<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
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 Section240.14a-11(c) or
Section240.14a-12
STARTEC GLOBAL COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 1999
To the Stockholders of
Startec Global Communications Corporation:
The Annual Meeting of Stockholders of Startec Global Communications
Corporation, a Delaware corporation, will be held at The Capital Hilton, 1001
16th Street, N.W., Washington, D.C. 20036, on June 17, 1999, commencing at 10:00
A.M. (Eastern Daylight Savings Time), for the following purposes, as described
in the Proxy Statement accompanying this Notice:
1. To elect the Class II members of the Board of Directors; and
2. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has no knowledge of any other business to be
presented or transacted at the Annual Meeting.
Only stockholders of record on April 23, 1999 are entitled to notice of and
to vote at the Annual Meeting. Further information as to the matters to be
considered and acted upon at the Annual Meeting can be found in the accompanying
Proxy Statement.
By Order of the Board of Directors,
PRABHAV V. MANIYAR
Secretary
May 13, 1999
YOU ARE CORDIALLY INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON. STOCKHOLDERS
WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY
DESIRE.
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION
10411 MOTOR CITY DRIVE
BETHESDA, MD 20817
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 1999
------------------------
This Proxy Statement, the foregoing Notice of Annual Meeting of Stockholders
and the enclosed form of proxy are first being sent or delivered to stockholders
on or about May 13, 1999, in connection with the solicitation of proxies for use
by the Board of Directors ("Board of Directors") of Startec Global
Communications Corporation, a Delaware corporation ("Company"), at its Annual
Meeting of Stockholders ("Annual Meeting") which will be held at The Capital
Hilton, 1001 16th Street, N.W., Washington, D.C. 20036, on June 17, 1999,
commencing at 10:00 A.M. (Eastern Daylight Savings Time), for the purposes set
forth in the foregoing Notice of Annual Meeting of Stockholders, and at any and
all adjournments or postponements thereof. A copy of the Company's Annual Report
accompanies this Proxy Statement.
The presence in person or by proxy of holders of record of a majority of the
outstanding shares of the Company's common stock, par value $.01 per share
("Common Stock"), is required to constitute a quorum for the transaction of
business at the Annual Meeting.
If the accompanying form of proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified therein. In the absence of instructions to the contrary, such shares
will be voted "FOR" each of the proposals set forth therein. Any stockholder
executing a proxy has the power to revoke it at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to such
revocation) by delivering written notice to the Secretary of the Company, by
executing another proxy dated as of a later date or by voting in person at the
Annual Meeting.
------------------------
The date of this Proxy Statement is May 13, 1999.
<PAGE>
THE ANNUAL MEETING
MATTERS TO BE CONSIDERED
The Annual Meeting has been called to (i) elect two persons who have been
nominated for election as Class II directors of the Company for terms expiring
at the annual meeting of stockholders to be held in the year 2002 and/or until
their successors are duly elected and qualified, and (ii) transact such other
business as may properly come before the Annual Meeting or any adjournments or
postponements thereof.
RECORD DATE AND OUTSTANDING STOCK
The record date ("Record Date") for determining those stockholders entitled
to notice of and to vote at the Annual Meeting was April 23, 1999. At that date,
there were outstanding 9,390,215 shares of Common Stock.
PROXIES
SOLICITATION. Solicitation of proxies is being made by management at the
direction of the Board of Directors, without additional compensation, through
the mail, in person or by telephone. The cost of such solicitation will be borne
by the Company. In addition, the Company will request brokers and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of Common Stock held of record by such persons, and the
Company will reimburse them for their reasonable expenses in so doing.
REVOCATION. The execution of a proxy does not affect the right to vote in
person at the Annual Meeting. A proxy may be revoked by the person giving it at
any time before it has been voted at the Annual Meeting by submitting a later
dated proxy or by giving written notice to the Secretary of the Company. Unless
a proxy is revoked or there is a direction to abstain on one or more proposals,
it will be voted on each proposal and, if a choice is made with respect to any
matter to be acted upon, in accordance with such choice. If no choice is
specified, the proxy will be voted as recommended by the Board of Directors.
