<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CSG SYSTEMS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
CSG SYSTEMS INTERNATIONAL, INC.
7887 EAST BELLEVIEW AVENUE, SUITE 1000
ENGLEWOOD, COLORADO 80111
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998
----------------
The Annual Meeting of Stockholders of CSG Systems International, Inc. (the
"Company" or "CSG") will be held at the office of the Company, 7887 East
Belleview Avenue, Suite 1000, Englewood, Colorado, on Thursday, May 21, 1998,
at 8:30 a.m., for the following purposes:
1. To elect three Class I Directors.
2. To transact such other business as properly may come before the
meeting or any adjournments thereof.
The Board of Directors fixed the close of business on March 23, 1998 as the
record date for determination of stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
LOGO
Joseph T. Ruble
Secretary
April 10, 1998
REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED
IF THE ENCLOSED ENVELOPE IS MAILED IN THE UNITED STATES. THE PROXY WILL NOT BE
USED IF YOU ATTEND THE MEETING IN PERSON AND SO REQUEST.
<PAGE>
CSG SYSTEMS INTERNATIONAL, INC.
7887 EAST BELLEVIEW AVENUE, SUITE 1000
ENGLEWOOD, COLORADO 80111
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CSG Systems International, Inc. (the
"Company" or "CSG") for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the office of the Company, 7887 East Belleview Avenue,
Suite 1000, Englewood, Colorado, on Thursday, May 21, 1998, at 8:30 a.m., and
at any adjournments of the Annual Meeting. All proxies will be voted in
accordance with the instructions contained therein; if no choice is specified,
the proxies will be voted in favor of the director nominees named in this
Proxy Statement. Any proxy may be revoked by a stockholder at any time before
it is exercised by giving written notice to that effect to the Secretary of
the Company, by delivering to the Company a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person.
The Board of Directors has fixed the close of business on March 23, 1998, as
the record date for determining the stockholders of the Company who are
entitled to notice of and to vote at the Annual Meeting. At the close of
business on March 23, 1998, there were outstanding and entitled to vote
25,522,336 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"). Each share is entitled to one vote.
All costs of this solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers, and
regular employees, without additional remuneration, and their appointed agents
may solicit proxies by telephone, facsimile and personal interviews. Brokers,
custodians and fiduciaries will be requested to forward proxy soliciting
material to the owners of stock held in their names. The Company will
reimburse banks and brokers for their reasonable out-of-pocket expenses
incurred in connection with the distribution of proxy material.
The Company's Annual Report for the year ended December 31, 1997, is being
mailed to stockholders with this Proxy Statement and the accompanying proxy on
or about April 20, 1998.
VOTES REQUIRED
A majority of the shares of Common Stock outstanding is required to be
present or represented by proxy at the Annual Meeting in order to have the
quorum necessary to take action at the Annual Meeting. Assuming that a quorum
is present at the Annual Meeting, the three nominees for election as directors
who receive the greatest number of votes cast in the election of directors
will be elected as directors.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector appointed for the Annual Meeting. The inspector will treat
abstentions as Common Stock that is present and entitled to vote for purposes
of determining the presence of a quorum but as not voted for purposes of
determining the approval of any matter submitted to stockholders for a vote.
If a broker indicates on a proxy that such broker does not have discretionary
authority as to certain Common Stock to vote on a particular matter, such
shares will not be considered as present and entitled to vote with respect to
that matter.
1
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The first table below sets forth each person known by the Company to own
beneficially more than 5% of the outstanding Common Stock as of February 28,
1998, except as otherwise indicated. The second table below sets forth to the
Company's knowledge the beneficial ownership by each director, nominee and
executive officer of the Company, individually, and by all directors and
executive officers of the Company as a group, of Common Stock as of February
28, 1998, except as otherwise indicated.
PRINCIPAL STOCKHOLDERS
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
COMMON STOCK OF COMMON
BENEFICIALLY STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OUTSTANDING
------------------------------------ ------------ -----------
<S> <C> <C>
Morgan Stanley Dean Witter & Co.(1)............. 1,829,860(2) 7.2%
1221 Avenue of the Americas
New York, New York 10020
AMVESCAP PLC(3)................................. 1,379,200 5.4%
11 Devonshire Square
London EC24 4YR
England
General Motors Investment Management
Corporation(4)................................. 2,601,616 10.2%
767 Fifth Avenue
New York, New York 10153
Neal C. Hansen(5)............................... 1,708,282 6.7%
7887 East Belleview Avenue, Suite 1000
Englewood, Colorado 80111
</TABLE>
- --------
(1) Morgan Stanley Dean Witter & Co. ("Morgan Stanley") is the sole
stockholder of the general partner of MSCP III, L.P. ("Capital Partners")
and also of MSCP III Holdings, Inc. ("Holdings") and Morgan Stanley
Venture Capital II, Inc. ("Venture Capital"). Venture Capital is the sole
stockholder of Morgan Stanley Administrator, N.V. ("Administrator").
