<PAGE>
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 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
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)(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>
THE ASSOCIATED GROUP, INC.
200 GATEWAY TOWERS
PITTSBURGH, PA 15222
(412) 281-1907
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1998
Dear Stockholder:
The annual meeting of stockholders of The Associated Group, Inc. (the
'Company') will be held at the Meeting Room of Gateway Towers, 320 Fort Duquesne
Boulevard, Pittsburgh, Pennsylvania, on Thursday, June 4, 1998 at 11:00 a.m.,
Pittsburgh time, for the following purposes:
1. To elect two directors, to hold office for a term of three years and
until their successors are 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 22, 1998 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. IF YOU ARE A HOLDER OF BOTH CLASSES OF STOCK, PLEASE COMPLETE,
DATE, SIGN AND RETURN BOTH PROXY CARDS SO THAT ALL OF YOUR STOCK MAY BE VOTED.
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, 1998
<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 Meeting Room of
Gateway Towers, 320 Fort Duquesne Boulevard, Pittsburgh, Pennsylvania, on
Thursday, June 4, 1998 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 1997, were first mailed to
stockholders on or about April 30, 1998.
At the meeting, stockholders of the Company will be asked to elect two
directors to hold office for a three-year term and until their successors are
elected and qualified (see 'ELECTION OF DIRECTORS').
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 22, 1998 will be entitled to vote at the meeting. On April 22,
1998 (the 'Record Date'), 18,765,924 shares of Class A Common Stock and
19,299,540 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
18,765,924 votes, holders of Class B Common Stock were entitled to cast a total
of 771,981 15/25 votes, and the two classes together represent a total of
19,537,905 15/25 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 directors nominated by the Board of Directors as
set forth under the caption 'ELECTION OF DIRECTORS.' 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 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, among
Associated, Southwestern Bell Corporation and such subsidiary.
<PAGE>
ELECTION OF DIRECTORS
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.
Two directors are to be elected at the annual meeting to hold office until
the 2001 annual meeting of stockholders and until their successors are elected
and qualified. IT IS INTENDED THAT SHARES REPRESENTED BY THE ACCOMPANYING PROXY
CARD WILL BE VOTED FOR THE ELECTION OF THE NOMINEES 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. If the nominees fail to receive the requisite number
of votes, Myles P. Berkman and Joseph A. Katarincic will continue to serve as
directors until their successors are elected and qualified.
In the event that either nominee becomes unavailable for election, proxies
in the form solicited will be voted for an alternate designated by the Board of
Directors. Information concerning each nominee for election is set forth below.
Each nominee has furnished to the Company the information included with respect
to his beneficial ownership, as of April 22, 1998, of equity securities of the
Company and his principal occupation.
NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE IN 2001
Myles P. Berkman, age 61, 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. Mr. Berkman is a director of Teligent, Inc., the Company's
fixed wireless competitive local exchange carrier affiliate of which the Company
owns approximately 41%. Myles P. Berkman is the father of David J. Berkman.
Joseph A. Katarincic, age 67, 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 a director of The Allegheny County Sanitary Authority.
CONTINUING 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. Mr. Jones is President of DHJ Enterprises, Inc., a firm engaged in the
development of new business enterprises and investment activities. Until April
1997, Mr. Jones was the Vice Chairman of Nets Inc., formerly Industry.Net
Corporation, a company which was engaged in electronic database publishing, and
from 1992 to June 1996, was its Chairman. Mr. Jones is a director of Respironics
Inc., a corporation engaged in the development, manufacturing and marketing of
medical equipment, PNC Equity Management Corporation, a corporation engaged in
the investment in growth companies, and Teligent, Inc. Mr. Jones also serves as
an adjunct professor of entrepreneurship at the Carnegie Mellon Graduate School
of Business.
CONTINUING DIRECTOR WHOSE TERM EXPIRES IN 1999
David J. Berkman, age 36, 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. Mr. Berkman is a
director of Grupo Portatel, S.A. de C.V. and Vice Chairman of Portatel del
Sureste, S.A. de C.V., both of which are engaged in the ownership and operation
of a cellular telephone system in Mexico, and is a former director and member of
the
2
<PAGE>
Executive Committee of the Cellular Telephone Industry Association. Mr. Berkman
also serves as Chairman and Chief Executive Officer of TruePosition, Inc., a
wholly owned subsidiary of the Company engaged in the provision of wireless
location products and services, and is a director of Teletrac, Inc., a company
engaged in location and messaging services for vehicle and fleet management, and
Teligent, Inc.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1997 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 1997. 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 Amended
and Restated 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 37, 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 36, 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.
