<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] 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
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Notes:
<PAGE>
[LOGO OF TELESPECTRUM]
443 South Gulph Road
King of Prussia, PA 19406
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2000
----------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
TeleSpectrum Worldwide Inc. will be held on May 23, 2000 at 9:00 a.m., local
time, at the Philadelphia Airport Marriott, One Arrivals Road, Philadelphia,
PA, for the following purposes:
(1) To elect nine directors to TeleSpectrum's 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 7, 2000 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 TeleSpectrum's headquarters, 443 South Gulph Road, King of
Prussia, Pennsylvania, ten days prior to the meeting.
By Order of the Board of Directors,
/s/ Keith E. Alessi
Keith E. Alessi
Chief Executive Officer and
President
April 28, 2000
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 23, 2000
----------------
This Proxy Statement is being furnished to the stockholders of TeleSpectrum
Worldwide Inc. in connection with the Annual Meeting of Stockholders of
TeleSpectrum to be held on May 23, 2000 and any adjournments thereof (the
"Annual Meeting"). This Proxy Statement and the enclosed Proxy Card are being
mailed to stockholders on or about May 2, 2000.
Execution and return of the enclosed Proxy Card is being solicited by and on
behalf of the Board of Directors of TeleSpectrum 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 TeleSpectrum.
In addition, TeleSpectrum 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 $5,000 plus expenses,
will be paid by TeleSpectrum. Proxies may also be solicited, without extra
compensation, by officers and employees of TeleSpectrum by mail, telephone,
telefax, personal interviews and other methods of communication.
TeleSpectrum's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 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 7, 2000 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting. As
of that date, TeleSpectrum had outstanding 32,806,248 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 TeleSpectrum's Certificate of Incorporation or 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
<PAGE>
of determining the presence of a quorum. Brokers who hold shares in street
name for customers have the authority under the rules of the various stock
exchanges to vote on certain items when they have not received instructions
from beneficial owners. TeleSpectrum 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 TeleSpectrum at any time before the proxy is
voted.
ELECTION OF DIRECTORS
Election of Directors
The Board of Directors currently consists of nine directors. Each director
elected at the Annual Meeting will serve until the 2001 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. Vincent J.
Ciavardini, Mr. J. Brian O'Neill, Mr. Joseph V. Del Raso, Mr. Richard W.
Virtue, Mr. Michael E. Julian, Mr. David L. Kriegel, Mr. Robert B. Hellman,
Jr., and Mr. Jeffrey E. Stiefler 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, Ciavardini, O'Neill, Del Raso, Virtue, Julian, Kriegel, Hellman, and
Stiefler 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 TeleSpectrum
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 TeleSpectrum.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
Principal Occupations During Past Five Years and
Name of Director Age Certain Directorships
---------------- --- ------------------------------------------------
<C> <C> <S>
Keith E. Alessi 45 Keith E. Alessi has been Chief Executive Officer and
President and a director of TeleSpectrum since March
1998, and was the Chairman from March 1998 until
TeleSpectrum's merger with International Data
Response Corporation in June 1999. Effective May 1,
2000, Mr. Alessi will become Chairman of
TeleSpectrum. Mr. Alessi had been Chairman,
President and CEO of Jackson Hewitt, Inc., the
nation's second largest tax preparation service
company, from 1995 to 1998. From 1988 to 1994, Mr.
Alessi served in several executive positions with
Farm Fresh, Inc. and was Vice Chairman upon his
departure.
Vincent J. Ciavardini 45 Vincent J. Ciavardini served as President, Chief
Operating Officer and Director of PFPC, Inc., a
financial services company, for an eight year period
ending in April 2000. In addition, over the last
seven years Mr. Ciavardini served as President, COO
and Director of PFPC International, Ltd. (Dublin,
Ireland) and PFPC International (Cayman) Ltd. as
well as a Director of International Dollar Reserve
Fund. As of May 1, 2000, Mr. Ciavardini will become
President and Chief Executive Officer of
TeleSpectrum.
