SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of The
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TIE/COMMUNICATIONS, INC.
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(Name of Registrant as Specified in Its Charter)
TIE/COMMUNICATIONS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / 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:
Common Stock
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 1994
NOTICE IS HEREBY given that the Annual Meeting of Stockholders of
TIE/communications, Inc., a Delaware corporation (the "Company"), will
be held at the Doubletree Hotel, 10100 College Boulevard, Overland Park,
Kansas 66210, on Wednesday, June 22, 1994, at 10:00 a.m., local time,
for the purpose of considering and acting upon the following:
(1) The election of eight (8) directors to serve until the next Annual
Meeting of Stockholders or until their successors are duly elected and
qualified;
(2) The ratification of the selection of the firm of KPMG Peat Marwick
as independent auditors of the Company for 1994; and
(3) The transaction of such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on April 25, 1994 as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting, and at any adjournments or postponements thereof. A
complete list of the stockholders entitled to vote at the meeting will be
available for examination by any stockholder at the executive office of the
Company set forth above for any purpose germane to such meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting.
By Order of the Board of Directors
/s/ ROBERT W. WEBB
Robert W. Webb,
Secretary
May 2, 1994
TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 1994
INTRODUCTION
The enclosed proxy card is solicited by the Board of Directors of
TIE/communications, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders of the Company to be held at the Doubletree
Hotel, 10100 College Boulevard, Overland Park, Kansas 66210, on Wednesday, June
22, 1994, at 10:00 a.m., local time, and at any adjournments or postponements
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting (the "Notice"). The Company's principal executive offices are
located at 8500 West 110th Street, Overland Park, Kansas 66210, and its
telephone number is (913) 344-0400. Stockholders of record at the close of
business on April 25, 1994 are entitled to notice of and to vote at the meeting.
This proxy statement and the enclosed form of proxy card are first being mailed
to stockholders on or about May 2, 1994.
VOTING AT THE MEETING
On April 25, 1994, there were 3,981,338 shares of common stock, $.10 par
value (the "Common Stock"), issued and outstanding, held by approximately 7,601
stockholders of record. Each share of Common Stock outstanding on the record
date entitles the holder thereof to one vote on all matters submitted to a vote
of stockholders. To constitute a quorum for the transaction of business, a
majority of the outstanding shares entitled to vote must be present at the
meeting, in person or by proxy. The affirmative vote of the holders of a
majority of the shares of Common Stock entitled to vote on the subject matter
and represented at the meeting, in person or by proxy, will be necessary for the
election of directors and the ratification of the selection of the firm of KPMG
Peat Marwick as independent auditors of the Company for 1994. In accordance
with Delaware law, abstentions will, and broker non-votes will not, be counted
as being present at the meeting for purposes of voting. Therefore, an
abstention will effectively count as a vote against a proposal, but broker
non-votes will have no impact on the outcome of a proposal. The Company has
been advised by Marmon Holdings, Inc. and The Pritzker Family Philanthropic Fund
that shares of Common Stock owned by them, aggregating approximately 75% of the
Common Stock and therefore constituting a quorum, will be present and voted at
the meeting (i) for management's nominees for directors in accordance with the
manner specified in the Voting Agreement described under "Certain Transactions"
and (ii) for the ratification of the selection of KPMG Peat Marwick as
independent auditors of the Company for 1994.
PROXIES AND PROXY SOLICITATION
The persons named as proxies on the accompanying proxy card will, if no
contrary instructions are given, vote the shares represented thereby in favor of
each of management's nominees for election as a director, in favor of the
selection of the firm of KPMG Peat Marwick as independent auditors of the
Company for 1994 and in accordance with their best judgment on any other matters
which may properly come before the meeting. Management knows of no other
matters which may properly come before the meeting to be voted upon by the
holders of shares of Common Stock. Any stockholder executing a proxy retains
the right to revoke it at any time prior to exercise at the meeting. A proxy
may be revoked by timely delivery of written notice of revocation to the
Secretary of the Company, by execution and delivery of a later dated proxy or by
voting the shares in person at the meeting. If not revoked, all shares
represented by properly executed proxies will be voted as specified herein.
In addition to solicitation by mail, certain directors, officers and other
employees of the Company, not specifically employed for this purpose, may
solicit proxies, without additional remuneration therefor, by personal
interview, mail, telephone or telegraph. The Company will request brokers and
other fiduciaries to forward proxy solicitation material to the beneficial
owners of shares of Common Stock which are held of record by such brokers and
fiduciaries and will reimburse such persons for their reasonable out-of-pocket
expenses. All expenses incident to the preparation and mailing of, or otherwise
making available to all stockholders, the Notice, this proxy statement and the
form of proxy card will be paid by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is information concerning all persons known by the Company
to beneficially own 5% or more of the Common Stock as of April 25, 1994. Unless
otherwise noted, the persons named in the table have sole voting and investment
power with respect to all shares shown as beneficially owned by them.
SHARES OF
COMMON APPROXIMATE PERCENT
NAME AND ADDRESSES OF STOCK BENEFICIALLY OF
BENEFICIAL HOLDER OWNED CLASS OUTSTANDING
- - --------------------- ------------------ ------------------
Marmon Holdings, Inc. ...... 1,796,681 45.1%
225 West Washington Street
Chicago, Illinois 60606
The Pritzker Family
Philanthropic Fund........ 1,197,788 30.0%
200 West Madison Street
Chicago, Illinois 60606
Set forth below is information concerning the beneficial ownership of all
Directors and Executive Officers of the Company as of April 25, 1994. Unless
otherwise noted, the persons named in the table have sole voting and investment
power with respect to all shares shown as beneficially owned by them.
