<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the registrant / /
Filed by a party other than the registrant /X/
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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
TIE/COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(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
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------------
<PAGE>
TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1995
NOTICE IS HEREBY given that the Annual Meeting of Stockholders of
TIE/communications, Inc., a Delaware corporation (the "Company"), will be held
at the Company's headquarters located at 8500 West 110th Street, Overland Park,
Kansas 66210, on Monday, June 12, 1995, 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 LLP
as independent auditors of the Company for 1995; 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 14, 1995, 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
Robert W. Webb, Secretary
May 4, 1995
<PAGE>
TIE/COMMUNICATIONS, INC.
8500 WEST 110TH STREET
OVERLAND PARK, KANSAS 66210
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1995
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 Company's
headquarters located at 8500 West 110th Street, Overland Park, Kansas 66210, on
Monday, June 12, 1995, 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 14, 1995, 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 4, 1995.
VOTING AT THE MEETING
On April 14, 1995, there were 3,959,936 shares of common stock, $.10 par
value (the "Common Stock"), issued and outstanding, held by approximately 4,807
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 LLP as independent auditors of the Company for 1995. 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
for management's nominees for directors and for the ratification of the
selection of KPMG Peat Marwick LLP as independent auditors of the Company for
1995.
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 LLP as independent auditors of the
Company for 1995 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
1
<PAGE>
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 14, 1995. 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.
<TABLE>
<CAPTION>
SHARES OF APPROXIMATE
COMMON PERCENT
NAME AND ADDRESSES OF STOCK BENEFICIALLY OF CLASS
BENEFICIAL HOLDER OWNED OUTSTANDING
- ----------------------------------- ------------------ -----------------
<S> <C> <C>
Marmon Holdings, Inc. 1,796,681 45.1%
225 West Washington Street
Chicago, Illinois 60606
The Pritzker Family 1,197,788 30.0%
Philanthropic Fund
200 West Madison Street
Chicago, Illinois 60606
</TABLE>
2
<PAGE>
Set forth below is information concerning the beneficial ownership of all
Directors and Executive Officers of the Company as of April 14, 1995. 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.
<TABLE>
<CAPTION>
APPROXIMATE
SHARES OF COMMON PERCENT OF CLASS
STOCK IF MORE THAN
DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWNED ONE PERCENT
- -------------------------------------- ------------------ ----------------
<S> <C> <C>
George N. Benjamin, III............... 0 --
Eric V. Carter........................ 0 --
Robert C. Gluth....................... 0 --
Donald E. Goss........................ 0 --
Robert H. Hayes....................... 0 --
Robert E. LaBlanc..................... 1,057 --
Robert A. Pritzker.................... 0 --
Robert W. Webb........................ 0 --
Neal L. Brees......................... 1,992(1) --
Daniel E. Coomer...................... 0 --
Robert H. Kalina...................... 142(2) --
Randolph K. Piechocki................. 0 --
John W. Wellhausen.................... 0 --
All Directors and Executive Officers
as a Group (13 persons).............. 3,191(1)(2) --
<FN>
- ------------------------
(1) Includes 1,992 shares of Common Stock owned by the TIE Retirement and
Savings Stock Trust over which Mr. Brees has sole voting and investment
discretion as Trustee.
(2) 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.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 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, 1994 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. 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. Six of the nominees are currently members of
the Board of Directors and were elected directors at the last annual meeting of
stockholders; Donald E. Goss and Robert H. Hayes are nominees for the first
time.
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, 1990. 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 57; 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;
3
<PAGE>
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 59; 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.
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 1990; and Vice President,
Treasurer and Director of Marmon Holdings, Inc. since prior to 1990; first
elected as Director of the Company in April 1991.
DONALD E. GOSS, Age 64; retired since April 1990; previously served as
Senior Partner, Ernst & Young, and Midwest Regional Managing Partner for Arthur
Young, public accounting firms.
ROBERT H. HAYES, Age 63; retired; Executive Vice President of Duchossois
Industries, Inc., an owner and manager of companies involved in consumer
products, freight car manufacturing, ordnance products, radio and television
stations, and thoroughbred racing, from prior to 1990 through March 31, 1995.
ROBERT E. LABLANC, Age 61; President of Robert E. LaBlanc Associates, Inc.,
financial and technical consultants, since prior to 1990; Director of each of
Storage Technology Corporation, M/A Com, Inc., Tribune Co., and Prudential-Bache
Global Fund, Inc. since prior to 1990; first elected as Director of the Company
in 1981.
ROBERT A. PRITZKER, Age 68; 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 1990. Director of Acxiom Corporation. 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 56; Vice President and Secretary of the Company since
June 1993 and June 1992 respectively; Vice President and Secretary of each of
The Marmon Group, Inc., Marmon Industrial Corporation and Marmon Holdings, Inc.
since prior to 1990, and General Counsel and Secretary of Union Tank Car Company
since prior to 1990; first elected as Director of the Company in April 1991.
