<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 Rule 14a-11(c) or Rule 14a-12
WEST TELESERVICES 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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[_] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
<PAGE>
[LOGO OF WEST TELESERVICES CORPORATION]
WEST TELESERVICES CORPORATION
9910 MAPLE STREET
OMAHA, NEBRASKA 68134
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1998
To the Stockholders of
WEST TELESERVICES CORPORATION.
You are cordially invited to attend the annual meeting of stockholders (the
"Annual Meeting") of West TeleServices Corporation, a Delaware corporation
(the "Company"), which will be held at the Marriott Hotel, 10220 Regency
Circle, Omaha, Nebraska on May 13, 1998 at 9:00 a.m., Central Daylight Time,
for the following purposes:
1. To elect two directors to serve for three-year terms until the 2001
annual meeting of stockholders;
2. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as independent auditors for the Company for the fiscal year
ending December 31, 1998; and
3. To consider and transact such other business as may properly be
brought before the Annual Meeting or any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on April 13, 1998 as
the record date for the determination of stockholders entitled to receive
notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof.
By Order of the Board of Directors,
Mary E. West
Vice Chair and Secretary
Dated: April 17, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IN
THE EVENT YOU ATTEND THE ANNUAL MEETING AND VOTE IN PERSON, THE PROXY WILL NOT
BE USED. THESE PROXY MATERIALS ARE FURNISHED IN CONNECTION WITH THE
SOLICITATION BY THE BOARD OF DIRECTORS OF THE COMPANY OF PROXIES TO BE USED AT
THE ANNUAL MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
<PAGE>
WEST TELESERVICES CORPORATION
9910 MAPLE STREET
OMAHA, NEBRASKA 68134
----------------
PROXY STATEMENT
----------------
You are cordially invited to attend the Annual Meeting of Stockholders on
May 13, 1998, to be held at the Marriott Hotel, 10220 Regency Circle, Omaha,
Nebraska at 9:00 a.m. Central Daylight Time, and at any adjournment or
postponement thereof. The Company's Annual Report to Stockholders, this Proxy
Statement and accompanying proxy are first being mailed to stockholders on
approximately April 17, 1998.
PROXY INFORMATION
Your vote is important. Because many stockholders cannot personally attend
the Annual Meeting, it is necessary that a large number be represented by
proxy. Stockholders may sign, date and mail their proxies in the postage-paid
envelope provided. Proxies may be revoked at any time before they are
exercised by written notice to the Secretary, by timely notice of a properly
executed later dated proxy or by voting in person at the Annual Meeting.
All shares of Common Stock, par value $.01 per share, of the Company
("Common 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
Common Shares represented by that proxy will be voted at the discretion of the
person or persons holding such proxy.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among others things, consideration of a motion to
adjourn the Annual Meeting to another time or place, the persons named in the
enclosed form of proxy and acting thereunder will have discretion to vote on
those matters to the same extent as the person signing the proxy would be
entitled to vote. The Company does not currently anticipate that any other
matters will be raised at the Annual Meeting.
STOCKHOLDERS ENTITLED TO VOTE
Holders of record of the Common Shares at the close of business on April 13,
1998 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting. On March 17, 1998, there were 63,330,000 Common Shares outstanding.
Each Common Share is entitled to one vote on each matter brought before the
Annual Meeting. At March 17, 1998, there were also 10,000,000 shares of
authorized preferred stock, none of which have been issued.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND
DIRECTORS
The following table sets forth information concerning the beneficial
ownership of the Common Shares as of March 17, 1998, for (a) each person known
to the Company to be a beneficial owner of more than five percent of the
Common Shares; (b) each director and each of the nominees for director; (c)
each executive officer designated in the section of this Proxy Statement
captioned "Executive Compensation"; and (d) all directors and executive
officers as a group. Except as otherwise noted, each person named below had
sole voting and investment power with respect to such securities.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME AND ADDRESS(1) OWNED(2) COMMON SHARES
------------------- ------------ -------------
<S> <C> <C>
Gary L. West(3)...................................... 45,451,263 71.8%
Mary E. West(3)...................................... 45,451,263 71.8%
Troy L. Eaden(4)..................................... 8,516,250 13.4%
Thomas B. Barker..................................... 16,500 *
William E. Fisher.................................... 500 *
Greg T. Sloma(5)..................................... 2,300 *
Michael A. Micek..................................... 11,000 *
John W. Erwin........................................ 483,155 *
Mark V. Lavin........................................ 2,500 *
All directors and executive officers as a
group (13 persons)(1)............................... 55,008,833 86.9%
</TABLE>
- - --------
* Less than 1%
(1) The address of each executive officer and director of the Company is c/o
West TeleServices Corporation, 9910 Maple Street, Omaha, Nebraska 68134.
