SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
...............................INTER-TEL, INCORORATED...........................
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $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:
...............................................................................
(2) Aggregate number of securities to which transaction applies:
................................................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
...............................................................................
(4) Proposed maximum aggregate value of transaction:
...............................................................................
(5) Total fee paid:
...............................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously Paid:
..........................................................
2) Form, Schedule or Registration Statement No.
..........................................................
3) Filing Party:
..........................................................
4) Date Filed:
..........................................................
INTER-TEL, INCORPORATED
7300 WEST BOSTON STREET
CHANDLER, ARIZONA 85226
----------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1995
------------ ---------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Inter-Tel, Incorporated (the "Company"), an Arizona corporation, will be held on
Thursday, April 27, 1995 at 10:00 a.m., local time, at the Company's corporate
offices at 7300 W. Boston Street, Chandler, Arizona, 85226, for the following
purposes:
l. To elect directors to serve for the ensuing year and until their
successors are elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 15, 1995,
are entitled to notice of and to vote at the meeting. A copy of the Company's
1994 Annual Report to Shareholders, which includes certified financial
statements, was mailed with this Notice and Proxy Statement on or about March
23, 1995, to all shareholders of record on the record date.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he has previously returned a proxy.
Sincerely,
KURT R. KNEIP,
Secretary
Chandler, Arizona
March 23, 1995
INTER-TEL, INCORPORATED
7300 WEST BOSTON STREET
CHANDLER, ARIZONA 85226
----------------------------------------
PROXY STATEMENT
----------------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished by Inter-Tel, Incorporated
("Inter-Tel" or the "Company"), for use at the Annual Meeting of Shareholders to
be held Thursday, April 27, 1995, at 10:00 a.m., local time (the "Annual
Meeting"), or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at the Company's corporate offices at 7300 West Boston Street,
Chandler, Arizona 85226 (telephone number 602-961-9000).
These proxy solicitation materials were mailed on or about March 23,
1995, to all shareholders entitled to vote at the Annual Meeting.
RECORD DATE AND SHARE OWNERSHIP
Shareholders of record at the close of business on March 15, 1995 are entitled
to notice of and to vote at the meeting. At the record date, 10,407,176 shares
of the Company's Common Stock were issued and outstanding. As of the record
date, the following persons were known by the Company to be, or may be deemed to
be, the beneficial owner of more than 5% of the Company's Common Stock:
Shares of Common Stock
Beneficially Owned
------------------------
Number Percent
Name of Shares of Total
Steven G. Mihaylo
7300 West Boston Street
Chandler, Arizona 85226 ........................ 3,801,000 36.5%
----
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109-3614 ............... 1,281,500 12.3%
----
REVOCABILITY OF PROXIES
The enclosed proxy is solicited by the Board of Directors of the
Company. Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting at the Annual Meeting for the election of
directors may either (i) cumulate such shareholder's votes and give one nominee
for director a number of votes equal to (a) the number of directors to be
elected, multiplied by (b) the number of shares of the Company's Common Stock
held by such shareholder; or (ii) distribute such shareholder's votes on the
same principle among as many nominees for director as the shareholder thinks
fit, provided that votes cannot be cast for more than six nominees. However, no
shareholder will be entitled to cumulate votes for any nominee unless such
nominee's name has been placed in nomination prior to the voting and such
shareholder, or another shareholder, has given notice at the Annual Meeting
prior to the voting for directors of the intention of such shareholder to
cumulate such shareholder's votes. On all other matters, one vote may be cast
for each share held of the Company's Common Stock.
A quorum will be present if a majority of the votes entitled to be cast
are present in person or by valid proxy. All matters to be considered and acted
upon by the shareholders at the Annual Meeting must be approved by a majority of
the shares represented at the Annual Meeting and entitled to vote. Consequently,
abstentions will have the same legal effect as votes against a proposal. In
contrast, broker "non-votes" resulting from a broker's inability to vote a
client's shares on non-discretionary matters will have no effect on the approval
of such matters.
