's
proxy statement and proxy cards for that meeting.
By Order of the Board of Directors,
/s/ Scott G. Bruce
SCOTT G. BRUCE
General Counsel and Secretary
April 30, 1997
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PROXY
THE ASSOCIATED GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Myles P. Berkman, David J. Berkman, and
Scott G. Bruce, with the power to appoint a substitute, and hereby authorizes
any of them to represent and to vote as designated on the reverse side hereof
all the shares of Class A Common Stock and all the shares of Class B Common
Stock of The Associated Group, Inc. held of record by the undersigned on April
25, 1997, and entitled to vote at the Annual Meeting of Stockholders to be held
on June 5, 1997, or any adjournment thereof.
(Please date and sign on the reverse side)
Please mark your
votes as indicated
in this example /X/
Proposal Number 1 - Election of Director.
Nominee: Donald H. Jones
Vote Withhold
For Authority
to Vote
/ / / /
This Proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSAL 1, and shall be voted at the discretion of the holder
upon any other matters that may properly come before the meeting.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE 1997 ANNUAL
MEETING, THE 1997 PROXY STATEMENT AND THE 1996 ANNUAL REPORT OF THE ASSOCIATED
GROUP, INC.
Please sign your name exactly as it appears hereon. When signing as
attorney-in-fact, executor, administrator, trustee or guardian, please add your
title as such. When signing as joint tenants, all parties to the joint tenancy
msut sign. If signer is a corporation, please sign in full corporate name by
duly authorized officer or officers and affix the corporate seal.
Date: , 1997
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Signature of Stockholder
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Signature of Stockholder