(2) Under the rules of the Securities and Exchange Commission (the "SEC"),
shares are deemed to be "beneficially owned" by a person if such person
directly or indirectly has or shares (i) the power to vote or dispose of
such shares whether or not such person has any pecuniary interest in such
shares, or (ii) the right to acquire the power to vote or dispose of such
shares within 60 days, including any right to acquire through the exercise
of any option, warrant or right.
(3) Common Shares held by the Wests are held in joint tenancy with right of
survivorship. Voting power of these Common Shares is shared between them.
(4) Includes 1,516,250 Common Shares held by the Eaden Family Limited
Partnership, of which Mr. Eaden is a general partner.
(5) Includes 900 Common Shares held by Mr. Sloma's daughter and voted by Mr.
Sloma's wife as guardian.
ELECTION OF DIRECTORS
The Board of Directors presently consists of six directors divided into
three classes, each class serving for a period of three years. Two directors
will be elected at the Annual Meeting to serve for a term expiring at the
Company's annual meeting of stockholders to be held in the year 2001.
The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the two nominees named below, unless the stockholder
indicates on the proxy card that the vote should be withheld from any or all
of such nominees. Each nominee elected as a director will continue in office
until his or her successor has been duly elected and qualified, or until his
or her earlier death, resignation or retirement. Should any one or more of
these nominees become unable to serve for any reason or, for good cause, will
not serve, which is not anticipated, the Board of Directors may, unless the
Board of Directors by resolution provides for a lesser number of directors,
designate substitute nominees, in which event the persons named in the
enclosed proxy will vote for the election of such substitute nominee or
nominees.
2
<PAGE>
The Board of Directors has proposed the following nominees for election as
directors at the Annual Meeting.
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
IN THE YEAR 2001:
MARY E. WEST
TROY L. EADEN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE NAMED
NOMINEES FOR ELECTION AS DIRECTORS.
NOMINEES FOR TERMS EXPIRING IN 2001
MARY E. WEST co-founded WATS Marketing of America ("WATS") in 1978 and
remained with that Company until December 1985. In January 1986, she and Mr.
Eaden founded the Company. Mrs. West has served as Vice Chair of the Company
since 1987. Mrs. West and Gary L. West are wife and husband. Mrs. West is 52
years of age.
TROY L. EADEN co-founded the Company with Mrs. West in January 1986. He has
served as the principal executive of the Company since 1989 and has formally
held the title of Chief Executive Officer since March 1995. Mr. Eaden was
employed by WATS from May 1980 to December 1985. Mr. Eaden is 35 years of age.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
GARY L. WEST co-founded WATS in 1978 and remained with that company until
1985. Mr. West joined the Company in July 1987 after the expiration of a
noncompetition agreement with WATS. Mr. West has served as Chairman of the
Board since joining the Company. Mr. West and Mrs. West are husband and wife.
Mr. West is 52 years of age.
GREG T. SLOMA was appointed to the Board of Directors in 1997. Since 1996,
Mr. Sloma has been the President and Chief Operating Officer of Data
Transmission Network ("DTN"), an Omaha based provider of electronic
information and communication services. Mr. Sloma served as an Executive Vice
President and Chief Financial Officer of DTN prior to his promotion to his
current position. Prior to joining DTN in 1993, Mr. Sloma was a tax partner
with the accounting firm Deloitte & Touche. Mr. Sloma is 46 years of age.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
THOMAS B. BARKER joined the Company in 1991 as Executive Vice President of
Interactive. Mr. Barker was promoted to President and Chief Operating Officer
of the Company in March 1995. Prior to joining the Company, he served as
President and Chief Operating Officer of Cue Network Corp., a provider of
nationwide paging and satellite data distribution services. Mr. Barker is 43
years of age.
WILLIAM E. FISHER was appointed to the Board of Directors in 1997. Since
1993, Mr. Fisher has been director, Chairman of the Board, President and Chief
Executive Officer of Transaction Systems Architects, Inc. ("TSA"), an Omaha
based company which develops, markets and supports a broad line of software
products and services primarily focused on facilitating electronic payments.
Since 1991, Mr. Fisher has also served as Chief Executive Officer of Applied
Communications, Inc., a subsidiary of TSA. Mr. Fisher is a director of BA
Merchant Services, Inc. Mr. Fisher is 51 years of age.