If the enclosed proxy is properly executed and returned to the Company
in time to be voted at the Annual Meeting, it will be voted as specified on the
proxy, unless it is properly revoked prior thereto.
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation material to such beneficial owners. Proxies also may be solicited
by certain of the Company's directors, officers and regular employees,
personally or by telephone or telegram, without additional compensation.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of security holders of the Company that are intended to be
presented by such shareholders at the annual meeting of the company for the
fiscal year ending December 31, 1995 must be received by the Company no later
than November 24, 1995, in order to be included in the proxy statement and form
of proxy relating to such meeting.
INDEPENDENT AUDITORS
The independent auditors of the Company for the fiscal year ended
December 31, 1994 were Ernst & Young, LLP. A representative of Ernst & Young,
LLP will attend the annual meeting for the purpose of responding to appropriate
questions.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES
Six directors are to be elected at the meeting. Each nominee named
below is currently a director of the Company. In the event that any nominee of
the Company becomes unavailable for any reason or if a vacancy should occur
before election (which events are not anticipated) the shares represented by the
enclosed proxy may be voted for such other person as may be determined by the
holders of such proxy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them cumulatively, in their discretion, in such a manner as will assure the
election of as many of the nominees listed below as possible. In such event, the
specific nominees to be voted for will be determined by the proxy holders in
their discretion. The term of office of each person elected as a director will
continue until the next annual meeting and until his successor has been elected
and qualified.
The names of the nominees and certain biographical information relating
to the nominees are set forth below.
Director
Name of Nominees Age Position(s) Since
- ---------------- --- ----------- --------
Steven G. Mihaylo 51 Chairman, President and 1969
Chief Executive Officer
Gary D. Edens 53 Director 1994
Maurice H. Esperseth 69 Director 1986
C. Roland Haden 54 Director 1983
Norman Stout 37 Director 1994
Kathleen R. Wade 41 Director 1994
Mr. Mihaylo, the founder of the Company, has served as Chairman of the
Board of Directors of the Company since September 1983 and as Chief Executive
Officer of the Company since its formation in July 1969. Mr. Mihaylo also served
as President of the Company until December 1994 and as Chairman of the Board of
Directors from July 1969 to October 1982. Mr. Mihaylo also is a director of
MicroAge, Inc. and Microtest, Inc.
Mr. Edens was elected as a director of the Company in October 1994. He
has been a broadcasting media executive from 1970 to 1994, serving as Chairman
and Chief Executive Officer of Edens Broadcasting, Inc. from 1984 to 1994 when
that corporation's nine radio stations were sold. He presently is President of
The Hanover Companies, Inc., an investment firm. He is an active leader in
various business, civic and philanthropic organizations.
Mr. Esperseth has been a director of the Company since October 1986.
Mr. Esperseth joined the Company in January 1983 as Senior Vice
President-Research and Development, after a 32-year career with GTE, and served
as Executive Vice President of Inter-Tel from 1986 to 1988. Mr. Esperseth
retired as an officer of the Company on December 31, 1989.
Dr. Haden has been a director of the Company since 1983. Dr. Haden has
been Vice Chancellor and Dean of Engineering of Texas A&M University since 1993.
Previously, he served as Vice Chancellor of Louisiana State University from 1991
to 1993, Dean of the College of Engineering and Applied Sciences at Arizona
State University from 1989 to 1991, Vice President for Academic Affairs at
Arizona State University from 1987 to 1988, and Dean of the College of
Engineering and Applied Sciences from 1978 to 1987. Dr. Haden holds a doctoral
degree in Electrical Engineering from the University of Texas and has served on
the faculties of the University of Oklahoma and Texas A & M University.
Mr. Stout was elected a director of the Company in October 1994. Mr.
Stout has been President of Superlite Block, a manufacturer of concrete block
since February 1993. Prior thereto he was employed by Bouhem-Fields, Inc. of
Dallas, Texas, a manufacturer of crushed stone, as Chief Executive Officer from
1990 to 1993 and as Chief Financial Officer from 1986 to 1990. Previously, Mr.