SIGNATURES IN CERTAIN CASES. If a stockholder is a corporation, the
enclosed proxy should be signed in its corporate name by an authorized officer
and his or her title should be indicated. If stock is registered in the name of
two or more trustees or other persons, the proxy must be signed by a majority of
them. If stock is registered in the name of a decedent, the proxy should be
signed by an executor or administrator, and his or her title as such should
follow the signature.
QUORUM AND VOTING
The presence, in person or by proxy, of holders of record of a majority of
the outstanding shares of Common Stock is required to constitute a quorum for
the transaction of business at the Annual Meeting. As to all matters, each
stockholder is entitled to one vote for each share of Common Stock held.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. The directors
will be elected by at least a plurality of the votes cast at the election. Votes
against a candidate and votes withheld have no legal effect. In matters other
than the election of directors, abstentions are counted as votes against in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
As of the Record Date, directors and executive officers of the Company and
their affiliates had the power to vote approximately 52.1% of the outstanding
Common Stock. All of the directors and executive
2
<PAGE>
officers have expressed an intention to vote in favor of all of the director
candidates proposed by the Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the ownership of the
Company's voting securities on the Record Date, including options and warrants
by (i) each person known by the Company to be the beneficial owner of more than
five percent of any class of its voting securities, (ii) each director and
executive officer, and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS(1) OWNED(2) COMMON STOCK
- ----------------------------------------------------------------------------- ------------------ -------------------
<S> <C> <C>
Ram Mukunda.................................................................. 3,583,675 38.2%
Blue Carol Enterprises(3).................................................... 807,124 8.6%
Vijay Srinivas(4)............................................................ 311,200 3.3%
Prabhav V. Maniyar........................................................... 118,616 1.3%
Nazir G. Dossani(5).......................................................... 10,000 *
Richard K. Prins(6).......................................................... 47,000 *
Anthony Das(7)............................................................... 12,000 *
All Directors and Executive Officers as a group (6 persons).................. 4,889,615 52.1%
</TABLE>
- ------------------------
* Represents beneficial ownership of one percent or less of the outstanding
shares of Company Common Stock.
(1) Unless otherwise indicated, the address of all persons listed is c/o Startec
Global Communications Corporation, 10411 Motor City Drive, Bethesda, MD
20817.
(2) Unless otherwise indicated, each person possesses sole voting and investment
power with respect to the shares identified as beneficially owned in the
table. Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission. Shares of Common Stock subject to
options, warrants or other rights to purchase which are exercisable within
60 days of the Record Date are deemed outstanding for computing the
percentage ownership of the persons holding such options, warrants or
rights, but are not deemed outstanding for computing the percentage
ownership of any other person.
(3) The address of Blue Carol Enterprises Ltd. is 930 Ocean Center Harbour City,
Kowloon, Hong Kong. Blue Carol Enterprises Ltd. is an affiliate of Portugal
Telecom International.
(4) Such shares are held by Mr. Srinivas and his wife as joint tenants. Mr. and
Mrs. Srinivas are the brother-in-law and sister of Ram Mukunda, the
Company's President and Chief Executive Officer. Mr. Srinivas' term as a
Company director expires at the Annual Meeting and he is not standing for
re-election.
(5) Includes options to purchase 1,000 shares of Common Stock.
(6) Includes options to purchase 1,000 shares of Common Stock and warrants to
purchase 33,000 shares of Common Stock. Mr. Prins is a Senior Vice President
of Ferris, Baker Watts, Incorporated, one of the underwriters of the
Company's initial public offering, which received warrants to purchase up to
150,000 shares of Common Stock in connection with the initial public
offering. Mr. Prins received 33,000 of such warrants, which amount is
reflected in the first sentence of this footnote.
(7) Includes options to purchase 4,500 shares of Common Stock.
3
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors, each
containing, as nearly as possible, an equal number of directors. Directors
within each class are elected to serve three-year terms, and approximately
one-third of the directors stand for election at each annual meeting of the
stockholders. At the Annual Meeting, the stockholders will elect the persons to
serve as Class II directors of the Company.