APPROXIMATE
SHARES OF PERCENT OF CLASS
DIRECTORS AND COMMON STOCK IF MORE THAN
EXECUTIVE OFFICERS BENEFICIALLY OWNED ONE PERCENT
- - ------------------ ------------------ ----------------
George N. Benjamin, III.... 0 ---
Eric V. Carter............. 0 ---
Lewis Collens.............. 0 ---
Robert C. Gluth............ 0 ---
Thomas L. Kelly, Jr. ...... 27,090 ---
Robert E. LaBlanc.......... 1,057 ---
Robert A. Pritzker......... 0 ---
Robert W. Webb............. 0 ---
Neal L. Brees.............. 0 ---
Robert H. Kalina........... 142(1) ---
Edward F. Muehlberger...... 0 ---
Mark D. Amatrudo........... 0 ---
Randolph K. Piechocki...... 0 ---
All Directors and Executive
Officers as a Group
(13 persons).............. 28,289(1) ---
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(1) Includes 142 shares of Common Stock owned by the TIE Charitable
Trust Foundation over which Mr. Kalina has voting and investment
discretion as a trustee.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially
own more than 10% of the Common Stock to file reports of beneficial
ownership and changes in beneficial ownership of Common Stock with the
Securities and Exchange Commission (the "Commission") and the American
Stock Exchange. Based solely on a review of such reports furnished to
the Company, the Company believes that during the fiscal year ended
December 31, 1993 all such reports were timely filed with the
Commission.
ELECTION OF DIRECTORS
At the meeting, eight directors are to be elected to the Board of
Directors. Each director elected at the meeting will hold office until
the next annual meeting of stockholders or until his successor shall
have been elected and duly qualified. Pursuant to a certain Voting
Agreement (identified and defined below), the Board of Directors has
accepted the designation of Messrs. Kelly and LaBlanc as Minority
Designees (as hereinafter defined; see "Certain Transactions"), and has
nominated six additional nominees (collectively, with the Minority
Designees, the "Nominees"). It is the intention of the persons named on
the enclosed proxy card to vote for the election of the Nominees named
below, each of whom has consented to serve as a director if elected.
All of the Nominees are currently members of the Board of Directors and
were elected directors at the last annual meeting of stockholders.
Marmon Holdings, Inc. and The Pritzker Family Philanthropic Fund have
informed the Company that it is their intention to vote for the Nominees
at the meeting in accordance with the manner specified in the Voting
Agreement described under "Certain Transactions."
The information set forth below is submitted with respect to the
Nominees to the Board of Directors for whom it is intended that proxies
will be voted. Unless otherwise indicated, each Nominee's principal
occupation has been held since at least January 1, 1989. Directorships
are identified of issuers with a class of securities registered pursuant
to Section 12 of the Exchange Act, of issuers registered as investment
companies under the Investment Company Act of 1940, as amended, and of
other select entities.
George N. Benjamin, III, Age 56; President and Chief Executive
Officer of the Company since April 1, 1992; Group Vice President of The
Marmon Group, Inc. from August 1988 to April 1, 1992; founder and
President of Trig Systems, a telecommunications management consulting
group, from July 1987 to August 1988; from December 1985 to July 1,
1987, President of Ericsson, Inc., a wholly-owned subsidiary of
Ericsson, N.A., Elected to the Board of Directors of the Company in
April 1991; previously served on the Board of Directors of the Company
from September 1989 to April 1990.
Eric V. Carter, Age 58; Executive Vice President of the Company
since April 1, 1992; President and Chief Executive Officer of the
Company from April 9, 1991 through March 30, 1992; Executive Vice
President of the Company from June 1990 through April 8, 1991; Vice
President--Operations of the Company from December 1987 through June
1990; first elected as Director of the Company in 1990.
Lewis V. Collens, Age 56; President of Illinois Institute of
Technology since June 1990; Vice President/Dean of the teaching branch
of Illinois Institute of Technology from September 1983 to May 1990;
Director of Dean Foods Company since 1991; first elected as Director of
the Company in May 1992.
Robert C. Gluth, Age 70; Executive Vice President, Treasurer and
Director of each of The Marmon Group, Inc., Marmon Industrial
Corporation, The Marmon Corporation and Union Tank Car Company since
prior to 1989; and Vice President, Treasurer and Director of Marmon
Holdings, Inc. since prior to 1989; first elected as Director of the
Company in April 1991.
Thomas L. Kelly, Jr., Age 57; Partner of Thomas L. Kelly Associates
since 1991; Founder of the Company and Chairman of the Board and
President of the Company from prior to 1989 through April 8, 1991; first
elected as Director of the Company in 1971.
Robert E. LaBlanc, Age 60; President of Robert E. LaBlanc
Associates, Inc., financial and technical consultants, since prior to
1989; Director of each of Storage Technology Corporation, M/A Com, Inc.,
Tribune Co., and Prudential-Bache Global Fund, Inc. since prior to 1989;
first elected as Director of the Company in 1981.
