<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
RSL COMMUNICATIONS, LTD.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:(1)
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
|_| 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:
- ------------------------------------------------------------------------------
- --------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[LOGO]
RSL COMMUNICATIONS, LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting of Shareholders of RSL COMMUNICATIONS,
LTD. (the "Company"), a Bermuda company, will be held at the Southampton
Princess Hotel, 101 South Shore Road, Southampton, Bermuda SN02, on May 7,
1998 at 4:00 P.M., for the following purposes:
1. To elect eight directors to serve on the Company's Board of
Directors until the next Annual General Meeting of
Shareholders;
2. To receive and adopt the financial statements of the Company
for the Company's fiscal year ended December 31, 1997, together
with the auditors' report thereon; and
3. To appoint Deloitte & Touche LLP as auditors for the Company
and to delegate to the Company's Audit Committee the authority
to fix the auditors' fee for the current fiscal year.
Only shareholders of record at the close of business on April 20,
1998 are entitled to notice of and to vote at the meeting and any adjournments
thereof.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter
to be presented to the shareholders.
By Order of the Board of Directors,
Tucker Hall
Secretary
Hamilton, Bermuda
April 27, 1998
IMPORTANT: The prompt return of
proxies will ensure that your shares will be
voted. A self-addressed envelope is enclosed
for your convenience.
<PAGE>
RSL COMMUNICATIONS, LTD.
--------------------------------------------------
PROXY STATEMENT FOR ANNUAL
GENERAL MEETING OF SHAREHOLDERS
May 7, 1998
--------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of RSL COMMUNICATIONS, LTD. (the
"Company"), a Bermuda company, for use at the Annual General Meeting of
Shareholders of the Company (the "Meeting") to be held at the Southampton
Princess Hotel, 101 South Shore Road, Southampton, Bermuda SN02, on May 7,
1998 at 4:00 P.M., and at any adjournments thereof.
Shareholders who execute proxies retain the right to revoke them at
any time by notice in writing to the Secretary of the Company, by revocation
in person at the Meeting or by presenting a later-dated proxy. Unless so
revoked, the shares represented by proxies will be voted at the Meeting in
accordance with the directions given therein. In the absence of such
directions, the shares will be voted FOR the election of all eight nominees
for the Board of Directors, FOR the adoption of the financial statements of
the Company for the Company's fiscal year ended December 31, 1997, together
with the auditors' report thereon and FOR the appointment of Deloitte & Touche
LLP as auditors for the Company and the delegation to the Company's Audit
Committee (the "Audit Committee") of the authority to fix the auditors' fee
for the current fiscal year.
The Company will bear the cost of preparing, assembling and mailing
the enclosed form of proxy, this Proxy Statement and other material which may
be sent to shareholders in connection with this solicitation. In addition,
D.F. King & Co., Inc. has been engaged by the Company to act as proxy
solicitors and facilitate voting by telephone and will receive fees of $1,500,
plus expenses. Shareholders can vote their shares either by signing and
returning the proxy card or voting by telephone. Shareholders who hold their
shares directly and reside in the United States may vote by telephone by
calling 1-800-207-2014. Shareholders who hold their shares directly and reside
outside the United States should call 212-269-5550. Shareholders who hold
their shares through a bank or broker may vote by telephone by following the
instructions they receive from their bank or broker. Officers and regular
employees may solicit proxies by mail, telephone, telegraph and personal
interview, for which no additional compensation will be paid. The Company may
reimburse persons holding shares in their names or in the names of nominees
for their reasonable expenses in sending proxies and proxy material to their
principals.
The Company's headquarters and registered office is located at
Clarendon House, Church Street, Hamilton HM CX Bermuda. The approximate date
on which this Proxy Statement and the enclosed form of proxy was first sent to
shareholders was April 27, 1998.
VOTING
Shareholders of record of the Company's Class A common shares, par
value $.00457 per share (the "Class A Common Stock"), at the close of business
on April 20, 1998 shall be entitled to one vote for each share then held.
Shareholders of record of the Company's Class B common shares, par value
$.00457 per share (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"), at the close of business on April 20, 1998
shall be entitled to 10 votes for each share then held. Holders of shares of
Class A Common Stock and holders of shares of Class B Common Stock vote
together as a single class. On April 20, 1998, there were issued and
outstanding 11,364,196 shares of Class A Common Stock and 30,460,722 shares of
Class B Common Stock.
<PAGE>
Shareholders vote at the Meeting by casting ballots (in person or by
proxy) which are tabulated by a person who is appointed by the Board of
Directors before the Meeting to serve as inspector of election at the Meeting
and who has executed and verified an oath of office. The presence, in person
or by proxy, of shareholders entitled to cast at least a majority of the total
number of votes entitled to be cast on each matter to be voted upon at the
Meeting constitutes a quorum as to each such matter. Abstentions and broker
"non-votes" are included in the determination of the number of shares present
at the Meeting for quorum purposes, but abstentions and broker "non-votes"
are not counted in the tabulations of the votes cast on proposals presented to
shareholders. 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 or has discretionary power but
elects not to exercise it. Broker "non-votes" are not counted in the
tabulations of the votes cast on proposals presented to the shareholders
because shares held by a broker are not considered to be entitled to vote on
matters as to which brokers lack (or elect not to exercise) discretionary
power.
The Board of Directors does not intend to present and knows of no
others who intend to present at the Meeting any matter or business other than
those set forth in the accompanying Notice of Annual General Meeting of
Shareholders. If other matters are properly brought before the Meeting, it is
the intention of the persons named in the accompanying form of proxy to vote
any proxies on such matters in accordance with their judgment.
Any proposal of an eligible shareholder intended to be presented at
the next annual general meeting of shareholders of the Company must be
received by the Company by December 28, 1998, to be eligible for inclusion in
the Company's proxy statement and form of proxy relating to such meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 20,
1998 with respect to the beneficial ownership of the Common Stock and also
sets forth certain information with respect to voting power as of such date by
each director and nominee for director of the Company, by the Company's Chief
Executive Officer, by each of the Company's four other most highly compensated
executive officers and by all directors, nominees for director and executive
officers as a group and by each shareholder known by the Company to
beneficially own more than 5% of any class of the Company's outstanding voting
securities, except as otherwise noted in footnote 1 to the table. Each of the
shareholders identified in the table has sole voting and investment power over
the shares beneficially owned by such person, except as otherwise noted in the
footnotes to the table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF OF
CLASS A COMMON STOCK(1)(2) CLASS B COMMON STOCK(2) COMMON STOCK(2)
-------------------------- ----------------------- ---------------
% OF
VOTING % OWNER-
NUMBER PERCENT NUMBER PERCENT POWER(3) SHIP(3)
------ ------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Ronald S. Lauder (4)(5)(6)(7)(8)....... 48,464 * 18,086,296 62.5% 59.8% 42.9%
Itzhak Fisher (4)(9)................... - - 4,590,986 16.1 15.4 11.0
Leonard A. Lauder (4)(6)(7)(8)(10)..... - - 6,399,831 22.5 21.5 15.3
EL/RSLG Media, Inc. (4)(8)............. - - 1,786,350 6.3 6.0 4.3
RSL Investments Corporation (4)(5)..... - - 9,348,563 32.9 31.4 22.4
Jacob Z. Schuster (4)(11).............. - - 1,720,715 6.0 5.8 4.1
Gustavo A. Cisneros (12)............... 1,408,629 10.5% - - * 3.4
Nir Tarlovsky (4)(13).................. 717,804 5.3 345,301(14) 1.2 1.4 2.5
Nesim Bildirici (15)................... 547,499 4.0 178,513 * * 1.7
Mark J. Hirschhorn..................... 62,305 * - - * *
Eugene Sekulow (16).................... 43,800 * - - * *
Fred H. Langhammer..................... 12,226 * - - * *
Richard Williams (17).................. 350,400 2.6 - - * *
Nicolas G. Trollope (18)............... 1,000 * - - * *
Andrew Gaspar (4)(6)(7)(19)............ 2,005,641 15.0 1,170,497 4.1 4.6 7.6
Bukfenc, Inc. (19)(20)................. 1,953,033 14.6 - - * 4.7
All directors, nominees for director and
executive officers as a group
(19 persons)(21)...................... 5,335,223 37.1 28,364,795 98.1 95.2 77.8
Essex Investment Management Company (22) 1,090,530 8.2 - - * 2.6
Nicholas-Applegate Capital Management (23) 683,600 5.1 - - * 1.6
</TABLE>
- ---------------
* Less than 1%.
(1) Does not include (i) 28,914,981 shares of Class A Common Stock issuable
upon conversion of shares of Class B Common Stock (including 459,900
shares of Class B Common Stock issuable upon the exercise of warrants
held by Ronald S. Lauder (the "Lauder Warrants")) or (ii) 1,128,866
shares of Class A Common Stock issuable upon the exercise of certain
other outstanding warrants (the "Warrants") issued in connection with a
$300.0 million debt offering by one of the Company's subsidiaries in
1996. Shares of Class B Common Stock are convertible at any time into
shares of Class A Common Stock for no additional consideration on a
share-for-share basis. The Company has an effective shelf registration
statement covering (i) the issuance to the holders of the Warrants of
1,152,715 shares of Class A Common Stock underlying the Warrants and (ii)
the sale of 300,000 shares of Class A Common Stock by Bukfenc, Inc., a
corporation wholly owned by Andrew Gaspar, who is currently a director of
the Company but is not standing for re-election to the Board of Directors
of the Company, and members of his family. The registration of the shares
underlying the Warrants was required pursuant to a registration rights
agreement entered into in connection with the issuance of the Warrants.