Messrs. Prabhav V. Maniyar and Sudhakar Shenoy were nominated by the Board
of Directors to serve as Class II directors of the Company. All nominees have
consented to be named herein and to serve if elected. If a nominee, at the time
of his election, is unable or unwilling to serve, and as a result another
nominee is designated, the persons named in the enclosed proxy or their
substitute will have discretionary authority to vote or to refrain from voting
for the other nominee in accordance with their judgment. Unless contrary
instructions are given, the shares represented by the enclosed proxy will be
voted "FOR" the election of Prabhav V. Maniyar and Sudhakar Shenoy.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION
DIRECTOR
NAME AGE SINCE POSITION WITH THE COMPANY
- ---------------------------------------------- --------- ------------- ----------------------------------------------
<S> <C> <C> <C>
CLASS II
Prabhav V. Maniyar............................ 39 1997 Senior Vice President, Chief Financial
Officer, and Secretary
Sudhakar Shenoy............................... 52 -- Nominee for Director
CONTINUING DIRECTORS
CLASS I
Nazir G.Dossani............................... 57 1997 Director(1)(2)
Richard K. Prins.............................. 42 1997 Director(1)(2)
CLASS III
Ram Mukunda................................... 40 1989 President, Chief Executive Officer, and
Treasurer
</TABLE>
- ------------------------
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
BACKGROUND OF NOMINEES
The business experience, principal occupation and employment of the nominees
have been as follows:
Prabhav V. Maniyar joined the Company as Chief Financial Officer in January
1997. From June 1993 until he joined the Company, Mr. Maniyar was the Chief
Financial Officer of Eldyne, Inc., Unidyne Corporation and Diversified Control
Systems, LLC, collectively known as the Witt Group of Companies. The Witt Group
of Companies was acquired by the Titan Corporation in May 1996. From June 1985
to May 1993, he held progressively more responsible positions with NationsBank.
Mr. Maniyar earned a B.S.
4
<PAGE>
in Economics from Virginia Commonwealth University and an M.A. in Economics from
Old Dominion University.
Sudhakar Shenoy is the founder and Chief Executive Officer of Information
Management Consultants, an internationally recognized systems and software
development firm serving the public and private sectors. Mr. Shenoy received a
bachelor's degree in electrical engineering from the Indian Institute of
Technology, an M.S. in electrical engineering and an M.B.A. from the University
of Connecticut Schools of Engineering and Business Administration, respectively.
BACKGROUNDS OF CONTINUING DIRECTORS
Ram Mukunda is the founder of the Company. Prior to 1989, Mr. Mukunda was an
Advisor in Strategic Planning with INTELSAT, an international consortium
responsible for global satellite services. While at INTELSAT, he was responsible
for issues relating to corporate, business, financial planning and strategic
development. Prior to joining INTELSAT, he worked as a fixed-income analyst with
Caine, Gressel. Mr. Mukunda earned an M.S. in electrical engineering from the
University of Maryland.
Nazir G. Dossani joined the Company as a director in October 1997 at the
completion of the Company's initial public offering. Mr. Dossani has been Vice
President for Asset/Liability Management at the Federal Home Loan Mortgage Corp.
since January 1993. Prior to this position, Mr. Dossani was Vice
President--Pricing and Portfolio Analysis at the Federal National Mortgage
Association. Mr. Dossani received a Ph.D. in regional science from the
University of Pennsylvania and an M.B.A. from the Wharton School of the
University of Pennsylvania.
Richard K. Prins joined the Company as a director in October 1997 at the
completion of the Company's initial public offering. Mr. Prins is a Senior Vice
President with Ferris, Baker Watts, Incorporated. From July 1988 through March
1996, he served as Managing Director of Investment Banking with Crestar
Securities Corporation. Mr. Prins received an M.B.A. from Oral Roberts
University and a B.A. from Colgate University. He currently serves on the Board
of Directors of Path Net, Inc., a domestic telecommunications company, and The
Association for Corporation Growth, National Capital Chapter.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held seven meetings in 1998 and took various actions
by written consent. During 1998, each incumbent director attended at least 75%
of the aggregate of the total number of meetings of the Board during the period
for which such incumbent was a director, and the total number of meetings held
by all committees on which such incumbent served.
The Board of Directors has established a Compensation Committee and an Audit
Committee. The Compensation Committee is responsible for reviewing and approving
salaries, bonuses and benefits paid or given to all executive officers of the
Company and making recommendations to the Board of Directors with regard to
employee compensation and benefit plans. The Compensation Committee also
administers the Company's Amended and Restated Option Plan and the Amended and
Restated 1997 Performance Incentive Plan ("1997 Plan"). This committee met twice
during 1998. The Audit Committee is charged with recommending the engagement of
independent accountants to audit the Company's financial statements, discussing
the scope and results of the audit with the independent accountants, reviewing
the functions of the Company's management and independent accountants pertaining
to the Company's financial statements, reviewing management's procedures and
policies regarding internal accounting controls, and performing such other
related duties and functions as are deemed appropriate by the Audit Committee
and the Board of Directors. This committee did not meet during 1998.
