<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
TeleSpectrum Worldwide Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TeleSpectrum Worldwide Inc.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
TELESPECTRUM WORLDWIDE INC.
443 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
----------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of TeleSpectrum Worldwide Inc. (the "Company") will be held on May
27, 1998 at 10:00 a.m., local time, at the Marriott West Hotel at 111 Crawford
Avenue, West Conshojocken, Pennsylvania for the following purposes:
(1) To elect six directors to the Board of Directors; and
(2) To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 24, 1998 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting and
any adjournments thereof. A complete list of such stockholders will be
available at the Company's headquarters, 443 South Gulph Road, King of
Prussia, Pennsylvania, ten days prior to the meeting.
By Order of the Board of Directors,
Keith E. Alessi
Chairman, Chief Executive Officer
and President
May 6, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR
REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PREPAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
<PAGE>
TELESPECTRUM WORLDWIDE INC.
443 SOUTH GULPH ROAD
KING OF PRUSSIA, PA 19406
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
----------------
This Proxy Statement is being furnished to the stockholders of TeleSpectrum
Worldwide Inc. (the "Company") in connection with the Annual Meeting of
Stockholders of the Company to be held on May 27, 1998 and any adjournments
thereof (the "Annual Meeting"). This Proxy Statement and the enclosed Proxy
Card are being mailed to stockholders on or about May 6, 1998.
Execution and return of the enclosed Proxy Card is being solicited by and on
behalf of the Board of Directors of the Company for the purposes set forth in
the foregoing notice of meeting. The costs incidental to the solicitation and
obtaining of proxies, including the cost of reimbursing banks and brokers for
forwarding proxy materials to their principals, will be borne by the Company.
In addition, the Company has retained ChaseMellon Shareholder Services LLC
("ChaseMellon") to assist in the solicitation of proxies from brokers, bank
nominees and other institutional holders, as well as individual holders of
record. The fee to ChaseMellon, which is estimated at $4,000 plus expenses,
will be paid by the Company. Proxies may also be solicited, without extra
compensation, by officers and employees of the Company by mail, telephone,
telefax, personal interviews and other methods of communication.
The Company's Form 10-K for the fiscal year ended December 31, 1997 is being
mailed to stockholders with this Proxy Statement.
VOTING AT THE MEETING
RECORD DATE; VOTE REQUIRED; PROXIES
Only stockholders of record at the close of business on April 24, 1998 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting. As
of that date, the Company had outstanding 25,441,038 shares of Common Stock,
par value $.01 per share ("Common Stock"). The holders of a majority of such
shares, represented in person or by proxy, shall constitute a quorum at the
Annual Meeting. A quorum is necessary before business may be transacted at the
Annual Meeting except that, even if a quorum is not present, the stockholders
present in person or by proxy shall have the power to adjourn the meeting from
time to time until a quorum is present. Each stockholder entitled to vote
shall have the right to one vote for each share of Common Stock outstanding in
such stockholder's name.
The shares of Common Stock represented by each properly executed Proxy Card
will be voted at the Annual Meeting in the manner directed therein by the
stockholder signing such Proxy Card. The Proxy Card provides spaces for a
stockholder to withhold authority to vote for the nominees for the Board of
Directors. The nominees are to be elected by a plurality of the votes cast at
the Annual Meeting. With respect to any other matter that may properly be
brought before the Annual Meeting, the affirmative vote of a majority of the
shares represented in person or by proxy at the Annual Meeting and entitled to
vote is required to take action, unless a greater percentage is required
either by law or by the Company's Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws.
With regard to the election of directors, votes may be cast in favor of or
withheld from any or all nominees. Votes that are withheld will be excluded
entirely from the vote and will have no effect, other than for purposes of
determining the presence of a quorum. Brokers who hold shares in street name
for customers have the
<PAGE>
authority under the rules of the various stock exchanges to vote on certain
items when they have not received instructions from beneficial owners. The
Company believes that brokers that do not receive instructions are entitled to
vote those shares with respect to the election of directors.
