<PAGE>
SCHEDULE 14A
(Rule 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 (S) 240.14a-11(c) or (S) 240.14a-12
CARRIER ACCESS CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee
(Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------
(2) Aggregate number of securities to which transaction applies:
----------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------
(4) Proposed maximum aggregate value of transaction:
----------------------
(5) Total fee paid:
-------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------
(3) Filing Party:
---------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------
<PAGE>
CARRIER ACCESS CORPORATION
5395 PEARL PARKWAY
BOULDER, COLORADO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
----------------
To the Stockholders of Carrier Access Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Carrier Access Corporation, a Delaware corporation (the
"Company"), will be held on May 27, 1999 at 11:00 a.m., M.D.T., at The Golden
Hotel, 800 11th Street, Golden, Colorado 80401, for the following purposes:
1. To elect directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified.
2. To ratify the appointment by the Board of Directors of KPMG LLP as
independent auditors of the Company for the fiscal year ending December
31, 1999.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice of Annual Meeting.
Only holders of record of the Company's common stock at the close of
business on May 3, 1999, the record date, are entitled to vote on the matters
listed in this Notice of Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
By Order Of The Board Of Directors
of Carrier Access Corporation
/s/ Nancy Pierce
Nancy Pierce
Secretary
Boulder, Colorado
May 5, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED ENVELOPE.
<PAGE>
CARRIER ACCESS CORPORATION
----------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
----------------
This Proxy Statement is being furnished to the holders of common stock, par
value $.001 per share (the "Common Stock"), of Carrier Access Corporation, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of the Company's Stockholders (the "Annual Meeting") to be held on May 27, 1999
at 11:00 a.m., M.D.T., and at any adjournment or postponement thereof, for the
purpose of considering and acting upon the matters set forth herein and in the
accompanying Notice of Annual Meeting. The Annual Meeting will be held at The
Golden Hotel, 800 11th Street, Golden, Colorado 80401. The telephone number at
The Golden Hotel is (303) 279-9353. The Company's headquarters are located at
5395 Pearl Parkway, Boulder, Colorado 80301, and the telephone number at that
location is (303) 442-5455.
This Proxy Statement and the accompanying form of proxy are first being
mailed on or about May 5, 1999, together with the Company's 1998 Annual Report
to Stockholders, to all holders of Common Stock entitled to vote at the Annual
Meeting.
VOTING AT THE ANNUAL MEETING; RECORD DATE
Only holders of record of the Company's Common Stock at the close of
business on May 3, 1999 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. Such stockholders are entitled to cast one vote for
each share of Common Stock held as of the Record Date on all matters properly
submitted for the vote of stockholders at the Annual Meeting. As of the Record
Date, there were 23,856,954 shares of the Company's Common Stock outstanding
and entitled to be voted at the Annual Meeting. No shares of Preferred Stock
were outstanding. For information regarding security ownership by management
and by the beneficial owners of more than 5% of the Company's Common Stock, see
"Share Ownership by Principal Stockholders and Management."
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by and on behalf of the Board.
The persons named in the proxy have been designated as proxies for the Board.
Any proxy given pursuant to such solicitation and received in time for the
Meeting will be voted as specified in such proxy. If no instructions are given,
proxies will be voted "FOR" the election of the nominees listed below under
Proposal One, "FOR" the ratification of the appointment of KPMG LLP under
Proposal Two and, in the discretion of the proxies named on the proxy card,
with respect to any other matters properly brought before the meeting and any
adjournments thereof. In the event that any other matters are properly
presented at the Meeting for action, the persons named in the proxy will vote
the proxies in accordance with their best judgement. Any proxy given pursuant
to this solicitation may be revoked by the stockholder at any time before it is
exercised by written notification delivered to the Secretary of the Company, by
voting in person at the Meeting, or by delivering another proxy bearing a later
date. Attendance by stockholder at the Meeting does not alone serve to revoke
his or her proxy.
<PAGE>
Quorum; Required Vote; Abstentions and Non-Votes
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to be voted generally at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. The affirmative vote of a majority
of the votes duly cast is required for the election of directors and to ratify
the appointment of auditors. Stockholders do not have the right to cumulate
their votes in the election of directors.
Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of shares
is present at a meeting; however, such votes are not deemed to be "votes cast."
