SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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
(S) 240.14a-11(c) or (S) 240.14a-12
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
- --------------------------------------------------------------------------------
(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:
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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.
[_] 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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Notes:
[LOGO OF PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED]
1700 Old Meadow Road
McLean, Virginia 22102
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 17, 1999
----------------
To the Stockholders of Primus Telecommunications Group, Incorporated:
The Annual Meeting of Stockholders of Primus Telecommunications Group,
Incorporated, a Delaware corporation (the "Company") will be held at 10:00
a.m., local time, on June 17, 1999 at the Hyatt Regency Reston, 1800 Presidents
Street, Reston, VA 20190, for the following purposes:
1. To elect two directors of the Company;
2. To approve an amendment to the Company's Stock Option Plan to increase
the number of shares reserved for issuance upon exercise of options
granted thereunder; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of the Common Stock at the close of business on May 18, 1999 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof. Such stockholders may vote in person or by proxy. The
stock transfer books of the Company will not be closed. The accompanying form
of proxy is solicited by the Board of Directors of the Company.
By Order of the Board of Directors
/s/ K. Paul Singh
K. Paul Singh
Chairman of the Board of
Directors, President, and Chief
Executive Officer
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY WRITTEN NOTICE
AT THAT TIME.
May 19, 1999
[LOGO OF PRIMUS TELECOMMUNICATIONS GROUP, INC.]
1700 Old Meadow Road
McLean, Virginia 22102
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
June 17, 1999
----------------
This Proxy Statement, which is first being mailed to stockholders on
approximately May 19, 1999, is furnished in connection with the solicitation by
the Board of Directors of Primus Telecommunications Group, Incorporated (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Annual Meeting"), to be held at 10:00 a.m. on June 17, 1999 at
the Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20190, and at any
adjournments or postponements thereof. If proxies in the accompanying form are
properly executed and returned prior to voting at the Annual Meeting, the
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), represented thereby, will be voted as instructed on the proxy. If no
instructions are given on a properly executed and returned proxy, the shares of
the Common Stock represented thereby will be voted IN FAVOR OF the election of
the nominees for directors named below, IN FAVOR OF approval of an amendment to
the Company's Stock Option Plan to increase the number of shares reserved for
issuance upon exercise of options granted thereunder, and in support of
management on such other business as may properly come before the Annual
Meeting or any adjournments thereof. Any proxy may be revoked by a stockholder
prior to its exercise upon written notice to the Secretary of the Company, by
delivering a duly executed proxy bearing a later date, or by the vote of a
stockholder cast in person at the Annual Meeting.
VOTING
Holders of record of the Common Stock on May 18, 1999 will be entitled to
vote at the Annual Meeting or any adjournments or postponements thereof. As of
that date, there were [28,404,934] shares of Common Stock outstanding and
entitled to vote. The presence, in person or represented by proxy, of at least
a majority of the shares entitled to vote will constitute a quorum for purposes
of the transaction of business. Each share of Common Stock entitles the holder
thereof to one vote on the election of each nominee for director and on any
other matter that may properly come before the Annual Meeting. Stockholders are
not entitled to cumulative voting in the election of directors. Directors are
elected by the affirmative vote of a plurality of the votes of the shares
entitled to vote, present in person or represented by proxy, and votes may be
cast in favor of or withheld from each director nominee. An affirmative vote of
a majority of the shares present in person or represented by proxy at the
Meeting, and entitled to vote on the subject matter, is required for approval
of all other matters presented. Abstentions, votes withheld and broker non-
votes are counted in determining whether a quorum is present. Abstentions with
respect to any proposal other than the election of directors will have the same
effect as votes against the proposal, because approval requires a vote in favor
of the proposal by a majority of the votes entitled to be cast by stockholders
present in person or by proxy at the Meeting. If no instructions are given on a
properly executed and returned proxy, the shares of Common Stock represented
thereby will be voted IN FAVOR OF the election of Messrs. Singh and DePodesta
as directors and IN FAVOR OF an amendment to the Company's Stock Option Plan to
increase the number of shares reserved for issuance upon exercise of options
granted thereunder.
The cost of solicitation of proxies by the Board of Directors will be borne
by the Company. Proxies may be solicited by mail, personal interview, telephone
or telegraph and, in addition, directors, officers and regular
1
employees of the Company may solicit proxies by such methods without additional
remuneration. Banks, brokerage houses and other institutions, nominees or
fiduciaries will be requested to forward the proxy materials to beneficial
owners in order to solicit authorizations for the execution of proxies. The
Company will, upon request, reimburse such banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding such
proxy materials to the beneficial owners of the Common Stock.
ELECTION OF DIRECTORS
(Proposal 1)
The Company's Board of Directors is divided into three classes, with
staggered three-year terms. Currently, the Board of Directors has six members.
Unless otherwise specified in the accompanying proxy, the shares voted pursuant
thereto will be cast for K. Paul Singh and John F. DePodesta, for terms
expiring at the Annual Meeting of Stockholders to be held following fiscal 2001
(the "2002 Annual Meeting"). If, for any reason, at the time of election, any
of the nominees named should decline or be unable to accept his or her
nomination or election, it is intended that such proxy will be voted in favor
of the election, in the nominee's place, of a substituted nominee, who would be
recommended by the Board of Directors. The Board of Directors, however, has no
reason to believe that any of the nominees will be unable to serve as a
director.
Set forth below is biographical information furnished as to each nominee for
election as a director and each of the current directors. There are no family
relationships among any of the directors of the Company.
Nominees for Election to the Board of Directors
For a Three Year Term Expiring at 2002 Annual Meeting
K. Paul Singh co-founded the Company in 1994 with Mr. DePodesta and serves as
its Chairman, President and Chief Executive Officer. From 1991 until he co-
founded the Company, he served as the Vice President of Global Product
Marketing for MCI. Prior to joining MCI, Mr. Singh was the Chairman and Chief
Executive Officer of Overseas Telecommunications, Inc. ("OTI"), a provider of
private digital communications in over 26 countries which he founded in 1984
and was purchased by MCI in 1991.