J. Brian O'Neill 40 J. Brian O'Neill was the Chairman of the Board and
Chief Executive Officer since the formation of
TeleSpectrum in April 1996 until March 1998. Mr.
O'Neill was the Chairman of the Board of Directors
and Chief Executive Officer of CRW Financial, Inc.
from May 1995 until its merger with TeleSpectrum in
June 1999. From July 1992 to May 1995, Mr. O'Neill
was Chairman and Chief Executive Officer of Casino
and Credit Services, Inc. Mr. O'Neill is currently
involved in operating a privately-held real estate
company.
Joseph V. Del Raso 47 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
TeleSpectrum since February 1997.
Richard W. Virtue 55 Richard W. Virtue has served as a director of
TeleSpectrum since August 1996. Mr. Virtue served as
Chief Executive Officer of SOMAR, Inc., a
predecessor of TeleSpectrum, from 1982 until August
1996.
Michael E. Julian 49 Michael E. Julian has been a director of
TeleSpectrum since September 1998. Mr. Julian is
currently a consultant. Mr. Julian served as Chief
Executive Officer of Jitney-Jungle Stores of America
from March 1997, and as Chairman of the Board from
August 1998, until June 1999. From 1988 until March
1997, Mr. Julian served as Chairman of the Board and
Chief Executive Officer of Farm Fresh, Inc. In
January 1998, Farm Fresh, Inc. petitioned for a
prepackaged Chapter 11 bankruptcy and emerged in May
1998.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations During Past Five Years and
Name of Director Age Certain Directorships
---------------- --- ------------------------------------------------
<C> <C> <S>
David L. Kriegel 53 David L. Kriegel has been a director of
TeleSpectrum since September 1998. Mr. Kriegel has
been Chairman, Chief Executive Officer and
President of Drug Emporium, Inc. since January
1993.
Robert B. Hellman, Jr. 39 Robert B. Hellman, Jr., is a managing director of
MDC Management Company III, L.P., which is the
general partner of McCown De Leeuw & Co. III, L.P.
and McCown De Leeuw & Co. Offshore (Europe) III,
L.P. He is also managing director of MDC Management
Company IIIA, L.P., which is the general partner of
McCown De Leeuw & Co. (Asia), L.P. These
partnerships are engaged in investment activities.
Mr. Hellman is also a member of The Gamma Fund LLC,
a limited liability company engaged in investment
activities. Mr. Hellman has been associated with
McCown De Leeuw & Co. since 1987. From 1982 to
1985, he worked for Bain & Company, a management
consulting company. Mr. Hellman has been a director
of TeleSpectrum since June 1999.
Jeffrey E. Stiefler 51 Jeffrey E. Stiefler has served as our Chairman
since June 1999. Mr. Stiefler served as the Chief
Executive Officer and Chairman of the Board of
International Data Response Corporation from June
1996 until its merger with TeleSpectrum in June
1999. He served as President and a director of
American Express Company, a publicly-traded
financial services company, from 1993 to 1995. Mr.
Stiefler currently serves as Vice Chairman of
Walker Digital, a privately-held business invention
and development company. Mr. Stiefler was an
operating partner of McCown De Leeuw & Co. from
January 1996 to December 1999, and is currently an
advisor to McCown De Leeuw.
Set forth below is certain information with respect to each executive officer
of TeleSpectrum that is not also a nominee for director.
OTHER EXECUTIVE OFFICERS
<CAPTION>
Name of Officer Age Principal Occupations During Past Five Years
--------------- --- --------------------------------------------
<C> <C> <S>
James Carroll 56 James Carroll has been Executive Vice President--
Telemarketing since June 1999. From June 1997 until
June 1999, Mr. Carroll served as a consultant to
TeleSpectrum regarding its outbound telemarketing
activities. From August 1996 until June 1997, Mr.