The Company was required to register Bukfenc, Inc.'s shares pursuant to
previously granted registration rights. Mr. Gaspar is not involved in the
day-to-day management of the Company and his sale represented 8.6% of his
deemed beneficial ownership in the Company.
(2) Mr. Gaspar is in the process of converting certain shares of Class B Common
Stock beneficially owned by him directly and through Bukfenc, Inc. and
Buckfenc, LLC into an equal number of shares of Class A Common Stock. Such
shares of Class B Common Stock are included in the number of outstanding
shares of Class B Common Stock set forth at page 1 of this Proxy Statement
and for purposes of the meeting (and, therefore, Mr. Gaspar is entitled to
10 votes for each such share) but for purposes of the foregoing table
(including this note and the other footnotes thereto) are treated as if
they were outstanding shares of Class A Common Stock on April 20, 1998
(on which date Mr. Gaspar did not beneficially own any shares of Class A
Common Stock). See note 19.
(3) Represents the percentage of total voting power and the percentage
ownership of the Common Stock beneficially owned by each identified
shareholder and all directors, nominees for director and executive officers
as a group. The Class A Common Stock and the Class B Common Stock are the
only authorized classes of the Company's capital stock with shares
outstanding.
(4) The business address of each of the indicated holders of the Company's
securities is 767 Fifth Avenue, New York, New York 10153.
(footnotes continued on next page)
3
<PAGE>
(footnotes continued from previous page)
(5) Includes (a) 48,464 shares of Class A Common Stock owned directly by
Ronald S. Lauder; (b) 261,407 shares of Class B Common Stock owned by
R.S. Lauder, Gaspar & Co., L.P. ("RSLAG") (see note 7); (c) 909,090
shares of Class B Common Stock owned by Lauder Gaspar Ventures LLC
("LGV") (see note 6); (d) 9,348,563 shares of Class B Common Stock owned
by RSL Investments Corporation, a corporation wholly-owned by Mr. Lauder;
(e) 1,786,350 shares of Class B Common Stock owned by EL/RSLG Media, Inc.
("EL/RSLG") (see note 8); (f) 893,175 shares of Class B Common Stock
owned by RAJ Family Partners L.P., of which Mr. Lauder is a limited
partner and a shareholder of the general partner; (g) 4,427,811 shares of
Class B Common Stock owned directly by Ronald S. Lauder; and (h) 459,900
shares of Class B Common Stock issuable upon exercise of the Lauder
Warrants. Mr. Lauder disclaims beneficial ownership of some of the shares
owned by RSLAG, LGV, EL/RSLG and RAJ Family Partners, L.P.
(6) Andrew Gaspar is managing member of LGV and Ronald S. Lauder and Leonard
A. Lauder are both members with substantial ownership interests in LGV,
and as such each may be deemed to beneficially own all of the shares of
Class B Common Stock owned by LGV. Such shares, however, are only
included once in the computation of shares beneficially owned by
directors, nominees for director and executive officers as a group. The
managing member of LGV has executed an irrevocable proxy in favor of
Ronald S. Lauder to vote Ronald S. Lauder's allocable interest in such
shares as directed by him. Ronald S. Lauder, Leonard A. Lauder and Andrew
Gaspar each disclaim beneficial ownership of some of such shares.
On March 20, 1998, LGV distributed an aggregate of 1,149,669 shares of
Class B Common Stock to its members on a pro-rata basis. As a result of
such distribution, (a) 571,727 shares of Class B Common Stock were
transferred to Ronald S. Lauder; (b) 571,727 shares of Class B Common
Stock were transferred to Leonard A. Lauder; (c) an aggregate of 4,972
shares of Class B Common Stock were transferred to Andrew Gaspar and
Bukfenc, LLC (see notes 2 and 19); and (d) 909,090 shares of Class B
Common Stock remain in LGV.
(7) Andrew Gaspar is president of the corporate general partner of RSLAG, and
Ronald S. Lauder is directly and indirectly the owner of a majority of
the of the limited partnership interests in RSLAG, and, as, nominees for
director such, may be deemed to beneficially own all of the shares of
Class B Common Stock owned by RSLG. The general partner of RSLAG has
executed an irrevocable proxy in favor of Ronald S. Lauder to vote Ronald
S. Lauder allocable interest in such shares as directed by him. In
addition, Leonard A. Lauder owns limited partnership interests in RSLAG.
Ronald S. Lauder, Leonard A. Lauder and Andrew Gaspar each disclaim
beneficial ownership of some of such shares. The shares of Class B Common
Stock owned by RSLAG which may be deemed to be beneficially owned by
Ronald S. Lauder, Andrew Gaspar and Leonard A. Lauder are only included
once in the computation of shares beneficially owned by directors,
nominees for director and executive officers as a group.
On March 20, 1998, RSLAG distributed an aggregate of 16,366,325 shares of
Class B Common Stock to its partners on a pro-rata basis. As a result of
such distribution, (a) an aggregate of 12,028,088 shares of Class B
Common Stock were transferred to certain entities over which Ronald S.
Lauder has control or the stock holdings of which he may be deemed to
have beneficial ownership; (b) an aggregate of 3,274,975 shares of Class
B Common Stock were transferred to Leonard A. Lauder and certain entities
over which he has control or the stock holdings of which he may be deemed
to have beneficial ownership; (c) an aggregate of 2,300,669 shares of
Class B Common Stock were transferred to Andrew Gaspar and Bukfenc, Inc.
(see notes 2, 19 and 20); and (d) 261,407 shares of Class B Common Stock
remain in RSLAG.
(8) The 1995 Estee Lauder RSL Trust, of which Ronald S. Lauder is a trustee
and the beneficiary, and The 1995 Estee Lauder LAL Trust, of which
Leonard A. Lauder is a trustee and the beneficiary, each own 50% of
EL/RSLG's outstanding common stock. As such, Ronald S. Lauder and Leonard
A. Lauder may each be deemed to beneficially own all of the shares of
Class B Common Stock owned by EL/RSLG. Ronald S. Lauder and Leonard A.
Lauder each disclaim beneficial ownership of some of such shares. Such
shares, however, are only included once in the computation of shares
beneficially owned by directors, nominees for director and executive
officers as a group.
(9) Such shares are owned by Fisher Investment Partners, L.P., a Delaware
limited partnership, of which Itzhak Fisher is the sole general partner
and the Fisher 1997 Family Trust is the sole limited partner. Mr. Fisher
disclaims beneficial ownership of such shares.
(10) Includes (a) an aggregate of 1,170,497 shares of Common Stock owned by
LGV and RSLAG (see notes 6 and 7); (b) 2,196,558 shares of Class B Common
Stock owned directly by Leonard A. Lauder; (c) 4,866 shares of Class B
Common Stock owned by Mr. Lauder's wife; (d) 348,385 shares of Class B
Common Stock owned by LAL Family Partners, L.P., of which Mr. Lauder is a
general partner; (e) 1,786,350 shares of Class B Common Stock owned by
EL/RSLG (see note 8); and (f) 893,175 shares of Class B Common Stock
owned by LWG Family Partners, L.P., a partnership whose managing partner
is a corporation which is one-third owned by Mr. Lauder. Mr. Lauder
disclaims beneficial ownership of some of the shares owned by RSLAG, LGV,
EL/RSLG and LWG Family Partners, L.P. and all of the shares of Class B
Common Stock owned by his wife.
(11) Such shares are owned by Schuster Family Partners I, L.P., a New York
limited partnership, of which Jacob Z. Schuster is the sole general
partner and the limited partners of which are certain of Mr. Schuster's
children. Mr. Schuster disclaims beneficial ownership of such shares.
(12) Such shares are owned by Coral Gate Investments Ltd. ("Coral Gate"), an
investment business company organized under the laws of the British
Virgin Islands, which is beneficially owned by Gustavo A. Cisneros and
his brother, Ricardo Cisneros. The business address for Gustavo A.
Cisneros is c/o Highgate Properties, Inc., 36 East 61st Street, New York,
New York 10021.
(13) Includes 525,677 shares of Class A Common Stock owned directly by Mr.
Tarlovsky and 192,127 shares of Class A Common Stock Common Stock
issuable upon the exercise of an equal number of currently exercisable
options granted to Mr. Tarlovsky under the 1995 Plan.
(14) Such shares are owned by Tarlovsky Investment Partners, L.P., a Delaware
limited partnership of which Nir Tarlovsky is the sole general partner
and the Tarlovsky 1997 Family Trust is the sole limited partner. Mr.
Tarlovsky disclaims beneficial ownership of such shares.
(footnotes continued on next page)
4
<PAGE>
(footnotes continued from previous page)
(15) Consists of 202,561 shares of Class A Common Stock owned directly by Mr.