John F. DePodesta co-founded the Company in 1994 with Mr. Singh, and serves
as a director and its Executive Vice President. In addition to his position
with the Company, Mr. DePodesta also currently serves as the Chairman of the
Board of Iron Road Railways Incorporated, which he co-founded in 1994, and
served as Senior Vice President, Law and Public Policy, of Genesis Health
Ventures, Inc. from January 1996 through March 1998. Additionally, since 1994
he has been "of counsel" to the law firm of Pepper Hamilton LLP, where he was
previously a partner since 1979. Before joining Pepper Hamilton LLP, Mr.
DePodesta served as the General Counsel of Consolidated Rail Corporation.
The Board of Directors recommends a vote IN FAVOR OF Proposal 1 to Elect the
Two Nominees. If no instructions are given on a properly executed and returned
proxy, the shares of Common Stock represented thereby will be voted IN FAVOR OF
Messrs. Singh and DePodesta.
Members of the Board of Directors Continuing in Office
Term Expiring at 2000 Annual Meeting
Herman Fialkov became a director of the Company in 1995. He is a consultant
to Newlight Management LLC and a General Partner of PolyVentures Associates,
L.P., a venture capital firm, and has been associated with various venture
capital firms since 1968. Previously, he was an officer and director of General
Instrument Corporation which he joined in 1960 as a result of its acquisition
of General Transistor Corporation, a company Mr. Fialkov founded. Mr. Fialkov
is also a director of GlobeComm Systems, Inc.
2
David E. Hershberg became a director of the Company in 1995. Mr. Hershberg is
the founder, Chairman, President and CEO of GlobeComm Systems, Inc., a system
integrator of satellite earth stations. From 1976 to 1994, Mr. Hershberg was
the President and Chief Executive Officer of Satellite Transmission Systems,
Inc., a global provider of satellite telecommunications equipment, and became a
Group President of California Microwave, Inc., a company that acquired
Satellite Transmission Systems, Inc.
Members of The Board of Directors Continuing in Office
Term Expiring at 2001 Annual Meeting
John G. Puente became a director of the Company in 1995. From 1987 to 1995,
he was Chairman of the Board and CEO of Orion Network Systems, a satellite
telecommunications company. Mr. Puente is currently Chairman of the Board of
Telogy Networks, Inc., a privately-held company, and a director of MICROS
Systems, Inc. Prior to joining Orion, Mr. Puente was Vice Chairman of M/A-Com
Inc., now known as Hughes Network Systems, Inc., a diversified
telecommunications and manufacturing company, which he joined in 1978 when M/A-
Com acquired Digital Communications Corporation, a satellite terminal and
packet switching manufacturer of which Mr. Puente was a founder and Chief
Executive Officer.
Douglas M. Karp became a director of the Company in June 1998. Mr. Karp has
been a Managing Director of E.M. Warburg, Pincus & Co., LLC (or its
predecessor, E.M. Warburg, Pincus & Co., Inc.) since May 1991. Prior to joining
E.M. Warburg, Pincus & Co., LLC, Mr. Karp held several positions with Salomon
Inc. including Managing Director from January 1990 to May 1991, Director from
January 1989 to December 1989 and Vice President from October 1986 to December
1988. Mr. Karp is a director of Qwest Communications Inc., TV Filme, Inc.,
Journal Register Company, PageNet de Brasil, S.A., StarMedia Network Inc. and
several privately held companies.
Mr. Karp was nominated by Warburg, Pincus Investors, L.P. ("Warburg, Pincus")
for election as a director of the Company. In connection with the Company's
merger with TresCom International, Inc. in June 1998, Warburg, Pincus was
granted the right, for so long as it beneficially owns at least 10% of the
outstanding Common Stock, to nominate one director to the Company's Board of
Directors.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Messrs.
Fialkov and Hershberg, who were not at any time officers or employees of The
Company. No executive officer of the Company serves as a member of the board of
directors or compensation committee of another entity which has one or more
executive officers that will serve as a member of the Board of Directors or the
Company's Compensation Committee.
Committees and Meetings of the Board of Directors
During the year ended December 31, 1998, the Board of Directors held nine
meetings and acted by written consent on two occasions. Each director attended
at least 75% of the aggregate of the total number of meetings of the Board of
Directors and committees of the Board of Directors on which he served.
During the year ended December 31, 1998 the Audit Committee, which currently
consists of Messrs. Fialkov and Puente, held two meetings. The Audit Committee
has the authority and responsibility to hire one or more independent public
accountants to audit the Company's books, records and financial statements and
to review the Company's systems of accounting (including its systems of
internal control), to discuss with such independent public accountants the
results of such audit and review, to conduct periodic independent reviews of
the systems of accounting (including systems of internal control), and to make
reports periodically to the Board of Directors with respect to its findings.
3
During the year ended December 31, 1998, the Compensation Committee, which
consists of Messrs. Fialkov (Chairman) and Hershberg, held five meetings and
acted by written consent on one occasion. The Compensation Committee is
responsible for fixing the compensation of the Chief Executive Officer and the
other executive officers, deciding other compensation matters such as those
relating to the operation of the Company's Stock Option Plan ("Stock Option
Plan") and Director Stock Option Plan ("Director Option Plan"), including the
award of options under the Stock Option Plan, and approving certain aspects of
the Company's management bonus plan.
During the year ended December 31, 1998, the Nominating Committee, which
consists of Messrs. Puente (Chairman) and Singh, did not hold any meetings. The
Nominating Committee is responsible for selecting those persons to be nominated
to the Company's Board of Directors and will not consider nominees recommended
by the stockholders.
Compensation of Directors
The Company pays non-employee directors an annual fee of $10,000 and will
reimburse their expenses for attending meetings. In addition, the Company
grants each person who becomes an Eligible Director (as defined in the Director
Option Plan) options to purchase 15,000 shares of the Common Stock pursuant to
Primus's Director Option Plan which vest one-third upon the grant date, and
one-third on each of the first and second anniversary of the grant dates. The
Company did not grant any such options in 1997 or 1998.
Directors and Executive Officers
The following table and biographies set forth information concerning the
individuals who serve as directors and executive officers of the Company.