3
<PAGE>
BOARD OF DIRECTORS AND COMPENSATION
Beginning immediately prior to the initial public offering of the Company in
November 1996, the Board of Directors consisted of four directors: Gary L.
West, Mary E. West, Troy L. Eaden and Thomas B. Barker. As described in the
Restated Bylaws of the Company, the Board has authority to fix the number of
directors and to elect directors resulting from any increase in the number of
directors. In February 1997, the Board increased the number of its members to
six and elected William E. Fisher and Greg T. Sloma to fill the two vacancies
on the Board.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established a Compensation Committee, comprised
of Gary L. West, Troy L. Eaden, William E. Fisher and Greg T. Sloma (the
"Compensation Committee"), which provides recommendations concerning salaries
and incentive compensation for employees of, and consultants to, the Company.
The Board of Directors has also established an Audit Committee, comprised of
Troy L. Eaden, William E. Fisher and Greg T. Sloma (the "Audit Committee"),
which reviews the results and scope of the annual audit of the Company's
financial statements conducted by the Company's independent accountants, the
scope of other services provided by the Company's independent accountants,
proposed changes in the Company's financial and accounting standards and
principles, and the Company's policies and procedures with respect to its
internal accounting, auditing and financial controls. The Audit Committee also
makes recommendations to the Board of Directors on the engagement of the
independent accountants as well as other matters which may come before the
Audit Committee or at the direction of the Board of Directors. The Board of
Directors does not have a Nominating Committee.
ATTENDANCE AT MEETINGS OF THE BOARD OF DIRECTORS AND OF COMMITTEES
The Board of Directors met three times during the fiscal year ended December
31, 1997. Each of the directors who served during such period attended at
least 75% of the aggregate number of meetings of the Board of Directors and
any committee of which they were members during such period. The Compensation
Committee and the Audit Committee each met once during the fiscal year ended
December 31, 1997.
DIRECTORS' ANNUAL COMPENSATION
During the fiscal year ended December 31, 1997, non-employee members of the
Board of Directors received $12,000 in directors' fees. The Company is
obligated to reimburse the members of the Board of Directors for all
reasonable expenses incurred in connection with their attendance at directors'
meetings. No director made any claim for reimbursement in fiscal 1997. Members
of the Board of Directors who are not employees of the Company receive $2,000
per meeting plus reasonable expenses incurred in connection with their
attendance at directors' meetings. Pursuant to the 1996 Stock Incentive Plan
(the "1996 Plan"), these directors are granted options to acquire 2,000 Common
Shares as of the date of their first election to the Board of Directors (the
"Initial Grant"). Each director also is granted options to purchase 1,000
additional Common Shares as of each of the Company's annual stockholders
meetings provided that such director remains a member of the Board of
Directors at such time (the "Annual Grant"). The options become vested and
exercisable one year from the date such options are granted. Effective
February 1, 1997, the Board of Directors adopted an amendment to the 1996 Plan
that increased the Initial Grant from 2,000 Common Shares to 14,000 Common
Shares and increased the Annual Grant from 1,000 Common Shares to 4,000 Common
Shares. The vesting schedule for such options was changed to a three year
period (for the Initial Grants and Annual Grants, respectively, options for
6,000 and 1,000 Common Shares vest on the first anniversary of the date of
grant and options for 4,000 and 1,500 Common Shares vest on the second and
third anniversary of the date of grant).
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation of the Company's Chief Executive Officer and the four other most
highly compensated executive officers of the Company (collectively, the "Named
Executive Officers") for each of the last three fiscal years. There were no
stock appreciation rights outstanding during the fiscal year ended December
31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
COMPENSATION AWARDS
--------------- ------------
SECURITIES
UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
--------------------------- ------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Troy L. Eaden................ 1997 262,095 -- -- 4,750
Chief Executive Officer 1996 259,644 -- -- 1,680
and Director 1995 234,493 -- -- 2,850
Thomas B. Barker............. 1997 306,419 59,758 650,000(2) 4,750
President, Chief Operating 1996 220,457 527,134 437,000 1,680
Officer and Director 1995 293,284 223,845 -- 2,850
John W. Erwin................ 1997 160,599 248,234 460,000(2) 4,716
President-- 1996 177,752 -- 76,000 2,729
Direct Teleservices 1995 148,811 -- -- 2,708
Mark V. Lavin................ 1997 162,867 136,929 152,000(2) 4,750
Executive Vice President-- 1996 105,017 -- 121,600 --
Operator Teleservices 1995 -- -- -- --
Michael A. Micek............. 1997 140,151 131,417 300,000(2) 4,750
Chief Fiancial Officer, 1996 140,260 140,532 212,800 2,836
Executive Vice President-- 1995 126,827 125,000 -- 2,850
Finance and Treasurer
</TABLE>
- - --------
(1) These amounts, if any, reflect matching contributions made by the Company
on behalf of each Named Executive Officer pursuant to the Company's
Employee 401(k) Retirement Plan.