Bildirici and 344,938 shares of Class A Common Stock issuable upon the
exercise of an equal number of currently exercisable options granted to
Mr. Bildirici under the 1995 Plan.
(16) Consists of 43,800 shares of Class A Common Stock issuable upon the
exercise of an equal number of currently exercisable options granted to
Mr. Sekulow under the 1995 Plan.
(17) Consists of 350,400 shares of Class A Common Stock issuable upon the
exercise of an equal number of currently exercisable options granted to
Mr. Williams under the 1995 Plan.
(18) Such shares are owned by The Proverbs Trust, a Bermuda trust, of which
Mr. Trollope and his wife are the trustees and beneficiaries.
(19) Includes (a) 48,879 shares of Class A Common Stock owned directly by Mr.
Gaspar; (b) an aggregate of 1,170,497 shares of Class A Common Stock
owned by LGV and RSLAG (see notes 6 and 7); (c) 2,253,033 shares of Class
A Common Stock owned by Bukfenc, Inc., a corporation wholly owned by Mr.
Gaspar and members of his family; and (d) 3,729 shares of Class A Common
Stock owned by Bukfenc, LLC, a limited liability company, of which Mr.
Gaspar and members of his family are the only members.
(20) Mr. Gaspar disclaims beneficial ownership of some of such shares. The
address for Bukfenc, Inc. is 122 Salem Road, East Hills, New York 11577.
See note 19.
(21) Includes 1,019,595 shares of Class A Common Stock issuable upon the
exercise of an equal number of options granted to certain of the
directors, nominee for directors and executive officers as a group.
In addition, the following directors, nominee for directors and executive
officers hold the number of non-exercisable options to purchase the
number of shares of Class A Common Stock indicated: Ronald S. Lauder,
6,818; Itzhak Fisher, 432,856; Leonard A. Lauder, 2,273; Gustavo
Cisneros, 2,273; Fred Langhammer, 3,409; Andrew Gaspar, 3,409; executive
officers (not including executive officers that are also directors) as a
group, 283,678.
(22) Information as to shares owned by Essex Investment Management Company, an
investment adviser registered under Section 203 of the Investment
Advisers Act of 1940, is as of March 31, 1998, and is taken from a
Schedule 13G/A filed with the Securities and Exchange Commission (the
"Commission") on April 9, 1998. The address for Essex Investment Management
Company is 125 High Street, Boston, Massachusetts 02110.
(23) Information as to the shares owned by Nicholas-Applegate Capital
Management, an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is as of December 31, 1997, and is taken
from a Schedule 13G filed with the Commission on February 3, 1998. The
address for Nicholas-Applegate Capital Management is 600 West Broadway,
29th Floor, San Diego, California 92101.
5
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Eight directors will be elected at the Meeting to the Company's Board
of Directors to hold office, subject to death, removal or resignation, until
the Company's next annual general meeting of shareholders and thereafter until
their successors have been elected and qualified.
The election of directors requires the affirmative vote of a majority
of the votes cast, in person or by proxy, at the Meeting, provided that a
quorum is present in person or by proxy. Unless otherwise indicated, the
accompanying form of proxy will be voted FOR the election of persons listed
below. At this time, the Board of Directors knows of no reason why any nominee
might be unable to serve. All nominees are currently directors. There is no
arrangement or understanding between any director and any other person
pursuant to which such person was selected as a director with the exception of
Mr. Fisher, the Company's Chief Executive Officer. The Company is obligated
under Mr. Fisher's employment agreement to use its best efforts to ensure that
Mr. Fisher continues to serve as a director. For additional information
relating to Mr. Fisher's employment agreement with the Company, see the
discussion on page 11 of this Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE EIGHT NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
Year
Became a
Name of Nominee Positions(s) Age Director
--------------- ------------ --- --------
<S> <C> <C> <C>
Ronald S. Lauder Director and Chairman of the Board 54 1994
Itzhak Fisher Director, President and Chief Executive Officer 42 1994
Jacob Z. Schuster Director, Executive Vice President, Chief Financial 49 1994
Officer, Assistant Secretary and Treasurer
Gustavo A. Cisneros Director 52 1997
Fred H. Langhammer Director 54 1997
Leonard A. Lauder Director 65 1997
Eugene A. Sekulow Director 66 1995
Nicolas G. Trollope Director 50 1996
</TABLE>
- --------------------------------
Set forth below is certain information with respect to the nominees
to the Company's Board of Directors.
Ronald S. Lauder co-founded the Company, has served as its Chairman
since 1994 and is the principal and controlling shareholder of the Company. He
is also a founder and has served as the non-executive Chairman of the Board of
Central European Media Enterprises Ltd. ("CME"), an owner and operator of
commercial television stations and networks in Central and Eastern Europe
since 1994. Mr. Lauder is a principal shareholder of The Estee Lauder
Companies Inc. ("Estee Lauder") and has served as Chairman of Estee Lauder
International, Inc. and Chairman of Clinique Laboratories, Inc. since
returning to the private sector from government service in 1987. From 1983 to
1986, Mr. Lauder served as Deputy Assistant Secretary of Defense for European
and NATO affairs. From 1986 to 1987, Mr. Lauder served as U.S. Ambassador to
Austria. Mr. Lauder is a director of Estee Lauder. He is Chairman of the Board
of Trustees of the Museum of Modern Art, Treasurer of the World Jewish
Congress, a member of the Board of Governors of the Joseph H. Lauder Institute
of Management and International Studies at the University of Pennsylvania and
a member of the Visiting Committee of the Wharton School at the University of
Pennsylvania.
6
<PAGE>
Itzhak Fisher, a co-founder of the Company, has been a director,
President and Chief Executive Officer of the Company since its inception in
1994. From 1992 to 1994, Mr. Fisher served as General Manager of Clalcom Inc.,
the telecommunications subsidiary of Clal (Israel), Ltd., Israel's largest
investment corporation ("Clal"). Prior to joining Clal, from 1990 to 1992, Mr.
Fisher served as the Special Consultant to the President of BEZEQ, the Israel
Telecommunication Corp. Ltd., Israel's national telecommunications company.
Mr. Fisher previously was a consultant to Mobil Oil Corporation, in the
telecommunications field. In addition, Mr. Fisher co-founded Medic Media,
Inc., a company engaged in the business of renting telephone and television
systems in hospitals throughout Israel, and was a director and its President
and Chief Executive Officer.
Jacob Z. Schuster has been a director, Secretary or Assistant
Secretary, Treasurer and Executive Vice President of the Company since 1994
and has been Chief Financial Officer of the Company since February 1997. From
1986 to 1992, Mr. Schuster was a General Partner and the Treasurer of Goldman,
Sachs & Co. ("Goldman Sachs"). Mr. Schuster has been President and Treasurer
of RSL Management Corporation ("RSL Management") since November 1995 and
Executive Vice President of RSL Investments Corporation since March 1994. Mr.
Schuster joined Goldman Sachs in 1980, was made a General Partner in 1986 and
served as Treasurer of the firm from 1985 until his retirement from the firm
in 1992. In 1993, Mr. Schuster served as a consultant to Goldman Sachs.
Gustavo A. Cisneros has been a director of the Company since March
1997. For more than five years, Mr. Cisneros, together with other members of
his family or trusts established for their benefit, has owned direct or
indirect beneficial interests in certain companies that own or are engaged in
a number of diverse commercial enterprises principally in Venezuela, the
United States, Brazil, Chile and Mexico. Mr. Cisneros has also been the
Chairman of the Board of Directors of Pueblo Xtra International, Inc., a
holding company which owns all of the common stock of Pueblo International,
Inc., a company engaged in the business of operating supermarkets and video
rental outlets, since June 1993 and a Director of Univision Communications
Inc., a Spanish-language television broadcasting company, since May 1994.
Fred H. Langhammer, a director of the Company since September 1997,
has been President of Estee Lauder since 1995, Chief Operating Officer of
Estee Lauder since 1985, a director of Estee Lauder since November 1995, and
was Executive Vice President of Estee Lauder from 1985 until 1995. Mr.
Langhammer joined Estee Lauder in 1975 as President of its operations in
Japan. In 1982, he was appointed Managing Director of Estee Lauder's
operations in Germany. Prior to joining Estee Lauder, Mr. Langhammer was
General Manager of Dodwell (Japan), a global trading company. He is a member
of the Board of Directors of the Cosmetics, Toiletries and Fragrance
Association, an industry group, and serves on the Board of the American
Institute for Contemporary German Studies at Johns Hopkins University.
Leonard A. Lauder has been a director of the Company since March
1997. Mr. Lauder is a principal shareholder and, since 1982, has served as
Chief Executive Officer of Estee Lauder and was President of Estee Lauder from
1972 until 1995. He became Chairman of the Board of Directors of Estee Lauder
in 1995. He has been a director of Estee Lauder since 1958. Mr. Lauder
formally joined Estee Lauder in 1958 after serving as an officer in the United
States Navy. He is Chairman of the Board of Trustees of the Whitney Museum of
American Art, a Charter Trustee of the University of Pennsylvania and a
Trustee of The Aspen Institute. He also served as a member of the White House
Advisory Committee on Trade Policy and Negotiations under President Reagan.
