<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.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1
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(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.:
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(3) Filing party:
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(4) Date filed:
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(1) set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
RSL COMMUNICATIONS, LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
The annual general meeting of shareholders of RSL COMMUNICATIONS, LTD.,
a Bermuda company, will be held at the offices of Conyers, Dill & Pearman,
Clarendon House, Church Street, Hamilton HM CX, Bermuda, on June 23, 2000 at
10:00 A.M., for the following purposes:
1. To elect eight directors to serve on our Board of Directors;
2. To approve a proposal to adopt our employee stock purchase plan; and
3. To appoint Deloitte & Touche LLP as our auditors and to delegate to our
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 26, 2000
are entitled to notice of and to vote at the meeting and any adjournments
thereof.
It is important that all shareholders be represented at the meeting.
Shareholders of record may vote by either: (1) signing and returning promptly
the enclosed proxy card in the accompanying envelope; (2) attending the meeting
and voting in person; or (3) voting by telephone or via the Internet as directed
on the enclosed proxy card. Voting by written proxy, by telephone or via the
Internet will not limit a shareholder's right to vote at the meeting if he or
she attends in person.
By Order of the Board of Directors,
Michael Ashford
Secretary
Hamilton, Bermuda
April 29, 2000
<PAGE>
RSL COMMUNICATIONS, LTD.
------------------------------------------------------
PROXY STATEMENT FOR ANNUAL
GENERAL MEETING OF SHAREHOLDERS
June 23, 2000
-------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of RSL COMMUNICATIONS, LTD., a Bermuda
company, for use at the annual general meeting of our shareholders to be held at
the offices of Conyers, Dill & Pearman, Clarendon House, Church Street, Hamilton
HM CX, Bermuda, on June 23, 2000 at 10:00 A.M., and at any adjournments thereof.
Our headquarters and registered office is located at Clarendon House,
Church Street, Hamilton HM CX, Bermuda. We also maintain offices at 810 Seventh
Avenue, 39th Floor, New York, New York 10019. The approximate date on which this
Proxy Statement and the enclosed form of proxy is to be sent to shareholders is
May 18, 2000.
We will bear the cost of preparing, assembling and mailing the enclosed
form of proxy, this Proxy Statement and other materials which may be sent to
shareholders in connection with this solicitation. It is important that all
shareholders be represented at the meeting. Shareholders of record may vote by
either: (1) signing and returning promptly the enclosed proxy card in the
accompanying envelope; (2) attending the meeting and voting in person; or (3)
voting by telephone or via the Internet as directed on the enclosed proxy card.
The method by which a shareholder votes prior to the meeting will not limit his
or her right to vote at the meeting if he or she attends in person. Officers and
other of our employees may solicit proxies by mail, telephone, telegraph and
personal interview, for which no additional compensation will be paid. We 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.
Shareholders who have voted -- whether by telephone, Internet or mail
- -- retain the right to revoke such instructions at any time (1) by subsequently
voting by the same or a different method, (2) by notice in writing to our
Secretary or (3) by revocation in person at the meeting. All shares that have
been properly voted at the meeting -- whether by telephone, Internet or mail --
and not revoked will be voted at the meeting in accordance with the instructions
given therein. If we receive more than one set of instructions from a
shareholder before the date of the meeting, we will vote such shareholder's
shares once and in accordance with the instructions that we last receive. If a
shareholder holding shares registered in the name of a brokerage firm or bank
votes via the Internet or if any shareholder signs a proxy card but, in either
case, does not give voting instructions with respect to a particular matter,
such shareholder's shares will be voted as recommended by our Board of Directors
with respect to such matter. A shareholder who votes by telephone and a
shareholder with shares registered in his or her own name who votes via the
Internet must vote with respect to each matter to be presented at the meeting in
order for his or her votes to be recognized with respect to any matter.
Shareholders of record of our Class A common shares, par value $.00457
per share, at the close of business on April 26, 2000 are entitled to one vote
for each share then held. Shareholders of record of our Class B common shares,
par value $.00457 per share, which we refer to together with our Class A common
shares as our Common Shares, at the close of business on April 26, 2000 are
entitled to 10 votes for each share then held. Holders of shares of Class A
common shares and holders of Class B common shares vote together as a single
class. On April 26, 2000, there were issued and outstanding 31,438,603 Class A
common shares and 24,267,283 Class B common shares.
Shareholders vote at the meeting by casting ballots (in person or by
proxy) which are tabulated by a person who is appointed by our 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. 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. 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.
Our Board of Directors does not intend to present and knows of no other
person who intends to present at the meeting any matter or business other than
those set forth in the accompanying Notice of Annual General Meeting of
Shareholders.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 26, 2000
with respect to the beneficial ownership of our Common Shares and also sets
forth certain information with respect to voting power as of such date by each
of our directors and nominees for director, by our chief executive officer, by
each of our four other most highly compensated executive officers for the fiscal
year ended December 31, 1999, and by all directors, nominees for director and
current executive officers as a group and by each shareholder known by us to
beneficially own more than 5% of any class of our outstanding voting securities.
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
----------------------------------------------------- Overall Voting
Power and
Ownership of
Class A Common Common Stock
Shares(1) Class B Common Shares ----------------------------
----------------------- ---------------------------
% of Voting
Number Percent Number Percent Power(2) % Ownership
------------- ------- ----------------- ------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald S. Lauder (3) ........................ 8,549(4) * 15,941,427(5)(6) 64.5 57.2 28.4
Itzhak Fisher (7) ........................... 179,908(8) * 3,132,642(9) 12.9 11.5 5.9
Leonard A. Lauder (3) ....................... 4,405(10) * 5,733,176(6)(11) 23.6 20.9 10.3
RSL Investments Corporation (3) ............. -- -- 9,496,295 39.1 34.6 17.0
EL/RSLG Media, Inc. (3) ..................... -- -- 1,814,579(6) 7.5 6.6 3.3
Jacob Z. Schuster (3) ....................... 43,242(12) * 1,646,559(12) 6.8 6.0 3.0
Gustavo A. Cisneros (13) .................... 2,445,519(14) 7.8 -- -- * 4.4
Coral Gate Investments Ltd. (13) ............ 2,441,114(15) 7.8 -- -- * 4.4
Donald R. Shassian(7) ....................... 117,999(16) * -- -- * *
David A. Hardwick ........................... 35,281(17) * -- -- * *
Nir Tarlovsky (7) ........................... 863,199(18) 2.7 -- -- * 1.5
Nesim N. Bildirici (7) ...................... 510,283(19) 1.6 87,958 * * 1.1
Eugene A. Sekulow ........................... 49,205(20) * -- -- * *
Fred H. Langhammer (3) ...................... 31,631(21) * -- -- * *
Nicolas G. Trollope ......................... 1,000(22) * -- -- * *
All directors and executive officers
as a group (18 persons) ..................... 4,533,023(23) 12.5 24,727,183(24) 100.0 88.3 49.8
Metro Holding AG (25) ....................... 3,214,284 10.2 -- -- 1.2 5.8
Essex Investment Management
Company(26) ........................ 1,792,045 5.7 -- -- * 3.2
Putnam Investments (27) ..................... 2,768,550 8.8 -- -- 1.0 5.0
</TABLE>
- ---------------------------------------
* Less than 1%.
(1) Except as otherwise noted in a footnote to this table, the foregoing
does not include (a) 24,267,283 Class A common shares issuable upon the
conversion of outstanding Class B common shares, (b) 459,900 Class A
common shares issuable upon the conversion of 459,900 Class B common
shares issuable pursuant to a warrant issued to Ronald S. Lauder, which
warrant became exercisable on October 3, 1997 at an exercise price of
$.00457 per share and expires on October 3, 2007, (c) grants of equity
interests in subsidiaries, which upon exercise generally gives the
recipient the right to receive cash or to acquire Class A common
shares, at our discretion and (d) Class A common shares issuable upon
conversion of 2,300,000 Series A preferred shares. Class B common
shares are convertible at any time into Class A common shares for no
additional consideration on a share-for-share basis. Series A preferred
shares are convertible at any time by the holders at an initial
conversion price of $22.14 per share ($50 liquidation preference per
share).
(2) Represents the percentage of total voting power and the total
percentage ownership of Class A common shares and Class B common shares
combined beneficially owned as of April 26, 2000 by each identified
shareholder and all directors and executive officers as a group.
(3) The business address is 767 Fifth Avenue, New York, New York 10153.
(4) Includes 6,213 Class A common shares issuable to Ronald S. Lauder upon
the exercise of an equal number of currently exercisable options,
granted to Mr. Lauder under our 1997 Directors' Compensation Plan.
(5) Consists of (a) 9,496,295 Class B common shares owned by RSL
Investments Corporation, a corporation wholly owned by Ronald S.
Lauder, (b) 1,814,579 Class B common shares owned by EL/RSLG Media (see
note 6), (c) 907,290 Class B common shares owned by RAJ Family
Partners, of which Mr. Lauder is a limited partner and a shareholder of
the general partner, (d) 3,263,363 Class B common shares owned directly
by Mr. Lauder, and (e) 459,900 Class B common shares issuable upon the
exercise of a warrant issued to Mr. Lauder.
(6) 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 Media's outstanding common stock. Therefore, Ronald S. Lauder
and Leonard A. Lauder may each be deemed to beneficially own all of the
Class B common shares owned by EL/RSLG Media. Ronald S. Lauder and
Leonard A. Lauder each disclaim beneficial ownership of some of these
shares. However, these shares are only included once in the computation
of shares beneficially owned by directors and executive officers as a
group.
(7) The business address is 810 Seventh Avenue, 39th Floor, New York, New
York 10019.
(8) Consists of (a) 177,839 Class A common shares and (b) 33,333 Class A
common shares issuable upon the exercise of an equal number of
currently exercisable options granted to Mr. Fisher under our 1997
Stock Incentive Plan.
(9) Represents shares owned by Fisher Investment Partners, 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
these shares.
(10) Includes 2,069 Class A common shares issuable upon the exercise of an
equal number of currently exercisable options, granted to Leonard A.
Lauder under our 1997 Directors' Compensation Plan.
(11) Consists of (a) 2,658,056 Class B common shares owned directly by
Leonard A. Lauder, (b) 4,866 Class B common shares owned by Mr.
Lauder's wife, (c) 348,385 Class B common shares owned by LAL Family
Partners, of which Mr. Lauder is a general partner, (d) 1,814,579 Class
B common shares owned by EL/RSLG Media (see note 6), and (e) 907,290
Class B common shares owned by LWG Family Partners, a partnership whose
managing partner is a corporation which is one-third owned by Mr.
Lauder. Mr. Lauder disclaims
2
<PAGE>
beneficial ownership of all of the Class B common shares owned by his
wife and some of the shares owned by LWG Family Partners.
(12) The Class A common shares consist of (i) 42,845 Class A common shares
owned by Schuster Family Partners, of which Jacob Z. Schuster is the
sole general partner and the limited partners are some of his children
and (ii) 397 Class A common shares issuable upon the exercise of an
equal number of currently exercisable options, granted to Mr. Schuster
under our 1997 Directors' Compensation Plan. The Class B common shares
represent shares owned by Schuster Family Partners. Mr. Schuster
disclaims beneficial ownership of the shares owned by Schuster Family
Partners.
(13) The business address of each of Gustavo A. Cisneros and Coral Gate
Investments is c/o Highgate Properties, 36 East 61st Street, New York,
New York 10021.
(14) Consists of (a) 2,069 Class A common shares issuable upon the exercise
of an equal number of currently exercisable options, granted to Gustavo
A. Cisneros under our 1997 Directors' Compensation Plan, (b) 2,336
Class A common shares issued to Mr. Cisneros under our 1997 Directors'
Compensation Plan and (c) 2,441,114 Class A common shares owned by
Coral Gate Investments, an international business company organized
under the laws of the British Virgin Islands, which is indirectly
beneficially owned by Mr. Cisneros and his brother, Ricardo Cisneros.
(15) Represents shares indirectly beneficially owned by Gustavo A. Cisneros
and his brother, Ricardo Cisneros. Mr. G. Cisneros disclaims beneficial
ownership of some of these shares.
(16) Consists of (a) 18,000 Class A common shares and (b) 99,999 Class A
common shares issuable upon the exercise of an equal number of
currently exercisable options granted to Mr. Shassian under our 1997
Stock Incentive Plan.
(17) Consists of (a) 28,281 Class A common shares and (b) 7,000 Class A
common shares issuable upon the exercise of an equal number of
currently exercisable options granted to Mr. Hardwick under our 1997
Stock Incentive Plan.
(18) Consists of (a) 718,915 Class A common shares owned by Tarlovsky
Investment Partners, of which Nir Tarlovsky is the sole general partner
and the Tarlovsky 1997 Family Trust is the sole limited partner and (b)
144,284 Class A common shares issuable upon the exercise of an equal
number of currently exercisable options granted to Mr. Tarlovsky under
our 1997 Stock Incentive Plan.
(19) Consists of (a) 365,999 Class A common shares and (b) 144,284 Class A
common shares issuable upon the exercise of an equal number of
currently exercisable options granted to Mr. Bildirici under our 1997
Stock Incentive Plan.
(20) Consists of (a) 2,069 Class A common shares issuable upon the exercise
of an equal number of currently exercisable options, granted to Eugene
Sekulow under our 1997 Directors' Compensation Plan, (b) 2,336 Class A
common shares issued to Mr. Sekulow under our 1997 Directors'
Compensation Plan, (c) 43,800 Class A common shares issuable upon the
exercise of an equal number of currently exercisable options granted to
Mr. Sekulow under our 1995 Stock Option Plan and (d) 1,000 Class A
common shares held directly by Mr. Sekulow.
(21) Consists of (a) 2,069 Class A common shares issuable upon the exercise
of an equal number of currently exercisable options, granted to Fred
Langhammer under our 1997 Directors' Compensation Plan, (b) 2,336 Class
A common shares issued to Mr. Langhammer under our 1997 Directors'
Compensation Plan and (c) 27,226 Class A common shares owned directly
by Mr. Langhammer.