5
<PAGE>
COMPENSATION OF DIRECTORS
Currently, the Company's directors do not receive cash compensation for
their service on the Board of Directors. In the future, however, directors who
are not executive officers or employees of the Company may receive meeting fees,
committee fees and other compensation relating to their service. Each member of
the Board of Directors who is not an officer of the Company is entitled to
receive an automatic grant of options to purchase 5,000 shares of Common Stock
upon joining the Board and additional options to purchase 5,000 shares per year
of service thereafter. All directors will be reimbursed for reasonable out-of-
pocket expenses incurred in connection with their attendance at Board and
committee meetings.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
ANNUAL COMPENSATION
The following table sets forth certain summary financial information
concerning compensation for services in all capacities awarded to, earned by or
paid to, the Company's Chief Executive Officer and certain of the other most
highly compensated officers of the Company, whose aggregate cash and cash
equivalent compensation exceeded $100,000 ("Named Officers"), with respect to
the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------
ANNUAL COMPENSATION SECURITIES ALL
NAME AND ------------------------------------ UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- ------------------------------------------- ----------- ---------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Ram Mukunda................................ 1998 $ 401,117(2) -- 30,000 $ 35,000
President/Chief 1997 $ 345,833(3) -- -- $ 30,800
Executive Officer 1996 $ 165,872 -- -- $ 18,000
Prabhav V. Maniyar(4)...................... 1998 $ 180,042 15,000 $ 18,000
Chief Financial 1997 $ 149,585 -- 157,616 --
Officer/Secretary 1996 -- -- -- --
Gustavo Pereira............................ 1998 $ 129,583 -- -- --
Vice President- 1997 $ 110,000 -- 7,500 --
Engineering 1996 $ 110,000 -- -- --
Anthony Das(5)............................. 1998 $ 124,167 -- 15,000 --
Senior Vice 1997 $ 79,167 -- 30,000 --
President 1996 -- -- -- --
Dhruva Kumar............................... 1998 $ 104,167 -- -- --
Vice President 1997 $ 77,209 -- 34,000 --
1996 $ 43,008 -- 19,950 --
</TABLE>
- ------------------------
(1) This amount includes the value of an automobile allowance
(2) Includes $102,000 accrued salary for prior periods.
(3) Includes $150,000 accrued salary for prior periods.
(4) Mr. Maniyar joined the Company in January 1997.
(5) Mr. Das joined the Company in February 1997.
6
<PAGE>
CERTAIN EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Ram Mukunda on July 1,
1997 ("Mukunda Agreement"), pursuant to which Mr. Mukunda holds the positions of
President, Chief Executive Officer and Treasurer of the Company, was paid an
initial annual base salary of $250,000 per year, is entitled to participate in
the 1997 Plan, is eligible to receive a bonus of up to 40% of his base salary as
determined by the Compensation Committee based upon the financial and operating
performance of the Company, and is entitled to receive an automobile allowance
of $1,500 per month. In addition, the Mukunda Agreement provides that, if there
is a "Change of Control", Mr. Mukunda will receive, for the longer of 12 months
or the balance of the term under his employment agreement (which initially could
be for a period of up to three years), the following benefits: (1) a severance
payment equal to $20,830 per month; (2) a pro rata portion of the bonus
applicable to the calendar year in which such termination occurs; (3) all
accrued but unpaid base salary and other benefits as of the date of termination;
and (4) such other benefits as he was eligible to participate in at and as of
the date of termination. Effective July 1, 1998, Mr. Mukunda's annual base
salary was increased to $325,000.
The Company also entered into an employment agreement with Prabhav V.
