<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12
CONVERGYS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
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<PAGE>
[LOGO]
201 EAST FOURTH STREET
CINCINNATI, OHIO 45202
------------------------
NOTICE OF 1999 ANNUAL MEETING
AND PROXY STATEMENT
---------------------
NOTICE OF ANNUAL MEETING
To The Shareholders:
The annual meeting of shareholders of Convergys Corporation (the "Company")
will be held in the CINCINNATI MUSEUM CENTER AT UNION TERMINAL, 1301 Western
Avenue, Cincinnati, Ohio on Wednesday, April 21, 1999 at 11:30 A.M. for the
following purposes:
1. To elect two directors for three-year terms ending in 2002;
2. To act upon such other matters as may properly come before the meeting.
Shareholders of record at the close of business on February 26, 1999 will be
entitled to vote at the meeting and any adjournment thereof.
The vote of each shareholder is important, whatever the number of shares
held. Whether or not you plan to attend the meeting, please sign and return the
accompanying proxy card promptly in the enclosed envelope. PLEASE NOTE THAT YOUR
VOTE CANNOT BE COUNTED UNLESS YOU SIGN AND RETURN THE PROXY CARD OR ATTEND THE
MEETING AND VOTE BY BALLOT.
W. D. Baskett III
SECRETARY
March 12, 1999
<PAGE>
CONVERGYS CORPORATION
201 EAST FOURTH STREET
CINCINNATI, OHIO 45202
------------------------
PROXY STATEMENT
---------------------
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders on or about March 17, 1999 in connection with the solicitation of
proxies by the Board of Directors of Convergys Corporation (the "Company") for
use at the annual meeting to be held on April 21, 1999 at 11:30 A.M. in the
Reakirt Auditorium at Cincinnati Museum Center at Union Terminal, 1301 Western
Avenue, Cincinnati, Ohio.
Shares can be voted at the meeting only if the shareholder is represented by
proxy or is present in person. A shareholder giving a proxy in the accompanying
form retains the power to revoke it by a later appointment received by the
Company or by giving notice of revocation to the Company in writing or in open
meeting. Such later appointments or notices should be directed to W. D. Baskett
III, Secretary of the Company, at the address set forth above. Shares
represented by properly executed proxies received in the accompanying form will
be voted in accordance with the instructions contained therein. IN THE ABSENCE
OF CONTRARY INSTRUCTIONS, SUCH SHARES WILL BE VOTED: (1) TO ELECT AS DIRECTORS
THE PERSONS NAMED AS CLASS I DIRECTORS ON PAGE 5 AND (2) TO ACT UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
An abstention from voting and broker non-votes (as defined below) will be
included in determining the presence of a quorum.
In the event that a broker, bank, custodian, nominee or other record holder
of shares indicates on a proxy that it does not have discretionary authority to
vote certain shares on a particular matter (a "broker non-vote"), those shares
will be considered as present but not entitled to vote with respect to that
matter.
If a shareholder is a participant in the Company's Retirement and Savings
Plan or the Convergys CMG Retirement Savings Plan and the accounts are
registered in the same name, the proxy will also serve as a voting instruction
for the trustees of these plans.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
PROMPTLY SO THAT A QUORUM MAY BE REPRESENTED AT THE MEETING.
<PAGE>
GENERAL
The Company was formed in May 1998 as a wholly-owned subsidiary of
Cincinnati Bell Inc. ("CBI") as part of CBI's plan to distribute its information
management and customer management businesses to its shareholders. Following an
initial public offering of the Company's common shares, without par value
("Common Shares"), in August 1998 (the "IPO"), the Company became independent of
CBI on December 31, 1998 when CBI distributed its Company Common Shares to CBI's
shareholders (the "Spin-Off").
On the record date, February 26, 1999, outstanding voting securities of the
Company consisted of 152,117,096 Common Shares, all of one class. Each Common
Share has one vote on each matter presented for action at the meeting. The
following table sets forth information, unless otherwise indicated, as of the
record date, with respect to those persons that the Company believes to be
beneficial owners of more than 5% of the Company's voting securities:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER(a) COMMON SHARES CLASS
- ---------------------------------- --------------------------------------------------- --------------- -----------
<S> <C> <C> <C>
Common Shares The Western and Southern Life Insurance Company 13,905,392 8.5%
("Western Southern")
400 Broadway
Cincinnati, Ohio 45202
</TABLE>
- ------------------------
(a) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or investment
power with respect to any such security or has the right to acquire
beneficial ownership of any such security within 60 days.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, directors and greater than 10%
shareholders are required by regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, the
Company believes that, during the period commencing January 1, 1998 and ending
December 31, 1998, all such persons complied on a timely basis with the filing
requirements of Section 16(a).
BOARD OF DIRECTORS
GENERAL INFORMATION
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Directors are kept informed of
the Company's business by various reports and documents sent to them, as well as
by operating and financial reports presented at Board and committee meetings by
the Chairman, Chief Executive Officer and other officers.
Meetings of the Board of Directors are scheduled approximately seven times a
year, and there is also an organizational meeting following the annual meeting
of shareholders. Additional meetings of the Board may be called whenever needed.
The Board of Directors of the Company held seven meetings in 1998. Each director
attended at least 80% of the total number of meetings of the Board and
committees of which he or she was a member.
COMMITTEES OF THE BOARD
The committees established by the Board of Directors to assist it in the
discharge of its responsibilities are described below. The biographical
information on each director, including those nominated for
2
<PAGE>
election, which begins on page 5 of this Proxy Statement, identifies the
committee memberships currently held by each nominee and each incumbent
director.
