<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SYKES ENTERPRISES, 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:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------
<PAGE> 2
(SYKES ENTERPRISES, INC. LOGO)
100 NORTH TAMPA STREET
SUITE 3900
TAMPA, FLORIDA 33602
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1999
---------------------
To the Shareholders of Sykes Enterprises, Incorporated:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Sykes Enterprises, Incorporated (the "Company") will be held at the
Wyndham Harbour Island Hotel, 725 South Harbour Island Boulevard, Tampa,
Florida, on Thursday, April 29, 1999, at 10:00 a.m., Eastern Standard Time, for
the following purposes:
1. To elect three directors to hold office until the 2002 Annual
Meeting of Shareholders;
2. To approve the adoption of the Company's 1999 Employees' Stock
Purchase Plan; and
3. To transact any other business as may properly come before the
Annual Meeting.
Only shareholders of record as of the close of business on March 8, 1999,
will be entitled to vote at the Annual Meeting or any adjournment or
postponement thereof. Information relating to the matters to be considered and
voted on at the Annual Meeting is set forth in the proxy statement accompanying
this Notice.
By Order of the Board of Directors,
/s/ MARGERY BASS
MARGERY BASS
Secretary
April 1, 1999
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE VOTE ON THE
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY
AND MAILING IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
(SYKES ENTERPRISES, INC. LOGO)
100 NORTH TAMPA STREET
SUITE 3900
TAMPA, FLORIDA 33602
---------------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Sykes Enterprises, Incorporated
(the "Company") for the Annual Meeting of Shareholders (the "Annual Meeting") to
be held at the Wyndham Harbour Island Hotel, 725 South Harbour Island Boulevard,
Tampa, Florida, on Thursday, April 29, 1999, at 10:00 a.m., Eastern Standard
Time, or any adjournment thereof.
If the accompanying proxy form ("Proxy") is completed, signed, dated,
returned to the Company, and not revoked, the shares represented thereby will be
voted at the Annual Meeting as directed by the shareholder on the Proxy. The
giving of the Proxy does not affect the right to vote in person should the
shareholder be able to attend the Annual Meeting. The shareholder may revoke the
Proxy at any time prior to the voting thereof.
The annual report to shareholders of the Company for the year ended
December 31, 1998, along with this Proxy Statement, are first being mailed on or
about April 1, 1999, to shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record as of the close of business on March 8, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, 40,504,708 shares of common stock, $.01 par value per
share ("Common Stock"), were outstanding and entitled to vote at the Annual
Meeting, and 1,474,998 Exchangeable Shares (as defined below) were outstanding
and entitled to vote at the Annual Meeting through the exercise by Firstar Bank
Milwaukee, N.A. (the "Trustee") of certain voting rights under the Voting Trust
Agreement dated December 29, 1998. As of the Record Date, an aggregate of
41,979,706 shares were outstanding and entitled to vote at the Annual Meeting.
Each outstanding share of Common Stock and each outstanding Exchangeable Share
(through the voting trust described below) is entitled to one vote on all
matters submitted to a vote of shareholders.
In connection the Company's acquisition of Oracle Service Networks
Corporation ("Oracle"), former shareholders of Oracle were issued exchangeable
shares of Oracle, each of which is exchangeable for one share of Common Stock
(the "Exchangeable Shares"). Holders of Exchangeable Shares are entitled to the
same
<PAGE> 4
rights, benefits, and privileges as holders of Common Stock, including the right
to vote at Company shareholder meetings. The voting rights of the Exchangeable
Shares are held through a voting trust, pursuant to which the Company issued to
the Trustee one share of preferred stock, $.01 par value per share ("Special
Preferred Voting Stock"). The share of Special Preferred Voting Stock is
entitled to a number of votes at meetings of shareholders of the Company equal
to the number of Exchangeable Shares outstanding as of the record date for that
meeting. Each holder of Exchangeable Shares is entitled to instruct the Trustee
as to the voting of the number of votes attached to the Special Preferred Voting
Stock represented by such holder's Exchangeable Shares. The Trustee will
exercise each vote attached to the Special Preferred Voting Stock only as
directed by the relevant holder, and in the absence of instructions from a
holder as to voting will not exercise such votes. A holder of Exchangeable
Shares may attend the Annual Meeting and vote personally such holder's relevant
number of votes. A holder of Exchangeable Shares may instruct the Trustee to
give a proxy to such holder entitling the holder to vote personally such
holder's relevant number of votes or to grant to the Company's management a
proxy to vote such votes. The Trustee has furnished (or caused to be furnished)
this Proxy Statement, the notice of the Annual Meeting, the annual report to
shareholders of the Company for the year ended December 31, 1998, and other
related materials to the record holders of Exchangeable Shares.
The Common Stock and Exchangeable Shares (through the voting trust
described above) vote together as a single class. Votes cast by proxy or in
person at the Annual Meeting will be tabulated by the inspector of elections
appointed for the Annual Meeting, who will also determine whether a quorum is
present for the transaction of business. The Company's Bylaws provide that a
quorum is present if the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the meeting are present in person or
represented by proxy. Abstentions will be counted as shares that are present and
entitled to vote for purposes of determining whether a quorum is present. Shares
held by nominees for beneficial owners will also be counted for purposes of
determining whether a quorum is present if the nominee has the discretion to
vote on at least one of the matters presented, even though the nominee may not
exercise discretionary voting power with respect to other matters and even
though voting instructions have not been received from the beneficial owner (a
"broker non-vote"). Neither abstentions nor broker non-votes are counted in
determining whether a proposal has been approved.
Under Florida law, if a quorum exists, directors are elected by a plurality
of the votes cast by the shares entitled to vote in the election. The proposal
set forth herein to approve the adoption of the Company's 1999 Employees' Stock
Purchase Plan will be adopted if a majority of the total votes present or
represented and entitled to vote at the Annual Meeting vote in favor of such
proposal.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each of the proposals listed in the
Notice of Annual Meeting of Shareholders which are set forth more completely
herein. Returning your completed Proxy will not prevent you from voting in
person at the Annual Meeting, should you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof, (ii) submitting a duly executed Proxy bearing a later date, or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment thereof and will not be used for any
other meeting. Proxies solicited hereby will be returned to the Board of
2
<PAGE> 5
Directors and will be tabulated by an inspector of elections designated by the
Board of Directors who will not be employed by the Company or any of its
affiliates.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails, by
directors, officers, and regular employees of the Company without additional
compensation therefor. The Company also has made arrangements with brokerage
firms, banks, nominees, and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record to the beneficial owners of
such shares. The Company will reimburse such record holders for their reasonable
out-of-pocket expenses.
PROPOSAL 1:
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES FOR ELECTION AS
DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE NOMINEES. EXECUTED
PROXIES IN THE ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING, UNLESS
AUTHORITY TO DO SO IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE
NOMINEES NAMED BELOW.
The Company's Board of Directors is divided into three classes (designated
"CLASS I," "CLASS II," and "CLASS III"), as nearly equal as possible, with each
class serving three-year terms expiring at the third annual meeting of
shareholders after their elections. The term of the current CLASS I directors
expires at the 1999 Annual Meeting of Shareholders. Accordingly, three CLASS I
directors will be elected at the Annual Meeting to serve until their terms
expire at the 2002 Annual Meeting of Shareholders (in each case, until their
respective successors are elected and qualified). In the event any such nominee
is unable to serve, the persons designated as proxies will cast votes for such
other person in their discretion as a substitute nominee. The Board of Directors
has no reason to believe that the nominees named below will be unavailable, or
if elected, will decline to serve.