Maniyar on July 1, 1997 ("Maniyar Agreement"), pursuant to which Mr. Maniyar
holds the positions of Senior Vice President, Chief Financial Officer and
Secretary of the Company, was paid an initial annual base salary of $175,000 per
year, is entitled to participate in the 1997 Plan, is eligible to receive a
bonus of up to 40% of his base salary, as determined by the Compensation
Committee based upon the financial and operating performance of the Company, and
is entitled to receive an automobile allowance of $750 per month. In addition,
the Maniyar Agreement provides that if there is a "Change of Control", Mr.
Maniyar will receive, for the longer of 12 months or the balance of the term
under his employment agreement (which initially could be for a period of up to
three years), the following benefits: (1) a severance payment equal to $14,580
per month; (2) a pro rata portion of the bonus applicable to the calendar year
in which such termination occurs; (3) all accrued but unpaid base salary and
other benefits; and (4) such other benefits as he was eligible to participate in
at and as of the date of termination. Effective July 1, 1998, Mr. Maniyar's
annual base salary was increased to $225,000.
The Mukunda Agreement and the Maniyar Agreement each has an initial term of
three years and is renewable for successive one year terms. In addition, the
agreements also contain provisions which restrict the ability of Messrs. Mukunda
and Maniyar to compete with the Company for a period of one year following
termination.
For purposes of the Mukunda Agreement and the Maniyar Agreement, a "Change
of Control" shall be deemed to have occurred if (A) any person becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of all classes of the
Company's then outstanding voting securities; or (B) during any period of two
consecutive calendar years individuals who at the beginning of such period
constitute the Board of Directors, cease for any reason to constitute at least a
majority thereof, unless the election or nomination for the election by the
Company's stockholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved; or (C) the stockholders of the Company
approve a merger or consolidation of the Company with any other company or
entity, other than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation (exclusive of the situation where the merger or consolidation
is effected in order to implement a recapitalization of the Company in which no
person acquires more than 30% of the combined voting power of the Company's then
outstanding securities); or (D) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information regarding grants of
options to purchase Common Stock made by the Company during the fiscal year
ended December 31, 1998, to each of the Named Officers. No stock appreciation
rights were granted during fiscal 1998. On April 28, 1999, the closing price of
the Common Stock was $10.75.
<TABLE>
<CAPTION>
REALIZED VALUE AT
ASSUMED ANNUAL RATES
OF
STOCK PRICE
PERCENTAGE
NUMBER OF OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTIONS TERM(3)
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------
NAME GRANTED(#) IN 1997(1) ($/SH)(2) DATE 5%($) 10%($)
- ----------------------------------------- --------------- ----------------- ------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ram Mukunda.............................. 30,000 3.07% 14.25 6/8/08 29,778 281,726
Prabhav V. Maniyar....................... 15,000 1.53% 14.25 6/8/08 14,889 140,863
Gustavo Pereira.......................... -- -- -- -- -- --
Anthony Das.............................. 15,000 1.53% 9.00 6/8/08 93,639 219,613
Dhruva Kumar............................. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) During 1998, the Company granted options to purchase a total of 977,900
shares of Common Stock.
(2) The exercise price was equal to the per share fair market value of the
Common Stock underlying the options on the date of grant. In December 1998,
all outstanding options held by non-executive officers of the Company were
repriced to $9.00.
(3) Amounts reflected in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Common Stock over the term of the options. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent upon the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
holder of the option.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information as of December 31, 1998,
regarding the number and year end value of unexercised stock options to purchase
Common Stock held by each of the Named Officers. No stock appreciation rights
were exercised during fiscal 1998.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED NUMBER OF
"IN-THE-MONEY' SECURITIES UNDERLYING
OPTIONS AT UNEXERCISED OPTIONS
FISCAL YEAR-END($)(1) AT FISCAL YEAR-END(#)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------------------- -------------------------------- --------------------------------
<S> <C> <C>
Ram Mukunda................................... 0/0 0/30,000
Prabhav V. Maniyar............................ 0/0 10,000/55,000
Gustavo Pereira............................... 14,445/57,780 1,500/6,000
Anthony Das................................... 43,335/317,790 4,500/33,000
Dhruva Kumar.................................. 46,224/184,896 4,800/19,200
</TABLE>
- ------------------------
(1) Options are "in-the-money" if the fair market value of underlying securities
exceeds the exercise price of the options. The amounts set forth represent
the difference between $9.63 per share, the fair market value of the Common
Stock issuable upon exercise of options at December 31, 1998 and the
exercise price of the option, multiplied by the applicable number of shares
underlying the options. On April 28, 1999, the closing price of the Common
Stock was $10.75.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("Compensation
Committee") is responsible for recommending compensation policies with respect
to the Company's executive officers, and for making decisions about awards under
the Company's stock-based compensation plans. Each member of the Compensation
Committee is a "non-employee director" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code. This report addresses the Company's compensation policies for 1998 as they
affected the Chief Executive Officer and the Company's other executive officers.