Eugene A. Sekulow has been a director of the Company since September
1995. Until his retirement in December 1993, Mr. Sekulow served as Executive
Vice President-International of NYNEX Corporation, having served as President
of NYNEX International Company from 1986 to 1991. Prior to joining NYNEX
International Company, Mr. Sekulow had served as President of RCA
International, Ltd. since 1973. Mr. Sekulow previously served as a member of
the United States State Department Advisory Committee on International
Communications and Information Policy and on the State Department Task Force
on Telecommunications in Eastern Europe.
Nicolas G. Trollope, a director of the Company since July 1996, has
been a partner with the law firm of Conyers, Dill & Pearman, Hamilton,
Bermuda, since 1991. Mr. Trollope has been with Conyers, Dill & Pearman
7
<PAGE>
since 1975. Mr. Trollope has served as a director of CME since June 1994 and
also serves as vice president and secretary of CME.
Other than Ronald S. Lauder and Leonard A. Lauder, who are brothers,
no family relationship exists between any director or executive officer of the
Company.
Number of Directors
The Board of Directors believes that it is in the best interests of
the Company and its shareholders that the Company have independent directors
with outstanding achievement in their personal careers, broad business
experience and skills, an understanding of the Company's business environment
and an ability to make independent analytical inquiries and who can provide
the Company with the benefit of their insights and devote adequate time to
Board duties. To this end, in September 1997, shareholders of the Company
approved a proposal to increase the maximum number of directors to 11. The
Board of Directors intends to continue to seek out additional candidates for
appointment to the Board of Directors when appropriate, or to fill the three
vacancies that presently exist on the Board of Directors. At this Meeting, the
proxies cannot be voted for a greater number of persons than the number of
nominees set forth above.
Committees and Meetings of the Board of Directors
During the fiscal year ended December 31, 1997, the Board of
Directors met, or acted by unanimous written consent, on 11 occasions. Each
member of the Board of Directors attended at least 75% of the aggregate number
of meetings of the Board of Directors and the Committees of the Board on which
they serve. The compensation of directors is described on page 11 of this
Proxy Statement. Directors do not receive additional compensation for
attending Board of Directors' or committee meetings.
The Company's Board of Directors (the "Board of Directors") has an
Executive Committee (the "Executive Committee"), a Compensation Committee (the
"Compensation Committee") and the Audit Committee.
Executive Committee
The Executive Committee is currently composed of Ronald S. Lauder,
Andrew Gaspar, Itzhak Fisher, Jacob Z. Schuster and Eugene A. Sekulow. Mr.
Gaspar is not standing for re-election to the Company's Board of Directors
and, as of the date of the Meeting, will no longer be a member of the
Executive Committee. A majority of the members of the Executive Committee must
approve any action taken by the Executive Committee. During the period between
meetings of the Board of Directors, the Executive Committee has all powers and
authority of the Board of Directors to manage the Company's business, except
that the Executive Committee, acting alone, cannot (i) amend the Company's
Memorandum of Association or Bye-laws (which also requires shareholder
approval); (ii) adopt an agreement of merger or consolidation or approve the
sale, lease or exchange of all or substantially all of the Company's property
and assets; or (iii) approve or recommend to the Company's shareholders a
dissolution of the Company. The Executive Committee met, or acted by unanimous
written consent, six times in 1997.
Compensation Committee
The Compensation Committee is currently composed of Ronald S. Lauder,
Gustavo A. Cisneros and Eugene A. Sekulow. During a portion of 1997, Andrew
Gaspar and Itzhak Fisher were members of the Compensation Committee. The
Compensation Committee is responsible for determining executive compensation
policies and guidelines and for administering the Company's stock option and
compensation plans, including the 1995 Plan, the Company's 1997 Performance
Incentive Plan (the "1997 Performance Plan"), 1997 Stock Incentive Plan (the
"1997 Plan") and 1997 Directors' Compensation Plan (the "Directors' Plan").
The Compensation Committee met one time in 1997.
8
<PAGE>
Audit Committee
The Audit Committee is currently composed of Ronald S. Lauder, Eugene
A. Sekulow and Fred H. Langhammer and is charged with (i) recommending the
engagement of independent accountants to audit the Company's financial
statements, (ii) discussing the scope and results of the audit with the
independent accountants, (iii) reviewing the functions of the Company's
management and independent accountants pertaining to the Company's financial
statements and (iv) performing such other related duties and functions as are
deemed appropriate by the Audit Committee and the Board of Directors. During a
portion of 1997, Itzhak Fisher was a member of the Audit Committee. The Audit
Committee met one time in 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that, during the fiscal year ended December 31,
1997, all filing requirements under Section 16(a) of the Securities Exchange
Act of 1934 (the "Exchange Act") applicable to its officers, directors and
greater than 10 percent beneficial owners were complied with on a timely
basis, except that Mr. Ronald S. Lauder, Chairman of the Board of Directors, a
director and greater than 10 percent beneficial owner filed two days late one
Form 4 covering two transactions and Mr. Leonard A. Lauder, a director and
greater than 10 percent beneficial owner, filed two days late one Form 4
covering three transactions.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes all plan and non-plan compensation
awarded to, earned by or paid to the Company's current Chief Executive Officer
and four other most highly compensated executive officers for services
rendered in all capacities to the Company in the last two fiscal years
(together, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
------------ OPTIONS/
YEAR SALARY BONUS (1) SARS (#)
---- ------ --------- ---------
<S> <C> <C> <C> <C>
Itzhak Fisher............................................... 1997 $400,000 $650,000 432,856
President and Chief Executive Officer..................... 1996 350,000 150,000 -
Nir Tarlovsky............................................... 1997 187,500 300,000 -
Vice President of Business Development.................... 1996 178,000 75,000 -
Richard E. Williams (2)..................................... 1997 240,000 165,000 350,400
President and Chief Executive Officer of RSL COM Europe,
Ltd....................................................... 1996 172,000 50,000 -
Nesim N. Bildirici (3)...................................... 1997 185,000 300,000 -
Vice President of Mergers and Acquisitions................ 1996 165,000 75,000 -
Mark J. Hirschhorn.......................................... 1997 155,000 232,500 16,206
Vice President--Finance................................... 1996 140,000 50,000 93,294
</TABLE>
- ---------------
(1) Annual bonuses received are reported in the year earned, whether paid in
that year or in the following year. Bonuses for 1997 were determined
pursuant to the 1997 Performance Plan described below and paid in the
first quarter of 1998 following receipt of 1997 audited financial
results.
(2) Mr. Williams' salary has been converted to U.S. dollars for the purposes
of this table based upon the average exchange rate of British pounds to
U.S. dollars for the periods covered.
(3) Mr. Bildirici is employed by the Company but, during 1996, was employed
by both the Company and RSLAG. For purposes of this Proxy Statement, he
is treated as an employee of the Company only for the relevant periods.
9
<PAGE>
No other annual compensation, restricted stock awards, stock
appreciation rights ("SARs") or long-term incentive plan payouts or other
compensation (all as defined in the regulations of the Commission) were
awarded to, earned by or paid to the Named Executive Officers during 1996 or
1997.
Option Grants In Last Fiscal Year
The following table sets forth information with respect to grants of
stock options to purchase Class A Common Stock granted to the Named Executive
Officers during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF % OF TOTAL EXERCISE
SECURITIES OPTION/SARS OR
UNDERLYING GRANTED TO BASE
OPTIONS/SARS EMPLOYEES PRICE
GRANTED IN FISCAL (PER GRANT DATE
NAME (#) YEAR SHARE) EXPIRATION DATE PRESENT VALUE(1)
- ---- ------------ ----------- -------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Itzhak Fisher(2)...................... 432,856 29.7 $22.00 10/5/04 $4,297,105
Nir Tarlovsky......................... - - - - -
Richard E. Williams(3)................ 350,400 24.0 .00457 10/5/07 7,707,325
Mark Hirschhorn(4).................... 16,206 1.1 .00457 1/1/07 344,329
Nesim N. Bildirici.................... - - - - -
</TABLE>
- ---------------
(1) The grant date present value has been calculated as of the grant dates,
which dates were October 6, 1997, October 3, 1997 and January 1, 1997 for
Itzhak Fisher, Richard E. Williams and Mark J. Hirschhorn, respectively,
using a variant of the Black-Scholes option pricing model. In applying
the model, the Company assumed a three-month volatility of 45%, a 5.62%
risk-free rate of return and a 10-year option term. Since this model is
assumption-based, it may not accurately determine the options' present
value. The true value of the options, when and if exercised, will depend
on the actual market price of the Class A Common Stock on the date of
exercise.
(2) Shares issuable upon the exercise of options granted under the 1997 Plan
pursuant to Mr. Fisher's employment agreement dated September 2, 1997.
The exercise price per share is initially $22.00 and is increased on the
first day of each calendar quarter after the date of grant, compounded
annually, equal to one-quarter of the yield to maturity on U.S. Treasury
Securities having a maturity, at the time of grant of the options,
approximately equal to seven years. Forty percent of the options are
exercisable on December 31, 2000, 70% are exercisable on December 31,
2001 and 100% are exercisable on December 31, 2002.
