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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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYKES ENTERPRISES, INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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:
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(4) Date Filed:
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yes.
[large red stylized letters matching format of front cover of Annual Report]
SYKES Enterprises, Incorporated
1997 proxy statement
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SYKES ENTERPRISES, INC. (LOGO)
100 NORTH TAMPA STREET
SUITE 3900
TAMPA, FLORIDA 33602
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
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To the Shareholders of Sykes Enterprises, Incorporated:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Sykes Enterprises, Incorporated (the "Company") will be held at the
Wyndham Harbour Island Hotel, 725 South Harbour Island Boulevard, Tampa, Florida
on Thursday, May 8, 1997 at 1:00 p.m. Eastern Standard Time for the following
purposes:
1. To elect (i) two directors to hold office until the 1998 Annual
Meeting of Shareholders, (ii) three directors to hold office until the 1999
Annual Meeting of Shareholders, and (iii) three directors to hold office
until the 2000 Annual Meeting of Shareholders;
2. To approve an amendment to the Company's 1996 Employee Stock Option
Plan to increase the number of options that can be granted to 1,750,000,
and thus qualify the additional options for incentive stock option
treatment;
3. To amend the Company's Articles of Incorporation to increase the
number of authorized shares of common stock from 50,000,000 to 200,000,000
shares;
4. To amend the Company's Articles of Incorporation and Bylaws to
increase to 50% the threshold of shareholder votes required to call a
special shareholders' meeting;
5. To amend the Company's Bylaws to require 66 2/3% shareholder
approval to amend the Bylaws; and
6. To transact any other business as may properly come before the
Annual Meeting.
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Only shareholders of record as of the close of business on March 27, 1997
will be entitled to vote at the Annual Meeting or any adjournment or
postponement 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/ Margery Bass
----------------------------------
MARGERY BASS
Secretary
April 9, 1997
YOUR VOTE IS IMPORTANT.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE VOTE ON THE
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY
AND MAILING IT PROMPTLY IN THE ENCLOSED ENVELOPE.
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SYKES ENTERPRISES, INC. (LOGO)
100 NORTH TAMPA STREET
SUITE 3900
TAMPA, FLORIDA 33602
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PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
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This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Sykes Enterprises, Incorporated
(the "Company") for the Annual Meeting of Shareholders (the "Annual Meeting") to
be held at the Wyndham Harbour Island Hotel, 725 South Harbour Island Boulevard,
Tampa, Florida, on Thursday, May 8, 1997 at 1:00 p.m. Eastern Standard Time, or
any adjournment thereof.
If the accompanying proxy form ("Proxy") is completed, signed, returned to
the Company, and not revoked, the shares represented thereby will be voted at
the Annual Meeting as directed by the shareholder. The giving of the Proxy does
not affect the right to vote in person should the shareholder be able to attend
the Annual Meeting. The shareholder may revoke the Proxy at any time prior to
the voting thereof.
The annual report to shareholders of the Company for the year ended
December 31, 1996 along with this Proxy Statement are first being mailed on or
about April 9, 1997 to shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record as of the close of business on March 27, 1997
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At that date, there were 21,893,818 shares of common stock, $.01 par value per
share ("Common Stock"), outstanding and entitled to vote. Each outstanding share
of Common Stock is entitled to one vote on all matters submitted to a vote of
shareholders.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of elections appointed for the Annual Meeting who will also
determine whether a quorum is present for the transaction of business. The
Company's Bylaws provide that a quorum is present if the holders of a majority
of the issued and outstanding shares of Common Stock entitled to vote at the
meeting are present in person or represented by
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proxy. Abstentions will be counted as shares that are present and entitled to
vote for purposes of determining whether a quorum is present. Shares held by
nominees for beneficial owners will also be counted for purposes of determining
whether a quorum is present if the nominee has the discretion to vote on at
least one of the matters presented, even though the nominee may not exercise
discretionary voting power with respect to other matters and even though voting
instructions have not been received from the beneficial owner (a "broker
non-vote"). Neither abstentions nor broker non-votes are counted in determining
whether a proposal has been approved.
Under Florida law, if a quorum exists, directors are elected by a plurality
of the votes cast by the shares entitled to vote in the election. The proposals
set forth herein to approve (i) amending the Company's Articles of Incorporation
to increase the number of authorized shares of common stock to 200 million
shares and (ii) the amendment to the Company's 1996 Employee Stock Option Plan
increasing the number of options that can be granted to 1,750,000, and thus
qualify the additional options for incentive stock option treatment, will be
adopted if a majority of the total votes present or represented and entitled to
vote at the Annual Meeting vote in favor of such proposals. The proposal set
forth herein to approve amending the Company's Articles of Incorporation and the
Bylaws to increase to fifty percent (50%) the threshold of shareholder votes
required to call a special shareholders' meeting will be adopted if a majority
of the total outstanding shares of Common Stock vote in favor of such proposal.
The proposal set forth herein to approve amending the Company's Bylaws to
require sixty-six and two-thirds percent (66 2/3%) shareholder approval to amend
the Bylaws will be adopted if more than sixty-six and two-thirds percent
(66 2/3%) of the total outstanding shares of Common Stock vote in favor of such
proposal.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each of the proposals listed in the
Notice of Annual Meeting of Shareholders which are set forth more completely
herein. Returning your completed Proxy will not prevent you from voting in
person at the Annual Meeting should you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it at any time
before it is exercised by: (i) filing with the Secretary of the Company written
notice thereof; (ii) submitting a duly executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment thereof and will not be used for any
other meeting. Proxies solicited hereby will be returned to the Board of
Directors and will be tabu-
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lated by inspectors of election designated by the Board of Directors who will
not be employed by the Company or any of its affiliates.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails, by
directors, officers and regular employees of the Company without additional
compensation therefor. The Company also has made arrangements with brokerage
firms, banks, nominees and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record to the beneficial owners of
such shares. The Company will reimburse such record holders for their reasonable
out-of-pocket expenses.
PROPOSAL 1:
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES FOR ELECTION AS
DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE NOMINEES. PROXIES IN THE
ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING, UNLESS AUTHORITY TO DO SO
IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED BELOW.
The Company's Board of Directors is divided into three classes, as nearly
equal as possible, with each class serving three year terms expiring at the
third annual meeting of shareholders after their elections. Pursuant to Section
607.0805 of the Florida Business Corporation Act, however, the terms of each of
the initial directors of the Company may expire at the Annual Meeting, which is
the first shareholders' meeting of the Company at which directors will be
elected since the Company's incorporation in Florida in 1996. Accordingly, two
directors are to be elected at the Annual Meeting to Class II to hold office for
a term expiring at the 1998 Annual Meeting of Shareholders, three directors are
to be elected at the Annual Meeting to Class I to hold office for a term
expiring at the 1999 Annual Meeting of Shareholders, and three directors are to
be elected at the Annual Meeting to Class III to hold office for a term expiring
at the 2000 Annual Meeting of Shareholders (in each case, until their respective
successors are elected and qualified). In the event any of such nominees is
unable to serve, the persons designated as proxies will cast votes for such
other person in their discretion as a substitute nominee. The Board of Directors
has no reason to believe that the nominees named below will be unavailable, or
if elected, will decline to serve.
