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
[X] Definitive proxy statement by Rule 14a-6(e) (2) )
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
VIALOG CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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VIALOG CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 29, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of VIALOG Corporation (the "Company") to be held on June 29, 2000, at 10:00
a.m., at the Renaissance Bedford Hotel, 44 Middlesex Turnpike, Bedford,
Massachusetts.
At this meeting, you will be asked to vote upon the following matters:
1. To elect two Class III directors to the board of directors to hold
office until the annual meeting of stockholders in 2003; and
2. To transact any other business as may properly come before the
meeting and at any adjournment of the meeting.
Stockholders of record at the close of business on May 26, 2000 will be
entitled to vote at this meeting and at any adjournment of the meeting.
Please mark, sign, date and return the enclosed form of proxy as
promptly as possible to assure your representation at the meeting. If you attend
the meeting, you may vote in person even if you have returned a proxy.
By Order of the Board of Directors
/s/ David L. Lougee,
-----------------------
David L. Lougee, Clerk
June 1, 2000
<PAGE>
VIALOG CORPORATION
35 NEW ENGLAND BUSINESS CENTER, SUITE 160
ANDOVER, MASSACHUSETTS 01810
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
We are furnishing this proxy statement to our stockholders in
connection with the solicitation by our board of directors of proxies for use at
the annual meeting of stockholders to be held on Thursday, June 29, 2000 at
10:00 a.m. at the Renaissance Bedford Hotel, 44 Middlesex Turnpike, Bedford,
Massachusetts, and any adjournment thereof. A copy of our 1999 Annual Report to
Stockholders is being mailed with this proxy statement to each stockholder
entitled to vote at the meeting. This proxy statement and accompanying proxy
materials will first be mailed to all stockholders entitled to vote at the
meeting beginning June 1, 2000.
Voting and Proxies
The Company's board of directors has fixed the close of business on May
26, 2000 as the record date for determining stockholders entitled to notice of
and to vote at the annual meeting. Accordingly, only holders of record of shares
of the Company's common stock at the close of business on that date will be
entitled to notice of and to vote at the annual meeting and any adjournment
thereof. At the close of business on May 26, 2000, 9,418,730 shares of the
Company's common stock were outstanding.
Each holder of record of shares of the Company's common stock on the
record date is entitled to cast one vote per share, in person or by properly
executed proxy, on any matter that may properly come before the annual meeting.
The presence in person or by properly executed proxy of the holders of a
majority of the shares of the Company's common stock outstanding on the record
date is necessary to constitute a quorum at the annual meeting. Directors will
be elected at the annual meeting by a plurality of the votes cast by the
stockholders entitled to vote at the election. With respect to the required vote
on any particular matter, abstentions and votes withheld by nominee record
holders who did not receive specific instructions from the beneficial owners of
such shares will not be treated as votes cast although they will count toward
the presence of a quorum. The failure of a broker to return a signed proxy card
will result in the shares held of record by such broker not being counted
towards the determination of a quorum.
Proxy Voting and Revocation
All proxies received pursuant to this solicitation will be voted except
as to matters where authority to vote is specifically withheld. Where a choice
is specified as to the election of the nominees for director, the proxies will
be voted in accordance with the specification. If no choice is specified, the
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persons named in the proxies intend to vote for the election of the nominees for
director.
The board of directors does not know of any matters, other than the
matters described in this Proxy Statement, which are expected to be presented
for consideration at the annual meeting. If any other matters are properly
presented for consideration at the annual meeting, the persons named in the
accompanying proxy will have discretion to vote on such matters in accordance
with their best judgment.
Stockholders of the Company who execute proxies may revoke them at any
time before such proxies are voted by filing with the Clerk of the Company at or
before the annual meeting a written notice of revocation bearing a later date
than the proxy or by executing and delivering to the Clerk of the Company at or
before the annual meeting later-dated proxies relating to the same shares.
Attendance at the annual meeting will not have the effect of revoking a proxy
unless the shareholder so attending so notifies the Clerk of the Company in
writing at any time prior to the voting of the proxy.