(2) These awards represent a grant of additional options as well as repricing
of options previously granted in November 1996. See "Compensation Report
on Executive Compensation and Stock Option Repricing."
5
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth options granted to the Named Executive
Officers. The Company did not issue stock appreciation rights in fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE(1)
----------------------------------------------------- -------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE OR GRANT DATE
GRANTED(2) TO EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME (#) IN FISCAL YEAR ($ / SH.) DATE ($)
---- ---------- --------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Troy L. Eaden........... -- -- N/A N/A N/A
Thomas B. Barker........ 650,000(3) 13.73 $15.625 June 2, 2007 4,970,420
John W. Erwin........... 460,000(3) 9.71 $15.625 June 2, 2007 3,517,528
Mark V. Lavin........... 152,000(3) 3.21 $15.625 June 2, 2007 1,162,314
Michael A. Micek........ 300,000(3) 6.34 $15.625 June 2, 2007 2,294,040
</TABLE>
- - --------
(1) The fair value of the stock options was estimated at the date of grant
using the Black-Scholes pricing model. The calculation was based on a
risk-free interest rate of 6.5%, no dividend yield, expected volatility of
45%, and an expected life of 5.4 years.
(2) The options will vest and become exercisable at a rate of 10% on and after
the first and second anniversaries of the date of grant, an additional 15%
on each of the third, fourth, fifth, and sixth anniversaries of the date
of grant, and the final 20% on the seventh anniversary of the date of
grant. However, upon a change of control, all options will become fully
vested. All options expire ten years after the date of the grant.
(3) These options represent a grant of additional options as well as a
repricing of options previously granted in November 1996. See
"Compensation Report on Executive Compensation and Stock Option
Repricing."
The following table sets forth the number of shares covered by options held
by Messrs. Barker, Erwin, Lavin and Micek, the members of the Named Executive
Officers who held options in 1997, and the value of the options as of December
31, 1997. None of the options were exercisable in 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUE(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END
(#) ($)
----------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas B. Barker........ N/A 650,000 N/A N/A
John W. Erwin........... N/A 460,000 N/A N/A
Mark V. Lavin........... N/A 152,000 N/A N/A
Michael A. Micek........ N/A 300,000 N/A N/A
</TABLE>
- - --------
(1) Based on a closing price of $12.00 per Common Share on December 31, 1997,
none of the options were in the money at fiscal year end.
EMPLOYMENT AGREEMENTS
Pursuant to an employment agreement dated as of June 30, 1991, Mr. Eaden's
salary and bonus are determined annually by the Board of Directors. Mr.
Eaden's employment shall terminate upon certain events including Mr. Eaden's
death or disability, the sale of all or substantially all of the assets of the
Company, termination of employment by the Company for cause or without cause,
or Mr. Eaden's resignation. Upon termination of employment for any reason, the
Company shall pay Mr. Eaden all salary through the date of termination,
together with any bonuses declared by the Board of Directors with respect to
Mr. Eaden's services
6
<PAGE>
prior to the effective date of termination. Mr. Eaden also agrees, for a
period of two years following the termination of his employment, not to engage
in any business competing for the customers or accounts of the Company and not
to induce or attempt to induce any person employed by the Company at the time
of Mr. Eaden's termination to leave his employment or agency with the Company.
Thomas B. Barker, John W. Erwin, Mark V. Lavin and Michael A. Micek serve
the Company pursuant to employment agreements dated as of January 1, 1996, as
amended December 9, 1997 for Mr. Barker, January 1, 1996, as amended December
22, 1997 for Mr. Erwin, July 1, 1996, as amended December 22, 1997 for Mr.
Lavin and January 1, 1996, as amended December 9, 1997 for Mr. Micek (the
dates of the initial agreements are collectively referred to as the "Effective
Date"). Each agreement has an initial term of two years from the Effective
Date. Each agreement will be automatically renewed, subject to prior
termination, for successive one-year periods on the second anniversary of the
respective Effective Date and each anniversary thereafter unless either party
gives notice of non-renewal. These agreements provide, respectively, for the
employment of Mr. Barker as President and Chief Operating Officer of the
Company, for Mr. Erwin as the President--Outbound Services of the Company, for
Mr. Lavin as Executive Vice President--Operator Services of the Company and
for Mr. Micek as Chief Financial Officer and Executive Vice President--
Finance. Under the respective agreements, Mr. Barker's base salary is $415,000
per year, Mr. Erwin's base salary is $165,000 per year, Mr. Lavin's base
salary is $157,500 per year, and Mr. Micek's base salary is $150,000 per year.