If a signed Proxy Card is returned and the stockholder has given no
direction with respect to a voting matter, the shares will be voted with
respect to that matter by the proxy agents as recommended by the Board of
Directors. Execution and return of the enclosed Proxy Card will not affect a
stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it by giving notice of
revocation to the Secretary of the Company at any time before the proxy is
voted.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors currently consists of six directors. Each director
elected at the Annual Meeting will serve until the 1999 annual meeting of
stockholders and until such director's successor has been elected and
qualified, except in the event of such director's earlier death, resignation
or removal.
The Board of Directors has nominated Mr. Keith E. Alessi, Mr. J. Brian
O'Neill, Mr. Joseph Del Raso, Mr. William F. Rhatigan, Mr. Richard W. Virtue
and Mr. Kevin W. Walsh for election to the Board of Directors.
The persons named as proxy agents in the enclosed Proxy Card intend (unless
instructed otherwise by a shareholder) to vote for the election of Messrs.
Alessi, O'Neill, Del Raso, Rhatigan, Virtue and Walsh as directors. In the
event that nominee should become unable to accept nomination or election (a
circumstance which the Board of Directors does not expect), the proxy agents
intend to vote for any alternate nominee designated by the Board of Directors,
or the Board may decide to reduce the number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH NOMINEE.
2
<PAGE>
Set forth below is certain information with respect to each nominee for
director and each other person currently serving as a director of the Company
whose term of office will continue after the Annual Meeting, including the
class and term of office of each such person. This information has been
provided by each director at the request of the Company.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING
PAST FIVE YEARS AND CERTAIN
NAME OF DIRECTOR AGE DIRECTORSHIPS
---------------- --- ----------------------------
<C> <C> <S>
Keith E. Alessi.................. 43 Keith E. Alessi has been Chairman of
the Board, Chief Executive Officer and
President since March 1998. Mr. Alessi
had been Chairman, President and CEO of
Jackson Hewitt, Inc., the nation's
second largest tax preparation service
company since 1995. From 1988 to 1994
Mr. Alessi served in several executive
positions with Farm Fresh, Inc. and was
Vice Chairman upon his departure.
J. Brian O'Neill................. 38 J. Brian O'Neill was the Chairman of the
Board and Chief Executive Officer since
the formation of the Company in April
1996 until his departure in March 1998.
Mr. O'Neill has been the Chairman of the
Board of Directors and Chief Executive
Officer of CRW Financial, Inc. since May
1995. From July 1992 to May 1995, Mr.
O'Neill was Chairman and Chief Executive
Officer of Casino and Credit Services,
Inc. From May 1988 to July 1992, Mr.
O'Neill was Chairman of O'Neill
Properties, Inc., a real estate
development company.
Joseph V. Del Raso .............. 45 Joseph V. Del Raso has been a partner
at the law firm of Pepper Hamilton LLP
since January 1998. Prior thereto,
Mr. Del Raso was a partner at the law
firm of Stradley Ronon Stevens & Young
from 1992 through January 1998. From
1988 to 1992 he was a partner at the
law firm of Holland and Knight in Ft.
Lauderdale, Florida. He has been a
director of the Company since February
1997.
William F. Rhatigan.............. 53 William F. Rhatigan has served as a
director of the Company since August
1996. Mr. Rhatigan served as President
of the Company's Direct Marketing Group
from August 1996 through February 1997.
Mr. Rhatigan was Chairman and Chief
Executive Officer of NBG Services,
Inc., a predecessor of the Company,
from 1991 until August 1996.
Richard W. Virtue................ 53 Richard W. Virtue has served as a
director of the Company since August
1996. Mr. Virtue served as Chief
Executive Officer of SOMAR, Inc., a
predecessor of the Company, from 1982
until August 1996.
Kevin W. Walsh................... 42 Kevin W. Walsh has been a director of
the Company since August 1996. Mr.
Walsh has been a partner of the law
firm Adelman Lavine Gold and Levin, a
professional corporation, since 1988.