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 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 Robert E.
LaBlanc and Robert A. Pritzker. Lewis V. Collens served as a member of the Audit
and Compensation Committees until his resignation from the Board of Directors in
March 1995.
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
4
<PAGE>
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 1994, the Board of Directors held four meetings and the
Compensation, Audit and Nominating Committees held one, 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 1994.
CERTAIN TRANSACTIONS
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. The amount paid pursuant to such
agreement in 1994 was $39,700. 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. See "Compensation Committee Interlocks and
Insider Participation."
EXECUTIVE COMPENSATION
The following table discloses compensation received for the fiscal years
ended December 31, 1994, 1993 and 1992 by the Company's Chief Executive Officer
and each of the other executive officers of the Company who were serving as such
on December 31, 1994, whose salary and bonus exceeded $100,000 in the fiscal
year ended December 31, 1994.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- COMPENSATION ------------
OTHER ANNUAL ------------ ALL OTHER
BONUS COMPENSATION LTIP PAYOUT COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY (A) (B) (C) (D)
- ------------------------------------------------------------ ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1994 $265,267 $30,000 -- -- $4,620
George N. Benjamin, III .................................... 1993 253,836 64,000 -- $150,000 4,468
President & Chief Executive Officer 1992 189,632 50,000 -- -- 1,301
Randolph K. Piechocki ...................................... 1994 207,532 18,000 $208,995 34,944 4,620
Executive Vice President; President, TIE Systems, Inc., a 1993 200,007 36,000 16,667 66,868 4,000
subsidiary of the Company 1992 182,000 -- 18,191 72,800 3,260
1994 109,169 20,000 99,994 -- 3,949
Robert H. Kalina ........................................... 1993 97,503 20,000 16,025 -- 750
Vice President -- Engineering and Operations 1992 -- -- -- -- --
<FN>
- ------------------------
(a) Bonuses are reported for the year in which they are earned, although such
bonuses are generally paid in the year following the year in which they are
earned.
(b) For 1994, includes $204,855 and $96,958 paid to Messrs. Piechocki and
Kalina, respectively, as moving related expenses pursuant to their
respective relocation agreements with the Company, entered into in
connection with the relocation of the Company's headquarters from
Connecticut to Kansas. For 1993, includes $16,667 and $16,025 paid to
Messrs. Piechocki and Kalina, respectively, as a retention bonus. 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.
(c) Mr. Benjamin's payment was made pursuant to a long term incentive
arrangement based upon Company growth criteria measured by return on
investment for 1992 and 1993. Mr. Piechocki's payment was made pursuant to
a 1991 Deferred Bonus Agreement, entered into in connection with the
reorganization of the Company in 1991. Such agreement has a four-year
vesting schedule that results in a portion of the aggregate amount to be
paid vesting on each annual anniversary of the agreement. For Mr. Piechocki
also includes $66,868 and $72,800 earned for 1993 and 1992 respectively.
(d) Includes contributions made by the Company of $4,620, $4,620 and $3,949
pursuant to the Company's Profit Sharing and Savings Plan, which is a
defined contribution plan, on behalf of Messrs. Benjamin, Piechocki and
Kalina, respectively, during 1994. During 1993, similar contributions by
the Company of $4,468, $4,000 and $750 were made on behalf of Messrs.
Benjamin, Piechocki and Kalina, respectively. In addition, payments of
$1,301 and $3,260 were made in 1992 to Messrs. Benjamin and Piechocki.
</TABLE>
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.
6
<PAGE>
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 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 Compensation Committee of the Board of Directors (the "Committee"), and the
Committee has complete autonomy in establishing executive officers'
compensation. For 1994, the period covered by this report, all of the members of
the Committee were non-employee directors.
EXECUTIVE COMPENSATION POLICIES
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. 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 variable bonus
opportunities based upon recommendations made by the Chief Executive Officer
(other than with respect to himself) and the Committee's own 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 Chief Executive Officer and Executive Vice
President of the Company and are focused primarily upon the achievement of
specific performance criteria that will strengthen the Company's position in its
industry. The decreased emphasis in 1993 and 1994 on bonus amounts based 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 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. Similarly, the Committee believes that
establishing long term objective 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 1994 bonuses, the
factors considered by the Committee primarily included individual experience,
the officer's level of responsibility, historical bonus levels and, 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.
7
<PAGE>
In determining compensation packages for executive officers, the Committee
considers the results of independent consultant's surveys relative to
compensation paid by companies with similar revenues and scope of operations,
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 most recent survey, which was conducted during
mid-1994, disclosed that the compensation paid by the Company to its executive
officers was below the median compensation payable by the Company's competitors
in the telecommunications industry.