The Executive Committee has four members, two of whom are officers of the
Company. The Committee meets on call whenever needed and has authority to act on
most matters during the intervals between Board meetings, except for those
matters reserved to the full Board of Directors by the Ohio General Corporation
Law. The Committee met four times in 1998.
The Audit and Finance Committee has four members, none of whom is an officer
of the Company. The Committee meets with management to consider the adequacy of
the internal controls of the Company and the objectivity of its financial
reporting; the Committee also meets with the independent accountants and with
appropriate Company financial personnel and internal auditors concerning these
matters. The Committee recommends to the Board the appointment of the
independent accountants, subject to ratification by the shareholders at the
annual meeting. Both the internal auditors and the independent accountants
periodically meet alone with the Committee and have unrestricted access to the
Committee. The Committee also reviews the capital structure of the Company,
short-term borrowing limits, proposed financings, options available for the
financing of all material acquisitions by the Company, the Company's benefit
plans, the performance of the portfolio managers of such plans and pension plan
funding. From time to time the Committee makes such reports and recommendations
to the Board with respect to the foregoing as it deems appropriate. The
Committee met one time in 1998.
The Compensation and Benefits Committee has three members, none of whom is
an officer of the Company. It makes recommendations to the Board with respect to
the compensation of the Chief Executive Officer, the Chairman of the Board and
non-employee directors. The Committee approves the compensation of Senior
Managers of the Company and administers the Company's 1998 Long Term Incentive
Plan (the "LTIP"). The Committee met four times in 1998.
The Governance and Nominating Committee has four members, one of whom is an
officer of the Company. The Committee reviews the performance of senior
management, recommends candidates for director, monitors the scope and
performance of Board committees, and suggests to the Board shareholder concerns
to be addressed.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no remuneration for
serving as directors or committee members. Non-employee directors receive an
annual retainer of $16,000 and a meeting fee of $1,000 for each Board and
committee meeting attended. The Chairmen of the Finance and Audit Committee and
the Compensation and Benefits Committee receive an additional fee of $3,000 per
year for serving as Chairmen of those committees. In lieu of the annual retainer
and individual meeting fees, Mr. Mechem, as Chairman of the Board, receives an
annual fee of $300,000 and supplemental medical insurance, the cost of which is
approximately $1,941 per year. During 1998, the non-employee directors received
their compensation as members of the Board of Directors of CBI and, except for
meeting fees, they were not separately compensated for serving as members of the
Company's Board of Directors.
Non-employee directors also receive stock options pursuant to the LTIP. In
conjunction with the IPO, Mr. Mechem received an option to purchase 100,000
Common Shares and each of the other non-employee directors received an option to
purchase 19,800 Common Shares. Each non-employee director who is first elected
or appointed to the Board after the IPO will receive an option to purchase
17,000 Common Shares. Each non-employee director also will receive an option to
purchase 7,500 Common Shares on the day of each annual meeting of shareholders
subsequent to his or her initial election or appointment to the Board, provided
that he or she continues in office after the annual meeting. The exercise price
for each option granted is 100% of the fair market value of the Common Shares on
the date of grant.
3
<PAGE>
Directors may elect to defer the receipt of all or a part of their fees and
retainers under the Company's Deferred Compensation Plan for Non-Employee
Directors (the "Directors Deferred Compensation Plan"). Amounts so deferred are
assumed to be invested in the same type of investments, including Common Shares,
as are made available to employees of the Company under the Company's qualified
Retirement and Savings Plan. In addition, the Directors Deferred Compensation
Plan reflects amounts accrued under CBI's Deferred Compensation Plan for Outside
Directors (the "CBI Plan") prior to 1999. Accounts under the Directors Deferred
Compensation Plan will be paid out in cash, in one lump sum or up to ten annual
installments, when the director leaves the Board. However, amounts originally
accrued under the CBI Plan may be subject to forfeiture if the director leaves
the Board (other than by reason of death) prior to completing at least five
years service as a non-employee director, including service as a non-employee
director of CBI.
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common Shares as
of February 26, 1999 by each director and named executive officer and by all
directors and officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
FEBRUARY 26, PERCENT OF COMMON
1999(a) SHARES
------------------- -------------------
<S> <C> <C>
John F. Barrett(b)(c)................................... 61,568 *
William D. Baskett III(b)............................... 358,439 *
Judith G. Boynton....................................... 37,800 *
Gary C. Butler.......................................... 25,000 *
David F. Dougherty...................................... 408,478 *
Brian C. Henry.......................................... 454,635 *
Roger L. Howe........................................... 104,800 *
Robert J. Marino(b)..................................... 420,988 *
Steven C. Mason......................................... 35,800 *
Charles S. Mechem, Jr................................... 139,238 *
James F. Orr............................................ 1,597,062 *
Brian H. Rowe........................................... 53,119 *
All Directors and Officers as a group (consisting of 19
persons, including those named above)................. 4,321,678 2.6%
</TABLE>
* Less than 1 percent
- ------------------------
(a) Includes Common Shares subject to outstanding options which are exercisable
by such individuals within 60 days. The following options are included in
the totals: 1,294,888 Common Shares for Mr. Orr; 361,600 Common Shares for
Mr. Henry; 345,224 Common Shares for Mr. Marino; 325,424 Common Shares for
Mr. Dougherty; 308,832 Common Shares for Mr. Baskett; 124,000 Common Shares
for Mr. Mechem; 55,800 Common Shares for Mr. Barrett; 39,800 Common Shares
for each of Messrs. Howe and Rowe; 35,800 Common Shares for each of Mrs.
Boynton and Mr. Mason; and 17,000 Common Shares for Mr. Butler.
(b) Includes Common Shares held directly by members of the director's or
officer's family who have the same home as the director or officer but as to
which the director or officer disclaims beneficial ownership: 1,568 for Mr.
