<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
<TABLE>
<S> <C>
Filed by the Registrant / /
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)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 29, 2000
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 Hyatt Regency Bethesda, One
Bethesda Metro Center, Bethesda, Maryland 20814, on June 29, 2000, commencing at
10:30 A.M. (Eastern Daylight Savings Time), for the following purposes, as
described in the Proxy Statement accompanying this Notice:
1. To elect the Class III member 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 May 19, 2000 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,
YOLANDA STEFANOU FAERBER
Secretary
May 31, 2000
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 29, 2000
------------------------
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 31, 2000, 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 Hyatt Regency
Bethesda, One Bethesda Metro Center, Bethesda, Maryland 20814 on June 29, 2000,
commencing at 10:30 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 31, 2000.
<PAGE>
THE ANNUAL MEETING
MATTERS TO BE CONSIDERED
The Annual Meeting has been called to (i) elect one person who has been
nominated for election as a Class III director of the Company for a term
expiring at the annual meeting of stockholders to be held in the year 2003
and/or until his successor is 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 is May 19, 2000. At that date,
there were outstanding 14,267,860 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 Class III
director will be elected by 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 26.5% of the outstanding
Common Stock. All of the directors and executive officers have expressed an
intention to vote in favor of the director candidate proposed by the Board of
Directors.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
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>
PERCENTAGE OF
NAME AND ADDRESS(1) NUMBER OF SHARES(2) OUTSTANDING
------------------- ------------------- -------------
<S> <C> <C>
Ram Mukunda(3).............................................. 3,584,675 25.1%
Prabhav V. Maniyar(4)....................................... 134,616 *
Sudhakar Shenoy(5).......................................... 1,000 *
Nazir G. Dossani (6)........................................ 12,000 *
Richard K. Prins(7)......................................... 47,000 *
Anthony A. Das(8)........................................... 3,000 *
David Venn(9)............................................... -- *
John H. Wolaver(10)......................................... -- *
All Directors and Executive Officers as a group
(8 persons)............................................... 3,782,291 26.5%
Gold & Appell Transfer SA(11)............................... 939,350 6.6%
Omar Hodge Building
Wickhams Cay, Road Town
Tortula, British Virgin Islands
Blue Carol Enterprises Ltd.................................. 807,124 5.7%
930 Ocean Center
Harbour City
Kowloon, Hong Kong
</TABLE>
------------------------
* Represents beneficial ownership of less than one percent of the outstanding
shares of our class of common stock.
(1) Unless otherwise noted, the address of all persons listed is c/o Startec
Global Communications Corporation, 10411 Motor City Drive, Bethesda, MD
20817.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
Shares of common stock subject to options, warrants or other rights to
purchase which are currently exercisable or are exercisable within 60 days
of the Record Date are deemed beneficially owned for computing the
percentage ownership of the persons holdings such options, warrants or
rights, but are not deemed outstanding for computing the percentage
ownership of any other person. Unless otherwise indicated, each person
possesses sole voting and investment power with respect to the shares shown.
(3) Includes exercisable options to purchase 6,000 shares of common stock. Does
not include unexercisable options to purchase 64,000 shares of common stock.
(4) Includes exercisable options to purchase 23,000 shares of common stock. Does
not include unexercisable options to purchase 63,000 shares of common stock.
(5) Does not include unexercisable options to purchase 10,000 shares of common
stock.
(6) Includes exercisable options to purchase 3,000 shares of common stock. Does
not include unexercisable options to purchase 17,000 shares of common stock.
(7) Includes exercisable options to purchase 3,000 shares of common stock and a
warrant to purchase 33,000 shares of common stock. Does not include
unexercisable options to purchase 17,000 shares of common stock.
(8) Includes exercisable options to purchase 3,000 shares of common stock. Does
not include unexercisable options to purchase 46,500 shares of common stock.
(9) Does not include unexercisable options to purchase 40,000 shares of common
stock.
(10) Does not include unexercisable options to purchase 36,500 shares of common
stock.
(11) As reported on Schedule 13D/A filed with the SEC on April 10, 2000.