As a result, abstentions and broker "non-votes" are not included in the
tabulation of the voting results on the election of directors or issues
requiring approval of a majority of the votes cast and, therefore, do not have
the effect of votes in opposition in such tabulations. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner.
Proxies
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the Board of
Directors. If any other matters are properly presented for consideration at the
Annual Meeting, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place (including, without
limitation, for the purpose of soliciting additional proxies), the persons
named in the enclosed proxy and acting thereunder will have discretion to vote
on those matters in accordance with their best judgment. The Company does not
currently anticipate that any other matters will be raised at the Annual
Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked (i) by filing
with the Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares or
(ii) by attending the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not of itself revoke a proxy). Any written notice of
revocation or subsequent proxy must be received by the Secretary of the Company
prior to the taking of the vote at the Annual Meeting. Such written notice of
revocation or subsequent proxy should be hand delivered to the Secretary of the
Company or should be sent so as to be delivered to Carrier Access Corporation,
5395 Pearl Parkway, Boulder, Colorado 80301, Attention: Secretary.
Expenses of Solicitation
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. The Company may
reimburse brokerage firms, custodians, nominees, fiduciaries and other persons
representing beneficial owners of Common Stock for their reasonable expenses in
forwarding solicitation material to such beneficial owners. Directors, officers
and employees of the Company may also solicit proxies in person or by
telephone, telegram, letter, facsimile or other means of communication. Such
directors, officers and employees will not be additionally compensated, but
they may be reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation.
Procedure for Submitting Stockholder Proposals
Stockholders may present proper proposals for inclusion in the Company's
proxy statement and for consideration at the next annual meeting of its
stockholders by submitting their proposals in writing to the Secretary of the
Company in a timely manner. In order to be included in the Company's proxy
materials for the 2000 annual meeting of stockholders, stockholder proposals
must be received by the Secretary of the Company
2
<PAGE>
no later than January 6, 2000, and must otherwise comply with the requirements
of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of six directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's six nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the next annual meeting of
stockholders or until a successor has been elected and qualified.
Roger L. Koenig. (Age 45) Mr. Koenig has served as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its inception in September 1992. Prior to co-founding the Company, Mr. Koenig
served as the President and Chief Executive Officer of Koenig Communications,
an equipment systems integration and consulting firm. Prior to founding Koenig
Communications, Mr. Koenig held a number of positions with IBM/ROLM Europe, a
telecommunications equipment manufacturer, including Engineering Section
Manager for Europe. Mr. Koenig received a B.S. in Electrical Engineering from
Michigan State University and an M.S. in Engineering Management from Stanford
University.
Nancy Pierce. (Age 41) Ms. Pierce has served as Vice President-Finance and
Administration, Chief Financial Officer, Treasurer, Secretary and Director of
the Company since its inception in September 1992. Prior to co-founding the
Company, Ms. Pierce served as the Controller of Koenig Communications, an
equipment systems integration and consulting firm. Prior to joining Koenig
Communications, Ms. Pierce was a systems analyst at IBM Corporation and an
internal auditor at ROLM Corporation. Ms. Pierce received a B.S. in
Communication Disorders from Colorado State University and an M.B.A. from
California State University, Chico.
John Barnett (Age 58) Mr. Barnett has served as a Director of the Company
since December 1998. Mr. Barnett is currently President of the Wholesale
Services division of MCI WorldCom, Inc. (February 1997-Present) and was
President of WorldCom International from June 1996 through February 1997. From
January 1995 until June 1996, Mr. Barnett served as Senior Vice President of
Sales and Marketing of Williams Communications Company. From July 1993 until
January 1995, Mr. Barnett served as President of WilTel International, a
division of WilTel Network Services. WilTel Network Services is a predecessor
of WorldCom, Inc. Mr. Barnett has also served as a Director of America's
Carriers Telecommunication Association (ACTA), the Multimedia
Telecommunications Association as well as several privately held corporations.
Mr. Barnett received a B.A. in Political Science from Tulane University.
Douglas Carlisle. (Age 42) Mr. Carlisle has served as a Director of the
Company since September 1997. Mr. Carlisle has been a General Partner of Menlo
Ventures since September 1984. Mr. Carlisle has served as a director of
numerous public and private companies over the past 15 years. Mr. Carlisle
received a B.S.E.E. in Electrical Engineering from the University of
California, Berkeley and a J.D. and an M.B.A. from Stanford University.
