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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GLOBAL CROSSING LTD
- --------------------------------------------------------------------------------
(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)(4) 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF GLOBAL CROSSING LTD.]
May 8, 2000
Dear Shareholder:
The Board of Directors cordially invites you to attend the 2000 Annual
General Meeting of Shareholders, which we will hold at 10:00 a.m., local time,
on June 15, 2000, at Equitable Center, 787 Seventh Avenue, New York, New York.
The Notice of 2000 Annual General Meeting and Proxy Statement accompanying
this letter describe the business to be acted upon at the meeting. The Annual
Report on Form 10-K for the year ended December 31, 1999 is also enclosed.
It is important that your shares be represented at the Annual General
Meeting, whether or not you plan to attend the meeting in person. Please
complete, sign and date the enclosed proxy card and return it in the
accompanying prepaid envelope to ensure that your shares will be represented at
the meeting.
Thank you for your continued support.
/s/ Gary Winnick
GARY WINNICK
Chairman of the Board of Directors
<PAGE>
[LOGO OF GLOBAL CROSSING LTD.]
----------------
Notice of 2000 Annual General Meeting of Shareholders
----------------
We will hold the 2000 Annual General Meeting of Shareholders (the "annual
meeting") of Global Crossing Ltd. at Equitable Center, 787 Seventh Avenue, New
York, New York, on June 15, 2000, at 10:00 a.m., local time, for the following
purposes:
To receive the report of the independent auditors of Global Crossing and the
financial statements for the year ended December 31, 1999 and to take the
following actions:
1. To elect five Class A directors for a term expiring at the 2003 Annual
General Meeting of Shareholders;
2. To appoint Arthur Andersen as independent auditors of Global Crossing
for the year ending December 31, 2000 and authorize the Board of
Directors to determine their remuneration;
3. To consider and act upon a proposal to amend the 1998 Global Crossing
Ltd. Stock Incentive Plan, including an increase in the number of
authorized shares of Global Crossing common stock reserved for issuance
under that plan;
4. To consider and act upon a proposal to approve the Global Crossing
Senior Executive Incentive Compensation Plan; and
5. To transact any other business that may properly come before the annual
meeting and any adjournment or postponement of the meeting.
Only shareholders of record at the close of business on April 24, 2000, which
has been fixed as the record date for notice of the annual meeting, are
entitled to receive this notice and to vote at the annual meeting.
It is important that your shares be represented at the annual meeting.
Whether or not you expect to attend the annual meeting, please vote by
completing, signing and dating the enclosed proxy card and returning it
promptly in the reply envelope provided.
By order of the Board of Directors,
/s/ Mitchell Sussis
MITCHELL C. SUSSIS
Secretary
May 8, 2000
<PAGE>
PROXY STATEMENT
----------------
GENERAL INFORMATION
The Board of Directors of Global Crossing Ltd. ("Global Crossing" or the
"Company") is soliciting your proxy for use at the Annual General Meeting of
Shareholders to be held on June 15, 2000 (the "annual meeting"). These proxy
materials are being mailed to shareholders beginning on or about May 8, 2000.
The principal executive offices of Global Crossing are located at Wessex House,
45 Reid Street, Hamilton HM12, Bermuda. Our telephone number is 441-296-8600.
You may visit us at our website located at www.globalcrossing.net.
Date, Time and Place
We will hold the Annual General Meeting at Equitable Center, 787 Seventh
Avenue, New York, New York, on June 15, 2000 at 10:00 a.m., local time, subject
to any adjournments or postponements.
Who Can Vote; Votes Per Share
Shareholders of record at the close of business on April 24, 2000 are
eligible to vote at the meeting. As of the close of business on that date, we
had outstanding 817,653,894 shares of common stock.
Each share entitled to vote on any given matter, other than shares held by
holders of shares representing greater than 9.5% of the total votes cast on
that matter (whose voting power will be limited as described in the next two
paragraphs), will be entitled to one vote on such matter plus any additional
votes on such matter that may be allocated to such share based on a formula
contained in our bye-laws and described in the next two paragraphs.
For purposes of the following discussion, when we refer to "Controlled
Shares" we mean, among other things, all shares of Global Crossing common stock
that a shareholder is deemed (1) to own directly, indirectly or constructively
pursuant to Section 958 of the Internal Revenue Code or (2) to own beneficially
directly or indirectly as a result of the possession of sole or shared voting
power within the meaning of Section 13(d) of the Securities Exchange Act of
1934 and the rules and regulations under that act.
Under our bye-laws, each share of common stock will have one vote on each
matter, except that if and so long as the Controlled Shares of any shareholder
(or group of shareholders) constitute more than 9.5% of the voting power of all
shares voting on such matter, then the voting rights with respect to the
Controlled Shares voted by that shareholder (or group) on such matter will be
limited, in the aggregate, to a voting power of 9.5% or, in the case of
Canadian Imperial Bank of Commerce and its affiliates, collectively, to 20%,
based on a formula contained in the bye-laws. The additional votes that could
be cast on such matter by that shareholder (or group) if there were no
restrictions on voting rights will be allocated to the other holders of common
stock, pro rata based on their number of shares of common stock. However, no
shareholder (or group of shareholders) that has been allocated any additional
votes may exceed the limitation on voting rights as a result of that
allocation.
Assuming every share of Global Crossing common stock outstanding on the
record date were voted on each matter at the annual meeting, each share of
Global Crossing common stock, other than shares held by any 9.5% or larger
shareholder, would be entitled to approximately 1.002 votes on each such
matter.
Quorum and Voting Requirements
The presence in person or by proxy of at least two shareholders entitled to
vote and holding shares representing more than 50% of the votes of all
outstanding shares of Global Crossing common stock will constitute a quorum at
the annual meeting. Abstentions and broker "non-votes" are counted for purposes
of establishing a quorum. A broker "non-vote" occurs when a nominee (such as a
broker) holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power for that
particular matter and has not received instructions from the beneficial owner.
1
<PAGE>
Approval of each of the proposals requires the affirmative vote of at least a
majority of the votes cast. Abstentions and broker "non-votes" will not affect
the voting results, although they will have the practical effect of reducing
the number of affirmative votes required to achieve a majority by reducing the
total number of shares from which the majority is calculated.
Approval of Proposal No. 3 (regarding the 1998 Global Crossing Ltd. Stock
Incentive Plan) and Proposal No. 4 (regarding the Global Crossing Senior
Executive Incentive Compensation Plan) additionally require that a majority of
the outstanding shares on April 24, 2000 actually cast votes on the applicable
matter. Abstentions and broker "non-votes" will have the practical effect of
reducing the likelihood that this requirement will be satisfied.
How to Vote
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. If you are the shareholder of
record, you may either vote in person at the meeting or by proxy. All shares of
Global Crossing common stock represented by a proxy that is properly executed
by the shareholder of record and received by our transfer agent, EquiServe,
L.P., by June 14, 2000, will be voted as specified in the proxy, unless validly
revoked as described below. If you return a proxy by mail and do not specify
your vote, your shares will be voted as recommended by the Board of Directors.
As an alternative to appointing a proxy, a Global Crossing shareholder that
is a corporation may appoint any person to act as its representative by
delivering written evidence of that appointment, which must be received at our
principal executive offices not later than one hour before the time fixed for
the beginning of the meeting. A representative so appointed may exercise the
same powers, including voting rights, as the appointing corporation could
exercise if it were an individual shareholder.
The Board of Directors is not currently aware of any business that will be
brought before the annual meeting other than the proposals described in this
Proxy Statement. If, however, other matters are properly brought before the
annual meeting or any adjournment or postponement of the meeting, the persons
appointed as proxies will have discretionary authority to vote the shares
represented by duly executed proxies in accordance with their discretion and
judgment.
Revocation of Proxies
You may revoke your proxy at any time before it is voted (1) by so notifying
the Secretary of Global Crossing in writing at the address of Global Crossing's
principal executive offices not less than one hour before the time fixed for
the beginning of the meeting, (2) by signing and dating a new and different
proxy card or (3) by voting your shares in person or by an appointed agent or
representative at the meeting. You cannot revoke your proxy by merely attending
the annual meeting.
Proxy Solicitation
Global Crossing will bear the costs of soliciting proxies from the holders of
our common stock. Proxies will initially be solicited by us by mail, but
directors, officers and selected other employees of Global Crossing may also
solicit proxies by personal interview, telephone, telegraph or e-mail.
Directors, executive officers and any other employees of Global Crossing who
solicit proxies will not be specially compensated for those services, but may
be reimbursed for out-of-pocket expenses incurred in connection with the
solicitation. Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to beneficial owners and will be
reimbursed for their reasonable out-of-pocket expenses incurred in sending
proxy materials to beneficial owners. We have retained Corporate Investor
Communications, Inc. to aid in the solicitation of proxies. Corporate Investor
Communications, Inc. will receive customary fees and expense reimbursement for
its services. Our transfer agent, EquiServe, L.P., has agreed to assist us in
connection with the tabulation of proxies.
2
<PAGE>
1999 Audited Financial Statements
Under Global Crossing's bye-laws and Bermuda law, audited financial
statements must be presented to shareholders at an annual general meeting of
shareholders. To fulfill this requirement, we will present at the annual
meeting audited consolidated financial statements for the fiscal year 1999.
Copies of those financial statements are included in our Annual Report on Form
10-K, which is being mailed to shareholders together with this Proxy Statement.
Representatives of Arthur Andersen, Global Crossing's independent auditors,
will be present at the annual meeting and available to respond to appropriate
questions.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The members of the Board of Directors of Global Crossing are classified into
three classes, one of which is elected at each Annual General Meeting of
Shareholders to hold office for a three-year term. The Board of Directors has
nominated Norman Brownstein, Thomas J. Casey, William E. Conway, Jr., Leo J.
Hindery, Jr. and James F. McDonald for election as Class A directors at the
2000 annual meeting for a three-year term expiring at the 2003 Annual General
Meeting of Shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE.
Except where otherwise instructed, proxies will be voted for election of all
the nominees. Should any nominee be unwilling or unable to serve as a director,
which is not anticipated, it is intended that the persons acting under the
proxy will vote for the election of another person designated by the Board,
unless the Board chooses to reduce the number of directors constituting the
full Board.
DIRECTORS AND EXECUTIVE OFFICERS OF GLOBAL CROSSING
The following table sets forth the names, ages and positions of the directors
and executive officers of Global Crossing. Additional biographical information
concerning these individuals is provided in the text following the table.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Gary Winnick........... 52 Chairman of the Board and Director
Lodwrick M. Cook....... 71 Co-Chairman of the Board and Director; Chairman,
Global Marine Systems
Leo J. Hindery, Jr. ... 52 Chief Executive Officer and Director; Chairman and
Chief Executive Officer, GlobalCenter Inc.
Thomas J. Casey........ 48 Vice Chairman of the Board and Director
Joseph P. Clayton...... 50 Director; President, Global Crossing North America
Jack M. Scanlon ....... 58 Director; Vice Chairman of the Board, Asia Global
Crossing
Gary A. Cohen.......... 44 Chief Operating Officer
Dan J. Cohrs........... 47 Chief Financial Officer
John L. Comparin....... 47 Senior Vice President, Human Resources
James C. Gorton........ 38 Senior Vice President and General Counsel
Joseph P. Perrone...... 51 Senior Vice President, Finance
John A. Scarpati....... 48 Chief Administrative Officer
Robert B. Sheh......... 60 Executive Vice President, Construction and
Operations
Edward Mulligan........ 44 Senior Vice President, Network Operations
William B. Carter ..... 55 President, Global Crossing Development Co.; Chief
Executive Officer, Global Marine Systems
S. Wallace Dawson, Jr.. 54 President, Atlantic Crossing
Robert Annunziata...... 52 Director
Jay R. Bloom........... 44 Director
Norman Brownstein...... 56 Director
William E. Conway, Jr.. 50 Director
Eric Hippeau........... 48 Director
Dean C. Kehler......... 43 Director
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Geoffrey J.W. Kent....... 57 Director
Canning Fok Kin-ning..... 48 Director
David L. Lee............. 50 Director
Douglas H. McCorkindale.. 60 Director
James F. McDonald........ 60 Director
Barry Porter............. 42 Director
Bruce Raben.............. 46 Director
Michael R. Steed......... 50 Director
</TABLE>
Class A Director Nominees for Terms Expiring at the 2003 Annual General Meeting
Norman Brownstein--Mr. Brownstein, a Director of Global Crossing since May
2000, is Chairman of the Board of the legal firm of Brownstein Hyatt & Farber,
P.C., a position he has held since 1986. A member of the American College of
Real Estate Lawyers, Mr. Brownstein primarily practices in the areas of real
estate law and commercial transactions. Mr. Brownstein is a Presidential
appointee of the U.S. Holocaust Memorial Council, a director of the National
Jewish Center for Immunology and Respiratory Medicine, a Trustee of the Simon
Wiesenthal Center, and a Vice President of the American Israel Public Affairs
Committee. He also serves as a director of Wyndham International.
Thomas J. Casey--Mr. Casey has been Vice Chairman and a Director since
December 1998, after having been appointed Managing Director of Global Crossing
in September 1998. Prior to joining Global Crossing, Mr. Casey was co-head of
Merrill Lynch & Co.'s Global Communications Investment Banking Group for three
years. From 1990 to 1995, Mr. Casey was a partner and co-head of the
telecommunications and media group of the law firm of Skadden, Arps, Slate,
Meagher and Flom. Mr. Casey also serves as president of Pacific Capital Group,
Inc. ("PCG"), a leading merchant bank specializing in telecommunications, media
and technology, which has a substantial equity investment in Global Crossing.
Mr. Casey is also a director of Value America, Inc. and StorageNetworks, Inc.
William E. Conway, Jr.--Mr. Conway, a Director of Global Crossing since
August 1998, has been a managing director of The Carlyle Group, a private
global investment firm, since 1987. Prior thereto, Mr. Conway had been Senior
Vice President and Chief Financial Officer of MCI Communications Corporation.
Mr. Conway also serves as director of Nextel Communications, Inc.
Leo J. Hindery, Jr.--In February 2000, Mr. Hindery was named Chief Executive
Officer of Global Crossing. Mr. Hindery has been a Global Crossing Director
since February 2000 and Chairman and Chief Executive Officer of Global
Crossing's GlobalCenter Inc. subsidiary since December 1999. Prior thereto, he
had been President and Chief Executive Officer of AT&T Broadband & Internet
Services since March 1999. From March 1997 until March 1999, Mr. Hindery was
President of Tele-Communications, Inc., a cable television and programming
company. Prior thereto, he was Managing General Partner of InterMedia Partners,
a cable television operator that he founded in 1988.