Morgan Stanley may be deemed to be the beneficial owner of the shares of
the Company owned by Capital Partners, Holdings, Venture Capital and
Administrator. Morgan Stanley disclaims beneficial ownership with respect
to these shares except to the extent of its pecuniary interest therein.
(2) Includes 1,143,424 shares owned by Capital Partners, 577,969 shares owned
by Holdings, 104,895 shares owned by Venture Capital and 3,572 shares
owned by Administrator, each of which is an affiliate of Morgan Stanley.
(3) Beneficial ownership is as of December 31, 1997. AMVESCAP PLC has filed
with the Securities and Exchange Commission (the "SEC") a Schedule 13G
dated February 9, 1998, stating that AMVESCAP PLC and its subsidiaries
AVZ, Inc., AIM Management Group, Inc., AMVESCAP Group Services, Inc.,
INVESCO, Inc., INVESCO North American Holdings, Inc., INVESCO Capital
Management, Inc., INVESCO Funds Group, Inc., INVESCO Management &
Research, Inc., and INVESCO Realty Advisors, Inc. have shared voting power
and shared dispositive power with respect to all of these shares.
(4) General Motors Investment Management Corporation ("GMIMCo") has shared
voting power and shared dispositive power with respect to 2,601,616
shares, and Mellon Bank, N.A., as the trustee (the "Trustee") of the First
Plaza Group Trust, the General Motors Hourly-Rate Employees Pension Trust,
and the General Motors Salaried Employees Pension Trust (the "Trusts"),
has shared voting power and shared dispositive power with respect to these
shares. Each Trust is a trust formed under and for the benefit of one or
more employee benefit plans (the "Plans") of General Motors Corporation
("GM") and its subsidiaries. GMIMCo is registered as an investment adviser
under the Investment Advisers Act of 1940; its principal business is
providing investment advice and investment management services with
respect to the assets of the Plans and of certain direct and indirect
subsidiaries of GM and associated entities.
2
<PAGE>
GMIMCo has the responsibility to select and terminate investment managers
with respect to the Plans. It also itself manages certain assets of the
Plans. One investment manager acting with respect to the Plans is J.P.
Morgan (the "External Manager"). GMIMCo and the External Manager have
discretionary voting and investment power with respect to shares of the
Company included among such assets. Of the 2,601,616 shares, 8,900 shares
are under management by the External Manager, which GMIMCo has the
authority to terminate, and 2,592,716 shares are under management by GMIMCo
for the benefit of the Plans. Because of the Trustee's limited role, the
Trustee disclaims beneficial ownership of the shares which it holds.
(5) Includes 39,900 shares subject to currently exercisable options and 20,000
shares subject to options which are exercisable within 60 days after
February 28, 1998. Also included are 700,000 shares owned by Hansen
Partnership, Ltd. of which Mr. Hansen is General Partner, as well as
51,204 shares owned by Mr. Hansen's spouse. Mr. Hansen disclaims
beneficial ownership of the shares owned by his spouse and, except to the
extent of his pecuniary interest therein, the shares owned by Hansen
Partnership, Ltd.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
COMMON STOCK OF COMMON
BENEFICIALLY STOCK
NAME OF BENEFICIAL OWNER OWNED(1)(2) OUTSTANDING
------------------------ ------------ -----------
<S> <C> <C>
Larry G. Fendley......... 86,667 *
George F. Haddix......... 1,149,320(3)(4) 4.5%
Neal C. Hansen........... 1,708,282(5) 6.7%
Royce J. Holland......... 4,000 *
Janice Obuchowski........ -- --
Gregory A. Parker........ 39,175(4) *
John P. Pogge............ 170,300(4) *
Bernard W. Reznicek...... 5,500 *
Rockwell A. Schnabel(6).. 273,381 1.1%
Frank V. Sica(7)......... 120,841 *
All directors and
executive officers
as a group (10 persons). 3,557,466 13.9%
</TABLE>
- --------
* Less than 1% of the outstanding Common Stock.
(1) Includes 53,334, 39,900, 4,000, 9,175, 20,300, 4,000 and 130,709 shares
subject to currently exercisable options which are held by Messrs.
Fendley, Hansen, Holland, Parker, Pogge and Reznicek and all directors and
executive officers as a group, respectively.
(2) Includes 33,333, 20,000, and 53,333 shares subject to option which are
held by Messrs. Fendley and Hansen and all directors and executive
officers as a group, respectively, and are exercisable within 60 days
after February 28, 1998.
(3) Includes 21,400 shares owned by Dr. Haddix and his spouse as joint
tenants.
(4) Includes 42,800, 18,000 and 66,000 shares which were purchased by Dr.
Haddix and Messrs. Parker and Pogge, respectively, pursuant to stock
purchase agreements with the Company and which remain subject to a stock
repurchase option on the part of the Company, effective upon termination
of services as an employee of or a consultant to the Company. The shares
are released from the repurchase option in equal increments over a five-
year period; 60% of Dr. Haddix's shares and 40% of Messrs. Parker's and
Pogge's shares originally purchased have been released from the repurchase
option as of February 28, 1998.
(5) Includes 700,000 shares owned by Hansen Partnership, Ltd. of which Mr.