Joseph Graziano. (Age 54) Mr. Graziano has served as a Director of the
Company since July 1996. Mr. Graziano served as Executive Vice President, Chief
Financial Officer of Apple Computer, Inc. during the period from June 1989
through December 1995. Mr. Graziano also served as a Director at Apple Computer
from June 1993 through October 1995. Mr. Graziano also serves as a Director of
IntelliCorp., Inc., an
3
<PAGE>
enterprise software company, Pixar Animation Studios and CIDCO, a developer of
advanced telephony products, and several private companies in the software and
telecommunications industries. Mr. Graziano received a B.S.B.A. in Business
Administration from Merrimack College. Mr. Graziano is also a Certified Public
Accountant.
Ryal Poppa. (Age 65) Mr. Poppa has served as a Director of the Company since
May 1996. Mr. Poppa has been a private investor since June 1996. Mr. Poppa was
the Chairman of the Board of Directors, President and Chief Executive Officer
of Storage Technology Corporation, a data storage company, from January 1985 to
May 1996. Mr. Poppa also currently serves as a Director of Metrocall, a paging
company, and Redcape Policy Software, Inc., an enterprise software company. Mr.
Poppa received a B.A. in Business Administration from Claremont McKenna
College.
Board Meetings and Committees
During 1998, the Board of Directors held seven meetings (including regularly
scheduled and special meetings), and no incumbent directors attended fewer than
75% of the total number of meetings of the Board of Directors and the
committees, if any, of which he or she was a member. Certain matters approved
by the Board of Directors were approved by unanimous written consent.
The Board of Directors currently has two standing committees: an Audit
Committee and a Compensation Committee. The Company has no nominating committee
or committee performing a similar function. The Audit Committee and the
Compensation Committee currently consist of Messrs. Graziano and Poppa.
Audit Committee. The Audit Committee reviews and supervises the Company's
financial controls, including selecting the Company's auditors, reviewing the
books and accounts of the Company, meeting with the officers of the Company
regarding the Company's financial controls, acting upon recommendations of
auditors and taking such further action as the Audit Committee deems necessary
to complete an audit of the books and accounts of the Company, as well as other
matters which may come before it or as directed by the Board of Directors.
Compensation Committee. The Compensation Committee reviews and approves the
compensation and benefits for the Company's executive officers, administers the
Company's stock plans and performs such other duties as may from time to time
be determined by the Board of Directors.
Director Compensation
The Company currently does not compensate any member of the Company's Board
of Directors and does not intend to pay cash compensation to non-employee
directors. However, members of the Board of Directors are eligible to receive
discretionary option grants and stock issuances under the 1998 Stock Incentive
Plan (the "1998 Plan"). In addition, non-employee directors each receive an
initial 15,000-share automatic option grant upon becoming a director. Each
initial 15,000-share option grant vests in four successive equal annual
installments upon the individual's completion of each year of service on the
Board of Directors over the four year period measured from the option grant
date. Each director also receives a 3,500-share option grant on the date of
each annual meeting of stockholders pursuant to the 1998 Plan. The 3,500-share
option grant vests upon the individual's completion of one year of Board
service measured from the option grant date. All such option grants are granted
at the fair market value on the date of grant. The 1998 Plan also permits the
plan administrator to activate a director fee option grant program.
4
<PAGE>
Security Ownership Of Certain Beneficial Owners and Management
The following table sets forth information concerning the beneficial
ownership of Common Stock of the Company as of April 28, 1999 for the
following: (1) each person or entity who is known by the Company to own
beneficially more than 5% of the outstanding shares of the Company's Common
Stock; (2) each of the Company's current directors; (3) each of the officers
named in the Summary Compensation Table below; and (4) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Beneficial Number of Shares Percentage of Shares
Owner (1) Beneficially Owned(2) Beneficially Owned(2)
- ------------------------------ -------------------- --------------------
<S> <C> <C>
Entities affiliated with Menlo 1,570,641 6.6%
Ventures (3).....................