(22) Represents shares owned by The Proverbs Trust, a Bermuda trust, of
which Mr. Trollope and his wife are the trustees and beneficiaries.
(23) Includes 539,931 Class A common shares issuable upon the exercise of an
equal number of currently exercisable options granted to directors and
executive officers as a group.
(24) Includes Class B common shares issuable upon the exercise of a warrant
issued to Ronald S. Lauder.
(25) Information as to the shares owned by Ligapart AG, a wholly owned
subsidiary of Metro Holding AG, is as of July 22, 1998, and is taken
from a Schedule 13G filed with the SEC on July 28, 1998. The address of
Metro Holding AG is Neuhofstrasse 4, CH-6340 Baar, Switzerland.
(26) Information as to the shares owned by Essex Investment Management
Company, an investment adviser registered under the Investment Advisers
Act, is as of December 31, 1998, and is taken from a Schedule 13G/A
filed with the SEC on January 8, 1999. The address of Essex Investment
Management Company is 125 High Street, Boston, Massachusetts 02110.
(27) Putnam Investments, which is a wholly owned subsidiary of Marsh &
McLennan Companies, wholly owns two registered investment advisers:
Putnam Investment Management, which is the investment adviser to the
Putnam family of mutual funds and The Putnam Advisory Company, which is
the investment adviser to Putnam's institutional clients. Both
subsidiaries have dispository power over the Class A common shares as
investment managers, but each of the mutual fund's trustees have voting
power over the shares held by each fund, and The Putnam Advisory
Company has shared voting power over the shares held by the
institutional clients. Pursuant to Rule 13d-4 of the Securities
Exchange Act, Marsh & McLennan Companies and Putnam Investments have
disclaimed beneficial ownership of these shares. Information as to the
shares owned by Putnam Investments and its affiliates, is as of July
31, 1999, and is taken from a Schedule 13G/A filed with the SEC on
November 12, 1999. The address of Putnam Investments is One Post Office
Square, Boston, Massachusetts 02109.
3
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers, directors and
persons who beneficially own greater than 10% of a registered class of the
Company's equity securities to file certain reports (which we refer to as
"Section 16 Reports") with the SEC with respect to ownership and changes in
ownership of the Common Shares and other of our equity securities. Based solely
on our review of the Section 16 Reports furnished to us and written
representations from certain reporting persons, we believe that, during the
fiscal year ended December 31, 1999, all filing requirements under Section 16(a)
of the Securities Exchange Act of 1934 applicable to our officers, directors and
greater-than-10% beneficial owners were complied with on a timely basis except
that Mr. Ronald S. Lauder, our chairman, and Mr. Gustavo Cisneros, one of our
directors, each filed late one Form 4 Statement of Changes in Beneficial
Ownership of Securities covering one transaction. In addition, Mr. Jeremy Owen
and Mr. Michael Day, each an executive officer of our company, filed late their
Form 3 Initial Statement of Beneficial Ownership of Securities.
PROPOSAL 1
ELECTION OF DIRECTORS
At the meeting, eight directors will be elected to our Board of
Directors to serve until our next annual general meeting of shareholders.
Vote Required; Recommendation
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. If a shareholder holding shares registered in
the name of a brokerage firm or bank votes via the Internet or if any
shareholder signs a proxy card but, in either case, does not give voting
instructions with respect to a particular matter, such shareholder's shares will
be voted FOR the election of persons listed below. A shareholder who votes by
telephone and a shareholder with shares registered in his or her own name who
votes via the Internet must vote with respect to each matter to be presented at
the Meeting in order for his or her votes to be recognized with respect to any
matter.
At this time, our 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 except that we are obligated
under Mr. Fisher's employment agreement to use our best efforts to ensure that
Mr. Fisher continues to serve as a director. For additional information relating
to Mr. Fisher's employment agreement with us, see the discussion on under the
heading "Employment Contracts, Termination of Employment and Change-in-Control
Arrangements" in this Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF
THE EIGHT NOMINEES TO THE BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
YEAR
BECAME A
NAME OF NOMINEE POSITION(S) AGE DIRECTOR
- --------------- ----------- --- --------
<S> <C> <C> <C>
Ronald S. Lauder Director and non-executive Chairman of the Board 56 1994
Itzhak Fisher Director, President and Chief Executive Officer 44 1994
Jacob Z. Schuster Director 51 1994
Gustavo A. Cisneros Director 54 1997
Fred H. Langhammer Director 56 1997
Leonard A. Lauder Director 67 1997
Eugene A. Sekulow Director 68 1995
Nicolas G. Trollope Director 52 1996
</TABLE>
Set forth below is certain information with respect to the nominees to
the Board of Directors.
Ronald S. Lauder, our co-founder, has served as non-executive chairman
of our board of directors since 1994 and is our principal and controlling
shareholder. He is also a founder and has served as the non-executive chairman
of the board of directors of Central European Media Enterprises, the leading
commercial television company in Central and Eastern Europe since 1994. Mr.
Lauder is a principal shareholder of The Estee Lauder Companies and has served
as chairman of Estee Lauder International and Chairman of Clinique Laboratories
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 The Estee Lauder Companies. He is chairman
of the board of trustees of the Museum of Modern Art, chairman of the Council of
Presidents of American Jewish Organizations, chairman of the International
Public Committee of the World Jewish Restitution Organization, president of the
Jewish National Fund, 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
4
<PAGE>
of the Wharton School at the University of Pennsylvania.
Itzhak Fisher, our co-founder, has been a director on our board of
directors, and our president and chief executive officer since inception in
1994. Mr. Fisher also serves as a director of deltathree.com. From 1992 to 1994,
Mr. Fisher served as general manager of Clalcom, the telecommunications
subsidiary of Clal (Israel), Ltd., Israel's largest investment corporation.
Prior to joining Clalcom, from 1990 to 1992, Mr. Fisher served as the special
consultant to the president of BEZEQ, the Israel Telecommunication Corp.,
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, 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.
Gustavo A. Cisneros has been a member of our board of directors since
March 1997. For more than the past 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 companies that own or are engaged in a
number of diverse commercial enterprises, principally in Venezuela, the U.S.,
Brazil, Chile and Mexico. Mr. Cisneros has also been the chairman of the board
of directors of Pueblo Xtra International, a holding company which owns all of
the common stock of Pueblo International, a company engaged in the business of
operating supermarkets and video rental outlets, since June 1993. Mr. Cisneros
has been a member of the board of directors of each of Univision Communications
Inc., a Spanish-language television broadcasting company, since May 1994, and
Spalding Holdings Corporation, a global manufacturer and marketer of branded
consumer products serving the sporting goods markets, since 1984. Mr. Cisneros
also has been a member of the board of directors of Panamerican Beverages
Company, which bottles soft drink products for The Coca-Cola Company in diverse
markets in Latin America, including a substantial part of central Mexico,
greater Sao Paulo, Campinas and Santos in Brazil, most of Costa Rica and most of
Colombia, since 1996. In addition, Mr. Cisneros serves as a director of America
On-Line Latin America, Inc., a subsidiary of America On-Line, Inc.
Fred H. Langhammer, a member of our board of directors since September
1997, has been chief executive officer of The Estee Lauder Companies since
January 2000, president of The Estee Lauder Companies since 1995, and a director
of The Estee Lauder Companies since January 1996, and was its chief operating
officer from 1985 until December 1999 and its executive vice president from 1985
until 1995. Mr. Langhammer joined The Estee Lauder Companies in 1975 as
president of its operations in Japan. In 1982, he was appointed managing
director of The Estee Lauder Companies' operations in Germany. Prior to joining
The Estee Lauder Companies, Mr. Langhammer was general manager of Dodwell
(Japan), a global trading company. He is a member of the board of directors of
Nabisco Group Holdings Corporation, the Cosmetics, Toiletries and Fragrance
Association, an industry group, and the American Institute for Contemporary
German Studies at Johns Hopkins University. He is also a Senior Fellow of the
Foreign Policy Association.
Leonard A. Lauder has been a member of our board of directors since
March 1997. Mr. Lauder is a principal shareholder and has served, since 1958, as
a director, and since 1995, as chairman of the board of directors, of The Estee
Lauder Companies and was its president from 1972 until 1995. He served as chief
executive officer of The Estee Lauder Companies from 1982 to December 1999. Mr.
Lauder formally joined The Estee Lauder Companies in 1958 after serving as an
officer in the U.S. 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.
Jacob Z. Schuster has been a director on our board of directors since
1994. Mr. Schuster has been president and treasurer of RSL Management
Corporation since November 1995 and executive vice president of RSL Investments
Corporation since March 1994. Mr. Schuster also serves as a director of
deltathree.com. Mr. Schuster had served as our executive vice president and
assistant secretary from 1994 to December 1999, our treasurer from 1994 through
1998 and our chief financial officer from February 1997 until December 1998.
From 1986 to 1992, Mr. Schuster was a general partner and the treasurer of
Goldman Sachs. 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 in 1992. In 1993, Mr. Schuster served as a consultant to Goldman
Sachs.
Eugene A. Sekulow has been a member of our board of directors since
September 1995. Until his retirement in December 1993, Mr. Sekulow served as
executive vice president--international of NYNEX, having served as president of
NYNEX International from 1985 to 1993. Prior to joining NYNEX International, Mr.
Sekulow had served as president of RCA International since 1973. Mr. Sekulow has
been a member of the board of directors of USN Communications, a competitive
local exchange carrier, since 1995. Mr. Sekulow is also chairman of the German
American Chamber of Commerce, a member of the Council on Foreign Relations, and
an adjunct professor at Columbia University Graduate School of Business. Mr.
Sekulow previously served as a member of the U.S. State Department Advisory
Committee on International Communications and Information Policy and on the
State Department Task Force on Telecommunications in Eastern Europe. Mr. Sekulow
is also a trustee of the American Institute for Contemporary German Studies at
Johns Hopkins University.
Nicolas G. Trollope, a member of our board of directors 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 since
1975. Mr. Trollope has served as a director of Central European Media
Enterprises since June 1994 and also serves as its vice president and secretary.
Mr. Trollope has served as secretary and a director of Delphi International,
which provides insurance
5
<PAGE>
services through a wholly-owned subsidiary, since September 1997.
Other than Ronald S. Lauder and Leonard A. Lauder, who are brothers, no
family relationship exists between any of our directors or executive officers.
With the exception of Mr. Fisher, our president and chief executive
officer, whose information is set forth above, set forth below is certain
information with respect to our executive officers and certain other officers as
of April 1, 2000.
Donald R. Shassian, 44, has served as our chief operating officer since
August 1999 and as executive vice president, chief financial officer and
treasurer since January 1999. Mr. Shassian also serves as a director of
deltathree.com. From 1993 through 1998, Mr. Shassian served as senior vice
president and chief financial officer of Southern New England Telecommunications
with management responsibility for all of the financial, information technology
and corporate development activities of that company. From 1988 through 1993,
Mr. Shassian served as a partner at Arthur Andersen LLP, providing audit and
business advisory services to a variety of companies in the telecommunications
industry. In 1992, Mr. Shassian was named the partner-in-charge of Arthur
Andersen LLP's telecommunications industry practice group for North America.
From 1977 through 1988, Mr. Shassian served in various other capacities at
Arthur Andersen LLP, providing audit and other business advisory services
primarily to companies in the telecommunications industry.
Nir Tarlovsky, 33, has been our vice president of business development
since April 1995 and served as a member of our board of directors from April
1995 until March 1997. Mr. Tarlovsky serves as a director of deltathree.com and
on the supervisory board of Telegate. From 1992 to March 1995, Mr. Tarlovsky
served as senior economist of Clalcom, where he was responsible for oversight of
the operations and budgets of 150 of Clalcom's subsidiaries. While at Clalcom,
he was also responsible for the development of new international
telecommunications ventures. Before 1992, Mr. Tarlovsky served as an officer in
the Israeli army, where he was responsible for management and financial
oversight of international research and development projects.
Nesim N. Bildirici, 33, has been our vice president of mergers and
acquisitions since 1995 and served as a member of our board of directors from
April 1995 until March 1997. From August 15, 1993 to December 31, 1996, Mr.
Bildirici was employed by both us and R.S. Lauder, Gaspar & Co. Mr. Bildirici
was a managing director of R. S. Lauder, Gaspar & Co. from 1996 until recently.
Mr. Bildirici was an investment banker at Morgan Stanley from 1989 to 1991 prior
to joining R.S. Lauder, Gaspar & Co. From 1991 to 1993, Mr. Bildirici was a
student at the Harvard Business School, where he received his MBA.
Karen van de Vrande, 49, has been our vice president of marketing since
March 1996. From March 1993 to February 1996, Ms. van de Vrande served as
managing director of AT&T's Consumer Communications Services for Europe, the
Middle East and Africa. From 1990 to 1993, Ms. van de Vrande served as managing
director of AT&T's Israeli operations. She served in various marketing and sales
capacities at AT&T from 1981 to 1990.
Avery S. Fischer, 33, has served as our vice president of legal affairs
and general counsel since January 1999, our assistant secretary since December
1999 and our legal counsel since January 1997. Mr. Fischer also serves as a
director of deltathree.com. From 1994 to 1997, Mr. Fischer was an associate with
the law firm of Rosenman & Colin LLP, New York, New York with a practice
concentrating in mergers and acquisitions, securities and general corporate
counseling. From 1993 to 1994, Mr. Fischer was an associate with the law firm of
Shea & Gould, New York, New York with a practice concentrating in commercial and
securities litigation.
David H. Hardwick, 53, has served as our vice president, global network
services since August 1999. Prior to that time, Mr. Hardwick served as the chief
operating officer for RSL COM Europe since 1997, where he was responsible for
development of business in all of the European countries in which we operate,
providing centralized management information and billing services, and for
engineering and operations support services. Prior to joining our company in
1997, Mr. Hardwick was managing director of WorldCom in the UK. Prior thereto,
Mr. Hardwick spent 10 years with British Telecom as a general manager in a
variety of roles, including digital network development and deployment,
development of British Telecom's systems integration business and management of
corporate sales.