Hansen is General Partner, and 51,204 shares owned by Mr. Hansen's spouse.
Mr. Hansen disclaims beneficial ownership of the shares owned by his
spouse and, except to the extent of his pecuniary interest therein, the
shares owned by Hansen Partnership, Ltd.
3
<PAGE>
(6) Mr. Schnabel is a Co-Chairman of Trident Capital, Inc. Trident Capital,
L.P. owns 2,214 shares and Trident Administrator, N.V. owns 2,045 shares.
Trident Capital LP and Trident Administrator, N.V. are affiliates of
Trident Capital, Inc., and Mr. Schnabel may be deemed to be the beneficial
owner of such shares. Except to the extent of his pecuniary interest
therein, Mr. Schnabel disclaims beneficial ownership with respect to such
shares.
(7) The information concerning Mr. Sica's stock ownership is given as of April
1, 1998. 108,283 of these shares are held by Capital Partners and have
been designated for Mr. Sica but not yet distributed to him. See Notes (1)
and (2) to the table above under "Principal Stockholders".
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes consisting of three
Class I directors, two Class II directors and three Class III directors, who
will serve until the annual meetings of stockholders of the Company to be held
in 1998, 1999 and 2000, respectively, and until their respective successors
are elected and qualified. Three Class I directors will be elected at the
Annual Meeting to serve for a three-year term expiring at the annual meeting
of stockholders to be held in 2001.
The persons named in the accompanying proxy will vote, unless the proxy is
marked otherwise, to elect as Class I directors Ms. Obuchowski and Messrs.
Pogge and Schnabel. The proxy may not be voted for more than three directors.
If a nominee is unable to serve, the person acting under the proxy may vote
the proxy for the election of a substitute. The Company does not presently
contemplate that any nominee will be unable to serve.
The following information relates to the nominees for election at the Annual
Meeting and to the other directors whose terms of office will continue after
the Annual Meeting:
Nominees for Class I Directors With Terms Expiring in 2001:
JANICE I. OBUCHOWSKI DIRECTOR SINCE 1997
Ms. Obuchowski, 46, was elected to the Company's Board of Directors in
November 1997. Since December 1996, Ms. Obuchowski has been an Executive Vice
President of Next Wave Telecom, Inc., a provider of wireless PCS (personal
communications services) utilizing digital CDMA technology. From 1992 to 1996,
Ms. Obuchowski was the President of Freedom Technologies, Inc. Ms. Obuchowski
served as Assistant Secretary for Communications and Information for the
Department of Commerce and Administrator for the National Telecommunications
and Information Administration during the Bush Administration. Ms. Obuchowski
also is a director of Orbital Sciences Corp.
JOHN P. POGGE DIRECTOR SINCE 1997
Mr. Pogge, 44, joined the Company in 1995 and has been President and Chief
Operating Officer of the Company since September 1997. Prior to that time, he
was an Executive Vice-President of the Company and General Manager, Business
Units. From 1992 to 1995, Mr. Pogge was Vice-President, Corporate Development
for US West, Inc. From 1987 to 1991, Mr. Pogge served as Vice-President and
General Counsel of Applied Communications, Inc. He was elected to the
Company's Board of Directors in September 1997.
ROCKWELL A. SCHNABEL DIRECTOR SINCE 1994
Mr. Schnabel, 61, has served as a director of the Company since its
inception in 1994. Mr. Schnabel has been a Co-Chairman of Trident Capital,
Inc. since 1993. He served as the Acting Secretary of Commerce and the Deputy
Secretary of Commerce during the Bush Administration and was the U.S.
Ambassador to Finland from 1985 to 1989. From 1965 to 1983, Mr. Schnabel
served in various positions, including president of Bateman, Eichler, Hill,
Richards Group (Everen Securities), a member of the New York Stock Exchange.
Mr. Schnabel also is a director of Cyprus Amax Minerals Co., International
Game Technology, Inc. and Pegasus Systems, Inc.
4
<PAGE>
Class II Directors With Terms Expiring in 1999:
ROYCE J. HOLLAND DIRECTOR SINCE 1997
Mr. Holland, 49, was elected to the Company's Board of Directors in January
1997. Mr. Holland has been Chairman and Chief Executive Officer of Allegiance
Telecom, Inc. since March 1997. Mr. Holland served as the President of MFS
Communications Company, Inc., a competitive local exchange carrier, from 1990
until MFS's acquisition by WorldCom, Inc. at the end of 1996.
BERNARD W. REZNICEK DIRECTOR SINCE 1997
Mr. Reznicek, 61, was elected to the Company's Board of Directors in January
1997. Mr. Reznicek has served as National Director of Utility Marketing for
Central States Indemnity Company of Omaha, a Berkshire Hathaway company, since
January 1997. Mr. Reznicek was Dean of College of Business Administration at
Creighton University from 1994 to 1996. Previously, Mr. Reznicek was Chairman
and CEO of Boston Edison Company, an electric utility company, from 1987 to
1994. Mr. Reznicek also is a director of CalEnergy Co., Stone & Webster, Inc.,
Guarantee Life Insurance Co., and State Street Corporation.