3000 Sand Hill Road, Building 4,
Suite 100
Menlo Park, CA 94025
Roger L. Koenig (4)............... 13,921,116 58.5
Nancy Pierce (5).................. 13,921,116 58.5
KELD, LLC (6)..................... 10,500,000 44.1
Shrichand B. Dodani (7)........... 213,724 *
J. Randy Shipley (8).............. 202,000 *
John W. Stahura (9)............... 102,500 *
John Barnett, Jr. (10)............ 37,300 *
Douglas Carlisle (3).............. 1,570,641 6.6
Joseph Graziano (11).............. 187,540 *
Ryal Poppa (12)................... 223,924 *
All directors and executive
officers as a group (13)......... 16,458,745 67.8
</TABLE>
- --------
*Less than 1%
(1) Except as otherwise noted, the address of each person listed on the table
is c/o Carrier Access Corporation, 5395 Pearl Parkway, Boulder, Colorado
80301.
(2) Number and percentage of shares beneficially owned is based on 23,845,279
shares outstanding as of April 28, 1999. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to options currently exercisable or
exercisable within 60 days of April 28, 1999 are deemed to be outstanding
and to be beneficially owned by the person holding such options for the
purpose of computing the number of shares beneficially owned and the
percentage of such person or entity holding such securities but are not
outstanding for the purpose of computing the percentage of any other person
or entity. Except as indicated by footnotes to the table, and subject to
the applicable community property laws, based on information provided by
the persons shown in the table, such persons have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(3) Represents 1,503,006 shares held of record by Menlo Ventures VII, L.P. and
67,635 shares held of record by Menlo Entrepreneurs Fund VII, L.P.
(collectively, the "Menlo Partnerships"). Mr. Carlisle, a director of the
Company, is a managing member of MV Management VII, LLC, the General
Partner of each of the Menlo Partnerships, and has shared voting and
investment power with respect to the shares held by the Menlo Partnerships.
However, Mr. Carlisle disclaims beneficial ownership of all such shares,
except to the extent of his pecuniary interest therein as a result of his
indirect general partnership interest in each of the Menlo Partnerships.
(4) Represents 1,711,558 shares held by Mr. Koenig, 1,709,558 shares held by
Ms. Pierce and 10,500,000 shares held by KELD, LLC. Mr. Koenig is a
managing member of KELD, LLC and has shared voting and investment power
over the shares held by KELD, LLC.
(5) Represents 1,709,558 shares held by Ms. Pierce, 1,711,558 shares held by
Mr. Koenig and 10,500,000 shares held by KELD, LLC. Ms. Pierce is a
managing member of KELD, LLC. Ms. Pierce is a managing
5
<PAGE>
member of KELD, LLC and has shared voting and investment power over the
shares held by KELD, LLC.
(6) Mr. Koenig and Ms. Pierce are managing members of KELD, LLC and have
shared voting and investment power over the shares held by KELD, LLC.
(7) Includes 131,250 shares of common stock issuable upon exercise of
immediately exercisable options, all of which are subject to the Company's
right of repurchase.
(8) Includes 200,000 shares of common stock issuable upon exercise of
immediately exercisable options, 162,500 of which are subject to the
Company's right of repurchase.
(9) Includes 102,500 shares of common stock issuable upon exercise of
immediately exercisable options, 93,750 of which are subject to the
Company's right of repurchase.
(10) Includes 30,000 shares of common stock issuable upon exercise of
immediately exercisable option, all of which are subject to the Company's
right of repurchase.
(11) Includes 75,000 shares of common stock issuable upon exercise of
immediately exercisable options, 37,500 of which are subject to the
Company's right of repurchase.
(12) Includes 75,000 shares of common stock issuable upon exercise of
immediately exercisable options, 37,500 of which are subject to the
Company's right of repurchase.
(13) Includes 463,750 shares of common stock issuable upon exercise of
immediately exercisable options, 417,500 of which are subject to the
Company's right of repurchase. Also includes 75,000 shares issued
pursuant to early option exercises which are subject to the Company's
right of repurchase.