James F. McDonald--Mr. McDonald, a Director of Global Crossing since
September 1999, has been President and Chief Executive Officer of Scientific-
Atlanta, Inc., a leading supplier of broadband communications systems,
satellite-based video, voice and data communications networks and world-wide
customer service and support, since 1993. He is also a director of Scientific-
Atlanta and Burlington Resources, Inc.
Class B Directors with Terms Expiring at the 2001 Annual General Meeting
Robert Annunziata--Mr. Annunziata, a Director of Global Crossing since March
1999, was Chief Executive Officer of Global Crossing from February 1999 through
March 2000. From September 1998 to February 1999, Mr. Annunziata was President
of AT&T's business services group, responsible for the AT&T global network.
Prior thereto, Mr. Annunziata was Chairman and Chief Executive Officer of the
Teleport Communications Group, a competitive local exchange carrier, from 1983
to 1998.
5
<PAGE>
Lodwrick M. Cook--Mr. Cook has been Co-Chairman of the Board of Global
Crossing since September 1997 and Vice Chairman and Managing Director of PCG
since 1997. He became Chairman of Global Marine Systems, a wholly-owned
subsidiary of Global Crossing, in 1999. Prior to joining PCG, Mr. Cook spent 39
years at Atlantic Richfield Co., last serving as Chairman of the Board of
Directors from 1986 to 1995, when he became Chairman Emeritus. Mr. Cook is also
a member of the Board of Directors of Castle & Cooke, Inc., Litex, Inc. and
911Notify.com.
Eric Hippeau--Mr. Hippeau, a Director of Global Crossing since September
1999, is Chairman and Chief Executive Officer of Ziff-Davis Inc., a publicly-
listed company whose majority shareholder is Softbank Corp. Ziff-Davis Inc. is
a leading integrated media and marketing company focused on computing and
internet-related technology. Mr. Hippeau has held this position since December
1993, prior to which he held other senior executive positions within Ziff-
Davis. He is also a director of Ziff-Davis Inc., Yahoo!, Inc., and Starwood
Hotels and Resorts Worldwide, Inc.
Geoffrey J.W. Kent--Mr. Kent, a Director of Global Crossing since August
1998, is Chairman and Chief Executive Officer of the Abercrombie & Kent group
of companies in the travel-related services industry, and has been associated
with these companies since 1967.
David L. Lee--Mr. Lee, a Director of Global Crossing since March 1997, was
President and Chief Operating Officer from March 1997 through May 2000. He has
also been a managing general partner of Clarity Partners, LP since May 2000 and
a managing director of PCG since 1989.
Bruce Raben--Mr. Raben, a Director of Global Crossing since March 1997, is a
managing director of CIBC World Markets Corp. Prior to joining CIBC World
Markets in January 1996, Mr. Raben was a founder, managing director and co-head
of the Corporate Finance Department of Jefferies & Co., Inc. since 1990.
Mr. Raben also serves as a director of Optical Security, Inc., Evercom, Inc.,
Terex Corporation and Equity Marketing, Inc.
Jack M. Scanlon--Mr. Scanlon has been a Director since April 1998 and Vice
Chairman of Asia Global Crossing since March 2000. Mr. Scanlon was Chief
Executive Officer of Global Crossing from April 1998 to March 1999 and Vice
Chairman of Global Crossing from March 1999 to March 2000. In addition, he was
Chief Executive Officer of Asia Global Crossing from September 1999 to February
2000. Prior to joining Global Crossing, Mr. Scanlon was President and General
Manager of the Cellular Networks and Space Sector of Motorola Inc. and had been
affiliated with Motorola Inc. since 1990.
Class C Directors with Terms Expiring at the 2002 Annual General Meeting
Jay R. Bloom--Mr. Bloom, a Director of Global Crossing since March 1997, is a
managing director of CIBC World Markets Corp. and co-head of its Leveraged
Finance Group. In addition, Mr. Bloom is a member of CIBC's U.S. Management
Committee; co-head of CIBC World Markets High Yield Merchant Banking Funds; and
a managing director of Caravelle Advisors, L.L.C., the investment advisor to
Caravelle Investment Fund, L.L.C., an entity that owns shares of Global
Crossing common stock. Mr. Bloom is also a managing director and member of
Trimaran Fund II, L.L.C., Trimaran Fund Management, L.L.C., and Trimaran
Investments II, L.L.C. Prior to joining CIBC World Markets in 1995, Mr. Bloom
was a founder and managing director of The Argosy Group L.P. Mr. Bloom also
serves as a director of CIBC World Markets Corp., Heating Oil Partners, L.P.,
Consolidated Advisers Limited, L.L.C., Argosy Heating Partners, Inc., Dominos,
Inc., IASIS Healthcare Corporation and Morris Material Handling, Inc.
Joseph P. Clayton--Mr. Clayton has been a Director of Global Crossing since
September 1999. He has also served as President, Global Crossing North America
since that time. Mr. Clayton was also Vice Chairman of Global Crossing from
September 1999 to March 2000. Prior to the merger with Global Crossing, Mr.
Clayton was Chief Executive Officer of Frontier since August 1997, having
served as Frontier's President and Chief Operating Officer from June 1997 to
August 1997. Prior thereto, he was Executive Vice President, Marketing and
Sales--Americas and Asia, Thomson Consumer Electronics, a worldwide leader in
the consumer electronics industry.
6
<PAGE>
Dean C. Kehler--Mr. Kehler, a Director of Global Crossing since March 1997,
is a managing director of CIBC World Markets Corp. and co-head of its Leveraged
Finance Group. In addition, Mr. Kehler is a member of CIBC's U.S. Management
Committee; co-head of CIBC World Markets High Yield Merchant Banking Funds; and
a managing director of Caravelle Advisors, L.L.C., the investment advisor to
Caravelle Investment Fund, L.L.C., an entity that owns shares of Global
Crossing common stock. Mr. Kehler is also a managing director and member of
Trimaran Fund II, L.L.C., Trimaran Fund Management, L.L.C., and Trimaran
Investments II, L.L.C. Prior to joining CIBC World Markets in 1995, Mr. Kehler
was a founder and managing director of The Argosy Group L.P. Mr. Kehler also
serves as a director of CIBC World Markets Corp., Booth Creek Group, Inc. and
Heating Oil Partners, L.P.
Douglas H. McCorkindale--Mr. McCorkindale, a Director of Global Crossing
since September 1999, is Vice Chairman and President of Gannett Co., Inc., a
nationwide diversified communications company, and has held that position since
September 1997. Prior thereto, he was Gannett's Vice Chairman and Chief
Financial and Administrative Officer. Mr. McCorkindale is also a director of
Gannett and Continental Airlines and a director or trustee of a number of
investment companies in the family of Prudential Mutual Funds.
Michael R. Steed--Mr. Steed, a Director of Global Crossing since March 1997,
has been a managing director of PCG since December 1999. Prior thereto, Mr.
Steed had been Senior Vice President of Investments for the Union Labor Life
Insurance Company, ULLICO Inc. ("ULLICO") and its family of companies and
President of Trust Fund Advisors, ULLICO's investment management subsidiary,
since 1992. Mr. Steed also serves as a director of Value America, Inc. and VR-
1.
Gary Winnick--Mr. Winnick, founder of Global Crossing, has been Chairman of
the Board of Global Crossing since March 1997. Mr. Winnick is the founder and
has been the Chairman and Chief Executive Officer of PCG since 1985.
Other Executive Officers of Global Crossing
Gary A. Cohen--Mr. Cohen became Chief Operating Officer in May 2000. From
July 1999 until May 2000, Mr. Cohen was general manager of IBM Global
Telecommunications Industry, International Business Machines, Inc.'s business
in the telecommunications service provider, telecommunications equipment
supplier, and broadband distribution industries worldwide. From 1997 until July
1999, Mr. Cohen was vice president of IBM's Communications Sector, Asia
Pacific. Prior thereto, Mr. Cohen served as vice president of marketing for
IBM's Internet Division, having held various positions of increasing
responsibility at IBM since joining that company in 1978.
Dan J. Cohrs--Mr. Cohrs has been Chief Financial Officer of Global Crossing
since May 1998. From 1993 to 1998, Mr. Cohrs was affiliated with GTE
Corporation, rising to the position of Vice President and Chief Planning and
Development Officer in 1997.
John L. Comparin--Mr. Comparin has been Senior Vice President, Human
Resources of Global Crossing since August 1999. Prior thereto, Mr. Comparin had
been Senior Vice President--Human Resources of ALLTEL Corporation, an
information technology company that provides wireline and wireless
communications and information services, since 1990.
James C. Gorton--Mr. Gorton has been Senior Vice President and General
Counsel of Global Crossing since July 1998, and also served as Secretary of
Global Crossing from August 1998 through September 1999. From 1994 to 1998, Mr.
Gorton was a partner in the New York law firm of Simpson Thacher & Bartlett.
Joseph P. Perrone--Mr. Perrone became Senior Vice President, Finance, in May
2000. Prior thereto, Mr. Perrone had served as a senior partner in Arthur
Andersen's Communications, Media, and Entertainment Practice, having been a
partner at Arthur Andersen since 1981.
7
<PAGE>
John A. Scarpati--Mr. Scarpati was appointed Chief Administrative Officer of
Global Crossing in December 1999. He previously served as Vice President and
Chief Financial Officer at AT&T Business Services Group from 1998 to 1999.
Prior thereto, Mr. Scarpati served since 1984 in various executive officer
positions for the Teleport Communications Group, including Senior Vice
President and Chief Financial Officer.
Robert B. Sheh--Mr. Sheh has been Executive Vice President, Construction and
Operations since February 1999. From 1992 to 1998, Mr. Sheh served as President
and Chief Executive Officer of International Technology Corporation, an
environmental management services firm, and as Chairman and Chief Executive of
Air & Water Technologies, an environmental management services firm. From 1989
to 1992 Mr. Sheh served as President of The Ralph M. Parsons Company, a
worldwide engineering and construction company. Mr. Sheh held positions of
increasing responsibility at Parsons over a period of 20 years.
Edward Mulligan--Mr. Mulligan joined Global Crossing in November 1999 as
Senior Vice President for Engineering and Operations. In July 1973, Mr.
Mulligan began his career with AT&T. In 1990 he joined Teleport Communications
Group ("TCG") and rose within the organization to head the Product Lines-of-
Business. In 1998 he rejoined AT&T when TCG was acquired by AT&T.
William B. Carter--Mr. Carter has served as President of Global Crossing
Development Co., a subsidiary of Global Crossing, since September 1997. Since
July 1999, he has also served as CEO of the Global Marine Systems subsidiary of
Global Crossing. Prior to joining Global Crossing, he was President and Chief
Executive Officer of AT&T Submarine Systems, Inc., overseeing the research and
development, planning, negotiations, engineering, implementation, and
integration of their international cable and satellite facilities. Mr. Carter
previously served as director of international network operations for AT&T.
S. Wallace Dawson, Jr.--Mr. Dawson joined Global Crossing in September 1997
and was appointed Chief Executive Officer, Atlantic Crossing Ltd. in August
1998. Mr. Dawson joined Bell Laboratories in 1968 and subsequently became
associated with AT&T Long Lines, where he was responsible for AT&T Packet
Switched Services and Data Networking Services. At AT&T Submarine Systems,
Inc., he had overall delivery responsibility for implementation of all
submarine cable projects.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held four regularly scheduled meetings and twelve
special meetings in 1999. No director attended fewer than 75% of the aggregate
of such meetings of the Board and of the committees of the Board on which he or
she served.
The four standing committees of the Board are the Audit Committee, the
Compensation Committee, the Nominating Committee and the Executive Committee.
These committees are described in the following paragraphs.
The Audit Committee consists of Messrs. Conway (chairman), Hippeau and Kent.
The Audit Committee held 2 meetings during 1999. The primary purpose of the
Audit Committee is to assist the Board in fulfilling its oversight
responsibilities relating to financial information that will be provided to the
shareholders and others, the Company's systems of internal controls, and the
audit process. In fulfilling this purpose, the Committee performs the following
functions:
. Reviews the Company's audited financial statements and oversees the
Company's financial reporting process.
. Inquires regarding areas of disagreement between management and the
external auditors on auditing or accounting matters.
. Reviews the impact on the financial statements of material transactions,
contracts and contingencies.
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. Reviews with auditors the adequacy of the Company's financial,
operational and technological internal controls and risk management
activities.
. Reviews the status of compliance with laws, regulations, and internal
procedures and the scope and status of the Company's systems designed to
ensure such compliance.
. Reviews contingent liabilities and legislative and regulatory
developments that could materially impact the Company.
. Conducts periodic reviews of all material transactions with related
parties and of management's efforts to monitor compliance with the
Company's code of conduct.
. Recommends the appointment of the external auditor by the Board after
reviewing the proposed firm's intended audit scope and fees and matters
impacting the firm's independence from the Company.
. Oversees audit work and reviews significant findings of all audits
performed by the external and internal auditors.
The Compensation Committee consists of Messrs. McDonald (chairman), Kent and
McCorkindale. The Compensation Committee held 10 meetings during 1999. The
primary purpose of the Compensation Committee is to assist the Board in its
oversight responsibility regarding executive compensation, employee benefits,
management development and succession, and significant human resources issues.
In fulfilling this purpose, the Committee performs the following functions:
. Recommends to the Board the target compensation for the Chairman, the
Co-Chairman and the Chief Executive Officer.
. Sets compensation for the Company's other executive officers and for
other designated members of senior management.
. Acts in an advisory capacity regarding compensation guidelines for key
employees other than the designated executives.
. Establishes and administers performance goals for compensation intended
to qualify as "performance-based compensation" under Section 162(m) of
the Internal Revenue Code, and certifies whether such performance goals
have been obtained.
. Publishes an annual report to shareholders on compensation of executive
officers.
. Oversees administration of all stock-based incentive plans and
authorizes all grants of stock options and other stock-based incentives
to the designated executives and other employees, directors, and
consultants.
. When deemed necessary or desirable by the Committee, adopts or amends
employee benefit plans or recommends that the Board do so, and oversees
administration of all employee benefit plans in which the Committee or
the Board is named as a plan administrator or fiduciary.
. Administers a periodic evaluation by the Board of the performance of the
Chief Executive Officer and reviews management's evaluation of the
performance of other designated executives.
. Periodically reviews management's succession and management development
plans.
. Reviews significant human resources issues such as workforce diversity
and corporate culture.
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The Nominating Committee consists of Messrs. McCorkindale (chairman),
Hippeau, Kehler and Cook. The Nominating Committee held one meeting during
1999. The Nominating Committee reviews the qualifications of director
candidates and recommends candidates to the Board, and recommends to the Board
criteria regarding the composition and size of the Board. Although the
Nominating Committee has not adopted formal procedures for the submission of
shareholders' recommendations for nominees for Board membership, such
recommendations may be made by submitting the names and other pertinent
information in writing to: Douglas H. McCorkindale, Chairman of the Nominating
Committee, c/o Global Crossing Ltd., 360 North Crescent Drive, Beverly Hills,
California 90210.