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NOMINEES FOR DIRECTORS
Principal Occupation
Name Age and Other Information
- ---- --- ---------------------
CLASS II -- TERM EXPIRES AT THE 1998 ANNUAL MEETING
John D. Gannett, Jr.................. 42 John D. Gannett, Jr. rejoined
the Company in 1995 as Senior
Vice President with
responsibility for infor-
mation technology development
services and solutions. Prior
to 1995, Mr. Gannett provided
consulting services to the
Company under an agreement
entered into in 1991. From
1979 to 1991, Mr. Gannett held
various management positions
within the technical and
documentation services areas
of the Company. Mr. Gannett
also has served as a director
of the Company since December
1984.
H. Parks Helms....................... 61 H. Parks Helms has served as a
director of the Company since
its inception in 1977 and is a
member of the Audit Committee.
Mr. Helms is the Managing
Partner of the law firm of
Helms, Cannon, Hamel & Hender-
son in Charlotte, North
Carolina. Mr. Helms has held
numerous political
appointments and elected posi-
tions, including as a member
of the North Carolina House of
Representatives.
CLASS I -- TERM EXPIRES AT THE 1999 ANNUAL MEETING
David E. Garner...................... 39 David E. Garner joined the
Company in 1984 and, since
1994, has served as Senior
Vice President with responsi-
bility for information
technology support services
for both national and
international operations.
Prior to becoming Senior Vice
President, Mr. Garner held
various technical and
managerial positions within
the Company. In January 1996,
Mr. Garner was elected to the
Company's Board of Directors.
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Principal Occupation
Name Age and Other Information
- ---- --- ---------------------
Gordon H. Loetz...................... 47 Gordon H. Loetz was elected to
the Company's Board of
Directors in 1993 and is a
member of the Audit Committee.
In 1982, Mr. Loetz founded
Comprehensive Financial
Services, a financial
investment advisory company.
He currently is the President
of CFS Insurance Agency, Inc.
Ernest J. Milani..................... 67 Ernest J. Milani was elected
to the Board of Directors of
the Company in April 1996 and
is a member of the
Compensation Committee. From
1970 until 1996, Mr. Milani
held various positions with
CDI Corporation, a
publicly-held provider of
engineering and technical
services, most recently as
President of CDI Corporation
Northeast and CDI Technical
Services Ltd., both of which
are subsidiaries of CDI
Corporation.
CLASS III -- TERM EXPIRES AT THE 2000 ANNUAL MEETING
John H. Sykes........................ 60 John H. Sykes has been
Chairman of the Board of
Directors, President and Chief
Executive Officer of the Com-
pany since its inception in
1977. Previously, Mr. Sykes
was Senior Vice President of
CDI Corporation, a pub-
licly-held technical services
firm.
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Principal Occupation
Name Age and Other Information
- ---- --- ---------------------
Furman P. Bodenheimer, Jr............ 67 Furman P. Bodenheimer, Jr. was
elected to the Board of
Directors
of the Company in 1991 and is
a member of the Compensation
and Stock Option Committees.
Mr. Bodenheimer has been
President and Chief Executive
Officer of Zickgraf
Enterprises, Inc. and
Nantahala Lumber in Franklin,
North Carolina since 1991.
Prior thereto and until 1988,
Mr. Bodenheimer was President
of First Citizens Bank and
Vice Chairman of First
Citizens Mortgage Company and
First Title Insurance Company.
From 1988 to 1991, Mr.
Bodenheimer was a consultant
to financial institutions.
R. James Stroker..................... 50 R. James Stroker has served as
a director of the Company
since 1990 and is a member of
the Compensation and Stock
Option Committees. Mr. Stroker
is Judge of the Ninth Ju-
dicial Circuit of the State of
Florida and has over 21 years
of judicial experience. Mr.
Stroker also serves on the
Board of Directors of the
University of Orlando Law
School. Mr. Stroker is the
son-in-law of Mr. Sykes.
PROPOSAL 2:
APPROVAL OF THE AMENDMENT TO THE
1996 EMPLOYEE STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1996 EMPLOYEE STOCK OPTION PLAN (THE "1996 PLAN") TO INCREASE THE
NUMBER OF SHARES WITH RESPECT TO WHICH OPTIONS MAY BE GRANTED TO 1,750,000 AND
URGES EACH SHAREHOLDER TO VOTE "FOR" THE APPROVAL. EXECUTED AND UNMARKED PROXIES
IN THE ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING IN FAVOR OF THE
APPROVAL OF THE AMENDMENT.
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GENERAL
At the August 1, 1996 Board of Directors meeting, the Board increased the
number of stock options available under the 1996 Plan from 1,050,000 to
1,750,000. The original options granted under the 1996 Plan, subject to certain
restrictions, can qualify for treatment as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Such treatment permits the employees to defer the recognition of income
on these options until such time as the options are exercised and the underlying
shares of stock are sold by the employee. The purpose of shareholder approval of
the amendment to the 1996 Plan is to permit the options to purchase 700,000
shares of Common Stock added to the 1996 Plan to qualify for incentive stock
option treatment pursuant to Section 422 of the Code.
PURPOSE
The purpose of the 1996 Plan is to enable the Company and its subsidiaries
to compete successfully in attracting, motivating and retaining employees with
outstanding abilities by making it possible for them to purchase shares of
Common Stock on terms which will give them a direct and continuing interest in
the future success of the business of the Company and its subsidiaries.
SHARES SUBJECT TO OPTIONS
As amended, the 1996 Plan permits options to be granted to purchase up to
1,750,000 shares of Common Stock. Options to purchase 601,694 shares have been
granted previously. Consequently, options to purchase 1,148,306 shares of Common
Stock remain eligible to be granted under the 1996 Plan. To the extent that
options granted under the 1996 Plan expire or terminate without having been
exercised in full, the Common Stock subject thereto will become available for
further options under the 1996 Plan. Provision is made under the 1996 Plan (the
"Antidilution Provisions") for appropriate adjustment in the number of shares of
Common Stock covered by the 1996 Plan, and by each option granted thereunder and
the related, option price, in the event of any change in the Common Stock by
reason of a stock dividend, merger, reorganization, stock split,
recapitalization, combination, exchange of shares or otherwise.
ADMINISTRATION AND DURATION OF THE 1996 PLAN
The 1996 Plan is administered by a committee (the "Committee") of the
Company's Board of Directors consisting of "disinterested persons" in accordance
with the requirements of Rule 16b-3 promulgated pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Rule 16b-3"). In the event of a
disagreement as to the interpretation of the 1996 Plan or any amendment thereto
or any rule, regulation or procedure thereunder or as to any right or obligation
arising from or related to the 1996 Plan, the decision of the Committee (or, if
permitted under Rule 16b-3, the decision of the Board), shall be final and
binding
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upon all persons in interest. The number of shares of Common Stock subject to
options granted, if any, in each year, the employees to whom stock options are
granted and the terms of the stock options granted, including the number of
shares of Common Stock subject to such options, shall be wholly within the
discretion of the Committee, subject to the terms and conditions set forth in
the 1996 Plan.
The 1996 Plan will terminate on April 30, 2006, unless sooner terminated by
the Board of Directors. Upon such termination, the outstanding options granted
pursuant to the 1996 Plan will remain in effect until their exercise or
expiration.