Barrett; 2,107 for Mr. Baskett; 100 for Mr. Marino; and 18,830 for other
officers.
(c) Does not include Common Shares held by The Western and Southern Life
Insurance Company of which Mr. Barrett is President and Chief Executive
Officer. Mr. Barrett disclaims beneficial ownership of those shares.
4
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board of Directors of the Company presently consists of eight members,
two of whom are officers of the Company. The Company's Amended Articles of
Incorporation require that the directors be divided into three classes. At each
annual meeting of shareholders, directors constituting a class are elected for a
three-year term. The terms of the Class I directors expire in 1999. The Board of
Directors has nominated Judith G. Boynton and Brian H. Rowe for election as
directors in Class I to serve until the 2002 annual meeting of shareholders. The
two nominees for director receiving the greatest number of votes will be elected
Class I directors. The three directors in Class II continue to serve until the
2000 annual meeting of shareholders and the three directors in Class III
continue to serve until the 2001 annual meeting of shareholders. The directors
of each class will serve until their respective successors are elected and
qualified.
It is intended that shares represented by the accompanying form of proxy
will be voted for the election of the nominees, unless contrary instructions are
indicated as provided on the proxy card. (If you do not wish your shares to be
voted for particular nominees, please so indicate on the proxy card.) If one or
both of the nominees should at the time of the meeting be unavailable or unable
to serve as a candidate, the shares represented by the proxies will be voted to
elect the remaining nominee and any substitute nominee or nominees designated by
the Board of Directors. The Board of Directors knows of no reason why either of
the nominees will be unavailable or unable to serve.
For each director of the Company, including those nominated for election,
there follows a brief listing of principal occupation during at least the past
five years, other major affiliations and age on the date of this Proxy
Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
BELOW.
NOMINEES FOR CLASS I DIRECTORS
(TERMS EXPIRE IN 2002)
<TABLE>
<S> <C>
Judith G. Boynton, Executive Vice President and Chief Financial
[PHOTO] Officer of Polaroid Corporation since 1998; Vice President and
Controller of Amoco Corporation 1996-1998; General
Manager-Auditing, 1994-1996; Controller of Amoco Oil Company,
1993-1994. Director of the Company since May 1998; member of the
Audit and Finance Committee and the Governance and Nominating
Committee. Age 44.
Brian H. Rowe, Retired Chairman of General Electric Aircraft
[PHOTO] Engines (GEAE) since 1995; Chairman of GEAE, 1993-1995; President
and Chief Executive Officer of GEAE, 1979-1993; Senior Vice
President of General Electric Company, 1979-1993. Director of
Stewart & Stevenson Services, Inc., B/E Aerospace, Textron, Inc.,
The Fifth Third Bank and Canadian Marconi Company. Director of
the Company since May 1998; member of the Audit and Finance
Committee and the Compensation and Benefits Committee. Age 67.
</TABLE>
5
<PAGE>
CLASS II DIRECTORS
(TERMS EXPIRE IN 2000)
<TABLE>
<S> <C>
John F. Barrett, President and Chief Executive Officer of The
[PHOTO] Western and Southern Life Insurance Company since 1994; President
and Chief Operating Officer, 1989-1994; Executive Vice President
and Chief Financial Officer, 1987-1989. Director of The Western
and Southern Life Insurance Company, The Fifth Third Bancorp and
its subsidiary, The Fifth Third Bank, and The Andersons, Inc.
Director of the Company since May 1998; Chairman of the Audit and
Finance Committee; member of the Compensation and Benefits
Committee and the Executive Committee. Age 49.
Charles S. Mechem, Jr., Chairman of the Board of the Company
[PHOTO] since May 1998. Chairman of the Board of CBI, 1996-1998;
Commissioner Emeritus, Ladies Professional Golf Association
(LPGA); Commissioner of the LPGA, 1991-1995; Chairman of The
United States Shoe Corporation, 1993-1995; Director of AGCO, Mead
Corporation, Ohio National Life Insurance Company, J. M. Smucker
Company, Firstar Corporation and its subsidiary, Firstar Bank.
Director of the Company since May 1998; Chairman of the Executive
Committee and the Governance and Nominating Committee. Age 68.
James F. Orr, President and Chief Executive Officer of the
[PHOTO] Company since May 1998. Chief Operating Officer of CBI,
1996-1998; Chairman of Convergys Information Management Group
Inc. since 1996; Chairman of Convergys Customer Management Group
Inc. since 1997; Executive Vice President of CBI and President
and Chief Executive Officer of Convergys Information Management
Group Inc., 1995-1996; Chief Operating Officer of Convergys
Information Management Group Inc., 1994; President and Chief
Executive Officer of Convergys Customer Management Group Inc.,
1993-1994. Director of the Company since May 1998; member of the
Executive Committee. Age 53.
</TABLE>
6
<PAGE>
CLASS III DIRECTORS
(TERMS EXPIRE IN 2001)
<TABLE>
<S> <C>
Gary C. Butler, President and Chief Operating Officer of
[PHOTO] Automatic Data Processing, Inc. since 1998; Group President of
the Employer Services Group, 1995-1998; Group President of the
Dealer Services Group, 1990-1995. Director of Automatic Data
Processing, Inc. and Career Builder Inc. Director of the Company
since January 1999; member of the Audit and Finance Committee.
Age 52.
Roger L. Howe, Retired Chairman of the Board of U.S. Precision
[PHOTO] Lens, Inc. since 1998; Chairman of the Board, 1988-1998; Chairman
of the Board and Chief Executive Officer, 1970-1988. Director of
Baldwin Piano & Organ Co., Cintas Corporation, and Firstar
Corporation and its subsidiary, Firstar Bank. Director of the
Company since May 1998; member of the Audit and Finance Committee
and the Governance and Nominating Committee. Age 64.