The Executive Committee consists of Messrs. Winnick (chairman), Bloom,
Conway, Cook, Hindery and McCorkindale. The Executive Committee held no
meetings in 1999. With certain exceptions, the Executive Committee may exercise
all the powers of the Board of Directors when the Board is not in session.
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SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth, as of April 24, 2000, certain information
regarding the beneficial ownership of our common stock by (i) each person or
entity who is known by us to own beneficially 5% or more of our voting common
stock, (ii) each of our directors and executive officers and (iii) all of our
directors and executive officers as a group. To our knowledge, each such
shareholder has sole voting and investment power with respect to the shares
shown, unless otherwise noted. For purposes of this table, an individual is
deemed to have sole beneficial ownership of securities owned jointly with such
individual's spouse. Amounts appearing in the table below include (i) all
shares of common stock outstanding as of April 24, 2000, (ii) all shares of
common stock issuable upon the exercise of options within 60 days of April 24,
2000 and (iii) all shares of common stock issuable upon the exercise of
warrants within 60 days of April 24, 2000. The warrants designated below as
"New PCG Warrants" and "GCL Warrants" each represent the right to immediately
purchase shares of Global Crossing common stock at an exercise price of $9.50
per share.
<TABLE>
<CAPTION>
Beneficial Ownership of Common Stock
------------------------------------------------------
Shares Shares
Subject to Subject Shares
Number of New PCG to GCL Subject to Percentage
Shares(1) Warrants Warrants Options(2) of Class
----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Pacific Capital Group,
Inc.(3)................ 79,136,648 6,050,004 2,515,788 0 10.62%
360 North Crescent
Drive
Beverly Hills,
California 90210
Canadian Imperial Bank
of Commerce(4)......... 68,529,669 0 0 240,000 8.41%
161 Bay Street, 8th
Floor--BCE Place
P.P. Box 500
M5J258, Toronto, Canada
Gary Winnick(5)......... 79,136,648 6,050,004 2,515,788 1,800,000 10.81%
Lodwrick M. Cook........ 3,143,929 950,002 0 362,240 *
Leo J. Hindery, Jr...... 0 0 0 170,000 *
Thomas J. Casey(6)...... 422,749 0 0 1,106,666 *
Joseph Clayton.......... 542,396 0 0 1,440,000 *
Dan J. Cohrs............ 0 0 0 927,505 *
John Comparin........... 5,000 0 0 0 *
James C. Gorton......... 15,000 0 0 617,690 *
David L. Lee(7)......... 17,350,014 1,825,002 663,456 900,000 2.53%
Barry Porter............ 15,814,795 1,825,002 610,266 900,000 2.33%
John M. Scanlon......... 363,748 0 0 1,904,965 *
John A. Scarpati........ 900 0 0 333,334 *
Robert Sheh............. 0 0 0 583,685 *
William B. Carter....... 239,520 0 0 1,556,096 *
Wallace S. Dawson....... 68,958 0 0 530,400 *
Edward Mulligan......... 6,012 0 0 50,000 *
Robert Annunziata....... 0 0 0 5,438,424 *
Jay R. Bloom(8)......... 13,993,966 0 0 128,533 1.73%
William E. Conway,
Jr.(9)................. 2,247,640 0 0 75,000 *
Canning Fok Kin-ning.... 0 0 0 8,898,889 1.08%
Eric Hippeau............ 35,895 0 0 42,300 *
Dean C. Kehler(8)....... 14,805,827 0 0 128,533 1.83%
Geoffrey J.W. Kent...... 0 0 0 75,000 *
Douglas McCorkindale.... 38,855 0 0 87,400 *
James McDonald.......... 5,351 0 0 40,932 *
Bruce Raben............. 0 0 0 120,000 *
Michael R. Steed........ 0 0 0 120,000 *
All Directors and
Executive Officers as a
Group.................. 187,967,080 10,650,010 3,789,510 28,577,592 21.04%
</TABLE>
- --------
* Percentage of shares beneficially owned does not exceed one percent.
(1) As of April 24, 2000, 817,653,894 shares of common stock were issued and
outstanding.
(2) Represents stock options issued under stock option plans of Global
Crossing, except that Mr. Fok's amount includes 8,888,889 shares of
common stock issuable upon conversion of the 400,000 shares of
convertible preferred stock issued to Hutchison Whampoa in connection
with the formation of the
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Hutchison Global Crossing joint venture. As Managing Director of Hutchison
Whampoa, Mr. Fok may be deemed to share investment and voting control over
these shares.
(3) Includes 40,349,650 shares of common stock and common stock warrants
owned or managed by GKW Unified Holdings, a company formed for the
benefit of Gary Winnick and members of his family and managed by Pacific
Capital Group, which thereby shares investment and voting power over
such shares.
(4) These share amounts, which are effective as of April 14, 2000, include
11,453,529 shares held by certain affiliates of Canadian Imperial Bank
of Commerce in such a manner that CIBC shares investment power over such
shares. The indicated options have been assigned to CIBC by CIBC
employees who previously served on the GCL board of directors.
(5) Includes all shares of common stock beneficially owned by Pacific
Capital Group, a company controlled by Mr. Winnick.
(6) Includes 422,749 shares of common stock owned by Casey Global Holdings
LLC, which is managed by GCL in such a manner that Mr. Casey shares
investment and voting power over such shares.
(7) Includes (a) all 9,900,822 shares of common stock and 513,156 shares of
common stock issuable upon the exercise of warrants owned by San Pasqual
Corp., a corporation of which Mr. Lee and his family are the sole
shareholders and over whose portfolio securities Mr. Lee shares
investment and voting power and (b) all 3,988,242 shares of common stock
and 150,300 shares of common stock issuable upon the exercise of
warrants owned by the David and Ellen Lee Family Trust, of which Mr. Lee
is a trustee and in such capacity shares investment and voting power
over such shares.
(8) Includes (a) 11,453,529 shares held by certain affiliates of Canadian
Imperial Bank of Commerce in such a manner that Messrs. Bloom and Kehler
have shared investment and voting power over such shares and (b) 218,434
shares held by Caravelle Investment Fund, LLC, for whose investment
advisor Messrs. Bloom and Kehler serve as managing directors.
(9) Includes 2,239,640 shares of common stock beneficially owned by the
Carlyle Group, of which Mr. Conway is managing director and in such
capacity shares voting and investment control over such shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the beginning of 1999, we entered into the transactions described
below with certain of our directors, executive officers and affiliates.
Transactions with Pacific Capital Group and its Affiliates
Prior to 1999, Global Crossing entered into certain transactions with
affiliates of Pacific Capital Group ("PCG"), including the acquisition of
development rights to certain of the Company's fiber optic cable systems. PCG
is controlled by Gary Winnick, Chairman of the Board of the Company, and some
other officers and directors of Global Crossing either currently are or at one
time were affiliated with PCG, including Messrs. Cook, Casey, Lee and Porter.
During 1999, Global Crossing subleased from PCG two suites in an office
building in Beverly Hills, California for payments aggregating approximately
$287,000 over the year. In October 1999, Global Crossing consolidated its
Beverly Hills offices into approximately 87,000 square feet of office space at
its present headquarters building at 360 North Crescent Drive. Global Crossing
leases this space from North Crescent Realty V, LLC, which is managed by and
affiliated with PCG, for an aggregate monthly cost of approximately $400,000.
North Crescent Realty V, LLC paid approximately $7.5 million to improve the
360 North Crescent property to meet Global Crossing's specifications and was
reimbursed approximately $3.2 million of this amount by Global Crossing.
Global Crossing engaged an independent real estate consultant to review the
terms of Global Crossing's occupancy of the 360 North Crescent building, and
the consultant found the terms to be consistent with market terms and
conditions and the product of an arm's length negotiation. Global Crossing
subleases approximately 12,000 square feet of the building to PCG for an
aggregate monthly cost of approximately $53,000.
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PCG has fractional ownership interests in respect of four aircraft used by
Global Crossing during 1999. Global Crossing reimburses PCG for PCG's cost of
maintaining these ownership interests so that PCG realizes no profit from the
relationship. During 1999, PCG billed Global Crossing approximately $2 million
in aggregate under this arrangement.
In March 2000, Global Crossing entered into a ten year lease of an aircraft
that had previously been owned by WINCO Aviation, a company controlled by Gary
Winnick (through PCG) and Lodwrick Cook. A commercial equipment financing
company purchased the aircraft from WINCO Aviation and then leased the aircraft
to Global Crossing on standard commercial terms. The purchase price of the
aircraft was approximately $12.5 million, which is the amount WINCO Aviation
paid for the aircraft, before transactions costs, when WINCO Aviation first
acquired the aircraft in August 1999. As supported by two independent
appraisals obtained by Global Crossing, the fair market value of the aircraft
was in excess of the purchase price.
Relationship with Crescent Wireless Ltd.
In January 2000, Crescent Wireless Ltd. ("Crescent Wireless") was formed for
the purpose of participating in the spectrum auctions being held in the United
Kingdom to provide "third generation" wireless telecommunications services.
Crescent Wireless is controlled by Gary Winnick, David Lee and Barry Porter,
each a director and executive officer of the Company. In connection with the
performance by Crescent Wireless of its business operations, the Company made
available to Crescent Wireless on a consultancy basis certain of the Company's
personnel. In consideration for these services, the shareholders of Crescent
Wireless granted to the Company an option to purchase any or all of the equity
ownership of Crescent Wireless owned by those shareholders. On April 3, 2000,
it was announced that Crescent Wireless had withdrawn from the United Kingdom
spectrum auctions.
Relationship with NextWave Telecom Inc.
In December 1999, Global Crossing entered into an agreement with NextWave
Telecom Inc. pursuant to which the Company agreed to make a minority investment
in NextWave through the purchase of its convertible preferred stock, subject to
certain conditions relating to the status of NextWave's PCS licenses.
NextWave's goal is to deploy a state-of-the-art wireless telecommunications
network specifically designed to provide next-generation wireless services.
Global Crossing also entered into a Strategic Services Agreement pursuant to
which it is to be the preferred provider of backhaul, long distance backbone,
web-hosting, and other communications services to NextWave. PCG and CIBC both
also committed to purchase shares of NextWave's convertible preferred stock,
subject to essentially the same conditions relating to the status of NextWave's
PCS licenses. As of May 1, 2000, the conditions relating to NextWave's PCS
licenses have not been satisfied, and none of Global Crossing, PCG or CIBC has
consummated an equity investment in NextWave.
Transactions with Canadian Imperial Bank of Commerce and its Affiliates
During 1999, Canadian Imperial Bank of Commerce and its affiliates ("CIBC")
entered into certain financing transactions with Global Crossing. In
particular, CIBC: (1) acted as an arranger for the $600 million ten-day demand
note issued by Global Marine Systems in July, (2) acted as an arranger for the
$3 billion senior secured credit facility entered into by Global Crossing
Holdings Ltd. in July, (3) was an initial purchaser of the $2 billion aggregate
principal amount of unsecured senior notes issued by Global Crossing Holdings
in November, and (4) was an initial purchaser of Global Crossing Ltd.'s $650
million aggregate liquidation preference 7% cumulative convertible preferred
stock issued in December. During 1999, Global Crossing paid CIBC approximately
$5.6 million in fees in connection with these transactions. CIBC has a
substantial beneficial ownership interest in Global Crossing, and Messrs.
Bloom, Kehler and Raben, directors of Global Crossing, are employees of an
affiliate of CIBC.
Relationship with Ziff-Davis Inc. and Affiliates
Eric Hippeau, a director of Global Crossing, is the chairman and chief
executive officer of Ziff-Davis Inc., a majority of the common stock of which
is beneficially owned by Softbank Corp. Softbank is a party to the
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Asia Global Crossing joint venture established to provide advanced network-
based telecommunications services to businesses and consumers throughout Asia.
Global Crossing, which is responsible for the management and operation of the
network, contributed to the venture its 57.75% share of the Pacific Crossing
cable system and its development rights in East Asia Crossing. Softbank and
Microsoft each contributed $175 million in cash to Asia Global Crossing and
also committed to make a total of at least $200 million in Global Crossing
Network capacity purchases over a three-year period, expected to be utilized
primarily on the Pacific Crossing system and East Asia Crossing. Softbank and
Microsoft also agreed to use Asia Global Crossing's network in the region.
Global Crossing currently owns 93% of Asia Global Crossing, with Softbank and
Microsoft each owning 3.5%. When the fair market value of Asia Global Crossing
is determined to exceed $5 billion, the ownership interest of Softbank and
Microsoft will increase to a maximum of 19% each at a valuation of $7.5 billion
and above. Mr. Hippeau is Softbank's representative on the Asia Global Crossing
board of directors. In addition, Ziff-Davis is one of the largest web-hosting
customers of our GlobalCenter subsidiary.
Relationship with Hutchison Whampoa Limited
Canning Fok Kin-ning, managing director of Hutchison Whampoa Limited
("Hutchison"), was appointed a director of Global Crossing effective February
28, 2000. In November 1999, Hutchison and Global Crossing entered into an
agreement to form a 50/50 joint venture to pursue fixed-line telecommunications
and Internet opportunities in the Hong Kong Special Administrative Region,
China. The joint venture, the formation of which was completed in January 2000,
combines Hutchison's existing territory-wide, building-to-building fixed-line
fiber optic telecommunications network and certain Internet-related assets in
Hong Kong with Global Crossing's international fiber optic broadband cable
capacity and web hosting, Internet applications and data services. For its 50%
share, Global Crossing provided to Hutchison $400 million in Global Crossing
convertible preferred stock. Additionally, Global Crossing committed to
contribute to the joint venture international telecommunications capacity
rights on its global fiber optic network and data center related capabilities
which together are valued at $350 million, as well as $50 million in cash.
Agreements with Global Crossing Stockholders
In August 1998, PCG, GKW Unified Holdings (an affiliate of Gary Winnick and
PCG), affiliates of CIBC, Global Crossing and some of our other shareholders,
including some of our officers and directors and their affiliates, entered into
a Stockholders Agreement and a Registration Rights Agreement. Under the
Stockholders Agreement, Global Crossing was granted a right of first refusal on
specified private transfers by these shareholders during the first two years
after the consummation of our initial public offering on August 14, 1998. In
addition, subject to the exceptions in the Stockholders Agreement, some of
these shareholders had rights, which are referred to as tag-along rights,
permitting these shareholders to participate, on the same terms and conditions,
in some transfers of shares by any other of these shareholders as follows: (1)
PCG, GKW Unified Holdings and CIBC and their affiliates and permitted
transferees had the right to participate in any transaction initiated by any of
them to transfer 5% or more of our outstanding securities; and (2) PCG, GKW
Unified Holdings, CIBC and their affiliates and permitted transferees had the
right to participate in any transaction initiated by any of them to transfer
any of our securities if that transaction would result in a change of control
of Global Crossing. The Stockholders Agreement was terminated effective March
28, 2000. Under the Registration Rights Agreement, our shareholders who are
parties to that agreement and a number of their transferees have demand and
piggyback registration rights and will receive indemnification and, in some
circumstances, reimbursement for expenses from us in connection with an
applicable registration.