The agreements also provide for an annual bonus determined at the discretion
of the Board of Directors. In the event of death, termination for cause or
without cause or resignation, the Company will pay any salary earned through
the date of termination, any bonus earned at the end of the month immediately
preceding the date of termination and all vested benefits, if any, as of the
date of termination. In the event of a termination without cause or
resignation, the employment agreements provide for the executive to remain as
a consultant to the Company for at least twenty-four months following
termination of employment. If the employee is terminated for cause, the
Company, in its sole discretion, may elect to retain such executive as a
consultant. During the consulting period, the executive will only be paid his
annual base salary.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND STOCK OPTION
REPRICING
The Company's executive compensation program is administered by the
Compensation Committee. The Compensation Committee is currently composed of
two non-employee directors and two employee directors. The Compensation
Committee approves compensation objectives and policies as well as
compensation plans and specific compensation levels for all executive
officers. Prior to the initial public offering of the Company, compensation of
the Company's executive officers was determined by Mr. Eaden. The Company
subsequently formed the Compensation Committee in order to administer the
executive compensation program commencing with the fiscal year ended December
31, 1997.
The Compensation Committee seeks to provide a total compensation package
that will motivate and retain key employees. The Compensation Committee also
seeks to provide incentives to achieve short and long-term business objectives
that will enhance the value of the Common Shares. When determining
compensation amounts, the Compensation Committee considers (1) the base salary
levels of executives with similar responsibilities in companies in a similar
line of business, (2) the executive's experience in his or her position at the
Company and in the line of business as well as his or her performance over a
sustained period of time, and (3) the historical and projected financial
performance of the Company and the particular division associated with the
executive. An analysis of the financial performance includes a review of such
measures as revenues, operating margin, net income, return on stockholders'
equity, return on revenues, and total market value. The Compensation Committee
makes a subjective determination based upon a collective consideration of all
such factors. Compensation for the named executive officers for the fiscal
year ended December 31, 1997, was comprised of three components: (1) base
salary, (2) cash bonuses and (3) long-term incentive compensation.
The base salary of the Chief Executive Officer was determined by the Board
of Directors. The base salary of the other named executive officers was
determined through contracts which are discussed under the caption "Employment
Agreements."
7
<PAGE>
The Compensation Committee has based bonuses for executive officers on the
attainment of financial targets set forth in formulas described in each of
their employment agreements. The formulas are individually tailored to
motivate the particular executive in accordance with his or her position, his
or her prior performance, and the potential impact he or she could have on the
growth of sales and profit for the Company and the division with which he or
she is associated. For the fiscal year ended December 31, 1997, the results of
the Company and of the applicable individual divisions met the minimum
objectives as set forth in each of the executive's employment agreements, and
accordingly, each received a cash bonus.
Long-term incentive compensation opportunities are provided through grants
of stock options, stock appreciation rights, restricted stock awards, phantom
stock unit awards, performance share unit awards and other stock bonus awards
under the 1996 Plan. All grants are made at exercise prices which are at least
equal to the fair market value of the Common Shares on the date of grant in
order that executives can gain only when stockholders gain. In making grants
under the plan for fiscal 1997, the Board of Directors considered an
employee's position with the Company and relevant responsibilities, service,
individual and Company performance and the anticipated length of future
service. Stock Options were granted to Messrs. Barker, Erwin, Lavin and Micek
for the fiscal year ended December 31, 1997. In addition to the 1996 Plan, the
Company also sponsors the Company's 1997 Employees Stock Purchase Plan (the
"Stock Purchase Plan") which provides employees the opportunity to purchase
Common Shares through annual offerings to be made during the five year period
commencing July 1, 1997.
Grants of options to acquire Common Shares are utilized by the Company as an
employment incentive to recruit and retain persons necessary for the
development and financial success of the Company. The grant of options is
provided for under the 1996 Plan which has 9,499,500 Common Shares for the
grant of incentive awards. In November 1996, the Board of Directors provided
for the grant of options representing 3,601,000 Common Shares to employees,
including all of the Named Executive Officers other than Mr. Eaden.