Class III Directors With Terms Expiring in 2000:
GEORGE F. HADDIX, PH.D. DIRECTOR SINCE 1994
Dr. Haddix, 59, is a co-founder of the Company and was the President of the
Company from its inception in 1994 until September 1997 and currently serves
as a consultant to the Company with respect to its technical management and
administration. From 1989 to 1991, Dr. Haddix was a General Partner in Hansen,
Haddix and Associates, a partnership which provided advisory management
services to suppliers of software products and services. From 1987 to 1988,
Dr. Haddix served as President and Chief Executive Officer of US West Network
Systems. Dr. Haddix received a Ph.D. in Mathematics from Iowa State University
in 1968 and has served on the faculties of three universities. Dr. Haddix also
is a director of American Business Information, Inc.
NEAL C. HANSEN DIRECTOR SINCE 1994
Mr. Hansen, 57, is a co-founder of the Company and has been the Chairman of
the Board and Chief Executive Officer of the Company since its inception in
1994. From 1991, until founding the Company, Mr. Hansen served as a consultant
to several software companies, including First Data Corporation ("FDC"). From
1989 to 1991, Mr. Hansen was a General Partner in Hansen, Haddix and
Associates, a partnership which provided advisory management services to
suppliers of software products and services. From 1983 to 1989, Mr. Hansen was
Chairman and Chief Executive Officer of US West Applied Communications, Inc.
and President of US West Data Systems Group.
FRANK V. SICA DIRECTOR SINCE 1994
Mr. Sica, 47, has served as a director of the Company since its inception in
1994. Mr. Sica currently is a private investor. He was a Managing Director of
Morgan Stanley & Co. Incorporated from 1988 to March 31, 1998, and had been
employed by Morgan Stanley & Co. Incorporated since 1981, originally in the
Mergers and Acquisition Department, and from 1988 to March 31, 1998, in the
Merchant Banking Division. Prior to March 31, 1998, he was a Vice Chairman and
a director of the general partner of MSCP III, L.P. and held various positions
with certain entities affiliated with MSCP III, L.P. See "Principal
Stockholders". Mr. Sica also is a director of Kohl's Corporation and SITA
Telecommunications Holdings, N.V.
John P. Pogge and Gregory A. Parker, a Vice-President of the Company and the
Company's Chief Financial Officer, are brothers-in-law. There are no other
family relationships between any of the directors or officers. There are no
arrangements between any director or officer and any other person pursuant to
which such person was selected as a director or officer.
5
<PAGE>
The Board of Directors has a standing Audit Committee, composed of Ms.
Obuchowski and Messrs. Schnabel (Chairman) and Reznicek. The Audit Committee
held one meeting and acted by written consent on one other occasion during the
year ended December 31, 1997. The Committee's functions are to recommend to
the Board of Directors the firm to be appointed as the Company's independent
accountants, to review and approve the scope of the Company's annual audit, to
review the audit report and recommendations to management of the Company's
independent accountants, to consult with the Company's independent accountants
concerning the Company's financial controls, accounting procedures, and
internal auditing functions, and to consider and review such other matters
relating to the financial and accounting affairs of the Company as the
Committee may deem appropriate.
The Board of Directors has a standing Compensation Committee, composed of
Messrs. Sica (Chairman), Holland and Schnabel, which held five meetings and
acted by written consent on three other occasions during the year ended
December 31, 1997. The Committee's functions are to provide oversight with
respect to the compensation and benefit policies, plans, and programs of the
Company for the executive officers of the Company and, to the extent not
otherwise determined by contract or formal plan, to review and recommend to
the Board of Directors salaries, bonuses, and other benefits and compensation
for the executive officers of the Company. The Committee also is responsible
for the administration of and the granting of stock options, stock purchase
rights, and other awards under the Company's 1995 Incentive Stock Plan, 1996
Stock Incentive Plan, and CSG Employee Stock Purchase Plan.
The Company does not have a nominating committee.
During the year ended December 31, 1997, the Board of Directors held six
meetings. During the period of their service on the Board of Directors, all
directors attended at least 75% of the aggregate number of meetings of the
Board of Directors and of the committees on which they serve.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers (as defined in the applicable regulations) and directors, and persons
who own more than 10% of a class of the Company's equity securities registered
under such Act, to file certain reports of ownership and changes of ownership
of the Company's equity securities with the SEC. Officers, directors, and more
than 10% stockholders are required by SEC regulation to furnish to the Company
copies of all Section 16(a) forms which they file.
Based solely on its review of the copies of such forms submitted to it, or
written representations from certain reporting persons that no Form 5 was
required for those persons, the Company believes that, except as set forth
below, all filing requirements applicable to its officers and directors were
complied with for the year ended December 31, 1997. Mr. Reznicek made a late
filing with respect to one purchase of shares of Common Stock in August 1997.
Mr. Schnabel made two late filings with respect to shares of Common Stock
distributed to him by a limited partnership in August and December 1997. The
Company did not receive copies of any filings from General Motors Investment
Management Corporation.