The Board may at any time terminate the 1996 Plan, or amend the 1996 Plan
as it shall deem advisable, including (without limiting the generality of the
foregoing) any amendment deemed by the Board to be necessary or advisable to
assure conformity of the 1996 Plan and any incentive stock options granted
thereunder to the requirements of Section 422 of the Code, as now or hereafter
in effect and to assure conformity with any requirements of other applicable
state or federal laws or regulations. The Board may not, however, without the
required approval by the shareholders of the Company, amend the 1996 Plan if
such shareholder approval is required to comply with Rule 16b-3 or the Code.
ELIGIBILITY AND EXTENT OF PARTICIPATION
Employees eligible to receive options pursuant to the 1996 Plan are persons
who are regularly employed on a salary basis by the Company or any subsidiary of
the Company, including officers and employee directors of the Company or such
subsidiary. No incentive stock option shall be granted to any employee who
immediately after such option is granted, owns capital stock of the Company
possessing more than 10% of the total combined voting power or value of all
classes of capital stock of the Company unless the option price at the time such
incentive stock option is granted is at least 110% of the fair market value of
the shares subject to the incentive stock option and such incentive stock option
is not exercisable by its terms after the expiration of five years from the date
of its grant. Directors who are not also employees of the Company or a
subsidiary of the Company are not eligible to participate under the 1996 Plan.
An incentive stock option shall be granted under the 1996 Plan to an optionee
only if the aggregate fair market value (determined as of the date the option is
granted) of the Common Stock for which options are exercisable for the first
time by such optionee during any calendar year does not exceed $100,000. No
participant in the 1996 Plan is eligible to receive options to purchase more
than 300,000 shares of Common Stock under the 1996 Plan during any calendar
year.
OPTION PRICE
Except for options granted to shareholders owning 10% or more of the voting
power of all classes of the Company's capital stock as described in the
preceding paragraph, the per share option price of an incentive
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stock option granted or to be granted pursuant to the 1996 Plan, as determined
by the Committee, shall be an amount not less than 100% of the fair market value
of the Common Stock on the date that the option is granted (subject to
adjustment as provided under the Antidilution Provisions). For purposes of the
1996 Plan, the "fair market value" of a share of Common Stock is defined as the
average closing price of the Common Stock on an established national or regional
stock exchange or automated quotation system, including, without limitation, the
Nasdaq National Market, during the five trading days immediately preceding the
date that the option is granted. If the Common Stock is not listed on such an
exchange or quoted on such a quotation system, the fair market value of the
Common Stock will be determined by the Committee.
OPTION PERIOD
The term of each option granted pursuant to the 1996 Plan shall be as
determined by the Committee, but in no event shall the term of an option exceed
a period of ten years from the date of its grant. In certain circumstances
involving certain mergers, reorganizations, transactions involving the sale or
transfer of substantially all of the assets of the Company or the acquisition of
more than 50% of the Common Stock by any person or group of related persons
without the prior approval of the Board, options that have been granted under
the 1996 Plan shall become immediately exercisable in full.
METHOD OF PAYMENT
Payment of the option price may be made in cash or by check, or by delivery
of shares of Common Stock equivalent in fair market value to the option price,
or by a combination of cash and shares of Common Stock, at the election of the
employee and subject to the terms of the applicable stock option agreement. In
the event an optionee exercises an option by surrendering shares of Common Stock
as payment of the exercise price, the 1996 Plan permits the Committee to grant a
replacement option equal to the number of shares surrendered as payment.
METHOD OF EXERCISE AND PAYMENT TERMS
Subject to the terms of each stock option agreement, options granted under
the 1996 Plan may be exercised in whole or in part. Upon exercise of an option,
the employee must pay in full the option price for the shares of Common Stock
being purchased.
LIMITATIONS ON TRANSFERABILITY AND
EFFECT OF DEATH OR TERMINATION
OF EMPLOYMENT
Options granted under the 1996 Plan are not transferable other than by will
or by the laws of descent and distribution.
During the lifetime of an optionee, his or her option shall be exercisable
only by him or her and only while continuously employed by the Company or one of
its subsidiaries, or, if after termination of employment, either within (i) one
month after termination of employment, other than by reason of the optionee's
death, retire-
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ment with the consent of the Company or such subsidiary as the case may be, or
permanent disability within the meaning of Section 22(e)(3) of the Code, or (ii)
three months after termination of employment if the optionee dies, retires with
the appropriate consent or is permanently disabled as described above, but only
if and to the extent the option was exercisable on the last day of such
employment. If an optionee dies within a period during which a stock option
could have been exercised by the optionee, the stock option may be exercised
after his or her death by those entitled to exercise such option under the
optionee's will or the laws of descent and distribution, but only if and to the
extent such stock option was exercisable immediately prior to his or her death.
In the discretion of the Committee, the three month period referenced above may
be extended for a period of up to one year.
The above exceptions to the general rule that options granted under the
1996 Plan must be exercised during employment by the Company or one of its
subsidiaries are further limited by the requirement that no option may be
exercised after the expiration of such option.
FEDERAL INCOME TAX CONSIDERATIONS
Incentive Stock Options. The holder of an option that qualifies as an
incentive stock option under Section 422 of the Code generally does not
recognize income for federal income tax purposes at the time of the grant or
exercise of an incentive stock option (but the spread between the exercise price
and the fair market value of the underlying shares on the date of exercise
generally will constitute a tax preference item for purposes of the alternative
minimum tax). The optionee generally will be entitled to long term capital gain
treatment upon the sale of shares acquired pursuant to the exercise of an
incentive stock option if the shares have been held for more than two years from
the date of grant of the option and for more than one year after exercise. If
the optionee disposes of the stock before the expiration of either of these
holding periods (a "disqualifying disposition"), the gain realized on
disposition will be compensation income to the optionee to the extent the fair
market value of the underlying stock on the date of exercise (or, if less, the
amount realized on disposition of the underlying stock) exceeds the applicable
exercise price.
Nonqualified Stock Options. An optionee does not recognize income for
federal income tax purposes upon the grant of a nonqualified stock option but
must recognize ordinary income upon exercise to the extent of the excess of the
fair market value of the underlying shares on the date of exercise over the
exercise price for the option. The Company generally will be entitled to a
deduction in the same amount and at the same time as ordinary income is
recognized by the optionee. A subsequent disposition of the shares acquired
pursuant to the exercise of a nonqualified option typically will give rise to
capital gain or loss to the extent the amount realized for the sale differs from
the fair market value of the shares on the date of exercise. This capital gain
or loss will be a long-term gain or loss if the shares sold had been held for
more than one year after the date of exercise.
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PROPOSAL 3:
APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK TO 200,000,000 SHARES
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF AMENDING THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 50,000,000 TO 200,000,000 SHARES AND URGES EACH SHAREHOLDER TO VOTE
"FOR" THE AMENDMENT. EXECUTED AND UNMARKED PROXIES IN THE ACCOMPANYING FORM WILL
BE VOTED AT THE ANNUAL MEETING IN FAVOR OF THE APPROVAL OF THE AMENDMENT.
GENERAL
The sole purpose of the amendment is to increase the number of authorized
shares of Common Stock, as set forth in Section 3.1 of Article III of the
Company's Articles of Incorporation, from 50,000,000 to 200,000,000. The
amendment is attached to this Proxy Statement as Exhibit A.