Solicitations
Proxies are being solicited by and on behalf of the board of directors.
The Company will bear the entire cost of solicitation of proxies. In addition to
solicitation by mail, directors, officers, and regular employees of the Company
(who will not be specifically engaged or compensated for such services) may
solicit proxies by telephone or otherwise. Arrangements will be made with
brokerage houses and other custodians, nominees, and fiduciaries to forward
proxies and proxy material to their principals, and the Company will reimburse
them for their expenses.
PROPOSAL 1
ELECTION OF DIRECTORS
Under the Company's By-laws, the board of directors consists of such
number as the Stockholders of the Company shall determine but not less than
three. The board of directors may enlarge the number of directors in its
discretion. The board of directors has set the number of directors at seven. The
board is classified into three classes, as nearly equal in number as possible,
whose terms of office expire at different times in annual succession.
There are two Class III directors whose terms expire at the 2000 annual
meeting: Kim A. Mayyasi and David L. Lougee. Mr. Mayyasi and Mr. Lougee are
nominees for re-election as Class III Directors.
A third Class III director position and a Class II director position
(whose term expires at the annual meeting of stockholders in 2002) are currently
vacant. Proxies cannot be voted for a greater number of persons than the
nominees named in this Proxy Statement.
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If the two nominees are elected, there will be two directors (Edward M.
Philip and Richard G. Hamermesh) whose terms expire at the annual meeting of the
Company's stockholders in 2001, one director (Joanna M. Jacobson) whose term
expires at the annual meeting of the Company's stockholders in 2002 and two
directors whose terms expire at the annual meeting of the Company's stockholders
in 2003 (Kim A. Mayyasi and David L. Lougee).
The members of each class of directors are elected to serve a
three-year term. It is intended that the persons named on the proxy card as
proxies will vote shares of the Company's common stock so authorized for the
re-election of Mr. Mayyasi and Mr. Lougee to the board of directors. The board
of directors expects that the nominees will be available for election; but if
they or one of them should become unavailable, it is intended that the proxy
would be voted for a nominee or nominees who would be designated by the board of
directors, unless the number of directors is reduced.
Mr. Mayyasi and Mr. Lougee will serve until the annual meeting of the
Company's stockholders in 2003 and until their successors are elected and
qualified or their earlier death, resignation or removal. The nominees are
currently directors of the Company, and the nominees have agreed to serve as
directors if elected at the annual meeting.
The board of directors recommends a vote FOR the election of the
nominees described above.
The biographical summary of the nominees for director of the Company,
and the other directors of the Company, appear below under the heading "Board of
Directors and Executive Officers."
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Our directors and executive officers are as follows:
Name Age Position
---- --- --------
<S> <C> <C>
Kim A. Mayyasi(1).................... 43 President, Chief Executive Officer and Director
Michael E. Savage.................... 41 Senior Vice President and Chief Financial Officer
Robert F. Saur....................... 39 Chief Information Officer
Robert F. Moore...................... 45 Senior Vice President, Core Services
Joanna M. Jacobson(2)................ 40 Director
David L. Lougee(1)(2)................ 60 Director
Richard G. Hamermesh(1).............. 52 Director
Edward M. Philip (2)................. 35 Director
</TABLE>
-------------------------
(1) Member of the compensation committee.
(2) Member of the audit committee.
KIM A. MAYYASI has been President, Chief Executive Officer and a
director since July 1999. From June 1994 to June 1999, Mr. Mayyasi served as
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Managing Partner of Hill, Holliday, Connors, Cosmopulos, Inc., a nationally
recognized advertising agency owned by The Interpublic Group of Companies, Inc.
MICHAEL E. SAVAGE has been Senior Vice President and Chief Financial
Officer since September 1999. From May 1997 to August 1999, Mr. Savage served as
Chief Financial Officer of Digital City, a subsidiary of American Online, Inc.
From May 1994 to May 1997, Mr. Savage served as Chief Financial Officer and Vice
President of World Corp., the holding company of World Airways, Inc. and
InteliData Technologies Corp.