In May 1997, as a result of a decrease in the market price of the Common
Shares during the five preceding months and recognizing that previously
granted options had lost much of their incentive in motivating employees
(including the Named Executive Officers who were granted options) to remain
with the Company and share in its overall financial goals, the Board of
Directors authorized the repricing of 3,601,000 options, including 847,400
options granted to the Named Executive Officers (the "Old Options"). The
repricing was effected by granting new options (the "New Options") at an
exercise price of $15.625 per Common Share, which was the fair market value of
the Common Shares on June 2, 1997, in exchange for the Old Options, whose
exercise price was $18.00 per Common Share.
In addition to the exchange of the Old Options for New Options, the Company
also issued additional options to purchase 1,107,400 Common Shares (including
714,600 options granted to the Named Executive Officers) with the same
exercise price as the New Options with respect to those who elected to have
their Old Options repriced.
The New Options as well as the additional options grants have terms and
conditions that are similar to the Old Options, except for the exercise price,
the expiration date (which is now June 2, 2007, rather than November 27, 2006)
and the vesting schedule. Rather than vesting in certain percentages over a
ten year period, the options will now become vested with respect to 10% of the
options granted on the first and second anniversaries of the date of the
grant, 15% on each of the third, fourth, fifth and sixth anniversaries of the
date of grant and 20% on the final anniversary of the date of grant.
8
<PAGE>
By repricing the Old Options, providing for the grant of additional options
and a more favorable vesting schedule, the Company intended to reward key
employees who held Old Options, including the Named Executive Officers, for
their contributions to the Company. No other option repricing has occurred in
the past ten years. The following table summarizes all repricing of options
held by thee Named Executive Officers in 1997:
TEN YEAR OPTION REPRICING
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE OF EXERCISE PRICE ORIGINAL
UNDERLYING STOCK AT THE OF STOCK AT THE OPTION
OPTIONS TIME OF TIME OF TERM AT
DATE OF REPRICED OR REPRICING OR REPRICING OR NEW EXERCISE REPRICING
NAME REPRICING AMENDED AMENDMENT($) AMENDMENT($) PRICE($) (MONTHS)
---- ------------ ----------- --------------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas B. Barker....... June 2, 1997 437,000 15.625 18.00 15.625 9 Years,
President and Chief 5.8 Months
Operating Officer
John W. Erwin.......... June 2, 1997 76,000 15.625 18.00 15.625 9 Years,
President--Direct 5.8 Months
Teleservices
Mark V. Lavin.......... June 2, 1997 121,600 15.625 18.00 15.625 9 Years,
Executive Vice 5.8 Months
President--Direct
Response Teleservices
Michael A. Micek....... June 2, 1997 212,800 15.625 18.00 15.625 9 Years,
Chief Financial 5.8 Months
Officer, Executive
Vice President--
Finance and Treasurer
</TABLE>
The Compensation Committee believes that the role of Chief Executive Officer
is particularly important in reaching corporate objectives and accordingly
review Mr. Eaden's compensation package annually based on his performance as
Chief Executive Officer and the overall performance of the Company. For the
fiscal year ended December 31, 1997, Mr. Eaden received a base salary of
$262,095. Mr. Eaden did not receive a cash bonus during 1997 and did not
participate in the 1996 Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
generally disallows a tax deduction to public companies for annual
compensation over $1 million paid to each of the corporation's Chief Executive
Officer and four other most highly compensated executive officers, except to
the extent such compensation qualifies as "performance-based." Based on
information currently available, the Compensation Committee believes that all
compensation arrangements that could potentially result in the compensation of
any Named Executive Officer exceeding $1 million will qualify as performance-
based and that all compensation paid to the Company's Named Executive Officers
will be fully deductible. Provided that other Company objectives are met, the
Company intends to structure future incentive compensation arrangements for
its Named Executive Officers in a manner that will allow such compensation to
be fully deductible for Federal income tax purposes.
The Compensation Committee
Troy L. Eaden
William E. Fisher
Greg T. Sloma
Gary L. West
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is presently composed of Troy L. Eaden, William
E. Fisher, Greg T. Sloma and Gary L. West. During the fiscal year ended
December 31, 1997, the Compensation Committee met once, and during such time
made all executive officer compensation decisions.
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return for the period since its initial public offering with the
cumulative total return of the S&P 500 Index and a composite group of
companies (the "Composite Index"), in each case assuming an investment of $100
on November 26, 1996 and the accumulation and reinvestment of dividends
through December 31, 1997. The Composite Index consists of companies that
provide outsourced teleservices and is comprised of the following companies:
APAC Teleservices, Inc., ATC Communications Group Inc., ICT Group Inc.,
Precision Response Corp, RMH Teleservices Inc., Sitel Corporation, Sykes
Enterprises, Inc., Telespectrum Worldwide Inc. and Teletech Holdings, Inc. The
total stockholder return for each company in the Composite Index has been
weighted according to its market capitalization.