Of the 50,000,000 shares of Common Stock presently authorized, 21,893,818
shares were issued and outstanding and 2,050,000 shares were reserved for
issuance, as of the Record Date, under the 1996 Plan and the 1996 Non-Employee
Director Stock Option Plan. The increase in authorized shares of Common Stock
will provide shares for various purposes, including, without limitation,
possible future stock splits or stock dividends, issuances from time to time in
the event opportunities are presented for the acquisition of other companies,
possible future public offerings or private placements, possible adoption of a
rights plan, and possible future employee stock option or benefit plans. Except
as otherwise indicated herein and except for 767,146 shares of Common Stock
issued on March 31, 1997 to the shareholders of Info Systems of North Carolina,
Inc. in connection with the acquisition of that entity by the Company, there are
no understandings, agreements, plans or commitments relating to the issuance of
additional shares of voting Common Stock at this time.
The Company's Board of Directors has determined that the amendment is
advisable and voted to recommend it to the Company's shareholders for approval.
The Board of Directors has determined, after giving due consideration to the
foregoing, that the adoption of the amendment would be in the best interests of
the Company and its shareholders. If the amendment is approved by the Company's
shareholders, the Company will file Articles of Amendment to the Company's
Articles of Incorporation to that effect with the Florida Department of State.
Upon acceptance of that filing, the amendment would become effective.
In the event the amendment is approved by the shareholders and the increase
in authorized shares of Common Stock becomes effective, such shares can be
issued at such times and for such consideration as the Board of Directors, in
its discretion, determines
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without further shareholder action, except as may be required by applicable law.
Because the Company's Articles of Incorporation do not provide for preemptive
rights, shareholders will not have a preferential right to subscribe for their
proportionate share of any new issue of stock unless so provided by the Board of
Directors. Issuance of any of the proposed additional authorized shares, other
than as a pro rata distribution to existing shareholders, would dilute the
proportionate voting power of existing shareholders.
ANTI-TAKEOVER EFFECTS
The Company does not view the amendment as part of an "anti-takeover"
strategy. The amendment is not being advanced as a result of any known effort by
any party to accumulate shares of the Company's Common Stock or to obtain
control of the Company. Nevertheless, the amendment might have the effect of
discouraging an attempt by another person or entity, through the acquisition of
a substantial number of shares of the Company's Common Stock, to acquire control
of the Company with a view to imposing a merger, sale of all or any part of the
Company's assets or a similar transaction, because the issuance of new shares
could be used to dilute the stock ownership of such person or entity.
Furthermore, certain corporations have issued preferred stock or warrants or
other rights to acquire preferred stock or common stock to the holders of their
common stock pursuant to rights plans having terms designed to protect against
the adverse consequences to shareholders of partial takeovers and front-end
loaded two-step takeovers and freezeouts. The purpose of such a rights plan is
to ensure that shareholders receive a fair price for their shares in the event
of a takeover, by requiring any person who seeks to acquire a significant block
of the corporation's stock to obtain a waiver of rights plan from its board of
directors. The Company's Board of Directors is considering adopting a rights
plan for the Company, and assuming that such a plan is adopted, the additional
authorized and unissued shares of Common Stock contemplated by the amendment
would be available for issuance pursuant thereto.
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PROPOSAL 4:
APPROVAL OF AN AMENDMENT TO THE ARTICLES OF
INCORPORATION AND BYLAWS TO INCREASE THE
THRESHOLD TO CALL A SPECIAL SHAREHOLDERS' MEETING
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION AND THE BYLAWS TO INCREASE THE THRESHOLD OF
REQUIRED SHAREHOLDER VOTES FROM THIRTY-FIVE PERCENT (35%) TO FIFTY PERCENT (50%)
FOR SHAREHOLDERS TO CALL A SPECIAL MEETING AND URGES EACH SHAREHOLDER TO VOTE
"FOR" THE APPROVAL. EXECUTED AND UNMARKED PROXIES IN THE ACCOMPANYING FORM WILL
BE VOTED AT THE ANNUAL MEETING IN FAVOR OF THE APPROVAL OF INCREASING THE
THRESHOLD TO CALL A SPECIAL SHAREHOLDERS' MEETING.
GENERAL
The purpose of the amendment is to increase the number of shareholder votes
from thirty-five percent (35%) to fifty percent (50%) that are needed to call a
special meeting of the shareholders, as set forth in Section 5.1 of Article V of
the Company's Articles of Incorporation and Section 3.2(b) of the Company's
Bylaws. The amendment is attached to this Proxy Statement as Exhibit A. SEE THE
DISCUSSION BELOW REGARDING THE PURPOSES AND ANTI-TAKEOVER EFFECTS OF PROPOSALS 4
AND 5.
PROPOSAL 5:
APPROVAL OF AN AMENDMENT TO THE
BYLAWS TO INCREASE THE VOTING
FOR SHAREHOLDERS TO AMEND THE BYLAWS
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S BYLAWS TO INCREASE THE VOTING REQUIREMENT FOR SHAREHOLDERS TO AMEND
THE BYLAWS TO SIXTY-SIX AND TWO-THIRDS PERCENT (66 2/3%). EXECUTED AND UNMARKED
PROXIES IN THE ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING IN FAVOR OF
APPROVING THE INCREASED VOTING REQUIREMENT FOR SHAREHOLDERS TO AMEND BYLAWS.
GENERAL
The purpose of the amendment is to increase the number of shareholder votes
from a majority to sixty-six and two-thirds percent (66 2/3%) that are needed to
amend the Company's Bylaws, as set forth in Section 11.1 of the Bylaws. The
amendment is attached to this Proxy Statement as Exhibit A.
PURPOSES AND EFFECTS OF PROPOSALS 4 AND 5
The Company's Board of Directors has determined that the amendments to the
Company's Articles of Incorporation and Bylaws described in Proposals 4 and 5
are advisable and voted to recommend them to the Company's shareholders for
approval. Proposal 4 would require that the Company call a special shareholders'
meeting upon the application of share-
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holders owning at least fifty percent (50%) of the stock entitled to vote at the
special meeting, which is maximum percentage permitted under Florida law. Under
the current Articles of Incorporation and Bylaws, the Company is required to
call such a special meeting upon the application of shareholders owning
thirty-five percent (35%) of the stock entitled to vote. The Company believes
that such an increase limitation will avoid the time and expense of requiring
the Company to hold special meetings of stockholders on the application of a
minority of stockholders.
Proposal 5 would increase the shareholder vote required to amend the Bylaws
from a majority to sixty-six and two-thirds percent (66 2/3%). The Company
believes that this amendment will increase the probability that changes brought
about by shareholders to change the Bylaws are in the best interest of the
majority of shareholders. This amendment to the Bylaws also would be consistent
with the 2/3 shareholder approval requirement to amend the Articles of
Incorporation. In addition, the purpose of the proposed amendments is to
discourage certain types of transactions that involve an actual or threatened
change of control of the Company. They are designed to make it more difficult
and time-consuming to change majority control of the Board and thus to reduce
the vulnerability of the Company to an unsolicited proposal for the takeover of
the Company or an unsolicited proposal for the restructuring or sale of all or
part of the Company. As more fully described below, the Board believes that, as
a general rule, such unsolicited proposals are not in the best interests of the
Company and its stockholders.