Year of Expiration
Name Age Position of Term as Director
---- --- -------- -------------------
K. Paul Singh (1)(2)...... 48 Chairman of the Board of
Directors, President, and
Chief Executive Officer 1999
Neil L. Hazard............ 46 Executive Vice President
and Chief Financial
Officer N/A
John F. DePodesta (1)..... 54 Executive Vice President
and Director 1999
Ravi Bhatia............... 50 Chief Operating Officer,
Primus Australia N/A
Yousef Javadi............. 43 Chief Operating Officer,
Primus North America N/A
John Melick............... 40 Vice President of
International Business
Development N/A
Jay Rosenblatt............ 34 Vice President, Global
Carrier Services N/A
Herman Fialkov (1)(3)(4).. 77 Director 2000
David E. Hershberg (1)(3). 61 Director 2000
Douglas M. Karp (1)....... 43 Director 2001
John Puente (1)(2)(4)..... 68 Director 2001
- --------
(1) Background presented above. See "Election of Directors."
(2) Member of Nominating Committee.
(3) Member of Compensation Committee.
(4) Member of Audit Committee.
4
Neil L. Hazard joined the Company in 1996 as its Executive Vice President and
Chief Financial Officer. Prior to joining the Company, Mr. Hazard was employed
by MCI in several executive positions, most recently as its Director of
Corporate Accounting and Financial Reporting, responsible for consolidation of
MCI's financial results, external reporting to stockholders and securities
compliance reporting. Mr. Hazard served as acting Controller of MCI for six
months and as Director of Global Product Marketing. Prior to joining MCI in
1991, Mr. Hazard served as the Chief Financial Officer of OTI.
Ravi Bhatia joined the Company in October 1995 as the Managing Director of
Primus Telecommunications Pty., Ltd. (Australia). In March 1996 Mr. Bhatia
became the Chief Operating Officer of Primus Australia and as such is
responsible for implementing the Company's business strategy in Australia. Mr.
Bhatia has over 26 years of international experience in the telecommunications
industry, which includes nine years of employment with MCI in various sales and
marketing positions. Most recently, he served as the Director of Sales and
Marketing for MCI in the South Pacific Region, based in Sydney.
Yousef Javadi joined the Company in March 1997 as Chief Operating Officer of
Primus North America. Prior to joining the Company, Mr. Javadi was Vice
President of Business Development at GE Americom (a GE Capital company) from
1995-1997. From 1991-1995 Mr. Javadi was the Director of Global Services for
MCI. From 1985-1991 he was the Vice President of Sales and Marketing for OTI.
Prior to OTI, Mr. Javadi worked at Hughes Network Systems.
John Melick joined the Company in 1994 as its Vice President of Sales and
Marketing and since 1996, has served as Vice President of International
Business Development of the Company. Prior to joining the Company, he was a
Senior Manager with MCI responsible for the day-to-day management of its global
product portfolio in Latin American and the Caribbean region. He joined MCI in
1991 at the time of the acquisition of OTI where he managed the development of
OTI's service expansion into Mexico and Latin America.
Jay Rosenblatt has served as the Company's Vice President of Global Carrier
Services since January 1996 and previously was Director of Marketing and Sales
responsible for the Company's commercial programs from September 1994 to
January 1996. Prior to joining the Company in 1994, Mr. Rosenblatt was with MCI
as the marketing manager responsible for private network services in the
Americas and Caribbean.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities (collectively, "Reporting
Persons"), to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of the Common Stock and other
equity securities of the Company. Reporting Persons are additionally required
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company or written representations of Reporting
Persons that no reports were required to be filed, all Section 16(a) filing
requirements applicable to the Reporting Persons were complied with, except
that Jay Rosenblatt filed his initial report of stock ownership approximately
three months late.
5
EXECUTIVE COMPENSATION
Report on Executive Compensation
The Compensation Committee has furnished the following report on executive
compensation:
General. During 1998, the compensation of the executive officers was
administered and determined by the Compensation Committee of the Board of
Directors. The Company's executive compensation programs are designed to
attract, motivate and retain the executive talent needed to optimize
stockholder value in a competitive environment. The programs are intended to
support the goal of increasing stockholder value while facilitating the
business strategies and long-range plans of the Company.
The following is the Compensation Committee's report addressing the
compensation of the Company's executive officers for 1998.
Compensation Policy and Philosophy. The Company's executive compensation
policy (i) is designed to establish an appropriate relationship between
executive pay and the Company's annual performance, its long term growth
objectives and its ability to attract and retain qualified executive officers,
and (ii) is based on the belief that the interests of the executives should be
closely aligned with the Company's stockholders. The Compensation Committee
attempts to achieve these goals by integrating competitive annual base salaries
with (i) annual incentive bonuses based on corporate performance and on the
achievement of specified performance objectives set forth in the Company's
financial plan for such fiscal year and (ii) stock options through the
Company's Stock Option Plan. In support of this philosophy, a meaningful
portion of each executive's compensation is placed at-risk and linked to the
accomplishment of specific results that are expected to lead to the creation of
value for the Company's stockholders from both the short-term and long-term
perspectives. The Compensation Committee believes that cash compensation in the
form of salary and performance-based incentive bonuses provides company
executives with short term rewards for success in operations, and that long
term compensation through the award of stock options encourages growth in
management stock ownership which leads to expansion of management's stake in
the long term performance and success of the Company. The Compensation
Committee considers all elements of compensation and the compensation policy
when determining individual components of pay.
The Compensation Committee believes that leadership and motivation of the
Company's employees are critical to achieving the objectives of the Company.
The Compensation Committee is responsible for ensuring that its executive
officers are compensated in a way that furthers the Company's business
strategies and which aligns their interests with those of the stockholders. To
support this philosophy, the following principles provide a framework for
executive compensation: (i) offer compensation opportunities that attract the
best talent to the Company; (ii) motivate individuals to perform at their
highest levels; (iii) reward outstanding achievement; (iv) retain those with
leadership abilities and skills necessary for building long-term stockholder
value; (v) maintain a significant portion of executives' total compensation at
risk, tied to both the annual and long-term financial performance of the
Company and the creation of incremental stockholder value; and (vi) encourage
executives to manage from the perspective of owners with an equity stake in the
Company.
Executive Compensation Components. As discussed below, the Company's
executive compensation package is primarily comprised of three components: base
salary, annual incentive bonuses and stock options.