ROBERT F. MOORE joined the Company in November 1997 as Vice President
Marketing and Business Development. In April 1999, Mr. Moore became Senior Vice
President, Core Services. Mr. Moore served as Vice President Sales and Marketing
for Citizens Communication Corporation, a division of Citizens Utilities, Inc.
from March 1997 to October 1997. From January 1994 to December 1996, Mr. Moore
served as a Senior Vice President of Hill, Holliday, Connors, Cosmopulos, Inc.
ROBERT F. SAUR has been Chief Information Officer since October 1999.
From May 1992 to October 1999, Mr. Saur was Chief Information Officer for
Cambridge Technology Partners, a management consulting and systems integration
firm.
JOANNA M. JACOBSON served as a consultant to the Company prior to, and
became a director of, the Company in November 1997. Since November 1999, Ms.
Jacobson has been a Senior Lecturer in the Entrepreneurial Management/Service
Management Unit at the Harvard Business School. From April 1996 to July 1999,
Ms. Jacobson served as President of Keds Corp., a distributor of athletic
footwear and a division of Stride-Rite Corporation. From February 1995 to March
1996, she was a partner in Core Strategy Group, a strategic marketing consulting
firm. Ms. Jacobson currently serves as a director of Stride Rite Corp.
DAVID L. LOUGEE became a director of the Company in November 1997. Mr.
Lougee has been Managing Partner of the law firm of Mirick, O'Connell, DeMallie
& Lougee, LLP for more than the last five years. Mr. Lougee is also a director
of Meridian Medical Technologies, Inc., a public company in the medical devices
and drug delivery business. Mirick, O'Connell, DeMallie & Lougee, LLP serves as
the Company's outside general counsel.
RICHARD G. HAMERMESH became a director of the Company in June 1998. Dr.
Hamermesh is a founder and Managing Partner of The Center for Executive
Development, an executive education consulting firm in Cambridge, Massachusetts.
Dr. Hamermesh currently serves as director of two public companies--BE
Aerospace, Inc., a manufacturer of interior products for aircraft cabins, and
Applied Extrusion Technologies Inc., a manufacturer of oriented polypropylene
films used in consumer product labeling, flexible packaging and overwrap
applications.
EDWARD M. PHILIP became a director of the Company in February 1999. He
has served as Chief Financial Officer and Secretary of Lycos, Inc. since
December 1995 and Chief Operating Officer since December 1996. From July 1991 to
December 1995, Mr. Philip was employed by The Walt Disney Company where he
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served in various finance positions, most recently as Vice President and
Assistant Treasurer. Mr. Philip is also a director of Allscripts, Inc., which
provides physicians with Internet and client/server medication management
solutions.
Board of Directors
The board of directors meets periodically throughout the year and holds
special meetings as required. The board met eight times during 1999. The board
of directors has assigned certain responsibilities to the audit committee and
the compensation committee. No director of the Company attended fewer than 75%
of the total meetings of the board and committee meetings on which such board
member served in 1999 during the period such board member was a director.
The members of the audit committee during 1999 were Ms. Jacobson, Mr.
Lougee and Mr. Philip, who was appointed to the audit committee in July 1999.
The audit committee held one meeting during 1999. The audit committee reviews
the scope and results of the annual audit of the Company's consolidated
financial statements conducted by its independent accountants, proposed changes
in the Company's financial and accounting standards and principles, and the
Company's policies and procedures with respect to internal accounting, auditing
and financial controls, and makes recommendations to the board of directors on
the engagement of the independent accountants, as well as other matters which
may come before it or as directed by the board of directors.
From January 1999 to June 1999, the compensation committee consisted of
Mr. Lougee, Ms. Jacobson and Glenn D. Bolduc. In June 1999, Mr. Mayyasi replaced
Mr. Bolduc on the compensation committee. In July 1999, Mr. Hamermesh replaced
Ms. Jacobson on the compensation committee. The compensation committee held no
formal meetings during 1999. The compensation committee assists in the
administration of our compensation programs, including the 1996 and 1999 Stock
Plans, and performs such other duties as may from time to time be determined by
the board of directors.