3
<PAGE> 6
NOMINEES FOR DIRECTORS
CLASS I -- TERM EXPIRES AT THE 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---- --- ------------------------------------------
<S> <C> <C>
Gordon H. Loetz............................ 49 Gordon H. Loetz was elected to the
Company's Board of Directors in 1993 and
currently serves as Vice Chairman of the
Board of Directors. In February 1999, Mr.
Loetz became a director and President of
Sykes Financial Services, Inc., a newly
formed wholly owned subsidiary of the
Company. From November 1997 through
February 1999, Mr. Loetz served as the
Company's Executive Vice President and
Chief Operating Officer. Prior to November
1997 and for more than the past five years,
Mr. Loetz served as President of CFS
Insurance Agency, Inc. Mr. Loetz founded
Comprehensive Financial Services, a
financial investment advisory company.
Ernest J. Milani........................... 69 Ernest J. Milani was elected to the Board
of Directors of the Company in April 1996
and is a member of the Compensation
Committee and the Stock Option Committee.
Until 1996 and for more than the past five
years, Mr. Milani held various positions
with CDI Corporation, a publicly-held
provider of engineering and technical
services, including President of CDI
International Ltd. and most recently as
President of CDI Corporation Northeast and
CDI Technical Services Ltd., both of which
are subsidiaries of CDI Corporation.
Iain A. Macdonald.......................... 54 Iain A. Macdonald was elected to the Board
of Directors of the Company in March 1998
and is a member of the Audit Committee.
Prior to joining the Company's board, Mr.
Macdonald served as a director of McQueen
International Ltd. from 1996 until its
acquisition by the Company. Until 1995 and
for more than the past five years, Mr.
Macdonald was Chairman of ComputerGroup
plc, a supplier of personal computers,
networks, and related services. Mr.
Macdonald also serves on the Board of
Directors of Frederick's Dairies, Ltd.;
Signs & Labels, Ltd.; Lincoln Software,
Ltd.; and Warthog Software, Ltd.
</TABLE>
4
<PAGE> 7
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
CLASS II -- TERM EXPIRES AT THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---- --- ------------------------------------------
<S> <C> <C>
H. Parks Helms............................. 63 H. Parks Helms has served as a director of
the Company since its inception in 1977 and
is a member of the Audit Committee. Mr.
Helms is the Managing Partner of the law
firm of Helms, Cannon, Hamel & Henderson in
Charlotte, North Carolina. Mr. Helms has
held numerous political appointments and
elected positions, including as a member of
the North Carolina House of
Representatives.
Adelaide A. (Alex) Sink.................... 50 Adelaide A. (Alex) Sink was elected to the
Company's Board of Directors in June 1997
and is a member of the Audit Committee. Ms.
Sink is the President of NationsBank
Florida. She has held that position for
more than the past five years, except for a
five-month period in 1998 when she served
as President of NationsBank Private Client
Group nationwide. Ms. Sink serves on
several community and statewide volunteer
boards in Florida.
Linda McClintock-Greco, M.D................ 44 Linda McClintock-Greco, M.D. was elected to
the Board of Directors of the Company in
May of 1998 and is a member of the
Compensation Committee and the Stock Option
Committee. Since 1998, Dr. McClintock-Greco
has been the President and Chief Executive
Officer of Greco & Assoc. Consulting, Inc.,
a healthcare consulting firm, and in that
capacity serves as the Vice President of
Medical Affairs for Entrusted Healthcare
Management Services for the state of
Florida. Until 1998, she served as Chief
Executive Officer and Chief Medical Officer
of Tampa General HealthPlan, Inc.
(HealthEase), and had spent the past 11
years in the health care industry as both a
private practitioner in Texas and a managed
care executive serving as the Regional
Medical Director with Humana Health Care
Plan. Dr. McClintock-Greco serves on the
Board of Directors of the Florida
Association of Managed Care Organizations
(FAMCO) currently acting as Treasurer. Dr.
McClintock-Greco also serves on the board
of several charitable organizations.
</TABLE>
5
<PAGE> 8
CLASS III -- TERM EXPIRES AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---- --- ------------------------------------------
<S> <C> <C>
John H. Sykes............................. 62 John H. Sykes has been Chairman of the Board of
Directors and Chief Executive Officer of the Company
since its inception in 1977. He also served as
President of the Company from inception until
December 1998, at which time David L. Grimes joined
the Company as President.
Furman P. Bodenheimer, Jr. ............... 69 Furman P. Bodenheimer, Jr. was elected to the Board
of Directors of the Company in 1991 and is a member
of the Compensation Committee and the Stock Option
Committee. Mr. Bodenheimer has been President and
Chief Executive Officer of Zickgraf Enterprises,
Inc. and Nantahala Lumber in Franklin, North
Carolina for more than the past five years.
R. James Stroker.......................... 52 R. James Stroker has served as a director of the
Company since 1990 and is a member of the
Compensation Committee and the Stock Option
Committee. Mr. Stroker is Judge of the Ninth
Judicial Circuit of the State of Florida and has
held that position for more than the past five
years. Mr. Stroker also serves on the Board of
Directors of the University of Orlando Law School.
Mr. Stroker is the son-in-law of Mr. Sykes.
</TABLE>
PROPOSAL 2:
APPROVAL OF THE ADOPTION OF THE
COMPANY'S 1999 EMPLOYEES' STOCK PURCHASE PLAN
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE COMPANY'S 1999
EMPLOYEES' STOCK PURCHASE PLAN (THE "PLAN") AND URGES EACH SHAREHOLDER TO VOTE
"FOR" APPROVAL OF THE PLAN. EXECUTED AND UNMARKED PROXIES IN THE ACCOMPANYING
FORM WILL BE VOTED AT THE ANNUAL MEETING IN FAVOR OF APPROVING THE PLAN.
The Board of Directors has adopted the Plan, subject to shareholder
approval, and the Plan will become effective when shareholder approval is
obtained. The material terms of the Plan are summarized below and are qualified
in their entirety by the terms of the Plan, which is included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31, 1998.
GENERAL
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). A
total of 1,000,000 shares of Common Stock are being reserved for issuance under
the Plan. Because benefits under the Plan will vary depending on participants'
elections and the fair market value of the Common Stock at various future dates,
it is not possible to determine exactly what benefits might be received by the
Company's employees following the adoption of the Plan.
6
<PAGE> 9
PURPOSE
The purpose of the Plan is to provide a means for employees to share in the
ownership of the Company through payroll deductions, and to provide an incentive
for continued employment. The Plan enables employees to buy small amounts of
Common Stock without incurring excessive transaction costs and gives them the
additional advantage of dollar cost averaging in their purchases of Common
Stock. Increased loyalty, productivity, and shareholder value often result from
employee stock ownership.
ADMINISTRATION
The Plan will be administered by a Committee of the Board of Directors
("Committee") consisting of not less than two directors. If at any time the
Committee shall not be in existence, the Board of Directors shall administer the
Plan.