DIRECTOR COMPENSATION
Each non-employee director of the Company is entitled to receive the
following compensation: (i) $2,500 for each meeting of the Board of Directors
attended in person; (ii) $500 for each meeting of the Board of Directors
attended by conference telephone call or its equivalent; and (iii) $500 for
each meeting of a committee of the Board of Directors attended in person or by
conference telephone call or its equivalent. Directors who are officers or
employees of the Company do not receive additional compensation for serving as
a director or committee member. The Company also has a Stock Option Plan for
Non-Employee Directors (the "Plan") which was approved at the 1997 annual
meeting of stockholders. During the year ended December 31, 1997, the Board
granted options under the Plan to each of Messrs. Holland, Reznicek and
Schnabel and Ms. Obuchowski, who are non-employee directors of the Company, to
purchase 12,000 shares of Common Stock at a price per
6
<PAGE>
share equal to the last sale price of the Common Stock as quoted on the Nasdaq
National Market System on the date of the grant. Each option will become
exercisable in three equal installments commencing on the first anniversary of
the grant date and continuing on the two consecutive anniversaries of the
grant date thereafter if the optionee is then a member of the Board and will
expire ten years after the date of the grant, if not sooner exercised. If a
director ceases to be a member of the Board before fully exercising his or her
options, then various provisions of the Plan relating to such an event will
govern the continuing exercisability of such options. On February 11, 1998,
the Board of Directors granted Mr. Sica a similar option to purchase 12,000
shares of Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to the compensation
paid by the Company to each of its executive officers for services rendered
during the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
------------------------ ------------
STOCK
NAME AND FISCAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUSES AWARDED COMPENSATION(4)
- ------------------ ------ ------- ------- ------------ --------------
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Neal C. Hansen.......... 1997 300,000 195,000(2) 60,000 7,312
Chairman of the Board
and 200,000(3)
Chief Executive Officer 1996 220,000 150,000 112,250 8,700
1995 200,000 150,000 -- 2,500
George F. Haddix........ 1997 250,000 150,000(2) 40,000 7,312
President and 1996 220,000 150,000 112,250 8,236
Chief Technical
Officer(5) 1995 200,000 150,000 -- 2,500
John P. Pogge........... 1997 250,000 135,000(2) 60,000 12,162
President and 120,000(3)
Chief Operating
Officer(6) 1996 175,000 100,000 32,000 1,063
1995(7) 145,000 72,500 -- --
Larry G. Fendley........ 1997 185,000 100,000(2) 20,000 7,376
Executive Vice
President, 90,000(3)
Product Delivery
Services 1996(8) 170,000 100,000 175,000 --
Gregory A. Parker....... 1997 140,000 65,000(2) 34,700 9,663
Vice President and 120,000(3)
Chief Financial Officer 1996 105,400 30,000 17,500 --
1995(9) 100,000 15,000 -- --
</TABLE>
- --------
(1) With respect to each of the individuals named in the Summary Compensation
Table, the aggregate amount of perquisites and other personal benefits,
securities or property received was less than 10% of the total of annual
salary and bonus reported for such individual.
(2) Each of these bonuses were annual performance bonuses paid to the
executive officers. The bonus earned for each year is payable in the first
quarter of the subsequent year.
(3) Each of these bonuses were special bonuses paid to the executive officers
in October 1997 in recognition of extraordinary services performed by such
officers in connection with the negotiation of an Asset Purchase Agreement
and a Master Subscriber Management System Agreement with certain
affiliates of Tele-Communications, Inc. and the successful consummation
and implementation of the transactions contemplated by such agreements.
See Report of the Compensation Committee on Executive Compensation.
(4) All Other Compensation for 1998 for Mr. Hansen and Dr. Haddix consists of
employer contributions to the CSG Incentive Savings Plan (a 401(k) Plan).
All Other Compensation for 1998 for Messrs. Pogge, Fendley,
7
<PAGE>
and Parker consists of employer contributions to the CSG Incentive Savings
Plan (Pogge--$7,583, Fendley--$600, Parker--$7,604) and employer credits to
the CSG Systems, Inc. Wealth Accumulation Plan (Pogge--$4,579, Fendley--
$6,776, Parker--$2,059). The CSG Systems, Inc. Wealth Accumulation Plan is
a deferred compensation plan which provides for elective salary and
incentive compensation deferrals by participants. CSG Systems, Inc. matches
a participant's deferral up to 25% thereof, with a maximum annual credit of
$6,250 per participant. A deferred compensation plan participant's deferral
account also is credited monthly with an interest equivalent based upon the
account balance and a current index of corporate bond yields.
(5) Dr. Haddix resigned as President and Chief Technical Officer of the
Company effective September 24, 1997, in anticipation of his retirement as
an employee of the Company on December 31, 1997. He currently serves as a
consultant to the Company with respect to its technical management and
administration.
(6) Mr. Pogge was elected President and Chief Operating Officer of the Company
on September 24, 1997. Prior to that time, he served as an Executive Vice
President and General Manager, Business Units for the Company.
(7) Mr. Pogge joined the Company in April 1995. His salary for 1995 was
calculated on an annualized basis.