Our executive officers are elected annually by the directors and serve
at the discretion of the directors. There are no family relationships among our
directors and executive officers.
MATERIAL RELATIONSHIPS
AND RELATED PARTY TRANSACTIONS
The following is a description of transactions since January 1, 1999 to
which we have been a party and in which the amount involved exceeded $60,000 and
any director, executive officer or security holder that we know owns more than
five percent of our capital stock during 1999 had or will have a direct or
indirect material interest.
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David L. Lougee, one of our directors, is a partner of Mirick,
O'Connell, DeMallie & Lougee, LLP, the law firm we currently retain as legal
counsel. In 1999, we paid Mirick, O'Connell, DeMallie & Lougee, LLP an aggregate
of approximately $692,000 in legal fees and expenses for legal services.
The Company provides teleconferencing services to customers of a
company owned by Susan C. Hassett, spouse of John J. Hassett, a stockholder who
owns more than five percent of our capital stock, for which we recorded revenues
of $178,184 in 1999.
On November 6, 1997, we entered into a stockholder agreement with Mr.
Hassett that provides, among other things, that while any senior notes or other
obligation of the Company or our operating centers (as subsidiary guarantors)
with respect to the senior notes remain outstanding:
o With respect to all matters submitted to a vote of our
stockholders regarding the appointment, election or removal of
directors or officers of the Company, Mr. Hassett will vote any
shares of our voting stock over which he has direct or indirect
voting power in the same proportion as the votes cast in favor
of and against the particular matter voted upon, by all of our
other stockholders; and
o Mr. Hassett will not serve as a director or officer of the
Company or any subsidiary.
In 1999, Mr. Hassett provided consulting services to the Company in
consideration of fees totaling $30,000.
Security Ownership of Certain Beneficial Owners,
Directors and Management of the Company
The following table provides information regarding the beneficial
ownership of our outstanding common stock as of May 15, 2000 by:
o each person or group that we know owns more than 5% of the
common stock,
o each of our directors,
o each of our executive officers, and
o all of our directors and executive officers as a group.
Beneficial ownership is determined under rules of the SEC and includes
shares over which the indicated beneficial owner exercises voting and/or
investment power. Shares of common stock that we may issue upon the exercise of
options or warrants currently exercisable or exercisable within 60 days of May
15, 2000 are deemed outstanding for computing the percentage ownership of the
person holding the options or warrants but are not deemed outstanding for
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computing the percentage ownership of any other person. Except as we otherwise
indicate, we believe the beneficial owners of the common stock listed below,
based on information furnished by them, have sole voting and investment power
over the number of shares listed opposite their names. The address for each
stockholder below is c/o VIALOG Corporation, 35 New England Business Center,
Suite 160, Andover, MA 01810. At the close of business on May 15, 2000, there
were 9,141,854 shares of our common stock issued and outstanding.
<TABLE>
<CAPTION>
Shares Issuable Number of Shares
pursuant to Warrants Beneficially Owned
and Options (Including the
Exercisable Number of
within Shares
60 days of shown in the Percentage of
Name of Beneficial Owner May 15, 2000 first column Shares Outstanding
------------------------ ------------ ------------ ------------------
<S> <C> <C> <C>
John J. Hassett................................... 0 785,562 8.59%
Robert F. Moore................................... 126,505 126,505 1.36%
Kim A. Mayyasi.................................... 100,006 100,006 1.08%
David L. Lougee................................... 35,678 86,178 *
Joanna M. Jacobson................................ 37,010 37,010 *
Richard G. Hamermesh.............................. 34,346 34,336 *
Edward M. Philip.................................. 30,010 30,010 *
Michael E. Savage................................. 4,170 4,170 *
Robert F. Saur.................................... 0 0 *
All executive officers and directors as a group
(8 persons).................................... 367,725 418,215 4.40%
</TABLE>
-------------------------
* Less than 1%.