ELIGIBILITY
All employees of the Company, or its participating subsidiaries, are
eligible to participate in the Plan except (i) directors of the Company, (ii)
executive officers of the Company, and (iii) five percent or greater
shareholders of the Company. The Committee may specify which of the Company's
subsidiaries are eligible to participate in the Plan. The Committee also may
exclude from eligibility employees with less than two years of employment and
those employees whose customary employment is for less than 20 hours per week or
five months per year. The Committee may apply any lesser service requirement as
a condition of eligibility.
GRANT OF PURCHASE RIGHTS
In the discretion of the Committee, each calendar year, or more frequently
if deemed appropriate, each eligible employee automatically shall be granted the
right to purchase up to a maximum number of shares of Common Stock as the
Committee, in its discretion, may determine. The maximum number of shares of
Common Stock available for purchase shall be the same for all eligible employees
and all eligible employees shall have the same rights and privileges with
respect to the purchase of shares under the Plan. In no event, however, may an
employee be granted an option in any one calendar year to purchase stock with a
value of more than $25,000.
Each purchase right shall be exercisable during the period established by
the Committee. A purchase period may not exceed two years. In no event may the
Committee issue purchase rights that may be exercised more than ten years after
shareholder approval of the Plan.
PURCHASE PRICE
The purchase price per share of each purchase right granted under the Plan
shall be the fair market value, as determined by the Committee, of a share of
Common Stock on the date of exercise, less 12.5%.
EXERCISE OF PURCHASE RIGHTS
The Committee may establish payroll deduction as a method of funding
employee stock purchases. Amounts deducted from pay will not be segregated from
the Company's general assets and will not be credited with interest.
7
<PAGE> 10
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
The number of shares subject to any purchase right and the number of shares
issuable under the Plan are subject to adjustment in the event of a
recapitalization of Common Stock. No rights to purchase a fractional share of
Common Stock shall result from a recapitalization.
AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may amend or terminate the Plan at any time, except
that any such amendment or termination will not adversely affect outstanding
purchase rights under the Plan.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary as of the date of this proxy statement
of the U.S. federal income tax considerations associated with the purchase of
shares of Common Stock under the Plan. The U.S. federal tax laws may change and
the U.S. federal, state, and local tax consequences for any participating
employee will depend upon his or her individual circumstances. Each
participating employee is encouraged to seek the advice of a qualified tax
advisor regarding the tax consequences of participation in the Plan.
General. The Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code.
Tax Treatment of the Employee. Participating employees will not recognize
income for U.S. federal income tax purposes either upon enrollment in the Plan
or upon the purchase of shares of Common Stock under the Plan. All tax
consequences are deferred until a participating employee sells the shares,
disposes of shares by gift, or dies. Payroll deductions used to purchase shares
of Common Stock, however, remain fully taxable as ordinary income at the time
the deduction is taken, and there is no deferral of the ordinary income tax
assessed on these amounts.
If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable purchase period or if
the employee dies while owning the shares, the employee realizes ordinary income
on a sale (or a disposition by way of gift or upon death) to the extent of the
lesser of: (i) 12.5% of the fair market value of the shares at the beginning of
the purchase period, or (ii) the actual gain (the amount by which the market
value of the shares on the date of sale, gift or death exceeds the purchase
price). All additional gain upon the sale of shares is treated as long-term
capital gain. If the shares are sold and the sale price is less than the
purchase price, there is no ordinary income, and the employee has a long-term
capital loss for the difference between the sale price and the purchase price
depending upon the amount of time the shares are held.
If the shares are sold or are otherwise disposed of including by way of
gift (but not death, bequest or inheritance) within either the one-year or the
two-year holding periods described above (in any case, a "disqualifying
disposition"), the employee realizes ordinary income at the time of sale or
other disposition equal to 12.5% of the fair market value of the shares at the
date of purchase. This amount will constitute ordinary income in the year of the
sale or other disposition even if no gain is realized on the sale or if a
gratuitous transfer is made. The difference, if any, between the proceeds of
sale and the fair market value of the shares at the date of purchase is a
long-term or short-term capital gain or loss, depending on how long the share
have been held.
8
<PAGE> 11
Tax Treatment of the Company. The Company will be entitled to a deduction
in connection with the disposition of shares acquired under the Plan only to the
extent that the employee recognizes ordinary income on a disqualifying
disposition of the shares (but not if an employee satisfies the holding period
requirements).
BOARD OF DIRECTORS
GENERAL
The Board of Directors held seven meetings during the year ended December
31, 1998. The Board of Directors also took certain actions by unanimous written
consent in lieu of a meeting, as permitted by Florida law. During 1998, the
Audit Committee met two times, the Compensation Committee met four times, and
the Stock Option Committee met two times. Each of the directors, except for Ms.
Sink, attended at least 75% of the meetings of the Board of Directors and the
committees on which they served during the year ended December 31, 1998. Ms.
Sink, who is also a member of the Audit Committee, attended 67% of the meetings
of the Board of Directors and the Audit Committee.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
as such for service as members of either the Board of Directors or any
committees of the Board. Directors who are not employees of the Company receive
(subsequent to the Annual Meeting) an annual fee of $5,000, payable in cash or
shares of Common Stock based on the fair market value of the Common Stock on the
date of payment at the election of each director, plus $1,000 per Board and
committee meeting attended.
Directors who are not employees of the Company also receive options to
purchase Common Stock under the Company's 1996 Non-Employee Director Stock
Option Plan. On the date that a new outside director is first elected or
appointed, he or she automatically will be granted options to purchase 5,000
shares of Common Stock. In addition, each outside director automatically will be
granted options to purchase 5,000 shares of Common Stock annually on the day
following the Company's annual meeting of shareholders. All options granted will
have an exercise price equal to the then fair market value of the Common Stock.
The initial options granted to new directors will become exercisable over a
period of three years in equal amounts or until the director has completed his
or her initial term, and subsequent options will become exercisable one year
after the date of grant.
Mr. Milani and the Company entered into a one-year consulting agreement on
April 1, 1996 providing for an annual fee of $100,000. This one-year consulting
agreement was renewed on the same terms effective April 1, 1997. The agreement
requires Mr. Milani to provide certain technical consulting services to the
Company as requested by the Company. The agreement terminated March 30, 1998,
and was not renewed. Subsequent to that date, Mr. Milani periodically provided
consulting services to the Company on a per diem compensation basis. Mr.
Milani's per diem compensation from the Company during 1998 was $34,000.
COMMITTEES OF THE BOARD
The Board of Directors has established committees whose responsibilities
are summarized as follows:
Audit Committee. The Audit Committee is comprised of Mr. Helms, Mr.
Macdonald, and Ms. Sink and is responsible for reviewing the independence,
qualifications, and activities of the Company's independent certified
accountants and the Company's financial policies, control procedures, and
accounting staff. The
9
<PAGE> 12
Audit Committee recommends to the Board the appointment of the independent
certified public accountants and reviews and approves the Company's financial
statements. The Audit Committee is also responsible for the review of
transactions between the Company and any Company officer, director, or entity in
which a Company officer or director has a material interest.
Compensation Committee. The Compensation Committee is comprised of Mr.
Bodenheimer, Dr. Greco, Mr. Milani, and Mr. Stroker and is responsible for
establishing the compensation of the Company's directors, officers, and other
managerial personnel, including salaries, bonuses, termination arrangements, and
other executive officer benefits.
Stock Option Committee. The Stock Option Committee is comprised of Mr.