Principal shareholders of Global Crossing representing at that time over a
majority of the voting power of our common stock entered into a Voting
Agreement with Frontier Corporation in March 1999 in connection with the
Frontier merger. These Global Crossing shareholders reaffirmed their voting
obligations under the Voting Agreement in connection with subsequent amendments
made to the merger agreement during 1999. Pursuant to the Second Reaffirmation
of Voting Agreement and Share Transfer Restriction Agreement dated September 2,
1999, the Global Crossing shareholders that were parties to the Voting
Agreement also agreed,
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<PAGE>
from September 2, 1999 until March 28, 2000, not to transfer record or
beneficial ownership of any shares of Global Crossing common stock held by such
shareholders, other than transfers to charities, transfers made with the
consent of the Company and other limited exceptions, and to work in good faith
toward implementing a program with the purpose that, if the Global Crossing
shareholders that were parties to the Voting Agreement wished to sell or
transfer their shares after March 28, 2000, these sales or transfers would be
completed in a manner that would provide for an orderly trading market for the
shares of Global Crossing common stock.
Also on September 2, 1999, fourteen of our executive officers and three
executive officers of Frontier entered into a Share Transfer Restriction
Agreement with Global Crossing. Under this agreement, the Global Crossing
executive officers agreed not to sell or transfer shares of our common stock,
and the Frontier executive officers agreed not to sell or transfer shares of
Frontier common stock and the shares of Global Crossing common stock they would
receive in exchange for their Frontier common stock in the merger, until March
28, 2000, subject in each case to substantially the same exceptions as were
applicable to the Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement described in the immediately preceding paragraph.
Loan to Executive Officer
In May 1998, Dan J. Cohrs, an executive officer of the Company, received an
interest-free relocation loan in the aggregate principal amount of $250,000.
This loan is repayable in full on May 18, 2001.
Relationship with Brownstein Hyatt & Farber, P.C.
Norman Brownstein, a director of the Company, is Chairman of the law firm of
Brownstein Hyatt & Farber, P.C. During 1999, Global Crossing retained Mr.
Brownstein and Brownstein Hyatt & Farber to perform legal and consulting
services relating to governmental relations (including regulatory affairs),
real estate matters, and mergers and related transactions. Global Crossing paid
approximately $6.9 million for these services in 1999. In addition, in his
capacity as a consultant Mr. Brownstein was issued options to purchase a total
of 250,000 shares of Global Crossing common stock on August 6, 1999 at an
exercise price of $33 per share. These options vest ratably on each of the
first three anniversaries of the date of grant. It is expected that Brownstein
Hyatt & Farber will continue to provide ongoing legal services to the Company
throughout 2000, and the firm receives a monthly retainer of $50,000 in that
regard.
Relationship with Arthur Andersen
Arthur Andersen has served as independent auditors of the Company since
Global Crossing's inception and continues to serve in that capacity. Joseph P.
Perrone, a recently appointed executive officer of the Company, had been the
engagement audit partner for Global Crossing from prior to its initial public
offering through April 27, 2000.
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PROPOSAL NO. 2
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Under Section 89 of the Companies Act, 1981 of Bermuda, Global Crossing
shareholders have the authority to appoint the independent auditors of Global
Crossing and to authorize the Global Crossing Board of Directors to determine
the auditors' remuneration. Upon the recommendation of the Audit Committee, the
Board of Directors has tentatively selected Arthur Andersen as independent
accountants to audit our consolidated financial statements for the fiscal year
ending December 31, 2000. The Board of Directors is asking shareholders to
approve such appointment and the authority of the Board to determine their
remuneration.
Arthur Andersen acted as independent accountants for the year 1999. In
connection with its audit of the consolidated financial statements of the
Company, Arthur Andersen also reviewed certain filings with the SEC. In
addition, Arthur Andersen performed certain non-audit services for the Company
and its subsidiaries in 1999. A representative of Arthur Andersen is expected
to be present at the meeting. Such representative will have the opportunity to
make a statement, if he or she so desires, and is expected to be available to
respond to questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
ARTHUR ANDERSEN AND OF THE AUTHORITY OF THE BOARD TO DETERMINE THEIR
REMUNERATION.
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PROPOSAL NO. 3
AMENDMENT OF 1998 GLOBAL CROSSING LTD. STOCK INCENTIVE PLAN
On December 7, 1999 and May 1, 2000, the Global Crossing Board of Directors
approved certain amendments to the 1998 Global Crossing Ltd. Stock Incentive
Plan (the "1998 Plan"), subject to shareholder approval. The Global Crossing
Board of Directors is asking shareholders to approve these amendments. Below is
a summary of certain important features of the 1998 Plan and of the proposed
amendments. This summary is qualified in its entirety by reference to the full
text of the 1998 Plan in Annex A.
Administration and Participation. The 1998 Plan is administered by the
Compensation Committee of the Global Crossing Board of Directors, which may
delegate its duties in whole or in part to any subcommittee solely consisting
of at least two individuals who are "non-employee" directors within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934 and "outside directors"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986. The
1998 Plan allows the Compensation Committee to make awards of stock options,
stock appreciation rights, which can be granted either in conjunction with, or
independent of, stock options, and other stock-based awards to any employee,
director or consultant who is selected by the Compensation Committee to
participate in the 1998 Plan.
The Compensation Committee has the authority to interpret the 1998 Plan, to
establish, amend and rescind any rules and regulations relating to the 1998
Plan and to make any other determinations that the Compensation Committee deems
necessary or desirable for the administration of the 1998 Plan. Any decision of
the Compensation Committee in the interpretation and administration of the 1998
Plan lies within its sole and absolute discretion and is final, conclusive and
binding on all parties concerned, including participants in the 1998 Plan and
their beneficiaries or successors.
Limitations. Prior to the proposed amendments, an aggregate of 90,000,000
shares of Global Crossing common stock has been authorized for issuance under
the 1998 Plan. If the proposed amendments are approved by the shareholders, an
aggregate of 111,000,000 shares of Global Crossing common stock will be
authorized for issuance under the 1998 Plan. As of April 28, 2000, a total of
70,623,769 shares of Global Crossing common stock had been issued under the
1998 Plan, 62,550,399 shares were subject to outstanding options granted under
the plan and 19,376,231 shares were available for additional stock option
grants or other stock-based awards. No award may be granted under the 1998 Plan
after the tenth anniversary of July 1, 1998, but awards granted prior to that
date may extend beyond that date.
The proposed amendments include limitations on the amount of awards that may
be granted under the 1998 Plan. Under these limits the maximum number of shares
for which stock options and stock appreciation rights may be granted to any one
participant during any calendar year is 5,000,000; and the maximum amount of
other stock-based awards that are intended to be deductible by the Company
under Section 162(m) of the Internal Revenue Code ("performance-based awards")
that may be granted to any one participant during any calendar year is
1,500,000 shares (or $20,000,000 if not expressed in shares). In addition, the
proposed amendments would also cap all awards other than stock options and
stock appreciation rights such that the total number of shares that may be
granted over the life of the 1998 Plan in respect of such other stock-based
awards could not exceed five percent of the total number of shares available
under the plan.
Stock options. Stock options granted under the 1998 Plan may be non-qualified
or incentive stock options for federal income tax purposes. The Compensation
Committee will set option exercise prices and terms and will determine the time
at which stock options will be exercisable. However, the term of a stock option
may not exceed 10 years. In addition, the proposed amendments would prohibit
the granting of options with an exercise price less than the fair market value
of the shares on the date of grant.
A stock option that is intended to be an incentive stock option under Section
422 of the Internal Revenue Code may not be granted to any participant who, at
the time of the purported grant, owns more than 10% of the
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<PAGE>
total combined voting power of all classes of capital stock of Global Crossing
or any of its subsidiaries, unless (1) the option price for such stock option
is at least 110% of the fair market value of a share on the date of the grant
and (2) the term of that stock option does not exceed the day preceding the
fifth anniversary of the grant date.
Stock appreciation rights. Stock appreciation rights may be granted by the
Compensation Committee to participants as a right in conjunction with the
number of shares underlying stock options granted to participants under the
1998 Plan or on a stand-alone basis with respect to a number of shares for
which a stock option has not been granted. Stock appreciation rights constitute
the right to receive payment for each share of the stock appreciation rights
exercised in stock or in cash equal to the excess of that share's fair market
value on the date of exercise over the exercise price per share, multiplied by
the number of shares covered (1) in the case of a stock appreciation right
independent of an option, by the stock appreciation right and (2) in the case
of a stock appreciation right granted in conjunction with an option, by the
option. The Compensation Committee will determine the exercise price per share
of stock appreciation rights; however, that price may not be less than the
greater of (1) the fair market value, in the case of a stock appreciation right
independent of an option, of a share of common stock on the grant date and, in
the case of an applicable stock appreciation right granted in conjunction with
an option, of the price of that option and (2) an amount permitted by
applicable laws, rules, by-laws or policies of regulatory authorities or stock
exchanges. The Compensation Committee may also impose, in its discretion,
conditions on the exercisability or transferability of stock appreciation
rights.
The Compensation Committee may also grant limited stock appreciation rights
that are exercisable upon the occurrence of special contingent events. Limited
stock appreciation rights may provide for a different method of determining
appreciation, may specify that payment will be made only in cash and may
provide that any related awards are not exercisable while the limited stock
appreciation rights are exercisable.
Other stock-based awards. The Compensation Committee has the authority to
grant other stock-based awards, which may consist of awards of common stock,
restricted stock and awards that are valued in whole or in part by reference
to, or are otherwise based on the fair market value of, shares of common stock.
Other stock-based awards may be granted on a stand-alone basis or in addition
to any other awards granted under the 1998 Plan. The Compensation Committee
will determine the form of other stock-based awards and the conditions on which
they may be dependent, such as the right to receive one or more shares of
common stock or the equivalent value in cash upon the completion of a specified
period of service or the occurrence of an event or the attainment of
performance objectives. The Compensation Committee will also determine the
participants to whom other stock-based awards may be made, the timing thereof,
the number of shares to be awarded, whether such other stock-based awards will
be settled in cash, stock or a combination of cash and stock and all other
terms of such awards.
In the event that the Compensation Committee grants other stock-based awards
that are intended to be deductible by the Company under Section 162(m) of the
Internal Revenue Code ("performance-based awards"), such awards will be
determined based on the attainment of written performance goals approved by the
Compensation Committee (i) while the outcome for that performance period is
substantially uncertain and (ii) no more than 90 days after the commencement of
the performance period to which the performance goal relates or, if less, the
number of days which is equal to 25 percent of the relevant performance period.
The performance goals must be based upon one or more of the following criteria:
(i) consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per share; (v) book value per share; (vi)
return on shareholders' equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability of an
identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital; and (xviii) return
on assets. These criteria may relate to the Company or one or more of its
subsidiaries, divisions or units, and may be applied on an absolute basis or be
relative to one or more peer group companies or indices, all as the
Compensation Committee shall determine. To the degree consistent with Section
162(m) of the Internal
18
<PAGE>
Revenue Code, the performance goals may be calculated without regard to
extraordinary items. The Compensation Committee determines whether the
applicable performance goals have been met and certifies and ascertains the
amount of the performance-based award. If and to the extent permitted by the
Compensation Committee and consistent with the provisions of Section 162(m) of
the Internal Revenue Code, a participant may elect to defer payment of a
performance-based award.
Miscellaneous. Unless otherwise determined by the Compensation Committee,
stock options, stock appreciation rights and restricted stock awards are not
transferable or assignable. Global Crossing may deduct sufficient sums to pay
withholding required for federal, state and local taxes or other taxes as a
result of the exercise of a stock award. A participant may elect to defer
receipt of the shares in respect of which a stock option is exercised pursuant
to any deferred compensation plan of the Company which contemplates such
deferral.
In the event of any stock dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange of
stock or other corporate exchange or any distribution to shareholders other
than regular cash dividends, the Compensation Committee may, in its sole
discretion, make a substitution or adjustment, as the Compensation Committee
deems to be equitable, to the number or kind of stock issued or reserved for
issuance under the 1998 Plan or pursuant to outstanding awards and the term,
including option price, of such awards.
Except as otherwise provided in a stock award agreement, in the event of a
change in control with respect to Global Crossing, the Compensation Committee
may, in its sole discretion, accelerate a stock award, cause Global Crossing to
make a cash payment in exchange for a stock award, require the issuance of a
substitute stock award or take any other actions it deems necessary or
desirable.
The Board may amend or discontinue the 1998 Plan at any time; provided that,
with certain limited exceptions described in the plan, the Board may not
increase the total number of shares reserved for issuance under the plan or
change the maximum number of shares for which awards may be granted to any one
participant. In addition, no amendment or discontinuation may impair any of the
rights or obligations of any participant under any outstanding award without
such participant's consent.
Effectiveness. The 1998 Plan became effective as of July 1, 1998 and was
amended by the Board of Directors on June 18, 1999, December 7, 1999 and May 1,
2000. The June 18, 1999 amendments were approved by the shareholders at the
1999 Annual General Meeting. If the plan as amended by the December 7, 1999 and
May 1, 2000 amendments is not approved by the shareholders at the 2000 Annual
General Meeting, the amendments increasing the total number of shares reserved
for issuance under the plan and changing the maximum number of shares for which
awards may be granted to any participant will terminate and be of no force or
effect.
Certain income tax consequences. Global Crossing has been advised by counsel
that the material federal income tax consequences to Global Crossing and the
participants in the 1998 Plan of the grant and exercise of options and stock
appreciation rights under existing and applicable provisions of the Internal
Revenue Code of 1986 and regulations will generally be as follows:
Incentive stock options. A participant will not realize any taxable
income at the time an incentive stock option is granted or exercised, and
Global Crossing will not receive an income tax deduction at the time of
grant or exercise. If a participant does not sell stock acquired upon the
exercise of an incentive stock option within (1) two years after the date
of the grant or (2) one year after the date of exercise, then a subsequent
sale of such stock generally will be taxed as capital gain or loss. If a
participant disposes of shares acquired upon the exercise of an incentive
stock option within the period set forth in clause (1) or (2) above, then
that participant will generally realize ordinary income in an amount equal
to the lesser of (a) the gain realized by that participant upon such
disposition and (b) the excess of the fair market value of the stock on the
date of exercise over the exercise price. In that event, Global Crossing
would generally be
19
<PAGE>
entitled to an income tax deduction equal to the amount recognized as
ordinary income by the applicable participant. Any gain in excess of the
amount recognized by the participant as ordinary income would be taxed as
short-term or long-term capital gain, depending on the holding period.