Jeremy E. Owen, 47, has served as our vice president, products and
services, since August 1999 and prior thereto, as our European vice president
and business development director in RSL COM Europe, with responsibility for
business planning, marketing, regulation and new country start-ups across the
region. Mr. Owen was a founding director of RSL COM Europe, joining the board in
August 1995. From April 1995 to July 1995, Mr. Owen was a consultant in
strategic marketing to major multinational corporations. Prior thereto, Mr. Owen
held various positions with British Telecom from 1974 to March 1995. He joined
the British Telecom senior management group in 1987 as director of satellite
projects for Asia Pacific, and became director of the South Asia region in 1988.
Prior to that he had various responsibilities in British Telecom including
international bid management teams, the international British Telecom brand,
marketing to top customer groups, the national specialist product sales forces,
and data and computer systems engineering.
6
<PAGE>
Michael J. Day, 36, has served as our chief information officer since
November 1999 and as director of billing and management information systems for
our European operations since October 1997. From 1995 to 1997 Mr. Day served as
director of billing and information systems of COLT Telecommunications in
Europe. From 1993 to 1995 Mr. Day served as director of information technology
for Syntegra, the systems integration company of British Telecom. From 1986
through 1993 Mr. Day served in various capacities at NFC Plc, a major global
transport and distribution company.
Joel Beckoff, 44, has served as our vice president--controller since
April 1999. From 1987 to the time he joined us, Mr. Beckoff served in several
positions of increasing responsibilities at GTE Corporation. Most recently, Mr.
Beckoff was assistant vice president--finance for GTE's international operations
primarily responsible for financial planning, reporting and analysis. Prior
thereto, Mr. Beckoff had been director responsible for all consolidated internal
and external financial reporting for GTE. Prior to joining GTE, from 1977 to
1987, Mr. Beckoff was a senior manager with KPMG Peat Marwick providing audit
and related services to a variety of clients, primarily in the financial
services industry.
Michael Ashford, 53, has served as our secretary since May 1998, and
since 1989 has been a manager of Codan Services Limited, Hamilton, Bermuda, a
corporate service company associated with the law firm of Conyers, Dill &
Pearman, Hamilton, Bermuda, our Bermuda counsel.
Number of Directors
Our Board of Directors believes that it is in our best interests and
the best interests of our shareholders that we have independent directors with
outstanding achievement in their personal careers, broad business experience and
skills, an understanding of our business environment and an ability to make
independent analytical inquiries and who can provide us with the benefit of
their insights and devote adequate time to Board of Directors' duties. To this
end, in September 1997, our shareholders approved and adopted a proposal to
increase the maximum number of directors to 11. Our Board of Directors intends
to continue to seek out additional candidates for appointment to the Board of
Directors and, when appropriate, 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, 1999, the Board of Directors
met, or acted by unanimous written consent, on seven 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 of Directors on which
they serve. The compensation of directors is described under the heading
"Compensation of Directors" in this Proxy Statement.
The Board of Directors has an Executive Committee, a Compensation
Committee and an Audit Committee. We do not have a standing nominating
committee.
Executive Committee
The Executive Committee is currently composed of Ronald S. Lauder,
Itzhak Fisher, Jacob Z. Schuster, Fred H. Langhammer and Eugene A. Sekulow. All
of the current members served on the Executive Committee during 1999. Mr.
Langhammer has served on the Executive Committee since March 1999. 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
o amend our corporate governing documents;
o adopt an agreement of merger or consolidation or approve the
sale, lease or exchange of all or substantially all of our
property and assets; or
o approve or recommend dissolution to our shareholders.
The Executive Committee met, or acted by unanimous written consent, eight times
in 1999.
Compensation Committee
The Compensation Committee is currently composed of Ronald S. Lauder,
Gustavo A. Cisneros and Eugene A. Sekulow. The Compensation Committee determines
executive compensation policies and guidelines and for administering our stock
option and compensation plans. The Compensation Committee met, or acted by
unanimous written consent, four times in 1999. For more information regarding
the Compensation Committee, see the section entitled "Compensation Committee
Interlocks and Insider Participation" in this Proxy Statement.
7
<PAGE>
Audit Committee
The Audit Committee is currently composed of Jacob Z. Schuster, Eugene
A. Sekulow and Fred H. Langhammer. During a portion of 1999, Mr. Ronald S.
Lauder served as a member of the Audit Committee. The Audit Committee is
responsible for:
o recommending independent accountants to audit our financial
statements;
o discussing the scope and results of the audit with the
independent accountants;
o reviewing the functions of management and independent
accountants pertaining to our financial statements; and
o performing such other related duties and functions as are
deemed appropriate by the Audit Committee and our Board of
Directors.
Pursuant to revised rules of the SEC, the Board of Directors intends to review
its Audit Committee Charter in 2000 and intends to comply with the requirements
of the new rules. The Audit Committee met four times in 1999.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes all plan and non-plan compensation
awarded to, earned by or paid to our Chief Executive Officer and four other most
highly compensated executive officers for services rendered in all capacities to
us in the last three fiscal years (together we refer to these individuals as the
"Named Executive Officers"). For additional information relating to compensation
of certain of the Named Executive Officers, see the heading "--Employment
Contracts, Termination of Employment and Change-in-Control Arrangements."
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------
Annual Number of
Compensation Securities
------------ Restricted Stock Underlying
Awards Options/SARs
------ ------------
Name and Principal Position Year Salary Bonus(1)
- --------------------------- ---- ------ --------
<S> <C> <C> <C> <C> <C>
Itzhak Fisher 1999 $450,000(2) $506,250 -- 100,000(3)
President and Chief Executive Officer 1998 400,000 650,000 -- --
1997 400,000 650,000 -- 432,856
Donald R. Shassian 1999 $325,000 $271,875 -- 300,000(3)
Chief Operating Officer, Chief Financial 1998 N/A N/A -- N/A
Officer, Executive Vice President and 1997 N/A N/A -- N/A
Treasurer
Nesim N. Bildirici 1999 $250,000 $193,125 -- --
Vice President of Mergers and Acquisitions 1998 250,000 250,000 -- 216,428
1997 185,000 300,000 -- --
Nir Tarlovsky 1999 $250,000 $193,125 -- --(3)
Vice President of Business Development 1998 250,000 300,000 -- 216,428
1997 187,500 75,000 -- --
David H. Hardwick 1999 $214,800 $125,832 $1,282,500(4) 90,000
Vice President of Global Network Services 1998 194,200 89,600 -- --
1997 64,750(5) 11,500(5) -- (6)
</TABLE>
- ----------
(1) Annual bonuses received are reported in the year earned and paid in the
first quarter of the following year upon receipt of the audit results
from the prior year.
(2) Mr. Fisher deferred $50,000 of his salary during 1999, which was paid
in January 2000.
(3) In addition, each of these individuals was granted options to purchase
24,848 shares of Class A common stock of deltathree.com, Inc., our
subsidiary, for services as a director of deltathree.com.
(4) Under our employment agreement with Mr. Hardwick, Mr. Hardwick agreed
to waive all of his rights under the second stock unit award referenced
in footnote 6 below, in exchange for the grant of 90,000 shares of our
restricted Class A common shares
8
<PAGE>
which will vest in their entirety on September 1, 2000. The closing
price of our Class A common shares on August 10, 1999, the date of
grant, was $14.25 per share. On December 31, 1999, based on a closing
price of our Class A common shares of $17.125, the value of such
restricted shares was $1,541,250.
(5) Reflects payments made to Mr. Hardwick from the time he joined our
company in August 1997.
(6) In September 1997, Mr. Hardwick was granted two stock unit awards to
purchase Class A common shares. Under the first stock unit award, Mr.
Hardwick is entitled to receive 3,842.86 restricted units at an initial
value of $.15 per unit. Each unit under the first unit award represents
the right to receive a number of Class A common shares having, at the
time of redemption, a fair market value of RSL COM Europe Ltd., our
subsidiary, equal to the difference between the initial value per unit
and the then per unit value. The first stock unit award vests and is
exercisable in equal installments on each of September 1, 1998, 1999
and 2000. Under the second stock unit award, Mr. Hardwick is entitled
to receive 5,764.29 restricted units at an initial value based on the
invested capital in RSL COM Europe. Each unit under the second unit
award represents the right to receive a number of Class A common shares
having, at the time of redemption, a fair market value equal to the
difference between the initial value per unit and the then per unit
value. The second unit award would have vested and become exercisable
on September 1, 2000, however, as discussed in footnote 4 above, all
rights under the second stock unit award have been waived by Mr.
Hardwick.
No other annual compensation, restricted stock awards, stock
appreciation rights or long-term incentive plan payouts or other compensation
were awarded to, earned by or paid to the Named Executive Officers during any of
our last three fiscal years.
Option Grants In Last Fiscal Year
The following table sets forth information with respect to grants of
stock options to purchase Class A common shares to the Named Executive Officers
during the fiscal year ended December 31, 1999. No SARs were granted by us to
the Named Executive Officers in 1999.
<TABLE>
<CAPTION>
Name Number of % of Total Exercise or Expiration Potential Realizable Value at
- ---- Securities Options/SARs Base Price Date Assumed Annual Rates of Stock
Underlying Granted to Per Share ---------- Price Appreciation for Option Term
Options/SARs Employees in ----------- 0% 5% 10%
Granted Fiscal Year(1) -- -- ---
------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Itzhak Fisher(3).............. 100,000(2) 2.94% $24.26 6/22/06 $0 $871,892 $2,141,306
Donald R. Shassian(3)......... 250,000(4) 7.34% $28.125 1/03/06 $0 $3,126,256 $7,036,052
50,000(2) 1.47% $24.26 6/22/06 $0 $435,946 $1,070,653
Nir Tarlovsky(3).............. -- -- N/A N/A N/A N/A N/A
Nesim N. Bildirici............ -- -- N/A N/A N/A N/A N/A
David Hardwick................ 15,000(2) .44% $24.26 6/22/06 $0 $130,784 $321,196
75,000(5) 2.20% $19.316 8/10/06 $0 $61,734 $643,126
</TABLE>
(1) Reflects the percentage of total stock options granted to employees in
1999 only and excludes stock appreciation rights included in some of
the restricted units and incentive units granted to persons other than
the Named Executive Officers under our 1997 Stock Incentive Plan.
(2) Class A common shares issuable upon the exercise of an option granted
under our 1997 Stock Incentive Plan. The option is exercisable in three
equal installments on June 22, 2000, June 22, 2001 and June 22, 2002.
(3) Each of such persons was also granted options to purchase 24,848 shares
of Class A common stock of deltathree.com, our subsidiary, for services
as a director of deltathree.com.
(4) Class A common shares issuable upon the exercise of an option granted
under our 1997 Stock Incentive Plan. The option is exercisable in three
equal installments on January 3, 2000, January 3, 2001 and January 3,
2002.
(5) Class A common shares issuable upon the exercise of an option granted
under our 1997 Stock Incentive Plan. The option is exercisable in three
equal installments on August 10, 2000, August 10, 2001 and August 10,
2002.
9
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table contains information about the exercise of stock
options during 1999 by the Named Executive Officers. The table also shows the
value at December 31, 1999 of unexercised stock options held by the Named
Executive Officers.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options Options at
at FY-End(2)
Number of Shares Value FY-End Exercisable/ Exercisable/
Name Acquired on Exercise Realized(1) Unexercisable Unexercisable
---- -------------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Itzhak Fisher(3)...................... 0 $0 0/532,856 $0/$0
Donald R. Shassian(3)............... 0 $0 0/300,000 $0/$0
Nir Tarlovsky(3)..................... 0 $0 72,158/144,270 $0/$0
Nesim N. Bildirici................... 0 $0 72,158/144,270 $0/$0
David Hardwick..................... 29,456(4) $740,825 0/90,000 $0/(5)
</TABLE>
(1) Represents the difference between the closing price of our Class A
common shares on the date of exercise (as quoted on The Nasdaq Stock
Market National Market System, as published in The Wall Street Journal)
and the option exercise price multiplied by the number of shares
underlying the options exercised.
(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 our Class A common shares on December 31,
1999 ($17.125 per share, as quoted on The Nasdaq Stock Market National
Market System, as published in The Wall Street Journal) and the option
exercise price.
(3) Each of such persons was also granted options to purchase 24,848 shares
of Class A common stock of deltathree.com, our subsidiary, for services
as a director of deltathree.com.
(4) Represents the exercise by Mr. Hardwick of a vested portion of the
first stock unit award discussed in footnote 6 of the "Summary
Compensation Table."
(5) Under Mr. Hardwick's first stock unit award, based on a valuation
attributed to RSL COM Europe, such award may be converted into
approximately 84,500 Class A common shares, which based on the closing
price of our Class A common shares of $17.125 on December 31, 1999,
would have a value equal to $1,447,063.
Compensation of Directors
We believe that the interests of our non-employee directors should be
aligned with the interests of our shareholders. To this end, we encourage such
directors to make investments in our Class A common shares and compensate such
directors for their services to us through the grant of stock options and stock
awards. We also encourage 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).
Directors' Plan
The purposes of the Directors' Plan are to enable us to attract,
maintain and motivate the best qualified directors and to enhance a long-term
mutuality of interest between the directors and our shareholders by granting
them shares and options to purchase shares.