Carroll served as the Executive Vice President of
Operations of TeleSpectrum. Prior to such time, Mr.
Carroll served as the Executive Vice President of
Operations of SOMAR, Inc., a predeccesor of
TeleSpectrum.
Jill A. Ward 39 Jill A. Ward has been the Executive Vice
President--Customer Care since June 1999. From
September 1997 to June 1999, Ms. Ward was employed
by International Data Response Corporation, a
predeccesor of TeleSpectrum, and served as
President of its U.S. Inbound and Customer Care
operations from April 1998 to June 1999. From
October 1992 to July 1997, Ms. Ward served as
Senior Vice President of Marketing and Business
Planning at Fidelity Investments, a financial
services company. Before joining Fidelity
Investments, Ms. Ward was a strategy consultant and
manager at Bain & Company.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name of Officer Age Principal Occupations During Past Five Years
--------------- --- --------------------------------------------
<C> <C> <S>
Francis J. Pennella 56 Francis J. Pennella has been Executive Vice
President--Human Resources/Administration and
Secretary since June 1999. From Januaary 1997 until
June 1999, Mr. Pennella served as Senior Vice
President--Human Resources of TeleSpectrum. Mr.
Pennella served as the Executive Vice President of
Wilmington Savings Fund Society from 1994 until
January 1997.
</TABLE>
Compensation Interlocks and Insider Participation
The Board of Directors has a Compensation Committee and an Audit Committee.
During fiscal year 1999, the Board of Directors held 10 meetings, the
Compensation Committee held three meetings and the Audit Committee held three
meetings. Each director attended at least 75% of the aggregate of the meetings
of the Board of Directors held during 1999 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 TeleSpectrum, and
the Audit Committee reviews the results and scope of the audit and other
services provided by TeleSpectrum's independent auditors.
The current members of both the Compensation Committee are Messrs. Kriegel,
O'Neill and Hellman. The current members of the Audit Committee are Messrs.
Del Raso, Julian and Virtue.
Director Compensation Arrangements
Directors who are not currently receiving compensation as officers,
employees or consultants of TeleSpectrum are entitled to receive an annual
retainer fee of $7,500 and monthly fees of $2,000, 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 of TeleSpectrum are currently entitled to receive
non-qualified stock options under TeleSpectrum's 1996 Equity Compensation
Plan. Each non-employee director of TeleSpectrum is granted a non-qualified
stock option exercisable for 10,000 shares of Common Stock on the date that
such person is first elected to the board. An additional grant of an option
exercisable for 2,500 shares of Common Stock is granted on each date that a
director person is re-elected to the board. All options granted to non-
employee directors under this policy vest in three annual equal installments
and contain such other terms and conditions as set forth in the plan.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or earned during the fiscal years ended December 31, 1998
and 1999 to TeleSpectrum's chief executive officer and president and the other
four most highly compensated executive officers of TeleSpectrum (collectively,
the "Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
Year Salary Bonus Awards (2)
---- -------- -------- ------------
<S> <C> <C> <C> <C>
Keith E. Alessi
Chairman of the Board, Chief 1999 $243,692 $250,000 --
Executive Officer and President 1998 189,000 -- 2,000,000
James Carroll(3)
Executive Vice President -- Outbound 1999 234,541 60,000 115,000
Telemarketing
Jill A. Ward(4)
Executive Vice President -- Customer 1999 237,783 25,000 115,000
Care
Francis J. Pennella
Executive Vice President -- Human 1999 177,692 40,000 80,000
Resources/Administration and Secretary
Paul J. Grinberg (4)(5)
Former Chief Financial Officer and 1999 255,926 55,000 115,000
Executive Vice President Finance
</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) Represents shares of Common Stock underlying stock options granted by
TeleSpectrum in 1998 and 1999.
(3) Includes consulting fees paid prior to June 30, 1999 while Mr. Carroll
served as an independent contractor to TeleSpectrum.