This report is not deemed to be "soliciting material" or deemed to be
"filed" with the Securities and Exchange Commission or subject to the
Commission's proxy rules or to the liabilities of Section 18 of the Exchange
Act, and the report shall not be deemed to be incorporated by reference into any
prior or subsequent filing by the Company under the Securities Act of 1933 or
the Exchange Act.
COMPENSATION POLICIES
The Compensation Committee's executive compensation policies are designed to
provide competitive compensation opportunities, reward executives in a manner
consistent with the Company's performance, recognize individual performance and
responsibility, underscore the importance of the creation of shareholder value,
and assist the Company in attracting and retaining qualified executives. The
Company's executive compensation program as implemented by the Compensation
Committee provides a competitive compensation program that will enable the
Company to attract, retain and reward experienced and highly motivated executive
officers who will have the skills, experience and talents required to promote
the short-and long-term financial performance and growth of the Company. The
principal elements of compensation employed by the Compensation Committee to
meet these objectives are base salaries, cash incentives, if appropriate, and
long-term stock-based awards. Senior officers are also eligible to receive
discretionary cash incentive payments based upon the overall growth in revenue
and profit and the performance of the Company.
All compensation decisions are determined following a review of many factors
that the Compensation Committee believes are relevant, including external
competitive data, the Company's achievements over the past year, the
individual's contributions to the Company's success, significant changes in role
or responsibility, and the internal equity of compensation relationships.
In general, the Compensation Committee intends that the overall total
compensation opportunities provided to the executive officers should reflect
competitive compensation for executives with corresponding responsibilities in
comparable companies providing similar products and services. To the extent
determined to be appropriate, the Compensation Committee also considers general
economic conditions and the Company's financial position. Actual compensation
earned by the executive officers reflects both their contributions to the
Company's actual creation of shareholder value and the Company's actual
financial performance.
The competitiveness of the Company's total compensation program--including
base salaries, annual cash incentives, and long-term stock-based incentives--is
assessed annually. Data for external comparisons may be drawn from a number of
sources, including the publicly available disclosures of selected comparable
companies offering similar services. While the targeted total compensation
levels for the executive officers are intended to be competitive, compensation
paid in any particular year may be more or less than the average, depending upon
the Company's actual performance. In 1999, the Compensation Committee intends to
retain a professional compensation consultant to research the executive
compensation levels of similar companies and to assist and advise it on the
setting of executive compensation levels.
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BASE SALARY
Base salaries for all executive officers, including the Chief Executive
Officer, are reviewed by the Compensation Committee on an annual basis. In
determining appropriate base salaries, the Compensation Committee considers
external competitiveness, the roles and responsibilities of the individual, the
internal equity of compensation relationships, and the contributions of the
individual to the Company's success.
ANNUAL CASH INCENTIVE OPPORTUNITIES
The Compensation Committee believes that executives should be rewarded for
their contributions to the success and profitability of the Company and, as
such, approves the annual cash incentive awards. Such awards are linked to the
achievement of revenue and net income goals by the Company, and the achievement
by the executives of certain assigned objectives. The individual objectives set
for executive officers of the Company include such goals as revenue, profit and
budget and operational objectives, and increased business unit productivity. The
Compensation Committee believes that these arrangements tie the executive's
performance closely to key measures of success of the Company. All executive
officers, including the Chief Executive Officer, are eligible to participate in
this program. There were no annual cash incentive award payments made by the
Company in 1998.
LONG-TERM STOCK-BASED INCENTIVES
The Compensation Committee also believes that it is essential to link
executive and shareholder interests. As such, from time to time the Compensation
Committee grants stock options to executive officers and other employees under
the 1997 Plan. In determining actual awards, the Compensation Committee
considers the externally competitive market, the contributions of the individual
to the success of the Company, and the need to retain the individual over time.