Bodenheimer, Dr. Greco, Mr. Milani, and Mr. Stroker and is responsible for
granting stock options under the 1996 Plan. Mr. Milani was not a member of the
Stock Option Committee prior to the termination of his consulting agreement with
the Company and joined the committee as of April 1, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Mr. Bodenheimer, Dr. Greco,
Mr. Milani, and Mr. Stroker.
Mr. Milani and the Company entered into a one-year consulting agreement on
April 1, 1996 providing for an annual fee of $100,000. This one-year consulting
agreement was renewed on the same terms effective April 1, 1997. The agreement
requires Mr. Milani to provide certain technical consulting services to the
Company as requested by the Company. The agreement terminated March 30, 1998,
and was not renewed; subsequent to that date, Mr. Milani periodically provided
consulting services to the Company on a per diem compensation basis. Mr.
Milani's per diem compensation from the Company during 1998 was $34,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
During the year ended December 31, 1998, the executive officers and
directors of the Company filed with the Securities and Exchange Commission (the
"Commission") on a timely basis all required reports relating to transactions
involving equity securities of the Company beneficially owned by them, except as
follows: Mr. Stroker did not file on a timely basis reports for the sale of 200
shares of Common Stock in January 1998 and the sale of 2,250 shares of Common
Stock in May 1998. Reports for these transactions subsequently were filed. Mr.
Loetz did not file on a timely basis a report for the grant of 100,000 stock
option shares under the Company's 1996 Employee Stock Option Plan in November
1997. A report for this transaction subsequently was filed. The Company has
relied solely on the written representation of its executive officers and
directors and copies of the reports they have filed with the Commission in
providing this information.
10
<PAGE> 13
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date with respect to, (i) each of the
Company's directors, (ii) each of the Company's executive officers named in the
Summary Compensation Table below, (iii) all directors and executive officers of
the Company as a group, and (iv) each person known by the Company to own
beneficially more than 5% of the Common Stock. Except as otherwise indicated,
each of the shareholders listed below has sole voting and investment power over
the shares beneficially owned.
<TABLE>
<CAPTION>
BENEFICIALLY OWNED
---------------------
NAME SHARES PERCENT+
- ---- ---------- --------
<S> <C> <C>
John H. Sykes(1)............................................ 18,057,850 43.6%
David L. Grimes(2).......................................... -- *
Keith L. Gibson(3).......................................... 25,150 *
Scott J. Bendert(4)......................................... 68,150 *
John D. Bray(5)............................................. 5,025 *
H. Parks Helms(6)........................................... 11,133 *
Gordon H. Loetz(7).......................................... 41,056 *
Ernest J. Milani(8)......................................... 13,483 *
R. James Stroker(9)......................................... 7,917 *
Furman P. Bodenheimer, Jr.(8)............................... 23,660 *
Adelaide A. Sink(10)........................................ 5,077 *
Iain A. Macdonald(11)....................................... 3,334 --
Linda McClintock-Greco(12).................................. 2,567 --
All directors and executive officers as a group(13)
persons................................................... 18,264,402 43.9%
</TABLE>
- ---------------
+ Includes Common Stock and Exchangeable Shares. Exchangeable shares are
exchangeable into Common Stock on a one-for-one basis.
* Less than 1.0%
(1) Includes the following shares over which Mr. Sykes retains voting and
investment power: (i) 17,786,250 shares owned by Mr. Sykes through Jopar
Investments Limited Partnership, a North Carolina limited partnership in
which Mr. Sykes is the sole limited partner and the sole shareholder of the
limited partnership's sole general partner; and (ii) 271,600 shares owned by
various trusts for the benefit of Mr. Sykes' children. Excludes 7,950 shares
owned by Mr. Sykes' wife, as to which Mr. Sykes disclaims beneficial
ownership. Mr. Sykes' business address is 100 North Tampa Street, Suite
3900, Tampa, Florida 33602.
(2) Excludes 250,000 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(3) Includes 25,000 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 175,000 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(4) Includes 65,000 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 165,000 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(5) Includes 5,000 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 50,000 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
11
<PAGE> 14
(6) Includes 4,167 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 8,333 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(7) Includes 40,833 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 71,667 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(8) Includes 11,667 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 8,333 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(9) Includes 7,917 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 8,333 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(10) Includes 6,667 shares of Sykes Common Stock issuable upon the exercise of
the stock options that are exercisable within 60 days of the Record Date.
Excludes 3,333 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(11) Includes 3,334 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 6,666 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
(12) Includes 1,667 shares of Sykes Common Stock issuable upon the exercise of
stock options that are exercisable within 60 days of the Record Date.
Excludes 3,333 shares of Sykes Common Stock issuable upon the exercise of
non-exercisable stock options.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's five other most highly compensated executive officers who
earned more than $100,000 for the years ended December 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
John H. Sykes............. 1998 $301,499 -- -- -- $27,495
President and Chief 1997 300,000 -- -- -- 27,495
Executive Officer 1996 300,000 -- -- -- 22,682
David L. Grimes........... 1998 $ 1,096 -- -- 250,000 --
President and Chief
Operating Officer(3)
Gordon H. Loetz........... 1998 $402,262 -- -- -- $ 3,600
Executive Vice President 1997 46,121 -- -- 100,000 33
and Chief Operating
Officer(4)
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Keith L. Gibson........... 1998 $227,262 -- -- 125,000 $ 235
Senior Vice President 1997 38,917 -- -- 75,000 25
Worldwide Sales and
Marketing(5)
Scott J. Bendert.......... 1998 $155,558 -- -- 185,000 $ 8,589
Senior Vice President -- 1997 123,846 $ 43,750 -- -- 6,435
Finance, Treasurer, and 1996 107,692 50,000 -- 45,000 3,235
Chief Financial Officer
John D. Bray.............. 1998 $156,493 -- -- 50,000 $ 3,862
Senior Vice President -- 1997 108,942 16,000 -- -- 3,099
Human Resources and 1996 80,279 20,625 -- 7,500 367
Administration(6)
</TABLE>
- ---------------
(1) Does not include the value of the perquisites provided to certain of the
named executive officers which in the aggregate did not exceed the lesser of
$50,000 or 10% of such officer's salary and bonus.
(2) Represents contributions to the Sykes Enterprises, Incorporated Employees'
Savings Plan and Trust and excess group term life insurance.
(3) Mr. Grimes joined the Company as President December 31, 1998 and assumed the
additional position of Chief Operating Officer on February 3, 1999.
(4) The information presented for Mr. Loetz includes his salary and all other
compensation since joining the Company in 1997. Mr. Loetz served as the
Company's Executive Vice President and Chief Operating Officer from November
1997 until February 1999.
(5) The information presented for Mr. Gibson includes his salary and all other
compensation since joining the Company during 1997.
(6) The information presented for Mr. Bray includes his salary and all other
compensation since joining the Company during 1996.
13
<PAGE> 16
The following table sets forth information with respect to grants of stock
options during 1998 to the executive officers named in the Summary Compensation
Table.