(3) Shares of Class A Common Stock issuable upon the exercise of options
issued on October 6, 1997. In connection with an employment agreement
dated as of August 5, 1995 between Mr. Williams and the Company, Mr.
Williams was granted the RSL Europe Option Rights (as defined below),
which rights were exchanged for the above-listed options.
(4) Shares of Class A Common Stock issuable upon the exercise of options
granted on January 1, 1997, under the 1995 Plan. The options became fully
vested on January 1, 1998.
Fiscal Year-End Option Values
The following table sets forth information with respect to each
exercise of stock options during the fiscal year ended December 31, 1997 by
the Named Executive Officers and the value at December 31, 1997 of unexercised
stock options held by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED ON VALUE FY-END (#) FY-END($)(2)
NAME EXERCISE (#) REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Itzhak Fisher............. 0 0 0/432,856 0/0
Nir Tarlovsky............. 509,580 $13,121,452 0/366,420 0/8,061,073
Richard E. Williams....... 0 0 350,400/0 7,707,325/0
Mark Hirschhorn........... 0 0 62,196/47,304 1,268,798/990,857
Nesim N. Bildirici....... 202,561 5,215,819 0/344,938 0/7,588,478
</TABLE>
(footnotes on next page)
10
<PAGE>
(footnotes from previous page)
(1) Represents the difference between the closing price of the Class A Common
Stock on the date of exercise (as quoted on The Nasdaq National Market
published in The Wall Street Journal) and the option exercise price
multiplied by the number of shares underlying the options exercised. Mr.
Tarlovsky and Mr. Bildirici continue to hold the shares received on
exercise.
(2) The value of unexercised in-the-money options was calculated by
multiplying the number of underlying shares held by the difference
between the closing price of the Class A Common Stock on December 31,
1997 ($22.00 per share, as quoted on The Nasdaq National Market published
in The Wall Street Journal) and the option exercise price.
Compensation of Directors
The Company believes that the interests of its non-employee directors
should be aligned with the interests of the Company's shareholders. To this
end, the Company asks such directors to make investments in the Class A Common
Stock and compensates such directors for their services to the Company
principally through the grant of stock options and stock awards. The Company
also encourages such directors to hold their shares and options as long as
they are on the Board of Directors (except for transfers for estate and tax
planning and personal liquidity needs).
With respect to the ownership of Class A Common Stock future
directors generally will be required, prior to joining the Board, to purchase,
at the then fair market value, shares of Class A Common Stock either in the
market or, if trading restrictions apply, from the Company.
Directors' Plan
The purposes of the Directors' Plan are to enable the Company to
attract, retain and motivate the best qualified directors and to enhance a
long-term mutuality of interest between the directors and shareholders of the
Company by granting them shares of, and options to purchase shares of, Class A
Common Stock.
Under the Directors' Plan, on the first business day following each
annual meeting of the Company's shareholders during the 10-year term of the
Directors' Plan, each non-employee director (including for these purposes, the
Chairman of the Board of Directors), will be granted options to acquire a
number of shares of Class A Common Stock with an aggregate fair market value
on the date of grant equal to $50,000 ($150,000 in the case of Ronald S.
Lauder in his capacity as Chairman of the Board of Directors). Each such
option will have a 10-year term. The exercise price of the options initially
will equal the fair market value of the Class A Common Stock on the date of
grant and will be increased on the first day of each calendar quarter by an
amount, compounded annually, based on the yield to maturity of United States
Treasury Securities having a maturity approximately equal to the term of such
options. Options granted under the Directors' Plan become exercisable in five
equal annual installments commencing on the first anniversary of the date of
grant. The maximum number of shares that may be issued under the Directors
Plan is 250,000.
Employment Arrangements
Each of the Company and International Telecommunications Group, Ltd.
("ITG"), a wholly-owned subsidiary of the Company, has entered into an
employment agreement with Itzhak Fisher, which commenced on October 6, 1997
and will terminate on December 31, 2002. The employment agreements provide
that Mr. Fisher is to serve as President and Chief Executive Officer of the
Company and specify certain of his other duties and reporting
responsibilities. The Company is obligated to use its best efforts to ensure
that Mr. Fisher continues to serve as a director and member of the Executive
Committee of the Company, and ITG is obligated to use its best efforts to
ensure that Mr. Fisher continues to serve as a director of ITG. Under the
employment agreements, Mr. Fisher is entitled to receive, in the aggregate, a
base salary of $400,000, increased by not less than $50,000 on each January 1,
commencing January 1, 1999, plus an additional amount based on the increase in
the consumer price index in the New York metropolitan area. In no event may
Mr. Fisher's base salary, in the aggregate, be less than $50,000 more than the
aggregate base salary of any other executive officer of the Company. The
employment agreements also provide that Mr. Fisher is to be a participant in
the 1997 Performance Plan (which generally outlines the bonus plan for 1997 and
future years). In addition, Mr. Fisher is eligible to receive cash bonuses of
$1,500,000 and $1,000,000 if the
11
<PAGE>
total return to the Company's shareholders from the date of the closing of the
Initial Public Offering (October 6, 1997) to December 31, 2000 and December
31, 2002, respectively, exceeds the return to common shareholders of (i) the
companies included in the peer group or line of business index in the
Company's proxy statement for that period (see page 18 of this Proxy
Statement) or (ii) if not included in such proxy statement, a group of
companies agreed to by the Executive and Compensation Committees as
representing comparable investment opportunities as the Company for the same
periods. If Mr. Fisher's employment is terminated for any reason other than by
the Company for Cause (as defined) or by Mr. Fisher without Good Reason (as
defined, including in the event of a change in control), Mr. Fisher is
entitled to a pro-rated bonus if the total return objective is achieved
through the date of such termination. Pursuant to the employment agreements,
upon the closing of the Company's initial public offering (which closed on
October 6, 1997 (the "Initial Public Offering")), Mr. Fisher was granted
options under the 1997 Plan to purchase 432,856 shares of Class A Common Stock
representing 1.0% of the outstanding Common Stock on a fully-diluted basis.
Forty percent of such options will be exercisable on December 31, 2000, an
additional 30% on December 31, 2001, and an additional 30% on December 31,
2002, except that all such options will become exercisable in the event that
Mr. Fisher's employment is terminated by the Company without Cause or Mr.
Fisher terminates his employment for Good Reason or by reason of his death or
Disability (as defined). The employment agreements also contain noncompetition
provisions applicable during the term of the employment agreements and for
one-year thereafter. If Mr. Fisher's employment is terminated by the Company
without Cause, or by Mr. Fisher for Good Reason, the employment agreements
provide that Mr. Fisher is entitled to receive benefits and his salary (in
addition to any vested benefits and previously earned but unpaid salary) for
the balance of the term of the employment agreement or for at least 12 months,
whichever is longer, plus an amount equal to his bonus under the 1997
Performance Plan for the immediately preceding year. In the event of Mr.
Fisher's death or Disability, he (or his representative or estate or
beneficiary) will be paid, in addition to any previously earned but unpaid
salary and vested benefits, 12 months salary (reduced, in the case of
disability, by any disability benefits he receives). If Mr. Fisher's
employment is terminated for any other reason, he is entitled to receive any
previously earned but unpaid salary and any vested benefits. In addition, if
Mr. Fisher's employment is terminated by the Company without Cause or by Mr.
Fisher for Good Reason or upon Mr. Fisher's death or Disability or the
expiration of his employment agreements, Mr. Fisher would be entitled to two
demand registrations of his shares in accordance with the terms of a
registration rights agreement among the Company and certain of its
shareholders including Mr. Fisher.
Each of the Company and ITG had also entered into an employment
agreement, dated as of April 1, 1995, with Nir Tarlovsky, the Vice President
of Business Development of the Company and a Vice President of ITG, the terms
of which expired on March 31, 1998. Mr. Tarlovsky's employment agreements
provided that his aggregate initial base salary would be $150,000 per annum.
Pursuant to the agreement with the Company, the Company granted to Mr.
Tarlovsky options under its 1995 Plan to acquire up to 876,000 shares of the
Class A Common Stock but in no event, greater than 2.0% of the outstanding
shares of capital stock as of the date on which his employment agreement
expired. Mr. Tarlovsky was granted options to acquire 192,127 shares of Class
A Common Stock under the agreements. These options are exercisable at $.000457
per share, vested on April 1, 1998 and expire 10 years from the date of grant.
The agreements contained non-compete covenants having a term of one year
following the termination of the agreements and a confidentiality covenant.
The agreement with the Company related to services to be provided by Mr.
Tarlovsky solely outside of the United States, while the agreement with ITG
related to services to be provided by Mr. Tarlovsky solely within the United
States. The Company and ITG are negotiating new employment agreements with Mr.
Tarlovsky.