Non-qualified stock options. A participant will not realize taxable
income upon the grant of a non-qualified stock option, and Global Crossing
will not receive an income tax deduction at such time. Upon exercise of a
non-qualified stock option, the applicable participant will realize
ordinary income in an amount equal to the excess of the fair market value
of the stock on the date of exercise over the exercise price. Upon a
subsequent sale of such stock, the participant will recognize short-term or
long-term capital gain depending on his or her holding period for the
shares. Global Crossing is generally allowed an income tax deduction at the
same time and in the same amount recognized as ordinary income by the
participant.
Stock appreciation rights. Amounts received upon the exercise of a stock
appreciation right are taxed as ordinary income when received. Global
Crossing is generally allowed an income tax deduction equal to the amount
recognized as ordinary income by the participant.
Other stock-based awards. Amounts received by the participant upon the
grant of other stock-based awards are ordinarily taxed as ordinary income
when received. However, if such other stock-based awards consist of
property subject to restrictions, the amounts generally will not be taxed
until the restrictions lapse or until the participant makes an election
under Section 83(b) of the Internal Revenue Code. Global Crossing is
generally allowed an income tax deduction at the same time and in the same
amount recognized as ordinary income by the participant.
Compliance with Section 162(m). The 1998 Plan should allow certain stock
options, stock appreciation rights and other stock-based awards to be
treated as qualified performance-based compensation under Section 162(m) of
the Internal Revenue Code. However, the Compensation Committee may, from
time to time, award compensation that is not deductible under Section
162(m).
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENTS TO
THE 1998 GLOBAL CROSSING LTD. STOCK INCENTIVE PLAN.
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PROPOSAL NO. 4
APPROVAL OF GLOBAL CROSSING SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
On February 12, 2000, the Board of Directors adopted the Global Crossing
Senior Executive Incentive Compensation Plan (the "Bonus Plan"). The Board is
now asking shareholders to approve the Bonus Plan. Below is a summary of
certain important features of the plan. This summary is qualified in its
entirety by reference to the full text of the plan in Annex B.
General. The purpose of the Bonus Plan is to advance the interests of Global
Crossing and its shareholders by providing incentives in the form of periodic
bonus awards ("Bonuses") to certain senior executive employees of the Company
and its subsidiaries, thereby motivating such executives to attain corporate
performance goals articulated under the Bonus Plan. Participation in the plan
is limited to those senior executives who are, or whom the Compensation
Committee anticipates may become, "covered employees" as defined in Section
162(m) of the Internal Revenue Code of 1986 ("Section 162(m)"). Bonuses are
payable in cash; provided that the Board may permit participants to elect to
receive payment in common shares of the Company. If and to the extent permitted
by the Compensation Committee and consistent with the provisions of Section
162(m), a participant may elect to defer payment of a Bonus.
The Bonus Plan is administered by the Compensation Committee, which may
delegate its duties and powers to any subcommittee thereof consisting solely of
at least two "outside directors" as defined under Section 162(m). The
Compensation Committee has exclusive authority, consistent with Section 162(m),
to select the participants in the plan, to determine the size and terms of the
Bonus opportunities (provided that no single participant may be awarded a Bonus
in excess of $6 million for any one fiscal year), to establish performance
objectives and the performance periods to which they relate, and to certify
whether such performance objectives have been attained. The Compensation
Committee is authorized to interpret the Bonus Plan, to establish, amend and
rescind any rules and regulations relating to the plan, and to make any other
determinations that it deems necessary or desirable for the administration of
the plan. Any decision of the Compensation Committee in the interpretation and
administration of the Bonus Plan lies within its sole and absolute discretion
and is final, conclusive and binding on all parties concerned.
Performance goals. Bonuses are determined based on the attainment of written
performance goals approved by the Compensation Committee for a performance
period which is established by the Compensation Committee (i) while the outcome
for that performance period is substantially uncertain and (ii) no more than 90
days after the commencement of that performance period or, if less, the number
of days which is equal to 25 percent of that performance period. The
performance goals must be based upon one or more of the following criteria:
(i) consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per share; (v) book value per share;
(vi) return on shareholders' equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability of an
identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital; and (xviii) return
on assets. These criteria may relate to the Company or one or more of its
subsidiaries, divisions or units, and may be applied on an absolute basis or be
relative to one or more peer group companies or indices, all as the
Compensation Committee shall determine. To the degree consistent with Section
162(m), the performance goals may be calculated without regard to extraordinary
items. The Committee determines whether the applicable performance goals have
been met and certifies and ascertains the amount of the Bonuses.
Amendment. The Board may amend, suspend or terminate the Bonus Plan at any
time, except that it may not impair any of the rights or obligations under any
Bonus opportunity theretofore granted without the applicable participant's
consent.
21
<PAGE>
Funding. The Company is not required to establish any special or separate
fund or to make any other segregation of assets to assure the payment of any
amounts under the Bonus Plan. Rights to receive payment of Bonuses earned under
the plan are no greater than the rights of the Company's (or the applicable
subsidiary's) unsecured creditors.
Effectiveness. The Bonus Plan became effective as of January 1, 2000.
However, if the plan is not approved by the shareholders at the 2000 Annual
General Meeting, the Bonus Plan and all outstanding Bonus opportunities will
terminate. In that event, the Board of Directors will consider other
alternatives for compensating the senior executives who are currently
participating in the plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SENIOR
EXECUTIVE INCENTIVE COMPENSATION PLAN.
22
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
REPORT OF THE COMPENSATION COMMITTEE
Compensation Philosophy
Global Crossing's compensation philosophy is to relate the compensation of
Global Crossing's executive officers to measures of company performance that
contribute to increased value for Global Crossing's shareholders. To assure
that compensation policies are appropriately aligned with the value Global
Crossing creates for shareholders, Global Crossing's compensation philosophy
for executive officers takes into account the following goals:
. enhancing shareholder value;
. representing a competitive and performance-oriented environment that
motivates executive officers to achieve a high level of individual,
business unit and corporate results in the business environment in which
they operate;
. relating incentive-based compensation to the performance of each
executive officer, as measured by financial and strategic performance
goals; and
. enabling Global Crossing to attract and retain top quality management.
The Compensation Committee of the Board of Directors, which we will refer to
as the "Committee," periodically reviews the components of compensation for
Global Crossing's executive officers on the basis of this philosophy and
periodically evaluates the competitiveness of its executive officer
compensation program relative to comparable companies. When the Committee
determines that executive officer compensation adjustments or bonus awards are
necessary or appropriate, it makes such modifications as it deems appropriate.
However, the Board of Directors has sole authority to modify the compensation
of the Chairman, the Co-Chairman and the Chief Executive Officer ("CEO"),
although the Committee makes recommendations to the board in this regard.
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility
of certain annual compensation payments in excess of $1 million to a company's
executive officers. It is the objective of the Compensation Committee to
administer compensation plans in compliance with the provisions of Section
162(m) where feasible and where consistent with Global Crossing's compensation
philosophy as stated above. In that connection, at the 2000 Annual General
Meeting of Shareholders, the Company intends to recommend the adoption of an
annual bonus plan meeting the requirements of Section 162(m). The Company
already has in place a stock incentive plan pursuant to which stock-based
incentives may be awarded in compliance with Section 162(m).
Executive Compensation Components
The major components of compensation for executive officers, including the
CEO, are base salary, annual bonuses and stock option grants. Each component of
the total executive officer compensation package emphasizes a different aspect
of Global Crossing's compensation philosophy.
. Base Salary. Base salaries for executive officers are initially set upon
hiring by the Committee (or, in the case of the Chairman, the Co-
Chairman and the CEO, by the Board of Directors upon the Committee's
recommendation) based on recruiting requirements (i.e., market demand),
competitive pay practices, individual experience and breadth of
knowledge, internal equity considerations and other objective and
subjective factors. Increases to base salary are also determined by the
Committee or the Board of Directors, as applicable. Increases are
determined primarily on an evaluation of competitive data, the
individual's performance and contribution to Global Crossing, and Global
Crossing's overall performance. Base salaries are periodically reviewed
by the Compensation Committee.
23
<PAGE>
. Target Annual Bonuses. Global Crossing relies to a large degree on
annual bonus compensation to attract, retain and reward executives of
outstanding abilities and to motivate them to perform to the full extent
of their abilities. Target bonuses for executive officers, including the
CEO, are determined on the basis of competitive bonus levels, level of
responsibility, ability to influence results on a corporate or business
unit level and, on occasion, subjective factors. Target annual bonuses
for the Chairman, the Co-Chairman and the CEO are determined by the
Board of Directors upon recommendation by the Compensation Committee.
Target annual bonuses for other executive officers are determined by the
Committee.
. Stock Option Grants. The only current long-term incentive opportunity
for executive officers, including the CEO, is the award of stock option
grants under the 1998 Global Crossing Ltd. Stock Incentive Plan. In
contrast to bonuses that are paid for prior year accomplishments, stock
option grants represent incentives tied to future stock appreciation.
They are intended to provide executive officers with a direct incentive
to enhance shareholder value. Options generally vest over a three-year
period with a maximum term of ten years. Option grants are awarded at
the discretion of the Committee primarily based on an evaluation of
competitive data and the anticipated contribution that the executive
officer will make to Global Crossing.
The Committee conducts annually a full review of the performance of Global
Crossing and its executive officers in assessing compensation levels. The
Committee considers various qualitative and quantitative indicators of both
Global Crossing and the individual performance of its executive officers. This
review evaluates Global Crossing's performance both on a short- and long-term
basis. The Committee may consider such quantitative measures as Total
Shareholder Return ("TSR"), Return on Shareholder's Equity ("ROSE"), Return on
Capital Employed ("ROCE"), revenue growth, and growth in Adjusted EBITDA and
other measures of profitability. The Committee may also consider qualitative
measures such as leadership, experience, strategic direction and overall
contribution to Global Crossing. In addition, the Committee evaluates
compensation in light of the compensation practices of other companies in the
telecommunications industry and peer group companies as may be determined by
the Committee. These companies are used as a reference standard for
establishing levels of base salary, bonus and stock options. For 1999,
executive officer compensation was targeted at the 75th percentile relative to
peer group companies in the telecom industry.
2000 Executive Compensation Review
Based on the factors set forth above, the Committee approved (or, in the case
of the Chairman, Co-Chairman and CEO, recommended that the Board of Directors
approve) salary increases and 1999 bonus awards for all executive officers. In
addition, the Committee approved approximately 11,000,000 additional stock
options grants to executive officers during 1999. Robert Annunziata was
appointed CEO in February 1999. Jack Scanlon held the position of CEO from the
beginning of 1999 through February 1999. In determining salary increases and
1999 bonus awards for Messrs. Annunziata and Scanlon, the Committee reviewed
the performance of Global Crossing against its goals. During 1999, annual
revenue increased from $420 million to $1.7 billion as a result of internal
growth and acquisitions completed during the year. Global Crossing's market
capitalization grew from $10 billion to $43 billion or 330%. In addition,
Mr. Annunziata was a key member of the team that completed the successful
merger with Frontier Corporation, and the acquisitions of Racal Telecom and
Global Marine Systems.
THE COMPENSATION COMMITTEE
James F. McDonald, Chairman
Geoffrey J.W. Kent
Douglas McCorkindale
24
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
The graph below compares the cumulative total shareholder return on Global
Crossing common stock for the period from August 14, 1998, the initial date of
trading of Global Crossing common stock, to December 31, 1999 with the
cumulative total return of the Standard & Poor's 500 Stock Index and the NASDAQ
Telecom Index over the same period. The graph assumes $100 invested on August
14, 1998 in Global Crossing common stock and $100 invested on such date in each
of the Standard & Poor's 500 Stock Index and the NASDAQ Telecom Index, with
dividends reinvested. In the proxy statement provided to shareholders in
connection with our 1999 Annual General Meeting of Shareholders, we used a peer
group of fiber optic cable providers comprised of Qwest, Level 3
Communications, Inc., Metromedia Fiber Network, Inc., IXC Communications, Inc.
and Equant NV (the "Old Peer Group"). We have decided to replace the Old Peer
Group index with the NASDAQ Telecom Index because we believe the latter index
to be readily accessible to our shareholders and more representative of the
industries in which we now compete. In accordance with SEC rules, the graph
below also illustrates the cumulative total shareholder return of the Old Peer
Group over the relevant period.
[GRAPH]
S&P 500 NASDAQ Old Peer
GBLX Stock Index Telecom Index Group
8/14/98 100 100 100 100
9/39/98 81.86 95.7 91.16 83.51
12/31/98 176.96 115.67 125.6 124.49
3/31/99 362.75 121.04 155.04 178.48
6/30/99 334.31 129.17 164.27 175.77
9/30/99 207.84 120.7 156.67 151.07
12/31/99 392.16 138.25 254.61 230.11
25
<PAGE>
SUMMARY COMPENSATION TABLE
The table below sets forth information concerning compensation paid to
certain executive officers during the last fiscal year.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------- -----------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Year Salary Bonus(1) Compensation(2) Award(s) Options/SARs Payouts Compensation(3)
---- -------- ----------- --------------- ---------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Winnick............ 1999 $169,615 $ 785,000 $ 94,097 -- -- -- --
Chairman
Robert Annunziata*...... 1999 464,679 11,000,000 -- -- 7,500,000 -- --
Former Chief
Executive Officer
Jack M. Scanlon*........ 1999 622,500 504,000 -- -- -- -- $ 5,000
Vice Chairman, Asia 1998 450,000 480,000 $213,569 -- 3,600,000 -- --
Global Crossing
Thomas J. Casey......... 1999 925,000 625,000 -- -- 1,600,000 -- --
Vice Chairman 1998 266,667 533,333 -- -- 2,000,000 -- --
John A. Scarpati........ 1999 36,217 2,000,000 -- -- 1,000,000 -- 222,222
Chief Administrative
Officer
William B. Carter....... 1999 622,500 395,000 -- -- -- -- 5,000
President, Global 1998 600,000 1,050,000 -- -- 3,000,000 -- $ 5,000
Crossing Development 1997 $200,000 $ 750,000 -- -- -- -- --
Co.; Chief Executive
Officer, Global Marine
Systems
</TABLE>
- --------
* Mr. Annunziata became Chief Executive Officer in February 1999 and Mr.
Scanlon resigned the position in February 1999. Mr. Scanlon is still one of
the four most highly compensated officers of Global Crossing other than the
CEO.