Under the Directors' Plan, on the first business day following each
annual general meeting of shareholders during the 10-year term of the Directors'
Plan, each non-employee director (whom we refer to as a "Non-Employee
Director"), including, Ronald S. Lauder as the non-executive Chairman of the
Board of Directors, will be granted a number of options to acquire a number of
Class A common shares with an aggregate fair market value on the date of grant
equal to $50,000 ($150,000 in the case of the Chairman of the Board of Directors
and $75,000 in the case of a Vice Chairman of the Board of Directors so long as
such person does not receive compensation for services to us other than as a
non-executive chairman or vice-chairman, as the case may be). Each such option
will have a 10-year term. The exercise price of the options will initially equal
the fair market value of the Class A common shares 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 U.S. Treasury Securities having a
maturity approximately equal to the term of such options. The options become
exercisable in five equal annual installments commencing on the first
anniversary of the date of grant. In addition, on the date of the annual general
meeting of our shareholders occurring in each of 1998 through 2007, each
Non-Employee Director will be granted a number of Class A common shares with an
aggregate fair market value on the date of grant equal to $30,000. The maximum
number of shares that may be issued under the Directors' Plan is 250,000. As of
December 31, 1999, we had granted options to acquire an
10
<PAGE>
aggregate of 103,365 Class A common shares under the Directors' Plan, of which
99,956 were outstanding (and 60,604 were outstanding and exercisable).
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
Itzhak Fisher has employment agreements with both us and RSL North
America through December 31, 2002. Under these agreements, Mr. Fisher is chief
executive officer and president of both companies. Under our employment
agreement with Mr. Fisher, we have promised to use our best efforts to ensure
that Mr. Fisher continues to serve as a member of our board of directors and our
executive committee. Also, RSL North America has promised to use its best
efforts to ensure that Mr. Fisher continues to serve as a member of its board of
directors. Under the employment agreements, which were effective September 2,
1997:
o Mr. Fisher is entitled to receive a total base salary of $450,000,
increased by at least $50,000 on each January 1, plus an additional
amount based on the increase in the consumer price index in the New
York metropolitan area. Mr. Fisher's aggregate base salary for 1999 was
$450,000.
o Mr. Fisher's base salary must always be at least $50,000 more than the
base salary of any other of our executive officers.
o Mr. Fisher is a participant in our 1997 Performance Incentive
Compensation Plan, or Performance Plan.
o Mr. Fisher is eligible to receive a cash bonus of $1,500,000 if the
total return to our shareholders from the date of our IPO to December
31, 2000 exceeds the return to common shareholders of peer companies.
Mr. Fisher is eligible to receive an additional cash bonus of
$1,000,000 if the total return to our shareholders from the date of our
IPO to December 31, 2002 meets the same criteria.
o If Mr. Fisher's employment is terminated for any reason other than by
us for cause or by Mr. Fisher without good reason, Mr. Fisher is
entitled to a pro-rated bonus if the total return objective is achieved
through the date of the termination.
o When our IPO closed, Mr. Fisher was granted an option under our 1997
Stock Incentive Plan to purchase 432,856 Class A common shares, which
represented 1.0% of the then outstanding common stock on a
fully-diluted basis. Forty percent of this option is exercisable on
December 31, 2000, another 30% on December 31, 2001 and the remaining
30% on December 31, 2002.
o If Mr. Fisher's employment is terminated by us without cause or Mr.
Fisher terminates his employment for good reason, including in the
event of a change in control, or by reason of his death or disability,
the entire option is immediately exercisable.
o If Mr. Fisher's employment is terminated by us without cause, or by Mr.
Fisher for good reason, Mr. Fisher may receive benefits and his base
salary, in addition to any vested benefits and previously earned but
unpaid salary, for the balance of the term of the employment agreements
or for at least 12 months, whichever is longer, plus an amount equal to
his bonus under our Performance Plan for the prior year.
o If Mr. Fisher dies or becomes unable to perform his duties, 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'
total base salary, reduced, in the case of disability, by any
disability benefits he receives.
o 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.
o If Mr. Fisher's employment is terminated by us 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 is entitled to two
demand registrations of his Class A common shares in accordance with
the terms of our registration rights agreement with some but not all of
our shareholders, including Mr. Fisher.
Donald Shassian has an employment agreement with us, which began on
January 1, 1999 and ends on December 31, 2002. Under this agreement, Mr.
Shassian served as our executive vice president and our chief financial officer
during 1999. Mr. Shassian presently serves as our chief operating officer and
executive vice president. Under this employment agreement:
o Mr. Shassian is entitled to receive a base salary of $325,000,
increased on each January 1, beginning January 1, 2000, by an amount
equal to his base salary then in effect, multiplied by the increase in
the applicable cost of living index during the prior year. Mr.
Shassian's base salary, as adjusted for cost of living increases, may
be further increased at the option and in the discretion of our board
of directors.
o Mr. Shassian is a participant in our Performance Plan.
o Mr. Shassian was granted an option to purchase 250,000 Class A common
shares under our 1997 Stock Incentive Plan. Mr. Shassian's option is
exercisable in three equal installments on January 1, 2000, January 1,
2001 and January 1, 2002, at an exercise price of $28.125 per share, as
long as Mr. Shassian is employed by us on each vesting date, and once
any installment becomes exercisable, that installment remains
exercisable until the expiration, seven years from the date of grant,
except as described below.
o Mr. Shassian's option is immediately terminated upon a termination of
Mr. Shassian's employment for cause.
o Mr. Shassian's option is immediately exercisable in full if his
employment with us is terminated by us other than for
11
<PAGE>
cause, by Mr. Shassian for good reason, including in the event of a
change in control, or by reason of Mr. Shassian's death or disability.
o Mr. Shassian's option, following any termination of his employment
other than for cause, remains exercisable for the lesser of two years
and the remaining term of his option.
o Mr. Shassian is entitled to receive additional grants of options to
purchase Class A common shares to the extent approved by the
compensation committee and our board of directors. These future grants
will be commensurate with Mr. Shassian's position with us and with
stock options awarded to other senior executives.
o We provide Mr. Shassian with life insurance coverage of at least
$1,000,000.
o If Mr. Shassian's employment is terminated without cause or by Mr.
Shassian for good reason, including in the event of a change in
control, Mr. Shassian is entitled to receive previously earned but
unpaid salary, vested benefits, a payment equal to his base salary for
the remainder of the term but in no event less than 12 months, and an
amount equal to Mr. Shassian's award, if any, under our Performance
Plan for the year prior to the year in which Mr. Shassian was
terminated. In the case of a termination by Mr. Shassian for good
reason as a result of a change in control, this payment under this plan
will be paid within five days after the termination date.
o If Mr. Shassian dies or is unable to perform his duties, 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'
base salary reduced, in the case of disability, by any disability
benefits he receives.
If Mr. Shassian's employment is terminated for any other reason, he is entitled
to his earned salary and vested benefits.
Nesim Bildirici has an employment agreement with us, which began on
January 1, 1998 and ends on December 31, 2000. Under this agreement, Mr.
Bildirici serves as our vice president of mergers and acquisitions. Under this
employment agreement:
o Mr. Bildirici is entitled to receive a base salary of $250,000,
increased on each January 1, beginning January 1, 1999, by an amount
equal to his base salary then in effect, multiplied by the increase in
the applicable cost of living index during the prior year. Mr.
Bildirici's base salary, as adjusted for cost of living increases, may
be further increased at the option and in the discretion of our board
of directors.
o Mr. Bildirici is a participant in our Performance Plan.
o Mr. Bildirici was granted an option to purchase 216,428 Class A common
shares under our 1997 Stock Incentive Plan. Mr. Bildirici's option is
exercisable, in three equal installments, as long as he is employed by
us on the applicable vesting date. Once any installment is exercisable,
that installment remains exercisable until the expiration, seven years
from the date of grant, except as described below. One-third of Mr.
Bildirici's option became exercisable on each of February 1, 1999 and
January 1, 2000. The remaining installment is exercisable on January 1,
2001.
o Mr. Bildirici's option is immediately terminated upon a termination of
Mr. Bildirici's employment by us for cause.
o Mr. Bildirici's option is immediately exercisable in full if Mr.
Bildirici's employment with us is terminated (1) by us other than for
cause, (2) by Mr. Bildirici for good reason or (3) by reason of Mr.
Bildirici's death or disability.
o Mr. Bildirici's option is immediately exercisable in full upon a change
in control. Mr. Bildirici's option, following any termination of Mr.
Bildirici's employment, other than for cause, remains exercisable for
the lesser of two years and the remaining term of his option.
o If Mr. Bildirici's employment is terminated by us without cause or by
Mr. Bildirici for good reason, Mr. Bildirici is entitled to receive
previously earned but unpaid salary, vested benefits and a payment
equal to his base salary as in effect immediately prior to the
termination date.
o If Mr. Bildirici dies or is unable to perform his duties, 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'
base salary reduced, in the case of disability, by any disability
benefits he receives.
o If Mr. Bildirici's employment is terminated for any other reason, he is
entitled to his earned salary and vested benefits.
Nir Tarlovsky has employment agreements with both us and RSL North
America, each of which began on January 1, 1998 and ends on December 31, 2000.
Under these employment agreements, Mr. Tarlovsky serves as vice president of
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business development of both companies. Under these employment agreements:
o Mr. Tarlovsky is entitled to receive a total base salary of $250,000,
increased on each January 1, commencing January 1, 1999, by an amount
equal to his base salary then in effect, multiplied by the applicable
cost of living index during the prior year. Mr. Tarlovsky's base
salary, as adjusted for cost of living increases, may be further
increased at the option and in the discretion of our board of
directors.
o Mr. Tarlovsky is a participant in our Performance Plan.
o Mr. Tarlovsky was granted an option to purchase 216,428 Class A common
shares under our 1997 Stock Incentive Plan. Mr. Tarlovsky's option is
exercisable in three equal installments, as long as Mr. Tarlovsky is
employed by us on the applicable vesting date, and once any installment
is exercisable, that installment remains exercisable until the
expiration, seven years from the date of grant, except as described
below. One-third of Mr. Tarlovsky's option became exercisable on each
of February 1, 1999 and January 1, 2000. The remaining installment is
exercisable on January 1, 2001. Mr. Tarlovsky's option is immediately
terminated upon a termination of his employment for cause.
o Mr. Tarlovsky's option is immediately exercisable in full if Mr.
Tarlovsky's employment with us is terminated (1) by us other than for
cause, (2) by Mr. Tarlovsky for good reason or (3) by reason of Mr.
Tarlovsky's death or disability.
o Mr. Tarlovsky's option is immediately exercisable in full upon a change
in control. Mr. Tarlovsky's option, following any termination of Mr.
Tarlovsky's employment, other than for cause, remains exercisable for
the lesser of two years and the remaining term of his option.
o If Mr. Tarlovsky's employment is terminated by either us or RSL North
America without cause or by Mr. Tarlovsky for good reason, Mr.
Tarlovsky is entitled to receive previously earned but unpaid salary,
vested benefits and a payment equal to his base salary as in effect
immediately prior to the termination date.
o If Mr. Tarlovsky dies or is unable to perform his duties, 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'
total base salary reduced, in the case of disability, by any disability
benefits he receives.
o If Mr. Tarlovsky's employment is terminated for any other reason, he is
entitled to his earned salary and vested benefits.
David Hardwick also has an employment agreement with us, which began on
August 10, 1999 and ends on July 31, 2002. Under this agreement, Mr. Hardwick
serves as vice president of global network services. Under this employment
agreement:
o Mr. Hardwick is entitled to receive a base salary of 150,000 pounds
sterling, increased on each January 1, beginning January 1, 2001, by an
amount equal to his base salary then in effect, multiplied by the
increase in the applicable cost of living index during the prior year.
Mr. Hardwick's base salary, as adjusted for cost of living increases,
may be further increased at the option and in the discretion of our
board of directors.
o Mr. Hardwick is a participant in our Performance Plan.
o Mr. Hardwick was granted an option to purchase 75,000 Class A common
shares under our 1997 Stock Incentive Plan. Such option is exercisable
in three equal installments on August 10, 2000, August 10, 2001 and
August 10, 2002, at an exercise price of $19.316 per share, as long as
Mr. Hardwick is employed by us on each vesting date, and once any
installment becomes exercisable, that installment remains exercisable
until the expiration, seven years from the date of grant, except as
described below.
o Mr. Hardwick was also granted 90,000 shares of our restricted Class A
common shares, which vest in their entirety on September 1, 2000, in
exchange for his rights to receive restricted units under a stock unit
award agreement.
o Mr. Hardwick's option and restricted stock grant are immediately
terminated upon a termination of Mr. Hardwick's employment for cause.
o Mr. Hardwick's option is immediately exercisable in full if his
employment with us is terminated by us other than for cause, by Mr.
Hardwick for good reason, including in the event of a change in
control, or by reason of Mr. Hardwick's death or disability. Mr.
Hardwick's restricted stock award is immediately vested in full if his
employment is terminated by us other than for cause or by reason of his
death or disability.
o Mr. Hardwick's option, following any termination of his employment
other than for cause, remains exercisable for the lesser of 90 days and
the remaining term of his option.
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o Mr. Hardwick is entitled to receive additional grants of options to
purchase Class A common shares to the extent approved by the
compensation committee and our board of directors. These future grants
will be commensurate with Mr. Hardwick's position with us and with
stock options awarded to other senior executives.
o We also provide Mr. Hardwick with a car allowance, as well as life
insurance coverage of at least four times his base salary.
o If Mr. Hardwick's employment is terminated without cause or by Mr.
Hardwick for good reason, Mr. Hardwick is entitled to receive
previously earned but unpaid salary, vested benefits and a payment
equal to his annual base salary.
o If Mr. Hardwick dies or is unable to perform his duties, 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'
base salary reduced, in the case of disability, by any disability
benefits he receives.
If Mr. Hardwick's employment is terminated for any other reason, he is entitled
to his earned salary and vested benefits.
Each of the employment agreements described above contains noncompetition
provisions which apply during the term of the relevant employment agreement and
for nine months after the employment period for Messrs. Tarlovsky and Bildirici,
and for one year after the employment period for Messrs. Fisher, Shassian and
Hardwick.
We have an agreement with Codan Services Limited, a corporate service company,
located in Bermuda, of which Michael Ashford, our secretary and a resident of
Bermuda, is a manager. Mr. Ashford serves as our secretary under this agreement.
We have also entered into, or are in the process of entering into, employment
agreements with some of our other executive officers and the country managers of
most of our local operations in various countries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended
December 31, 1999 were Ronald S. Lauder, Gustavo A. Cisneros and Eugene A.
Sekulow.