Base Salary. For 1998, the Compensation Committee approved the base
salaries of the executive officers based on (i) salaries paid to executive
officers with comparable responsibilities employed by companies with
comparable businesses, (ii) performance and accomplishment of the Company
in 1998, which is the most important factor, and (iii) individual
performance reviews for 1998 for most executive officers. The Compensation
Committee reviews executive officer salaries annually and exercises its
judgment based on all the factors described above in making its
determination, subject to the terms of such officer's employment agreement.
No specific formula is applied to determine the weight of each criteria.
6
Annual Incentive Bonuses. Annual incentive bonuses for the Chief
Executive Officer and the other named executive officers are based upon the
following criteria: (i) the Company's financial performance for the current
year; (ii) the furthering of the Company's strategic position in the
marketplace; and (iii) individual merit.
Long Term Incentive Compensation. Stock options encourage and reward
effective management which results in long-term corporate financial
success, as measured by stock price appreciation. The number of options
granted during 1998 to each executive officer or employee was based
primarily on the executive's or employee's ability to influence the
Company's long term growth and profitability. The Compensation Committee
believes that option grants afford a desirable long term compensation
method because they closely ally the interests of management with
stockholder value and that grants of stock options are the best way to
motivate executive officers to improve long-term stock market performance.
The vesting provisions of options granted under the Company's Stock Option
Plan are designed to encourage longevity of employment with the Company and
generally extend over a three-year period.
Compensation of Chief Executive Officer. The Compensation Committee believes
that K. Paul Singh, the Company's Chief Executive Officer, provides valuable
services to the Company and that his compensation should therefore be
competitive with that paid to executives at comparable companies. In addition,
the Compensation Committee believes that an important portion of his
compensation should be based on performance. Mr. Singh's annual base salary for
1998 was approximately $260,000. The factors which the Compensation Committee
considered in setting his annual base salary were his individual performance
and pay practices of peer companies relating to executives of similar
responsibility. The annual incentive bonus paid to Mr. Singh for 1998 was
$180,000. Such bonus was paid to Mr. Singh for his performance and role in
implementing the Company's strategy relating to acquisitions, financing and
operations, including overseeing the implementation of the Company's network.
Internal Revenue Code Section 162. Under Section 162 of the Internal Revenue
Code, the amount of compensation paid to certain executives that is deductible
with respect to the Company's corporate taxes is limited to $1,000,000
annually. It is the current policy of the Compensation Committee to maximize,
to the extent reasonably possible, the Company's ability to obtain a corporate
tax deduction for compensation paid to executive officers of the Company to the
extent consistent with the best interests of the Company and its stockholders.
The Compensation Committee
Herman Fialkov (Chairman)
David E. Hershberg
7
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years ended December 31, 1998, 1997
and 1996 certain compensation information with respect to the Company's Chief
Executive Officer and the other Company officers named therein (the "Named
Executive Officers").
Annual Compensation Long-Term Compensation
---------------------------- -----------------------------
Awards Payouts
--------------------- -------
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Salary Bonus Compensation Award(s) SARs Payouts Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
K. Paul Singh........... 1998 258,013 180,000 -- -- -- -- --
Chairman of the Board of 1997 247,692 160,000 -- -- 100,000 -- --
Directors, 1996 185,000 100,000 -- -- 338,100 -- --
President and Chief
Executive Officer
Neil L. Hazard.......... 1998 184,006 105,000 -- -- -- -- --
Executive Vice President 1997 159,231 100,000 -- -- 40,000 -- --
and Chief Financial Officer 1996 118,461 60,000 -- -- 304,290 -- --
Yousef B. Javadi........ 1998 154,808 80,000 -- -- -- -- --
Chief Operating Officer, 1997 121,154 60,000 -- -- 170,000 -- --
Primus North America 1996 -- -- -- -- -- -- --
John F. DePodesta....... 1998 178,718 135,000 -- -- -- -- --
Executive Vice President 1997 100,000 -- -- -- 180,000 -- --
1996 -- 10,000 -- -- -- -- --
John Melick............. 1998 128,391 55,000 -- -- -- -- --
Vice President of 1997 105,000 50,000 -- -- 25,000 -- --
International 1996 101,538 10,000 -- -- -- -- --
Business Development
Employment Agreement
The Company has entered into an employment agreement with Mr. Singh (the
"Singh Agreement"). The Singh Agreement is a five-year contract, with a term
beginning on June 1, 1994 and continuing until May 30, 1999, and from year to
year thereafter unless terminated. Under the terms of the Singh Agreement, Mr.
Singh is required to devote his full time efforts to the Company as Chairman of
the Board, President and CEO. The Company is required to compensate Mr. Singh
at an annual rate of $250,000 effective January 1, 1997 (which amount is
reviewed annually by the Board of Directors and is subject to increase at their
discretion). Mr. Singh, however, agreed to defer payment of his base salary
from June 1, 1994 through May 31, 1995, which was subsequently paid to him on
July 31, 1996. The Company is also obligated to (i) allow Mr. Singh to
participate in any bonus or incentive compensation plan approved for senior
management of the Company, (ii) provide life insurance in an amount equal to
three times Mr. Singh's base salary and disability insurance which provides
monthly payments in an amount equal to one-twelfth of his then applicable base
salary, (iii) provide medical insurance and (iv) pay up to $2,500 annually for
Mr. Singh's personal tax and financial planning services.
The Company may terminate the Singh Agreement at any time in the event of his
disability or for cause, each as defined in the Singh Agreement. Mr. Singh may
resign from the Company at any time without penalty (other than the non-
competition obligations discussed below). If the Company terminates the Singh
Agreement for disability or cause, the Company will have no further obligations
to Mr. Singh. If, however, the Company terminates the Singh Agreement other
than for disability or cause, the Company will have the following obligations:
(i) if the termination is after May 30, 1999, the Company must pay Mr. Singh
one-twelfth of his then applicable base salary as severance pay; and (ii) if
the termination is before June 1, 1999, the Company must pay to Mr. Singh, as
they become due, all amounts otherwise payable if he had remained employed by
the Company until June 1, 1999. If Mr. Singh resigns, he may not directly or
indirectly compete with the Company's business until six months after his
resignation. If the Company terminates Mr. Singh's employment
8
for any reason, Mr. Singh may not directly or indirectly compete with the
Company's business until six months after the final payment of any amounts owed
to him under the Singh Agreement become due.