Robert A. Pritzker, Age 67; Chairman of the Board of the Company
since April 9, 1991; Director and President of each of Union Tank Car
Company, The Marmon Group, Inc., Marmon Industrial Corporation, Marmon
Holdings, Inc. and The Marmon Corporation, since prior to 1989. Elected
to the Board of Directors in 1991; previously served on the Board of
Directors of the Company from August 1987 through August 1989.
Robert W. Webb, Age 55; Vice President and Secretary of each of The
Marmon Group, Inc., Marmon Industrial Corporation and Marmon Holdings,
Inc. since prior to 1989, and General Counsel and Secretary of Union
Tank Car Company since prior to 1989; first elected as Director of the
Company in April 1991 and Vice President of the Company in June 1993.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES THEREOF
The Board of Directors has designated an Audit Committee, a
Nominating Committee and a Compensation Committee. The current members
of the Audit Committee are Lewis V. Collens, Robert C. Gluth and Robert
E. LaBlanc; the current members of the Nominating Committee are George
N. Benjamin, III, Eric V. Carter and Robert A. Pritzker; the current
members of the Compensation Committee are Lewis V. Collens, Robert E.
LaBlanc and Robert A. Pritzker.
The functions of the Audit Committee include reviewing the
independence of the Company's independent auditors, recommending to the
Board of Directors the engagement and discharge of independent auditors,
reviewing with the independent auditors the plan and results of auditing
engagements, reviewing the scope and adequacy of internal accounting
controls and directing and supervising special investigations.
The functions of the Nominating Committee include recommending to
the Board of Directors the number of directors to constitute the whole
Board and the names of persons it concludes should be considered for
Board membership. The Nominating Committee will consider nominees
recommended by stockholders, and such submissions should be made to the
Corporate Secretary not later than: (a) with respect to the election of
directors at an annual meeting of stockholders of the Company, 180 days
in advance of such meeting, and (b) with respect to any election of
directors to be held at a special meeting of stockholders of the
Company, the close of business on the seventh day following the date on
which notice of such meeting is first given to stockholders.
The functions of the Compensation Committee include the review and
approval of executive salaries and bonuses and contributions to the
Company's Profit Sharing and Savings Plan. See "Compensation Committee
Report to Stockholders."
During fiscal 1993, the Board of Directors held four meetings and
the Compensation, Audit and Nominating Committees held two, two and one
meetings, respectively. Each director attended at least 75% of the
aggregate number of meetings held by the Board of Directors and the
Committees of the Board of Directors on which he served during fiscal
1993.
CERTAIN TRANSACTIONS
On July 1, 1991 (the "Effective Date"), the First Amended Joint
Plan of Reorganization (the "Plan of Reorganization") of the Company and
certain of its subsidiaries (collectively with the Company, the
"Debtors") became effective. Pursuant to the Plan of Reorganization,
(i) HCR Partners, an Illinois general partnership ("HCR"), which, as of
the Effective Date, held a $31,593,750 principal amount senior secured
note (the "HCR Note") issued by the Company and guaranteed by certain of
the other Debtors, exchange on the Effective Date the principal amount
of the HCR Note for an approximately 75% fully diluted interest in the
Common Stock, or 2,994,479 shares of Common Stock; and (ii) the holders
of record of the Company's old common stock, par value $0.05 per share
(the "Old Common Stock"), received one share of Common Stock in exchange
for every 35 shares of Old Common Stock held, which newly issued shares
aggregated approximately 25% of the Company's outstanding Common Stock.
Immediately after the Effective Date, the Company was advised that
pursuant to an agreement by and between Marmon Holdings, Inc., a
Delaware corporation ("MHI"), and The Pritzker Family Philanthropic Fund
(the "Fund"), the two partners of HCR, HCR was liquidated. In
connection with such liquidation, the shares of Common Stock directly
owned by HCR were distributed to each of MHI and the Fund pro rata in
accordance with their respective interests in HCR. Accordingly, as a
result thereof, MHI became the direct beneficial owner of 1,796,681
shares of Common Stock (or approximately 45%) and the Fund became the
direct beneficial owner of 1,197,788 shares of Common Stock (or
approximately 30%). The Company has been advised that in connection
with the above-described liquidation of HCR, (i) HCR's rights and
obligations pursuant to the Voting Agreement and the Registration
Agreement (described and defined below) were assigned and assumed by and
between MHI and the Fund, and (ii) HCR's rights and obligations pursuant
to the Credit Agreement (identified and defined below) were assigned and
assumed by MHI. The Company has consented to each such assignment.
Pursuant to the Voting Agreement, dated June 18, 1991, but
effective as of the Effective Date (the "Voting Agreement"), between the
Company and HCR, (i) prior to the first election of directors by
stockholders following the Effective Date, Eric V. Carter, Thomas L.
Kelly, Jr. and Robert E. LaBlanc (each of whom was a director of the
Company on June 18, 1991 and unaffiliated with HCR) nominated two
individuals to fill such nominating directors' seats on the Board (the
"Minority Designees"), and (ii) with respect to each election of
directors prior to July 1, 1994, the Minority Designees then serving on
the Board shall be entitled to designate two nominees. Messrs. Thomas
L. Kelly and LaBlanc currently are the Minority Designees serving on the
Board of Directors and Messrs. Thomas L. Kelly and LaBlanc are the
Nominees designated by the Minority Designees for election at the 1994
Annual Meeting of Stockholders. The Voting Agreement also provides,
subject to certain limitations, that all voting securities of the
Company beneficially owned by HCR and its affiliates will, in the
elections of Minority Designees, be voted by HCR and its affiliates and
successors pro rata in the same manner and proportion that votes of
other stockholders of the Company have been cast.