Kent R. Sander, age 44, has served as a Vice President of the Company and
as President and Chief Operating Officer of TruePosition, Inc., a wholly owned
subsidiary of the Company, since March 1997. From 1983 to 1997, Mr. Sander was
employed by Ericsson Radio Systems, Inc., the principal U.S. subsidiary of the
Swedish telecommunications firm, LM Ericsson, most recently as Vice President,
Business Operations, East Region.
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 22, 1998 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. The following share numbers have been adjusted to reflect the
Company's two-for-one stock split effected in October 1997.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF SHARES OUTSTANDING OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED SHARES VOTING POWER
- ------------------------------------------------------ ---------------------- ------------------ ------------
CLASS A CLASS B CLASS A CLASS B
--------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Estate of Jack N. Berkman (1) ........................ 2,332,416 2,410,266 12.4 12.5 12.4
c/o Myles P. Berkman
The Associated Group, Inc.
200 Gateway Towers
Pittsburgh, PA 15222
The Louis Berkman Company (2) ........................ 1,500,000 1,400,000 8.0 7.3 8.0
330 North 7th Street
Steubenville, OH 43952
Allen H. Berkman (3) ................................. 1,054,308 1,054,308 5.6 5.5 5.6
1500 Oliver Building
Pittsburgh, PA 15222
Myles P. Berkman (4) ................................. 678,906 1,442,406 3.6 7.2 3.8
c/o The Associated Group, Inc.
200 Gateway Towers
Pittsburgh, PA 15222
David J. Berkman (5).................................. 13,626 547,676 * 2.8 *
Donald H. Jones....................................... 80,622 154,372(6) * * *
Joseph A. Katarincic.................................. 26,500 128,370(6) * * *
Richard I. Goldstein.................................. -- 141,490(7) * * *
Scott G. Bruce........................................ -- 95,926(7) * * *
Kent R. Sander........................................ -- 12,000(7) * * *
All directors and executive officers as a group
(8 persons)......................................... 3,139,658 5,010,144(8) 16.7 23.8 17.0
</TABLE>
- ------------------
* Less than 1%
(1) Mr. Jack N. Berkman died on August 3, 1995. 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. Excludes
100,000 shares of Class B Common Stock which Louis Berkman donated to the
Louis and Sandra Berkman Foundation, of which Louis Berkman is a trustee, as
reported on his Schedule 13D filed with the Securities and Exchange
Commission and dated as of July 1, 1997.
(3) Allen H. Berkman is the uncle of Myles P. Berkman.
(4) Excludes 1,026 shares of each class owned of record by Myles P. Berkman's
wife. Includes 9,450 shares of each class held of record jointly with Mr.
Berkman's wife. The shares of Class B Common Stock include 763,500 shares
underlying stock options currently exercisable or exercisable within 60
days.
(5) Excludes 900 shares of each class owned of record by David J. Berkman's
wife. The shares of Class B Common Stock include 534,050 shares underlying
stock options currently exercisable or exercisable within 60 days.
(6) Includes 63,750 shares of Class B Common Stock underlying options currently
exercisable or exercisable within 60 days.
(7) Represents shares of Class B Common Stock underlying options currently
exercisable or exercisable within 60 days.
(8) Includes 1,744,516 shares of Class B Common Stock underlying stock options
currently exercisable or 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 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING
FISCAL STOCK ALL OTHER
NAME AND PRINCIPLE POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Myles P. Berkman................................... 1997 $750,000 $200,000 -- $ 39,471(1)
Chairman, President, 1996 700,000 150,000 20,000(2) 47,276(3)
Chief Executive Officer and Treasurer 1995 700,000 100,000 310,000(4) 37,200(5)
David J. Berkman................................... 1997 325,000 200,000 -- 4,750(6)
Executive Vice President 1996 300,000 150,000 25,000(2) 4,500(6)
1995 275,000 100,000 210,000(4) 4,500(6)
Richard I. Goldstein............................... 1997 257,800 150,000 -- 4,750(6)
Vice President 1996 232,800 115,000 25,000(2) 4,500(6)
1995 207,800 100,000 157,500(4) 59,061(7)
Scott G. Bruce..................................... 1997 153,600 150,000 -- 4,750(6)
General Counsel and Secretary 1996 138,600 75,000 20,000(2) 4,500(6)
1995 113,600 50,000 87,500(4) 4,500(6)
Kent R. Sander (8)................................. 1997 205,000 90,000 95,000(9) 4,750(6)
Vice President
</TABLE>
- ------------------
(1) Includes $34,721 paid by the Company for premiums attributable to the term
life insurance portion of split dollar life insurance policies and $4,750 of
contributions by the Company to the Company's 401(k) Savings Plan.