</TABLE>
3
<PAGE>
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee and an Audit Committee.
During fiscal year 1997, the Board of Directors held eleven meetings, the
Compensation Committee held one meeting and the Audit Committee held one
meeting. Each director attended at least 75% of the aggregate of the meetings
of the Board of Directors held during 1997 and of the committees on which he
served during the year.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company, and
the Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent auditors.
The current members of both the Compensation Committee and the Audit
Committee are Messrs. Del Raso and Walsh.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors who are not currently receiving compensation as officers,
employees or consultants of the Company are entitled to receive an annual
retainer fee of $7,500, plus $500 and reimbursement of expenses for each
meeting of the Board of Directors and each committee meeting that they attend
in person.
Non-employee directors are entitled to receive Non-Qualified Stock Options
("NQSO") pursuant to the formula grants under the Company's 1996 Equity
Compensation Plan (the "Plan"). According to the formula grants, each non-
employee director who was a member of the Board of Directors as of the
effective date of the Plan received a grant of an NQSO to purchase 2,500
shares of Common Stock at a price equal to the initial public offering price.
Subsequently, on each date on which the Company holds it annual meeting of
stockholders, each non-employee director in office immediately before and
after the annual election of directors will receive a grant of an NQSO to
purchase 2,500 of Common Stock at an exercise price equal to the closing price
per share on The Nasdaq National Market on the date of grant. Each non-
employee director who first becomes a member of the Board of Directors after
the effective date of the Plan will receive a grant of an NQSO to purchase
2,500 shares of Common Stock on the date he or she becomes a member of the
Board of Directors, at an exercise price equal to the closing price of the
Common Stock on The Nasdaq National Market on the date of grant. The term of
each such option shall be ten years and each such option shall be fully and
immediately exercisable upon the date of grant.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or earned during the fiscal years ended December 31, 1996
and 1997 to the Company's former chief executive officer and former president
and chief operating officer and the other executive officer of the Company who
in 1997 earned more than $100,000 in total annual compensation (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
---------------------------------
LONG-TERM
COMPENSATION
NAME AND POSITION YEAR SALARY($) BONUS($) AWARDS(#)(2)
- ----------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
J. Brian O'Neill........................ 1997 $130,000 $ 0 500,000
Former Chairman of the Board 1996 50,900 0 500,000
and Chief Executive Officer
Michael C. Boyd(3)...................... 1997 254,308 0 60,000
Former President and Chief 1996 178,194 0 300,000
Operating Officer
Richard C. Schwenk, Jr. ................ 1997 200,000 40,000(4) 200,000
Executive Vice President and 1996 122,000 0 100,000
Chief Financial Officer
</TABLE>
- --------
(1) Excludes perquisites and other personal benefits, securities or property
which are, in the aggregate, less than 10% of the total annual salary and
bonus.
(2) Represent shares of Common Stock underlying stock options granted by the
Company in 1996 and 1997.
(3) Mr. Boyd resigned from his positions with the Company in August 1997.
(4) Bonus was accrued in 1997 but not paid to Mr. Schwenk until 1998.
EMPLOYMENT AGREEMENTS
Each of Messrs. Alessi and Schwenk has an employment agreement with the
Company. Mr. Alessi's agreement (the "Alessi Agreement") provides that Mr.
Alessi is to be employed by the Company through March 19, 2001 at an annual
salary of $200,000, plus any bonuses as determined annually by the
Compensation Committee. Pursuant to the Alessi Agreement, Mr. Alessi was
granted options to purchase an aggregate of 2,000,000 shares of Common Stock
at an exercise price of $3.29 per share. An option to purchase an aggregate of
500,000 shares was granted under the 1996 Equity Compensation Plan and the
remaining options were not granted under the Plan. Options to purchase an
aggregate of 1,500,000 shares vest in three equal amounts on each of March 18,
1999, 2000 and 2001 of which 500,000 shares, is subject to performance
vesting. In particular 166,667 of such shares become exercisable if the
closing price of the Common Stock reaches $8.00 per share prior to September
18, 1999; 166,667 of such shares become exercisable if the closing price of
the Common Stock reaches $12.00 per share prior to June 18, 2000 and 166,666
of such shares become exercisable if the closing price of the Common Stock
reaches $18.00 per share prior to March 18, 2001. However, all of such shares
shall vest no later than March 18, 2003.