During 1999, RSL Management Corporation, which is wholly owned by
Ronald S. Lauder, our Chairman of the Board and our principal and controlling
shareholder, had subleased an aggregate of 7,500 square feet of office space to
us at an annual rent of $591,000. RSL Management sublet such space from The
Estee Lauder Companies Inc. Ronald S. Lauder is a principal shareholder of Estee
Lauder and Leonard A. Lauder, one of our directors, is the Chairman of the Board
of Estee Lauder. Fred H. Langhammer, one of our directors, is the President and
Chief Executive Officer of Estee Lauder. This sublease was terminated without
penalty on March 31, 2000. In addition, RSL Management provided payroll and
benefits services to us for an annual fee of $12,000 through 1999, which we
believe 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, one of our directors, is the President and
Treasurer of RSL Management.
We provide telecommunications services to Estee Lauder at rates
comparable to rates of our preferred customers.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for recommending to the Board
of Directors the overall executive compensation strategy of our company and for
the ongoing monitoring of the strategy's implementation. In addition to
recommending and reviewing the compensation of our 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 Stock Incentive Plan, the 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 our executive officers
constitute a highly qualified and motivated management team and are largely
responsible for our growth and success to date. The Compensation Committee
further believes that the stability of the management team, as well as our
ability to continue to incentivize management and to attract and retain highly
qualified executives for its expanding operations, will be a contributing factor
to our continued growth and success. In order to promote stability, growth and
performance, and to attract new executives, our strategy is to compensate our
executives with an overall package that we believe is competitive with those
offered by similarly situated companies and which consists of (i) a stable base
salary set at a sufficiently high level to retain and motivate these officers
but generally targeted to be in the top half of its peer group comparables, (ii)
an annual bonus linked to our overall performance each year and which could
represent a potentially significant portion of the executive officer's annual
compensation and (iii) equity-related compensation, which aligns the financial
interests of our executive officers with those of our shareholders by promoting
stock ownership and stock performance through the grant of stock options, SARs,
restricted stock and other equity and equity-based interests under our various
plans.
Executive officers are also entitled to customary benefits generally
available to all of our employees, including group medical and life insurance.
Base salary, bonuses and benefits are paid by us and our subsidiaries.
Federal Income Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, or 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 per person, or the Deductibility
Limit, subject to certain exceptions. The exceptions include the general
exclusion of performance-based compensation from the calculation of an executive
officer's compensation for purposes of determining whether his or her
compensation exceeds the Deductibility Limit. 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 we do not expect to pay our 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 our company to
provide compensation that is not fully deductible.
With respect to the Performance Plan described below, because the
Performance Plan was in existence prior to the completion of our IPO, the
Deductibility Limit generally will not apply to payments under such plan until
our annual general meeting of shareholders to be held in 2001, the first meeting
of our shareholders at which directors will be elected after the close of the
third calendar year following the calendar year in which our IPO was closed.
Base Salary
The Named Executive Officers' base salaries are based upon employment agreements
between us and such officers. See the heading "-- Employment Contracts,
Termination of Employment and Change-in-Control Arrangements." With respect to
other senior executives, base salaries were and are influenced by a variety of
objective and subjective factors.
Annual Incentive Bonuses
We have established the Performance Plan to enable us and our
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
Performance Plan is effective through and including the year 2000, unless
extended or earlier terminated by the Board of Directors. The Compensation
Committee may determine that any bonus payable under the Performance Plan be
paid in cash, in Class A common shares or in any combination thereof, provided
that at least 50% of such bonus is required to be paid in cash. In addition, the
Performance Plan permits a participant to elect to defer payment of his or her
bonus on terms and conditions established by the Compensation Committee. No more
than 400,000 Class A common shares may be issued under the Performance Plan.
Under the Performance Plan, bonuses are payable if we meet 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. Bonus amounts are generally determined
such that if 100% of the pre-established targets are achieved, participants will
generally be eligible to receive a bonus equal to their base salary for such
year. Additionally, the Performance Plan permits the Compensation Committee to
grant discretionary bonuses to participants, notwithstanding that a bonus would
not otherwise be payable under the Performance Plan, to recognize extraordinary
individual performance.
During 1999 under the direction of Itzhak Fisher, our President and
Chief Executive Officer, we had a very successful year with significant
accomplishments. Our actual performance was not, however, 100% of the
pre-established targets set by the Compensation Committee (after giving pro
forma effect to adjustments for acquisitions). Overall, this resulted in bonuses
paid that were less than the targeted level. Mr. Itzhak Fisher was awarded
$506,250, and $3,109,121 was awarded to 10 key employees at our global
headquarters and 12 country managers of our subsidiaries based upon the
recommendation of Mr. Fisher and as approved by the Compensation Committee and
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<PAGE>
the Board of Directors (including $783,957 paid to the other Named Executive
Officers). Pursuant to the terms of the Performance Plan, the awards were paid
in 2000, promptly following the completion of the audit of our 1999 financial
statements. The Compensation Committee determined that all such bonuses for 1999
were to be paid in cash.
The Chief Executive Officer's bonus compensation is based upon
employment agreements between each of us and RSL North America, on the one hand,
and Mr. Fisher, on the other hand, which provides for Mr. Fisher's participation
in the Performance Plan, as well as other long-term bonus compensation based on
our stock performance over time. For additional information relating to the
employment agreements with the Chief Executive Officer, see the discussion under
the heading "Employment Contracts, Termination and Change-in-Control
Arrangements" in this Proxy Statement.
Long-Term Incentive Compensation
We reinforce 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 Directors' Plan, see the
discussion under the heading "Directors' Plan" in this Proxy Statement. Grants
of stock, stock options, stock unit awards and SARs under such plans provide
executives with the opportunity to acquire an equity interest in us 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 shares.
1997 Stock Incentive Plan
The 1997 Stock Incentive Plan was adopted in conjunction with the
initial public offering of our Class A common shares in 1997 (our IPO) and was
subsequently amended. Under this plan, the Compensation Committee is authorized
to grant awards for up to 8,100,000 Class A common shares. The purposes of our
1997 Stock Incentive Plan are to foster and promote our long-term financial
success and materially increase shareholder value by (1) motivating superior
performance by means of performance-related incentives; (2) encouraging our
eligible employees to acquire an ownership interest in us; and (3) enabling us
to attract and retain the services of an outstanding management team and other
qualified and dedicated employees, as the successful conduct of our operations
depends on their judgment, interest and special effort.
The Compensation Committee administers this plan, which provides for the grant
of:
o incentive and non-incentive stock options to purchase Class A common
shares;
o stock appreciation rights, which may be granted in tandem with stock
options, in addition to stock options, or on a freestanding basis;
o restricted stock and restricted units;
o incentive stock and incentive units;
o deferred stock units; and
o stock in lieu of cash.
Under our 1997 Stock Incentive Plan, the Compensation Committee has
discretion at the time of grant or after the day a grant was made to change the
vesting schedule of an award granted to a participant. In March 1999, the
Compensation Committee determined that with respect to awards previously granted
and awards granted in the future, in the event of a change in control, 100% of
awards granted will immediately become fully vested and exercisable. The
Compensation Committee may, in it's sole discretion, cancel the award in
exchange for a payment to a participant in cash of an amount equal to the excess
of the change in control price over the exercise price for the award. No such
cancellation, acceleration of exercisability or vesting will occur following a
change in control if our Compensation Committee determines prior to the
occurrence of a change in control that the award will be honored or assumed, or
a new stock option will be substituted for the old one (this honored, assumed or
substituted option is referred to below as an alternative option) by the
participant's new employer (or the parent or a subsidiary of this new employer)
immediately following the change in control.
The Compensation Committee also determined that if one of our employees
is involuntarily terminated by us, other than for cause, or constructively
terminated following a change in control, the alternative option shall become
immediately vested and exercisable as of the date of the employee's termination,
unless with respect to the change-in-control transaction (1) initial discussions
occurred on or prior to March 1, 2000 and (2) our board of directors determines
that it is intended that "pooling of interests" accounting be available for a
transaction giving rise to, or directly related to, the change in control.
For purposes of the prior two paragraphs and the next paragraph, when we say
change in control, we mean the occurrence of:
o a sale or other disposition of our stock, or an issuance of our stock
as a result of which any "person" (as this term is used in the Exchange
Act), other than Ronald S. Lauder, is or becomes the beneficial owner
of more than 50% of the total voting power of our company and those
persons who are members of our board of directors immediately prior to
the closing of that transaction constitute less than one half of the
membership of our board of directors immediately following the closing
of that transaction;
o any merger, consolidation or reorganization following which those
persons who are members of our board of directors immediately prior to
the closing of any merger, consolidation or reorganization constitute
less than one half of the membership of the board of directors of the
surviving entity immediately following the closing of that transaction;
o a transaction in which more than 50% of the total value of our assets
and of our consolidated subsidiaries are transferred and the transferee
of those assets is not Mr. Lauder or a company controlled by him; or
o our complete liquidation.
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When we say change in control price above, we mean the highest price per Class A
common share paid in conjunction with any transaction resulting in a change in
control. This price is determined in good faith by our Compensation Committee if
any part of the offered price is payable other than in cash. In the case of a
change in control occurring solely by reason of a transaction in which more than
50% of the total value of our assets are transferred (as described above),
change in control price means the highest fair market value of our Class A
common shares on any of the 30 trading days immediately prior to the date on
which the change in control occurs.
Under our 1997 Stock Incentive Plan, the maximum number of shares for
which options or stock appreciation rights may be granted to any one participant
in a calendar year is 500,000. As of December 31, 1999, we had granted options
to acquire a total of 4,605,617 Class A common shares under this plan, of which
3,881,431 were outstanding (and 363,031 were outstanding and exercisable). We
also granted restricted units and incentive units under this plan to some
employees which generally are convertible into Class A common shares or cash, at
our discretion. As of December 31, 1999 the number of Class A common shares into
which vested and exercisable restricted units and incentive units which may be
converted is estimated to be approximately 447,000 shares.
1995 Stock Option Plan
In April 1995, the Board of Directors authorized, and our shareholders,
the 1995 Stock Option Plan (which was later amended and restated). Under this
plan, the Compensation Committee was authorized to grant options for up to
2,847,000 Class A common shares. As of December 31, 1999, we had granted options
to purchase 2,716,617 Class A common shares under this plan of which 444,868
remain outstanding (and 327,703 were outstanding and exercisable). In general,
options granted under this plan terminate on the tenth anniversary of the date
of grant. We developed the 1995 Stock Option Plan to provide incentives to our
employees and to attract new employees and non-employee directors. In connection
with the IPO, the plan was replaced by our other existing plans. We have not
granted further options under this plan since the IPO, and will not grant
further options under this plan.
Chief Executive Officer's Fiscal 1999 Compensation
In 1999, Mr. Itzhak Fisher, our co-founder and Chief Executive Officer
led us through an important year of change for our company, during which we
attained numerous milestones. We achieved positive EBITDA (as adjusted),
completed a successful initial public offering of our subsidiary,
deltathree.com, restructured the company in August 1999, expanded our owned
network and facilities, and refocused our business on developing products and
services to more fully address the growing needs and demands of our customer
base. Under the terms of his employment agreements with us and RSL North
America, Mr. Fisher received an aggregate annual base salary of $450,000 and his
required participation in the Performance Plan resulted in bonus compensation
for 1999 in the amount of $506,250, which was paid in March 2000. The terms of
Mr. Fisher's employment agreements are described in detail under the heading "--
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements" in this Proxy Statement. The Compensation Committee believes Mr.
Fisher's performance, ability and dedication to increase the long-term value of
our company for our shareholders through leadership and vision, was excellent.
Submitted By:
Ronald S. Lauder
Gustavo A. Cisneros
Eugene A. Sekulow
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PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change
in the total shareholder return on our Class A common shares during the period
beginning on October 1, 1997 (the date on which our Class A common shares began
trading publicly on The Nasdaq National Market) and ending on December 31, 1999
with the cumulative total return on The Nasdaq National Market - U.S. and
Foreign Index and our old self-determined peer group, and a new self-determined
peer group. The companies included in our old self-determined peer group are
Primus Telecommunications Group, Inc., Viatel, Inc., Pacific Gateway Exchange,
Inc., and Star Telecommunications, Inc. The companies included in our new
self-determined peer group include those in our old self-determined peer group
along with Global TeleSystems Group, Inc. The comparison assumes that $100 was
invested on October 1, 1997 in the Class A common shares and in the foregoing
indices and assumes the reinvestment of dividends. The performance shown is not
necessarily indicative of future performance.
COMPARISON OF TWENTY-SEVEN MONTH CUMULATIVE TOTAL RETURN
[GRAPH]
-------------------------------------------------------------
Cumulative Total Return($)
-------------------------------------------------------------
<TABLE>
<CAPTION>
CRSP Total Returns Index for 10/1/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RSL Communications, Ltd. 100.00 100.00 104.55 136.36 123.30 134.09 163.35 87.78 82.95 77.84
New Peer Group 100.00 128.47 186.88 168.42 113.34 174.78 161.75 232.74 124.58 214.18
Old Peer Group 100.00 128.47 186.88 147.21 96.23 135.88 111.16 157.63 99.28 164.17
Nasdaq Stock Market 100.00 92.77 108.71 111.19 99.01 128.49 144.07 157.90 161.32 241.15
(US and Foreign)
RSL Communications, Ltd. $24.125 $22.00 $23.00 $30.00 $27.125 $29.50 $35.94 $19.31 $18.25 $17.125
Closing Sale Price*
</TABLE>
* As quoted on The Nasdaq National Market System, as published in the
Wall Street Journal, for (unless otherwise stated) the last trading day
of the period.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We do not intend to make any consulting or other arrangements with our
non-employee directors or their affiliates under which they would be compensated
in any way.
The law firm of Conyers, Dill & Pearman, of which Nicolas G. Trollope,
a member of our board of directors, is a partner, was our counsel in Bermuda for
1999 and continues to be for 2000. Mr. Trollope is not paid for his services as
a member of our board of directors. We paid legal fees to Conyers, Dill &
Pearman of approximately $29,000 in 1999.