(2) 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. In 1998, such options were converted into options
under the 1994 Plan to purchase shares of the Company's Class B Common
Stock.
(3) 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.
(4) Adjusted to reflect the Company's two-for-one stock split effected in
October 1997. Includes options to purchase shares of TruePosition, Inc., a
wholly owned subsidiary of the Company, granted under the TruePosition, Inc.
(formerly 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) and Scott G. Bruce (7,500).
(5) 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.
(6) Reflects contributions by the Company on behalf of such person to the
Company's 401(k) Savings Plan.
(7) Includes $54,561 of relocation costs paid to Mr. Goldstein and $4,500 of
contributions by the Company on behalf of Mr. Goldstein to the Company's
401(k) Savings Plan.
(8) Mr. Sander's date of hire was March 17, 1997.
(9) Includes options to purchase 35,000 shares of TruePosition, Inc., granted
under the TruePosition, Inc. 1995 Stock Incentive Plan.
5
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following tables set forth information concerning the grant of stock
options to the named executive officers during the fiscal year ended December
31, 1997 pursuant to the 1994 Plan and the TruePosition, Inc. 1995 Stock
Incentive Plan (the 'TruePosition Plan') including the potential realizable
value of such grants (on a pre-tax basis) determined in accordance with
Securities and Exchange Commission rules. No stock options were granted to any
of the named executive officers during 1997 under the Microwave Services, Inc.
1996 Stock Incentive Plan (the 'Microwave Services Plan'). The information in
these tables shows how much the named executive officers may eventually realize
under two hypothetical situations: where the stock underlying the options gains
5% in value per year or 10% in value per year, in either case compounded over
the life of the options. These are assumed rates of appreciation and are not
intended to forecast future appreciation of the underlying stock.
<TABLE>
<CAPTION>
THE ASSOCIATED GROUP, INC.
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL
SECURITIES GRANTED TO RATES OF APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION ----------------------
NAME (#) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------------------- --------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Myles P. Berkman................... -- -- -- -- -- --
David J. Berkman................... -- -- -- -- -- --
Richard I. Goldstein............... -- -- -- -- -- --
Scott G. Bruce..................... -- -- -- -- -- --
Kent R. Sander..................... 60,000 70.6% $ 16.00 4/11/07 $603,739 $1,529,993
<CAPTION>
TRUEPOSITION, INC.
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL
SECURITIES GRANTED TO RATES OF APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION ----------------------
NAME (#) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------------------- --------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Myles P. Berkman................... -- -- -- -- -- --
David J. Berkman................... -- -- -- -- -- --
Richard I. Goldstein............... -- -- -- -- -- --
Scott G. Bruce..................... -- -- -- -- -- --
Kent R. Sander..................... 35,000 61.9% $ 42.00 3/17/07 $924,475 $2,342,801
</TABLE>
6
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE
The following tables contain information regarding (i) the exercise of
stock options by the named executive officers during the fiscal year ended
December 31, 1997 and (ii) the value at December 31, 1997 of any unexercised
stock options granted under the 1994 Plan, the TruePosition Plan and the
Microwave Services Plan:
<TABLE>
<CAPTION>
THE ASSOCIATED GROUP, INC.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR ENDED AT FISCAL YEAR END
ACQUIRED ON (#) (1) ($)(1)(2)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) (1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Myles P. Berkman............. -- -- 578,500 -- $14,248,488 --
David J. Berkman............. 14,500 $516,200 408,300 -- 10,148,003 --
Richard I. Goldstein......... 7,500 267,000 91,490 90,000 2,155,476 $ 1,878,750
Scott G. Bruce............... 3,500 124,600 42,426 48,000 966,966 1,002,000
Kent R. Sander............... -- -- -- 60,000 -- 787,500
</TABLE>
- ------------------
(1) Adjusted to reflect the Company's two-for-one stock split effected in
October 1997.
(2) The closing stock price of the Class B Common Stock was $29.125 on December
31, 1997.
<TABLE>
<CAPTION>
TRUEPOSITION, INC.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
(#)(1) ($)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Myles P. Berkman........................................... 10,000 -- * *
David J. Berkman........................................... 10,000 -- * *
Richard I. Goldstein....................................... 3,000 4,500 * *
Scott G. Bruce............................................. 3,000 4,500 * *
Kent R. Sander............................................. -- 35,000 * *
</TABLE>
- ------------------
(1) Represents options to purchase shares of the common stock of TruePosition,
Inc., a wholly owned subsidiary of the Company, pursuant to the TruePosition
Plan.