Messrs. Pritzker, Gluth and Webb, each of whom currently serves as
a director of the Company and is a Nominee for re-election, are
employees of The Marmon Group, Inc., a Delaware corporation ("MGI"),
which may be deemed to be under common control with MHI, and Messrs.
Pritzker, Gluth and Webb are, respectively, President, Vice President
and Treasurer, and Vice President of MHI. In addition, Messrs.
Pritzker, Gluth and Webb are President, Executive Vice President and
Treasurer, and Vice President and Secretary, respectively, of The Marmon
Corporation, a Delaware corporation, which may be deemed to be under
common control with MGI and MHI. Substantially all of the stock of MGI,
MHI and The Marmon Corporation is owned, directly or indirectly, by
trusts primarily for the benefit of the lineal descendants of Nicholas
J. Pritzker, deceased, and entities controlled by such trusts. In
compliance with MGI policy, during 1993 Messrs. Pritzker, Gluth and Webb
remitted to MGI all Director and Committee fees received by them from
the Company during that year. Except as described herein, there are no
arrangements or undertakings with respect to the election of directors
of the Company or the appointment of executive officers of the Company.
HCR, the Company and certain of the Company's subsidiaries
(collectively, the "Subsidiaries") entered into a Revolving Credit
Agreement, effective as of the Effective Date (the "Credit Agreement"),
whereby HCR agreed to provide to the Company up to $10 million on a
revolving basis through December 31, 1993. The Credit Agreement has
been assumed by MHI, and was amended effective December 31, 1993 to
provide to the Company up to $7 million on a revolving basis through
December 31, 1996. Advances under the Credit Agreement bear interest at
the per annum rate of one percent plus the "reference rate" of
Continental Bank N.A., and the Company pays a quarterly fee of
one-quarter percent per annum on the average unused amounts available
under the Credit Agreement. During 1993, the Company had no outstanding
advances under the Credit Agreement, and accordingly paid an approximate
$25,000 facilities fee in 1993. The Credit Agreement is guaranteed by
the Subsidiaries and is secured by first priority liens on substantially
all of the assets of the Company and the Subsidiaries. The Company and
HCR also entered into a Registration Rights Agreement dated as of June
18, 1991 (the "Registration Agreement") pursuant to which the Company
granted to HCR and its successors certain rights to register the shares
of Common Stock held thereby.
The Company entered into a Revolving Funds Agreement dated as of
January 1, 1992 (the "Funds Agreement") with The Marmon Corporation
pursuant to which the Company deposits its daily available cash balance
with MGI acting on behalf of The Marmon Corporation. The Funds
Agreement is terminable by either party upon 30 days' prior written
notice. Funds deposited by the Company with MGI are held in commingled
accounts with funds of entities under common control with The Marmon
Corporation, and are deliverable to the Company upon demand. The Marmon
Corporation pays interest to the Company monthly on the average daily
balance of funds held pursuant to the Funds Agreement during such month
at the prime rate made available by The First National Bank of Chicago
on the last day of such month. During 1993, The Marmon Corporation held
an average of approximately $5.3 million pursuant to the Funds
Agreement.
The Company entered into an Administrative and Consulting Services
Agreement dated as of August 1, 1991 (the "Administrative Agreement")
with MGI pursuant to which MGI provides certain centralized
administrative and consulting services to the Company. The
Administrative Agreement is terminable by either party on 30 days' prior
written notice. In consideration of services performed during 1993, the
Company paid $432,000 to MGI. Currently, the Company pays MGI a monthly
fee of $36,000 for each month during which the Administrative Agreement
is in effect. Pursuant to the Administrative Agreement, the Company has
also agreed to reimburse MGI for all reasonable expenses it incurs in
connection with the provision of services to the Company.
In January 1992, the Company executed an Employment Agreement with
Eric V. Carter, effective from July 1, 1992 through December 31, 1995,
providing for services by Mr. Carter of an average of 80 hours per
calendar quarter and payment by the Company of $2,435.83 per month, plus
$100 per hour for every hour worked in excess of 80 hours per quarter.
Pursuant to such agreement, Mr. Carter resigned, effective as of March
31, 1992, as President of the Company and TIE Canada, and was appointed
as Executive Vice President of the Company. Mr. Carter remains a
director of the Company and TIE Canada. As additional payment under
such employment agreement, the Company has agreed to pay to Mr. Carter
85% of medical insurance premiums for each of Mr. Carter and his wife
from 1996 through the year 2000 in annual amounts not to exceed $9,472,
$10,893, $12,528, $14,407 and $8,284, respectively, or to pay a lump sum
equal to the discounted present value of such amounts. By an amendment
dated March 13, 1992, the Company also agreed to reimburse Mr. Carter
for certain medical expenses relating to a pre-existing condition to the
extent such expenses would have been covered had Mr. Carter remained a
full-time employee.
The Company executed a Severance Agreement with Thomas L. Kelly,
Jr. on April 9, 1991 pursuant to which the Company agreed to pay to Mr.
Kelly $650,000 in 48 equal semi-annual installments of $13,541.66
commencing on May 1, 1991, together with the vested portion of benefit
and related employment plans.