Stock Options Granted to Certain Executive Officers During Last Fiscal Year
Under the Stock Option Plan, options to purchase Common Stock are available
for grant to selected employees of the Company. Options are also available for
grant to eligible directors under the Company's Director Stock Option Plan. No
options for the purchase of Common Stock were awarded to the Named Executive
Officers during 1998.
Stock Price Performance Graph
The graph below compares the Company's cumulative total stockholder return on
the Common Stock for the period from the date the Company's Common Stock
commenced trading on the Nasdaq National Market System (November 7, 1996)
through December 31, 1998, with the cumulative total return of the Standard &
Poor's Midcap 400 Index and the Standard & Poor's Telecommunications (Long
Distance) Index. The comparison assumes $100 was invested on November 7, 1996
in the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[PERFORMANCE GRAPH]
COMPANY/INDEX NOV-7-96 NOV-30-96 DEC-31-96 DEC-31-97 DEC-31-98
- ------------- -------- --------- --------- --------- ---------
Primus Telecommunications
Group, Incorporated.......... 100.00 100.00 115.91 146.59 150.00
Standard & Poor's Midcap 400
Index........................ 100.00 102.68 102.79 135.95 161.92
Standard & Poor's
Telecommunications (Long
Distance) - 500.............. 100.00 106.11 114.98 162.82 263.77
9
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 31, 1999, with
respect to the beneficial ownership of shares of the Common Stock by each
person or group who is known to the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock, by each director or nominee
for director, by each of the officers named on the Summary Compensation Table,
and by all directors and executive officers as a group. Unless otherwise
indicated, each person has sole voting power and sole investment power.
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership (1) of Class (2)
- ------------------------------------ ------------------------ ------------
K. Paul Singh (3)........................ 4,760,416 16.5%
1700 Old Meadow Road
McLean, VA 22102
Warburg, Pincus Investors, L.P. (4)...... 3,875,689 13.6%
466 Lexington Avenue
New York, NY 10017
Franklin Resources, Inc. (5)............. 2,035,270 7.2%
777 Mariners Island Boulevard
San Mateo, CA 94404
John F. DePodesta (6).................... 382,199 1.3%
Herman Fialkov........................... 30,000 *
David E. Hershberg (7)................... 51,667 *
Douglas M. Karp (8)...................... 3,875,689 13.6%
John G. Puente........................... 100,715 *
Neil L. Hazard (9)....................... 324,140 1.1%
Yousef B. Javadi (10).................... 112,242 *
John Melick (11)......................... 126,999 *
Ravi Bhatia (12)......................... 113,930 *
All executive officers and directors as a
group (13).............................. 9,939,073 33.5%
- --------
* Less than 1% of the outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting or investment
power with respect to the shares beneficially owned. Shares of Common
Stock subject to options or warrants currently exercisable or which become
exercisable on or prior to 60 days from March 31, 1999 are deemed
outstanding for computing the percentage ownership of the person holding
such options or warrants, but are not deemed outstanding for computing the
percentage ownership of any other person.
(2) Based upon 28,404,934 shares of Common Stock outstanding as of March 31,
1999.
(3) Includes 377,786 shares of Common Stock owned by Mr. Singh's wife and
children. 488,500 shares of Common Stock held by a private foundation of
which Mr. Singh is the president and a director, 396,828 shares of Common
Stock held of record by a series of revocable trusts of which Mr. Singh is
the trustee and pursuant to which Mr. Singh has sole voting power and
shared dispositive power, and 1,031 shares held in a 401(k) plan of which
Mr. Singh is a beneficiary. Also includes 371,433 shares of Common Stock
issuable upon the exercise of options granted to Mr. Singh.
(4) E.M. Warburg, Pincus & Co., LLC, a New York limited liability company
("E.M. Warburg"), manages Warburg, Pincus. Warburg, Pincus & Co., a New
York general partnership ("WP"), the sole general partner of Warburg,
Pincus, has a 20% interest in the profits of Warburg, Pincus as the
general partner. Lionel I. Pincus is the managing partner of WP and the
managing member of E.M. Warburg and may be deemed to control both WP and
E.M. Warburg.
10
(5) Based on a Schedule 13G dated February 1, 1999, Franklin Resources, Inc.
("Franklin") has reported that it may be deemed to be the beneficial owner
of 2,035,270 shares of Common Stock. According to the Schedule 13G, such
shares are also beneficially owned by Franklin Advisers, Inc., an
investment advisory subsidiary (the "Adviser") of Franklin, which has all
investment and/or voting power over the shares pursuant to an advisory
contract. In addition, Charles B. Johnson and Rupert H. Johnson, Jr. each
own in excess of 10% of the outstanding common stock of Franklin and are
the principal shareholders of Franklin and may, therefore, be deemed to be
the beneficial owner of the shares of Common Stock held by Franklin.
Franklin, the Adviser, and Messrs. Charles and Rupert Johnson disclaim any
economic interest or beneficial ownership in such shares.
(6) Includes 161,430 shares of Common Stock issuable upon the exercise of
options granted to Mr. DePodesta.
(7) Includes 50,715 shares of Common Stock issuable upon the exercise of
options granted to Mr. Hershberg and 952 shares of Common Stock owned by a
partnership of which Mr. Hershberg is a general partner.
(8) All shares shown as being beneficially owned by Mr. Karp are owned
directly by Warburg, Pincus and are included because of Mr. Karp's
affiliation with Warburg, Pincus. Mr. Karp disclaims "beneficial
ownership" of these shares within the meaning of Rule 13d-3 of the
Exchange Act. See Note 4 above.
(9) Includes 317,623 shares of Common Stock issuable upon the exercise of
options granted to Mr. Hazard.
(10) Includes 106,666 shares of Common Stock issuable upon the exercise of
options granted to Mr. Javadi.
(11) Includes 123,287 shares of Common Stock issuable upon the exercise of
options granted to Mr. Melick.
(12) Includes 43,810 shares of Common Stock issuable upon the exercise of
options granted to Mr. Bhatia. Certain of Mr. Bhatia's options and shares
are pledged to secure payment of certain loans. See "Certain
Transactions--Executive Officer Loan."