Mr. Schwenk's employment agreement (the "Schwenk Agreement") provides that
he is to be employed by the Company through May 5, 2000 at an annual salary of
$200,000, plus an annual bonus of up to $187,500 based in part on his
performance and in part upon the operating performance of the Company.
Pursuant to the Schwenk Agreement, Mr. Schwenk was granted a stock option
exercisable for 100,000 shares of Common Stock. This option became fully
vested on March 18, 1998 upon the hiring of Mr. Alessi and is exercisable at
an exercise price of $6.25 per share. If Mr. Schwenk is terminated without
cause or if he terminates his employment for good reason, Mr. Schwenk is
entitled to receive $275,000 payable over a one-year period.
5
<PAGE>
Each of Messrs. Rhatigan and Virtue have consulting agreements with the
Company which provide for the payment of annual consulting fees of $150,000.
Mr. Rhatigan's agreement (the "Rhatigan Consulting Agreement") expires on
December 31, 1999. Mr. Virtue's agreement (the "Virtue Consulting Agreement")
expires on August 13, 1999.
The following table sets forth certain information concerning options
granted to the Named Executive Officers in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION
SECURITIES PERCENTAGE OF FOR OPTION TERM(3)
UNDERLYING TOTAL OPTIONS EXERCISE EXPIRATION ---------------------
NAME OPTIONS GRANTED(1) AVAILABLE(2) PRICE DATE 5% 10%
- ---- ------------------ ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Brian O'Neill........ 500,000 10.0% $6.25 8/13/06 $1,965,296 $4,980,445
100,000 2.0% 6.25 2/13/07 393,059 996,089
400,000 8.0% 4.25 9/02/07 1,069,121 2,709,362
Michael C. Boyd......... 300,000 6.0% 6.25 8/13/06 1,179,177 2,988,267
60,000 1.2% 6.25 2/13/07 235,835 597,653
Richard C. Schwenk...... 100,000 2.0% 6.25 8/13/06 393,059 996,089
20,000 0.4% 6.25 2/13/07 78,612 199,218
180,000 3.6% 4.25 9/02/07 481,104 1,219,213
</TABLE>
- --------
(1) Mr. O'Neill's unexercisable shares underlying each option became
exercisable upon his resignation from the Company in March 1998. Mr.
Schwenk's unexercisable shares underlying each option became exercisable
upon the management change in March 1998. Mr. Boyd's shares underlying
each option became fully exercisable upon his resignation from the Company
in August 1997. Certain of the option grants represent shares underlying
each option which were originally granted in August 1996 and re-priced in
September 1997.
(2) Based on an aggregate of 5,000,000 options currently available under the
Plan.
(3) Represents the hypothetical gains or "option spreads" that would exist for
the options at the end of their ten year term. These gains are based on
assumed rates of annual compound stock price appreciation of 5% and 10%
from the date the option was granted to the end of the option term and are
calculated based on the exercise price per share on the date of grant.
Such 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of the future Common
Stock price.
6
<PAGE>
The following table sets forth certain information concerning the number and
value of unexercised options held by each of the Named Executive Officers on
December 31, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS(#) IN-THE-MONEY OPTIONS($)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(1)
- ---- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
J. Brian O'Neill..... 375,000 625,000 $ 0 $ 0
Michael C. Boyd...... 360,000 0 0 0
Richard C. Schwenk... 100,000 200,000 0 0
</TABLE>
- --------
(1) Based on the difference between $3.625, which was the closing price per
share of the Company's Common Stock as listed on the Nasdaq National
Market System on December 31, 1997, and the exercise price of each option.
(2) Mr. O'Neill's unexercisable shares underlying each option became
exercisable upon his resignation from the Company in March 1998. Mr.