EXECUTIVE COMPENSATION
The following table discloses compensation received for the fiscal
years ended December 31, 1993, 1992 and 1991 by the Company's Chief
Executive Officer and each of the four other executive officers of the
Company who were serving as such on December 31, 1993 whose salary and
bonus exceeded $100,000 in the fiscal year ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
------------------------------------- ---------------------- -------
Other Annual Restricted All other
Name and Compensation Stock Options/ LTIP Compensation
Principal Position(a) Year Salary Bonus (b)(c) Awards SAR's # Payouts (b)(d)
- - --------------------- ----- -------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George N. Benjamin, III.... 1993 $253,836 -- -- -- -- -- $4,468
President & Chief Executive 1992 189,632 $50,000 -- -- -- -- 1,301
Officer 1991 -- -- -- -- -- -- --
Brian J. Kelley............ 1993 $275,006 -- $12,500 -- -- -- 96,335
Executive Vice President 1992 250,000 -- 34,365 -- -- -- 102,618
1991 227,806 -- -- $28,825(e) -- -- --
Mark D. Amatrudo........... 1993 $83,657 $33,000 -- -- -- -- --
Chief Financial Officer 1992 75,000 31,000 -- -- -- -- --
1991 52,925 15,000 -- -- -- -- --
Robert H. Kalina........... 1993 $97,503 $20,000 $7,692 -- -- -- $750
Vice President-Engineering 1992 -- -- -- -- -- -- --
and Operations 1991 -- -- -- -- -- -- --
Randolph K. Piechocki...... 1993 $200,007 $36,000 $16,667 -- -- -- $70,858
President, TIE Systems, 1992 182,000 -- 21,191 -- -- -- 76,060
Inc., a subsidiary of the 1991 182,000 $15,648 -- -- -- -- --
Company
</TABLE>
- - -----------------
(a) Mr. Amatrudo resigned as an executive officer of the Company effective
December 31, 1993 and Mr. Kelley resigned as an executive officer of the
Company effective January 15, 1994. Mr. Kalina became an executive
officer of the Company in 1993.
(b) In accordance with the transition provisions applicable to the revised
rules adopted in 1992 relating to the disclosure of executive compensation
under the Exchange Act, amounts of Other Annual Compensation and All
Other Compensation are only shown for the Company's 1992 and 1993 fiscal
years.
(c) For 1993, includes $12,500, $7,692 and $16,667, paid to Messrs. Kelley,
Kalina and Piechocki, respectively, as a retention bonus. Such bonuses,
equal to one month's salary, were paid to each employee of the Company who
moved with the Company from Connecticut to Kansas. For Mr. Kelley,
includes for 1992 $34,365 relating to the buy out of stock options granted
to purchase stock of TIE/telecommunications Canada Limited, a subsidiary
of the Company, which occurred in connection with the cancellation of all
stock option plans of TIE Canada and the buy out of all outstanding
options pursuant to such plans. For Mr. Piechocki, includes for 1992
$21,191 to pay federal and state income taxes arising from a 1991
relocation agreement between Mr. Piechocki and the Company.
(d) Includes contributions made by the Company of $4,468, $4,497, $750 and
$4,000 pursuant to the Company's Profit Sharing and Savings Plan, which
is a defined contribution plan, on behalf of Messrs. Benjamin, Kelley,
Kalina and Piechocki, respectively, during 1993 and similar contributions
by the Company of $1,301, $2,618 and $3,260 on behalf of Messrs. Benjamin,
Kelley and Piechocki, respectively, during 1992. For Mr. Kelley, also
includes $91,838 and $100,000 earned for 1993 and 1992, respectively, and
for Mr. Piechocki, also includes $66,858 and $72,800 earned for 1993 and
1992, respectively, pursuant to their respective 1991 Deferred Bonus
Agreements entered into in connection with the reorganization of the
Company in 1991. Such agreements have four year vesting schedules that
result in a portion of the aggregate amount to be paid vesting on each
annual anniversary of the agreement.
(e) Mr. Kelley received restricted stock pursuant to the Company's 1986
Incentive Compensation Plan. This plan was terminated as of July 1, 1991
in connection with the reorganization of the Company.
EMPLOYMENT CONTRACTS
On April 27, 1992, the Company entered into an employment agreement
with George N. Benjamin, III pursuant to which Mr. Benjamin, currently a
director of the Company and a Nominee for re- election, was appointed as
President and Chief Executive Officer of each of the Company and
TIE/telecommunications Canada Limited ("TIE Canada"). The Agreement
provides that Mr. Benjamin's employment with the Company and TIE Canada
may be terminated at any time with or without cause; but if Mr.
Benjamin's employment is terminated other than for cause, he shall be
entitled to receive his full base salary for a period of six months.
During 1989, the Company entered into separation agreements with
each of Brian J. Kelley and Randolph K. Piechocki which provide that if,
during a specified period after a change in control of the Company, the
officer's employment is terminated under certain circumstances, such
officer shall be entitled to continue to receive his then current
compensation and benefits for a period of two years. With respect to
the change of control resulting from the reorganization of the Company
in 1991, such period expired in August 1993 and no payments were made to
either Mr. Kelley or Mr. Piechocki in connection therewith.
In August 1993, the Company entered into a separation agreement
with Mr. Piechocki which provides that if Mr. Piechocki's employment
with the Company is terminated without cause he shall be entitled to
continue to receive his then current compensation and benefits for a
period of one year.