THIS PAGE CONTAINS A LINE GRAPH IN WHICH THE Y AXIS REPRESENTS DOLLARS AND THE X
AXIS REPRESENTS DATES BEGINNING WITH NOVEMBER 26, 1996. THE VALUES ARE LISTED
ON THE FOLLOWING TABLE:
COMPARISON OF CUMULATIVE TOTAL RETURN*
WEST
TELESERVICES COMPOSITE S&P
CORPORATION INDEX 500
------------ --------- ---
11/26/96 100 100 100
12/31/96 126 83 98
12/31/97 67 38 131
* ASSUMES $100 INVESTED ON NOVEMBER 26, 1996.
TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
TOTAL RETURN BASED ON MARKET CAPITALIZATION.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and stockholders holding more than ten percent of the
Common Shares to file reports of holdings and transactions in the Common
Shares with the SEC. Officers, directors and greater than ten percent
stockholders are required by the SEC to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company or written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with during, or in respect of, the
fiscal year ended December 31, 1997, except that Greg T. Sloma did not file a
Form 4 on a timely basis for one acquisition of Common Shares.
10
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company leases a building located at 9910 Maple Street, Omaha, Nebraska,
which houses its corporate headquarters. The building has 42,000 square feet
of leasable space and is situated on a parcel of land of approximately 4.4
acres. This building is owned by 99-Maple Partnership, a partnership owned and
controlled by Gary L. West, the Company's Chairman of the Board, and Mary E.
West, the Company's Vice Chair of the Board and Secretary. This lease
commenced on April 1, 1988, and was renewed on September 1, 1994, for a term
of ten years. For the period commencing September 1, 1997, and ending August
31, 1998, the rent is $63,175 per month, which rent increases each year
thereafter at a rate of approximately six percent. For the period commencing
September 1, 2003, and ending August 31, 2004, the rent will be $89,635 per
month. In addition to payment of rent, the Company is obligated to pay all
taxes, insurance and maintenance pertaining to the building.
The Company, Gary L. West, Mary E. West, Troy L. Eaden and each of the
former stockholders of the West Affiliates entered into a Registration Rights
Agreement (the "Registration Rights Agreement") as of November 25, 1996,
which, among other things, provides that upon the request of the Wests or Mr.
Eaden, the Company will register under the Securities Act of 1933, as amended,
any of the Common Shares currently held by or acquired in the future by the
foregoing (a "Demand Registration"). The Wests, collectively, and Mr. Eaden,
individually, each will have the right to request four Demand Registrations.
Each of the foregoing and each of the seven other former stockholders of the
West Affiliates will have the right, which may be exercised at any time and
from time to time in the future, to include the Common Shares held by him or
her in certain other registrations.
West Telemarketing Insurance Agency, Inc. ("West Insurance") is a Texas
corporation which is wholly-owned by John W. Erwin, the Company's President of
Direct Teleservices. West Insurance is a licensed insurance agency formed in
June 1996 under the laws of Texas to service a client of West Telemarketing
Corporation Outbound in the insurance industry. These arrangements are set
forth in a Personnel Company Subscriber Service Agreement, dated as of
November 12, 1996. West Telemarketing Corporation Outbound pays hourly fees to
West Insurance for its agents' services, which fees have averaged
approximately $183,000 per month in the fiscal year ended December 31, 1997.
Neither West Insurance nor Mr. Erwin has made any profit in connection with
this arrangement and neither is expected to do so in the future. Mr. Erwin
entered into a Stock Redemption Agreement, dated April 9, 1996, with Gary L.
West, Mary E. West and Troy L. Eaden restricting the transfer of his West
Insurance stock and providing for the option by the Wests and Mr. Eaden to
acquire his West Insurance stock in the event of his death, disability or
termination of employment with West Insurance or at any other time they
desire. This Stock Redemption Agreement was assigned to the Company by the
Wests and Mr. Eaden, effective upon the closing of the Company's initial
public offering pursuant to an Assignment and Assumption Agreement, dated as
of November 12, 1996.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche L.L.P. ("Deloitte &
Touche") to be the Company's auditors for the fiscal year ending December 31,
1998 and recommends to stockholders that they vote for ratification of that
appointment. Deloitte & Touche served in this capacity for the fiscal year
ended December 31, 1997. Its representative will be present at the Annual
Meeting, will have an opportunity to make a statement and will be available to
respond to appropriate questions. The appointment of auditors is approved
annually by the Board of Directors and subsequently submitted to the
stockholders for ratification. The decision of the Board of Directors is based
on the recommendation of the Audit Committee, which reviews and approves in
advance the audit scope, the types of nonaudit services, and the estimated
fees for the coming year. The Audit Committee also reviews and approves
proposed nonaudit services to ensure that they will not impair the
independence of the accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
11
<PAGE>
OTHER MATTERS
REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote generally at
the Annual Meeting is necessary to constitute a quorum. Abstentions and
"broker non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A "broker non-vote" occurs when a nominee holding Common
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 voting instructions from the beneficial owner.