We use Codan Services as our corporate service company in Bermuda.
Michael Ashford, our secretary, is a manager of Codan Services. Mr. Ashford
serves as our secretary under our service agreement with Codan Services. Our
agreement with Codan Services also provides that it will furnish us with
corporate administrative services including the services of a registered office,
maintenance of statutory records and registers and associated clerical and
secretarial services.
deltathree.com
Since we acquired a controlling interest in deltathree.com in 1997, we
have funded deltathree.com's cash requirements through inter-company loans
bearing interest at the rate of 14% per annum. As of December 31, 1999,
deltathree.com owed approximately $14.8 million (principal and accrued interest)
to us. The inter-company loans are due on demand after November 29, 2000. We
have provided deltathree.com with a $10 million line of credit (in addition to
the existing $14.8 million), bearing interest at the rate of 14% per annum, due
on demand after November 1, 2000. deltathree.com has agreed with us that they
will not incur any debt other than inter-company debt without our written
consent so long as deltathree.com is a restricted subsidiary.
Following the completion of deltathree.com's initial public offering,
we remain the controlling stockholder and own 100% of its outstanding Class B
common stock, which represents approximately 95% of the combined voting power of
all of the outstanding capital stock of deltathree.com and approximately 68% of
the economic interest in deltathree.com.
Intercompany Compliance Agreement. We have entered into an agreement
with deltathree.com under which it has agreed not to take any action that would
cause us to default under our indentures. deltathree.com has also agreed to
obtain our written consent before incurring any debt and to provide us with
information that we require for our reporting obligation under our indentures
and under the securities laws.
Services Agreement. We entered into a services agreement with
deltathree.com on July 23, 1997, which was subsequently amended and restated as
of September 3, 1999. As amended and restated, the agreement extends to
September 2, 2004, and is automatically extended for additional one-year terms
unless terminated by deltathree.com or us. The services agreement may be
terminated by us or deltathree.com for cause, by the non-bankrupt party in the
event of bankruptcy of the other party or by us should we and/or our affiliates
hold less than 50% of the voting control of deltathree.com's outstanding common
stock.
Services and Facilities. Under the services agreement, if
deltathree.com requires equipment space or limited office space at any location
where we maintain an office or equipment, we are required to use our reasonable
best efforts to provide deltathree.com such space. However, we are not obligated
to provide deltathree.com with office space for more than that required by two
full-time employees, and we are entitled to vacate space without it being deemed
a breach of the agreement. deltathree.com is required to pay us their
proportionate share of all lease payments associated with such office or
equipment space. In addition, we are required to make reasonable efforts to
assist deltathree.com in obtaining Internet, frame relay and dedicated lines
from third parties in countries where we have communication switches colocated
with deltathree.com network servers at the same price that we pay such third
parties. As of December 31, 1999, deltathree.com colocated offices in five
locations and equipment in five locations. We are also required to use our
reasonable efforts to purchase dedicated bandwidth connectivity on
deltathree.com's behalf from third party bandwidth suppliers at the same price
as we pay such third party suppliers. As a result, deltathree.com realizes
certain bulk pricing benefits received by us.
Under the services agreement, we are also required to provide deltathree.com
with the following services:
o domestic inbound traffic termination--we are required to terminate
deltathree.com domestic inbound traffic through our switches in
countries where deltathree.com servers and our switches are co-located.
This termination service is provided to deltathree.com at the then
prevailing fair market rates for such service.
o international outbound termination--we are required to terminate
deltathree.com international outbound telephone traffic in each country
where deltathree.com servers and our switches are co-located and we
have contracted to receive such services in the ordinary course. This
termination service is provided to deltathree.com at the then
prevailing fair market rates for such service.
o traffic origination--we are required to use our best efforts to assist
deltathree.com in obtaining services, including toll-free services,
from local third parties which will provide deltathree.com users with
the ability to access deltathree.com's
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network at the same rates offered by such third parties to us in
countries where deltathree.com's servers and our switches are
co-located.
o use of our switches--we are required to provide deltathree.com with use
of our switches to connect deltathree.com carrier customers in each
location where deltathree.com's servers and our switches are colocated.
The termination rate is $0.01 per minute. deltathree.com is charged for
a minimum usage of 100,000 minutes per month per switch per connection,
whether or not such minutes are used. In addition, we provide
deltathree.com carrier customers billing and other similar
customer-related services at a charge of $0.01 per minute of carrier
traffic usage. Based on switches currently used, we charge
deltathree.com a minimum of $7,000 per month.
o use of prepaid calling platform--we are required to provide
deltathree.com with access to, and use of, our prepaid calling platform
in each location where deltathree.com's servers and our switches are
co-located. If deltathree.com elects to use our prepaid calling
platform, deltathree.com will be charged for a minimum of 100,000
minutes per month. The fee for using our prepaid calling platform is
$0.01 per minute of traffic usage. In addition, we are required to
provide deltathree.com with additional customer-related services for
deltathree.com's prepaid calling services at a rate of $0.015 per
minute of traffic usage. To date, deltathree.com has not elected to
purchase such services.
In the event any current or future strategic partner of ours objects to us
providing deltathree.com with any of the foregoing services, we can cease
providing the service to deltathree.com. A strategic partner is a minority
shareholder in us or any subsidiary of us owning more than 10% of the common
stock of such entity. However, we are required to use reasonable efforts to
encourage our strategic partners not to object. To date, no strategic partner
has objected to us providing deltathree.com with these services.
Under the services agreement, deltathree.com is required to provide
Internet telephony services and facilities to us necessary to route our
international telecommunications traffic between all originations and
destinations deltathree.com services. The agreement provides that deltathree.com
is required to use, at our request, up to 50% of deltathree.com's network
capacity to route our international telecommunications traffic between
deltathree.com's origination and termination points. For a period of two years
from November 29, 1999, we have committed to purchase a minimum of 50 million
minutes per annum of voice and fax transmission services from deltathree.com. If
we fail in this commitment we will be required to pay deltathree.com a shortfall
charge of 10% of the average daily weighted coverage price per minute charged by
deltathree.com to us in the last three months of each annual period. If
deltathree.com is no longer our subsidiary, our minimum purchase obligation will
cease. These services are provided to us at the then prevailing fair market
rates. However, the services agreement does not specify procedures for
establishing such rates.
Marketing. Under the services agreement, we will engage in joint
marketing with deltathree.com. Each of us is required to place, in a prominent
location, a link on its home page Web site to the other's home page Web site.
deltathree.com and we will also cross-sell each other's products and services,
including through promotional materials and customer service representatives and
other additional promotional efforts. However, neither we nor deltathree.com are
required to market or promote a product or service of the other if such product
or service competes with the other party's product or service.
Non-Competition. Under the services agreement between us and
deltathree.com, we are prohibited from competing with deltathree.com in
providing Internet telephony services as described in the services agreement,
provided that deltathree.com provides us with any requested Internet telephony
services promptly and with quality assurance. However, this non-competition
provision terminates on September 3, 2001 and the scope of such provision is
subject to the following limitations:
o we and our subsidiaries may acquire up to 20% in an entity providing
Internet telephony services;
o we and our subsidiaries may be stockholders in entities providing
Internet telephony services, provided that Internet telephony services
are ancillary to the business of that entity;
o the non-competition provision does not apply to our subsidiaries that
become publicly traded companies; and
o Internet telephony services under the non-competition provision are
limited to phone to phone services marketed as IP to the general
public, including both individuals and businesses and the following
Web-based enhanced communication services: PC-to-phone, D3 box, Click
IT, Global Roaming, IP-initiated conference calls, Phone-to-PC, D3 Fax,
information services and white boarding.
Carrier Transmission Services. We purchase carrier transmission
services from deltathree.com. Rates are established based on market rates.
Registration Rights Agreement. We have entered into an agreement with
deltathree.com under which we have the right to require deltathree.com on three
occasions to register for sale the shares of common stock we hold. We will not
be allowed to exercise these registration rights during the 180-day lock-up
period following deltathree.com's initial public offering. We also have an
unlimited number of "piggyback" registration rights. This means that any time
deltathree.com registers its common stock for sale, we will have the right to
include common stock of deltathree.com that we own in that
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offering and sale.
deltathree.com has agreed to pay all expenses that result from
registration of deltathree.com common stock that we own under the registration
rights agreement (other than underwriting commissions for the common stock we
sell and our taxes). deltathree.com has also agreed to indemnify us against
liabilities that may result from the sale of deltathree.com common stock we
hold, including Securities Act liabilities.
Management Agreement. deltathree.com has entered into an agreement with
us pursuant to which we have agreed that from the time deltathree.com completes
its initial public offering until such time as deltathree.com is no longer our
subsidiary, we will provide to deltathree.com the following services:
o international legal services
o financial services, including assistance in accounting, financial
reporting, budgeting, business controls, tax and treasury related
matters
o corporate finance and mergers and acquisition advisory services
o assistance with network planning
o product development
o assistance with strategic planning
o availability of our management
deltathree.com has agreed to pay to us $20,000 per month for these services,
subject to adjustments for inflation.
RSL COM PrimeCall Co-Branding and Services Agreement. deltathree.com
has entered into an agreement with RSL COM PrimeCall, our subsidiary, to develop
a prepaid IP calling card product. PrimeCall will arrange for the production of
the calling card, as well as assisting deltathree.com with sales, marketing and
distribution. deltathree.com will record all revenues from the sales of the
calling cards. In exchange for the services PrimeCall provides to
deltathree.com, deltathree.com will agree to establish and administer a Web site
for PrimeCall to help enable PrimeCall to market and sell its calling cards over
the Web and place 500,000 RSL COM PrimeCall banners on deltathree.com's site per
month. deltathree.com will oversee for PrimeCall all billing, collections and
fulfillment for on-line orders.
Release and Indemnification Agreement. We have entered into an
agreement with deltathree.com, pursuant to which each party has agreed to
release the other from any claims existing or arising from acts or events
occurring or failing to occur prior to the date of the agreement, other than
those arising from this agreement, the service agreement, the registration
rights agreement, the management agreement, the intercompany credit agreement,
the compliance agreement and other commercial transactions between
deltathree.com and us. Further, each party has agreed to indemnify the other for
breaches of the existing agreements described above.
For additional disclosure with respect to certain transactions between us and
certain of our directors, see the discussion under the heading "Compensation
Committee Interlocks and Insider Participation" in this Proxy Statement.
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PROPOSAL 2
ADOPTION OF OUR EMPLOYEE STOCK PURCHASE PLAN
General.
Effective April 26, 2000, our Board of Directors adopted the RSL
Communications, Ltd. Employee Stock Purchase Plan. In order to receive favorable
tax treatment under Section 423 of the Internal Revenue Code of 1986, as amended
(which we refer to as the "Code"), shareholder approval of the employee stock
purchase plan is required. A summary of the material features of the employee
stock purchase plan follows. This summary is qualified in its entirety by
reference to the full text of the employee stock purchase plan, which is set
forth in Exhibit A hereto and incorporated by reference herein.
The employee stock purchase plan provides our eligible employees and
employees of our designated subsidiaries with an opportunity to acquire our
Class A common shares and thereby align employee and shareholder long-term
interests.
All of our employees and employees of our designated subsidiaries who
have at least one year of service and work more than 20 hours per week and five
months in a calendar year will be eligible to participate in the employee stock
purchase plan, except that employees who are "highly compensated" within the
meaning of Section 414(q) of the Code and employees who are five percent or more
stockholders of our company or any parent or subsidiary will not be eligible to
participate.
Pursuant to the employee stock purchase plan, each eligible employee
will be permitted to purchase Class A common shares up to two times per calendar
year in an aggregate amount equal to 1% to 10% of the employee's base pay, as
elected by the employee. Under the employee stock purchase plan, a
participant's right to purchase Class A common shares may not accrue at a rate
that exceeds $25,000 of fair market value of Class A common shares during any
calendar year.
Unless otherwise determined by our Compensation Committee, the initial
offering period will commence on the first trading day on or after the effective
date of the employee stock purchase plan and end on the last trading day on or
prior to the first anniversary of the commencement date. Each subsequent
offering period will have a duration of approximately one year, commencing on
the first trading day and ending on the last trading day of each calendar year
(commencing with calendar year 2001). Each "purchase period" will have a
duration of approximately six months.
As of the last day of each "purchase period" ending within an "offering
period," participating employees will be able to purchase Class A common shares
for a purchase price equal to the lesser of:
o 85% of the fair market value of Class A common shares on the date the
offering period begins; and
o 85% of the fair market value of Class A common shares on the last day
of the purchase period.
A right to purchase shares which is granted to a participant under the
employee stock purchase plan is not transferable otherwise than by will or the
laws of descent and distribution.
In the event of any change in the outstanding Class A common shares
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification, or any other increase or decrease in the number of shares
effected without receipt of consideration by us adjustments may be made in the
number, kind and price of shares available for purchase under the employee stock
purchase plan and in the minimum and maximum number of shares which an
individual employee is entitled to purchase; provided, however, that conversion
of any of our convertible securities shall not be deemed to have been "effected
without receipt of consideration." Such adjustments shall be made by our Board
of Directors, whose determination in that respect shall be final, binding and
conclusive.
We have the right to terminate or amend the employee stock purchase
plan at any time without stockholder approval unless stockholder approval is
required by Section 423 of the Code or another law or regulation. If not
previously terminated by us, the employee stock purchase plan will terminate on
December 31, 2010.
The employee stock purchase plan will be administered by a committee
established by our Board of Directors, which will initially be our Compensation
Committee. The committee may make such rules and regulations and establish such
procedures for the administration of the employee stock purchase plan as it
deems appropriate. An aggregate of 4,000,000 Class A common shares has been
reserved for issuance under the employee stock purchase plan.
Certain federal income tax consequences of our employee stock purchase plan.