ANTI-TAKEOVER EFFECTS OF PROPOSALS 4 AND 5
The proposed amendments are not the result of management's knowledge of any
specific effort to accumulate the Common Stock or to obtain control of the
Company by means of a merger, tender offer, solicitation in opposition to
management, or otherwise. Nonetheless, Proposals 4 and 5 are being proposed at
this time because the Board of Directors believes that the amendments, taken
together with other provisions of the Company's Articles of Incorporation and
Bylaws, would, if adopted, enhance the likelihood of continuity and stability in
the composition of the Company's Board of Directors and in the policies
formulated by the Board, and, at the same time, effectively reduce the
possibility that a third party could effect a sudden or surprise change in
majority control of the Company's Board of Directors without the support of the
incumbent Board. However, the proposed amendments and other provisions in the
Articles of Incorporation and Bylaws of the Company may have significant effects
on the ability of shareholders of the Company to change the composition of the
incumbent Board of Directors and to benefit from certain transactions which are
opposed by the incumbent Board.
The Company's Articles of Incorporation and Bylaws currently contain
provisions having anti-takeover effects. These provisions include
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(i) the classification of the Board of Directors, (ii) supermajority voting
requirements for the shareholders of the Company to amend the Articles of
Incorporation, (iii) provisions authorizing the Board of Directors to issue
preferred stock with rights and provisions determined by the Board of Directors,
(iv) provisions preventing the removal of directors without cause and only by a
supermajority vote, (v) provisions requiring unanimity for shareholders to take
actions without a meeting through written consent, (vi) provisions setting forth
procedures for stockholder nomination of candidates for director, and (vii)
provisions requiring vacancies on the Board, including newly created
directorships, to be filled by the Board and not the Company's shareholders. In
addition, as discussed under Proposal 3, the Company is considering adopting a
shareholder rights plan. Lastly, neither the Articles of Incorporation nor the
Florida Business Corporation Act provide for cumulative voting for the Company's
directors.
The proposed amendments, taken together with other provisions of the
Company's Articles of Incorporation and Bylaws described above, will make more
difficult or discourage a proxy contest or the assumption of control by a holder
of a substantial block of the Company's stock or the removal of the incumbent
Board and could thus increase the likelihood that incumbent directors will
retain their positions. However, these provisions will help ensure that the
Board, if confronted by a surprise proposal from a third party which has
acquired a block of the Company's stock, will have sufficient time to review the
proposal and alternatives thereto and, if deemed appropriate, to seek a premium
price for the shareholders.
The proposed amendments and the provisions set forth above are intended to
encourage persons seeking to acquire control of the Company to initiate such an
acquisition through arm's length negotiations with the Company's management and
Board of Directors. These provisions also could have the effect of discouraging
a third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its shareholders. In addition, since these provisions are designed
to discourage accumulations of large blocks of the Company's stock by purchasers
whose objective is to have such stock repurchased by the Company at a premium,
adoption of the amendments could tend to reduce the temporary fluctuations in
the market price of the Company's stock which are caused by accumulations of
large blocks of the Company's stock. Accordingly, shareholders could be deprived
of certain opportunities to sell their stock at a temporarily higher market
price.
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BOARD OF DIRECTORS
GENERAL
The Board of Directors held six meetings during the year ended December 31,
1996. The Board of Directors also took certain actions by unanimous written
consent in lieu of a meeting, as permitted by Florida law. During 1996, the
Audit Committee met two times, the Compensation Committee met three times, and
the Stock Option Committee met three times. All directors attended all meetings
of the Board of Directors and all committees on which they served during the
year ended December 31, 1996, except Mr. Helms, who attended five of the six
meetings of the Board of Directors.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
as such for service as members of either the Board of Directors or any
committees of the Board. Directors who are not executive officers of the Company
receive (subsequent to the Annual Meeting) an annual fee of $5,000, payable in
cash or shares of Common Stock based on the fair market value of the Common
Stock on the date of payment at the election of each director, plus $1,000 per
Board and committee meeting attended. The outside directors also receive options
to purchase Common Stock under the Company's 1996 Non-Employee Director Stock
Option Plan.
Mr. Milani and the Company entered into a one-year consulting agreement on
April 1, 1996 providing for an annual fee of $100,000. This one year consulting
agreement was renewed on the same terms effective April 1, 1997. The agreement
requires Mr. Milani to provide certain technical consulting services to the
Company as requested by the Company.
COMMITTEES OF THE BOARD
The Board of Directors has established committees whose responsibilities
are summarized as follows:
Audit Committee. The Audit Committee is comprised of Messrs. Helms and
Loetz and is responsible for reviewing the independence, qualifications and
activities of the Company's independent certified accountants and the Company's
financial policies, control procedures and accounting staff. The Audit Committee
recommends to the Board the appointment of the independent certified public
accountants and reviews and approves the Company's financial statements. The
Audit Committee is also responsible for the review of transactions between the
Company and any Company officer, director or entity in which a Company officer
or director has a material interest.
Compensation Committee. The Compensation Committee is comprised of Messrs.
Bodenheimer, Milani and Stroker and is responsible for establishing the
compensation of the Company's directors, officers and other managerial
personnel, including
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salaries, bonuses, termination arrangements, and other executive officer
benefits.
Stock Option Committee. The Stock Option Committee is comprised of Messrs.
Bodenheimer and Stroker and is responsible for granting stock options under the
1996 Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was established in connection with the
Company's initial public offering in April 1996. The members of the Compensation
Committee are Messrs. Bodenheimer, Milani and Stroker. Except for Mr. Sykes, no
officer or employee of the Company has participated in deliberations of the
Board of Directors concerning executive officer compensation.
Mr. Milani and the Company entered into a one-year consulting agreement on
April 1, 1996 providing for an annual fee of $100,000. This one year consulting
agreement was renewed on the same terms effective April 1, 1997. The agreement
requires Mr. Milani to provide certain technical consulting services to the
Company as requested by the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
During the year ended December 31, 1996, the executive officers and
directors of the Company filed with the Securities and Exchange Commission (the
"Commission") on a timely basis all required reports relating to transactions
involving equity securities of the Company beneficially owned by them. The
Company has relied solely on the written representation of its executive
officers and directors and copies of the reports they have filed with the
Commission in providing this information.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date, with respect to: (i) each of
the Company's directors; (ii) each of the Company's executive officers named in
the Summary Compensation Table below; (iii) all directors and executive officers
of the Company as a group; and (iv) each person known by the Company to own
beneficially more than 5% of the Common Stock. Except as otherwise indicated,
each of the shareholders listed below has sole voting and investment power over
the shares beneficially owned.
Beneficially Owned
--------------------
Name Shares Percent
- ---- ---------- -------
John H. Sykes(1)................................ 12,507,767 57.1%
Pilgrim Baxter & Associates..................... 1,338,750 6.1%
David E. Garner(2).............................. -- --
John D. Gannett, Jr.(3)......................... 750 *
Scott J. Bendert(4)............................. 2,100 *
John L. Crites, Jr.(4).......................... -- --
Furman P. Bodenheimer, Jr.(5)................... 4,500 *
H. Parks Helms(5)............................... 3,000 *
Gordon H. Loetz(5).............................. -- --
Ernest J. Milani(5)............................. 900 *
R. James Stroker(5)............................. 450 *
All directors and executive officers
as a group (9) persons........................ 12,519,467 57.2%
- ---------------
* Less than 1.0%
(1) Includes the following shares over which Mr. Sykes retains voting and
investment power: (i) 12,236,167 shares owned by Mr. Sykes through Jopar
Investments Limited Partnership, a North Carolina limited partnership in
which Mr. Sykes is the sole limited partner and the sole shareholder of the
limited partnership's sole general partner, and (ii) 271,600 shares owned by
various trusts for the benefit of Mr. Sykes' children. Excludes 5,300 shares
owned by Mr. Sykes' wife, as to which Mr. Sykes disclaims beneficial
ownership. Mr. Sykes' business address is 100 North Tampa Street, Suite
3900, Tampa, Florida 33602.