RSL COM Europe, Ltd. ("RSL Europe") has entered into an employment
agreement, dated as of August 5, 1995, with Richard E. Williams, the Chief
Executive Officer of RSL Europe, the term of which expires in August 1998. The
employment agreement provides that Mr. Williams' base salary shall be
(pound)100,000 (approximately $160,000) per annum, which amount may be
increased at the sole discretion of RSL Europe's Board of Directors, all of
whose members are either members of the management of the Company or an
employee of the Company's subsidiary. Pursuant to the agreement, RSL Europe
granted to Mr. Williams the option to purchase shares of capital stock of RSL
Europe equal to up to 2.0% of the outstanding capital stock of RSL Europe (the
"RSL Europe Option Rights"). In addition, Mr. Williams is, under circumstances
more fully described in the agreement, entitled to receive certain annual
bonus payments based upon certain performance-based goals. The agreement
contains a non-compete covenant having a term of nine months following the
termination of the agreement and a confidentiality covenant.
12
<PAGE>
The Company entered into an agreement pursuant to which the Company, in
consideration for his waiver of the RSL Europe Option Rights, granted to Mr.
Williams options to purchase 350,400 shares of Class A Common Stock, which
options became exercisable upon the closing date of the Initial Public
Offering, at an exercise price per share of $.00457, and expire 10 years from
the date of grant.
The Company has entered into an agreement with Codan Services
Limited, a corporate service company, located in Bermuda, of which Tucker
Hall, the Company's Secretary and a resident of Bermuda, is a manager. Mr.
Hall serves as the Company's Secretary pursuant to such agreement.
The Company has also entered into, or is in the process of entering
into, employment agreements with other executive officers of the Company and
the country managers of its local operations in the United States, the United
Kingdom, France, Sweden, Finland, Australia, Italy, Japan and The Netherlands.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended
December 31, 1997 were Ronald S. Lauder, Gustavo A. Cisneros and Eugene A.
Sekulow. During a portion of 1997, Andrew Gaspar and Itzhak Fisher were
members of the Compensation Committee.
RSL Management, which is wholly-owned by Ronald S. Lauder, the
Chairman of the Board and the principal and controlling shareholder of the
Company, subleases an aggregate of 11,000 square feet of office space to the
Company at an annual rent of $767,000. RSL Management leases such space from
The Estee Lauder Companies Inc. Ronald S. Lauder, the Chairman of the Board
and the principal and controlling shareholder of the Company, and Leonard A.
Lauder, a director of the Company, are principal shareholders and directors of
Estee Lauder, Leonard A. Lauder is the Chief Executive Officer of Estee Lauder
and Fred Langhammer, a director of the Company, is the President and Chief
Operating Officer of Estee Lauder. In addition, RSL Management provided payroll
and benefits services to the Company for an annual fee of $6,000 through 1997,
which the Company believes is less than such services would cost if obtained
from third parties. (Ronald S. Lauder abstained from discussions relating to
maintaining such services.) Jacob Z. Schuster, Chief Financial Officer,
Executive Vice President, Treasurer and a director of the Company, is the
President and Treasurer of RSL Management. In 1996, Mr. Schuster received
compensation only for his services to RSL Management (and such compensation was
paid by RSL Management). In 1997, Mr. Schuster received compensation from RSL
Management and the Company for services provided by him to each of RSL
Management and the Company. Effective January 1, 1998, Mr. Schuster devotes 75%
of his time to the Company and 25% of his time to RSL Management and is being
compensated by each of the Company and RSL Management on that basis.
Ronald S. Lauder, the Chairman of the Board and the principal and
controlling shareholder of the Company has personally guaranteed the Company's
$7.5 million revolving credit facility with The Chase Manhattan Bank (the
"Revolving Credit Facility"). During a portion of 1997, the outstanding
commitment amount under the Revolving Credit Facility was $15.0 million and
Mr. Lauder had also personally guaranteed such amount. As consideration for
Mr. Lauder's guarantee of the Revolving Credit Facility, Mr. Lauder received,
in the aggregate, the Lauder Warrants. The Lauder Warrants became exercisable
beginning on October 3, 1997 at an exercise price of $.00457.
The Company entered into a consulting agreement as of September 1,
1995 with Eugene A. Sekulow, a director of the Company. The consulting
agreement expired August 31, 1997. The consulting agreement provided for Mr.
Sekulow to receive a $24,000 annual fee, as well as an annual grant of options
to purchase 21,900 shares of Class A Common Stock, for services rendered as a
consultant to the Company. The Company does not intend to enter into
agreements and arrangements with its non-employee directors or their
affiliates.
13
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for recommending to the
Board of Directors the overall direction for the executive compensation
strategy of the Company and for the ongoing monitoring of the strategy's
implementation. In addition to recommending and reviewing the compensation of
the executive officers, it is the responsibility of the Compensation Committee
to recommend new incentive compensation plans and to implement changes and
improvements to existing compensation plans, including the 1997 Plan, the 1997
Performance Plan and the Directors' Plan. The Compensation Committee makes its
compensation determinations based upon its own analysis of information it
compiles and the business experience of the members.
Overall Policy
The Compensation Committee believes that the Company's executive
officers constitute a highly qualified and motivated management team and are
largely responsible for the Company's growth and success to date. The
Compensation Committee further believes that the stability of the management
team, as well as the Company's ability to continue to incentivize management
and to attract and retain highly qualified executives for its expanding
operations, will be a contributing factor to the Company's continued growth
and success. In order to promote stability, growth and performance, and to
attract new executives, the Company's strategy is to (i) compensate its
executive officers through a stable base salary set at a sufficiently high
level to retain and motivate these officers but be in the lower half of its
peer group comparables, (ii) link a potentially significant portion of the
executive officers' annual cash compensation to the Company's overall
performance each year and (iii) align the financial interests of the Company's
executive officers with those of the Company's shareholders by promoting stock
ownership and stock performance through the Company's various equity-related
compensation plans.
The major elements of the executive compensation program are base
salary, annual performance bonuses and long-term incentive compensation in the
form of stock purchase, stock options, stock grants and SARs. Executive
officers are also entitled to customary benefits generally available to all
employees of the Company, including group medical and life insurance. Base
salary, bonuses and benefits are paid by the Company and its subsidiaries.
Federal Income Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the amount of compensation a publicly held corporation may
deduct as a business expense for Federal income tax purposes. The limit, which
applies to a company's chief executive officer and the four other most highly
compensated executive officers, is $1 million (the "Deductibility Limit"),
subject to certain exceptions (including the exclusion from the cap generally
of performance-based compensation). The Compensation Committee has determined
that compensation payable to the executive officers should generally meet the
conditions required for full deductibility under Section 162(m) of the Code.
While the Company does not expect to pay its executive officers compensation
in excess of the Deductibility Limit, the Compensation Committee also
recognizes that in certain instances it may be in the best interest of the
Company to provide compensation that is not fully deductible.
With respect to the 1997 Performance Plan described below, because
the 1997 Performance Plan was in existence prior to the completion of the
Initial Public Offering, the Deductibility Limit generally will not apply to
payments under such plan until the Company's first annual general meeting in
2001, the first meeting of the Company's shareholders at which directors will
be elected after the close of the third calendar year following the calendar
year in which the Initial Public Offering closed.
Base Salary
With the exception of the Chief Executive Officer, base salaries for
the Company's senior executives are influenced by a variety of objective and
subjective factors. The Chief Executive Officer's base salary is based upon an
employment agreement between the Company and the Chief Executive Officer.
14
<PAGE>
Annual Incentive Bonuses
The Company has established the 1997 Performance Plan to enable the
Company and its subsidiaries to attract, retain, motivate and reward the best
qualified executive officers and key employees by providing them with the
opportunity to earn competitive compensation directly linked to the Company's
performance. The 1997 Performance Plan was effective for 1997 and is effective
for each of calendar years 1998, 1999 and 2000, unless extended or earlier
terminated by the Board of Directors. The Compensation Committee may determine
that any bonus payable under the 1997 Performance Plan be paid in cash, in
shares of Class A Common Stock or in any combination thereof, provided that
not less than 50% of such bonus may be paid in cash. In addition, the 1997
Performance Plan permits a participant to elect to defer payment of his bonus
on terms and conditions established by the Compensation Committee. No more
than 400,000 shares of Class A Common Stock may be issued under the 1997
Performance Plan.
Under the 1997 Performance Plan, bonuses are payable if the Company
meets any one or more of the following performance criteria, which are set
annually by the Compensation Committee: (i) amount of or increase in
consolidated EBITDA (which consists of earnings (loss) before interest, income
taxes, depreciation and amortization); (ii) revenues; (iii) earnings per
share; (iv) net income; (v) gross profit margin; (vi) maximum capital
expenditures; (vii) return on equity; and/or (viii) return on total capital.
With respect to calendar year 1997 only, a cash bonus pool of
$2,675,000 was established by the Board of Directors and approved by the
Company's shareholders. The Company achieved the specified performance targets
set by the Compensation Committee for 1997 and, under the 1997 Performance
Plan, $650,000 was awarded to the Company's Chief Executive Officer, Mr.
Itzhak Fisher. Of the balance of funds remaining in the bonus pool,
approximately $1,250,000 was awarded to key employees of the Company and its
subsidiaries based upon the recommendation of Mr. Fisher and as approved by
the Compensation Committee and the Board of Directors (including $997,500 paid
to the other Named Executive Officers). The $775,000 balance of the $2,675,000
cash bonus pool was not paid out. Pursuant to the terms of the 1997 Performance
Plan, the awards were paid promptly following the completion of the audit of the
Company's 1997 financial statements. The Compensation Committee determined that
all such bonuses for 1997 were to be paid in cash.