(8) Mr. Fendley joined the Company in April 1996. His salary for 1996 was
calculated on an annualized basis.
(9) Mr. Parker joined the Company in July 1995. His salary for 1995 was
calculated on an annualized basis.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted to the Company's
executive officers during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
% OF
TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO PRICE
GRANTED ON EMPLOYEES PER EXPIRATION GRANT DATE
NAME COMMON STOCK(1) IN FISCAL 1997 SHARE(2) DATE PRESENT VALUE(3)
- ---- --------------- -------------- -------- ---------- ----------------
(#) (%) ($/SHARE) ($)
<S> <C> <C> <C> <C> <C>
Neal C. Hansen.......... 60,000 5.6 19.375 1/28/07 466,200
George F. Haddix........ 40,000 3.8 19.375 1/28/07 310,800
John P. Pogge........... 30,000 2.8 29.6875 8/14/07 354,300
30,000 2.8 19.375 1/28/07 233,100
Larry G. Fendley........ 20,000 1.9 19.375 1/28/07 155,400
Gregory A. Parker....... 14,700 1.4 19.375 1/28/07 114,219
20,000 1.9 29.6875 8/14/07 236,200
</TABLE>
- --------
(1) These options were granted pursuant to the Company's 1996 Stock Incentive
Plan. One-fourth of the options become exercisable on the first
anniversary of the grant date and on each of the second through fourth
anniversaries thereafter.
(2) The exercise price is the market price on the date the options were
granted.
(3) Grant date present value is determined using a modified Black-Scholes
option pricing model. The estimated values under the model are based on
several assumptions, including a weighted-average expected volatility of
40.0%, a weighted-average risk-free rate of return of 6.3%, no dividend
yield and expected option lives of four years, and may not be indicative
of actual value. The actual gain, if any, the option holder may realize
will depend on the excess of the actual market price of the stock over the
exercise price on the date the option is exercised. There is no assurance
that the value that may be realized by the option holder will be at or
near the value estimated by the modified Black-Scholes model.
8
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options during the last fiscal year by the Company's executive officers.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
SHARES END AT FISCAL YEAR END(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Neal C. Hansen.......... -- -- 22,450 149,800 286,250 2,382,500
George F. Haddix........ -- -- 32,250 -- 531,250 --
John P. Pogge........... -- -- 6,400 85,600 160,000 1,568,125
Larry G. Fendley........ -- -- 48,334 146,666 605,632 2,159,993
Gregory A. Parker....... -- -- 3,500 48,700 65,375 770,938
</TABLE>
- --------
(1) "In-the-Money Options" are options outstanding at the end of the last
fiscal year for which the fair market value of the Common Stock at the end
of the last fiscal year ($40.00 per share) exceeded the exercise price of
the options.
EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Hansen is party to an employment agreement with the Company. The
agreement expires in 1999, is terminable by Mr. Hansen upon 30 days' notice
and is terminable by the Company for cause or disability. The agreement
provides for an annual salary of not less than $200,000 (with annual CPI
adjustments), the opportunity for an incentive bonus of not less than
$100,000, insurance, an automobile allowance, and certain other benefits. The
agreement contains a post-termination non-competition clause restricting
competition by Mr. Hansen for three years after his termination of employment.
Prior to his retirement on December 31, 1997, Dr. Haddix was a party to an
employment agreement with the Company that had the same terms as Mr. Hansen's
employment agreement. Dr. Haddix entered into a Separation Agreement and
Releases dated December 31, 1997 with the Company pursuant to which Dr. Haddix
received separation benefits consisting of (i) the gross sum of $150,000
representing his 1997 performance bonus and (ii) the vesting as of December
31, 1997, of 9,800 Incentive Stock Options which were granted to him on
February 22, 1996. In the Separation Agreement and Releases, Dr. Haddix agreed
to an 18-month post-termination non-competition clause. On December 23, 1997,
Dr. Haddix entered into an Independent Consulting Agreement with the Company
to provide advice regarding the technical management and administration of the
Company. The agreement expires on December 23, 1999, and is terminable by
either party for cause. Dr. Haddix's compensation under the agreement consists
of $3,000 per calendar quarter on a retainer basis, inclusive of all costs,
expenses and taxes, plus $1,000 for each day worked (based on an 8-hour work
day) in excess of one day per month. Dr. Haddix will be entitled to receive a
pro-rated amount of such daily rate for any partial days worked in excess of
one day per month.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
consisting entirely of non-employee directors, approves all policies under
which compensation is paid or awarded to the Company's executive management.
The Committee is composed of Messrs. Sica (Chairman), Holland and Schnabel.
Compensation Philosophy
The Company's executive compensation program is premised on the belief that
the interests of executives should be closely aligned with those of the
Company's stockholders. CSG's executive compensation plans are also designed
to attract, retain, motivate and appropriately reward individuals who are
responsible for CSG's short-term and long-term profitability and growth. Based
on this philosophy, a significant portion of each executive's total
compensation is placed at-risk and linked to the accomplishment of specific
annual and long-term financial and strategic results, as well as appreciation
in the value of the Common Stock.