All executive officers, including the Chief Executive Officer, are eligible to
participate in this program.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee annually reviews and approves the compensation of
Mr. Mukunda, the Chief Executive Officer of the Company. The compensation
package for the Chief Executive Officer includes elements of base salary, annual
incentive compensation and long-term incentive compensation. Mr. Mukunda's total
compensation is designed to be competitive and to create rewards for short- and
long-term performance in line with the financial interests of the Company's
stockholders.
With regard to Mr. Mukunda's compensation, the Committee considers in
particular the Company's performance as evidenced by changes in the market price
of the Common Stock during the year as compared to changes in the
telecommunications industry and the broader economic environment, as well as
particular operational and business achievement of the Company. Mr. Mukunda is a
significant stockholder in the Company, and to the extent that his performance
as Chief Executive Officer translates into an increase in the value of the
Common stock, all Company stockholders, including him, share the benefits. The
Committee also considers the Chief Executive Officer's leadership in continuing
to improve the strategic position of the Company and its financial performance
during 1998 with respect to revenue growth, expense control, net income, and
earnings per share, compared to other telecommunications companies. The
Compensation Committee also considers the compensation levels of chief executive
officers at similar companies at similar stages of growth.
SECTION 162(M)
The Commission requires that this report comment upon the Company's policy
with respect to Section 162(m) of the Internal Revenue Code which, generally,
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its Named Officers. Qualifying performance-based compensation will not
be subject to the deduction limit if certain requirements are met. Although no
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Named Officer received compensation exceeding this limit in 1998, the Company
has limited the number of shares of Common Stock subject to options which may be
granted to Company employees in a manner that complies with the
performance-based requirements of Section 162(m). While the Compensation
Committee does not currently intend to qualify its annual incentive awards as
performance-based awards, it will continue to monitor the impact of Section
162(m) on the Company.
Respectfully submitted,
Nazir G. Dossani
Richard K. Prins
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Company's initial public offering, the Board of Directors did
not have a Compensation Committee or any committee performing a similar
function. Accordingly, the entire Board of Directors, including directors who
are executive officers of the Company, historically have made all determinations
concerning compensation of executive officers. The Board of Directors has
established a Compensation Committee which consists entirely of directors who
are not employees of the Company.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock for the period from October 9, 1997 through December 31, 1998 with
the cumulative total return on (i) the "NASDAQ-US Index", and (ii) the "NASDAQ
Telecommunications Index". The comparisons assume the investment of $100 on
October 9, 1997 in the Common Stock and in each of the indices and, in each
case, assumes reinvestment of all dividends. The Company has not paid any
dividends on its Common Stock and does not intend to do so in the foreseeable
future. The performance graph is not necessarily indicative of future
performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STARTEC GLOBAL COMMUNICATIONS CORP. NASDAQ TELECOMMUNICATIONS NASDAQ MARKET INDEX
<S> <C> <C> <C>
10/9/97 100.00 100.00 100.00
12/31/97 133.58 100.81 93.70
3/31/98 149.25 127.78 109.81
6/30/98 68.66 135.38 112.65
9/30/98 41.04 120.49 101.53
12/31/98 57.46 165.44 131.98
</TABLE>
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an agreement with Companhia Santomensed De Telecommunicacoes
("CST"), an affiliate of Blue Carol Enterprises Ltd. ("Blue Carol"), which
currently holds 9% of the outstanding shares of Common Stock, for the purchase
and sale of long distance services. Revenues generated from CST amounted to
approximately $1,501,000, 1,900,000, and 1,900,000 or 5%, 2% and 1% of the
Company's total revenues for the years ended December 31, 1996, 1997 and 1998,
respectively. Services provided to the Company amounted to approximately
$663,000, $680,000 and $366,000 of the Company's costs of services for the years
ended December 31, 1996, 1997 and 1998, respectively. The Company also has a
lease agreement with an affiliate of Blue Carol, Companhia Portuguesa Radio
Marconi, S.A. ("Marconi"), for rights to use undersea fiber optic cable under
which the Company is obligated to pay Marconi $38,330 semi-annually for five
years on a resale basis.