In November 1993, the Company entered into a separation agreement
and release with Mark D. Amatrudo in connection with his resignation as
Chief Financial Officer of the Company. Pursuant to the agreement, Mr.
Amatrudo agreed to continue to perform his duties as Chief Financial
Officer after the Company's relocation until a qualified replacement
could be found. In consideration of such agreement, the waiver by
Amatrudo of any transition bonus, separation pay or other compensation
from the Company and certain other covenants set forth in the agreement,
the Company agreed to pay to Mr. Amatrudo a lump-sum payment of $79,500
on January 2, 1994 and to recommend to the Compensation Committee that
Mr. Amatrudo be considered for a bonus with respect to his services to
the Company in 1993.
In December 1993, the Company entered into a separation agreement
with Robert H. Kalina which provides that if Mr. Kalina's employment
with the Company is terminated without cause prior to December 5, 1995
he shall be entitled to continue to receive his then current
compensation and benefits for a period of one year and that if Mr.
Kalina voluntarily terminates his employment with the Company prior to
December 5, 1995 he shall be entitled to continue to receive his then
current compensation and benefits for a period of six months.
DIRECTORS' COMPENSATION
The Company pays a $16,000 annual director's fee to each
non-management director. In addition, the annual fee for non-management
directors serving on the Audit, Compensation and Nominating Committees
is $2,000 per committee, with an additional fee of $500 per meeting of
the Committees attended.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
Decisions on compensation of the Company's executive officers are
made by the three member Compensation Committee of the Board of
Directors (the "Committee"), and the Committee has complete autonomy in
establishing executive officers' compensation. For 1993, the period
covered by this report, all of the members of the Committee were
non-employee directors.
EXECUTIVE COMPENSATION POLICIES
The Committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals, reward above-average
corporate performance, recognize individual initiative and achievements
and assist the Company in attracting and retaining qualified executives.
The Company's compensation policies are based on two fundamental
principles:
(1) Pay for Performance: Each executive officer's compensation is
related to performance against specific corporate and/or individual
goals.
(2) External Competitiveness: Each executive officer's
compensation, when targeted performance is achieved, will be competitive
with that paid to executive officers of the Company's peers in the
telecommunications industry who have similar responsibilities.
Each executive officer's pay is comprised of two components, a
fixed salary and a bonus tied to achievement of performance levels. The
Company does not currently have any equity-based compensation plans.
Salary is the largest component of each executive officer's annual
compensation, and is established in relation to the median compensation
paid by companies with similar revenues and scope of operations as
reported by an independent consultant's survey, with a primary focus on
compensation paid by the Company's competitors in the telecommunications
industry, including the Company's peers identified at "Performance
Graph" below. The focus on salary compensation is intended to prevent
any conflict between the interests of the executive officers and making
decisions to implement the Company's continuing cost-cutting programs
and strategic refocusing of its operations. In addition, the Company
provides significant variable bonus opportunities based upon the
Committee's subjective review after the close of the fiscal year of
certain performance criteria. The bonus criteria for executive officers
are established at the start of each year by the Committee in
consultation with the full Board of Directors and the executive officers
and are focused primarily upon the achievement of specific performance
criteria that will strengthen the Company's position in its industry
and, accordingly, create stockholder value. The decreased emphasis in
1993 on fixed and variable bonus amounts upon achievement of objective
performance criteria was made by the Committee in recognition of the
difficulty of establishing appropriate objective performance goals for
the executive officers. The Committee concluded, based upon its
experience in 1992, that short term objective performance targets are
difficult to establish for the executive officers because actions
necessary to strengthen the Company's long term competitive position and
stockholder value can cause significant fluctuations in the Company's
short term performance and may require executive officers to emphasize
aspects of the Company's business other than those for which performance
targets were established. Such actions often are taken as opportunities
arise, and the timing and impact cannot be anticipated. Similarly, the
Committee believes that establishing long term performance goals for the
Company is currently impractical because the Company's cost-cutting
programs and strategic refocusing make the timing and extent of growth
too difficult to forecast for purposes of establishing objective
performance targets.
In awarding the 1993 bonuses, the factors considered by the
Committee primarily included individual experience and performance, the
officer's level of responsibility and historical bonus levels. The
measures of individual performance included, to the extent applicable to
an individual executive officer, a number of qualitative and
quantitative factors such as the Company's historical and recent
financial performance in the principal area of responsibility of the
officer and the individual achievement of non-financial goals within his
responsibility and other contributions made by the officer to the
Company's success. For the President of the Company's TIE Systems, Inc.
subsidiary, the bonus amount was awarded primarily in recognition of his
contribution to the increases in the Company's operating and net income
for the year. For the Chief Financial Officer, the bonus award was
based primary upon the accuracy of budgets, forecasts and financial
controls, which have been instrumental in the Company's cost-cutting
program and in integrating acquired businesses into the Company. For
the Vice President - Engineering and Operations, who was not an
executive officer at the beginning of the fiscal year, the amount of his
bonus award was established primarily in relation to his historical
bonus amounts as an employee of the Company, which had been established
by the Chief Executive Officer. No bonus was awarded to the Executive
Vice President, who left the employ of the Company in January 1994.
OTHER COMPENSATION PLANS
At various times in the past, the Company has adopted certain
broad-based employee benefit plans in which the executive officers of
the Company were permitted to participate on the same terms as
non-executive employees who met applicable eligibility criteria, subject
to any legal limitations on the amounts that may be contributed or the
benefits that may be payable under the plans. Benefits under these
plans were not tied to Company performance.