A plurality of the votes duly cast is required for the election of directors
(i.e., the nominees receiving the greatest number of votes will be elected).
The affirmative vote by the holders of the majority of the Common Shares
present in person or represented by proxy and entitled to vote on the matter
is required to approve any other matter to be acted upon at the Annual
Meeting. For purposes of determining whether a matter has received the
required number of votes for approval, abstentions will be included in the
vote totals with the result that an abstention has the same effect as a
negative vote. A "broker non-vote" will not be included in the vote totals
and, therefore, will have no effect on the vote.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 1999 annual meeting of
stockholders, and who wish to have such proposals included in the Company's
Proxy Statement for the 1999 annual meeting of stockholders, must ensure that
such proposals are received by the Secretary of the Company at 9910 Maple
Street, Omaha, Nebraska 68134, not later than December 18, 1998. In the event
that the 1999 annual meeting of stockholders is called for a date that is not
within thirty (30) days before or after May 13, 1999, in order to be timely,
notice by the stockholder must be received not later than the close of
business on the tenth day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs. Such proposals must meet the
requirements set forth in the rules and regulations of the SEC in order to be
eligible for inclusion in the Company's Proxy Statement for the 1999 annual
meeting of stockholders. Any stockholder interested in making a proposal is
referred to Article II Section 11 of the Company's Restated Bylaws.
SOLICITATION OF PROXIES AND OTHER MATTERS
At the date this Proxy Statement went to press, management does not know of
any other matters to be brought before the Annual Meeting other than those
referred to above. If any matter should be presented at the Annual Meeting
upon which a vote properly may be taken, the Common Shares represented by the
proxy will be voted at the discretion of the person or persons holding such
proxy. The entire cost of soliciting management proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited
personally by directors, officers or regular employees of the Company, who
will not be compensated for their services. Management of the Company intends
to request banks, brokerage houses, custodians, nominees and fiduciaries to
forward soliciting material to the beneficial owners of the Common Shares held
of record by such persons and entities.
The Company will provide to any stockholder a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 free of charge
upon written request to its Secretary at 9910 Maple Street, Omaha, Nebraska
68134.
Troy L. Eaden
Chief Executive Officer
Dated: April 17, 1998
12
<PAGE>
WEST TELESERVICES CORPORATION
9910 Maple Street
Omaha, Nebraska 68134
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Gary L. West, Mary E. West and Troy L.
Eaden, and each of them, with power of substitution, attorneys and proxies for
and in the name and place of the undersigned, to vote the number of shares of
Common Stock that the undersigned is entitled to vote at the 1998 Annual Meeting
of the Stockholders of West TeleServices Corporation to be held at the Marriott
Hotel, 10220 Regency Circle, Omaha, Nebraska on Wednesday, May 13, 1998 at 9:00
a.m., Central Daylight Time, or at any adjournment or postponement thereof, as
designated on the reverse side hereof.
(change of address)
------------------------------------------
------------------------------------------
------------------------------------------
[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
<PAGE>
[X] Please mark your votes as in this example.
This proxy when executed will be voted in the manner directed herein. If
no direction is made, this proxy will be voted FOR the nominees in proposal 1
and FOR proposals 2 and 3.
<TABLE>
<CAPTION>
<S> <C>
- - -----------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the nominees in proposal 1 and FOR
proposals 2 and 3.
- - -----------------------------------------------------------------------------------------------------------------------
FOR ALL NOMINEES WITHOLD AUTHORITY TO VOTE
1. Election of Directors Mary E. West
(See reverse) Troy L. Eaden
For, except vote withheld from the following nominee(s):
Change of Address
On Reverse Side
------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of appointment of Deloitte & Touche L.L.P. as auditors
3. In accordance with their discretion, upon all other matters that may
properly come before said Annual Meeting and any adjournment thereof.
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The signer hereby revokes all
proxies heretofore given by the
signer to vote at said meeting or
any adjournments or postponements
thereof.
Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
---------------------- ------------
---------------------- ------------
SIGNATURE(S) DATE
[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