Executive Compensation
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four most
highly compensated executive officers during the last fiscal year (the "Named
Officers") for services rendered to the Company in all capacities during the
Company's last two fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------------
Annual
Compensation Awards
------------------ --------------------
Number of Securities
Name and Principal Position Year Salary($) Bonus($) Underlying Options
--------------------------- ---- --------- -------- --------------------
<S> <C> <C> <C> <C>
Roger L. Koenig 1998 163,462 50,000 --
President, Chief Executive
Officer and Chairman of 1997 143,269 -- --
the Board of Directors......... 1996 -- -- --
Nancy Pierce 1998 113,461 35,000 --
Vice President, Finance and
Administration, Chief 1997 94,615 -- --
Financial Officer, Treasurer
and Secretary.................. 1996 -- -- --
1998 135,000 76,998 37,500
Shrichand B. Dodani 1997 43,538 -- 187,500
Vice President, Engineering..... 1996 -- -- --
1998 93,462 119,449 175,000
J. Randy Shipley 1997 -- -- --
Vice President, Sales........... 1996 -- -- --
1998 93,981 22,500 112,500
John Stahura 1997 -- -- --
Vice President, Operations...... 1996 -- -- --
</TABLE>
- --------
6
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth, as to the Named Officers, information
concerning stock options granted during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term($)(4)
----------------------------------------------- -----------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise
Granted Fiscal Price Per Date of
Name (#)(1) Year(%)(2) Share($)(3) Expiration 5% 10%
---- ---------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Roger L. Koenig......... -- -- -- -- -- --
Nancy Pierce............ -- -- -- -- -- --
Shrichand B. Dodani..... 37,000 2.6% $ 11.00 6/30/2003 115,500 251,625
J. Randy Shipley........ 150,000 10.6% $ 4.00 4/13/2003 168,000 366,000
25,000 1.8% $16.875 10/2/2003 118,125 257,344
John Stahura............ 112,500 8.0% $ 4.00 4/6/2003 141,120 274,500
</TABLE>
- --------
(1) The options in this table are nonstatutory stock options, except as
otherwise provided, granted under the 1998 Stock Incentive Plan and have
exercise prices equal to the fair market value on the date of grant.
Certain options have five-year terms and vest over a period of 48 months at
a rate of 25% on the first anniversary date from the dated grant and a rate
of 6.25% per quarter thereafter until fully vested and certain options
cliff vest based on performance milestones.
(2) The Company granted options to purchase 1,411,650 shares of Common Stock
to employees in fiscal 1998.
(3) The options in this table may terminate before their expiration upon the
termination of optionee's status as an employee or consultant or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or "option spread" that would exist for the
options in this table based on assumed stock price appreciation from the
date of grant until the end of such options' five-year term at assumed
annual rates of 5% and 10%. The 5% and 10% assumed annual rates of
appreciation are specified in SEC rules and do not represent the Company's
estimate or projection of future stock price growth. The Company does not
necessary agree that this method can properly determine the value of an
option.
Option Exercises and Holdings
The following table sets forth, as to the Named Officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of December 31, 1998. Also reported are values
for "in-the-money" options that represent the positive spread between the
respective exercise prices of outstanding stock options and the fair market
value of the Company's Common Stock as of December 31, 1998.
7
<PAGE>
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at Fiscal Year End
(#)
----------------------------
Value of Unexercised
in-the-Money Options at
Name Exercisable(1) Unexercisable Fiscal Year End($)(2)
---- -------------- ------------- -----------------------
<S> <C> <C> <C>
Roger L. Koenig............ -- -- --
Nancy Pierce............... -- -- --
Shrichand B. Dodani........ 187,500 -- 6,457,500
J. Randy Shipley........... 175,000 -- 6,027,000
John Stahura............... 112,500 -- 3,874,500
</TABLE>
- --------
(1) Market value of underlying securities based on the closing price of
Company's Common Stock on December 31, 1998 (the last trading day of fiscal
1998) on the Nasdaq National Market of $34.44 minus the exercise price.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is currently comprised of two non-employee directors. The
Compensation Committee is responsible for establishing the policies and
programs which determine the compensation of the Company's officers. The
Compensation Committee sets base cash compensation and bonus compensation on an
annual basis for the Chief Executive Officer and other executive officers of
the Company. In addition, the Compensation Committee has exclusive authority to
grant stock options to executive officers. The Compensation Committee considers
both internal data, including corporate goals and individual performance, as
well as external data from outside compensation consultants and independent
executive compensation data from comparable high technology companies, in
determining officers' compensation.
Compensation Philosophy
When creating policies and making decisions concerning executive
compensation, the Compensation Committee:
. Establishes pay opportunities that are competitive based on prevailing
practices for the industry, the stage of growth of the Company, and the
labor markets in which the Company operates,
. Independently assesses operating results on a regular basis in light of
expected Company performance, and
. Aligns pay incentives with the long-term interests of the Company's
stockholders.
Compensation Program
The Company's executive compensation program has three major components, all
of which are intended to attract, retain and motivate highly effective
executives:
1. Base salary for executive officers is set annually by reviewing the
competitive pay practices of comparable high technology companies. Local and
national data are examined and taken into account, along with the skills and
performance of the individual and the needs of the Company.