(4) Includes salary paid by International Data Response Corporation, a company
that merged with TeleSpectrum in June 1999.
(5) Resigned his position with TeleSpectrum effective April 28, 2000.
Employment Agreements
Mr. Alessi has an employment agreement with TeleSpectrum. Mr. Alessi's
agreement provides that he is to be employed by TeleSpectrum as its Chairman
through March 19, 2001 at an annual salary of $200,000, plus any bonuses as
determined annually by the compensation committee. The Agreement also provides
for one year of severance benefits if the employment of Mr. Alessi is
terminated by TeleSpectrum without cause and prohibits Mr. Alessi from
competing with TeleSpectrum for two years after the end of his employment with
TeleSpectrum.
Mr. Ciavardini has an employment agreement with TeleSpectrum. Mr.
Ciavardini's agreement provides that he is to be employed by TeleSpectrum as
its President and Chief Executive Officer through May 1, 2003 at an annual
salary of not less than $325,000, plus any bonuses as determined annually by
the compensation committee. For the first twelve months of the Agreement, Mr.
Ciavardini's bonus will be not less than
6
<PAGE>
$300,000. The Agreement also provides for one year of severance benefits if
the employment of Mr. Ciavardini is terminated by TeleSpectrum without cause
and prohibits Mr. Ciavardini from competing with TeleSpectrum for one year
after the end of his employment with TeleSpectrum. Pursuant to his agreement,
Mr. Ciavardini was granted three stock options under TeleSpectrum's Amended
and Restated 1996 Equity Compensation Plan exercisable for an aggregate of
1,500,000 shares of common stock. One of these stock options, which is
exercisable for an aggregate 500,000 shares, vests incrementally on the
earlier of any ten day periods that the TeleSpectrum common stock reaches
certain closing prices, or in May 2004. The vesting schedule is as follows:
166,667 shares vest if the closing price of the common stock reaches $11.00
per share during a ten day period that begins prior to November 1, 2001;
166,667 shares vest if the closing price of the common stock reaches $17.00
per share during a ten day period that begins prior to August 1, 2003; and
166,667 shares vest if the closing price of the common stock reaches $23.50
per share during a ten day period that begins prior to April 30, 2003. The
remaining two of these options, exercisable for an aggregate of 1,000,000
shares, vest as to 100,000 shares on April 30, 2000 and the remaining 900,000
shares vest in three equal amounts on each of April 30, 2001, April 30, 2002
and April 30, 2003.
Mr. Carroll has an employment agreement with TeleSpectrum. Mr. Carroll's
agreement provides that he is to be employed by TeleSpectrum as Executive Vice
President--Outbound Telemarketing through December 31, 2000 at an annual
salary of $265,000, plus any bonuses as determined annually by the
compensation committee. The Agreement automatically renews for successive one-
year periods unless notice is given at least 30 days prior to the expiration
of the then applicable term. The Agreement also provides for six months of
severance benefits if the employment of Mr. Carroll is terminated by
TeleSpectrum without cause and prohibits Mr. Carroll from competing with
TeleSpectrum for one year after the end of his employment with TeleSpectrum.
Mr. Pennella has an employment agreement with TeleSpectrum. Mr. Pennella's
agreement provides that he is to be employed by TeleSpectrum as Executive Vice
President--Human Resources/Administration through December 31, 2000 at an
annual salary of $200,000, plus any bonuses as determined annually by the
compensation committee. The Agreement automatically renews for successive one-
year periods unless notice is given at least 30 days prior to the expiration
of the then applicable term. The Agreement also provides for one year of
severance benefits if the employment of Mr. Pennella is terminated by
TeleSpectrum without cause and prohibits Mr. Pennella from competing with
TeleSpectrum for one year after the end of his employment with TeleSpectrum.