OPTIONS GRANTED LAST YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
--------------------------------------------------------------------- -----------------------
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS MARKET PRICE
UNDERLYING GRANTED TO EXERCISE OR OF UNDERLYING
OPTIONS EMPLOYEES IN BASE PRICE SECURITY ON EXPIRATION
NAME GRANTED(#) 1998 ($/SHARE) DATE OF GRANT DATE 5%($) 10%($)
- ---- ---------- ------------- ----------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
John H. Sykes.......... -- -- -- -- -- -- --
David L. Grimes(1)..... 125,000 8.6% $27.49 $27.49 12/31/08 $ 612,872 $ 975,896
David L. Grimes(2)..... 125,000 8.6% 27.49 27.49 12/31/08 612,872 975,896
Gordon H. Loetz........ -- -- -- -- -- -- --
Keith L. Gibson........ 125,000 8.6% 20.00 20.00 4/15/08 2,137,924 3,404,287
Scott J. Bendert(1).... 125,000 8.6% 20.00 20.00 4/15/08 2,137,924 3,404,287
Scott J. Bendert(2).... 60,000 4.1% 20.00 20.00 4/15/08 1,026,204 1,634,058
John D. Bray(1)........ 50,000 3.4% 20.00 20.00 4/15/08 855,170 1,361,715
</TABLE>
- ---------------
(1) Options granted under the Company's 1997 Management Stock Incentive Plan,
all of which vest and become exercisable nine years after the date of grant,
subject to accelerated vesting and exercisability upon the satisfaction of
certain performance objectives.
(2) Options granted under the Company's 1996 Employee Stock Option Plan, which
vest and become exercisable in one-third increments each year beginning one
year after the date of grant.
The following table sets forth information with respect to the aggregate
stock option exercises by the executive officers named in the Summary
Compensation Table during 1998 and the year-end value of unexercised options
held by such executive officers.
AGGREGATE OPTION EXERCISES IN
LAST YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR END(#) AT YEAR END(1)
ACQUIRED ON --------------------------- ---------------------------
NAME EXERCISE(#) VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John H. Sykes............. -- $ -- -- -- $ -- $ --
David L. Grimes........... -- -- -- 250,000 -- 753,100
Gordon H. Loetz........... 2,500 29,844 37,083 75,417 194,224 416,578
Keith L. Gibson........... -- -- 25,000 175,000 131,875 1,576,250
Scott J. Bendert.......... -- -- 45,000 185,000 1,012,500 1,942,500
John D. Bray.............. 2,500 29,844 2,500 52,500 56,250 581,250
</TABLE>
- ---------------
(1) Based upon the closing sale price of $30.50 per share of common stock on
December 31, 1998, as reported in the Nasdaq National Market.
14
<PAGE> 17
EMPLOYMENT AGREEMENTS
John H. Sykes. On January 1, 1996, the Company entered into an employment
agreement with John H. Sykes, the Company's Chairman of the Board, President,
and Chief Executive Officer. The employment agreement provides for an initial
term of five years with an annual base salary of $300,000, which was
subsequently increased by the Board of Directors to $550,000. Thereafter, the
agreement automatically renews for successive two-year terms, unless terminated
by either party, with the base salary increasing by at least 30% subsequent to
the initial term and at least 15% for any subsequent automatic renewal term. Mr.
Sykes is also entitled to a performance bonus up to 100% of his base salary
based on the Company's achievement of specified levels of income before income
taxes as determined by the Compensation Committee and to participate in such
bonus programs and other benefit plans as are generally made available to other
executive officers of the Company.
If the agreement is terminated by the Company for any reason other than Mr.
Sykes' death or disability or other than cause (as defined therein), the Company
shall pay Mr. Sykes a one-time severance payment equal to two times the total of
the full amount of Mr. Sykes' annual base salary in effect at the time of such
termination plus Mr. Sykes' average annual bonus and other compensation for the
prior three years (or such shorter period if the agreement is in effect for less
than three years). During the two-year period following termination of
employment, Mr. Sykes shall not, in any area in which the Company's business is
then conducted, directly or indirectly compete with the Company.
The agreement also provides for a one-time severance payment, in lieu of
any other severance payment, equal to three times the total of the full amount
of Mr. Sykes' annual base salary then in effect plus Mr. Sykes' average annual
bonus and other compensation for the prior five years (or such shorter period if
the employment agreement is in effect for less than five years) upon a "change
of control" of the Company if, (i) Mr. Sykes is terminated from employment prior
to the end of the term of the agreement (except if terminated for cause), or
(ii) Mr. Sykes elects to terminate his employment with the Company under certain
circumstances. A "change of control" shall be deemed to have occurred if, (i)
any person (other than Mr. Sykes) beneficially owns 20% or more of the
outstanding shares of voting capital stock; (ii) the sale or transfer of greater
than 50% of the book value of the Company's assets occurs; (iii) the merger,
consolidation, share exchange, or reorganization of the Company occurs as a
result of which the holders of all of the shares of capital stock of the Company
as a group would receive less than 50% of the voting power of the capital stock
of the surviving corporation; (iv) the adoption of a plan of liquidation or the
approval of the dissolution of the Company; (v) the commencement of a tender
offer which, if successful, would result in a change of control; or (vi) a
determination by the Board of Directors, in view of then current circumstances
or impending events, that a change of control has occurred or is imminent.
David L. Grimes. Mr. Grimes joined the Company as President in December
1998. The Company entered into a two-year employment agreement with David L.
Grimes, providing for an annual base salary of $400,000. The agreement provides
that if it is terminated by the Company for cause (as defined therein) or by Mr.
Grimes for any reason, other than a reduction in compensation or any other
material adverse change in the terms and conditions of Mr. Grimes employment
following a change of control, Mr. Grimes will refrain from competing with the
Company for a one-year or two-year period, as selected by the Company and no
severance will be owed to Mr. Grimes. If the agreement is terminated by the
Company without cause or by Mr. Grimes upon a change of control for the reasons
described above, or upon the expiration of the agreement, Mr. Grimes is entitled
to a severance payment equal to $400,000 per year for the remainder of the term
plus $400,000 per year for the one-year or two-year noncompete period, as
selected by the Company. Mr. Grimes is prohibited from directly or indirectly
competing with the Company during such one- or two-year period in any
15
<PAGE> 18
area in which the Company's business is conducted. Mr. Grimes is also entitled
to a performance bonus of up to 50% of his base salary based upon his
achievement of specified goals and to participate in such bonus programs and
other benefit plans as are generally made available to other executive officers
of the Company. The agreement also provides for an additional severance payment
equal to two times Mr. Grimes base salary and actual bonus for the preceding
calendar year if, following a change of control, Mr. Grimes is terminated
without cause or if Mr. Grimes terminates his employment because of a reduction
in compensation or any other material adverse change in terms and conditions of
his employment. A "change of control" shall be deemed to occur if (i) there is a
change in the majority of directors of the Company, (ii) a merger consolidation,
or share exchange of the Company occurs, as a result of which the holders of
voting securities of the Company receive less than 50% of the combined voting
power of the surviving corporation, or (iii) the Company adopts a plan of
liquidation or dissolution or enters into an agreement for the sale or
disposition of all or substantially all of its assets.
Scott J. Bendert. On March 1, 1996, the Company entered into a two-year
employment agreement with Scott J. Bendert, providing for an annual base salary
of $110,000, which was subsequently increased to $200,000. The agreement
automatically renews for successive one-year terms, unless terminated by either
party, and provides that if the agreement is terminated for any reason other
than death, disability, or cause (as defined therein), the Company shall pay Mr.
Bendert a severance payment equal to his then annual base salary, payable in
accordance with the Company's standard payment practices, in consideration of
Mr. Bendert's agreement to refrain from competing directly or indirectly with
the Company for a period of one year in any area in which the Company's business
is then conducted. The agreement provides that if it is terminated by the
Company for cause or by Mr. Bendert, during a period of one year following
termination of employment, Mr. Bendert will not, in any area in which the
Company's business is then conducted, directly or indirectly compete with the
Company, and the Company shall not be required to pay the severance payment. Mr.