(2) Excludes 508,000 shares issuable upon exercise of nonexercisable options.
(3) Excludes 139,894 shares of Sykes Common Stock issuable upon the exercise of
nonexercisable stock options.
(4) Excludes 45,000 shares of Sykes Common Stock issuable upon the exercise of
nonexercisable stock options.
(5) Excludes 7,500 shares of Sykes Common Stock issuable upon the exercise of
nonexercisable stock options.
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EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's four other most highly compensated executive officers who
earned more than $100,000 for the years ended December 31, 1996 and 1995.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual ------------
Compensation Other Securities
------------------- Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation(1) Options Compensation(2)
- --------------------------- ---- -------- -------- --------------- ------------ ---------------
John H. Sykes.............. 1996 $300,000 $150,000 $ -- -- $ 22,682
President and Chief 1995 165,000 368,578 -- -- 24,573
Executive Officer
David E. Garner............ 1996 150,000 86,600 -- -- 8,488
Senior Vice President 1995 150,000 79,166 -- 762,000 9,321
John D. Gannett, Jr........ 1996 150,000 40,000 -- 139,894 7,165
Senior Vice President(3) 1995 69,806 25,000 -- -- 175,000
Scott J. Bendert........... 1996 107,692 50,000 -- 45,000 3,235
Vice President-Finance, 1995 89,716 20,000 -- -- 4,257
Treasurer and Chief
Financial Officer
John L. Crites, Jr......... 1996 88,134 -- -- 45,000 719
Vice President and 1995 -- -- -- --
General Counsel(4)
- ---------------
(1) Does not include the value of the perquisites provided to certain of the
named executive officers which in the aggregate did not exceed the lesser of
$50,000 or 10% of such officer's salary and bonus.
(2) Represents contributions to the Sykes Enterprises, Incorporated Employees'
Savings Plan and Trust and excess group term life insurance.
(3) Mr. Gannet rejoined the Company in July, 1995. "All Other Compensation"
consists solely of payments for consulting services and pursuant to
severance agreements entered into with Mr. Gannett in 1991.
(4) The information presented for Mr. Crites includes his salary and all other
compensation since joining the Company during 1996.
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The following table sets forth information with respect to grants of stock
options during 1996 to the executive officers named in the Summary Compensation
Table.
OPTIONS GRANTED LAST YEAR
Individual Grants
------------------------------------------------------------------------
Percentage
Number of of Total
Securities Options Market Price
Underlying Granted to Exercise or of Underlying
Options Employees Base Price Security on
Name Granted (#) in 1996 ($/Share) Date of Grant Expiration Date
---- ----------- ---------- ----------- ------------- ---------------
John H. Sykes......... --
David E. Garner....... --
John D. Gannett,
Jr.................. 46,631.5 7.2% $12.00 $12.00 April 29, 2006
46,631.5 7.2% 11.33 12.00 April 29, 2006
46,631.5 7.2% 10.00 12.00 April 29, 2006
---------
139,894.5
Scott J. Bendert...... 45,000 6.9% 12.00 12.00 April 29, 2006
John L. Crites, Jr.... 45,000 6.9% 12.00 12.00 April 29, 2006
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Term(1)
--------------------------------------
Name 0%($) 5%($) 10%($)
---- --------- ----------- -----------
John H. Sykes.........
David E. Garner.......
John D. Gannett,
Jr.................. $ -- $ 352,068 $ 891,594
31,243 383,311 922,837
93,263 445,331 984,857
-------- ---------- ----------
124,506 1,180,710 2,799,289
Scott J. Bendert...... 339,750 860,400
John L. Crites, Jr.... 339,750 860,400
- ---------------
(1) The dollar amounts under these columns are the result of calculations at the
hypothetical 5% and 10% rates set by the SEC and therefore are not intended
to forecast possible future appreciation, if any, of the Company's common
stock price. The option term is ten years.
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The following table sets forth information with respect to the aggregate
stock option exercises by the executive officers named in the Summary
Compensation Table during 1996 and the year-end value of unexercised options
held by such executive officers.
AGGREGATE OPTION EXERCISES
LAST YEAR AND YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-The-Money Options
Shares Options at Year End(#) at Year End(1)
Acquired on --------------------------- ---------------------------
Name Exercise (#) Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------------- ----------- ------------- ----------- -------------
John H. Sykes......................... -- -- -- -- -- --
David E. Garner....................... 254,000 $10,532,533 -- 508,000 -- $16,747,067
John D. Gannett, Jr................... -- -- -- 139,894 -- 3,691,776
Scott J. Bendert...................... -- -- -- 45,000 -- 1,147,500
John L. Crites, Jr.................... -- -- -- 45,000 -- 1,147,500
- ---------------
(1) Based upon the closing sale price of $37.50 per share of common stock on
December 31, 1996, as reported in the Nasdaq National Market.
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EMPLOYMENT AGREEMENTS
John H. Sykes. On January 1, 1996, the Company entered into an employment
agreement with John H. Sykes, the Company's Chairman of the Board, President and
Chief Executive Officer. The employment agreement provides for an initial term
of five years with an annual base salary of $300,000. Thereafter, the agreement
automatically renews for successive two-year terms unless terminated by either
party, with the base salary increasing by at least 30% subsequent to the initial
term and at least 15% for any subsequent automatic renewal term. Mr. Sykes is
also entitled to a performance bonus up to 100% of his base salary based on the
Company's achievement of specified levels of income before income taxes as
determined by the Compensation Committee and to participate in such bonus
programs and other benefit plans as are generally made available to other
executive officers of the Company.
If the agreement is terminated by the Company for any reason other than Mr.
Sykes' death or disability or other than cause (as defined therein), the Company
shall pay Mr. Sykes a one-time severance payment equal to two times the total of
the full amount of Mr. Sykes' annual base salary in effect at the time of such
termination plus Mr. Sykes' average annual bonus and other compensation for the
prior three years (or such shorter period if the agreement is in effect for less
than three years). During the two year period following termination of
employment, Mr. Sykes shall not, in any area in which the Company's business is
then conducted, directly or indirectly compete with the Company.
The agreement also provides for a one-time severance payment, in lieu of
any other severance payment, equal to three times the total of the full amount
of Mr. Sykes' annual base salary then in effect plus Mr. Sykes' average annual
bonus and other compensation for the prior five years (or such shorter period of
the employment agreement is in effect for less than five years) upon a "change
of control" of the Company if (i) Mr. Sykes is terminated from employment prior
to the end of the term of the agreement (except if terminated for cause) or (ii)
Mr. Sykes elects to terminate his employment with the Company under certain
circumstances. A "change of control" shall be deemed to have occurred if (i) any
person (other than Mr. Sykes) beneficially owns 20% or more of the outstanding
shares of voting capital stock, (ii) the sale or transfer of greater than 50% of
the book value of the Company's assets, (iii) the merger, consolidation, share
exchange or reorganization of the Company as a result of which the holders of
all of the shares of capital stock of the Company as a group would receive less
than 50% of the voting power of the capital stock of the surviving corporation,
(iv) the adoption of a plan of liquidation or the approval of the dissolution of
the Company, (v) the commencement of a tender offer which, if successful, would
result in a change of control, or (vi) a determination by the Board of Directors
in view of then current circumstances or impending events that a
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27
change of control has occurred or is imminent.