The following table sets forth certain information concerning options
granted to the Named Officers in 1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------
Percentage
of Total Potential Realizable Value
Number of Options at Assumed Annual Rates of
Securities Granted to Stock Price Appreciation
Underlying Employees for Option Term (2)
Options in 1999 Exercise Expiration ---------------------------
Name Granted (1) Price Date 5% 10%
---- ---------- ---------- -------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
James Carroll........... 75,000 8.6% $ 7.75 6/30/09 $ 469,313 $ 1,189,331
40,000 4.13 10/26/09
Jill A. Ward............ 75,000 8.6 7.75 6/30/09 469,313 1,189,331
40,000 4.13 10/26/09
Paul J. Grinberg........ 75,000 8.6 7.75 6/30/09 469,313 1,189,331
40,000 4.13 10/26/09
Francis J. Pennella..... 40,000 6.0 7.75 6/30/09 298,725 757,028
40,000 4.13 10/26/09
</TABLE>
- --------
(1) Based on an aggregate of 1,333,250 shares underlying stock options granted
in 1999.
(2) 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
7
<PAGE>
price appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent TeleSpectrum's estimate or projection of
the future Common Stock price.
The following table sets forth certain information concerning the number and
value of unexercised options held by each of the Named Officers on December
31, 1999.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, 1999 In-The-Money Options (1)
------------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Keith E. Alessi......... 499,999 1,333,334 $1,917,496 $5,113,336
James Carroll........... 40,000 125,000 152,600 158,150
Jill A. Ward............ 89,915 115,000 510,627 120,000
Paul J. Grinberg........ 87,392 115,000 468,801 120,000
Francis J. Pennella..... 46,666 93,334 100,431 170,869
</TABLE>
- --------
(1) Based on the difference between $7.125, which was the closing price per
share of TeleSpectrum's Common Stock as listed on the Nasdaq National
Market System on December 31, 1999 and the exercise price of each option.
Notwithstanding anything to the contrary, the following Report of the
Compensation 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 TeleSpectrum specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
REPORT OF THE COMPENSATION COMMITTEE
Report of the Compensation Committee
The Compensation Committee of TeleSpectrum Board is comprised of directors
who are not employees of TeleSpectrum. The committee is responsible for the
establishment and administration of TeleSpectrum's annual executive
compensation and its stock ownership programs. The committee evaluates the
performance and determines the compensation of the chief executive officer and
the other executive officers of TeleSpectrum based upon the written employment
agreements these persons have with TeleSpectrum. The committee also considers
other factors including the achievement of company financial goals and
individual performance goals and comparisons with other public companies.
The committee's policy is to offer compensation opportunities that will
enable TeleSpectrum to attract, motivate and retain individuals of outstanding
ability capable of enhancing stockholder value. The committee relies on a
combination of salary, bonus and stock options. Each of TeleSpectrum's current
executive officers, other than Ms. Ward, have formal employment agreements
that establish their annual salary and fringe benefits. Bonuses paid in 1999
reflect the Committee's evaluation of the respective performance of each Named
Officer.
It is the committee's philosophy that employees who have a significant
opportunity to share in TeleSpectrum's long-term economic success are more
likely to promote long-term shareholder value. The committee intends to
consider the awarding 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 evaluate individual
performance, overall contribution to TeleSpectrum, differences in the number
of shares underlying stock options among executive officers and the total
number of stock options to be awarded.
8
<PAGE>
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, 1999, this provision has not affected TeleSpectrum's tax
deductions, but the Committee will continue to monitor the potential impact of
Section 162(m) on TeleSpectrum's ability to deduct executive compensation.
COMPENSATION COMMITTEE--April 27,
2000.
David L. Kriegel
J. Brian O'Neill
Robert B. Hellman, Jr.