Stout was a Certified Public Accountant with Coopers & Lybrand.
Ms. Wade was elected a director of the Company in April 1994. Ms. Wade
is also a director and Co-Chief Executive Officer of Continental Homes Holding
Corporation, having been employed by this multi-market production homebuilder
and mortgage company and its predecessor since 1978. Prior thereto, Ms. Wade, a
Certified Public Accountant, was employed by Ernst & Ernst, an international
accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE NOMINEES
LISTED ABOVE.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock
of the Company as of March 3, 1995, by (a) each director of the Company, (b)
each of the Named Officers (defined below) and (c) all directors and executive
officers as a group:
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
NUMBER PERCENT
NAME(6) OF SHARES OF TOTAL
- -------------------- --------- --------
Steven G. Mihaylo 3,801,000 36.5%
Gary D. Edens 2,500 (1) (5)
Maurice H. Esperseth 17,517 (1) (5)
C. Roland Haden 3,922 (1) (5)
Norman Stout 2,500 (1) (5)
Kathleen R. Wade 2,500 (1) (5)
Steven P. Nichols 22,500 (5)
Thomas C. Parise 61,250 (2) (5)
Craig W. Rauchle 12,700 (5)
W. Kris Brown 0 (5)
Kurt R. Kneip 2,000 (3) (5)
All directors and executive
officers as a group (13 persons) 3,941,299 (4) 37.9%
(1) Includes 2,500 shares under options which were exercisable on March 1,
1995, or within 60 days of that date.
(2) Includes 7,500 shares under options which were exercisable on March 1,
1995, or within 60 days of that date.
(3) Includes 1,000 shares under options which were exercisable on March 1,
1995, or within 60 days of that date.
(4) Includes 21,000 shares subject to stock options held by all directors and
executive officers as a group which are currently exercisable or which will
become exercisable within 60 days after March 1, 1995.
(5) Less than 1%.
(6) Address for the above named directors and executive officers: C/O Inter-
Tel, Incorporated, 7300 West Boston Street, Chandler, AZ 85226-3224.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings
during the fiscal year ended December 31, 1994.
The Audit Committee of the Board of Directors consisted of directors
Esperseth, Wade and Stout. The Audit Committee met twice during the last fiscal
year. This Committee recommends engagement of the Company's independent public
accountants and is primarily responsible for approving the services performed by
the Company's independent public accountants and for reviewing and evaluating
the Company's accounting principles and its system of internal controls and
financial management practices.
The Compensation and Stock Option Committee of the Board of Directors
consisted of directors Esperseth, Edens and Haden. The Committee reviews
employee compensation and makes recommendations thereon to the Board of
Directors. The Committee met three times during the year. The Committee
functions include the administration of the Company's Stock Incentive Plans. The
Committee also determines, upon review of relevant information, the fair market
value of the Company's Common Stock, the exercise price-per-share at which
options shall be granted and the employees to whom options shall be granted.
There is no nominating committee or other committee performing similar
functions.
During the fiscal year ended December 31, 1994, each director attended
all meetings of the Board of Directors and of the committee(s) on which the
director served.
DIRECTOR COMPENSATION
Each director who is not employed by the Company was paid a fee of
$3,000 for each Board of Directors meeting attended and $1,500 for each
committee meeting attended. All directors, except Mr. Mihaylo, are eligible to
participate in the Company's 1990 Directors' Stock Option Plan, under which each
director is granted options to purchase 2,500 shares of Common Stock annually at
the market price five days after the date of his or her re-election.
SECTION 16(A) REPORTING
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended 1994, all Section 16(a) filing
requirements applicable to its officers, directors and ten percent shareholders
were complied with; except that one report covering two transactions for Mr.
Maurice Esperseth and one report covering one transaction for Mr. Karl Eller
were filed late by Company representatives assisting in the filings.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth compensation paid
by the Company for services rendered during the fiscal years 1994, 1993 and 1992
by the Chief Executive Officer and the four most highly compensated executive
officers of the Company (the "Named Officers") whose salary and bonus exceeded
$100,000 in 1994.