Schwenk's unexercisable shares underlying each option became exercisable
upon the management change in March 1998.
NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORT OF THE
COMPENSATION AND HUMAN RESOURCES COMMITTEE AND THE PERFORMANCE GRAPH ON PAGE 9
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, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of two non-employee directors. The Committee is generally
responsible for the establishment and administration of the policies which
govern annual executive compensation and stock ownership programs. The
Committee evaluates the performance and determines the compensation of the
Chief Executive Officer and the other executive officers of the Company based
upon the written employment agreements such persons have with the Company as
well as such other factors including the achievement of certain Company goals
(including financial goals), achievement of certain individual goals and
comparisons with other publicly-traded organizations.
The policy of the Committee with respect to executive officers is to offer
compensation opportunities which will enable the Company to attract, motivate
and retain individuals of outstanding ability capable of enhancing stockholder
value. Accordingly, in determining executive compensation, the Committee
relies on a combination of salary, bonus and stock options. Each of the
Company's named officers are parties to an employment agreement with the
Company which establishes their annual base salary and, except for the Chief
Executive Officer, baseline bonus opportunities. Each of these employment
agreements were negotiated as a condition to such officer's employment with
the Company.
It is the philosophy of the Compensation Committee that to maximize long-
term shareholder value it is necessary to offer employees a significant
opportunity to share in the economic success of the Company. In late August
and early September of 1997, the Compensation Committee determined that it was
necessary and appropriate to review the economic incentives offered to the
Company's employees in light of the significant drop in the market value of
the Company's Common Stock. The market price of the Company's common stock had
decreased substantially from the initial public offering price of the common
stock of $15.00 per share on August 8, 1996 and from a high of $22.125 in
August of 1996 to $4.25 at the close of business on September 2, 1997. The
Compensation Committee attributed this decrease to the inability of the
Company to meet the financial
7
<PAGE>
expectations of market analysts and to a general widespread decline in the
economic sector in which the Company competes, and not to overall market
conditions, and therefore it was not likely that the Company's Common Stock
would quickly recover as a result of increased overall market optimism.
The Compensation Committee believes that stock options are a critical
component of the compensation offered by the Company and promote long-term
retention of key employees, motivate high levels of performance and recognize
employee contributions in the success of the Company. The Compensation
Committee also believes that competition for key employees in the
telemarketing industry remains intense and that the use of significant stock
options for the retention and motivation of such personnel is widespread in
this industry. In light of the substantial decline in the market price of the
Company's Common Stock, the Compensation Committee believed that the large
numbers of outstanding stock options with an exercise price far in excess of
the actual market price were no longer an effective tool to encourage employee
retention or to motivate high levels of performance and was therefore
inconsistent with the Company's philosophy regarding the utilization of equity
incentives. After a series of informal meetings and discussions, consultation
with legal counsel and auditors for the Company, and an evaluation of the
compensation packages and option re-pricing programs of other organizations in
the Company's peer group, the Compensation Committee determined that options
granted under the 1996 Equity Compensation Plan were not positioned to achieve
their primary purposes and that it was advisable and in the Company's best
interests to adopt an option repricing program. As a result, the Compensation
Committee on September 2, 1997 approved an option repricing program.
Under this program all executive officers and employees and certain
consultants were eligible to participate by exchanging one or more of their
existing stock options ("Old Options") for new stock options ("New Options")
covering the same number of shares of Common Stock equal to the number of
unexercised shares of Common Stock covered by the applicable Old Option. Each
such exchanged Old Option was canceled. The exercise price of each New Option
was set at $6.25 per share or $2.00 above the closing price of $4.25 on
September 2, 1997. Other than the change in the exercise price, all other
terms of the New Options, including the time periods during which the New
Options became exercisable, are identical in all respects to the applicable
exchanged and canceled Old Options.
The Compensation Committee believes that, given the unique situation of the
Company, the foregoing option repricing program will motivate and provide
additional incentive to the grantees to improve the Company's performance and
enhance shareholder value.