Performance Graph
The following line graph compares the percentage change in the cumulative
total stockholder return on TeleSpectrum's Common Stock for the four months
since TeleSpectrum's Common Stock first started trading on the Nasdaq National
Market on August 8, 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 Direct Marketers"). Dividend reinvestment has been
assumed.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG TELESPECTRUM WORLDWIDE INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
- -------------------------------------------------------------------------------
- -
8/8/96 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------------------------------------------------------
- -
- -o-TLSP $100 $ 97 $ 22 $ 60 $ 44
- -------------------------------------------------------------------------------
- -
- -[]-Peer Group $100 $100 $ 44 $ 21 $ 74
- -------------------------------------------------------------------------------
- -
- -/\-NASDAQ $100 $118 $144 $203 $377
- -------------------------------------------------------------------------------
- -
9
<PAGE>
The Other Direct Marketers group is comprised of APAC TELESERVICES INC., ICT
GROUP INC., SITEL CORP. and TELETECH HOLDINGS INC., which like TeleSpectrum,
provide direct marketing services. TeleSpectrum was incorporated on April 26,
1996 and its direct marketing operations commenced on August 8, 1996, the date
on which it completed the acquisition of its operating businesses. The chart
above presents a comparison between TeleSpectrum, the Other Direct Marketers
(TeleSpectrum's peer group) and the NASDAQ Market Index from the date of these
acquisitions to December 31, 1999.
10-Year Option Repricing
The following table sets forth certain information regarding certain stock
options held by executive officers of TeleSpectrum that were repriced in
September 1997.
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price 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 9/2/97 100,000 4.25 14.38 6.25 9 yrs. 6 mo.
the Board 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.
(former Executive 9/2/97 20,000 4.25 14.38 6.25 9 yrs. 6 mo.
Vice President and
Chief Financial
Officer)
</TABLE>
ASSUMES $100 INVESTED ON AUG. 08, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1998
Index 8/8/96 12/31/96 12/31/97 12/31/98
- -----
Telespectrum Worldwide Inc. $100 $97 $22 $60
Nasdaq market index $100 $118 $144 $203
Peer group index $100 $100 $44 $21
10
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
A person or entity has beneficial ownership of shares if it has the power to
vote or dispose of the shares. This power can be exclusive or shared, direct
or indirect. In addition, a person beneficially owns shares underlying options
and warrants if the option or warrant is presently exercisable or will become
exercisable within 60 days.
As of April 7, 2000, there were 32,806,248 outstanding shares of
TeleSpectrum common stock. To calculate a stockholder's percentage of
beneficial ownership, you must include in both the numerator and denominator
those shares underlying the stockholder's options and warrants owned by that
stockholder. Options and warrants held by other stockholders, however, are not
included. Therefore, the denominator used in calculating beneficial ownership
among the stockholders of TeleSpectrum may differ.
The following table sets forth information regarding the beneficial
ownership of the TeleSpectrum Common Stock held by:
-- each person known to us to own beneficially more than 5% of
TeleSpectrum's outstanding shares;
-- the Chief Executive Officer and the other Named Officers;
-- each director of TeleSpectrum; and
-- all directors and executive officers of TeleSpectrum as a group.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Outstanding Shares
Beneficial Owner Beneficially Owned(1) Beneficially Owned(1)
- ---------------- --------------------- ---------------------
<S> <C> <C>
McCown De Leeuw & Co. III
L.P.(1).......................... 6,186,844 18.1%
J. Brian O'Neill(2)............... 3,625,773 10.2
Highfields Group(3)............... 2,357,739 7.2
Keith E. Alessi(4)................ 1,284,631 3.8
Richard W. Virtue(5).............. 1,015,725 3.1
Jeffrey E. Stiefler(6)............ 448,212 1.4
James Carroll(7).................. 226,207 *
Jill A. Ward(8)................... 114,915 *
Paul J. Grinberg(8)............... 112,392 *
Michael E. Julian(9).............. 91,666 *
Francis J. Pennella(10)........... 74,466 *
David L. Kriegel(9)............... 16,666 *
Joseph V. Del Raso(11)............ 12,833 *
Robert B. Hellman, Jr.(8)......... 3,333 *
All directors and executive offi-
cers As a group (12
persons)(12)..................... 7,024,019 18.8
</TABLE>
- --------
* Less than one percent.