The following discussion of the United States Federal income tax
consequences of the granting and exercise of options and the issuance and
acquisition of shares under our employee stock purchase plan, and the sale of
Class A common shares acquired as a result thereof, is based on an analysis of
the Code as currently in effect, existing laws, judicial decisions and
administrative rulings and regulations, all of which are subject to change. In
addition to being subject to the United States Federal income tax
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consequences described below, a participant may also be subject to state and/or
local income tax consequences in the jurisdiction in which he or she works
and/or resides.
A participant's contributions through payroll deductions are not tax
deductible but will constitute a part of the cost basis of the Class A common
shares purchased under the employee stock purchase plan.
No tax liability results on the grant of an option or the purchase of
Class A common shares. The employee becomes liable for Federal income tax on the
disposition of the Class A common shares. In order to receive the beneficial
treatment provided under Section 423 of the Code, a participant must hold the
Class A common shares for two years from the date the offering period begins, or
one year from the purchase date, whichever is later.
If an employee disposes of shares acquired under the employee stock
purchase plan after the holding period, or if an employee dies while holding any
shares acquired under the employee stock purchase plan, the employee must
include in gross income, as compensation, in the taxable year of disposition or
death, an amount with respect to each share equal to the lesser of (i) the
excess of the fair market value of the share at the time of the disposition or
death over the amount paid for the share, or (ii) the excess of the fair market
value of the share on the day the offering period begins over 85% of the fair
market value of the share on the day the offering period begins. We will not be
allowed a corresponding deduction for the amount treated as ordinary income.
Except in the case of death, the basis of the shares in the employee's
hands at the time of the disposition will equal the price paid for the shares
increased by the amount, if any, included in the employee's gross income as
compensation. Any additional gain recognized will be treated as short-term or
long-term capital gain depending on the holding period of such shares. In the
case of death of the employee, the basis of the shares to the employee's estate
or heirs will be determined under Section 1014 of the Code.
If an employee disposes of any of the shares purchased under the
employee stock purchase plan before the expiration of the required holding
period, the employee must include in gross income, as compensation, an amount
with respect to each share equal to the excess of the fair market value of the
share on the date of purchase over the price paid for such share pursuant to the
employee stock purchase plan. Such amount will be includible in the gross income
of the employee for the employee's taxable year in which the disposition occurs.
We will be allowed a corresponding deduction in the same year and in the same
amount required to be included in gross income by the employee.
The basis of the shares in the hands of the employee will be the amount
paid for the shares plus the amount, if any, included in the employee's gross
income as compensation. Any gain or loss will be short-term or long-term capital
gain or loss depending on the holding period for such shares. The holding period
for the shares will commence on the date the option is exercised with respect to
such shares.
The foregoing is intended as a summary of certain United States Federal
income tax consequences associated with the employee stock purchase plan and it
does not purport to be a complete statement of such consequences. It is
recommended that employees eligible to participate in the employee stock
purchase plan consult their own tax advisors for counseling. Tax treatment under
foreign, state, local or other law, including estate tax law, is not covered in
this summary.
The complete text of the employee stock purchase plan is set forth in Exhibit A
to this Proxy Statement.
Vote Required; Recommendation
Approval of this proposal 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. If a shareholder holding shares registered in
the name of a brokerage firm or bank votes via the Internet or if any
shareholder signs a proxy card but, in either case, does not give voting
instructions with respect to a particular matter, such shareholder's shares will
be voted FOR the proposal to adopt the employee stock purchase plan. A
shareholder who votes by telephone and a shareholder with shares registered in
his or her own name who votes via the Internet must vote with respect to each
matter to be presented at the meeting in order for his or her votes to be
recognized with respect to any matter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF
THE EMPLOYEE STOCK PURCHASE PLAN.
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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 our
independent auditors until the conclusion of the next annual general meeting. 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. Deloitte & Touche LLP acted as our independent auditors for the
fiscal year ended December 31, 1999 and our audited financial statements for
such fiscal year will be laid before the shareholders at the meeting in
accordance with our bye-laws.
Vote Required; Recommendation
The appointment of Deloitte & Touche LLP as our independent auditors
until the conclusion of the next annual general meeting 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. If a shareholder holding shares registered in the name of a
brokerage firm or bank votes via the Internet or if any shareholder signs a
proxy card but, in either case, does not give voting instructions with respect
to a particular matter, such shareholder's shares 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. A shareholder
who votes by telephone and a shareholder with shares registered in his or her
own name who votes via the Internet must vote with respect to each matter to be
presented at the meeting in order for his or her votes to be recognized with
respect to any matter.
Representatives of Deloitte & Touche LLP are expected to be present at
the meeting, will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS OUR AUDITORS AND THE DELEGATION TO THE AUDIT
COMMITTEE OF THE AUTHORITY TO FIX THE AUDITORS' FEE FOR THE CURRENT FISCAL YEAR.
SHAREHOLDER PROPOSALS
Any eligible shareholder of our company who wishes to submit a proposal
for action at the next annual general meeting of shareholders and desires that
such proposal be considered for inclusion in our proxy statement and form of
proxy relating to such meeting must provide a written copy of the proposal to us
at our principal executive offices prior to December 31, 2000 and must otherwise
comply with the rules of the SEC, Bermuda law and our governing documents
relating to shareholder proposals.
The proxy or proxies designated by us will have discretionary authority
to vote on any matter properly presented by an eligible shareholder of our
company for action at the next annual general meeting of shareholders but not
submitted for inclusion in the proxy materials for such meeting unless notice of
the matter is received by us at our principal executive office prior to December
31, 2000 and certain conditions of the applicable rules of the SEC are
satisfied.
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MISCELLANEOUS
Under Bermuda law, no matter or business other than those set forth in
the accompanying Notice of Annual General Meeting of Shareholders is permitted
to be presented at the meeting.
Copies of the Annual Report to shareholders with respect to the fiscal
year ended December 31, 1999 are being mailed simultaneously with this Proxy
Statement. If you want to save us the cost of mailing more that one Annual
Report to the same address, we will discontinue, at your request to our
Secretary, mailing of the duplicate copy to the account or accounts you select.
A copy of our Annual Report on Form 10-K including the financial
statements and the financial statements schedules attached thereto for the
fiscal year ended December 31, 1999 may be obtained without charge upon written
request to the attention of Mr. Michael Ashford, Secretary, at our headquarters
at Clarendon House, Church Street, Hamilton HM CX, Bermuda.
By Order of the Board of Directors,
Michael Ashford
Secretary
Hamilton, Bermuda
April 29, 2000
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EXHIBIT A
RSL COMMUNICATIONS, LTD.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under section 423 of the Code, as
amended. The provisions of the Plan shall, accordingly, be construed in a manner
consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean any committee appointed by the
Board to administer the Plan and to perform the functions set forth herein.
(d) "Common Stock" shall mean the Class A common shares,
$0.00457 par value, of the Company.
(e) "Company" shall mean RSL Communications, Ltd., a Bermuda
company, or any successor corporation.
(f) "Compensation" shall mean the fixed salary or wage paid by
the Employer to an Employee as reported to the United States government for
Federal income tax purposes for Employees in the United States or to such other
analogous governmental authority for Employees outside the United States,
including an Employee's portion of salary deferral contributions (i.e. pursuant
to section 401(k) of the Code and any amount excludable pursuant to section 125
of the Code), but excluding payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, commissions, severance pay, foreign
service pay, expense reimbursements, any credit or benefit under any employee
plan and any other compensation.
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(g) "Continuous Status As An Employee" shall mean the absence
of any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Employer, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(h) "Contributions" shall mean all payroll deductions or other
moneys credited to the account of a Participant pursuant to the Plan.
(i) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(j) "Effective Date" shall mean the date of the adoption of
the Plan by the Board of Directors, subject to approval by the shareholders of
the Company within 12 months.
(k) "Employee" shall mean any person who is customarily
employed for at least twenty (20) hours per week and more than five (5) months
in a calendar year by the Company or one of its Designated Subsidiaries and who
has been employed by the Company or one of its Designated Subsidiaries for at
least one year as of the Offering Date of a given Offering Period, except (i)
any such person who is prohibited by applicable foreign law from participating
in this Plan and (ii) any employee who is "highly compensated" within the
meaning of section 414(q) of the Code.
(l) "Employer" shall mean, as to any particular Employee, the
corporation which employs such Employee, whether it is the Company or a
Designated Subsidiary of the Company.
(m) "Exercise Date" shall mean the last Trading Day of each
Purchase Period with respect to an Offering Period.
(n) "Fair Market Value" per Share as of a particular date
shall mean the closing price per Share on such date as reported on the National
Association of Securities Dealers Automated Quotation/National Market System
("NASDAQ/NMS") (or on such other recognized market or quotation system on which
the trading prices of the Share are traded or quoted at the relevant time).
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(o) "Investment Account" shall mean a Plan account at a
brokerage firm, selected by the Company, that is established for each
Participant and in which all Shares purchased by the Participant pursuant to the
Plan are held until withdrawn, sold or delivered pursuant to Section 9 or 15
hereof. The Investment Account of the Participant shall be an integral part of
the Participant's account hereunder.
(p) "Offering Date" shall mean the first Trading Day of each
Offering Period of the Plan. The Offering Date of an Offering Period is the
grant date for the options offered in such Offering Period.
(q) "Offering Period" shall mean a period as described in
Section 4 hereof.
(r) "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of granting an option, each of the corporations other than the Company owns
shares possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
(s) "Participant" shall mean an Employee who participates in
the Plan.
(t) "Plan" shall mean the RSL Communications, Ltd. Employee
Stock Purchase Plan, as amended from time to time.
(u) "Purchase Period" shall mean the approximately six month
period, within an Offering Period, commencing on the Trading Day next following
the last previous Exercise Date in such Offering Period and ending with the next
Exercise Date in such Offering Period, except that the first Purchase Period of
any Offering Period shall commence on the first Trading Day of such Offering
Period and end with the next Exercise Date.
(v) "Shares" shall mean shares of Common Stock.
(w) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting an option, each of the corporations other than the last
corporation in the unbroken chain owns shares possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
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(x) "Trading Day" shall mean a day on which national stock
exchanges and the NASDAQ/NMS are open for trading.
3. Eligibility.
(a) Each Employee shall be eligible to participate in each
Offering Period under the Plan, subject to the requirements of Section 5 and the
limitations imposed by section 423(b) of the Code.
(b) Notwithstanding any provision of the Plan to the contrary,
no Employee shall be granted an option under the Plan (i) if, immediately after
the grant, such Employee (or any other person whose shares would be attributed
to such Employee pursuant to section 424(d) of the Code) would own shares and/or
hold outstanding options to purchase shares possessing five percent (5%) or more
of the total combined voting power or value of all classes of shares of the
Company or of any Subsidiary or Parent of the Company, or (ii) which permits
such Employee's right to purchase shares under all employee stock purchase plans
(as described in section 423 of the Code) of the Company and any Subsidiary or
Parent of the Company to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of Fair Market Value of such shares (determined at the time
such option is granted) for any calendar year in which such option would be
outstanding at any time. Any amounts received from an Employee which cannot be
used to purchase Shares as a result of this limitation will be returned as soon
as practicable to the Employee without interest.
4. Offering Periods. The Plan shall be implemented by a series of
Offering Periods. Unless determined otherwise by the Committee, the first such
Offering Period shall commence on the first Trading Day on or after the
Effective Date and end on the last Trading Day on or prior to the first
anniversary of such commencement date. Unless otherwise determined by the
Committee, each subsequent Offering Period shall have a duration of one year,
commencing on the first Trading Day and ending on the last Trading Day of each
calendar year (commencing with calendar year 2001). The Plan shall continue
until terminated in accordance with Section 21 hereof, subject to earlier
termination under Section 19 hereof. Subject to Section 19 hereof, the Committee
shall have the power to change the duration and/or the frequency of Offering
Periods and/or Purchase Periods with respect to future offerings and shall use
its best efforts to notify Employees of any such change at least fifteen (15)
days prior to the scheduled beginning of the first Offering Period to be
affected. In no event shall any option granted hereunder be exercisable more
than twenty-seven (27) months from its date of grant.
5. Grant of Option; Participation
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(a) On each Offering Date the Company shall commence an
offering by granting each Employee an option to purchase Shares on each Exercise
Date with respect to each Purchase Period of such Offering Period, subject to
the limitations set forth in Sections 3(b) and 12 hereof. Each option so granted
shall be exercisable for the number of Shares described in Section 8 hereof and
shall be exercisable only on the Exercise Date.
(b) An Employee may become a Participant in the Plan by
completing a subscription agreement on the form provided by the Employer,
authorizing payroll deductions or otherwise providing for the method of payment
(as set forth in Section 6 hereof) and filing it with the Company or the
Employer in accordance with the form's instructions at least ten (10) business
days prior to the applicable Offering Date, unless a later time for filing the
subscription agreement is set by the Committee for all Employees with respect to
a given offering. Additionally, the Participant may participate to a greater
extent by directing (where indicated on the subscription agreement form) that
any cash dividends received on the Shares held in the Participant's account
should be reinvested in additional Shares. Unless the Participant withdraws from
the Plan as provided in Section 11 hereof, or unless the Committee otherwise
provides, such authorization will remain in effect for subsequent Offering
Periods, until modified by the Participant in accordance with Section 6(b)
hereof.
6. Payroll Deductions; Method of Payment.
(a) Subject to Section 5(b) hereof, the Participant may, in
accordance with rules and procedures adopted by the Committee, authorize payroll
deductions on each payday during an Offering Period in an amount which is not
less than one percent (1%) and not more than ten percent (10%) of such
Participant's Compensation on each such payday. Payroll deductions shall
commence on the first payroll following the Offering Date and shall end on the
last payroll paid on or prior to the last Exercise Date of such Offering Period,
unless sooner terminated by the Participant's withdrawal from the Plan as
provided in Section 10 hereof. All payroll deductions made by a Participant
shall be credited to his or her account under the Plan. A Participant may not
make any additional payments into such account, but, at the Participant's
directions given in accordance with Section 5(b) hereof, any cash dividends on
Shares held in the Participant's account may be reinvested in Shares.