Bendert also is entitled to a performance bonus up to 25% of his base salary
based upon the Company's achievement of specified levels of income before income
taxes and upon his achievement of specified goals as determined by the
Compensation Committee, and to participate in such bonus programs and other
benefit plans as are generally made available to other executive officers of the
Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under rules of the Commission, the Company is required to provide certain
information concerning compensation provided to the Company's Chief Executive
Officer and its other executive officers. The disclosure requirements for the
executive officers include the use of tables and a report of the Committee
responsible for compensation decisions for the named executive officers
explaining the rationale and considerations that led to those compensation
decisions. Therefore, the Compensation Committee of the Board of Directors has
prepared the following report for inclusion in this Proxy Statement.
COMPENSATION COMMITTEE ROLE
The Compensation Committee of the Board of Directors and the Stock Option
Committee are responsible for separate aspects of the Company's compensation
program for its executive officers, including the named executive officers. The
Compensation Committee is responsible for making recommendations to the Board of
Directors concerning the salaries of executive officers. The Compensation
Committee is also responsible for overseeing other forms of cash compensation
and benefits to other senior officers. The Compensation Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers, and making recommendations to the full Board of Directors with
respect to these matters. The
16
<PAGE> 19
Stock Option Committee is responsible for making stock option grants under the
Company's stock option plans to executive officers of the Company.
COMPENSATION PHILOSOPHY
The Company's compensation is designed to maintain executive compensation
programs and policies that enable the Company to attract and retain the services
of highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.
The Compensation Committee monitors the operation of the Company's
executive compensation policies. The Company has retained independent
compensation consultants to assess the effectiveness of the Company's executive
compensation programs by comparing the Company's compensation programs to
various other companies with similar growth characteristics to those of the
Company. Key elements of the Company's compensation program consists of base
salary, discretionary annual cash bonuses, and periodic grants of stock options.
The Company's policies with respect to these elements, including the basis for
the compensation awarded the Company's chief executive officer, are discussed
below. While the elements of compensation described below are considered
separately, the Compensation Committee takes into account the full compensation
package offered by the Company to the individual, including health care and
other insurance benefits and contributions made by the Company under the
Company's 401(k) Plan and Deferred Compensation Plan.
Base Salaries. The Company has established competitive annual base
salaries for all executive officers, including the named executive officers. The
annual base salaries for each of the Company's executive officers, including the
Company's chief executive officer, reflect both the recommendations of the
Company's compensation consultants and the subjective judgment of the
Compensation Committee based on the consideration of the executive officer's
position with the Company, the executive officer's tenure, the Company's needs,
and the executive officer's individual performance, achievements, and
contributions to the growth of the Company.
Mr. Sykes' annual base salary for 1998, as the Company's Chief Executive
Officer, was $300,000. The Compensation Committee believed that this annual base
salary was well below what it should be and was not consistent with the salary
range established for this position based on the Compensation Committee's
discussions with outside consultants, the factors noted above, and Mr. Sykes'
prior experience and managerial expertise, his knowledge of the Company's
operations, and the industry in which it operates. The Compensation Committee
recommended that Mr. Sykes' annual base salary be raised to $550,000. The full
Board approved this recommendation.
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus under the Company's Bonus Program. The Bonus Program provides for the
discretionary payment of annual incentive awards to key employees, including
executive officers of the Company, pursuant to a formula related to the
Company's operating goals and personal performance goals. Payments under the
Bonus Program are discretionary and are subject to certain limitations. Mr.
Sykes received no bonus payments in 1998.
Stock Options. Under the Company's 1996 Employee Stock Option Plan and the
1997 Management Stock Incentive Plan (the "Plans"), stock options may be granted
to key employees, including executive officers of the Company. The Plans are
administered by the Stock Option Committee in accordance with Rule 16b-3 of the
Securities Exchange Act of 1934, as amended. The Stock Option Committee
recommended that
17
<PAGE> 20
a certain number of stock options under the Plans be made available for issuance
by the CEO for hiring and retention purposes within certain parameters at
various levels of management. The full Board approved the recommendation on
March 5, 1998.
The principal factors considered in determining the granting of stock
options to executive officers of the Company were the executive officer's tenure
with the Company, his or her total cash compensation for the prior year, the
executive officer's acceptance of additional responsibilities and his or her
contributions toward the Company's attainment of strategic goals. During 1998,
all stock options granted to executive officers of the Company under the Plans
were made at fair market value on the date of grant (as calculated under the
Plans) and were not exercisable for a vesting period of one to nine years
following the date of grant.
During the year ended December 31, 1998, no options to purchase shares of
Common Stock under the Plans were granted to Mr. Sykes.
SECTION 162(m) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, a tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers, unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. Based upon the Compensation Committee's commitment
to link compensation with performance as described in this report, the
Compensation Committee currently intends to qualify compensation paid to the
Company's executive officers for deductibility by the Company under Section
162(m).
COMPENSATION COMMITTEE
FURMAN P. BODENHEIMER
LINDA MCCLINTOCK-GRECO
ERNEST J. MILANI
R. JAMES STROKER
February 28, 1999
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
18
<PAGE> 21
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Common Stock with the cumulative total return on the
Nasdaq Stock Market (U.S.) Index and the Nasdaq Computer and Data Processing
Index since the Company's initial public offering on April 29, 1996. This graph
assumes that $100 was invested on April 29, 1996 in the Company's common stock,
the Nasdaq Stock Market (U.S.) Index, and the Nasdaq Computer and Data
Processing Index.
COMPARISON OF 32 MONTH CUMULATIVE TOTAL RETURN*
AMONG SYKES ENTERPRISES, INC.
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
<TABLE>
<CAPTION>
NASDAQ
NASDAQ COMPUTER
SYKES STOCK AND DATA
MEASUREMENT PERIOD ENTERPRISES, MARKET PROCESSING
(FISCAL YEAR COVERED) INC. (U.S.) INDEX INDEX
<S> <C> <C> <C>
4/29/96 100.00 100.00 100.00
12/31/96 312.50 109.00 106.00
12/31/97 243.75 133.22 129.69
12/31/98 381.25 187.11 232.05
</TABLE>
- ---------------
* $100 invested on 4/30/96 in stock or index including reinvestment of
dividends. Fiscal year ending December 31.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company does not make or endorse any predictions as to the future
stock performance.
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
19
<PAGE> 22
INDEPENDENT PUBLIC ACCOUNTANTS
On January 14, 1999, the Company appointed Ernst & Young, LLP as its
independent public accounting firm engaged as the principal accountant to audit
the Company's financial statements for the year ended December 31, 1998. The
Company has selected Ernst & Young, LLP as its principal independent public
accountant for 1999. A representative of Ernst & Young, LLP will be present at
the Annual Meeting. The representative of Ernst & Young, LLP will be available
to respond to appropriate questions and may make a statement if he so desires.
PricewaterhouseCoopers, L.L.P. and one of PWC's predecessor firms, Coopers
& Lybrand, LLP (together "PWC"), previously served as the Company's principal
independent public accountant. The Company was advised by the Securities and
Exchange Commission (the "SEC") that PWC violated the independence standards
promulgated by the SEC, which require, among other things, that public
accounting firms and their professionals not have any direct or material
indirect financial interest in their audit clients. Among the violations, a
professional of PWC's Tampa office owned securities of the Company during the
period that PWC was designated as the Company's independent public accountant.