(1) Includes (i) 1,179,994 shares of Common Stock obtainable upon the
exercise of warrants owned by McCown De Leeuw & Co. III, L.P., an
investment partnership whose general partner is MDC Management Company
III, L.P. ("MDC III"), (ii) 83,630 shares of Common Stock obtainable
upon the exercise of warrants held by McCown De Leeuw & Co. Offshore
(Europe) III, L.P., an investment partnership whose general partner is
MDC Management Company IIIE, L.P. ("MDC IIIE"); (iii) 20,253 shares of
Common Stock obtainable upon the exercise of warrants held by McCown De
Leeuw & Co. III (Asia), L.P., an investment partnership whose general
partner is MDC Management Company IIIA, L.P. ("MDC IIIA"); and (iv)
22,869 shares of Common Stock obtainable upon the exercise of warrants
owned by The Gamma Fund LLC, a California limited liability company.
Members of The Gamma Fund LLC include George E. McCown, David De Leeuw,
David E. King, Robert B. Hellman, Jr. and Steven Zuckerman, who are
also the only managing directors of MDC III, MDC IIIE and MDC IIIA.
Voting and dispositive decisions regarding the Common Stock owned by
MDC III, MDC IIIE and MDC IIIA are made by Mr. McCown and Mr. De Leeuw,
as managing directors of each of such partnerships, who together have
more than the required two-thirds-in-interest vote of the managing
general partners necessary to effect such decisions on behalf of any
such entity. Voting and dispositive
11
<PAGE>
decisions regarding the Common Stock owned by The Gamma Fund are made by
a vote or consent of a majority in number of the members of The Gamma
Fund. No managing director is able to individually direct the voting or
disposition of common stock beneficially owned by MDC III, MDC IIIE and
MDC IIIA. Messrs. McCown, De Leeuw, King, Hellman and Zuckerman have no
direct ownership of any shares of common stock and disclaim beneficial
ownership of any shares of Common Stock except to the extent their
proportionate partnership interest or membership interests (in the case
of The Gamma Fund). The address of all MDC entities and The Gamma Fund
is c/o McCown De Leeuw & Co., 3000 Sand Hill Road, Building 3, Suite
290, Menlo Park, California 94025.
(2) Includes 1,677,051 shares of Common Stock obtainable upon exercise of
stock options and 822,860 shares of Common Stock obtainable upon
exercise of warrants.
(3) Of the shares listed, 562,220 are beneficially owned by Highfields
Capital I, LP, a Delaware limited partnership, and 208,918 shares are
beneficially owned by Highfields Capital II, LP, a Delaware limited
partnership. Highfields Associates LLC, a Delaware limited liability
company, is the general partner of these partnerships. Messrs. Richard
Grubman and Jonathan S. Jacobson are the managing members of Highfield
Associates LLC and direct the operations in that capacity. The
remaining 1,795,519 shares are beneficially owned by Highfields Capital
Management, LP ("Highfields Capital"), a Delaware limited partnership,
which serves as investment manager to Highfields Capital Ltd., a Cayman
Islands company, with respect to shares directly owned by Highfields,
Ltd. Messrs. Grubman and Jacobson are managing members of Highfields GP
LLC, a Delaware limited liability company, which is a general partner
of Highfields Capital, and directs its operations in that capacity.
Highfields Ltd., the client of Highfields Capital, has the power to
direct the receipt of dividends and proceeds from the sale of these
shares. The foregoing information is derived from a Schedule 13G filed
by Highfield Associates, LLC, Highfield Capital and Messrs. Grubman and
Jacobson on February 14, 2000.
(4) Includes 1,000,000 shares of Common Stock obtainable upon exercise of
stock options.