3
<PAGE>
PROPOSAL I
ELECTION OF DIRECTOR
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 person to
serve as Class III director of the Company.
Mr. Ram Mukunda was nominated by the Board of Directors to serve as a
Class III director of the Company. Mr. Mukunda has 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 Ram
Mukunda.
THE BOARD RECOMMENDS A VOTE FOR RAM MUKUNDA FOR DIRECTOR
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION DIRECTOR
NAME AGE SINCE POSITION WITH THE COMPANY
---- -------- -------- -------------------------------------------
<S> <C> <C> <C>
CLASS III (term expiring in 2003)
Ram Mukunda............................... 41 1989 President, Chief Executive Officer,
Treasurer and Director
CONTINUING DIRECTORS
CLASS I (term expiring in 2001)
Nazir G. Dossani.......................... 58 1997 Director(1)(2)
Richard K. Prins.......................... 43 1997 Director(1)(2)
CLASS II (term expiring in 2002)
Prabhav V. Maniyar........................ 40 1997 Corporate Vice President, Chief Financial
Officer and Director
Sudhakar Shenoy........................... 53 1999 Director(1)(2)
</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 nominee
has been as follows:
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 and
mathematics from the University of Maryland.
BACKGROUNDS OF CONTINUING DIRECTORS
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 Senior
Vice President for Asset/Liability Management at the Federal Home Loan Mortgage
Corp. since December 1998 and 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
4
<PAGE>
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.
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. in Economics from Virginia Commonwealth
University and an M.A. in Economics from Old Dominion University.
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 and Director of Investment Banking 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 Socrates Technologies Corporation.
Sudhakar Shenoy joined the Company as a director in 1999. Mr. 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.
BOARD AND COMMITTEE MEETINGS
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 of the Company's executive
officers 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 Amended and
Restated 1997 Performance Incentive Plan ("1997 Plan"). The members of the
Compensation Committee are Richard Prins, Nazir Dossani and Sudhakar Shenoy.
This committee met twice during 1999. The Audit Committee, which consists
entirely of non-employee directors, 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 management and the 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. The members of the Audit Committee are
Richard Prins, Nazir Dossani and Sudhakar Shenoy. This committee met once during
1999.
The Board of Directors held six meetings in 1999 and took various actions by
written consent. During 1999, 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.
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 10,000 shares of Common Stock
upon joining the Board of Directors and additional options to purchase 10,000
shares per year of service thereafter. All directors will be reimbursed for
5
<PAGE>
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 with
respect to the last three fiscal years 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").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Ram Mukunda............................... 1999 $ 324,987 $ -- 40,000 $35,426
President, Chief Executive Officer 1998 401,117(2) 30,000 35,000
1997 345,833(3) 30,800
Prabhav V. Maniyar........................ 1999 233,645 21,000 15,846
Chief Financial Officer 1998 180,042 15,000 18,000
1997 149,585 157,616
Anthony A. Das............................ 1999 152,305 21,000
Chief Operating Officer, Online Services 1998 124,167 15,000
1997 79,167 30,000
David Venn (4)............................ 1999 40,000
Chief Operating Officer, European 1998
Operations 1997
John H. Wolaver (5)....................... 1999 36,500
Chief Operating Officer, North American 1998
Operations 1997
</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. Venn joined the Company on December 28, 1999.
(5) Mr. Wolaver joined the Company on December 28, 1999.
CERTAIN EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Ram Mukunda on
July 1, 1997, pursuant to which Mr. Mukunda holds the positions of President,
Chief Executive Officer and Treasurer, 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 Company's financial and operating
performance, and is entitled to receive an automobile
6
<PAGE>
allowance of $1,500 per month. In addition, the 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.
We also entered into an employment agreement with Prabhav V. Maniyar on
July 1, 1997, pursuant to which Mr. Maniyar holds the positions of Corporate
Vice President and Chief Financial Officer, 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 Company's financial and operating
performance, and is entitled to receive an automobile allowance of $750 per
month. Mr. Maniyar resigned effective February 22, 2000 as Secretary. In
addition, the 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.