The committee intends to consider the awarding of additional bonuses and the
issuance of additional stock options in order to emphasize the link between
executive incentives and the creation of stockholder value. In considering
these awards, the Committee intends to consider individual performance,
overall contribution to the Company, the number of non-vested stock options
and the total number of stock options to be awarded.
Section 162(m) of the Internal Revenue Code generally denies a federal
income tax deduction for certain compensation exceeding $1,000,000 paid to the
Chief Executive Officer or any of the four other highest paid executive
officers, excluding (among other things) certain performance-based
compensation. Through December 31, 1996, this provision has not affected the
Company's tax deductions, but the Committee will continue to monitor the
potential impact of Section 162(m) on the Company's ability to deduct
executive compensation.
COMPENSATION COMMITTEE--April 30,
1998.
Joseph V. Del Raso
Kevin W. Walsh
8
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the percentage change in the cumulative
total stockholder return on the Company's Common Stock for the sixteen months
since the Company's Common Stock first started trading on the Nasdaq National
Market on August 13, 1996, with the cumulative total return of the Nasdaq
Market Index (the "Nasdaq Market Index") and a peer industry group described
more fully below (the "Other Teleservice Providers") Dividend reinvestment has
been assumed.
LOGO
<TABLE>
<CAPTION>
INDEX(1) 8/13/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
-------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
TeleSpectrum............ $100.00 $119.19 $ 97.03 $ 72.58 $ 42.98 30.94 22.16
Other Teleservice
Providers............. $100.00 $144.18 $101.33 $ 77.53 $ 89.53 51.04 45.52
NASDAQ Mkt. Index....... $100.00 $106.99 $115.91 $119.02 $139.79 150.27 154.58
</TABLE>
- --------
(1)Assumes $100 invested on August 13, 1996.
The Other Teleservice group is comprised of APAC TELESERVICES INC., ICT
GROUP INC., SITEL CORP. and TELETECH HOLDINGS INC., which like the Company,
provide teleservices. The Company was incorporated on April 26, 1996 and its
teleservice operations commenced on August 13, 1996, the date on which it
completed the acquisition of its operating businesses. The chart above presents
a comparison between the Company, the Other Teleservice Providers (the Company's
peer group) and the NASDAQ Market Index from the date of these acquisitions to
December 31, 1997.
9
<PAGE>
10-YEAR OPTION REPRICING
The following table sets forth certain information regarding certain stock
options held by executive officers of the Company that were repriced in
September 1997.
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL TERM
UNDERLYING OF STOCK AT EXERCISE PRICE NEW REMAINING AT
OPTIONS TIME OF AT TIME OF EXERCISE DATE OF
NAME AND POSITION DATE REPRICED REPRICING REPRICING PRICE REPRICING
----------------- ------ ---------- ------------ -------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Brian O'Neill........ 9/2/97 500,000 $4.25 $15.00 $6.25 8 yrs. 11 mo.
(former Chairman of the
Board 9/2/97 100,000 4.25 14.38 6.25 9 yrs. 6 mo.
and Chief Executive
Officer)
Michael C. Boyd......... 9/2/97 300,000 4.25 15.00 6.25 8 yrs. 11 mo.
(former President and 9/2/97 60,000 4.25 14.38 6.25 9 yrs. 6 mo.
Chief Operating
Officer)
Richard C. Schwenk...... 9/2/97 100,000 4.25 15.00 6.25 8 yrs. 11 mo.