(5) Includes 10,833 and 254,000 shares of Common Stock obtainable upon
exercise of stock options and warrants, respectively.
(6) Includes 342,703 and 77,967 shares of Common Stock obtainable upon
exercise of stock options and warrants, respectively.
(7) Includes 65,000 and 42,200 shares of Common Stock obtainable upon
exercise of stock options and warrants, respectively.
(8) Represents shares of Common Stock obtainable upon exercise of stock
options.
(9) Includes 6,666 shares of Common Stock obtainable upon exercise of stock
options.
(10) Includes 71,666 shares of Common Stock obtainable upon exercise of
stock options.
(11) Includes 10,833 shares of Common Stock obtainable upon exercise of
stock options.
(12) Includes 4,609,086 shares of Common Stock obtainable upon exercise of
stock options and warrants.
CERTAIN TRANSACTIONS
Transactions with Directors
TeleSpectrum paid Michael Julian approximately $67,000 in 1999 in
consideration for consulting services performed on TeleSpectrum's behalf in
1999. TeleSpectrum paid J. Brian O'Neill approximately $169,000 in 1999
pursuant to the terms of a severance arrangement.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as TeleSpectrum's independent public
accountants and auditors since TeleSpectrum's inception in 1996. 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.
12
<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 2001 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 TeleSpectrum's proxy statement and
related proxy card if it is received by TeleSpectrum no later than
January 23, 2001.
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 TeleSpectrum, and persons who own more
than ten percent of TeleSpectrum'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 TeleSpectrum with
copies of all Section 16(a) forms which they file.
To TeleSpectrum's knowledge, based solely on a review of the copies of such
reports furnished to TeleSpectrum 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 Messrs. Carroll, Pennella, Grinberg and Pennella
and Ms. Ward each filed their Forms 3 late and Messrs. Alessi and Del Raso each
filed their Forms 5 late (each covering one transaction).
OTHER MATTERS
The Board of Directors of TeleSpectrum 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,
Keith E. Alessi
Chief Executive Officer and
President
April 28, 2000
13
<PAGE>
TELESPECTRUM WORLDWIDE INC.
443 S. Gulph Road
King of Prussia, PA 19406
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS, MAY 23, 2000
KNOW ALL MEN BY THESE PRESENTS that, I the undersigned stockholder of
TeleSpectrum Worldwide Inc., a Delaware corporation (the "Company"), do hereby
nominate, constitute, and appoint Keith C. Alessi or Francis Pennella or any one
or more of them, my true and lawful attorney(s) with full power of substitution
for me and in my name, place and stead, to vote all of the Common Stock, par
value $.01 per share, of the Company, standing in my name on its books on April
7, 2000, at the Annual Meeting of its Stockholders to be held on May 23, 2000 at
the Philadelphia Airport Marriott, one Arrivals Road, Philadelphia, PA, at 9:00
a.m., local time, and at any and all postponements or adjournments thereof.
(Continued, and to be marked, dated and signed, on the reverse side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
Please mark [X]
your votes as
indicated in
this manner
WITHHELD
FOR FOR ALL
1. Election of Directors [_] [_]
Nominees:
Keith E. Alessi J. Brian O'Neil
Joseph V. Del Rasto Richard W. Virtue
Vincent T. Ciavardini Robert B. Hollman, Jr.
Michael E. Julian Jeffrey E. Stietler
David R. Kriegel
WITHHELD FOR: (Write that nominee's name in the space provided below).
- ---------------------------------------
2. In their discretion, to transact any other business as may properly come
before the Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting and a joint
proxy statement/prospectus and revokes all prior Proxies to said meeting. This
Proxy, when properly executed, will be voted in the manner directed herein by
the undersigned stockholder.
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 endorsed person. Make sure that the name as your stock certificate(s) is
exactly as you indicate above. Please mark, sign, date and return this proxy
using the enclosed self-addressed postage prepaid envelope.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