Steven C. Mason, Retired Chairman of the Board and Chief
[PHOTO] Executive Officer of Mead Corporation since 1997; Chairman of the
Board and Chief Executive Officer, 1992-1997. Director of PPG
Industries, Inc. and Elder Beerman Stores. Director of the
Company since May 1998; Chairman of the Compensation and Benefits
Committee; member of the Executive Committee and the Governance
and Nominating Committee. Age 63.
</TABLE>
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the Company's Compensation and Benefits Committee covers the
following:
- Role of the Compensation and Benefits Committee
- Executive Compensation Principles
- Components of Executive Compensation
- Compensation of the Chief Executive Officer
- Stock Ownership Guidelines
- Deductibility of Executive Compensation
ROLE OF THE COMPENSATION AND BENEFITS COMMITTEE
The Company's Compensation and Benefits Committee has the responsibility to
annually review and recommend to the Board compensation for the Chief Executive
Officer. The Committee reviews and approves the compensation for the Company's
Chief Financial Officer, the General Counsel, the Presidents of Convergys
Information Management Group Inc. ("IMG") and Convergys Customer Management
Group Inc. ("CMG") and other executive officers.
EXECUTIVE COMPENSATION PRINCIPLES
The executive compensation program established by the Company's Compensation
and Benefits Committee is based on the following principles: (a) compensation
should be related to performance and should be comparable to the compensation
provided by a select group of high performing growth companies; (b) individual
compensation targets should be competitive with selected survey groups and
provide significant incentives for superior Company performance; (c)
compensation should align the interests of the executive officers with the
interests of the Company's shareholders; and (d) compensation should enable the
Company to attract and retain the management necessary to lead and manage a high
growth services company.
Compensation levels for executive officers are benchmarked to the outside
market, using information from general industry surveys conducted by two outside
consultants. The outside market is defined as a select group of leading high
performing growth companies and those with whom the Company competes for
executive talent.
COMPONENTS OF EXECUTIVE COMPENSATION
The three components of the total compensation program are:
- Base Salary
- Annual Incentive Bonus
- Long Term Incentives
BASE SALARIES. For the period from January 1, 1998 through August 12, 1998,
the named executive officers' base salaries were set by the CBI Compensation
Committee. For the period from August 13, 1998, the date of the IPO, through
December 31, 1998, the named executive officers' base salaries were set by the
Company's Compensation and Benefits Committee.
Base salary ranges have been set at levels that are comparable to similar
positions at other companies with whom we compare for compensation purposes. It
is intended that salaries will only be adjusted as needed based on individual
performance and on the results of our market surveys.
8
<PAGE>
ANNUAL INCENTIVES. The named executive officers' annual incentive targets
for 1998 were set by the CBI Compensation Committee. The adequacy and
appropriateness of those awards were reviewed and approved by the Company's
Compensation and Benefits Committee. For the Chief Executive Officer, Chief
Financial Officer and General Counsel, bonuses were based on CBI's actual
"earnings per share" (EPS), compared to goals that were established by CBI's
Board of Directors. In addition to a CBI EPS component, the annual bonuses of
the Presidents of IMG and CMG were based upon the achievement of subsidiary
operating income and revenue levels.
On a going forward basis, the midpoint of each position's range for total
cash compensation (base salary and bonus) will be targeted at the median of the
comparator group. The annual bonuses for the Chief Executive Officer, Chief
Financial Officer and General Counsel will be based two-thirds on Company EPS
and one-third on personal performance as determined by the Chief Executive
Officer and the Company's Compensation and Benefits Committee. The annual
bonuses for subsidiary Presidents will be based two-thirds on subsidiary
operating income and one-third on the achievement of personal goals.
LONG TERM INCENTIVES. The executive officers' long term incentives for 1998
were set by the CBI Compensation Committee and included both CBI stock options
and CBI performance shares under CBI's long term incentive plan. By reason of
the Spin-Off on December 31, 1998, all CBI performance share targets were cashed
out and, as noted below, options to purchase Common Shares were issued to all
holders of CBI stock options, including the named executive officers.
In conjunction with the IPO, stock options were granted to the Company's
executive officers and other key managers under the Company's LTIP. In addition,
as the Company moved toward becoming a newly independent entity, grants of
restricted stock were awarded under the LTIP. The grants made to the named
executive officers are shown in the tables on pages 11 and 12.
On a going forward basis, it is anticipated their long term incentives will
principally be in the form of stock options under the LTIP. The value of their
total direct compensation (base salary, annual bonus and long term incentive)
will be targeted to the 75(th) percentile of the comparator group.
At the time of the Spin-Off, each CBI shareholder received one Common Share
for each CBI common share owned on the record date. Similarly, to preserve the
value of grants previously made by CBI, each holder of a CBI stock option
received an option to purchase the same number of Common Shares and each holder
of a CBI restricted stock grant received a restricted stock grant for the same
number of Common Shares.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As Chief Operating Officer of CBI from January 1, 1998 through September 1,
1998 and as President and Chief Executive Officer of the Company from May 8,
1998 through December 31, 1998, in accordance with the policies discussed, Mr.
Orr received the base salary and annual incentive award that was based upon
CBI's actual EPS versus the EPS goal for 1998, shown in the table on page 11,
the stock options shown in the table on page 12, the restricted stock grant
shown in the table on page 11 and a CBI performance share target of 7,100
performance shares.
STOCK OWNERSHIP GUIDELINES
To further align the interests of the Company's executive officers with
those of the Company's shareholders, the Company's Compensation and Benefits
Committee has established Common Share ownership guidelines for the Company's
senior executives.