(Executive Vice
President 9/2/97 20,000 4.25 14.38 6.25 9 yrs. 6 mo.
and Chief Financial
Officer)
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 1, 1998, except as otherwise
indicated in the relevant footnote, by (i) each person or group who is known
by the Company to own beneficially more than 5% of the Common Stock, (ii) each
of the Company's directors, (iii) each of the executive officers and (iv) all
current executive officers and directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
---------------- --------------------- --------------------
<S> <C> <C>
J. Brian O'Neill (2).............. 8,349,204 32.8%
443 South Gulph Road
King of Prussia, PA 19406
CRW Financial, Inc................ 6,946,583 27.3
200 Four Falls Corporate Center--
Suite 415
West Conshohocken, PA 19428
Richard W. Virtue (3)............. 885,392 3.5
8132 Divider Drive
Snow Mass, CO 81615
Richard C. Schwenk (6)............ 363,877 1.4
William F. Rhatigan (4)........... 329,817 1.3
Keith E. Alessi (5)............... 227,964 *
Joseph Del Raso (7)............... 7,000 *
Kevin W. Walsh (7)................ 5,000 *
All directors and executive
officers as a group (8 persons).. 10,228,254 40.2
</TABLE>
- --------
*Less than one percent.
(1) Based on 25,441,038 shares of Common Stock outstanding as of April 1,
1998. In accordance with the rules of the Securities and Exchange
Commission, shares underlying options or warrants to purchase Common Stock
that are exercisable as of April 1, 1998 or within 60 days thereafter are
deemed outstanding and to be beneficially owned by the person holding such
option or warrant for purposes of computing such person's percentage
ownership, but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person.
10
<PAGE>
(2) Includes 6,946,583 shares of Common Stock held by CRW Financial, Inc.
("CRW Financial"). Mr. O'Neill is Chairman of the Board and Chief
Executive Officer, and a principal stockholder of CRW Financial, and may
be deemed to have shared voting and investment power over the shares held
by CRW Financial. Mr. O'Neill disclaims beneficial ownership of all such
shares. Includes 610,160 shares of Common Stock owned by CRW Financial
which are obtainable by Mr. O'Neill upon the exercise of a warrant and
1,000,000 shares of Common Stock issuable upon the exercise of vested
stock options.
(3) Includes 129,500 shares of Common Stock issuable upon the exercise of a
warrant and 2000 shares of Common Stock issuable upon the exercise of
vested stock options.
(4) Includes 56,250 shares of Common Stock issuable upon the exercise of a
warrant. Includes 25,000 shares of Common Stock issuable upon the exercise
of vested stock options Excludes 50,000 shares of Common Stock issuable
upon the exercise of non-vested options.
(5) Excludes 2,000,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(6) Includes 300,000 shares of Common Stock issuable upon the exercise of
vested stock options. Excludes 40,000 shares of Common Stock issuable upon
the exercise of non-vested stock options.
(7) Includes 5,000 shares of Common Stock issuable upon the exercise of stock
options.
CERTAIN TRANSACTIONS
HEADQUARTERS LEASE
The Company subleases its headquarters, representing an aggregate of
approximately 21,000 square feet, from CRW Financial, which has subleased the
facility from HFS, Inc., which in turn, leases this space from CRW Building
Limited Partnership, a partnership of which the general partner is controlled
by J. Brian O'Neill, the Chairman and Chief Executive Officer of the Company.
Under this sublease, the Company is required to pay annual rental payments of
approximately $420,000. In September, 1997 CRW Building Limited Partnership
sold its interest in the facility to HUB Property Trust, a Maryland real
estate investment trust.
PURCHASE OF COMMON STOCK BY KEITH ALESSI
On March 18, 1998, Keith E. Alessi executed his employment agreement to
become the Chairman, Chief Executive Officer and President of the Company. In
connection with his hiring, Mr. Alessi purchased 227,964 shares ("Purchased
Shares") of Common Stock for an aggregate price of $500,000, or $2.19 per
share. If Mr. Alessi voluntarily resigns or is terminated for cause prior to
March 18, 1999, Mr. Alessi will be required to pay the Company the sum of
$250,000, representing the difference between the fair market value (which
fair market value has been calculated by reference to the average closing sale
price of the Common Stock on the Nasdaq National Market for the 30 trading
days preceding the date hereof) and purchase price of the Purchased Shares.