INTER-TEL, INCORPORATED
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
SECURITIES ALL
UNDERLYING OTHER
SALARY BONUS OPTIONS COMPENSATION (1)
NAME AND POSITION YEAR ($) ($) (#) ($)
- ------------------- ------ ------- ------- ------------ ---------------
(A) (B) (C) (D) (G) (I)
Steven G. Mihaylo 1994 204,000 76,145 0 2,310
Chairman and Chief 1993 181,700 0 2,248
Executive 1992 450,000 250,000 0 2,182
Steven P. Nichols (3) 1994 170,000 124,675 0 2,310
1993 170,000 54,706 0 2,182
1992 148,846 109,277 20,000 2,182
Thomas C. Parise 1994 170,000 115,506 70,000 2,310
President & Chief 1993 170,000 (2) 2,248
Operating Officer 1992 157,692 93,778 15,000 2,182
Craig W. Rauchle 1994 170,000 72,510 50,000 2,119
Exec. Vice President 1993 170,000 (2) 2,119
Corporate Develop 1992 148,846 46,168 20,000 2,182
W. Kris Brown (4) 1994 90,000 82,943(6) 20,000 1,788
Vice President
Kurt R. Kneip (5) 1994 85,861 24,747 20,000 1,485
Vice President/CFO/ 1993 50,351 1,258
Secretary/Treasurer
- ----------------
(1) Company contribution under 401(k) Retirement Plan. In addition, each
officer was allocated common stock under the Employee Stock Ownership Plan.
(A maximum of 165 shares in 1994, 184 shares in 1993 and 94 shares in
1992.)
(2) Stock options granted in 1993 were replaced by those granted in 1994. See
"Compensation Committee Report."
(3) Mr. Nichols resigned as Senior Vice President - Direct Sales in December
1994.
(4) Mr. Brown was elected Vice President in December 1994.
(5) Mr. Kneip was elected Vice President and Chief Financial Officer in
September 1993.
(6) Includes $13,187 in interdivisional incentive awards.
No compensation is present under omitted columns (e), (f) and (h).
AGGREGATED OPTION EXERCISES IN 1994 AND
DECEMBER 31, 1994 OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, DECEMBER 31,
ACQUIRED 1994 (#) 1994 ($) (2)
ON VALUE ------------- --------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- --------------------- --------- -------- -------------- -------------
Steven G. Mihaylo (1)
Steven P. Nichols:
Exercised 5,000 33,750
Exercisable 5,000 25,000
Unexercisable 5,000 25,000
Thomas C. Parise:
Exercised 0
Exercisable 7,500 37,500
Unexercisable 73,750 106,250
Craig W. Rauchle:
Exercised 17,500 126,525
Exercisable 5,000 25,000
Unexercisable 55,000 87,500
W. Kris Brown:
Exercised 0
Exercisable 0
Unexercisable 20,000 25,000
Kurt R. Kneip:
Exercised 1,000 3,500
Exercisable 1,000 1,500
Unexercisable 22,000 28,000
- --------------------
(1) Steven G. Mihaylo has elected not to participate in the Company's stock
option plans at this time.
(2) Potential unrealized value is (i) the fair market value at December 31,
1994 ($ 7.25 per share) less the option exercise price times (ii) the
number of shares.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Officers, Information
concerning stock options granted during the fiscal year ended December 31, 1994.