David E. Garner. On March 1, 1996, the Company entered into a three-year
employment agreement with David E. Garner, providing for an annual base salary
of $150,000. The agreement automatically renews for successive one-year terms
unless terminated by either party, and provides that if the agreement is
terminated for any reason other than death or disability, the Company shall pay
Mr. Garner non-compete payments equal to $150,000 per year for three years,
payable in accordance with the Company's standard payment practice. Mr. Garner
is prohibited from directly or indirectly competing with the Company during such
three-year period in any area in which the Company's business is then conducted.
The agreement also requires the Company to purchase disability insurance that
will pay Mr. Garner $150,000 per year for three years in the event of his
disability and life insurance that will pay Mr. Garner's estate $450,000 in the
event of his death. Mr. Garner also is entitled to a performance bonus up to
100% of his base salary based upon the Company's achievement of specified levels
of income before income taxes and upon his achievement of specified goals as
determined by the Compensation Committee, and to participate in such bonus
programs and other benefit plans as are generally made available to other
executive officers of the Company.
John D. Gannett, Jr. On March 1, 1996, the Company also entered into a
three-year employment agreement with John D. Gannett, Jr. providing for an
annual base salary of $150,000. The agreement automatically renews for
successive one-year terms unless terminated by either party, and provides that
if the agreement is terminated by the Company for any reason other than cause
(as defined therein), the Company shall pay Mr. Gannett a non-compete payment
equal to $150,000 per year for two years, payable in accordance with the
Company's standard payment practices. Mr. Gannett is prohibited from directly or
indirectly competing with the Company during such two-year period in any area in
which the Company's business is then conducted. The agreement provides that if
it is terminated by the Company for cause, during a period of two years
following termination of employment, Mr. Gannett will not, in any area in which
the Company's business is then conducted, directly or indirectly compete with
the Company and the Company shall then be required to pay a severance payment of
$125,000. Mr. Gannett also is entitled to a performance bonus up to 100% of his
base salary based upon the Company's achievement of specified levels of income
before income taxes and upon his achievement of specified goals as determined by
the Compensation Committee, and to participate in such bonus programs and other
benefit plans as are generally made available to other executive officers of the
Company.
Scott J. Bendert. On March 1, 1996, the Company entered into a two-year
employment agreement with Scott J. Bendert, providing for an annual base salary
of $110,000. The
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agreement automatically renews for successive one-year terms unless terminated
by either party, and provides that if the agreement is terminated for any reason
other than death, disability, or cause (as defined therein), the Company shall
pay Mr. Bendert a severance payment equal to $110,000, payable in accordance
with the Company's standard payment practices, in consideration of Mr. Bendert's
agreement to refrain from competing directly or indirectly with the Company for
a period of one year in any area in which the Company's business is then
conducted. The agreement provides that if it is terminated by the Company for
cause or by Mr. Bendert, during a period of one year following termination of
employment, Mr. Bendert will not, in any area in which the Company's business is
then conducted, directly or indirectly compete with the Company and the Company
shall not be required to pay the severance payment. Mr. Bendert also is entitled
to a performance bonus up to 35% of his base salary based upon the Company's
achievement of specified levels of income before income taxes and upon his
achievement of specified goals as determined by the Compensation Committee, and
to participate in such bonus programs and other benefit plans as are generally
made available to other executive officers of the Company.
STOCK OPTION PLANS
The Company maintains two stock option plans to attract, motivate and
retain key employees and members of the Board of Directors who are not employees
of the Company. These stock option plans have been adopted by Board of Directors
and were approved by the shareholders of the Company on March 1, 1996.
1996 Employee Stock Option Plan. The Company's 1996 Employee Stock Option
Plan, as amended (the "Employee Plan"), provides for the grant of incentive or
nonqualified stock options to purchase up to 1,750,000 shares of Common Stock.
In 1996, the executive officers named in the Summary Compensation Table received
options to purchase a total of 229,894 shares of Common Stock as follows: John
D. Gannett, Jr., 139,894 shares with an exercise price as follows: (i) 33 1/3%
of such shares at $12.00 per share, (ii) 33 1/3% at $11.33 per share, and (iii)
33 1/3% at $10.00 per share; Scott J. Bendert, 45,000 shares with an exercise
price of $12.00 per share; and John L. Crites, Jr., 45,000 shares with an
exercise price of $12.00 per share. Certain other officers and employees of the
Company hold options to purchase an additional 371,800 shares of Common Stock at
a range of $12.00 to $46.90 per share. Such options vest ratably over the
three-year period following the date of grant, except for 120,000 options
granted to certain key employees, all of which are immediately exercisable.
1996 Non-Employee Director Stock Option Plan. The Company's 1996
Non-Employee Director Stock Option Plan, as amended (the "Non-Employee Plan"),
provides for the grant of nonqualified stock options to purchase up to 300,000
shares of Common Stock to members of the Board of Directors who are not em-
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29
ployees of the Company. Each outside director received options to purchase 7,500
shares of Common Stock at an exercise price of $12.00 per share. Thereafter, on
the date on which a new outside director is first elected or appointed, he or
she shall automatically be granted options to purchase 5,000 shares of Common
Stock. Each outside director also shall be granted options to purchase 5,000
shares of Common Stock annually on the day following the annual meeting of
shareholders. All options granted will have an exercise price equal to the then
fair market value of the Common Stock. Options shall become exercisable over a
period of three years in equal amounts until a director has completed his or her
initial term, whereupon all options granted prior to that time shall become
exercisable, and subsequent options shall become exercisable one year after the
date of grant.
SPLIT DOLLAR PLAN
The Company's Split Dollar Plan (the "Split Dollar Plan") provides for
benefits to certain executive officers and key employees upon retirement or
death prior to retirement. For each calendar year, each participant contributes
at least 2% but no more than 10% of his or her compensation during the year. The
Company contributes a percentage of each participant's contribution as
determined in the Company's discretion at the beginning of each year. Upon the
participant's retirement, the participant shall receive his or her contributions
to the Split Dollar Plan plus the vested portion of the Company's contributions.
Such contributions vest ratably over a ten year period commencing on the
participant's third year of service contingent upon the participant's agreement
not to divulge confidential information of the Company or compete with the
Company. Upon the death of the participant, the beneficiaries of the participant
shall receive the death benefit payable under the life insurance policy
purchased with the contributions made to the Split Dollar Plan.
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 chief executive
officer and its 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 and the
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Stock Option Committee are responsible for separate aspects of the Company's
compensation program for its executive officers, including the named executive
officers. The Compensation Committee is responsible for making recommendations
to the Board of Directors concerning the salaries of executive officers. The
Compensation Committee is also responsible for overseeing other forms of cash
compensation and benefits to other senior officers. The Compensation Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers and making recommendations to the full Board of Directors with
respect to these matters. Since the completion of the Company's initial public
offering, the Stock Option Committee is responsible for making stock option
grants under the Company's stock option plans to executive officers of the
Company. Prior to the Company's initial public offering, the Stock Option
Committee made recommendations to the Board of Directors with respect to stock
option grants to executive officers.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms generally to
the compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.