(1) The amounts in this column represent annual bonuses, except that Mr.
Annunziata's amount reflects a $10,000,000 signing bonus and a $1,000,000
annual bonus; and Mr. Scarpati's amount reflects a $2,000,000 signing
bonus.
(2) Mr. Winnick received imputed income for the personal use of corporate
aircraft in 1999.
(3) Messrs. Scanlon and Carter received matching company contributions on their
401(k) plan deferrals. Mr. Scarpati is to receive an $8,000,000 bonus upon
the completion of 3 years of service, of which 1/36th was accrued in 1999.
26
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning options granted to certain
executive officers during the last fiscal year.
<TABLE>
<CAPTION>
Potential Realizable Value At
Assorted Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
----------------------------------------------------------- -------------------------------------
Number of % of Total
Securities Options Market Price
Underlying Granted to of Common
Options Employees in Exercise or Stock on Expiration
Name Granted Fiscal Year Base Price Grant Date Date 0% 5% 10%
- ---- ---------- ------------ ----------- ------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Winnick........... -- -- -- -- -- -- -- --
Chairman
Robert Annunziata...... 4,000,000 11.16% $19.813 $24.812 2/22/09 $19,996,000 $82,412,534 $178,171,752
Former Chief Executive 500,000 1.40% 24.812 24.812 2/22/09 -- 7,802,067 19,771,969
Officer 3,000,000 8.37% 45.000 45.000 12/3/09 -- 84,900,775 215,155,232
Jack M. Scanlon........ -- -- -- -- -- -- -- --
Vice Chairman, Asia
Global Crossing
Thomas J. Casey........ 300,000 0.84% 61.375 61.375 5/16/09 -- 11,579,522 29,344,783
Vice Chairman 300,000 0.84% 25.000 25.000 9/24/09 -- 4,716,710 11,953,068
1,000,000 2.79% 45.000 45.000 12/3/09 -- 28,300,258 71,718,411
John A. Scarpati....... 1,000,000 2.79% $53.000 $45.000 12/3/09 $(8,000,000) $20,300,258 $ 63,718,411
Chief Administrative
Officer
William B. Carter...... -- -- -- -- -- -- -- --
President, Global
Crossing Development
Co.; Chief Executive
Officer, Global
Marine Systems
</TABLE>
27
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below sets forth information concerning exercises of stock options
by certain executive officers during the last fiscal year and the fiscal year-
end value of such executive officers' unexercised options.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-The-Money Options(2)
------------------------- -------------------------
Shares Acquired Value
Name On Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary Winnick............ -- -- 1,200,000 600,000 $58,998,000 $ 29,499,000
Chairman
Robert Annunziata....... 81,576 $ 2,243,340 1,500,000 6,000,000 42,781,000 105,561,000
Former Chief Executive
Officer
Jack M. Scanlon......... 345,680 12,525,410 1,334,560 1,800,000 65,613,642 88,497,000
Vice Chairman, Asia
Global Crossing
Thomas J. Casey......... -- -- 1,006,666 1,926,666 33,699,968 42,799,968
Vice Chairman
John A. Scarpati........ -- -- 333,334 666,666 -- --
Chief Administrative
Officer
William B. Carter....... 174,144 $ 4,860,345 1,706,096 1,000,000 $83,880,210 $ 49,165,000
President, Global
Crossing Development
Co., Chief Executive
Office Global Marine
</TABLE>
- --------
(1) Amounts indicated are based upon the difference between the exercise price
and the closing market price on the exercise date.
(2) Amounts indicated are based upon the difference between the exercise price
and the closing market price per share of the common stock of $50.00 on
December 31, 1999.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Global Crossing Board of Directors consists
of Messrs. McDonald, Kent and McCorkindale, none of whom had any relationships
with Global Crossing requiring disclosure under Securities and Exchange
Commission rules. However, prior to November 4, 1999, the Compensation
Committee consisted of Lodwrick M. Cook, Michael R. Steed and Jay R. Levine (an
employee of an affiliate of Canadian Imperial Bank of Commerce), who were
involved in certain transactions described under Proposal No. 1 above beneath
the caption "Certain Relationships and Related Transactions."
CERTAIN COMPENSATION ARRANGEMENTS
The 1998 Global Crossing Ltd. Stock Incentive Plan (the "1998 Plan") provides
that, unless otherwise provided in the specific award agreement, upon a "change
in control," certain awards granted under the 1998 Plan may, in the sole
discretion of the Compensation Committee, be deemed to vest immediately. The
award agreements generally provide for accelerated vesting upon a change in
control. A "change in control" is defined under the 1998 Plan in general as the
occurrence of any of the following: (1) any person or entity, other than
certain of our affiliates, becomes the "beneficial owner," as defined under
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, of securities
of Global Crossing representing 30% or more of the combined voting power of our
then outstanding securities; (2) during any period of 24 months, individuals
who at the beginning of such period constituted the Board of Directors and any
new director (other than any directors who meet certain exceptions specified in
the 1998 Plan) whose election was approved in advance by a vote of at least
two-thirds of the directors then still in office cease for any reason to
constitute at least a majority of the board; (3) our shareholders approve any
transaction pursuant to which Global Crossing is merged or consolidated with
any other company, other than a merger or consolidation which would result in
our shareholders immediately prior thereto continuing to own more than 65% of
the combined voting power of the voting securities of the surviving entity
outstanding after such transaction; or (4) our shareholders approve a plan of
complete liquidation of Global Crossing or an agreement for the sale or
disposition by Global Crossing of all or substantially all of our assets, other
than the liquidation of Global Crossing into a wholly owned subsidiary.
In January 2000, the Board of Directors authorized Global Crossing to enter
into change in control agreements with our executive officers and certain of
our other key executives. These agreements provide for certain benefits upon
actual or constructive termination of employment in the event of a "Change in
Control" (as defined below). With respect to any of the executive officers
named in the Summary Compensation Table above, if, within 24 months of the
month in which a Change in Control occurs, his employment is terminated by us
(other than for cause or by reason of death or disability), or he terminates
employment for "good reason" (generally, an unfavorable change in employment
status, compensation or benefits or a required relocation), he shall be
entitled to receive (i) a lump sum payment equal to three times the sum of his
annual base salary plus guideline bonus opportunity (reduced by any cash
severance benefit otherwise paid to the executive under any applicable
severance plan or other severance arrangement), (ii) a prorated annual target
bonus for the year in which the Change in Control occurs, (iii) continuation of
his life and health insurance coverages for three years and (iv) payment of any
excise taxes due in respect of the foregoing benefits and of any other payments
made to the executive as a result of the Change in Control. The term of each of
these agreements will continue through December 31, 2001, after which it will
be automatically extended for additional one-year terms subject to termination
by either party on one year's prior notice. There is an automatic 24-month
extension following any Change in Control. A Change in Control generally is
deemed to occur if: (1) any person or entity, other than certain of our
affiliates, becomes the "beneficial owner" of securities of Global Crossing
representing 20% or more of the combined voting power of our then outstanding
securities; (2) during any period of 24 months, individuals who at the
beginning of such period constituted the Board of Directors and any new
director (other than any directors who meet certain exceptions specified in the
change in control agreement) whose election was approved in advance by a vote
of at least two-thirds of the directors then still in office
29
<PAGE>
cease for any reason to constitute at least a majority of the board; (3) any
transaction is consummated pursuant to which Global Crossing is merged or
consolidated with any other company, other than a merger or consolidation which
would result in our shareholders immediately prior thereto continuing to own
more than 65% of the combined voting power of the voting securities of the
surviving entity outstanding after such transaction; or (4) Global Crossing is
completely liquidated or we sell or dispose of all or substantially all of our
assets, other than the liquidation of Global Crossing into a wholly owned
subsidiary.
In December 1999, we entered into an employment agreement with Leo J.
Hindery, Jr. providing for Mr. Hindery's employment as Chairman and Chief
Executive Officer of our GlobalCenter subsidiary for an initial term of three
years. The employment agreement provided for a base annual salary of not less
than $500,000 and a guaranteed bonus of not less than $500,000. Mr. Hindery
also received stock options to purchase 500,000 shares of Global Crossing
common stock at an exercise price of $45 per share. These stock options vest
34% on Mr. Hindery's first date of employment and the balance in 22% increments
on each of the first, second and third anniversaries of such date. Pursuant to
the employment agreement, Mr. Hindery is also entitled to receive stock options
covering 5.5% of the common stock of our GlobalCenter subsidiary or of a
tracking stock designed to reflect the performance of the GlobalCenter
business. Such GlobalCenter stock options will have an aggregate exercise price
of $110 million and will vest 34% immediately and the balance in 22% increments
on each of the first, second and third anniversaries of Mr. Hindery's
employment start date. In March 2000, Mr. Hindery's compensation arrangements
were changed to reflect his new responsibilities as CEO of Global Crossing Ltd.
At that time, Mr. Hindery's annual base salary was increased to $995,000 and he
received an additional 2,000,000 Global Crossing Ltd. stock options at an
exercise price of $54.375 per share, such options to vest ratably over three
years. Upon a "change in control" or upon the actual or constructive discharge
of Mr. Hindery without "cause" (as defined in Mr. Hindery's agreement), all of
his options will immediately vest in full, and Mr. Hindery will be entitled to
receive a lump sum payment equal to the sum of his annual base salary and bonus
through the end of the term of the agreement.
In February 1999, we entered into an employment agreement with Robert
Annunziata providing for Mr. Annunziata's employment as Chief Executive Officer
of Global Crossing for an initial term of three years. The employment agreement
provided for a base annual salary of not less than $500,000 and a target annual
bonus of not less than $500,000. In addition, Mr. Annunziata was provided a $10
million signing bonus, subject to partial repayment in certain circumstances,
as well as a $5 million fully recourse loan facility to be used to purchase
shares of Global Crossing common stock to the extent Mr. Annunziata used a like
amount of his own funds for such purpose. Mr. Annunziata did not elect to make
use of this loan facility. Mr. Annunziata also received stock options to
purchase 4,000,000 (after giving effect to the March 9, 1999 stock split)
shares of Global Crossing common stock at a split-adjusted exercise price of
$19.81 per share. These stock options were to vest in 25% increments starting
on February 19, 1999 and on February 22 of each of the first three years of Mr.
Annunziata's employment. Under the employment agreement, Mr. Annunziata was
given the right, for a period of six months following the initial term of the
agreement, to require the Company to purchase from him any shares of the
Company's common stock held by him as a result of the exercise of the 4,000,000
stock options at a purchase price equal to $49.625 per share. Pursuant to the
employment agreement, Mr. Annunziata also received stock options to purchase an
aggregate of 500,000 (post-split) shares of Global Crossing common stock, at a
split-adjusted exercise price of $24.81 per share, all of which became vested
on Mr. Annunziata's first day of employment. Upon Mr. Annunziata's resignation
as CEO on March 2, 2000, all of Mr. Annunziata's then unvested stock options
granted under the agreement became immediately vested and Mr. Annunziata became
entitled to receive a lump sum payment equal to two times his then annual base
salary and bonus.
Global Crossing entered into an employment agreement, dated as of April 1,
1998, with Jack Scanlon, providing for Mr. Scanlon's employment as Global
Crossing's Chief Executive Officer for an initial term of two years. The
employment agreement provided for a base annual salary of not less than
$600,000 and a guaranteed bonus of not less than $400,000. In addition, Mr.
Scanlon was issued options to purchase a total of 3,600,000 (after adjusting
for subsequent stock splits) shares of Global Crossing common stock at a split-
adjusted exercise price of $0.835 per share. These options vest in 25%
increments on Mr. Scanlon's first day of employment and
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on each of the first three anniversaries of that date. Upon a "change in
control" of Global Crossing, as defined in the 1998 Plan, all of these options
will immediately vest, and Mr. Scanlon will be entitled to terminate the
agreement and receive a lump sum payment equal to two times his then annual
base salary and bonus. Mr. Scanlon will also be entitled to such lump sum
payment if he is actually or constructively discharged without "cause" (as
defined in the agreement). Mr. Scanlon voluntarily resigned as Chief Executive
Officer of Global Crossing in February 1999 to become Vice Chairman of Global
Crossing. His employment agreement was extended for one additional year at that
time but otherwise was left substantially unchanged.
In September 1998, Thomas Casey was hired by Pacific Capital Group as its
President. At such time, it was agreed among Pacific Capital Group, Global
Crossing and Mr. Casey that, in addition to Mr. Casey's role as President of
Pacific Capital Group, Mr. Casey would also serve as Managing Director of
Global Crossing. In connection with such employment, Mr. Casey received
economic rights to 2,000,000 shares of Global Crossing common stock at an
effective price of $2.00 per share. Such rights vest in 33% increments on the
first day of Mr. Casey's employment and on each of the first and second
anniversaries of the first day of Mr. Casey's employment. In connection with
Mr. Casey's dual employment, Global Crossing and Pacific Capital Group
established an arrangement whereby each entity would be responsible for a
portion of Mr. Casey's salary and long-term compensation based upon the
relative amount of time spent by Mr. Casey on matters pertaining to such
entity. Initially, 80% of Mr. Casey's salary and long-term compensation was
allocated to Global Crossing and 20% of such amounts was allocated to Pacific
Capital Group, subject to adjustment and re-allocation on an annual basis. On
March 18, 1999, in recognition of the time spent by Mr. Casey on Global
Crossing matters to such date and his expected ongoing responsibilities with
Global Crossing, the Global Crossing Board of Directors elected to assume Mr.
Casey's employment agreement, including the full amount of Mr. Casey's salary
and long-term compensation, with Mr. Casey serving fulltime in his role with
Global Crossing as Managing Director and Vice Chairman of the Board of
Directors.
In December 1999, Global Crossing entered into an employment agreement with
John A. Scarpati providing for Mr. Scarpati's employment as Chief
Administrative Officer of Global Crossing for an initial term of three years.
The employment agreement provides for a base salary of not less than $500,000
and a target annual bonus of 100% of his base annual salary. In addition, Mr.
Scarpati was provided a $2 million signing bonus, subject to partial repayment
in certain circumstances, as well as the right to an $8 million payment in the
event he remains employed by Global Crossing for three years or is actually or
constructively discharged without "cause" (as defined in the agreement). In
connection with his employment, Mr. Scarpati received stock options to purchase
1,000,000 shares of Global Crossing common stock at an exercise price of $53
per share. These stock options vest in 25% increments on the date Mr. Scarpati
commenced employment with the Company and on each of the first three
anniversaries thereof. Upon a "change in control" (as defined in the 1998 Plan)
or upon the actual or constructive discharge of Mr. Scarpati without "cause"
(as defined in the agreement), these options will immediately vest in full, and
Mr. Scarpati will be entitled to terminate the agreement and receive a lump sum
payment equal to the sum of his then annual base salary and bonus.