(b) A Participant may withdraw from the Plan as provided in
Section 10, which will terminate his or her Contributions for the Purchase
Period in which such withdrawal occurs. A Participant may increase or decrease
the rate of his or her
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Contributions during an Offering Period by completing and filing with the
Employer a new subscription agreement authorizing a change in payroll deduction
rate. The Committee may, in its discretion, limit the number of rate changes by
a Participant during an Offering Period. A change in rate shall be effective as
of the next payroll period following the date of filing of the new subscription
agreement.
(c) The Committee may, in its discretion, establish rules and
procedures providing for payment by Participants other than by means of payroll
deduction.
7. Option Price. The option price per Share subject to an offering
shall be the lower of: (i) 85% of the Fair Market Value of a Share on the
Offering Date; or (ii) 85% of the Fair Market Value of a Share on the Exercise
Date.
8. Exercise of Option. Unless a Participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of Shares
shall be exercised automatically on each Exercise Date during the applicable
Offering Period, and the maximum number of whole Shares subject to such option
shall be purchased for him or her at the applicable option price with the
accumulated Contributions in his or her account. No fractional shares shall be
purchased; any Contributions in a Participant's account which are not sufficient
to purchase a full Share shall be retained in the account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
Participant as provided in Section 10 hereof. The Shares purchased upon exercise
of an option hereunder shall be deemed to be transferred to the Participant on
the Exercise Date. During his or her lifetime, a Participant's option to
purchase Shares hereunder is exercisable only by him or her.
9. Delivery of Shares; Withdrawal or Sale of Shares.
(a) As promptly as practicable after each Exercise Date, the
Company shall arrange the delivery of the whole and fractional Shares purchased
on such date by each Participant to the Participant's Investment Account.
(b) A Participant (or, in the event of the Participant's
death, the designated beneficiary, if any, or other appropriate person in
accordance with Section 14 hereof) may at any time submit a written request to
the Company for withdrawal of such Shares from the Investment Account, or, in
the alternative (with the consent of the brokerage firm at which the
Participant's Investment Account is located), the Participant (or another person
in accordance with Section 14 hereof) may direct the sale of such Shares by such
brokerage firm. As promptly as practicable after receipt by the Company
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of such a written request, the Company shall arrange the delivery to the
Participant of a share certificate representing such Shares (any fractional
Share being paid in cash). Unless the Committee, in its sole discretion,
otherwise determines, withdrawals may be made by a Participant no more
frequently than once each Offering Period.
10. Withdrawal of Cash; Withdrawal from Plan; Termination of Employment
(a) At any time during an Offering Period, a Participant may,
by giving written notice to the Employer, withdraw all, but not less than all,
of the Contributions credited to his or her account under the Plan and not
theretofore used to acquire Shares. Withdrawal of such Contributions shall be
deemed a withdrawal from the Plan. All of the Participant's Contributions then
credited to his or her account shall be paid to him or her promptly after
receipt of his or her notice of withdrawal, his or her option for the remainder
of the Offering Period shall be automatically terminated, and no further
Contributions for the purchase of Shares shall be made during such Offering
Period. The Participant may rejoin the Plan for any subsequent Offering Period
as to which the Participant is an Employee by complying with the procedures set
forth in Section 5 hereof.
(b) Upon termination (for any reason, including, without
limitation, retirement or death) of the Participant's Continuous Status as an
Employee during an Offering Period in which the Employee is a Participant, the
Contributions credited to his or her account and not theretofore used to acquire
Shares shall be returned to him or her or, in the case of his or her death, to
the person or persons entitled thereto under Section 14 hereof, and his or her
option for the remainder of such Offering Period shall be automatically
terminated. Such termination shall be deemed a withdrawal from the Plan.
(c) A Participant's withdrawal from an offering or the Plan
shall not have any effect upon his or her eligibility to participate in a
succeeding offering or in any similar plan which may hereafter be adopted by the
Employer.
11. Dividends, Share Splits and Interest. Cash dividends paid on Shares
held in a Participant's account shall be paid to the Participant as soon as
practicable, unless reinvested in Shares pursuant to the Participant's
directions. Share splits of, or dividends paid in Shares on, the Shares held in
the Participant's Investment Account shall be held in the Participant's
Investment Account until withdrawn or sold in accordance with Section 9 hereof.
Dividends paid in property other than cash or Shares shall be distributed to the
Participant as soon as practicable. No interest shall accrue on or be payable
with respect to the Contributions of a Participant to the Plan or any assets
held in the Participant's Plan account.
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12. Stock.
(a) The maximum number of Shares which shall be made available
for sale under the Plan shall be 4,000,000 Shares of Common Stock, subject to
adjustment upon changes in capitalization of the Company as provided in Section
18 hereof. If the total number of Shares which would otherwise be subject to
options granted pursuant to Section 5(a) hereof on the Offering Date exceeds the
number of Shares then available under the Plan (after deduction of all Shares
for which options have been exercised or are then outstanding), the Board (or
the Committee, as applicable) shall make a pro rata allocation of the Shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the Board
(or the Committee, as applicable) shall give written notice of such reduction of
the number of Shares subject to the option to each Employee affected thereby and
shall similarly reduce the rate of Contributions, if necessary. Any amounts
remaining in an Employee's account which have not been applied to the purchase
of Shares pursuant to this Section 12 shall be refunded on or promptly after the
applicable Exercise Date.
(b) A Participant shall have no rights as a shareholder with
respect to Shares covered by his or her option until such option has been
exercised.
(c) Shares to be delivered to a Participant under the Plan
shall be registered in the name of the Participant or, if requested in writing
by the Participant, in the names of the Participant and his or her spouse as
joint tenants with rights of survivorship.
13. Administration. The Committee shall supervise and administer the
Plan and shall have full power to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of the Plan and not
inconsistent with the Plan, to construe and interpret the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
Any decision reduced to writing and signed by all members of the Committee shall
be fully effective as if it had been made at a meeting duly held. Except as
otherwise provided by the Committee, each Employer shall be charged with all
expenses incurred in the administration of the Plan with respect to such
Employer's Employees. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan, and all members of the Committee shall be fully indemnified by the
Company with respect to any such action, determination or interpretation. All
decisions, determinations and interpretations of the Committee shall be final
and binding on all persons, including
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<PAGE>
the Company, the Employer, the Participant (or any person claiming any rights
under the Plan from or through any Participant) and any shareholder.
14. Designation of Beneficiary.
(a) A Participant may file a written designation of a
beneficiary who is to receive any Shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death.
(b) Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of the death of a
Participant, if a beneficiary validly designated under the Plan is living at the
time of such Participant's death, the Company shall deliver such Shares and/or
cash to such beneficiary. If no such beneficiary is living at the time of such
Participant's death, the Company shall deliver such Shares and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate in compliance with law.
15. Transferability. Neither Contributions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 14 hereof) by the Participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw
Contributions in accordance with Section 10.
16. Use of Funds. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions.
17. Reports. Individual accounts shall be maintained for each
Participant in the Plan. Statements of account will be given to Participants
promptly following each Exercise Date, which statements will set forth the
amounts of Contributions, the per Share purchase price, the number of Shares
purchased and the remaining cash balance, if any.
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<PAGE>
18. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
option which has not yet been exercised and the number of Shares which have been
authorized for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per Share covered by each
option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of Shares effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustments shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, to shorten the Offering Period then in
progress by setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each Participant in writing, at least ten (10) days prior to the New Exercise
Date, that the Exercise Date for his or her option has been changed to the New
Exercise Date and that his or her option will be exercised automatically on the
New Exercise Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10. For purposes of this Section, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
Share subject to the option immediately prior to the sale of assets or merger,
the consideration (whether stock, cash or other securities or property) received
in the sale of assets or merger by holders of Common Stock for each share of
Common Stock held on the effective date of the transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the sale of assets or
10
<PAGE>
merger was not solely common stock of the successor corporation or its parent
(as defined in section 424(e) of the Code), the Board may, with the consent of
the successor corporation and the Participant, provide for the consideration to
be received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in fair market value to the per Share
consideration received by holders of Common Stock and the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time
terminate or amend the Plan. Except as provided in Section 18 and Section 19, no
such termination may affect options previously granted, nor may an amendment
make any change in any option theretofore granted which adversely affects the
rights of any Participant. In addition, to the extent necessary to comply with
section 423 of the Code (or any successor rule or provision or any applicable
law or regulation), the Company shall obtain shareholder approval in such a
manner and to such a degree as so required.
(b) Without shareholder consent and without regard to whether
any Participant rights may be considered to have been "adversely affected," but
subject to regulatory approval, the Committee shall be entitled to change the
Offering Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Shares for each participant properly correspond with amounts
withheld from the participant's Compensation, and establish such other
limitations or procedures as the Committee determines in its sole discretion
advisable which are consistent with the Plan.
(c) In the event the Committee determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, subject to
11
<PAGE>
regulatory approval, the Committee may, in its discretion and, to the extent
necessary or desirable, modify or amend the Plan to reduce or eliminate such
accounting consequence including, but not limited to:
(i) altering the option price for any Offering
Period including an Offering Period underway
at the time of the change in option price;
(ii) shortening any Offering Period so that
Offering Period ends on a new Exercise Date,
including an Offering Period underway at the
time of the Committee action; and
(iii) allocating Shares as between participants in
any Offering Period.
Such modifications or amendments shall not require shareholder approval or the
consent of any Participants.
(d) Without amending the Plan, the Committee may allow for
participation under the terms hereunder by Employees of non-U.S. Designated
Subsidiaries with such modifications of the terms and conditions otherwise
specified hereunder as may in the judgment of the Committee be necessary or
desirable to foster and promote achievement of the purposes hereof. In
furtherance of such purposes, the Committee may make such amendments, procedures
and the like as may be necessary or advisable to comply with provisions of laws
(including tax laws) in other countries in which such Designated Subsidiaries
operate or have employees.
20. Notices. All notices or other communications by a Participant to
the Company or the Employer under or in connection with the Plan shall be deemed
to have been duly given when they are received in a timely manner in the form
and by the person or office specified by the Company (or the Employer, as the
case may be).
21. Term of Plan. The Plan shall become effective on the Effective
Date, subject to the approval of the Plan by the shareholders of the Company
within twelve (12) months before or after the date the Plan is adopted. The Plan
shall continue in effect until December 31, 2010, unless sooner terminated under
Section 19.
12
<PAGE>
22. Regulations and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of the State of
New York, without giving effect to the conflict of law provisions thereof.
(b) The obligation of the Company to sell or deliver Shares
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations (domestic or foreign), including all
applicable federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or appropriate by
the Committee. The Company shall not be required to issue or deliver any
certificates for Shares prior to the completion of any registration or
qualification of such Shares under, and the obtaining of any approval under or
compliance with, any state or federal law, or any ruling or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Certificates for Shares issued hereunder may be legended
as the Committee may deem appropriate.
23. Withholding of Taxes. Notwithstanding any other provision of the
Plan, the Company shall deduct from all Contributions under the Plan all
federal, state, local and other taxes required by law to be withheld with
respect to such Contributions. If the Participant makes a disposition, within
the meaning of section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Participant pursuant to such
Participant's exercise of an option, and such disposition occurs within the
two-year period commencing on the day after the date of grant of such option or
within the one-year period commencing on the day after the date of transfer of
the Share or Shares to the Participant pursuant to the exercise of such option,
such Participant shall, within ten (10) days of such disposition, notify the
Employer thereof and thereafter immediately deliver to the Employer any amount
of Federal, state or other taxes and other amounts which the Employer informs
the Participant the Employer is required to withhold.
24. No Right to Continued Employment. The Plan does not, directly or
indirectly, create in any Employee or class of Employees any right with respect
to continuation of employment by the Company or any Subsidiary, and it shall not
be deemed to interfere in any way with the Company's or any Subsidiary's right
to terminate, or otherwise modify, an Employee's employment at any time with or
without cause.
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RSL COMMUNICATIONS, LTD.
PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
June 23, 2000
This Proxy Is Solicited On Behalf Of The Board Of Directors
CLASS [A/B] COMMON SHARES
The undersigned hereby constitutes and appoints Nicolas
Trollope, Michael Ashford, Roger Burgess, Chips Outerbridge and Dawna Ferguson,
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 26, 2000 at the Annual General Meeting of Shareholders
to be held at the offices of Conyers, Dill & Pearman, Clarendon House, Church
Street, Hamilton HM CX, Bermuda, on June 23, 2000 at 10:00 a.m. (local time) 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:
This proxy, when properly executed, will be voted as directed.
If no direction is indicated, the proxy will be voted as recommended by the
Company's Board of Directors.
The undersigned hereby acknowledges receipt of the Notice of
Annual General Meeting of Shareholders to be held on June 23, 2000 and the Proxy
Statement, dated April 29, 2000, prior to the signing of this proxy.
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 at right.
Nominees:
RONALD S. LAUDER
ITZHAK FISHER
JACOB Z. SCHUSTER
GUSTAVO A. CISNEROS
FRED H. LANGHAMMER
LEONARD A. LAUDER
EUGENE A. SEKULOW
NICOLAS G. TROLLOPE
FOR all nominees listed at right ____
WITHHOLD AUTHORITY
to vote for all nominees listed at right _______
Instruction: To withhold authority to vote for any individual nominee,
mark the "FOR" box and write that nominee's name in the space provided below:
Exceptions: ________________________________
2. Approval of the proposal to adopt the Company's employee stock purchase
plan.
FOR _______ AGAINST _________ ABSTAIN________
3. Appointment of Deloitte & Touche LLP as independent auditors of the
Company until the completion of the next annual general meeting and the
delegation to the Audit Committee of the authority to fix the auditors'
fee for the current fiscal year.
FOR _______ AGAINST _________ ABSTAIN________
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope
provided as soon as possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the
instructions. Have your control number and the proxy card available when you
call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the
on-screen instructions. Have your control number available when you access the
web page.
YOUR CONTROL NUMBER IS:
Dated , 2000
--------------------
--------------------------------------------
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 ______