Compensation Plan
Each year the Committee conducts a review of the Company's executive
compensation program. This review includes a consideration of reports based on
an independent compensation consultant's assessment of the competitiveness of
the Company's executive compensation and a comparison of the Company's
executive compensation to that of other technology companies. The compensation
review permits an ongoing evaluation of the link between the Company's
performance and its executive compensation in the context of the compensation
programs of other public companies.
The Committee approves the compensation of the executive officers, including
the Chief Executive Officer, whose compensation is detailed in this Proxy
Statement and sets policies with respect to the Company's executive
compensation program generally.
The key elements of the Company's executive compensation program consist of
base annual salaries, performance bonuses, and stock options.
The Committee's policies with respect to each of these elements, including
the basis for the compensation paid to Mr. Hansen, are discussed below.
Base Annual Salaries
Base annual salaries for executive officers are initially determined by
evaluating the responsibilities of the position, the experience and knowledge
of the individual, and the scope and complexity of the executive's position
relative to other senior management positions internally and at competitive
frame companies. The external comparison is based on the results of a report
prepared by an independent compensation consulting firm and takes into
consideration the compensation practices and programs of other corporations
which are most likely to compete with the Company for the services of
executive management personnel.
Annual salary adjustments are determined by evaluating the performance of
each executive officer, taking into account changes in responsibilities.
Individual performance ratings take into account such factors as achievement
of the Company's strategic plan and attainment of specific individual
objectives.
With respect to the base salary paid to Mr. Hansen in 1997, the Committee
took into account a comparison of base salaries of chief executive officers of
peer companies, the Company's performance in 1996, and the assessment by the
Committee of Mr. Hansen's individual performance. Based upon this evaluation,
the Committee increased Mr. Hansen's base salary by $80,000 to $300,000 for
1997.
10
<PAGE>
Performance Bonuses
The Company maintains a Performance Bonus Plan (the "Bonus Plan"), which
provides for the payment of performance bonuses to most management employees
of the Company who do not receive sales commissions. Executive officers
participate in the Bonus Plan, which is a pay-for-performance plan designed to
compensate participants for achieving certain levels of performance with
respect to key objectives established in the Company's annual financial plan.
The performance bonuses for executive officers for 1997 ranged from
approximately 50% to 65% of base salary, depending upon the executive
officer's position.
Annually, the Committee approves targeted levels and minimum threshold
levels of performance with respect to key objectives affecting the executive
officers' performance bonuses. No performance bonus is paid when results are
below the threshold levels. As actual results approach targeted levels, the
performance bonus payout increases at an accelerated rate. For executive
officers, the performance bonus objectives are based upon revenue and earnings
of the Company. Performance bonuses are paid during the first quarter after
the fiscal year in which they are earned.
Mr. Hansen's performance bonus is based on the Company's overall revenue and
earnings performance. Mr. Hansen earned a performance bonus of $195,000 for
1997, based upon 100% achievement of the applicable targets, as compared with
$150,000 in 1996, which also was based upon 100% achievement of the applicable
targets. Although the targeted levels of performance were increased for 1997,
the formulas for 1997 and 1996 were substantially the same.
TCI Special Bonus
In 1997, the Company consummated the largest transaction in the Company's
history by acquiring certain assets from and entering into a Master Subscriber
Management System Agreement with certain affiliates of Tele-Communications,
Inc. ("TCI"). The latter agreement is a 15-year exclusive agreement for the
Company to provide customer care and billing services for 13 million customers
of TCI and various of its affiliates. In recognition of extraordinary services
performed by certain officers and employees of the Company in connection with
the negotiation of the TCI Asset Purchase Agreement and Master Subscriber
Management System Agreement and the successful consummation and implementation
of the transactions contemplated by such agreements, the Committee recommended
and the Board approved the payment of a one-time special bonus to 14 officers
and employees of the Company. The special bonus paid to Mr. Hansen was
$200,000.
Stock Options
The third component of executive officers' compensation is the Company's
1996 Stock Incentive Plan pursuant to which the Company has granted to
executive officers options to purchase shares of Common Stock.
Stock options are designed to align the interests of executives with those
of the Company's stockholders. Stock options are granted at an exercise price
equal to the market price of the Common Stock on the date of grant, generally
vest in equal installments over four or five years, and are exercisable no
later than ten years from the date of grant. This plan is designed to provide
incentives for the creation of value for the Company's stockholders over the
long term because the full benefit of the compensation package cannot be
realized unless stock price appreciation occurs over a number of years.
In late 1996, the Committee retained an independent compensation consultant
to perform a comprehensive study of the Company's stock option program,
compared with other public companies in the technology industry. Based on this
study, the Committee concluded that the Company's past stock option grants
were in the lower range of the industry and not aligned with the Company's
compensation philosophy described above. The Committee concluded that the
Company's past administration of the stock option program was not competitive
with the programs of comparable companies, which placed the Company at a
disadvantage in recruiting and retaining the officers and employees necessary
for the conduct of business.