EXECUTIVE COMPENSATION
Summary Compensation. The following table summarizes the compensation
earned by the two individuals who served as the Company's Chief Executive
Officer in 1999 and the Company's executive officers who earned more than
$100,000 in salary and bonus in 1999 (the "named executive officers"). The
compensation summarized in this table does not include medical, group life
insurance, or other plan benefits that are available generally to all of the
Company's salaried employees, or perquisites or other personal benefits that do
not in the aggregate exceed the lesser of either $50,000 or 10% of the officer's
salary and bonus.
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<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation Awards
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation(s)
--------------------------- ---- ---------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Kim A. Mayyasi....................... 1999 177,692 0 250,000 0
President and CEO
Glenn D. Bolduc(1)................... 1998 261,923 0 40,000 0
Former President and CEO
1999 121,846 50,000 0 149,153(2)
Michael E. Savage.................... 1999 66,000 35,000 100,000 0
Senior Vice President and Chief
Financial Officer
Robert F. Moore...................... 1998 163,269 0 25,000 0
Senior Vice President, Core Services 1999 198,500 60,000 105,000 0
</TABLE>
-----------------------
(1) Mr. Bolduc resigned from his position as Chief Executive Officer and
President on June 30, 1999, and as a director on December 31, 1999. As
of December 31, 1999, Mr. Bolduc held an aggregate of 269,000 shares of
restricted common stock worth approximately $840,625.
(2) Under the terms of the Severance Agreement dated June 8, 1999 between
the Company and Mr. Bolduc, we paid Mr. Bolduc an aggregate of $149,153
in severance-related compensation in 1999.
Option Grants in 1999. The following table summarizes all options
granted to the named executive officers in 1999. Amounts reported in the last
two columns represent hypothetical values that the holder could realize by
exercising the options immediately before their expiration, assuming the value
of the Company's common stock appreciates at the specified compounded annual
rates over the terms of the options. These numbers are calculated based on the
SEC's rules and do not represent the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and common stock
holdings will depend on the timing of exercise and the future performance of the
Company's common stock. The Company may not be able to achieve the rates of
appreciation assumed in this table and the named executive officers may not
receive the calculated amounts. This table does not take into account any
appreciation in the price of the common stock from the date of grant to the
current date. The values shown are net of the option exercise price, but do not
include deductions for taxes or other expenses associated with the exercise.
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<TABLE>
<CAPTION>
Option Grants in 1999
Individual Grants
--------------------------------------------------------- Potential
Realizable Value at
Number of Percent of Total Assumed Annual Rates of
Securities Options Granted Stock Price
Underlying to Employees in Exercise Appreciation for Option
Options Price Expiration Term
-------------------------
Name Granted (#) Fiscal Year (%) ($/Share) Date 5% ($) 10% ($)
----------- ------------- ------------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Kim A. Mayyasi 250,000 18.27 3.34 7/1/09 525,127 1,330,774
Glenn D. Bolduc 0 0 0 0 0
Michael E. Savage 100,000 7.31 3.56 11/11/09 224,075 567,850
Robert F. Moore 105,000 7.67 4.03 4/5/09 266,116 674,392
</TABLE>
The exercise price of these options is the fair market value on the
date of grant as determined under the Company's stock plans.
If a named executive officer ceases to be employed by the Company,
further vesting of the named executive officer's options ceases and all vested
options expire 90 days after the date the named executive officer ceases to be
employed by the Company.
Fiscal Year-End Option Values. The following table provides information
regarding the value of all unexercised options held by the named executive
officers at the end of 1999. The value of unexercised in-the-money options
represents the difference between the fair market value of our common stock on
December 31, 1999 and the option exercise price, multiplied by the number of
shares underlying the option. The closing sales price of the Company's common
stock on December 31, 1999 was $3.125.