2. Cash incentive compensation is designed to motivate executives to
attain short-term and longer-term corporate, business unit and individual
management goals. The actual annual cash bonuses received by an executive
depend upon attainment of these specified business goals. The formula for
incentive bonuses for fiscal year 1998 was based on the achievement of certain
revenue growth and operating margin targets, together with the attainment of
corporate goals and new product delivery dates. It is the intention of the
Compensation Committee in fiscal year 2000 to continue this linkage between the
achievement of specific financial targets and
8
<PAGE>
corporate goals, and the payment of incentive cash compensation, for officers
and other executives in the Company.
3. Equity-based incentive compensation has been provided to employees and
management through the Company's stock incentive plans. Under these plans,
officers, employees and certain consultants to the Company are eligible to be
granted stock options based on competitive market data, as well as their
responsibilities and position in the Company. These options allow participants
to purchase shares of the Company's Common Stock at the market price on the
date of the grant, subject to vesting during the participant's employment with
the Company. The purpose of this stock plan is to instill the economic
incentives of ownership and to create management incentives to improve
stockholder value. The Company's stock option plan utilizes vesting periods to
encourage employees and executives to remain with the Company and to focus on
longer-term results.
Chief Executive Officer Compensation
In determining Mr Koenig's compensation for the fiscal year ended December
31, 1998, the Compensation Committee reviewed industry surveys of compensation
paid to chief executive officers of comparable companies, with a focus on those
companies located in the Denver Area, and evaluated achievement of corporate
individual objectives for the fiscal year. After careful evaluation of
comparible positions and assesment of the difficulty in replacing a chief
executive officer in today's market, the Compensation Committee raised Mr.
Koenig's base salary to more adequately reflect industry standards. Like other
executive officers, Mr.Koenig was eligible to receive an incentive bonus
determined on the basis of (i) the Company's revenue growth and operating
margin and (ii) the achievement of specific corporate goals. Mr. Koenig
received a bonus of $50,000 for fiscal year 1998. We believe it is critical to
the Company's long-term success to continue to tie the Chief Executive
Officer's incentive to the Company's performance and to align individual
financial interests more closely with those of stockholders.
Other Executive Compensation
The Company provides certain compensation programs to executives that are
also available to other Company employees, including pre-tax savings plans and
medical/dental/vision benefits. There are no pension programs except where
prescribed by law in countries other than the United States. The Company
generally does not provide executive perquisites such as club memberships.
Deductibility of Executive Compensation
Beginning in 1994, the Internal Revenue Code of 1986, as amended (the
"Code") limited the federal income tax deductibility of compensation paid to
the Company's chief executive and to each of the other four most highly
compensated executive officers. For this purpose, compensation can include, in
addition to cash compensation, the difference between the exercise price of
stock options and the value of the underlying stock on the date of exercise.
The Company may deduct compensation with respect to any of these individuals
only to the extent that during any fiscal year such compensation does not
exceed $1 million or meets certain other conditions (such as stockholder
approval). Considering the Company's current compensation plans and policy, the
Company and the Compensation Committee believe that, for the near future, there
is little risk that the Company will lose any significant tax deduction
relating to executive compensation. If the deductibility of executive
compensation becomes a significant issue, the Company's compensation plans and
policy will be modified to maximize deductibility if the Company and the
Compensation Committee determine that such action is in the best interests of
the Company.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Ryal Poppa
Joseph Graziano
9
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
executive officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities ("10% Stockholders"), to
file reports of ownership on a Form 3 and changes in ownership on a Form 4 or a
Form 5 with the SEC. Such executive officers, directors and 10% Stockholders
are also required by SEC rules to furnish the Company with copies of all
Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no
Forms 5 were required for such persons, the Company believes that, during 1996,
its executive officers, directors and 10% Stockholders complied with all
applicable Section 16(a) filing requirements.
Compensation Committee Interlocks And Insider Participation
The Company's Compensation Committee is currently composed of Messrs.
Graziano and Poppa. No interlocking relationship exists between any member of
the Company's Compensation Committee and any member of the compensation
committee of any other company, nor has any such interlocking relationship
existed in the past. No member of the Compensation Committee is or was formerly
an officer or an employee of the Company.