Each of Mr. Mukunda's and Mr. Maniyar's agreements have an initial term of
three years and are 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 agreements, a "Change of Control"
shall be deemed to have occurred if (A) any person becomes a beneficial owner,
directly or indirectly, of the Company's securities representing 30% or more of
the combined voting power of all classes of the Company's 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 Company's stockholders approve a merger or consolidation
with any other company or entity, other than a merger or consolidation that
would result in the Company's voting securities outstanding immediately prior
thereto continuing to represent more than 50% of the combined voting power of
the Company's voting securities 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 in which
no person acquires more than 30% of the combined voting power of our outstanding
securities); or (D) the Company's stockholders approve a plan of complete
liquidation or an agreement for the sale or disposition of all or substantially
all of the Company's assets.
On December 28, 1999, the Company entered into an employment agreement with
David Venn. Under the agreement, Mr. Venn receives a base salary of $225,000 and
is eligible for an annual bonus of up to 40% of his base salary as determined by
the Company's Board of Directors or president. The agreement provides for
severance payments if he is terminated without cause equal to his base salary
for a period of six months. The agreement expires on December 31, 2002 unless
extended and contains confidentiality and non-competition provisions.
STOCK OPTION GRANTS
The following table sets forth certain information regarding grants of
options to purchase common stock made by the Compensation Committee during the
fiscal year ended December 31, 1999, to each of
7
<PAGE>
the officers listed in the summary compensation table above. No stock
appreciation rights were granted during 1999. On the Record Date, the closing
price of the Company's common stock was $12.50 per share.
<TABLE>
<CAPTION>
REALIZED VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF PERCENTAGE OF APPRECIATION FOR
SECURITIES TOTAL OPTIONS MARKET OPTIONS TERM(3)
UNDERLYING GRANTED TO EXERCISE PRICE ON EXPIRATION ---------------------
NAME OPTIONS GRANTED EMPLOYEES IN 1999(1) PRICE(2) GRANT DATE DATE 5% 10%
---- --------------- -------------------- -------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ram Mukunda.......... 40,000 3.21% $18.50 $18.16 12/28/09 $537,705 $1,362,650
Prabhav V. Maniyar... 21,000 1.69% 12.44 12.44 10/1/09 276,492 697,751
Anthony A. Das....... 21,000 1.68% 18.50 18.16 12/28/09 282,295 715,391
David Venn........... 40,000 3.21% 18.50 18.16 12/28/09 537,705 1,362,650
John H. Wolaver...... 36,500 2.92% 18.50 18.16 12/28/09 490,656 1,243,418
</TABLE>
------------------------
(1) During 1999, options were granted to purchase a total of 1,248,652 shares of
the Company's common stock.
(2) The exercise price was equal to or greater than the per share price of the
common stock underlying the options on the date of grant.
(3) Amounts reflected in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Company's common stock over the term of the options. Actual gains, if any,
on the stock option exercises and common stock holdings are dependent upon
the timing of such exercise and the future performance of our common stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
holder of the option.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information as of December 31, 1999
regarding the number and value of options exercised during 1999 and unexercised
options held by each of the officers listed in the summary compensation table
above. No stock appreciation rights were exercised during 1999.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING "IN-THE-
UNEXERCISED MONEY"
SHARES OPTIONS AT FISCAL OPTIONS AT
ACQUIRED YEAR-END FISCAL
ON VALUE REALIZED EXERCISABLE/ YEAR-END
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- -------------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Ram Mukunda.......... 6,000 64,000 76,125 642,000
Prabhav V. Maniyar... 23,000 63,000 376,812 964,823
Anthony A. Das....... 9,000 111,375 3,000 46,500 53,813 634,595
David Venn........... 40,000 0 351,100
John H. Wolaver...... 36,500 0 320,379
</TABLE>
------------------------
(1) Options are "in-the-money" if the fair market value of underlying securities
exceeds the exercise price of the options. On the Record Date, the closing
price of the Company's common stock was $12.50 per share.