<TABLE>
<CAPTION>
1999 Aggregated Option Exercises
and Fiscal Year-End Option Values
Number of Shares of Common
Stock Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired on Value Fiscal Year-End (#) Fiscal Year-End ($)
------------------------------------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---------- --------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kim A. Mayyasi 0 0 41,670 208,330 0 0
Glenn D. Bolduc 235,000 657,075 0 0 0 0
Michael E. Savage 0 0 0 0 0 0
Robert F. Moore 0 0 62,419 137,581 31,500 32,816
</TABLE>
Employment Agreement and Change-of-Control Provisions
Mr. Mayyasi's employment offer letter provides for an annual base
salary of $350,000 and an annual bonus of up to $100,000. If the Company
terminates Mr. Mayyasi's employment without cause, we will pay Mr. Mayyasi or
his estate his base salary and health insurance benefits for six months.
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Mr. Savage's employment agreement provides for an annual base salary of
$195,000, a signing bonus of $35,000, and an annual bonus of up to 50% of his
annual base salary. We may terminate his employment immediately with or without
cause. Mr. Savage may terminate his employment agreement with 30 days prior
written notice. If the Company terminates Mr. Savage's employment without cause,
or in the event of Mr. Savage's death or his termination of his employment under
certain circumstances set forth in the contract, we will pay Mr. Savage or his
estate his base salary and health insurance benefits for six months.
Mr. Moore's annual compensation is currently $230,000. Either party may
terminate his employment without cause with 30 days prior written notice. If the
Company terminates Mr. Moore's employment other than for cause, disability or
death, we will pay Mr. Moore his base compensation and employee benefits for
twelve months subject to adjustment if he finds new employment during the
severance period. Mr. Moore is entitled to a $500 monthly automobile allowance.
All unvested options held by Messrs. Mayyasi, Savage and Moore will
vest and become immediately exercisable upon the occurrence of any of the
following events:
o Our merger into or consolidation with another company,
o The sale of substantially all of our assets to another company,
or
o The sale of more than 50% of our outstanding capital stock to an
unrelated person or group.
Mr. Bolduc resigned as the Company's President and Chief Executive
Officer on June 30, 1999. Under the terms of Mr. Bolduc's severance agreement,
we will continue to pay Mr. Bolduc his base salary and a $1,000 monthly car
allowance for eighteen months beginning June 30, 1999. The Company also
accelerated the vesting of two of Mr. Bolduc's stock options.
Director Compensation
Directors who are also employees of the Company or one of its
subsidiaries do not receive additional cash compensation for serving as
directors. Each newly-elected director is granted an option to purchase 20,000
shares of common stock upon the director's election. Following each annual
meeting of stockholders, each non-employee director then in office is granted an
option to purchase 5,000 shares of common stock. Each non-employee director
receives a $10,000 annual retainer payable quarterly in arrears. Additionally,
each non-employee director receives $1,000 for attendance at each Board of
Directors meeting and $500 for each committee meeting (unless held on the same
day as a Board of Directors meeting). Directors are also reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or committees thereof or otherwise incurred in their capacity as Directors.
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Compensation Committee Interlocks and Insider Participation
From January 1999 and June 1999, the compensation committee consisted
of Mr. Bolduc, Ms. Jacobson and Mr. Lougee. In June 1999, Mr. Mayyasi replaced
Mr. Bolduc on the compensation committee. In July 1999, Mr. Hamermesh replaced
Ms. Jacobson on the compensation committee. Mr. Lougee also serves as one of our
directors and is Managing Partner of Mirick, O'Connell, DeMallie & Lougee, LLP,
the Company's legal counsel. None of the Company's executive officers or
directors serves as a member of the board of directors or compensation committee
of any other entity that has an executive officer serving as a member of the
Company's board of directors or compensation committee.
Board Compensation Committee Report on Executive Compensation
Overall Policy
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to stockholders by tying a
significant portion of executive compensation to the Company's success. The
overall objectives of this strategy are to provide competitive salaries
necessary to attract and retain the highest quality talent, to reward
performances that accomplish Company goals and priorities, and to provide
incentives that link the executive officers' opportunities for financial reward
with that of the stockholders.