During the second quarter of 1998, the Company made loans to certain of its
employees including executive officers. These loans were all made on
substantially the same terms, including interest rates. In this regard, the
Company advanced an aggregate of $1,488,238 to the employees, including $400,000
to the Company's Chief Executive Officer, Ram Mukunda, and $550,000 to the
Company's Chief Financial Officer, Prabhav V. Maniyar. The Company made the loan
to Mr. Mukunda in connection with the payment of taxes and certain other
obligations. Mr. Maniyar's loan was granted in connection with his exercise of
certain outstanding options to purchase Common Stock and the payment of taxes
related thereto. Both loans bear interest at a rate of 7.87 % per year. For Mr.
Mukunda, principal and interest on the loan are due December 31, 1999 and may
not be pre-paid. For Mr. Maniyar, principal and interest on the loan are due
June 30, 1999 and may not be pre-paid.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and certain of its officers, and persons who own more than 10% of the
Common Stock (collectively, "Insiders"), to file reports of ownership and
changes in their ownership of Common Stock with the Securities and Exchange
Commission. Insiders are required by Commission regulations to furnish the
Company with copies of all Section 16(a) reports that they file.
Based solely on its review of the copies of such reports received by it, or
written representations from such reporting persons that no Form 5s were
required for those persons, the Company believes that its Insiders complied with
all applicable Section 16(a) filing requirements for fiscal 1998.
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing proxy materials, the
handling and tabulation of proxies received and charges of brokerage houses and
other institutions, nominees and fiduciaries in forwarding such materials to
beneficial owners. In addition to the mailing of the proxy material, such
solicitation may be made in person or by telephone or facsimile by directors,
officers or regular employees of the Company without any special remuneration,
or by a professional proxy solicitation organization engaged by the Company.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented for
action at the Annual Meeting or any adjournment thereof. If any other matters
come before the Annual Meeting, however, it is intended that shares of Common
Stock represented by proxy will be voted in accordance with the judgment of the
persons named on the enclosed proxy card.
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STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with and subject to the provisions and
rules of the Securities and Exchange Commission and applicable laws of the State
of Delaware, wishes to submit a proposal for inclusion in Company's proxy
statement for its 2000 annual meeting of stockholders, must deliver such
proposal, in writing, to the principal executive offices of Company, 10411 Motor
City Drive, Bethesda, Maryland 20817, Attention: Secretary, on or prior to
January 13, 2000.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS
MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO PRABHAV V.
MANIYAR, SECRETARY, AT 10411 MOTOR CITY DRIVE, BETHESDA, MD 20817.
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PROXY
STARTEC GLOBAL COMMUNICATIONS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 17, 1999
The undersigned hereby appoints RAM MUKUNDA and PRABHAV V. MANIYAR, or
either of them acting in the absence of the other, with full power of
substitution, the proxy or proxies of the undersigned to attend the Annual
Meeting of Stockholders of Startec Global Communications Corporation, to be held
on June 17, 1999, and at any adjournments thereof, to vote the shares of Common
Stock that the signer would be entitled to vote if personally present as
indicated below and on the reverse side hereof and on any other matters brought
before the meeting, all as set forth in the Proxy Statement of Startec Global
Communications Corporation dated May 13, 1999, receipt of which is hereby
acknowledged.
Please date, sign and return promptly.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STARTEC GLOBAL
COMMUNICATIONS CORPORATION.
1. ELECTION OF DIRECTORS: Nominees: Prabhav V. Maniyar and Sudhakar Shenoy.
/ / FOR ALL NOMINEES / / WITHHOLD AUTHORITY FOR ALL NOMINEES
WITHHOLD AUTHORITY FOR THE FOLLOWING NOMINEE(S) AND VOTE FOR ALL OTHER NOMINEES.
- --------------------------------------------------------------------------------
The Board of Directors recommends that you vote FOR all nominees.
(Continued and to be signed on other side).
<PAGE>
Your signature(s) on this form of proxy should be exactly as your name and/or
names appear on this proxy. If the stock is held jointly, each holder should
sign. If signing is by an attorney, executor, administrator, trustee or
guardian, please give full title.
Dated ______________________, 1999
__________________________________
Signature
__________________________________
Signature
THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED AS DIRECTED BY
THE STOCKHOLDER. IF NO DIRECTION
IS GIVEN WHEN THE FULLY EXECUTED
PROXY IS RETURNED, SUCH SHARES
WILL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATION OF THE BOARD OF
DIRECTORS FOR ALL NOMINEES.