With respect to calendar years 1998 and thereafter, bonus amounts
will be determined as follows: if 100% of such pre-established target or
targets are achieved, participants will generally be eligible to receive a
bonus equal to their base salary for such year. If 120% of such target is
achieved, the bonus potentially payable to participants will generally equal
twice their base salary for such year and, if 80% of such target is achieved,
25% of such base salary. In the case of the Company's chief executive officer,
the amount of such potential bonus will be 150% of base salary if 100% of the
target is achieved, 250% of base salary if 120% of the target is achieved and
25% of such base salary if 80% of the target is achieved. To the extent the
Company's results exceed 80% of the target but are less that 120% of the
target, the amount of the bonus payable to participants will be adjusted
proportionately based on where such results fall within the ranges set forth
above. Any such bonus will consist of two components. Fifty percent of the
amount determined pursuant to the formula described above will be payable if
the applicable target is achieved. Up to an additional 50% of such amount will
be payable in the discretion of the Compensation Committee. In addition, the
1997 Performance Plan permits the Compensation Committee to grant
discretionary bonuses to participants, notwithstanding that a bonus would not
otherwise be payable under the 1997 Performance Plan, to recognize
extraordinary individual performance.
The Chief Executive Officer's bonus compensation is based upon an
employment agreement between the Company and Mr. Fisher which provides for Mr.
Fisher's participation in the 1997 Performance Plan as well as other long term
bonus compensation based on the Company's stock performance over time. For
additional information relating to the Company's employment agreement with the
Chief Executive Officer, see the discussion at page 11 of this Proxy
Statement.
15
<PAGE>
Long-Term Incentive Compensation
The Company reinforces the importance of producing satisfactory
returns to shareholders over the long term through the operation of the 1997
Plan and the Directors' Plan. (For a discussion relating to the Company's
Directors' Plan, refer to page 11 of this Proxy Statement.) Grants of stock,
stock options and SARs under such plans provide executives with the
opportunity to acquire an equity interest in the Company and align the
executive's interest with that of the shareholders to create shareholder value
as reflected in growth in the market price of the Class A Common Stock.
1997 Plan
The purposes of the 1997 Plan are to foster and promote the long-term
financial success of the Company and materially increase shareholder value by
(i) motivating superior performance by means of performance-related
incentives, (ii) encouraging and providing for the acquisition of an ownership
interest in the Company by executive officers and other key employees and
(iii) enabling the Company to attract and retain the services of an
outstanding management team upon whose judgment, interest and special effort
the successful conduct of its operations is largely dependent. The 1997 Plan
reflects the Company's view that it is desirable to lengthen the vesting
period and shorten the terms of its options, and to have a "cost of capital"
factor included in the pricing of the options.
Under the 1997 Plan, the Compensation Committee is authorized to
grant options for up to 3,100,000 shares of Class A Stock. The 1997 Plan is
administered by the Compensation Committee and provides for the grant of (i)
incentive and non-incentive stock options to purchase Class A Common Stock;
(ii) SARs, which may be granted in tandem with stock options, in addition to
stock options, or freestanding; (iii) restricted stock and restricted units;
(iv) incentive stock and incentive units; (v) deferred stock units; and (vi)
stock in lieu of cash (collectively, "Awards"). The number of shares of Class
A Common Stock which are available for Awards granted under the 1997 Plan
during its term is approximately 7.0% of the total number of shares of Class A
Common Stock outstanding on a fully diluted basis. The maximum number of
shares for which options or SARs may be granted to any one participant in a
calendar year is 500,000. The Company granted to its Chief Executive Officer,
pursuant to his employment agreement with the Company, options to acquire
432,856 shares of Class A Common Stock under the 1997 Plan representing 1.0%
of the Common Stock, on a fully-diluted basis. As of April 20, 1998, the
Company had granted options to acquire 437,856 Class A Common Stock under the
1997 Plan.
1995 Plan
In April 1995, the Board of Directors authorized, and the
shareholders of the Company approved, the 1995 Plan (which was later amended
and restated). Under the 1995 Plan, the Company's Compensation Committee was
authorized to grant options for up to 2,847,000 shares of Class A Common
Stock. As of December 31, 1997, the Company had granted options to purchase
2,716,617 shares of Class A Common Stock under the 1995 Plan. In general,
options granted under the 1995 Plan terminate on the tenth anniversary of the
date of grant. The 1995 Plan was developed to provide incentives to employees
of the Company and to attract new employees and non-employee directors. At the
time of the Initial Public Offering, the 1997 Plan, the 1997 Performance Plan
and the Directors' Plan were adopted and, as a result, the Company will not
grant further options under the 1995 Plan.
16
<PAGE>
Chief Executive Officer's Fiscal 1997 Compensation
The compensation paid to the Company's Chief Executive Officer,
Itzhak Fisher, in fiscal 1997 consisted of base salary, bonus and stock
options and was established pursuant to his employment agreements with the
Company and ITG. Under the terms of his employment agreements, Mr. Fisher
received an annual base salary of $400,000 and his required participation in
the 1997 Performance Plan resulted in bonus compensation in fiscal 1997 in the
amount of $650,000. In addition, pursuant to his employment agreements, Mr.
Fisher was granted options, which vest over five years and have a cost of
capital factor, under the 1997 Plan to purchase 432,856 shares of Class A
Common Stock representing 1.0% of the outstanding Common Stock on a
fully-diluted basis. The terms of Mr. Fisher's employment agreement are
described in detail at page 11 of this Proxy Statement. The Compensation
Committee believes Mr. Fisher's performance in 1997, and his ability and
dedication to increase the long-term value of the Company for its shareholders
through leadership and vision, was excellent.
Submitted By:
Ronald S. Lauder
Gustavo A. Cisneros
Eugene A. Sekulow
17
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change
in the total shareholder return on the Class A Common Stock during the period
beginning on October 1, 1997 (the date on which the Class A Common Stock began
trading publicly on the Nasdaq National Market) and ending on December 31,
1997 with the cumulative total return on The Nasdaq National Market - U.S. and
Foreign Index and a self-determined peer group. The companies included in the
self-determined peer group are Esprit Telecom Group, Primus Telecom Group,
Inc., Telegroup, Inc., Viatel, Inc., Pacific Gateway Exchange, Inc., Star
Telecommunications, Inc. and Trescom International, Inc. The comparison
assumes that $100 was invested on October 1, 1997 in the Class A Common Stock
and in the foregoing indices and assumes the reinvestment of dividends. The
performance shown is not necessarily indicative of future performance.
Comparison of Three-Month Cumulative Total Return
[CHART]
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 10/01/97 10/31/97 11/28/97 12/31/97
- ----------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
RSL Communications Ltd. 100.0 97.4 104.7 91.2
Nasdaq Stock Market (US &
Foreign) 100.0 94.3 94.5 92.9
Self-Determined Peer Group 100.0 98.2 103.9 124.7
</TABLE>
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company intends to avoid entering into agreements and
arrangements (such as consulting agreements) with its non-employee directors
or their affiliates which, directly or indirectly, would result in
compensation being received by such directors.
The law firm of Conyers, Dill & Pearman, of which Nicolas G.
Trollope, a director of the Company, is a partner, was engaged as the
Company's counsel in Bermuda for the fiscal year ended December 31, 1997 and
will continue to be so engaged for the current fiscal year. Mr. Trollope does
not receive compensation as a director; Conyers, Dill & Pearman was paid
$47,881 in 1997.
Pursuant to an employment agreement, dated July 31, 1997, between the
Company and Andrew Shields, an executive officer of the Company, the Company
loaned Mr. Shields $100,000 in 1997 to facilitate his relocation to another
state at the Company's request. The principal amount of $100,000 and interest
bearing a rate of 6% is due on August 11, 2002 unless either Mr. Shields sells
shares of Common Stock with an aggregate value equal to or greater than
$100,000 or Mr. Shield's employment is terminated, in which cases, the note is
payable on demand.
For additional disclosure with respect to certain transactions
between the Company and certain of its directors, see the discussion at page
11 of this Proxy Statement under the heading "Compensation Committee
Interlocks and Insider Participation."
PROPOSAL 2 - ADOPTION OF FINANCIAL STATEMENTS
The Audit Committee of the Board of Directors has approved the
audited financial statements for the Company's fiscal year ended December 31,
1997 (the "Financial Statements") together with the auditors' report thereon
for presentation to the shareholders at the Annual General Meeting of
Shareholders. Under Bermuda law, shareholders of Bermuda companies are
requested to adopt the Financial Statements. The adoption of the Financial
Statements by the shareholders does not affect any rights that the
shareholders may have with respect to the Financial Statements. The Board of
Directors recommends that the shareholders adopt the Financial Statements
together with the auditors' report thereon. The adoption of the Financial
Statements and the auditors' report thereon for the fiscal year ended December
31, 1997, requires the affirmative vote of a majority of the votes cast, in
person or by proxy, at the Meeting, provided that a quorum is present in
person or by proxy. Unless otherwise indicated, the accompanying form of proxy
will be voted FOR the adoption of the Financial Statements and the auditors'
report thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.