Prior to the Company's reorganization in 1991, it maintained five
equity-based plans in which executive officers were entitled to
participate. In connection with the Plan of Reorganization, however,
all of these plans were terminated. While the Committee believes such
plans may be beneficial in certain circumstances, the Committee does not
believe that equity based compensation plans are appropriate at this
time because the Company is undergoing a strategic refocusing of its
operations and concurrently implementing significant cost savings
measures. It is the Committee's opinion that such plans are not
necessary to appropriately align the interests of the Company's
executive officers with those of the stockholders and, further, that due
to the reorganization, the timing and extent of growth in value of the
Company is currently too difficult to forecast to make appropriate
equity based awards.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The Committee's approach in setting the target annual compensation
of George N. Benjamin, III (the "Chief Executive") is to seek to be
competitive with the Company's competitors in the telecommunications
industry and to have a significant portion of his target compensation
subject to meeting objective long term performance objectives and, to a
lesser extent, subjective criteria. The Committee believes that its
approach appropriately incentivizes the Chief Executive, while
acknowledging the importance to him of having some certainty in the
level of his compensation through non-performance based efforts.
The Chief Executive's base salary was established at $245,000 per
annum in April 1992 when he was recruited to become President and Chief
Executive Officer of the Company based upon an independent consultant's
survey of base salaries of chief executive officers of companies with
similar revenues and scope of operations, with a primary focus upon
compensation paid by the Company's competitors. In this analysis, it
was taken into consideration that the Company had recently been
reorganized and was changing its focus from an equipment distributor and
manufacturer to a direct sales and service organization and that the
presence of an effective leader would be required to accomplish the
transition. Another factor considered by the Committee was that, unlike
a preponderance of the Company's competitors, the Company does not
provide any equity-based or long term incentive plans to its executive
officers. As a result of this factor, at the time the Chief Executive's
salary was established the Committee provided for a bonus of $150,000
payable to the Chief Executive in 1994 if the Company achieved certain
objective growth criteria measured by return on investment for 1992 and
1993. Such criteria were met, and such bonus will be paid in 1994.
Return on investment was selected as an appropriate measure to
incentivize the Chief Executive to successfully manage the transition of
the Company's business in conjunction with the revenue growth targets
provided to other executive officers discussed above. In July 1993, the
Chief Executive Officer was awarded a 4.8 percent salary increase, the
amount of which was established by the Committee in relation to the
average raises awarded to the other employees of the Company generally,
historical salary increases to the chief executive officer of the
Company and cost of living adjustments. Because of the difficulty in
establishing objective bonus criteria to reflect the Chief Executive's
ability to provide effective leadership to the Company, the Chief
Executive's annual bonus is paid after the end of each year and is based
upon a subjective evaluation of his performance and the audited results
of the Company during the preceding year. The bonus amount for 1993 has
not yet been established for the Chief Executive, but factors being
evaluated in determining the bonus include the Company's financial
performance in relation to budgets and performance targets, the
Company's stock price and the Chief Executive's success in establishing
the strategic relationships and acquisitions which will serve as the
foundation for the Company's continued growth. The amount of this
bonus, if any, will be determined in the sole discretion of Mr.
Pritzker, Chairman of the Committee, in consultation with the other
members of the Committee.
Submitted by the Compensation Committee of the Board of Directors.
Robert A. Pritzker
Robert E. LaBlanc
Lewis V. Collens
PERFORMANCE GRAPH
The following graph compares the cumulative total return on
stockholder investment in the Company's Common Stock over the last 5
fiscal years of the Company to that of the Standard & Poor's 500 Stock
Index and an index based on the common stock of the following four
companies: Comdial Corporation, Executone Information Systems, Inc.,
Inter-Tel Inc. and Mitel Corporation. The graph assumes $100 invested
on December 31, 1988 and reinvestment of all dividends.
[Graphic No. 1 Appears Here]
Measurement Period
(fiscal year covered) TIE/communications, Inc. Peer Group S&P 500
- - --------------------- ------------------------ ---------- -------
1988 100 100 100
1989 61.54 103.14 131.69
1990 19.20 35.98 127.60
1991 13.64 32.41 166.47
1992 19.14 70.84 179.15
1993 12.98 210.89 197.21
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During 1993, the members of the Compensation Committee were Mr. Robert A.
Pritzker, Chairman of the Board of the Company, and Messrs. Robert E. LaBlanc
and Lewis V. Collens, neither of whom is or has been an officer of the Company
or any of its subsidiaries. None of the members of the Compensation Committee
is an employee of the Company or any of its subsidiaries or, except as described
below, had any transactions with the Company or any of its subsidiaries during
1993.
Mr. Pritzker is an employee of MGI, which may be deemed to be under common
control with MHI, and Mr. Pritzker is President of MHI. In addition, Mr.
Pritzker is President of The Marmon Corporation, a Delaware corporation, which
may be deemed to be under common control with MGI and MHI. In compliance with
MGI policy, during 1993 Mr. Pritzker remitted to MGI all Director and Committee
fees received by him from the Company during that year.