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 1999 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 stock 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. The Compensation Committee has retained 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 1999.
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 Compensation 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
communications industry and the broader economic environment, as well as
particular operational and business achievements 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 1999 with respect to revenue growth, expense control, net income, and
earnings per share, compared to other communications 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 1999, 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
Sudhakar Shenoy
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.
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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, 1999 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 Company's 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>
DATE STGC NASDAQ NASDAQ TELECOM
<S> <C> <C> <C>
31-Dec-99 128 233 329
30-Sep-99 82 157 202
30-Jun-99 72 154 212
31-Mar-99 46 141 200
31-Dec-98 57 126 162
30-Sep-98 41 97 118
30-Jun-98 69 109 134
31-Mar-98 149 105 126
31-Dec-97 134 90 99
9-Oct-97 100 100 100
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an agreement with Companhia Santomensed De
Telecommunicacoes, an affiliate of Blue Carol Enterprises Ltd., which currently
holds 5.7% of the outstanding shares of the Company's common stock, for the
purchase and sale of long distance services. Revenues generated from this
agreement amounted to approximately $1,900,000, $1,900,000 and $825,000, or 2%,
1% and 0.3% of the Company's total revenues for the years ended December 31,
1997, 1998 and 1999, respectively. Services provided amounted to approximately
$680,000, $366,000 and $409,000 of the Company's costs of services for the years
ended December 31, 1997, 1998 and 1999, respectively. The Company also has a
lease agreement with an affiliate of Blue Carol, Companhia Portuguesa Radio
Marconi, S.A. dated June 15, 1996, for rights to use undersea fiber optic cable
at a cost of $38,330 semi-annually for five years on a resale basis.
During the second quarter of 1998, loans at a rate of 7.87% per year were
made to certain employees of the Company, including executive officers. An
aggregate of $1,488,238 was advanced to the employees, including $400,000 to
Mr. Mukunda, and $550,000 to Mr. Maniyar. The loan to Mr. Mukunda was made in
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connection with the payment of taxes and other obligations. Mr. Maniyar's loan
was granted in connection with his exercise of outstanding options to purchase
common stock and the payment of taxes related thereto. Principal and interest on
Mr. Mukunda's loan are due December 31, 2000 and may not be pre-paid.
Mr. Maniyar's loan, including accrued interest, has been repaid.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of our common stock, to
file reports of ownership and changes in their ownership of our common stock
with the Securities and Exchange Commission. Such insiders are required by SEC
regulations to furnish us with copies of all Section 16(a) reports that they
file.
Based solely on its review of the copies of such reports received by the
Company, or written representations from such reporting persons that no Form 5s
were required for those persons, the Company believes that its directors and
executive officers complied with all applicable Section 16(a) filing
requirements for fiscal 1999, except that Messrs. Venn and Wolaver filed their
respective initial statements of beneficial ownership of securities on Form 3
approximately three months late, Mr. Mukunda failed to report an option award in
each of 1998 and 1999, Mr. Prins failed to report an option award in 1998,
Mr. Dossani failed to report an option award in each of 1998 and 1999, and
Mr. Maniyar failed to report an option award in each of 1998 and 1999.
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.
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 2001 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 31, 2001. Any stockholder who wishes to submit a proposal to be
presented to the Company's 2001 Annual Meeting of Stockholders, but which will
not be included in the Company's Proxy Statement, must be delivered, in writing,
on or prior to the anniversary date of the 2000 Annual Meeting of Stockholders
or such date as otherwise provided in the Company's Bylaws. Management may
exercise discretionary voting authority as to such proposal unless it is
delivered, in writing, on or prior to April 16, 2001.
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 YOLANDA
STEFANOU FAERBER, 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 29, 2000
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 29, 2000, 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 31, 2000, 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: Nominee: Ram Mukunda.
/ / FOR NOMINEE / / WITHHOLD AUTHORITY FOR NOMINEE
--------------------------------------------------------------------------------
The Board of Directors recommends that you vote FOR the nominee.
(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 ______________________, 2000
__________________________________
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 THE NOMINEE.