(13) Consists of 11 persons and includes 1,225,536 shares of Common Stock
issuable upon the exercise of options granted to directors and executive
officers. Includes 3,875,689 shares deemed to be beneficially owned by
Mr. Karp which are owned directly by Warburg, Pincus and are included
because of Mr. Karp's affiliation with Warburg, Pincus. Mr. Karp
disclaims "beneficial ownership" of these shares within the meaning of
Rule 13d-3 of the Exchange Act. See Notes 4 and 8 above.
11
CERTAIN TRANSACTIONS
Hotkey Investment
In March 1998, the Company purchased a controlling interest in Hotkey, a
Melbourne, Australia-based Internet service provider. The Company's 60%
ownership of Hotkey was purchased for approximately $1.3 million in cash. Prior
to the Hotkey Investment, the Company's chairman, K. Paul Singh, owned
approximately 14% of Hotkey. As a result of the March transaction, Mr. Singh
owned approximately 4% of Hotkey. In February of 1999, the Company purchased
the remaining 40% of Hotkey from its stockholders for approximately $1.1
million comprised of $0.3 million in cash and 57,025 shares of Common Stock. In
connection with the February transaction, K. Paul Singh received 6,148 shares
of Common Stock and $34,252 in cash.
Executive Officer Loan
On September 3, 1998, the Company loaned Ravi and Madhu Bhatia the principal
amount of $164,000. As of March 31, 1999, the Bhatias paid down the principal
amount of the loan to $112,681 and the Company extended the maturity of the
loan. This loan is now due on the earlier of the termination of Mr. Bhatia's
employment with the Company or August 31, 1999. Interest is calculated daily at
a rate of 10% per annum. Repayment of the loan is secured by options to
purchase Common Stock held by Mr. Bhatia and a pledge of 50,000 shares of
Common Stock. The Common Stock which is pledged is subject to a prior pledge in
favor of Schroder & Co. to secure payment of certain loans.
TresCom Merger
In June 1998, pursuant to an Agreement and Plan of Merger dated February 3,
1998, as amended (the "Merger Agreement"), Taurus Acquisition Corporation
("TAC"), a Florida corporation and wholly-owned subsidiary of the Company,
merged with and into TresCom International, Inc. ("TresCom"), a Florida
corporation (the "Merger"). Under the terms of the Merger Agreement, TresCom
Shareholders received 0.6147 shares of the Company's Common Stock in exchange
for each share of TresCom common stock outstanding at the effective time of the
Merger, other than shares beneficially owned by the Company or its affiliates.
The exchange ratio was determined pursuant to the Merger Agreement by dividing
$12.00 by $19.5223, which was the weighted average sales price of the Company's
stock during the 20-trading day period ending on June 4, 1998. As a result of
the consummation of the Merger, TresCom became a wholly-owed subsidiary of the
Company. Based upon approximately 12.7 million shares of TresCom common stock
outstanding as of the closing date, the Company issued approximately 7.8
million shares of its Common Stock in connection with the Merger.
As a result of the Merger, Warburg, Pincus Investors, L.P. ("Warburg,
Pincus"), which beneficially owned approximately 52% of TresCom's common stock,
received shares of Common Stock of the Company valued at approximately
$71,458,016. Warburg, Pincus beneficially owns 13.6% of the Company's Common
Stock. Pursuant to a Stockholder Agreement dated February 3, 1998, by and among
Mr. Singh, Warburg, Pincus and the Company, Warburg, Pincus was granted certain
demand and piggyback registrations rights relating to shares of the Company's
Common Stock, which if exercised, would permit Warburg, Pincus to transfer such
shares free of Rule 144 volume limitations (the same as non-affiliates of
TresCom), and the right, so long as Warburg, Pincus beneficially owns 10% or
more of the outstanding Common Stock of the Company, to nominate an individual,
reasonably acceptable to the non-employee directors of the Company, to serve as
a director on the Company's Board of Directors.
Satellite Earth Station
In June of 1998, the Company's U.K. subsidiary entered into a $2.1 million
agreement for the design, manufacture, installation and provision of training
with respect to a satellite earth station in London, England. David Hershberg,
one of the Company's directors, is the chairman, president and a stockholder of
the company providing such services. During 1998, $1.2 million was paid by the
Company for the above services.
12
APPROVAL OF AMENDED
STOCK OPTION PLAN
(Proposal 2)
At the 1999 Annual Meeting, the stockholders will be asked to approve an
amendment to the Primus Telecommunications Group, Incorporated Stock Option
Plan (the "Stock Option Plan") increasing the number of shares of Common Stock
available for issuance upon the exercise of options granted under the Stock
Option Plan from 3,690,500 to 5,500,000. Such approval will require the
affirmative vote of a majority of the voting power of all outstanding shares of
the Company's Common Stock present or represented and entitled to vote at the
1999 Annual Meeting. The Board of Directors believes that the amendment to the
Stock Option Plan is necessary in order to fulfill the Company's needs of
attracting and retaining talented employees and consultants. The material
features of the Stock Option Plan and information regarding options granted
thereunder are summarized below.
Summary of the Stock Option Plan
The Company established the Stock Option Plan for its employees and
consultants on January 2, 1995. The Stock Option Plan provides for the grant to
selected full and part-time employees and consultants of the Company and its
Subsidiaries who contribute to the development and success of the Company and
its Subsidiaries of both "incentive stock options" within the meaning of
Section 422 of the Code ("ISOs") and options that are non-qualified for federal
income tax purposes ("NQSOs"); provided, however, that consultants are eligible
for the grant of NQSOs only. The total number of shares of Common Stock for
which options may be granted pursuant to the Stock Option Plan is 5,500,000
(3,690,500 were available prior to the proposed amendment), of which 1,954,203
(144,703 were available prior to the proposed amendment) are available for
future grants, subject to certain adjustments reflecting changes in the
Company's capitalization. No individual may receive, over the term of the Stock
Option Plan, Options for more than an aggregate of 25 percent of the shares
authorized for grant under the Stock Option Plan. The Stock Option Plan is
currently administered by the Compensation Committee of the Board of Directors
which is comprised of directors who are not also employees of the Company. The
Compensation Committee determines, among other things, which employees and
consultants will receive options under the Stock Option Plan; the time when
options will be granted; the type of option (ISO or NQSO, or both) to be
granted, the number of shares subject to each option, the time or times when
the options will become exercisable and expire, and, subject to certain
conditions discussed below, the option price and duration of the option.