MHI, the Company and certain of the Company's subsidiaries (collectively,
the "Subsidiaries") are parties to the Credit Agreement, whereby MHI agreed to
provide to the Company up to $10 million on a revolving basis through December
31, 1993. The Credit Agreement was amended effective December 31, 1993 to
provide to the Company up to $7 million on a revolving basis through December
31, 1996. Advances under the Credit Agreement bear interest at the per annum
rate of one percent plus the "reference rate" of Continental Bank N.A., and the
Company pays a quarterly fee of one-quarter percent per annum on the average
unused amounts available under the Credit Agreement. During 1993, the Company
had no outstanding advances under the Credit Agreement, and accordingly paid an
approximate $25,000 facilities fee in 1993. The Credit Agreement is guaranteed
by the Subsidiaries and is secured by first priority liens on substantially all
of the assets of the Company and the Subsidiaries. The Company and HCR also
entered into a Registration Rights Agreement dated as of June 18, 1991 (the
"Registration Agreement") pursuant to which the Company granted to HCR and its
successors certain rights to register the shares of Common Stock held thereby.
The Company entered into the Funds Agreement with The Marmon Corporation in
1992, pursuant to which the Company deposits its daily available cash balance
with MGI acting on behalf of The Marmon Corporation. The Funds Agreement is
terminable by either party upon 30 days' prior written notice. Funds deposited
by the Company with MGI are held in commingled accounts with funds of entities
under common control with The Marmon Corporation, and are deliverable to the
Company upon demand. The Marmon Corporation pays interest to the Company
monthly on the average daily balance of funds held pursuant to the Funds
Agreement during such month at the prime rate made available by The First
National Bank of Chicago on the last day of such month. During 1993, The Marmon
Corporation held an average of approximately $5.3 million pursuant to the Funds
Agreement.
The Company entered into the Administrative Agreement with MGI in 1991,
pursuant to which MGI provides certain centralized administrative and consulting
services to the Company. The Administrative Agreement is terminable by either
party on 30 days' prior written notice. In consideration of services performed
during 1993, the Company paid $432,000 to MGI. Currently, the Company pays MGI
a monthly fee of $36,000 for each month during which the Administrative
Agreement is in effect. Pursuant to the Administrative Agreement, the Company
has also agreed to reimburse MGI for all reasonable expenses it incurs in
connection with the provision of services to the Company.
SELECTION OF AUDITORS
It is proposed that the stockholders ratify the selection of the firm of
KPMG Peat Marwick as the Company's independent auditors for 1994. KPMG Peat
Marwick has been the Company's independent certified public accountants since
1981, and at no time during such period has had any direct or indirect financial
interest in, or any connection with, the Company or any of its subsidiaries
other than as independent auditors. A representative of such firm is expected
to be present at the meeting, will be given an opportunity to make a statement
if the representative so desires, and will be able to respond to appropriate
questions. The Board of Directors recommends a vote FOR the approval of the
selection of such firm.
OTHER MATTERS
Management does not know of any other matters to be brought before the
meeting. If any other matters are properly brought before the meeting, the
persons named as proxies in the enclosed proxy card intend to vote the shares
represented by the proxy card in accordance with their best judgment on such
matters.
Any proposal which an eligible stockholder wishes to include in the proxy
statement for the 1995 Annual Meeting of Stockholders must be received by the
Company at its principal executive offices at 8500 West 110th Street, Overland
Park, Kansas 66210, no later than January 2, 1995.
By order of the Board of Directors
/s/ ROBERT A. PRITZKER
Robert A. Pritzker, Chairman
May 2, 1994
GRAPHICS APPENDIX LIST
Graphic No. 1 The graph is entitled "Performance Graph."
Presented is a comparison of the Company's Common Stock
for the last five years to that of the S&P 500 Stock Index
and an index based on the common stock of four companies,
all as described in narrative and tabular form on page 13
of the Proxy Statement.
TIE/COMMUNICATIONS, INC. PROXY 1994 ANNUAL MEETING OF STOCKHOLDERS
JUNE 22,1994
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints George N. Benjamin, III, Eric V. Carter,
and Robert W. Webb, or any one or more of them acting in the absence of the
others, with full power of substitution, proxies for the undersigned, to vote at
the 1994 Annual Meeting of Stockholders of TIE/communications, Inc. to be held
at 10:00 a.m. local time on Wednesday, June 22, 1994, at the Doubletree Hotel
at Corporate Woods, 10100 College Boulevard, Overland Park, Kansas 66210, and at
any adjournment(s) or postponement(s) thereof according to the number of votes
the undersigned might cast and with all powers the undersigned would possess
if personally present.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO P.O. BOX A3800,
CHICAGO IL 60690-9608 SO THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING.
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THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED
"FOR" THE PROPOSALS SET FORTH BELOW. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE PROPOSALS.
1. To elect the following eight (8) directors:
Nominees: George N. Benjamin, III, Eric V. Carter,
Lewis Collens, Robert C. Gluth, Thomas L. Kelly, Jr.,
Robert E. LaBlanc, Robert A. Pritzker, Robert W. Webb.
FOR WITHHOLD FOR ALL (Except Nominee(s) below)
/ / / / / /
- - --------------------------------------------------------------------------
2. To ratify the selection of the firm of KPMG Peat Marwick as the
independent auditors of the Company for 1994.
FOR AGAINST ABSTAIN
/ / / / / /
3. The transaction of such other business as may properly come before the
meeting, as set forth in the Proxy Statement dated May 2, 1994.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as a fiduciary or for an estate, trust, corporation or
partnership, your title or capacity should be stated.
Dated 1994
------------------------------
Signature(s)
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