TRANSACTIONS WITH MR. O'NEILL
On March 18, 1998, J. Brian O'Neill resigned as the Chairman, Chief
Executive Officer and President of the Company. Pursuant to the terms of an
employment agreement between the Company and Mr. O'Neill dated as of May 20,
1996, as amended as of January 1, 1998, (i) Mr. O'Neill is entitled to the
continuation of his salary at an annual rate equal to $150,000 until May 20,
2000 and (ii) all of Mr. O'Neill's options become fully vested and exercisable
at any time prior to the tenth anniversary of the applicable date of grant.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants and auditors since the Company's inception. Arthur Andersen LLP
has been selected to continue in such capacity for the current year. A
representative of that firm is expected to be present at the Annual Meeting
with the opportunity to make a statement if he or she desires to do so and to
be available to respond to appropriate questions.
11
<PAGE>
STOCKHOLDER PROPOSALS--1999 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for shareholder
action at annual meetings in accordance with regulations adopted by the
Securities and Exchange Commission. Any proposal which an eligible stockholder
desires to have presented at the 1999 annual meeting of stockholders
concerning a proper subject for inclusion in the proxy statement and for
consideration at the annual meeting, will be included in the Company's proxy
statement and related proxy card if it is received by the Company no later
than January 4, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that directors and certain officers of the Company, and persons who own more
than ten percent of the Company's Common Stock, file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of such Common Stock. Such directors, officers and more than ten
percent shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all fiscal year 1997 Section 16(a) filing requirements
applicable to its directors, officers and more than ten percent shareholders
were complied with except that Mr. Virtue filed his Form 5 late (which Form 5
covered 8 transactions), Mr. Rhatigan filed his Form 5 late (which Form 5
covered 7 transactions), Mr. Del Raso filed his Form 5 late (which Form 5
covered 2 transactions), CRW Financial filed its Form 5 late (which Form 5
covered 3 transactions), Mr. Robinson made a late filing of his Form 4 which
was required to be filed on January 10, 1998 and Messrs. Schwenk made a late
filing of his Form 4 which ws required to be filed on March 10, 1998.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring any other
matters before the Annual Meeting and has no reason to believe any other
matters will be presented. If, however, other matters properly do come before
the meeting, it is the intention of the persons named as proxy agents in the
enclosed Proxy Card to vote upon such matters in accordance with their
judgment.
By Order of the Board of Directors,
/s/ Keith E. Alessi
Keith E. Alessi
Chairman, Chief Executive Officer
and President
May 6, 1998
12
<PAGE>
PROXY TELESPECTRUM WORLDWIDE INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Telespectrum Worldwide Inc. (the "Company")
hereby appoints Keith E. Alessi and Richard C. Schwenk, Jr., or any of them
(with full power to act alone in the absence of the other and with full power of
substitution in each), the proxy or proxies of the undersigned, and hereby
authorizes any of them to represent and to vote as designated on the reverse,
all Shares of Common Stock of the Company held of record by the undersigned at
the close of business on April 24, 1998, at the Annual Meeting of Stockholders
to be held on May 27, 1998, and at any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
--FOLD AND DETACH HERE--
<PAGE>
This proxy, when properly executed will be voted in the manner Please mark [X]
directed herein. If no direction is made, this proxy will be your votes as
voted FOR Proposals 1 and 2. indicated in
the example
1. Election of Directors
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
[_] [_]
(Instructions: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list of nominees.) Nominees: Keith E. Alessi, J.
Brian O'Neill, Joseph DelRaso, William F. Rhatigan, Richard W. Virtue, Kevin W.
Walsh FOR, except vote withheld from the following nominee(s):
________________________________________________________________________________
2. In their discretion, the providers are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
CHECK HERE FOR ADDRESS CHANGE [_]
CHECK HERE IF YOU PLAN TO ATTEND [_]
THE MEETING
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
Signature______________________ Signature______________________ Date___________
Note: Please sign exactly as name appears herein. When shares are held by joint
tenants, all joint tenants should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the full title as such. If a
corporation, please sign in the full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
--FOLD AND DETACH HERE--
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
TELESPECTRUM WORLDWIDE INC.
May 27, 1998
Please Detach and Mail in the Envelope Provided