Because the employees and consultants of the Company who may participate and
the amount of their options are determined by the Compensation Committee in its
discretion, it is not possible to state the names or positions of, or the
number of options that may be granted to, the Company's employees and
consultants. There are approximately 890 employees and 40 consultants eligible
to participate in the Stock Option Plan. Compensation Committee members
administering the Stock Option Plan may vote on any matters affecting the
administration of the Plan, except that no member may act upon the granting of
an option to himself or herself.
The exercise price of the options granted under the Stock Option Plan is
determined by the Compensation Committee, but may not be less than the fair
market value per share of the Common Stock on the date the option is granted.
If, however, an ISO is granted to any person who, at the time of the grant,
owns capital stock possessing more than 10% of the total combined voting power
of all classes of the Company's capital stock, then the exercise price for such
ISO may not be less than 110% of the fair market value per share of the Common
Stock on the date the option is granted. The Compensation Committee also
determines the method of payment for the exercise of options under the Stock
Option Plan, and may consist entirely of cash, check, promissory notes or
Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price. The Compensation Committee, in its sole discretion,
may cooperate with an optionee to complete a cashless exercise transaction.
13
Options are not assignable or transferrable other than by will or the laws of
descent and distribution. In general, if an employee's employment with or a
consultant's engagement by the Company is terminated for any reason, such
employee's or consultant's options exercisable on the date of termination are
exercisable for three months following the date of termination. If the
Compensation Committee makes a determination that a terminated employee or
consultant engaged in disloyalty to the Company, disclosed proprietary
information, is convicted of a felony, or breached the terms of a written
confidentiality agreement or non-competition agreement, all unexercised options
held by such employee or consultant terminate upon the earlier of the date of
such determination or the date of termination. If the employment or service of
an employee or consultant terminates because of disability or death, such
employee's or consultant's options that are exercisable on the date of
disability or death will remain exercisable for 12 months following the date of
disability or death; provided, however, that if a disabled employee or
consultant commences employment or service with a competitor of the Company
during that 12-month period, all options held by the employee or consultant
terminate immediately.
Options issued pursuant to the Stock Option Plan outstanding on the date of a
"change in control" of the Company become immediately exercisable on such date.
A change in control for purposes of the Stock Option Plan includes the
acquisition by any person or entity of the beneficial ownership of 50% or more
of the voting power of the Company's stock, the approval by the Company's
stockholders of a merger, reorganization or consolidation of the Company in
which the Company's stockholders do not own 50% or more of the voting power of
the stock of the entity surviving such a transaction, the approval of the
Company's stockholders of an agreement of sale of all or substantially all of
the Company's assets, and the acceptance by the Company's stockholders of a
share exchange in which the Company's stockholders do not own 50% or more of
the voting power of the stock of the entity surviving such exchange.
There are no federal income tax consequences to the Company on the grant or
exercise of an ISO. If an employee disposes of stock acquired through the
exercise of an ISO within one year after the date such stock is acquired or
within two years after the grant of the ISO (a "Disqualifying Disposition"),
the Company will be entitled to a deduction in an amount equal to the
difference between the fair market value of such stock on the date it is
acquired and the exercise price of the ISO. There are no tax consequences to
the Company if an ISO lapses before exercise or is forfeited. The grant of a
NQSO has no immediate tax consequences to the Company. Upon the exercise of a
NQSO by an employee or consultant, the Company is entitled to a deduction in an
amount equal to the difference between the fair market value of the share
acquired through exercise of the NQSO and the exercise price of the NQSO. There
are no tax consequences to the Company if a NQSO lapses before exercise or is
forfeited.
An employee who receives an ISO is not subject to federal income tax on the
grant or exercise of the ISO; however, the difference between the option price
and the fair market value of the Common Stock received on the exercise of the
ISO ("ISO Stock") is an adjustment for purposes of the alternative minimum tax.
Upon the exercise of an ISO, an employee will have a basis in the ISO Stock
received equal to the amount paid. An employee will be subject to capital gain
or loss upon the sale of ISO Stock, unless such sale constitutes a
Disqualifying Disposition, equal to the difference between the amount received
for the stock and the employee's basis in such. The gain or loss will be long-
or short-term, depending on the length of time the ISO Stock was held prior to
disposition. There are no tax consequences to an employee if an ISO lapses
before exercise or is forfeited.
In the event of a Disqualifying Disposition, an employee will be required to
recognize (1) taxable ordinary income in an amount equal to the difference
between the fair market value of the ISO Stock on the date of exercise of the
ISO and the exercise price; and (2) capital gain or loss (long- or short-term,
as the case may be) in an amount equal to the difference between (a) the amount
realized by the employee upon the Disqualifying Disposition and (b) the
exercise price paid by the employee for the stock, increased by the amount of
ordinary income recognized by the employee, if any. If the disposition
generates an allowable loss (e.g., a sale to an unrelated party not within 30
days of purchase of Common Stock), then the amount required to be recognized
14
by the employee as ordinary income will be limited to the excess, if any, of
the amount realized on the sale over the basis of the stock.
The Stock Option Plan allows an employee or consultant to pay an exercise
price in cash or shares of the Company's Common Stock. If the employee pays
with shares of the Company's Common Stock that are already owned, the basis of
the newly acquired ISO Stock will depend on the tax character and number of
shares of the previously owned stock used as payment. If an employee pays with
shares acquired upon other than the exercise of an ISO ("non-ISO Stock"), the
transaction will be tax-free to the extent that the number of shares received
does not exceed the number of shares of non-ISO Stock paid. The basis of the
number of shares of newly acquired ISO Stock which does not exceed the number
of shares of non-ISO Stock paid will be equal to the basis of the shares paid.
The employee's holding period with respect to such shares will include the
holding period of the shares of non-ISO Stock paid. To the extent that the
employee receives more new shares than shares surrendered, the "excess" shares
of ISO Stock will take a zero basis. If an employee exercises an ISO by using
stock that is previously acquired ISO Stock, however, certain special rules
apply. If the employee has not held the previously acquired ISO Stock for at
least two years from the date of grant of the related ISO and one year from the
date the employee acquired the previously acquired ISO Stock, the use of such
ISO Stock to pay the exercise price will constitute a Disqualifying Disposition
and subject the employee to income tax with respect to the ISO Stock as
described above. In such circumstances, the basis of the newly acquired ISO
Stock will be equal to the fair market value of the previously acquired ISO
Stock used as payment.