OPTION GRANTS IN FISCAL 1994
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Total Price Appreciation for
Underlying Options Granted Option Term(4)
Options to Employees Exercise Expiration ----------------------
Name Granted(1) In Fiscal Year(2) Price ($/Sh) Date(3) 5%($) 10%($)
- -------------- ---------- ----------------- ------------ ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Parise 70,000 13.8% 6.00 Dec. 21, 2004 264,180 669,480
Craig W. Rauchle 50,000 9.8% 6.00 Dec. 21, 2004 188,700 478,200
W. Kris Brown 20,000 3.9% 6.00 Dec. 21, 2004 75,480 191,280
Kurt R. Kneip 20,000 3.9% 6.00 Dec. 21, 2004 75,480 191,280
- --------------
(1) Represents options granted in December 1994 in connection with the
repricing of options originally granted in 1993. Options for an aggregate
of 320,000 shares of the Common Stock were granted in this grant under the
Inter-Tel, Incorporated Long-Term Incentive Plan (the "LTIP"). In
connection with the repricing, the 1993 grants were surrendered and
terminated. See "Compensation Committee Report -- Repricing of Options."
(2) The Company granted options for 509,000 shares of Common Stock to employees
in fiscal 1994.
(3) Options may terminate before their expiration upon the termination of
optionee's status as an employee or consultant, the optionee's death or an
acquisition of the Company.
(4) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual
rate specified (5% and 10%). Annual compounding results in total
appreciation of 63% (at 5% per year) and 159% (at 10% per year). The
assumed annual rates of appreciation are specified in SEC rules and do not
represent the Company's estimate or projection of future stock price
growth. The Company does not necessarily agree that this method can
properly determine the value of an option.
</TABLE>
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION PRINCIPLES
The Company's Compensation and Stock Option Committee's
responsibilities include determining both the cash and non-cash compensation of
executive officers. Through 1994, non-cash compensation had been limited to
incentive stock option grants to purchase Company common stock at fair market
value at the grant date. All executive officers and some middle managers also
participate in such stock incentive plans. These plans are designed to retain
superior personnel and to tie their performance to the enhancement of
shareholder value.
Executive officers also participate in the Company's 401(k) Thrift
Savings Plan and the Inter-Tel Employee Stock Ownership Plan, together with all
other permanent Inter-Tel associates.
The Committee's policy regarding compensation of the Company's
executive officers is to provide generally competitive salary levels and
compensation incentives that attract and retain individuals of outstanding
ability; that recognize individual performance and the performance of the
Company; and that support the Company's primary goal -- to increase shareholder
value.
The Compensation Committee intends to continue to consider expansion of
executive compensation to include deferred cash and equity-based compensation
integrated with attainment of specific long-term performance goals and
shareholder value enhancement.
EXECUTIVE COMPENSATION PROGRAM
KEY EXECUTIVES
The total compensation program for executives, other than the Chief
Executive Officer, includes both cash and equity-based compensation. The
Committee determines the level of salary for executive officers and determines
the salary or salary ranges based upon a review of base salary levels for
comparable officer positions in similar companies of comparable size and
capitalization. Salary changes are based upon the Committee's subjective
assessment of the executive's performance and the scope and complexity of the
position held.
At the beginning of 1994, the Compensation Committee considered the
business plan of each major operating unit and of the consolidated Company.
Consideration included past and anticipated performance, new product and market
expectations, assets employed and similar factors. The Committee set income
performance levels for each unit and for the consolidated Company. Cash bonus
awards, based upon meeting or exceeding such performance levels and limited to a
percentage of base salary, were set for each executive officer.
As indicated above, annual cash bonus awards are integrated with
performance against specific profit contribution goals set forth in the
Company's business plan. Performance benchmarks are specific to the
responsibilities of the individual executive. The cash bonuses in the Summary
Compensation Table reflect the performance of the named officers against the
benchmarks established at the beginning of the year.
REPRICING OF OPTIONS
In December 1994, the Compensation Committee of the Board of Directors
determined to offer employees (including executive officers) the opportunity to
cancel outstanding stock options with exercise prices in excess of the fair
market value of the Company's Common Stock at that time, in exchange for new
options exercisable at $6.00 per share (the fair market value of the Company's
Common Stock on December 21, 1994). The new options were otherwise identical to
the canceled options except for an extension of the original vesting term. The
option exchange was an acknowledgment of the importance to the Company of having
equity incentives in the hands of key employees. The Compensation Committee
determined that stock options having exercise price significantly above the
current market price of the Company's Common Stock do not provide adequate
compensatory incentive if an employee is considering alternative employment
opportunities.