The Compensation Committee monitors the operation of the Company's
executive compensation policies. In 1996, the Company implemented the
recommendations of independent compensation consultants that were retained by
the Company to assess the effectiveness of the Company's executive compensation
programs by comparing the Company's compensation programs to various other
companies with similar growth characteristics to those of the Company. Key
elements of the Company's compensation program consists of base salary,
discretionary annual cash bonuses and periodic grants of stock options. The
Company's policies with respect to these elements, including the basis for the
compensation awarded the Company's chief executive officer, are discussed below.
While the elements of compensation described below are considered separately,
the Compensation Committee takes into account the full compensation package
offered by the Company to the individual, including healthcare and other
insurance benefits and contributions made by the Company under the Company's
Split Dollar Plan. See "Split Dollar Plan."
Base Salaries. The Company has established competitive annual base
salaries for all executive officers, including the named executive officers. The
annual base salaries for each of the Company's executive of-
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ficers, including the Company's chief executive officer, reflect both the
recommendations of the Company's compensation consultants and the subjective
judgment of the Compensation Committee based on the consideration of the
executive officer's position with the Company, the executive officer's tenure,
the Company's needs, and the executive officer's individual performance,
achievements and contributions to the growth of the Company.
Mr. Sykes' annual base salary as the Company's chief executive officer is
currently $300,000. The Compensation Committee believes that this annual base
salary is consistent with the salary range established for this position based
on the committee's discussions with outside consultants, the factors noted above
and Mr. Sykes prior experience and managerial expertise, his knowledge of the
Company's operations and the industry in which it operates.
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus under the Company's Bonus Program. The Bonus Program provides for the
payment of annual incentive awards to key employees, including executive
officers of the Company, pursuant to a formula related to the Company's
operating goals and personal performance goals.
The amount of the cash bonus to be paid to Mr. Sykes as the Company's chief
executive officer under the Bonus Program is $150,000 for the year ended
December 31, 1996, and was determined in accordance with the provisions of the
Bonus Program.
Stock Options. Under the Plans, stock options may be granted to key
employees, including executive officers of the Company. Prior to the Company's
initial public offering, the Stock Option Committee made recommendations to the
Board of Directors with respect to the granting of stock options to employees,
including executive officers of the Company, for approval or disapproval by the
Board of Directors. Since the Company's initial public offering, the Plans have
been administered by the Stock Option Committee in accordance with the
requirements of Rule 16b-3.
Prior to the Company's initial public offering, the principal factors
considered in determining the granting of stock options to executive officers of
the Company were the executive officer's tenure with the Company, his or her
total cash compensation for the prior year, the executive officer's acceptance
of additional responsibilities and his or her contributions toward the Company's
attainment of strategic goals.
During the year ended December 31, 1996, no options to purchase shares of
Common Stock under the Plans were granted to Mr. Sykes.
SECTION 162(M) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, a tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limita-
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tion. Based upon the Compensation Committee's commitment to link compensation
with performance as described in this report, the Compensation Committee
currently intends to qualify compensation paid to the Company's executive
officers for deductibility by the Company under Section 162(m).
COMPENSATION COMMITTEE
FURMAN P. BODENHEIMER
ERNEST J. MILANI
R. JAMES STROKER
March 21, 1997
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.
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STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Common Stock with the cumulative total return on the
Nasdaq Stock Market (U.S.) Index and the Nasdaq Computer and Data Processing
Index since the Company's initial public offering on April 29, 1996. This graph
assumes that $100 was invested on April 29, 1996 in the Company's common stock,
the Nasdaq Stock Market (U.S.) Index, and the Nasdaq Computer and Data
Processing Index.
Nasdaq
Computer
Sykes Nasdaq Stock and Data
Measurement Period Enterprises, Market (U.S.) Processing
(Fiscal Year Covered) Inc. Index Index
4/29/96 $100.00 $100.00 $100.00
12/31/96 $312.50 $109.00 $106.00
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company does not make or endorse any predictions as to the future
stock performance.
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.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as the
Company's independent auditors for 1997. A representative of Coopers & Lybrand
L.L.P. will be present at the Annual Meeting. Such representative will be
available to respond to appropriate questions and may make a statement if he so
desires.
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DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals which shareholders intend to present at the 1998 Annual Meeting
of Shareholders must be received by the Company no later than December 11, 1997
to be eligible for inclusion in the proxy material for that meeting.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which
is not referred to in the Notice of Annual Meeting. If any other matters
properly come before the Annual 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/ Margery Bass
-----------------------------------
MARGERY BASS
Secretary
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EXHIBIT A
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK TO 200,000,000 SHARES
3.1 Authorized Shares. The total number of shares of all classes of
capital stock that the Corporation shall have the authority to issue shall be
210,000,000 shares, of which 200,000,000 shares shall be Common Stock having a
par value of $0.01 per share ("Common Stock") and 10,000,000 shares shall be
Preferred Stock having a par value of $0.01 per share ("Preferred Stock"). The
Board of Directors is expressly authorized, pursuant to section 607.0602 of the
FBCA, to provide for the classification and reclassification of any unissued
shares of Common Stock or Preferred Stock and the issuance thereof in one or
more classes or series without the approval of the shareholders of the
Corporation, all within the limitations set forth in section 607.0601 of the
FBCA.
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE TO 50%
THE REQUIRED SHAREHOLDER VOTES TO CALL A SPECIAL MEETING OF SHAREHOLDERS
5.1 Call For Special Meeting. Special meetings of the shareholders of the
Corporation may be called at any time, but only by (a) the Chairman of the Board
of the Corporation, (b) a majority of the directors in office, although less
than a quorum, and (c) the holders of at least fifty percent (50%) of the total
number of votes of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
AMENDMENT TO THE COMPANY'S BYLAWS TO INCREASE TO 50%
THE REQUIRED SHAREHOLDER VOTES TO CALL A SPECIAL MEETING OF SHAREHOLDERS
Section 3.2 Special Meetings.
(b) Call by Shareholders. The Corporation shall call a special meeting of
the shareholders in the event that the holders of at least fifty percent (50%)
of all of the votes entitled to vote generally in the election of directors,
voting together as a single class, sign, date, and deliver to the Secretary one
or more written demands for the meeting describing one or more of the purposes
for which it is to be held. The Corporation shall give notice of such a special
meeting within sixty days after the date that the demand is delivered to the
Corporation.
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AMENDMENT TO THE COMPANY'S BYLAWS TO INCREASE
THE VOTING REQUIREMENT FOR SHAREHOLDERS TO AMEND THE BYLAWS
11.1 Power to Amend. These Bylaws may be amended or repealed by either the
Board of Directors or the shareholders, unless the Act reserves the power to
amend these Bylaws generally or any particular Bylaw provision, as the case may
be, exclusively to the shareholders or unless the shareholders, in amending or
repealing these bylaws generally or any particular bylaw provision, provide
expressly that the Board of Directors may not amend or repeal these bylaws or
such bylaw provision, as the case may be. The affirmative vote of sixty-six and
two-thirds percent (66 2/3%) of the total number of votes of the then
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend these bylaws. The shareholders of the Corporation may adopt
or amend a bylaw provision which fixes a greater quorum or voting requirement
for shareholders (or voting groups of shareholders), with respect to this or any
other section of these bylaws, than is required by the Act. The adoption or
amendment of a bylaw provision that adds, changes or deletes a greater quorum or
voting requirement for shareholders must meet the same quorum or voting
requirement and be adopted by the same vote and voting groups required to take
action under the quorum or voting requirement then in effect or proposed to be
adopted, whichever is greater.
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