The Company was among a number of companies affected by this type of activity
within PWC. On January 14, 1999, the SEC announced that it instituted and
simultaneously settled proceedings brought against PWC for failing to comply
with the independence standards with respect to its publicly held audit clients.
In connection with the foregoing, on January 14, 1999, the Company appointed
Ernst & Young, LLP as its principal independent public accountant to audit the
Company's financial statements for calendar year 1998 and dismissed PWC as the
Company's principal independent public accountant for calendar year 1998. Both
of these decisions were approved by the Audit Committee of the Board of
Directors.
The Company did not know and did not have any reason to know of PWC's lack
of compliance with the SEC's independence standards. Moreover, PWC's conduct is
not consistent with the standards regarding compliance with the SEC's
independence standards that the Company expects from its independent public
accountant. Nonetheless, the Company does not believe that these violations
affected the quality or integrity of the Company's financial statements that
were audited by PWC or PWC's audit opinions rendered in connection with such
audits.
PWC's report on the Company's financial statements for 1996 and 1997 did
not contain an adverse opinion or a disclaimer of opinion and was not qualified
or modified as to uncertainty, audit scope, or accounting principles. In
addition, during 1996 and 1997 and during the interim period in 1998 preceding
PWC's dismissal, there have not been any disagreements with PWC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to the satisfaction of
PWC, would have caused PWC to make reference to the subject matter of the
disagreement in connection with its report. During 1996 and 1997 and during the
interim period in 1998 preceding PWC's dismissal: (a) PWC has not advised the
Company that the internal controls necessary for it to develop reliable
financial statements do not exist; (b) PWC has not advised the Company that
information has come to PWC's attention that has led it to no longer be able to
rely on management's representations, or that has made PWC unwilling to be
associated with the financial statement prepared by management; (c) PWC has not
advised the Company of the need to expand significantly the scope of its audit,
or that information has come to PWC's attention during such time period that if
further investigated may, (i) materially impact the fairness or reliability of
either a previously issued audit report or the underlying financial statements,
or the financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent audited financial statements
(including information that may prevent PWC from rendering an unqualified audit
report on those financial statements), or (ii) cause PWC to be unwilling to rely
20
<PAGE> 23
on management's representations or be associated with the Company's financial
statements and; (d) PWC has not advised the Company that information has come to
PWC's attention that it has concluded materially impacts the fairness or
reliability of either, (i) a previously issued audit report or the underlying
financial statements, or (ii) the financial statements issued or to be issued
covering the fiscal periods subsequent to the date of the most recent financial
statements covered by an audit report (including information that, unless
resolved to the accountant's satisfaction, would prevent it from rendering an
unqualified audit report on those financial statements).
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in the Company's proxy statement for its 2000 Annual Meeting of
Shareholders is December 4, 1999. Notice to the Company of a shareholder
proposal submitted other than pursuant to Rule 14-8 will be considered untimely,
and the persons named in proxies solicited by the Board of Directors of the
Company for its 2000 Annual Meeting may exercise discretionary voting power with
respect to any such proposal, if received by the Company after February 17,
2000.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which
is not referred to in the Notice of Annual Meeting. If any other matters
properly come before the Annual Meeting, it is intended that the shares
represented by Proxy will be voted with respect thereto in accordance with the
judgment of the persons voting them.
By Order of the Board of Directors,
/s/ Margery Bass
MARGERY BASS
Secretary
21
<PAGE> 24
APPENDIX A
SYKES ENTERPRISES, INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS, APRIL 29, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Sykes Enterprises, Incorporated (the
"Company") hereby appoints John H. Sykes and Scott J. Bendert as Proxies, each
with the power to appoint a substitute, and hereby authorizes them to vote all
such shares of the Company as to which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Company, and at all adjournments
thereof, to be held at the Wyndham Harbour Island Hotel, 725 South Harbour
Island Boulevard, Tampa, Florida, on Thursday, April 29, 1999, at 10:00 a.m.,
Eastern Standard Time, in accordance with the following instructions.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
SYKES ENTERPRISES, INCORPORATED 1999 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1 - GORDON H. LOETZ 2 - ERNEST J. MILANI 3 - IAIN A. MACDONALD
[ ] FOR [ ] WITHHOLD AUTHORITY
----------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, | |
write the number(s) of the nominees in the box provided to the right.) ----------------------------------
2. To approve the adoption of the Company's 1999 Employees' Stock Purchase Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this Meeting or any adjournments or
postponements thereof.
Date NO. OF SHARES
----------------------------------- ----------------------------------
| |
Address Change? | |
MARK BOX [ ] ----------------------------------
Indicate changes below: SIGNATURE(S) IN BOX
Please sign exactly as your name
appears on this Proxy. When shares
are held by joint tenants, both
should sign. When signing as
attorney, executor, administrator,
trustee, or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
</TABLE>
<PAGE> 25
APPENDIX B
SYKES ENTERPRISES INCORPORATED
1999 EMPLOYEES' STOCK PURCHASE PLAN
1. Purpose. The Sykes Enterprises Incorporated 1999 Employees' Stock
Purchase Plan (the "Plan") has been established by Sykes Enterprises
Incorporated, a Delaware corporation (the "Company"), to allow employees of the
Company and its subsidiaries to purchase shares of Common Stock of the Company
("Company Shares") and thereby share in the ownership of the Company.
2. Company Shares Available for Purchase. Subject to adjustment in
accordance with Paragraph 12, the maximum number of Company Shares which may be
purchased pursuant to the Plan shall be 1,000,000 Company Shares.
3. Administration. The Plan shall be administered by a committee of the
Board of Directors of the Company consisting of not less than two (2) directors
appointed for such purpose (the "Committee"). A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by at least a majority of its members. Any decision or determination
reduced to writing and signed by all of the members of the Committee shall be
fully as effective as it if had been made by a unanimous vote at a meeting duly
called and held. If at any time the Committee shall not be in existence, the
Board of Directors of the Company (the "Board") shall administer the Plan and
all references to the Committee herein shall include the Board.
In accordance with the provisions of the Plan, the Committee shall
establish such terms and conditions for the grants of purchase rights as the
Committee may deem necessary or advisable, adopt such rules or regulations which
may become necessary or advisable for the operation of the Plan, and make such
determinations, and take such other actions, as are expressly authorized or
contemplated in the Plan or as may be required for the proper administration of
the Plan in accordance with its terms. The Committee, in its discretion, may
appoint an individual (the "Plan Administrator") to assist the Committee in
corresponding with employees, with record keeping and in performing other
administerial type functions in connection with the Plan; provided, however,
that the Plan Administrator shall exercise no discretion with respect to the
interpretation of the Plan or of the rights to purchase Company Shares pursuant
to the Plan. The interpretation of any provision of the Plan by the Committee
and any determination on the matters referred to in this paragraph shall be
final.
4. Eligibility. Any employee who is employed by the Company or one of its
participating subsidiaries on a given Grant Date (as defined below) shall be
eligible to participate in the Plan; provided, however, that no director or
"executive officer" (as defined below) or five percent (5%) or greater
shareholder of the Company or its subsidiaries shall be eligible to participate
in the Plan. The term "executive officer" shall mean those persons designated as
"officers" of the Company for purposes of reporting pursuant to Section 16(a) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder. The Committee may specify which of the Company's
subsidiaries are eligible to participate. The Committee may also exclude from
the group of eligible employees those with less than two years of employment at
the Grant Date and those whose customary employment is for less than 20 hours
per week or 5 months per year, or may apply any lesser service requirement as a
condition of eligibility.