9
<PAGE>
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deduction for
compensation paid to the Company's named executives. The Company's Compensation
and Benefits Committee intends to maximize the amount of compensation expense
that is deductible by the Company when it is appropriate and in the best
interests of the Company and its shareholders. However, compensation decisions
will be based primarily on the Committee's perception of the effectiveness of
each type of compensation for incenting results and the extent to which
performance goals have been achieved.
Compensation and Benefits Committee
Steven C. Mason, CHAIRMAN
John F. Barrett
Brian H. Rowe
10
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
The Company was a subsidiary of CBI until December 31, 1998, the date of the
Spin-Off. The following table shows the compensation of the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company or any of its subsidiaries for services to the Company, CBI and their
subsidiaries in all capacities. Mr. Orr served as a director of the Company and
of CBI but received no separate compensation in those capacities.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION --------------------------- -------------
-------------------------------- SECURITIES LONG-TERM
OTHER ANNUAL RESTRICTED UNDERLYING INCENTIVE
SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ---------------------------------- ---- -------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
James F. Orr...................... 1998 $509,647 $393,509 (b) $ 4,012,500(c) 623,800(d) $ 0
President and Chief 1997 370,000 284,000 (b) 0 87,600(e) 0
Executive Officer
William D. Baskett III............ 1998 $275,000 $158,889 (b) $ 675,000(c) 116,000(d) $ 0
General Counsel and 1997 0 85,200 (b) 0 60,000(e) 0
Secretary
Brian C. Henry.................... 1998 $320,000 $104,409 (b) $ 1,577,725(c) 107,200(d) $ 0
Chief Operating 1997 320,000 170,400 (b) 0 56,800(e) 0
Officer of IMG(f)
Robert J. Marino.................. 1998 $298,863 $ 70,036 (b) $ 1,125,000(c) 215,900(d) $ 0
President and Chief 1997 270,000 177,601 (b) 0 54,000(e) 0
Executive Officer of IMG
David F. Dougherty................ 1998 $283,521 $ 60,741 (b) $ 1,125,000(c) 215,900(d) $ 0
President and Chief 1997 241,039 36,920 (b) 0 54,000(e) 0
Executive Officer of CMG
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(a)
- ---------------------------------- ------------
<S> <C>
James F. Orr...................... $31,340
President and Chief 31,344
Executive Officer
William D. Baskett III............ $ 3,408
General Counsel and 0
Secretary
Brian C. Henry.................... $13,101
Chief Operating 19,719
Officer of IMG(f)
Robert J. Marino.................. $17,664
President and Chief 9,500
Executive Officer of IMG
David F. Dougherty................ $17,461
President and Chief 12,273
Executive Officer of CMG
</TABLE>
- ------------------------------
(a) Represents Company contributions to defined contribution savings plans and
to the Executive Deferred Compensation Plan described on page 14.
(b) Does not include the value of perquisites and other personal benefits
because the total amount of such compensation, if any, does not exceed the
lesser of $50,000 or 10% of the total amount of the annual salary and bonus
for the individual for that year.
(c) Restricted stock holdings as of December 31, 1998: Mr. Orr, 267,500 Common
Shares with a value of $5,542,333; Mr. Baskett, 45,000 Common Shares with a
value of $932,355; Mr. Henry, 70,000 Common Shares (including 25,000 Common
Shares issued at the time of the Spin-Off ["Spin-Off Restricted Shares"])
with a value of $1,450,330 and 25,000 CBI common shares with a value of
$418,750; and each of Messrs. Marino and Dougherty, 75,000 Common Shares
with a value of $1,553,925. In the case of Mr. Henry, the 25,000 Spin-Off
Restricted Shares were granted on December 31, 1998 and vest as follows:
15,000 shares on February 28, 2001; 5,000 shares on February 28, 2002; and
5,000 shares on February 28, 2003. Dividends will be paid on the CBI common
shares.
(d) Includes, for Mr. Orr, 44,400 CBI common shares and 579,400 Common Shares;
for Mr. Baskett, 21,000 CBI common shares and 95,000 Common Shares; for Mr.
Henry, 28,600 CBI common shares and 78,600 Common Shares; and for each of
Messers. Marino and Dougherty, 27,200 CBI common shares and 188,700 Common
Shares. The Common Share totals include options issued at the time of the
Spin-Off ("Spin-Off Options") relating to the CBI options granted in 1998.
(e) Includes, for Mr. Orr, 43,800 each of CBI common shares and Common Shares;
for Mr. Baskett, 30,000 each of CBI common shares and Common Shares; for Mr.
Henry, 28,400 each of CBI common shares and Common Shares; and for Messrs.
Marino and Dougherty, 27,000 each of CBI common shares and Common Shares.
The Common Share numbers are Spin-Off Options relating to the CBI options
granted in 1997.
(f) Mr. Henry also served as Chief Financial Officer of CBI from January 1, 1998
through September 1, 1998.