* At December 31, 1997, there was no trading market for the shares of common
stock of TruePosition, Inc. Accordingly, the fair market value of the
TruePosition, Inc. options at December 31, 1997 could not practicably be
determined.
<TABLE>
<CAPTION>
MICROWAVE SERVICES, INC.
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........................................... 20,000 * *
David J. Berkman........................................... 25,000 -- * *
Richard I. Goldstein....................................... 5,000 20,000 * *
Scott G. Bruce............................................. 4,000 16,000 * *
Kent R. Sander............................................. -- -- * *
</TABLE>
(Footnotes on next page)
7
<PAGE>
(Footnotes from previous page)
- ------------------
(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. Effective February 27, 1998, all outstanding
options under the Microwave Services Plan were adjusted as contemplated by
the Microwave Services Plan and converted into (the 'Conversion') and became
options (the 'Conversion Options') under the 1994 Plan to purchase shares of
Class B Common Stock. Each Conversion Option is governed by the terms of the
1994 Plan, and has the same term and vesting schedule as the related
Microwave Services, Inc. option which was converted pursuant to the
Conversion.
* At December 31, 1997, there was no trading market for the shares of common
stock of Microwave Services, Inc. Accordingly, the fair market value of the
Microwave Services, Inc. options at December 31, 1997 could not practicably
be determined.
LONG-TERM INCENTIVE PLAN AWARDS
In connection with the reorganization of Teligent, L.L.C., the predecessor
of Teligent, Inc., and the initial public offering of equity securities of
Teligent, Inc., outstanding company appreciation rights ('CARs') of Teligent,
L.L.C. were converted into options to purchase shares of Teligent, Inc. Class A
Common Stock. Pursuant to such conversion, David J. Berkman received options to
purchase 604,841 shares of Teligent, Inc. Class A Common Stock, of which, as of
December 31, 1997, 120,968 were exercisable. As of December 31, 1997, the value
of the exercisable portion of such in-the-money options was $2,190,126, and the
value of the unexercisable portion of such in-the-money options was $8,760,521.
COMPENSATION COMMITTEE REPORT
The Company has no standing compensation committee, and all decisions
regarding compensation for fiscal year 1997 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 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 1997 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 successful capital financing of the
Company's operating 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
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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 1997 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 1997, Myles P. Berkman and David J. Berkman were both executive
officers of the Company.
Joseph A. Katarincic is a member of the law firm of Katarincic & Salmon,
which performed services for the Company in fiscal year 1997. 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.
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 Stock Market(Registered)
('Nasdaq') on December 22, 1994.
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[CHART]
AGRPA AGRPB TELECOM NASDAQ
1994 100 100 100 100
1995 80.32 80.85 120.37 141.31
1996 130.85 126.59 135.12 173.94
1997 252.13 247.87 197.78 213.56
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 5,000 shares
of Class B Common Stock upon effectiveness of the 1994 Plan, and are awarded a
non-discretionary option of 5,000 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.
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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 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, 2007.
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 1998. 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.
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STOCKHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange Commission,
stockholder proposals intended to be presented at the Company's 1999 annual
meeting must be received by the Company at its principal executive offices no
later than December 31, 1998 to be considered for inclusion in the Company's
proxy statement and proxy cards for that meeting.
By Order of the Board of Directors,
SCOTT G. BRUCE
General Counsel and Secretary
April 30, 1998
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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 of The Associated Group, Inc. held of record by the
undersigned on April 22, 1998, and entitled to vote at the Annual Meeting of
Stockholders to be held on June 4, 1998, or any adjournment thereof.
(Please date and sign on the reverse side)
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example [x]
Proposal Number 1 - Election of Directors.
Nominees: Myles P. Berkman
Joseph A. Katarincic
Vote for Withhold Authority
all nominees to Vote for
(except as indicated all nominees
to the contrary) listed
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee(s) write
the name of such nominee(s) in the space provided:
______________________________________________________________________
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' 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 ANNUAL MEETING,
PROXY STATEMENT AND ANNUAL REPORT ON FORM 10-K 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
must sign. If signer is a corporation, please sign in full corporate name by
duly authorized officer or officers and affix the corporate seal.
Signature(s) _____________________________
Signature(s) _____________________________
Date ______________