The compensation committee is responsible for setting and administering
the policies that govern the compensation of the Company's executive officers.
Generally, the three principal components of the compensation program for
executive officers are base salary, bonus and equity-based incentives (typically
stock options), although awards are not necessarily granted in all three
categories every year. In reaching decisions on compensation, the compensation
committee also takes into account the full compensation package provided by the
Company to the officers, including severance plans, insurance, and benefits
generally available to all employees of the Company.
This report addresses the Company's compensation policies as they
relate to compensation reported for 1999.
Salary Administration
The ranges of appropriate base salaries for executives are determined
based in part on analysis of salary data on positions of comparable
responsibility within the teleconferencing industry. Specifically, the
compensation committee has reviewed and considered the salary data contained in
the American Electronics Association Executive Compensation Survey. Salaries of
executive officers are reviewed periodically, and any adjustments are made by
evaluating the performance of the Company and of each executive officer and
taking into account any change in the executive's responsibilities. Exceptional
performances are generally compensated with performance-related bonuses and
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stock options rather than raising base salaries, reflecting the compensation
committee's increasing emphasis on tying pay to performance criteria.
Bonus Program
Executives are eligible to receive bonuses based on the overall
performance of the Company and based on individual achievement. Bonuses are
awarded based upon the recommendation of the Chief Executive Officer and the
compensation committee's evaluation of the executive officer's achievement of
his or her goals.
Stock Option Program
Under the Company's 1996 and 1999 Stock Plans, the Company may grant
stock options and stock appreciation rights to any or all of the Company's
directors, employees, officers, and consultants. The compensation committee
believes that long-term incentive awards, such as stock options, link the
executive's opportunity for financial reward with that of the stockholders, in
that the value of an executive's stock options increases as the value of the
stockholders' shares increases. The compensation committee or board of directors
grants options to executive officers in order to continue to incentivize the
officers towards the achievement of the Company's long term goals.
Compensation of the Chief Executive Officer
Mr. Bolduc resigned as the Company's Chief Executive Officer and
President on June 30, 1999. Prior to his resignation, Mr. Bolduc's base
compensation was paid pursuant to an employment contract negotiated with the
Company in 1996, as amended in May of 1997. In 1998, the compensation committee
elected to increase Mr. Bolduc's base compensation by approximately six percent,
consistent with the percentage increase given to a majority of the employees of
the Company, and reflecting the compensation committee's goal to reward
performance mainly through a bonus award. In 1999, the board of directors
elected to grant Mr. Bolduc a bonus of $50,000 in recognition of Mr. Bolduc's
role in the Company's successful February 1999 acquisition of three additional
conferencing companies. Mr. Bolduc was not granted stock options or other stock
awards in 1999.
In accordance with the terms of the Severance Agreement dated June 8,
1999 between the Company and Mr. Bolduc, the Company paid Mr. Bolduc an
aggregate of $149,153 in severance-related compensation in 1999.
Mr. Mayyasi became the Company's Chief Executive Officer and President
in July 1999. Mr. Mayyasi's 1999 base compensation and stock option grant to
purchase 250,000 shares of the Company's common stock were based on the
employment arrangement negotiated by the Company and Mr. Mayyasi prior to the
commencement of his employment. Mr. Mayyasi was not awarded a bonus in 1999 but
will be entitled to a bonus based on his performance during the one year period
beginning July 1999 not to exceed $100,000 and as determined by the compensation
committee.