11
<PAGE>
II. GRANTS OF STOCK OPTIONS
The following table shows all options to purchase Common Shares and options
to purchase CBI common shares granted to the named executive officers during the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE OR
GRANTED TO EMPLOYEES IN BASE PRICE
NAME (a) FISCAL YEAR ($/SH) EXPIRATION DATE
- ---------------------------------- --------------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
James F. Orr...................... 44,400(c) 2.71% $13.155 1/2/08
535,000(d) 5.71 15.000 8/13/08
44,400(e) .47 17.439 1/2/08
William D. Baskett III............ 21,000(c) 1.28 $13.155 1/2/08
74,000(d) .79 15.000 8/13/08
21,000(e) .22 17.439 1/2/08
Brian C. Henry.................... 28,600(c) 1.75 $15.090 4/21/08
50,000(d) .53 15.000 8/13/08
28,600(e) .30 20.004 4/21/08
Robert J. Marino.................. 27,200(c) 1.66 $13.155 1/2/08
161,500(d) 1.72 15.000 8/13/08
27,200(e) .28 17.439 1/2/08
David F. Dougherty................ 27,200(c) 1.66 $13.155 1/2/08
161,500(d) 1.72 15.000 8/13/08
27,200(e) .28 17.439 1/2/08
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERM(b)
----------------------
5% 10%
NAME ($) ($)
- ---------------------------------- ---------- ----------
<S> <C> <C>
James F. Orr...................... $ 367,099 $ 930,579
5,043,980 12,787,570
486,668 1,233,787
William D. Baskett III............ 173,628 440,139
697,672 1,768,748
230,181 583,548
Brian C. Henry.................... 271,242 687,658
471,400 1,195,100
359,645 911,596
Robert J. Marino.................. 224,889 570,084
1,522,622 3,860,173
298,139 755,833
David F. Dougherty................ 224,889 570,084
1,522,622 3,860,173
254,295 755,833
</TABLE>
- ------------------------
(a) The material terms of the options granted are: grant type, non-statutory;
grant price, fair market value on grant date; exercisable 25% after one
year, an additional 25% after the second year and the remaining 50% after
the third year; term of grant, 10 years; except in case of retirement,
disability or death, any unexercisable options are cancelled upon
termination of employment. The terms of the Spin-Off Options are
substantially the same as the terms of the related CBI options.
(b) As required by rules of the Securities and Exchange Commission, potential
values stated are based on the prescribed assumption that the Company's
Common Shares and CBI's common shares will appreciate in value from the date
of grant to the end of the option term at annualized rates of 5% and 10%
(total appreciation of 62.8% and 159.3%) resulting in values of
approximately $21.42 and $34.11 for the options to purchase CBI common
shares expiring on January 2, 2008; $24.42 and $38.90 for the options to
purchase Common Shares expiring on August 13, 2008; $28.40 and $45.22 for
the options to purchase Common Shares expiring on January 2, 2008; $24.57
and $39.13 for the options to purchase CBI common shares expiring on April
21, 2008; and $32.57 and $51.87 for the options to purchase Common Shares
expiring on April 21, 2008. They are not intended, however, to forecast
possible future appreciation, if any, in the price of the Company's Common
Shares an the price of CBI's common shares. The total of all stock options
granted to employees, including executive officers, during fiscal 1998 was
approximately 6.1% of the total Common Shares outstanding during the year
and 1.2% of the total CBI common shares outstanding during the year. As an
alternative to the assumed potential realizable values stated in the above
table, the Securities and Exchange Commission rules would permit stating the
present value of such options at date of grant. Methods of computing present
values suggested by different authorities can produce significantly
different results. Moreover, since these stock options are not transferable,
there are no objective criteria by which any computation of present value
can be verified. Consequently, the Company's management does not believe
there is a reliable method of computing the present value of such stock
options for proxy disclosure purposes.
(c) Options to purchase CBI common shares granted by CBI in January 1998 (April
1998, in the case of Mr. Henry) as the annual grant.
(d) Options to purchase Common Shares granted by the Company in conjunction with
the IPO.
(e) Spin-Off Options with respect to the CBI options granted in January 1998
(April 1998, in the case of Mr. Henry).
12
<PAGE>
III. AGGREGATE OPTION EXERCISES
The following table shows aggregate option exercises for the Company and CBI
in the last fiscal year and fiscal year-end values:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT FY-END (#) AT FY-END ($)(a)
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
NAME (#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ------------------------------- ----------------- ------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
James F. Orr................... 60,000(b) $ 1,355,620 (E) 83,100(c) (E) $ 625,805
(U) 1,450,700(d) (U) $ 7,114,137
William D. Baskett III......... 0 0 (E) 255,000(c) (E) $ 3,286,468
(U) 201,000(d) (U) $ 1,142,644
Brian C. Henry................. 40,000(b) $ 825,625 (E) 198,800(c) (E) $ 2,566,793
(U) 384,400(d) (U) $ 1,605,341
Robert J. Marino............... 0 0 (E) 93,500(c) (E) $ 974,767
(U) 276,400(d) (U) $ 1,466,679
David F. Dougherty............. 0 0 (E) 43,700(c) (E) $ 359,633
(U) 286,600(d) (U) $ 1,568,545
</TABLE>
- --------------------------
(a) Values stated for the Company are based on the fair market value (average of
the high and low) of $20.719 per share of the Common Shares on the New York
Stock Exchange on December 31, 1998. Values stated for CBI are based on the
fair market value (average of the high and low) of $16.75 per share of the
Common Shares on the New York Stock Exchange on January 4, 1999.
(b) CBI common shares.
(c) For Mr. Orr, 41,550 Common Shares and 41,550 CBI common shares; for Mr.
Baskett, 127,500 Common Shares and 127,500 CBI common shares; for Mr. Henry,
99,400 Common Shares and 99,400 CBI common shares; for Mr. Marino, 46,750
Common Shares and 46,750 CBI common shares; and for Mr. Dougherty, 21,850
Common Shares and 21,850 CBI common shares.
(d) For Mr. Orr, 992,850 Common Shares and 457,850 CBI common shares; for Mr.
Baskett, 137,500 Common Shares and 63,500 CBI common shares; for Mr. Henry,
217,200 Common Shares and 167,200 CBI common shares; for Mr. Marino, 218,950
Common Shares and 57,450 CBI common shares; and for Mr. Dougherty, 224,050
Common Shares and 62,550 CBI common shares.