10
<PAGE>
Company Stock Price Performance
The following graph compares the cumulative total return to stockholders on
the Company's Common Stock with the cumulative total return of the S&P 500
Index and the Nasdaq Telecom Index. The graph assumes that $100 was invested on
August 1, 1998 in the Company's Common Stock, the S&P 500 Index and the Nasdaq
Telecom Index, including reinvestment of dividends. No dividends have been
declared or paid on the Company's Common Stock. Note that historic stock price
performance is not necessarily indicative of future stock price performance.
[TOTAL RETURN TO STOCKHOLDERS PERFORMANCE GRAPH APPEARS HERE]
Total Return Analysis
<TABLE>
<CAPTION>
7/31/98 12/31/98
<S> <C> <C>
Carrier Access Corporation................................... $100.00 $286.98
Nasdaq Telecommunications Index.............................. $100.00 $116.92
S&P 500...................................................... $100.00 $110.41
</TABLE>
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
Bloomberg Financial Markets.
11
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP as independent auditors of the
Company to audit the consolidated financial statements of the Company for the
year ending December 31, 1999, and has determined that it would be desirable to
request that the stockholders ratify such appointment.
KPMG LLP has audited the Company's financial statements since 1994. A
representative of KPMG LLP is expected to be present at the Annual Meeting with
the opportunity to make a statement if he desires to do so, and is expected to
be available to respond to appropriate questions.
Required Vote
Although stockholder approval is not required for the appointment of KPMG
LLP since the Board of Directors has the responsibility for selecting auditors,
the Board of Directors has conditioned its appointment of the Company's
independent auditors upon the receipt of the affirmative vote of a majority of
the votes duly cast at the Annual Meeting. In the event that the stockholders
do not approve the selection of KPMG LLP, the Board of Directors will
reconsider its selection.
The Board of Directors recommends a vote "FOR" this proposal.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at
the Annual Meeting. If any additional matters are properly presented at the
Meeting, the persons named in the enclosed proxy will have discretion to vote
shares they represent in accordance with their own judgement on such matters.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute
and return, at your earliest convenience, the accompanying proxy in the
envelope which has been enclosed.
THE BOARD OF DIRECTORS
Boulder, Colorado
May 5, 1999
12
<PAGE>
PROXY
CARRIER ACCESS CORPORATION
5395 Pearl Parkway
Boulder, Colorado 80301
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated May 3, 1999, hereby appoints Roger L. Koenig and Nancy Pierce
proxies (each with the power to act alone and with the power of substitution
and revocation) to represent the undersigned and to vote, as designated below,
all shares of Common Stock of Carrier Access Corporation that the undersigned
is entitled to vote at the Annual Meeting of Stockholders of Carrier Access
Corporation to be held on May 27, 1999 at The Golden Hotel, 800 llth Street,
Golden, CO 80401 at 11:00 a.m., M.D.T., and any adjournment thereof. Matters 1
and 2 set forth below have been proposed by the Company.
1. ELECTION OF DIRECTORS
[_] FOR Roger L. Koenig [_] WITHHOLD AUTHORITY to vote for Roger L. Koenig
[_] FOR Nancy Pierce [_] WITHHOLD AUTHORITY to vote for Nancy Pierce
[_] FOR John W. Barnett, Jr. [_] WITHHOLD AUTHORITY
to vote for John W. Barnett, Jr.
[_] FOR Douglas C. Carlisle [_] WITHHOLD AUTHORITY
to vote for Douglas C. Carlisle
[_] FOR Joseph A. Graziano [_] WITHHOLD AUTHORITY
to vote for Joseph A. Graziano
[_] FOR Ryal R. Poppa [_] WITHHOLD AUTHORITY to vote for Ryal R. Poppa
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS
[_] FOR the ratification of KPMG LLP as the Company's
[_] WITHHOLD AUTHORITY to vote for the ratification of KPMG
LLP as the Company's independent
accountants for the fiscal year
independent accountants for the fiscal year ending
December 31, 1999. ending December 31, 1999.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEMS 1 AND 2 ABOVE.
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ADDRESSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.
Date: __________________________, 1999
______________________________________
Signature
Please sign exactly as your
name appears on the
certificate or certificates
representing shares to be
voted by this proxy, as shown
on the left. Jointly owned
shares will be voted as
directed if one owner signs
unless another owner instructs
to the contrary, in which case
the shares will not be voted.
If signing in a representative
capacity, please indicate
title and authority.