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 have a significant portion of his
target compensation be based upon 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
was 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. In July 1993 and April 1994, the Chief Executive
Officer was awarded a 4.8% and 4.4% salary increase, respectively, the amounts
of which were 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 Committee awarded the
Chief Executive a $30,000 bonus for 1994, which bonus was paid to the Chief
Executive during April 1995. The principal factor considered by the Committee in
connection with determining the bonus paid to the Chief Executive was the Chief
Executive's success in establishing systems and procedures and in positioning
the Company to be able
8
<PAGE>
to respond to the Company's continually changing technological and regulatory
environment. The amount of the Chief Executive's bonus was determined in the
sole discretion of Mr. Pritzker, Chairman of the Committee, in consultation with
the other member of the Committee.
Submitted by the Compensation
Committee of
the Board of Directors.
Robert A. Pritzker
Robert E. LaBlanc
9
<PAGE>
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, 1989 and reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TIE/COMMUNICATIONS, INC. PEER GROUP S&P 500
<S> <C> <C> <C>
Dec-89 100 100 100
Dec-90 31.2 34.88 96.9
Dec-91 22.17 31.42 126.42
Dec-92 31.1 68.69 136.05
Dec-93 21.09 204.48 149.76
Dec-94 14.3 145.75 151.74
</TABLE>
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TIE/COMMUNICATIONS,
(FISCAL YEAR COVERED) INC. PEER GROUP S&P 500
- --------------------- ----------------------- ----------- -----------
<S> <C> <C> <C>
1989 100 100 100
1990 31.20 34.88 96.90
1991 22.17 31.42 126.42
1992 31.10 68.69 136.05
1993 21.09 204.48 149.76
1994 14.30 145.75 151.74
</TABLE>
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During 1994, 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, who resigned as a Board member in March 1995, none of whom
is or has been an officer of the Company or any of its subsidiaries. Neither of
the present 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 1994.
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 2,994,469 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
Registration Agreement (described and defined below) were assigned to and
assumed by MHI and the Fund, and (ii) HCR's rights and obligations pursuant to
the Credit Agreement (identified and defined below) were assigned to and assumed
by MHI. The Company has consented to each such assignment.
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 1994
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. A $75,000 facilities fee payable in 1994 in connection with
the extension of the Credit Agreement with MHI was paid in 1995. Advances under
the Credit Agreement bear interest at the per annum rate of one percent plus the
"reference rate" of Bank of America Illinois, and the Company pays a quarterly
fee of one-quarter percent per annum on the average unused amounts
11
<PAGE>
available under the Credit Agreement. During 1994, the Company had a maximum
advance under the Credit Agreement of $3.8 million, the total of which was
repaid on or before December 31, 1994. 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 1994, The Marmon Corporation held an average of approximately
$250,000 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 provided certain centralized administrative and consulting services
to the Company. The Administrative Agreement was terminable by either party on
30 days' prior written notice. In consideration of services performed during
1994, the Company paid $432,000 to MGI. Pursuant to the Administrative
Agreement, the Company also agreed to reimburse MGI for all reasonable expenses
it incurred in connection with the provision of services to the Company.
Effective January 1, 1995, upon substantially the same terms and conditions, the
Company re-entered into an Administrative Agreement with MGI wherein the same
administrative and consulting services will continue to be provided by MGI.
Currently, the Company pays MGI a monthly fee of $36,000 for each month during
which the Administrative Agreement is in effect.
SELECTION OF AUDITORS
It is proposed that the stockholders ratify the selection of the firm of
KPMG Peat Marwick LLP as the Company's independent auditors for 1995. KPMG Peat
Marwick LLP 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 1996 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 December 22, 1995.
By order of the Board of Directors
Robert A. Pritzker, Chairman
May 4, 1995
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PROXY
TIE/COMMUNICATIONS, INC. 1995 ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1995
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
1995 Annual Meeting of Stockholders of TIE/communications, Inc. to be held at
10:00 a.m. local time on Monday, June 12, 1995, at the Company's headquarters
located at 8500 West 110th Street, 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.
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
FOR ALL
FOR WITHHELD EXCEPT
1. To elect the following eight (8) directors: / / / / / /
NOMINEES: George N. Benjamin, III, Eric V.
Carter, Robert C. Gluth, Donald E. Goss,
Robert H. Hayes, Robert E. LaBlanc, Robert A.
Pritzker, Robert W. Webb. ----------------------------
Nominee Exception
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.
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of KPMG / / / / / /
Peat Marwick LLP as the independent auditors
of the Company for 1995.
3. The transaction of such other business as may properly come before the
meeting, as set forth in the Proxy Statement dated May 4, 1995.
Dated , 1995
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Signature(s)
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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.