5. Grant of Purchase Rights. In the discretion of the Committee, each
calendar year, or more frequently if deemed appropriate, beginning on such date
as the Committee may specify (the "Grant Date"), each eligible employee of the
Company and its subsidiaries shall automatically be granted the right to
purchase up to such maximum number of Company Shares as the Committee, in its
discretion, may
<PAGE> 26
determine. The maximum number of Company Shares available for purchase shall be
the same for all eligible employees and all eligible employees shall have the
same rights and privileges with respect to the purchase of Company Shares under
the Plan. In no event, however, may an employee be granted an option in any one
calendar year to purchase stock with a value of more than $25,000 as of the
Grant Date. Further, nothing contained herein shall require the Committee to
cause any purchase rights to be granted hereunder during any calendar year and
the Committee may, in connection with any grant of rights, specify the maximum
number of Company Shares in the aggregate available for purchase by all eligible
employees during any Purchase Period (the "Maximum Number of Purchase Period
Company Shares").
Each purchase right shall be exercisable during the period following the
Grant Date (such period is hereinafter referred to as the "Purchase Period")
established by the Committee, subject to the limitations provided in paragraph
2. A purchase period may not exceed two years. In the event the Committee
decides to cause any purchase rights to be granted under the Plan, the Company
shall send to each eligible employee a written notice specifying the Grant Date
and the terms and conditions of the right, including the purchase price per
share of Company Shares subject to such right. No Company Shares may be issued
pursuant to the exercise of purchase rights after the maximum number of Company
Shares provided for in paragraph 2 has been purchased. Each purchase right
granted pursuant to this paragraph 5 shall expire at 12:00 p.m., on the last day
of the Purchase Period, unless terminated earlier pursuant to paragraph 11.
In no event may the Committee issue purchase rights that may be exercised
more than ten years after shareholder approval of this plan.
6. Exercise of Purchase Rights. Subject to the limitations elsewhere in
the Plan, employees may exercise their rights to purchase Company Shares granted
under the Plan, in whole, or in part, at any time during the Purchase Period. An
employee wishing to exercise his or her rights to purchase Company Shares
granted under the Plan must complete an application on a form prescribed by the
Committee, which form shall be deemed to include the full terms and conditions
of the Plan. Each application to purchase Company Shares shall be accompanied by
payment in full to the Company, in cash or its equivalent, of the purchase price
for such Company Shares. An application on the prescribed form, properly
completed and accompanied by the required payment, shall be deemed to be
accepted as of the last day of the Purchase Period, subject to adjustment in the
number of Company Shares which may be purchased by participants as provided for
pursuant to this paragraph 6. Notwithstanding the foregoing, no application
shall be accepted unless received by the Plan Administrator or postmarked, if
delivered by mail, on or before the last day of the Purchase Period. Any
purchase rights that have been granted and which are not exercised or funded on
the last day of the Purchase Period shall immediately terminate. The Committee
may establish payroll deduction as a method of funding employee stock purchases,
but amounts deducted from pay will not be segregated from the Company's general
assets and will not be credited with interest.
If applications to purchase a number of Company Shares in excess of the
Maximum Number of Purchase Period Company Shares are received by the Plan
Administrator, each employee properly exercising purchase rights during such
Purchase Period shall be entitled to purchase the number of Company Shares
determined by the sum of:
a) the Applicable Minimum Number of Company Shares; and
b) a pro rata portion of the Company Shares available after satisfying
each employee's minimum purchase rights based on the number of shares with
respect to which such employee has exercised his purchase rights and the
aggregate number of shares with respect to which all employees have
exercised purchase rights during the Purchase Period.
<PAGE> 27
For purposes of this paragraph 6, the "Applicable Minimum Number of Company
Shares" which may be purchased during a Purchase Period shall be such number of
Company Shares as the Committee, in its discretion, may determine.
Notwithstanding any other provisions in this paragraph 6, the Committee may
adjust the number of Company Shares which may be purchased by an employee
according to such non-discriminatory rules and regulations as the Committee may
establish. Any monies held by the Company on behalf of a participant during the
Purchase Period but not used to exercise purchase rights shall be returned to
the participant. No interest will accrue on any monies held by the Company on
behalf of participants during a Purchase Period.
7. Purchase Price. The purchase price per share of each purchase right
granted under the Plan shall be the fair market value, as determined by the
Committee, of a Company Share on the date of exercise, less 12.5% of such market
value. Notwithstanding the foregoing, the purchase price per share of a Company
Share shall in no event be less than the par value of a Company Share.
8. Limitations on Exercise of Purchase Rights. Purchase rights granted
under the Plan shall not become exercisable until such time as the Company
Shares which may be issued pursuant to the Plan (i) have been registered under
the Securities Act of 1933, as amended (the "Act"), and any applicable state and
foreign securities laws; or (ii) in the opinion of the Company's counsel, may be
issued pursuant to an exemption from registration under the Act and in
compliance with any applicable state and foreign securities laws.
9. Stock Certificates. Certificates covering the Company Shares purchased
under the Plan shall be issued as soon as reasonably practicable after the last
day of the Purchase Period.
10. Nontransferability of Purchase Rights. An employee's right to exercise
purchase rights under the Plan shall not be transferable by such employee and
may be exercised only by the employee. An employee's right to exercise purchase
rights may not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated.
11. Termination of Employment. Participation in the Plan terminates
immediately when an employee ceases to be employed by the Company or a
subsidiary for any reason whatsoever, including by reason of death, discharge or
resignation, and such terminated employee's right to exercise purchase rights
under the Plan shall thereupon terminate. As soon as administratively feasible
after termination of participation, the Company shall pay to such employee or
his or her estate any amounts held by the Company on behalf of the employee at
the time of termination and not yet used to exercise purchase rights.
12. Adjustments. In order to prevent dilution or enlargement of purchase
rights, in the event of reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation or other change in
Company Shares, the Committee shall make appropriate changes in the number of
Company Shares which may be purchased pursuant to the Plan, and the number of
Company Shares covered by, and the purchase price under, each outstanding
purchase right, and such other changes in the Plan and outstanding purchase
rights as the Committee may deem appropriate under the circumstances. No rights
to purchase a fractional Company Share shall result from any such change.
13. Restrictions on Stock Transferability. The Committee shall impose such
non-discriminatory restrictions on the transfer of any shares of stock acquired
pursuant to the exercise of a purchase right under the Plan as it may deem
advisable, including, without limitation, restrictions under applicable Federal
securities law, under the requirements of any stock exchange upon which such
shares of stock are then listed, if any, and under any state and foreign
securities laws applicable to such shares.
<PAGE> 28
14. Amendment/Termination. The Board may amend or terminate the Plan at
any time, but any such amendment or termination (other than an adjustment
contemplated by paragraph 12) shall not affect purchase rights outstanding at
the time thereof.
15. Applicable Law. The Plan shall, to the extent not inconsistent with
applicable federal law, be construed under the laws of the State of Florida.
16. Effective Date. The Plan shall become effective as of the date of its
adoption by both the Board and the Company's shareholders.