COMPENSATION OF OUTSIDE DIRECTORS
Each director who is not an employee of Global Crossing receives cash
compensation of $2,500 for each meeting of the Board of Directors attended and
$1,500 for each attended meeting of a committee of the board of which he or she
is a member. In addition, each non-employee chairman of a board committee also
receives an annual retainer of $5,000. During 1999, each non-employee director
commencing service on the board received options to purchase 120,000 shares of
Global Crossing common stock at an exercise price equal to the fair market
value of Global Crossing common stock on the date of grant. Each such option
has a term of 10 years, became exercisable immediately with respect to the
first 30,000 shares, and will become exercisable with respect to the remaining
90,000 shares in two equal installments on each of the first and second
anniversaries of the date of grant, in each case so long as such director
continues to be a director of Global Crossing on such date.
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SUBMISSION OF FUTURE SHAREHOLDER PROPOSALS
All proposals of shareholders who wish to bring business before Global
Crossing's 2001 Annual General Meeting of shareholders must be received by us
at our principal executive offices at Wessex House, 45 Reid Street, Hamilton
HM12 Bermuda, not later than January 8, 2001, for inclusion in our proxy
statement and form of proxy relating to such annual meeting. Upon timely
receipt of any such proposal, we will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with applicable
regulations and provisions governing the solicitation of proxies.
Under the Companies Act, any shareholders who represent not less than 5% of
the total voting power of shareholders having the right to vote at the meeting
or who are 100 or more in number may requisition any resolution which may
properly be moved at an annual shareholders' meeting. A shareholder wishing to
move a resolution at an annual meeting is generally required to give us notice
of the resolution at our registered office at least six weeks before the
meeting. Any such proposal must also comply with the other provisions contained
in our bye-laws relating to shareholder proposals.
Pursuant to the Company's bye-laws, for a shareholder to nominate a director
for election at the 2001 Annual General Meeting of Shareholders, a notice
executed by that shareholder (not being the person to be proposed) must be
received by the Secretary of the Company not later than January 8, 2001 stating
the intention of that shareholder to propose such person for appointment and
setting forth as to each person whom the shareholder proposes to nominate for
election (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class, series and number of shares of the Company which are beneficially owned
by such person, (iv) particulars which would, if such person were so appointed,
be required to be included in the Company's register of directors and officers
and (v) all other information relating to such person that is required to be
disclosed in solicitations for proxies for the election of directors pursuant
to the rules and regulations of the Securities and Exchange Commission under
Section 14 of the Securities Exchange Act of 1934, as amended, together with
notice executed by such person of his or her willingness to serve as a director
if so elected.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information we file at the Securities and
Exchange Commission's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the Securities and Exchange Commission
at 1-800-SEC-0330 for further information on the public reference rooms. Our
Securities and Exchange Commission filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the Securities and Exchange Commission at "http://www.sec.gov." You may also
visit Global Crossing at http://www.globalcrossing.net.
May 8, 2000
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ANNEX A
1998 GLOBAL CROSSING LTD.
STOCK INCENTIVE PLAN
Amended and Restated as of May 1, 2000
1. Purpose of the Plan
The purpose of the Plan is to aid the Company and its Subsidiaries in
recruiting and retaining key individuals of outstanding ability and to motivate
such individuals to exert their best efforts on behalf of the Company and its
Subsidiaries by providing incentives through the granting of Awards. The
Company expects that it will benefit from the added interest which such key
individuals will have in the welfare of the Company as a result of their
proprietary interest in the Company's success.
2. Definitions
The following capitalized terms used in the Plan have the respective meanings
set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) Award: An Option, Stock Appreciation Right or Other Stock-Based Award
granted pursuant to the Plan.
(c) Beneficial Owner: A "beneficial owner", as such term is defined in
Rule 13d-3 under the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following events:
(i) any Person (other than a Person holding securities representing
10% or more of the combined voting power of the Company's outstanding
securities as of the Effective Date, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of Shares of the Company), becomes the Beneficial
Owner, directly or indirectly, of securities of the Company, (a) in
excess of the interest in the Company held by the shareholders of the
Company as of the Effective Date (or their heirs or distributors by
will or the laws of descent and distribution) and (b) representing 30%
or more of the combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months (not including any
period prior to the Effective Date), individuals who at the beginning
of such period constitute the Board, and any new director (other than
(A) a director nominated by a Person who has entered into an agreement
with the Company to effect a transaction described in Sections 2(e)(i),
(iii) or (iv) of the Plan, (B) a director nominated by any Person
(including the Company) who publicly announces an intention to take or
to consider taking actions (including, but not limited to, an actual or
threatened proxy contest) which if consummated would constitute a
Change in Control or (C) a director nominated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's
securities) whose election by the Board or nomination for election by
the Company's shareholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
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(iii) the shareholders of the Company approve any transaction or
series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation which would result in the shareholders of the Company
immediately prior thereto continuing to own (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 65% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iv) the shareholders 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,
other than a liquidation of the Company into a wholly-owned subsidiary.
(f) Code: The Internal Revenue Code of 1986, as amended, or any successor
thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: Global Crossing Ltd.
(i) Disability: Inability to engage in any substantial gainful activity
by reason of a medically determinable physical or mental impairment which
constitutes a permanent and total disability, as defined in Section
22(e)(3) of the Code (or any successor section thereto). The determination
whether a Participant has suffered a Disability shall be made by the
Committee based upon such evidence as it deems necessary and appropriate. A
Participant shall not be considered disabled unless he or she furnishes
such medical or other evidence of the existence of the Disability as the
Committee, in its sole discretion, may require.
(j) Effective Date: July 1, 1998.
(k) Fair Market Value: on a given date, the closing price of the Shares
as reported on such date on the Composite Tape of the principal national
securities exchange on which such Shares are listed or admitted to trading,
or, if no Composite Tape exists for such national securities exchange on
such date, then on the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if the Shares are not listed
or admitted on a national securities exchange, the per Share closing bid
price on such date as quoted on the National Association of Securities
Dealers Automated Quotation System (or such market in which such prices are
regularly quoted), or, if there is no market on which the Shares are
regularly quoted, the Fair Market Value shall be the value established by
the Committee in good faith. If no sale of Shares shall have been reported
on such Composite Tape or such national securities exchange on such date or
quoted on the National Association of Securities Dealer Automated Quotation
System on such date, then the immediately preceding date on which sales of
the Shares have been so reported or quoted shall be used.
(l) ISO: An Option that is also an incentive stock option granted
pursuant to Section 6(d) of the Plan.
(m) LSAR: A limited stock appreciation right granted pursuant to Section
7(d) of the Plan.
(n) Other Stock-Based Awards: Awards granted pursuant to Section 8 of the
Plan.
(o) Option: A stock option granted pursuant to Section 6 of the Plan.
(p) Option Price: The purchase price per Share of an Option, as
determined pursuant to Section 6(a) of the Plan.
(q) Participant: An individual who is selected by the Committee to
participate in the Plan; provided that such individual must be a common law
employee of the Company or any of its Subsidiaries, a member of the Board,
or a consultant who performs bona fide services for the Company or any of
its Subsidiaries.
(r) Performance-Based Awards: Certain Other Stock-Based Awards granted
pursuant to Section 8(b) of the Plan.
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(s) Person: A "person", as such term is used for purposes of Section
13(d) or 14(d) of the Act (or any successor section thereto).
(t) Plan: The 1998 Global Crossing Ltd. Stock Incentive Plan.
(u) Shares: Common Shares of the Company, par value $0.01 per Share.
(v) Stock Appreciation Right: A stock appreciation right granted pursuant
to Section 7 of the Plan.
(w) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of
the Code (or any successor section thereto).
3. Shares Subject to the Plan
The total number of Shares that may be issued under the Plan is 111,000,000.
The maximum number of Shares for which Options and Stock Appreciation Rights
may be granted during a calendar year to any Participant shall be 5,000,000.
The maximum number of Shares for which Other Stock-Based Awards may be granted
over the life of the Plan shall be five percent (5%) of the total number of
Shares that may be issued under the Plan. The Shares may consist, in whole or
in part, of unissued Shares or treasury Shares. The issuance of Shares or the
payment of cash upon the exercise of an Award shall reduce the total number of
Shares available under the Plan, as applicable. Shares which are subject to
Awards which terminate or lapse may be granted again under the Plan.
4. Administration
The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are intended to qualify as "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor
rule thereto) and "outside directors" within the meaning of Section 162(m) of
the Code (or any successor section thereto). Awards may, in the discretion of
the Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its affiliates or a
company acquired by the Company or with which the Company combines. The number
of Shares underlying such substitute awards shall be counted against the
aggregate number of Shares available for Awards under the Plan. The Committee
is authorized to interpret the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, and to make any other determinations that
it deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to, Participants and their beneficiaries
or successors). The Committee shall have the full power and authority to
establish the terms and conditions of any Award consistent with the provisions
of the Plan and to waive any such terms and conditions at any time (including,
without limitation, accelerating or waiving any vesting conditions). The
Committee shall require payment of any amount it may determine to be necessary
to withhold for federal, state, local or other taxes as a result of the
exercise of an Award. Unless the Committee specifies otherwise, the Participant
may elect to pay a portion or all of such withholding taxes by (a) delivery in
Shares or (b) having Shares withheld by the Company from any Shares that would
have otherwise been received by the Participant.
5. Limitations
No Award may be granted under the Plan after the tenth anniversary of the
Effective Date, but Awards theretofore granted may extend beyond that date.
6. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the Committee,
nonqualified or incentive stock options for federal income tax purposes, as
evidenced by the related Award agreements, and shall be subject to
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the foregoing and the following terms and conditions and to such other terms
and conditions, not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be exercisable
at such time and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than ten
years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the Plan or in
an Award agreement, an Option may be exercised for all, or from time to
time any part, of the Shares for which it is then exercisable. For purposes
of Section 6 of the Plan, the exercise date of an Option shall be the later
of the date a notice of exercise is received by the Company and, if
applicable, the date payment is received by the Company pursuant to clauses
(i), (ii) or (iii) in the following sentence. The purchase price for the
Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (i) in cash
or its equivalent (e.g., by check); (ii) in Shares having a Fair Market
Value equal to the aggregate Option Price for the Shares being purchased
and satisfying such other requirements as may be imposed by the Committee;
provided, that such Shares have been held by the Participant for no less
than six months (or such other period as established from time to time by
the Committee or generally accepted accounting principles); (iii) partly in
cash and partly in such Shares; or (iv) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal
to the aggregate Option price for the shares being purchased. No
Participant shall have any rights to dividends or other rights of a
stockholder with respect to Shares subject to an Option until the
Participant has given written notice of exercise of the Option, paid in
full for such Shares and, if applicable, has satisfied any other conditions
imposed by the Committee pursuant to the Plan. If and to the extent
permitted by the Committee, a Participant may elect to defer receipt of the
Shares in respect of which an Option is exercised pursuant to any deferred
compensation plan of the Company which contemplates such deferral.
(d) ISOs. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements of
Section 422 of the Code (or any successor section thereto). No ISO may be
granted to any Participant who at the time of such grant, owns more than
ten percent of the total combined voting power of all classes of stock of
the Company or of any Subsidiary, unless (i) the Option Price for such ISO
is at least 110% of the Fair Market Value of a Share on the date the ISO is
granted and (ii) the date on which such ISO terminates is a date not later
than the day preceding the fifth anniversary of the date on which the ISO
is granted. Any Participant who disposes of Shares acquired upon the
exercise of an ISO either (i) within two years after the date of grant of
such ISO or (ii) within one year after the transfer of such Shares to the
Participant, shall notify the Company of such disposition and of the amount
realized upon such disposition.
(e) Attestation. Wherever in this Plan or any agreement evidencing an
Award a Participant is permitted to pay the exercise price of an Option or
taxes relating to the exercise of an Option by delivering Shares, the
Participant may, subject to procedures satisfactory to the Committee,
satisfy such delivery requirement by presenting proof of beneficial
ownership of such Shares, in which case the Company shall treat the Option
as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant (i) a Stock Appreciation Right
independent of an Option or (ii) a Stock Appreciation Right in connection with
an Option, or a portion thereof. A Stock Appreciation Right granted pursuant to
clause (ii) of the preceding sentence (A) may be granted at the time the
related Option is granted or at any time prior to the exercise or cancellation
of the related Option, (B) shall cover the same
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Shares covered by an Option (or such lesser number of Shares as the Committee
may determine) and (C) shall be subject to the same terms and conditions as
such Option except for such additional limitations as are contemplated by this
Section 7 (or such additional limitations as may be included in an Award
agreement).
(b) Terms. The exercise price per Share of a Stock Appreciation Right shall
be an amount determined by the Committee but in no event shall such amount be
less than the greater of (i) the Fair Market Value of a Share on the date the
Stock Appreciation Right is granted or, in the case of a Stock Appreciation
Right granted in conjunction with an Option, or a portion thereof, the Option
Price of the related Option and (ii) an amount permitted by applicable laws,
rules, by-laws or policies of regulatory authorities or stock exchanges. Each
Stock Appreciation Right granted independent of an Option shall entitle a
Participant upon exercise to an amount equal to (i) the excess of (A) the Fair
Market Value on the exercise date of one Share over (B) the exercise price per
Share, times (ii) the number of Shares covered by the Stock Appreciation Right.
Each Stock Appreciation Right granted in conjunction with an Option, or a
portion thereof, shall entitle a Participant to surrender to the Company the
unexercised Option, or any portion thereof, and to receive from the Company in
exchange therefor an amount equal to (i) the excess of (A) the Fair Market
Value on the exercise date of one Share over (B) the Option Price per Share,
times (ii) the number of Shares covered by the Option, or portion thereof,
which is surrendered. The date a notice of exercise is received by the Company
shall be the exercise date. Payment shall be made in Shares or in cash, or
partly in Shares and partly in cash (any such Shares valued at such Fair Market
Value), all as shall be determined by the Committee. Stock Appreciation Rights
may be exercised from time to time upon actual receipt by the Company of
written notice of exercise stating the number of Shares with respect to which
the Stock Appreciation Right is being exercised. No fractional Shares will be
issued in payment for Stock Appreciation Rights, but instead cash will be paid
for a fraction or, if the Committee should so determine, the number of Shares
will be rounded downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion, such conditions
upon the exercisability or transferability of Stock Appreciation Rights as it
may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant LSARs that are
exercisable upon the occurrence of specified contingent events. Such LSARs may
provide for a different method of determining appreciation, may specify that
payment will be made only in cash and may provide that any related Awards are
not exercisable while such LSARs are exercisable. Unless the context otherwise
requires, whenever the term "Stock Appreciation Right" is used in the Plan,
such term shall include LSARs.
8. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may grant Awards of
Shares, Awards of restricted Shares and Awards that are valued in whole or in
part by reference to, or are otherwise based on the Fair Market Value of,
Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more Shares (or the
equivalent cash value of such Shares) upon the completion of a specified period
of service, the occurrence of an event and/or the attainment of performance
objectives. Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan. Subject to the provisions of the Plan, the
Committee shall determine to whom and when other Stock-Based Awards will be
made, the number of Shares to be awarded under (or otherwise related to) such
Other Stock-Based Awards; whether such Other Stock-Based Awards shall be
settled in cash, Shares or a combination of cash and Shares; and all other
terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Shares so awarded and
issued shall be fully paid and non-assessable).
(b) Performance-Based Awards. Notwithstanding anything to the contrary
herein, certain Other Stock-Based Awards granted under this Section 8 may be
granted in a manner which is deductible by the Company under Section 162(m) of
the Code (or any successor section thereto) ("Performance-Based Awards"). A
Participant's Performance-Based Award shall be determined based on the
attainment of written performance goals approved by the Committee for a
performance period established by the Committee (i) while the outcome
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for that performance period is substantially uncertain and (ii) no more than 90
days after the commencement of the performance period to which the performance
goal relates or, if less, the number of days which is equal to 25 percent of
the relevant performance period. The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i)
consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per Share; (v) book value per Share; (vi)
return on shareholders' equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability of an
identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital and (xviii) return
on assets. The foregoing criteria may relate to the Company, one or more of its
Subsidiaries or one or more of its divisions or units, or any combination of
the foregoing, and may be applied on an absolute basis and/or be relative to
one or more peer group companies or indices, or any combination thereof, all as
the Committee shall determine. In addition, to the degree consistent with
Section 162(m) of the Code (or any successor section thereto), the performance
goals may be calculated without regard to extraordinary items. The maximum
amount of a Performance-Based Award during a calendar year to any Participant
shall be (x) with respect to Performance-Based Awards that are granted in
shares, 1,500,000 shares and (y) with respect to Performance-Based Awards that
are not granted in shares, $20,000,000. The Committee shall determine whether,
with respect to a performance period, the applicable performance goals have
been met with respect to a given Participant and, if they have, to so certify
and ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. The amount of the Performance-Based
Award actually paid to a given Participant may be less than the amount
determined by the applicable performance goal formula, at the discretion of the
Committee. The amount of the Performance-Based Award determined by the
Committee for a performance period shall be paid to the Participant at such
time as determined by the Committee in its sole discretion after the end of
such performance period; provided, however, that a Participant may, if and to
the extent permitted by the Committee and consistent with the provisions of
Section 162(m) of the Code, elect to defer payment of a Performance-Based
Award.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares after
the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of Shares or other corporate exchange, or any
distribution to shareholders of Shares other than regular cash dividends or
any transactions similar to the foregoing, the Committee in its sole
discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or
kind of Shares or other securities issued or reserved for issuance pursuant
to the Plan or pursuant to outstanding Awards, (ii) the Option Price and/or
(iii) any other affected terms of such Awards.
(b) Change in Control. Except as otherwise provided in an Award
agreement, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if
any, as it deems necessary or desirable with respect to any Award
(including, without limitation, (i) the acceleration of an Award, (ii) the
payment of a cash amount in exchange for the cancellation of an Award
and/or (iii) the requiring of the issuance of substitute Awards that will
substantially preserve the value, rights and benefits of any affected
Awards previously granted hereunder) as of the date of the consummation of
the Change in Control.
10. No Right to Employment or Awards
The granting of an Award under the Plan shall impose no obligation on the
Company or any Subsidiary to continue the employment or service or consulting
relationship of a Participant and shall not lessen or affect the
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Company's or Subsidiary's right to terminate the employment or service or
consulting relationship of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).
11. Successors and Assigns
The Plan shall be binding on all successors and assigns of the Company and a
Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
12. Nontransferability of Awards
Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
13. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which, (a) without the approval of
the shareholders of the Company, would (except as is provided in Section 9 of
the Plan), increase the total number of Shares reserved for the purposes of the
Plan or change the maximum number of Shares for which Awards may be granted to
any Participant or (b) without the consent of a Participant, would impair any
of the rights or obligations under any Award theretofore granted to such
Participant under the Plan; provided, however, that the Committee may amend the
Plan in such manner as it deems necessary to permit the granting of Awards
meeting the requirements of the Code or other applicable laws. Notwithstanding
anything to the contrary herein, the Board may not amend, alter or discontinue
the provisions relating to Section 9(b) of the Plan after the occurrence of a
Change in Control.
14. International Participants
With respect to Participants who reside or work outside the United States of
America and who are not (and who are not expected to be) "covered employees"
within the meaning of Section 162(m) of the Code, the Committee may, in its
sole discretion, amend the terms of the Plan or Awards with respect to such
Participants in order to conform such terms with the requirements of local law.
15. Choice of Law
The Plan shall be governed by and construed in accordance with the laws of
the State of New York without regard to conflicts of laws.
16. Effectiveness of the Plan
The Plan shall be effective as of the Effective Date. The Plan, as amended
and restated on June 18, 1999, became effective as of such later date after
having been approved by shareholders at the 1999 Annual General Meeting. The
Plan, as amended and restated as of December 7, 1999, shall be effective as of
such later date, subject to the approval of the shareholders of the Company
with respect to those amendments requiring shareholder approval under Section
13. The Plan, as amended and restated as of May 1, 2000, shall be effective as
of such later date, subject to the approval of the shareholders of the Company
with respect to those amendments requiring shareholder approval under Section
13.
A-7
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ANNEX B
GLOBAL CROSSING
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the Global Crossing Senior Executive Incentive
Compensation Plan (the "Plan") is to advance the interests of Global Crossing
Ltd. (the "Company") and its shareholders by providing incentives in the form
of periodic bonus awards ("Awards") to certain senior executive employees of
the Company and its subsidiaries, thereby motivating such executives to attain
corporate performance goals articulated under the Plan.
2. Administration. (a) The Plan shall be administered by the Compensation
Committee of the Company's Board of Directors ("Board"), or such other persons
as the Compensation Committee may designate (the "Committee"). The Committee
may delegate any of its duties and powers in whole or in part to any
subcommittee thereof consisting solely of at least two "outside directors," as
defined under Section 162(m) of the United States Internal Revenue Code of
1986, as amended (the "Code").
(b) The Committee shall have the exclusive authority to select the senior
executives to be granted Awards under the Plan, to determine the size and terms
of the Awards (subject to the limitations imposed on Awards in Section 4
below), to modify the terms of any Award that has been granted (except for any
modification that wold increase the amount of the Award payable to an
executive), to determine the time when Awards will be made and the performance
period to which they relate, to establish performance objectives in respect of
such performance periods, and to certify that such performance objectives were
attained; provided, however, that any such action shall be consistent with the
applicable provisions of Section 162(m) of the Code. The Committee is
authorized to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other determinations that it
deems necessary or desirable for the administration of the Plan. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan in the manner and to the extent that the Committee deems necessary or
desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned.
3. Participation. Awards may be granted to senior executives of the Company
and its subsidiaries who are "covered employees," as defined in Section 162(m)
of the Code, or who the Committee anticipates may become covered employees. An
executive to whom an Award is granted shall be a "Participant."
4. Awards Under the Plan. (a) A Participant's Award shall be determined based
on the attainment of written performance goals approved by the Committee for a
performance period which is established by the Committee (i) while the outcome
for that performance period is substantially uncertain and (ii) no more than
ninety (90) days after the commencement of that performance period or, if less,
the number of days which is equal to twenty five percent (25%) of that
performance period. The performance goals, which must be objective, shall be
based upon one or more of the following criteria: (A) consolidated earnings
before or after taxes (including earnings before interest, taxes, depreciation
and amortization); (B) net income; (C) operating income; (D) earnings per share
of common shares of the Company; (E) book value per share of common shares of
the Company; (F) return on shareholders' equity; (G) expense management; (H)
return on investment; (I) improvements in capital structure; (J) profitability
of an identifiable business unit or product; (K) maintenance or improvement of
profit margins; (L) stock price; (M) market share; (N) revenues or sales; (O)
costs; (P) cash flow; (Q) working capital; and (R) return on assets. The
foregoing criteria may relate to the Company, one or more of its subsidiaries
or one or more of its divisions or units, or any combination of the foregoing,
and may be applied on an absolute basis and/or be relative to one or more peer
group companies or indices, or any combination thereof, all as the Committee
shall determine. In addition, to the degree consistent with Section 162(m) of
the Code, the performance may be calculated without regard to extraordinary
items. The maximum amount of an Award to any one Participant with respect to a
fiscal year of the Company shall be $6 million.
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(b) The Committee shall determine whether the performance goals have been met
with respect to any affected Participant and, if they have, so certify and
ascertain the amount of the applicable Award. No Awards will be paid for that
performance period until such certification is made by the Committee. The
amount of the Award actually paid to any affected Participant (or, if such
Participant is deceased, the Participant's estate) may be less than the amount
determined by the applicable performance goal formula, at the discretion of the
Committee. The amount of the Award determined by the Committee for a
performance period shall be paid to the Participant within seventy-five (75)
days after the end of that performance period or as otherwise determined by the
Committee; provided, however, that a Participant may, if and to the extent
permitted by the Committee, elect to defer payment of an Award. Awards shall be
payable in cash; provided, however, if and to the extent so determined by the
Board, Participants may elect to receive payment of all or a designated portion
of the Award for such performance period in common shares of the Company.
(c) Notwithstanding any other provision of the Plan, in the event a
Participant should separate from service with the Company or a subsidiary for
any reason (other than termination by the Company for "cause," as defined by
the Committee), the Committee may, in its absolute discretion, authorize the
payment of all or a portion of such Participant's Award in respect of the
performance period during which the separation from service occurred.
(d) The provisions of this Section 4 shall be administered and interpreted in
accordance with Section 162(m) of the Code to ensure deductibility by the
Company and/or its subsidiaries of the payment of Awards.
5. Amendment and Termination of the Plan. (a) The Board may, at any time or
from time to time, suspend or terminate the Plan in whole or in part or amend
it in such respects as the Board may deem appropriate.
(b) No amendment, suspension or termination of the Plan shall, without the
Participant's consent, impair any of the rights or obligations under any Award
theretofore granted to a Participant under the Plan.
(c) The Committee may amend the Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Awards meeting
the requirements of future amendments, rules or regulations, if any, to or
under the Code or any other applicable laws.
6. Miscellaneous Provisions. (a) Determinations made by the Committee under
the Plan need not be uniform and may be made selectively among eligible
individuals under the Plan, whether or not such eligible individuals are
similarly situated. Neither the Plan nor any action taken hereunder shall be
construed as giving any employee or other person any right to continue to be
employed by or perform services for the Company or any subsidiary, and the
right to terminate the employment of or performance of services by any
Participant at any time and for any reason is specifically reserved to the
Company and its subsidiaries.
(b) No Award shall be considered as compensation under any employee benefit
plan of the Company or any subsidiary, except as otherwise may be provided in
such employee benefit plan. No reference in the Plan to any other plan or
program maintained by the Company shall be deemed to give any Participant or
other person a right to benefits under such other plan or program.
(c) Except as otherwise may be required by law or approved by the Committee,
a Participant's rights and interest under the Plan may not be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a Participant's death)
including, but not by way of limitation, execution, levy, garnishment, sale,
transfer, attachment, pledge, bankruptcy or in any other manner; provided,
however, that, subject to applicable law, any amounts payable to any
Participant hereunder are subject to reduction to satisfy any liabilities owed
by the Participant to the Company or any of its subsidiaries.
(d) The Company and its subsidiaries shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or
other taxes required by law to be withheld with respect to such payment.
B-2
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(e) The Company is the sponsor and legal obligor under the Plan, and shall
make all payments hereunder, other than payments to be made by any of the
subsidiaries, which shall be made by such subsidiary, as appropriate. Nothing
herein is intended to restrict the Company from charging a subsidiary that
employs a Participant for all or a portion of the payments made by the Company
hereunder. The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to assure the payment
of any amounts under the Plan, and rights to the payment hereunder shall be no
greater than the rights of the Company's (or subsidiary's) unsecured creditors.
All expenses involved in administering the Plan shall be borne by the Company.
(f) The validity, construction, interpretation, administration and effect of
the Plan and rights relating to the Plan and to Awards granted under the Plan,
shall be governed by the substantive laws, but not the choice of law rules, of
the State of New York.
(g) The Plan shall be effective as of January 1, 2000. However, if the Plan
is not approved by the affirmative vote of holders of a majority of the shares
of the Company present, or represented by proxy, and entitled to vote at the
Annual Meeting of Shareholders of the Company to be held in 2000, or at any
adjournment date thereof, the Plan and all Awards thereunder shall thereupon
terminate.
B-3
<PAGE>
[LOGO] Global Crossing(TM)
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
GLC40A DETACH HERE
[X] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR proposals 1 through 4.
1. Election of Directors.
Nominees: (01) Norman Brownstein, (02) Thomas J. Casey, (03) William E.
Conway, Jr., (04) Leo J. Hindery, Jr. and (05) James F. McDonald
FOR [_] [_] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] ______________________________________
For all nominees except as noted above
2. Proposal to appoint Arthur Andersen FOR AGAINST ABSTAIN
as independent auditors of Global [_] [_] [_]
Crossing Ltd. for 2000 and approve
the authority of the board of
directors of Global Crossing Ltd. to
determine their remuneration.
3. Proposal to amend the 1998 Global FOR AGAINST ABSTAIN
Crossing Ltd. Stock Incentive Plan. [_] [_] [_]
4. Proposal to approve the Global FOR AGAINST ABSTAIN
Crossing Senior Executive Incentive [_] [_] [_]
Compensation Plan.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please sign exactly as your name(s) appear(s) on this proxy card. Joint owners
should each sign personally. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title.
Signature:_________________ Date:________ Signature:______________ Date:________
<PAGE>
PROXY
GLOBAL CROSSING LTD.
Proxy for Annual General Meeting of Shareholders
June 15, 2000
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary Winnick and Lodwrick M. Cook, and each of
them, with power of substitution, as proxies at the annual meeting of
shareholders of GLOBAL CROSSING LTD. to be held on June 15, 2000, and at any
adjournment thereof, and to vote shares of stock of the company which the
undersigned would be entitled to vote if personally present.
This proxy will be voted as directed with respect to the proposals referred to
in Items 1 through 4 on the reverse side, but in the absence of such direction
this proxy will be voted FOR the election of all nominees for director listed on
the reverse side, and FOR the proposals referred to in Items 2 through 4.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- ---------------- ----------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ---------------- ----------------