11
<PAGE>
With the assistance of the compensation consultant, the Committee adopted a
new framework to govern the granting of stock options. This new framework
added greater consistency to the overall stock option granting program. The
Committee believes that this program, which became effective in January 1997,
is not only more equitable among the Company's employees but also more closely
aligns the objectives of the program with shareholder interests.
In the year ended December 31, 1997, Mr. Hansen was granted options to
purchase 60,000 shares of Common Stock.
Conclusion
Through the programs described above, a significant portion of the Company's
executive compensation is linked directly to individual and Company
performance in furtherance of the Company's strategic goals as well as to
stock price appreciation. The Committee intends to continue the policy of
closely linking executive compensation to Company performance and stockholder
return.
COMPENSATION COMMITTEE
Frank V. Sica, Chairman of the Committee
Royce J. Holland
Rockwell A. Schnabel
STOCK PRICE PERFORMANCE
THE FOLLOWING GRAPH ASSUMES $100 INVESTED ON FEBRUARY 28, 1996 (THE DATE ON
WHICH THE COMPANY'S COMMON STOCK WAS FIRST TRADED PUBLICLY) IN THE COMMON
STOCK, IN THE S&P 500 INDEX AND THE COMPANY'S STANDARD INDUSTRIAL
CLASSIFICATION ("SIC") CODE INDEX: COMPUTER PROCESSING AND DATA PREPARATION
SERVICES.
[LINE GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
CSG SYSTEMS SIC CODE INDEX S&P 500 INDEX
2/28/1996 100.00 100.00 100.00
3/29/1996 100.00 101.59 100.96
6/28/1996 113.04 110.41 105.49
9/30/1996 88.04 116.75 108.75
12/31/1996 66.85 108.88 117.82
3/31/1997 73.37 100.72 120.98
6/30/1997 134.24 119.19 142.10
9/30/1997 164.40 119.04 152.74
12/31/1997 173.91 118.39 157.13
ASSUMES $100 INVESTED ON FEB. 28,1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
12
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as the Company's independent public
accountants for the year ended December 31, 1997, and has been selected by the
Board of Directors to serve in such capacity for the current fiscal year
ending December 31, 1998.
The Company expects that a representative of Arthur Andersen LLP will be
present at the Annual Meeting, with the opportunity to make a statement if he
or she desires to do so, and that such representative will be available to
respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matters that may come
before the Annual Meeting; however, if any other matters are properly
presented at the Annual Meeting, it is the intention of the persons named in
the accompanying proxy to vote, or otherwise act, in accordance with their
judgment on such matters.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 annual
meeting of stockholders must be received by the Company at its principal
office in Englewood, Colorado, not later than December 2, 1998, for inclusion
in the proxy statement for that meeting. Pursuant to the bylaws of the
Company, a written notice of any such proposal must be received by the
Secretary of the Company not later than December 2, 1998, and must contain
certain information required by such bylaws.
The bylaws of the Company also provide that stockholder nominations of
persons for election to the Board of Directors are subject to certain advance
notice and informational requirements.
Copies of the Company's bylaws are available to stockholders upon request
made to the Secretary of the Company at the address set forth on page 1 of
this Proxy Statement.
The bylaw requirements referred to above do not supersede the conditions and
requirements established by the Securities and Exchange Commission for
stockholder proposals to be included in the Company's proxy materials for a
meeting of stockholders.
By Order of the Board of Directors
LOGO
Joseph T. Ruble
Secretary
April 10, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A
PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING,
AND YOUR COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE ANNUAL
MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR
PROXIES.
13
<PAGE>
PROXY PROXY
CSG SYSTEMS INTERNATIONAL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
Neal C. Hansen and John P. Pogge, and each of them acting without the
other, as the true and lawful attorneys, agents and proxies of the undersigned,
with full power of substitution, are hereby authorized to represent and to vote
as designated below all shares of Common Stock of CSG Systems International,
Inc. (the "Company") held of record by the undersigned on March 23, 1998 at the
Annual Meeting of Stockholders of the Company to be held at 8:30 a.m., local
time, on May 21, 1998 at the office of the Company, 7887 East Belleview Avenue,
Suite 1000, Englewood, Colorado, or at any adjournment thereof. Any and all
proxies heretofore given are hereby revoked.
UNLESS OTHERWISE SPECIFIED THIS PROXY WILL BE VOTED FOR THE DIRECTOR NOMINEES
NAMED IN THE PROXY STATEMENT.
1. ELECTION OF DIRECTORS
Nominees: Janice I. Obuchowski, John P. Pogge and Rockwell A. Schnabel as
Class I Directors for terms expiring in 2001.
[_] For all listed nominees (except for nominee(s) whose name(s) appear(s)
below):
---------------------------------------------------------------------------
[_] Withhold Authority to vote for the listed nominees.
Corporations, partnerships and limited liability companies should sign in
their names by an authorized officer, partner, member or manager.
IMPORTANT: Each joint owner shall sign.
Executors, administrators, trustees, etc.
should give full title.
I hereby acknowledge receipt of the Notice
of Annual Meeting of Stockholders and the
Proxy Statement furnished therewith.
Dated: , 1998
-----------------------
--------------------------------------
Signature
--------------------------------------
Signature (if held jointly)