19
<PAGE>
PROPOSAL 3 - APPOINTMENT OF AUDITORS
At the recommendation of the Audit Committee, the Board of Directors
recommends to the shareholders that Deloitte & Touche LLP be appointed as the
independent auditors of the Company for the fiscal year ending December 31,
1998. If an appointment is not so made, Deloitte & Touche LLP, as the auditors
in office shall continue in office until a successor is appointed. In
addition, the Board of Directors recommends to the shareholders that the
shareholders delegate to the Audit Committee the authority to fix the
auditors' fee for the current fiscal year. The appointment of Deloitte &
Touche LLP as independent auditors of the Company for the 1998 fiscal year and
the delegation to the Audit Committee of the authority to fix the auditors'
fee for the current fiscal year requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum
is present in person or by proxy. Unless otherwise indicated, the accompanying
form of proxy will be voted FOR the appointment of the auditors and the
delegation to the Audit Committee of the authority to fix the auditors' fee
for the current fiscal year.
Representatives of Deloitte & Touche LLP are not expected to be
present at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS AND THE
DELEGATION TO THE AUDIT COMMITTEE OF THE AUTHORITY TO FIX THE AUDITORS' FEE
FOR THE CURRENT FISCAL YEAR.
---------
Copies of the 1998 Annual Report to Shareholders are being mailed
simultaneously with this Proxy Statement. If you want to save the Company the
cost of mailing more that one Annual Report to the same address, the Company
will discontinue, at your request to the Secretary of the Company, mailing of
the duplicate copy to the account or accounts you select.
By Order of the Board of Directors,
Tucker Hall
Secretary
Hamilton, Bermuda
April 27, 1998
20
<PAGE>
RSL COMMUNICATIONS, LTD.
PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
May 7, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Itzhak Fisher, Mark
Hirschhorn and Nir Tarlovsky, or any one of them, with the power of
substitution, the proxies of the undersigned to vote with the same force and
effect as the undersigned all Class A common shares of RSL Communications,
Ltd. (the "Company") held of record by the undersigned on April 20, 1998 at
the Annual General Meeting of Shareholders to be held at the Southampton
Princess Hotel, 101 South Shore Road, Southampton, Bermuda SN02, on May 7,
1998 at 4:00 P.M. and at any adjournment or adjournments thereof, hereby
revoking any proxy or proxies heretofore given and ratifying and confirming
all that said proxies may do or cause to be done by virtue thereof with
respect to the following matters:
The Board recommends a vote FOR proposals 1, 2 and 3 below:
Please mark boxes |x| |_| in blue or black ink only.
1. Election of the eight nominees for director listed below:
<TABLE>
<S> <C> <C>
FOR all nominees listed below WITHHOLD AUTHORITY to vote Exceptions*
for all nominees listed below
|_| |_| |_|
</TABLE>
Nominees: RONALD S. LAUDER, ITZHAK FISHER, JACOB Z. SCHUSTER,
GUSTAVO A. CISNEROS, FRED H. LANGHAMMER, LEONARD A.
LAUDER, EUGENE A. SEKULOW, NICOLAS G. TROLLOPE
Instruction: to withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's
name in the space provided below:
*Exceptions:
---------------------------------------------------------
2. Adoption of the financial statements and the auditors' report thereon
for the fiscal year ended December 31, 1997.
<TABLE>
<S> <C> <C>
FOR |_| AGAINST |_| ABSTAIN |_|
</TABLE>
3. Appointment of Deloitte & Touche LLP as independent auditors of the
Company for the 1998 fiscal year and the delegation to the Audit
Committee of the authority to fix the auditors' fee for the current
fiscal year.
<TABLE>
<S> <C> <C>
FOR |_| AGAINST |_| ABSTAIN |_|
</TABLE>
21
<PAGE>
This proxy, when properly executed, will be voted as directed. If no
direction is indicated, the proxy will be voted (i) FOR the election of the
eight named individuals as directors, (ii) FOR the approval and adoption of
the financial statements and the auditors' report thereon, and (iii) FOR the
appointment of Deloitte & Touche LLP as independent auditors of the Company
for the 1998 fiscal year and the delegation to the Audit Committee of the
authority to fix the auditors' fee for the current fiscal year.
Shares cannot be voted unless this proxy card is signed and returned
or shares are voted by telephone. To vote by telephone, call 1-800-207-2014.
Shareholders residing outside the United States should call 212-269-5550. If
you vote by telephone, there is no need to mail your proxy card. Your vote
authorizes the named proxies in the same manner as if you signed, dated and
returned the proxy card.
The undersigned hereby acknowledges receipt of the Notice of Annual
General Meeting of Shareholders to be held on May 7, 1998 and the Proxy
Statement, dated April 27, 1998, prior to the signing of this proxy.
Dated , 1998
--------------------------------
--------------------------------------
Signature
--------------------------------------
Signature, if held jointly
Please sign your name exactly as it appears on your stock
certificate. When signing as attorney, executor,
administrator, trustee or guardian, please give your full
title as it appears hereon. When signing as joint tenants,
all parties in the joint tenancy must sign. When a proxy
is given by a corporation, it should be signed by an
authorized officer and the corporate seal affixed. When a
proxy is given by a partnership, it should be signed in
partnership name by an authorized person.
Will Attend Annual General Meeting |_|
Will Not Attend Annual General Meeting |_|
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY
IN THE ENCLOSED ENVELOPE.
22
<PAGE>
RSL COMMUNICATIONS, LTD.
PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
May 7, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Itzhak Fisher, Mark
Hirschhorn and Nir Tarlovsky, or any one of them, with the power of
substitution, the proxies of the undersigned to vote with the same force and
effect as the undersigned all Class B common shares of RSL Communications,
Ltd. (the "Company") held of record by the undersigned on April 20, 1998 at
the Annual General Meeting of Shareholders to be held at the Southampton
Princess Hotel, 101 South Shore Road, Southampton, Bermuda SN02, on May 7,
1998 at 4:00 P.M. and at any adjournment or adjournments thereof, hereby
revoking any proxy or proxies heretofore given and ratifying and confirming
all that said proxies may do or cause to be done by virtue thereof with
respect to the following matters:
The Board recommends a vote FOR proposals 1, 2 and 3 below:
Please mark boxes |x| |_| in blue or black ink only.
1. Election of the eight nominees for director listed below:
<TABLE>
<S> <C> <C>
FOR all nominees listed below WITHHOLD AUTHORITY to vote Exceptions*
for all nominees listed below
|_| |_| |_|
</TABLE>
Nominees: RONALD S. LAUDER, ITZHAK FISHER, JACOB Z. SCHUSTER,
GUSTAVO A. CISNEROS, FRED H. LANGHAMMER, LEONARD A.
LAUDER, EUGENE A. SEKULOW, NICOLAS G. TROLLOPE
Instruction: to withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's
name in the space provided below:
*Exceptions:
------------------------------------
2. Adoption of the financial statements and the auditors' report thereon
for the fiscal year ended December 31, 1997.
<TABLE>
<S> <C> <C>
FOR |_| AGAINST |_| ABSTAIN |_|
</TABLE>
3. Appointment of Deloitte & Touche LLP as independent auditors of the
Company for the 1998 fiscal year and the delegation to the Audit
Committee of the authority to fix the auditors' fee for the current
fiscal year.
<TABLE>
<S> <C> <C>
FOR |_| AGAINST |_| ABSTAIN |_|
</TABLE>
23
<PAGE>
This proxy, when properly executed, will be voted as directed. If no
direction is indicated, the proxy will be voted (i) FOR the election of the
eight named individuals as directors, (ii) FOR the approval and adoption of
the financial statements and the auditors' report thereon, and (iii) FOR the
appointment of Deloitte & Touche LLP as independent auditors of the Company
for the 1998 fiscal year and the delegation to the Audit Committee of the
authority to fix the auditors' fee for the current fiscal year.
Shares cannot be voted unless this proxy card is signed and returned
or shares are voted by telephone. To vote by telephone, call 1-800-207-2014.
Shareholders residing outside the United States should call 212-269-5550. If
you vote by telephone, there is no need to mail your proxy card. Your vote
authorizes the named proxies in the same manner as if you signed, dated and
returned the proxy card.
The undersigned hereby acknowledges receipt of the Notice of Annual
General Meeting of Shareholders to be held on May 7, 1998 and the Proxy
Statement, dated April 27, 1998, prior to the signing of this proxy.
Dated , 1998
--------------------------------
--------------------------------------
Signature
--------------------------------------
Signature, if held jointly
Please sign your name exactly as it appears on your stock
certificate. When signing as attorney, executor,
administrator, trustee or guardian, please give your full
title as it appears hereon. When signing as joint tenants,
all parties in the joint tenancy must sign. When a proxy
is given by a corporation, it should be signed by an
authorized officer and the corporate seal affixed. When a
proxy is given by a partnership, it should be signed in
partnership name by an authorized person.
Will Attend Annual General Meeting |_|
Will Not Attend Annual General Meeting |_|
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY
IN THE ENCLOSED ENVELOPE.
24