13
<PAGE>
IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE
Since no awards pursuant to any long-term incentive plans were made to any
named executive officer in the fiscal year ended December 31, 1998, no table has
been included.
V. DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
All of the named executive officers of the Company participate in both the
Company's Pension Plan and a non-qualified pension plan known as the
Supplemental Executive Retirement Plan (the "SERP").
Under the SERP, a participant's pension at retirement is 50% of the
participant's average monthly compensation reduced by benefits payable under the
Pension Plan, including amounts which are intended to supplement or be in lieu
of benefits under the Pension Plan, and Social Security benefits. The
compensation averaging period is the high 36 month period during the 60 month
period preceding retirement, there is a reduction of 2.5% for each year by which
the sum of the participant's years of age and years of service at retirement
total less than 75, and no benefits are payable if the participant leaves prior
to attaining age 55 and completing at least 10 years of service.
The benefit formula under the Pension Plan is a cash balance formula. Under
this formula, each participant has an account to which pension credits are
allocated at the end of each year based upon the participant's attained age and
covered compensation for the year. To the extent that a participant's covered
compensation exceeds the Social Security wage base, additional pension credits
are given for such excess compensation. The following chart shows the pension
credits which will be given at the ages indicated:
<TABLE>
<CAPTION>
ATTAINED AGE PENSION CREDITS
- ---------------------------------------------- ----------------------------------------------
<S> <C>
Less than 30 years............................ 2.50% of total covered compensation plus
2.50% of excess compensation
30 but less than 35 years..................... 2.75% of total covered compensation plus
2.75% of excess compensation
35 but less than 40 years..................... 3.25% of total covered compensation plus
3.25% of excess compensation
40 but less than 45 years..................... 4.00% of total covered compensation plus
4.00% of excess compensation
45 but less than 50 years..................... 5.25% of total covered compensation plus
5.25% of excess compensation
50 but less than 55 years..................... 6.50% of total covered compensation plus
6.50% of excess compensation
55 or more years.............................. 8.00% of total covered compensation plus
8.00% of excess compensation
</TABLE>
At the end of each year, a participant's account is also credited with
assumed interest at the rate of 7.75% per annum for 1999 and 2000, and 4% per
annum for subsequent years. At retirement or other termination of employment, an
amount equivalent to the balance then credited to the account is payable to the
participant in the form of an immediate or deferred lump sum or annuity. (In the
case of a participant who was a participant in CBI's Management Pension Plan
("CBMPP") on December 31, 1998, the participant's account also was credited with
pension credits equivalent to the participant's accrued benefit under CBMPP on
that date.)
If Messrs. Orr, Baskett, Henry, Marino and Dougherty continue in employment
and retire at the normal retirement age of 65, their estimated straight life
annuity annual pension amounts under both the Pension Plan and the SERP
combined, prior to deduction for Social Security benefits, would be: $451,578
for Mr. Orr, $59,596 for Mr. Baskett, $212,205 for Mr. Henry, $184,450 for Mr.
Marino and $172,131 for
14
<PAGE>
Mr. Dougherty. These annual pension amounts would be reduced: in the case of Mr.
Orr (age 53 and ten years of service), if he retires prior to age 59; in the
case of Mr. Baskett (age 59 and one year of service), if he retires prior to age
65; in the case of Mr. Henry (age 42 and five years of service), if he retires
prior to age 56; in the case of Mr. Marino (age 51 and three years of service),
if he retires prior to age 62; and in the case of Mr. Dougherty (age 42 and
eight years of service), if he retires prior to age 56.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into Employment Agreements with Messrs. Orr,
Baskett, Marino, and Dougherty which provide for their employment and retention
for four year terms commencing on August 13, 1998, subject to automatic one year
extensions unless terminated prior to the beginning of the final year. For years
after 1998, the Employment Agreements provide a minimum annual base salary, a
minimum annual bonus target, and annual grants of long-term incentives with a
minimum present value. If their employment is terminated within two years after
a change in control or if they elect to leave within 90 days after a change in
control, they will receive lump sum payments equal to three times the sum of
their base salary and bonus targets and benefits will continue to be provided
for three years. If their employment is terminated by the Company without cause,
they will receive lump sum severance payments equal to their base salary and
bonus targets for the remainder of the Employment Agreement terms (but not less
than two times the sum of their base salary and bonus targets) and benefits will
continue to be provided for the remainder of the Employment Agreement terms (or,
if longer, for two years).
IMG has entered into an Employment Agreement with Mr. Henry which provides
for the employment and retention of Mr. Henry for a five year term commencing on
March 1, 1998, subject to automatic one year extensions unless terminated prior
to the beginning of the final year. The Employment Agreement provides for a
minimum base salary and a minimum bonus target. If Mr. Henry's employment is
terminated within two years after a change in control or if Mr. Henry elects to
leave within 90 days after a change in control, he will receive a lump sum
payment equal to 2.99 times his base salary. If Mr. Henry's employment is
terminated by the Company without cause, he will receive a lump sum severance
payment equal to two times his base salary.
The Executive Deferred Compensation Plan was adopted effective January 1,
1999 to permit executives to defer receipt of up to 75% of their base salary and
up to 100% of their cash bonuses. There is a Company match of $.0666 for each
dollar deferred, with a maximum match of 4% of the participant's compensation in
excess of $160,000. Amounts deferred by participants (and the related Company
"match") are assumed to have been invested in various mutual funds and other
investments (including Company Shares). Upon termination of employment, the
amounts then credited to the participant's account are distributed in two equal
annual installments or in up to ten annual installments. The 1998 "match" for
Messrs. Orr, Marino, Henry, Baskett and Dougherty is reflected in the Summary
Compensation Table under the "All Other Compensation" column.