The grant of a NQSO has no immediate tax consequences to an employee or
consultant. The exercise of a NQSO requires an employee or consultant to
include in gross income the amount by which the fair market value of the
acquired shares exceeds the exercise price on the exercise date. The Company is
required to withhold income and employment taxes from an employee's wages on
account of this income. The employee's or consultant's basis in the acquired
shares will be their fair market value on the date of exercise. Upon a
subsequent sale of such shares, the employee or consultant will recognize
capital gain or loss equal to the difference between the sales price and the
basis in the stock. The capital gain or loss will be long- or short-term,
depending on whether the employee or consultant has held the shares for more
than one year. There are no tax consequences to an employee or consultant if a
NQSO lapses before exercise or is forfeited. If an employee or consultant uses
previously owned Common Stock as payment for the exercise price of a NQSO, to
the extent the employee or consultant surrenders the same number of shares
received, the exchange is tax-free and the new shares will have a basis equal
to that of the shares surrendered. The holding period for the new shares will
include the period the employee or consultant held the surrendered shares. To
the extent the employee or consultant receives more new shares than shares
surrendered, the excess shares are treated as having been acquired for no
consideration and the fair market value of such excess shares is includible in
the employee's or consultant's income as compensation. The basis of the excess
shares is their fair market value at the time of receipt. If the previously
owned shares consist of ISO Stock for which the holding requirements were not
met such that their use as payment of the exercise price constituted a
Disqualifying Disposition, the employee will have the income tax consequences
described above.
The Company's Board of Director's has authority to suspend, terminate or
discontinue the Stock Option Plan or revise or amend it in any manner with
respect to options not granted. No such revision, however, can change the
aggregate number of shares subject to the Stock Option Plan, change the
designation of employees eligible thereunder, or decrease the price at which
options may be granted. The Compensation Committee may not grant any options
under the Stock Option Plan after January 2, 2005.
The Board of Directors recommends a vote IN FAVOR OF Proposal 2 to approve
the amendment to the Company's Stock Option Plan to increase the number of
shares reserved for issuance upon exercise of options granted thereunder. If no
instructions are given on a properly executed and returned proxy, the shares of
Common Stock represented thereby will be voted IN FAVOR OF such amendment to
the Company's Stock Option Plan.
15
OTHER BUSINESS
The Board of Directors knows of no other matters that will be presented at
the Annual Meeting other than as set forth in this Proxy Statement. However, if
any other matter properly comes before the meeting, or any adjournment or
postponement thereof, it is intended that proxies in the accompanying form will
be voted, to the extent permitted by applicable law, in accordance with the
judgment of the persons named therein.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy materials for the 2000
Annual Meeting of Stockholders, a proposal intended to be presented by a
stockholder for action at that meeting must, in addition to meeting the
stockholder eligibility and other requirements of the Securities and Exchange
Commission's rules governing such proposals, be received not later than January
19, 2000 by the Secretary of the Company at the Company's principal executive
offices, 1700 Old Meadow Road, McLean, Virginia 22102. The execution of a proxy
solicited by the Company in connection with its 2000 Annual Meeting of
Stockholders shall confer on the designated proxyholders discretionary voting
authority to vote on any matter for which the Company has not received notice
on or prior to April 4, 2000.
------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT FOR
EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER
31, 1998. REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS, PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED, 1700 OLD MEADOW ROAD, MCLEAN, VIRGINIA
22102.
By Order of the Board of Directors
/s/ K. Paul Singh
K. Paul Singh
Chairman of the Board of
Directors, President, and Chief
Executive Officer
Date: May 19, 1999
McLean, Virginia
16
- --------------------------------------------------------------------------------
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints K. Paul Singh
and John F. DePodesta, and each of them acting individually, as the attorney
and proxy of the undersigned, with full power of substitution, to vote, as
indicated below and in their discretion upon such other matters as may properly
come before the meeting, all shares which the undersigned would be entitled to
vote at the Annual Meeting of the Stockholders of the Company to be held on
June 17, 1999, and at any adjournment or postponement thereof.
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 IN FAVOR OF THE ELECTION OF
MESSRS. SINGH AND DEPODESTA AS DIRECTORS AND IN FAVOR OF THE AMENDMENT TO THE
COMPANY'S STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UPON EXERCISE OF THE OPTIONS GRANTED THEREUNDER.
- --------------------------------------------------------------------------------
1. Election of Directors:
[_] FOR the nominees [_] WITHHOLD AUTHORITY
listed below to vote for the
nominees listed
below
Nominee: For a three-year term expiring at the 2002 Annual
Meeting--K. Paul Singh and John F. DePodesta
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
- ---------------------------------------------------------
2. Approval of an amendment to the Company's Stock Option Plan to increase the
number of shares reserved for issuance upon exercise of options granted
thereunder:
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE DATE AND SIGN YOUR PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
SPECIFIED, THE SHARES WILL BE VOTED (1) "FOR" THE ELECTION OF THE NOMINEES FOR
DIRECTOR LISTED ON THE REVERSE SIDE HEREOF AND (2) "FOR" APPROVAL OF AN
AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE UPON EXERCISE OF OPTIONS GRANTED THEREUNDER. THIS PROXY
ALSO DELEGATES DISCRETIONARY AUTHORITY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT.
-----------------------------------
Signature of Stockholder
-----------------------------------
Signature of Stockholder
Date: , 1999
-------------
NOTE: PLEASE SIGN THIS PROXY EX-
ACTLY AS NAME(S) APPEAR ON YOUR
STOCK CERTIFICATE. WHEN SIGNING AS
ATTORNEY-IN-FACT, EXECUTOR, ADMIN-
ISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE ADD YOUR TITLE AS SUCH, AND
IF SIGNER IS A CORPORATION, PLEASE
SIGN WITH FULL CORPORATE NAME BY A
DULY AUTHORIZED OFFICER OR OFFI-
CERS AND AFFIX THE CORPORATE SEAL.
WHERE STOCK IS ISSUED IN THE NAME
OF TWO (2) OR MORE PERSONS, ALL
SUCH PERSONS SHOULD SIGN.
- --------------------------------------------------------------------------------