13
<PAGE>
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Kim A. Mayyasi
Richard A. Hamermesh
David L. Lougee
Stock Performance Chart
The following chart compares the yearly stock market percentage change
in the cumulative total stockholder return on the Company's common stock with
the cumulative total return on the American Stock Exchange Market Index and the
SIC Code Index for the SIC group code applicable to the Company (SIC group code
4813 -Telephone Communications Except Radiotelephone Communications). Since
public trading of the Company's common stock did not commence until February 8,
1999, the chart assumes $100 was invested on February 8, 1999 in the Company's
common stock and in each of the indices described above. The chart also assumes
reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG VIALOG CORPORATION
AMEX MARKET INDEX AND SIC CODE INDEX
[GRAPHIC - GRAPH PLOTTED POINTS LISTED BELOW]
Dates Vialog Corporation SIC Code Index Amex Market Index
----- ------------------ -------------- -----------------
2/8/99 100.00 100.00 100.00
3/31/99 78.49 99.16 101.05
6/30/99 65.12 114.09 113.01
9/30/99 67.44 104.53 113.40
12/31/99 58.14 140.19 128.83
14
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Due to an administrative error, the Company's November 11, 1999 grant
to Robert F. Saur of a stock option to purchaser 50,000 shares of common stock
was not reported on a Form 3 until February 10, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG LLP, independent certified public accountants, served
as auditors for the fiscal year ended December 31, 1999. The board of directors
anticipates formally selecting KPMG LLP as auditors of the Company for the
fiscal year ending December 31, 2000 shortly after the annual meeting of
stockholders. A representative of KPMG LLP is expected to be present at the
annual meeting, will have the opportunity to make a statement if the
representative desires to do so, and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for action to be
included in the proxy statement and form of proxy relating to the Company's 2001
annual meeting of stockholders is required to submit such proposal to the Clerk
of the Company on or before February 1, 2001. If any written proposals are
submitted prior to June 30, 2000, they should be sent to:
Vialog Corporation
35 New England Business Center
Suite 160
Andover, MA 01810
Attention: Clerk
All written proposals submitted after June 30, 2000 should be sent to
the Company's new corporate offices at the following address:
Vialog Corporation
32 Crosby Drive
Bedford, MA 01730
Attention: Clerk
Any shareholder that intends to present a proposal that will not be
included in the proxy statement for the Company's 2001 annual meeting must
submit such proposal to the Clerk of the Company at Vialog Corporation, 32
Crosby Drive, Bedford, Massachusetts 01730 on or before April 17, 2001.
Proposals submitted after that date will be considered untimely.
15
<PAGE>
OTHER MATTERS
The board of directors knows of no other matters that will be presented
for consideration at the annual meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
June 1, 2000
By order of the Board of Directors
David L. Lougee, Clerk
16
<PAGE>
PROXY
VIALOG CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
JUNE 29, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael E. Savage and Richard E. Hamermesh
and each of them, with full power of substitution, to act as attorneys and
proxies for the undersigned to vote all shares of common stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
(the "Meeting"), to be held on Thursday, June 29, 2000 at the Renaissance
Bedford Hotel, located at 44 Middlesex Turnpike, Bedford, Massachusetts, at
10:00 a.m. local time, and at any and all adjournments thereof, as follows on
the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL STATED. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------
<PAGE>
[ X ] Please mark votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
1. The election of the following directors for the terms specified:
Nominees: (01) Kim A. Mayyasi (3-year term),
(02) David L. Lougee (3-year term)
FOR WITHHELD
[ ] [ ] MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE BELOW
EXCEPT
[ ]
---------------------------------------------------------------
INSTRUCTION: To withhold authority to vote for any individual nominee,
Mark `Except" and write that nominee's name in the space provided above.
Signature: Date:
--------------------------------- ------------------------------
<PAGE>
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting and any adjournment
thereof.
This proxy may be revoked at any time before it is voted by (i) filing with
the Clerk of the Company at or before the Meeting a written notice of
revocation bearing a later date than the proxy or (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Clerk
of the Company at or before the Meeting. If this proxy is properly revoked
as described above, then the power of such attorneys and proxies shall be
deemed terminated and of no further force and effect.
By signing below you acknowledge receipt from the Company prior to the
execution of this Proxy, or a Notice of the Annual Meeting, a Proxy
Statement and the Company's Annual Report to Stockholders for the fiscal
year ended December 31,1999.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. Please sign exactly as your name appears hereon.
When signing as attorney, executor, administrator, trustee or guardian,
please give your full title.
Signature: Date:
--------------------------------- ------------------------------