Under the LTIP, in the event of a change in control, all outstanding stock
options will become immediately exercisable, all restrictions applicable to
restricted stock awards will lapse and a pro rata portion of all accrued
incentive awards will be paid in cash. Under the Executive Deferred Compensation
Plan, the present value of all deferred amounts will be paid in cash in the
event of a change in control. The present values of all accrued unfunded
benefits under the Pension Plan and the SERP will be funded within five days
after a change in control.
15
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the percentage change, for the
period from August 13, 1998, the date of the IPO, through December 31, 1998, of
the cumulative total shareholder return on the Company's Common Shares with the
cumulative total return, of the S&P 500 Stock Index and the Custom Composite.
CUMULATIVE TOTAL RETURN
BASED ON INITIAL INVESTMENT OF $100 ON AUGUST 13, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
8/13/98 9/30/98 10/31/98 11/30/98 12/31/98
<S> <C> <C> <C> <C> <C>
Convergys Corp. $100 $100 $93 $122 $149
S&P 500 $100 $95 $103 $109 $115
Custom Composite $100 $88 $97 $106 $114
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
8/13/98 9/30/98 10/31/98 11/30/98 12/31/98
Convergys Corp. $100 $100 $93 $122 $149
S&P 500 $100 $95 $103 $109 $115
Custom Composite $100 $88 $97 $106 $114
</TABLE>
Convergys' total return assumes investment of $100 at the Company's IPO price of
$15.00.
The 8-Stock Custom Composite consists of Amdocs LTD., APAC Teleservices Inc.,
CSG Systems International Inc., DST Systems Inc., Saville Systems plc ADR, Sitel
Corp., Teletech Holdings Inc. and West Teleservices Inc.
16
<PAGE>
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit and Finance
Committee, has reappointed the firm of PricewaterhouseCoopers LLP as independent
accountants to audit the financial statements of the Company for the year 1999.
PricewaterhouseCoopers LLP audited the financial statements of CBI for many
years. One or more members of the firm of PricewaterhouseCoopers LLP will attend
the annual meeting, will have an opportunity to make a statement and will be
available to answer questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in the proxy statement for the
annual meeting in 2000 must be received by the Company on or before November 18,
1999 and must comply with Rule 14a-8 promulgated under the 1934 Act. If a
non-Rule 14a-8 shareholder proposal is submitted at the annual meeting in 2000,
the proxy solicited by the Board of Directors with respect to the annual meeting
will authorize the named proxies to exercise discretionary voting authority with
respect to that proposal unless notice of the proposal is received by the
Company on or before February 2, 2000. Proposals or notices should be sent to
W.D. Baskett III, Secretary, 201 East Fourth Street, Cincinnati, Ohio 45202.
OTHER MATTERS TO COME BEFORE MEETING
At the time this Proxy Statement was released for printing on March 12,
1999, the Company knew of no other matters which might be presented for action
at the meeting. If any other matters properly come before the meeting, it is
intended that the Common Shares represented by proxies will be voted with
respect thereto in accordance with the judgment of the persons voting them.
The costs of soliciting proxies will be borne by the Company. In addition to
this solicitation by mail, directors, officers and regular employees of the
Company may solicit proxies in person or by telephone, make additional requests
for the return of proxies and may receive proxies on behalf of the Company.
Brokers, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of Common Shares and will be
reimbursed for their expenses. The Company also has retained Georgeson & Company
Inc. to assist it in connection with the solicitation at an estimated fee of
$8,500 plus reimbursement of out-of-pocket expenses.
FINANCIAL STATEMENTS AVAILABLE
Financial statements for the Company and its subsidiaries are included in
the Annual Report of the Company to shareholders for the year 1998. A copy of
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year 1998 will be furnished, without charge, on
request directed to W. D. Baskett III, Secretary, 201 East Fourth Street,
Cincinnati, Ohio 45202.
By Order of the Board of Directors
W. D. Baskett III
SECRETARY
March 12, 1999
17
<PAGE>
[CONVERGYS LOGO]
CONVERGYS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 21, 1999
The undersigned hereby appoints John F. Barrett, Roger L. Howe and James F.
Orr, and each or any of them, proxies, with full power of substitution, to
represent and to vote all common shares of Convergys held of record by the
undersigned on February 26, 1999, at the annual meeting of shareholders to be
held on April 21, 1999, at 11:30 A.M. the in Cincinnati Museum Center at
Union Terminal in Cincinnati, Ohio, and at any adjournment thereof, notice of
which meeting together with the related proxy statement has been received.
The proxies are directed to vote the shares the undersigned would be entitled
to vote if personally present.
ITEM 1 Authority to vote for the FOR [ ] WITHHOLD [ ]
election of Class I ALL NOMINEES LISTED AUTHORITY TO VOTE
directors whose terms (EXCEPT AS MARKED TO
expire in 2002: THE CONTRARY BELOW)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Judith G. Boynton Brian H. Rowe
ITEM 2 To act upon such other matters as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE>
[CONVERGYS LOGO]
C/O CORPORATE TRUST SERVICES
MAIL DROP 10AT66--4129
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
FOLD AND DETACH HERE
- ---------------------------------------------------------------------------
Please vote, date and sign below and return this proxy form promptly in the
enclosed envelope. If you attend the meeting and wish to change your vote,
you may do so automatically by casting your vote at the meeting. This proxy
form, when properly executed, will be voted in accordance with the directions
given by the shareholder. If no directions are given hereon, the proxy form
will be voted FOR the election of directors.
Dated ____________________, 1999
________________________________
SIGNATURE
________________________________
SIGNATURE IF SHARES HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS
OPPOSITE. EXECUTORS, TRUSTEES,
ADMINISTRATORS AND OTHER FIDUCIARIES
SHOULD SO INDICATE.