Among the options that were canceled and exchanged were options granted
in October and November 1993 in a "basket" grant for the benefit of certain
specified executive officers of the Company, representing the right to acquire
an aggregate of 320,000 shares of Inter-Tel's Common Stock. The new options have
an exercise price of $6.00 per share (the fair market value of the Company's
Common Stock on December 21, 1994) and will be exercisable on December 1, 2004,
assuming continued employment with the Company. The vesting of these options can
accelerate, however, in accordance with the following schedule:
The following table indicates the fair market value required for
exercise after the vesting date of the installment.
Minimum Fair
Market Value of
Number of Shares Date Common Stock
Exercisable Installment on or after
in Installment Vests Vesting Date
- ---------------- ----------------- ---------------
First 20% December 21, 1995 $ 6.90
Second 20% December 21, 1996 $ 7.94
Third 20% December 21, 1997 $ 9.13
Fourth 20% December 21, 1998 $ 10.49
Last 20% December 21, 1999 $ 12.07
The minimum fair market value of the Common Stock required on or after
each vesting date represents an increase of 15% over the fair market value of
the Common Stock on December 21 of the prior year. The closing price of the
Company's Common Stock as reported on the NASDAQ National Market System for
March 3, 1995 was $11.50 per share.
<TABLE>
Under the terms of the 1994 grants, a group of twelve executive
officers (other than Mr. Mihaylo, who declined participation) collectively
received the above options to purchase an aggregate of 320,000 shares of Common
Stock under the LTIP.
TEN-YEAR OPTION REPRICINGS
<CAPTION>
Number of Market
Securities Price of Exercise
Underlying Stock at Price at New Length of
Options Time of Time of Exercise Original Option
Repriced Repricing Repricing Price Term at Date
Name Date (#) ($) ($) ($) of Repricing
- ------------------------ -------- ------ ------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Parise 12/21/94 70,000 6.00 7.50-9.25 6.00 9 years
President & Chief
Operating Officer
Craig W. Rauchle 12/21/94 50,000 6.00 7.50-9.25 6.00 9 years
Exec. Vice President,
Corporate Development
W. Kris Brown 12/21/94 20,000 6.00 7.50-9.25 6.00 9 years
Vice President
Kurt R. Kneip 12/21/94 20,000 6.00 7.50-9.25 6.00 9 years
VP/CFO/Sec/Treas
</TABLE>
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's salary was determined based on a review
of the salaries of Chief Executive Officers of similar companies of comparable
size and capitalization and upon a review of the Chief Executive Officer's
performance against the Company's 1994 performance.
The Compensation Committee determined the CEO's 1994 bonus based on
similar Company consolidated earnings performance criteria used to determine
bonuses for the other executive officers.
The Chief Executive Officer, Steven G. Mihaylo, has voluntarily elected
not to participate in equity-based compensation plans at this time.
Maurice H. Esperseth, Chairman
C. Roland Haden
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG INTER-TEL, PEER GROUP AND NASDAQ MARKET
The graph below compares the cumulative total return of the Company's
common stock with the NASDAQ market index and a self-determined peer group index
from January 1, 1990 to January 31, 1995. The common stocks of the peer group
companies have been included on a weighted basis to reflect the relative market
capitalization at the end of each period shown.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[The following descriptive data is supplied in accordance with
Rule 304(d)(2) of Regulation ST]
Assumes January 1, 1989 = 100
<CAPTION>
LEGEND
SYMBOL CRSP TOTAL RETURNS INDEX FOR: 12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 1/31/95
- ------ ----------------------------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------ INTER-TEL, INCORPORATED 100.0 72.7 68.2 331.8 636.4 527.3 786.4
...------... NASDAQ STOCK MARKET (US COMPANIES) 100.0 84.9 136.3 158.6 180.9 176.9 177.9
- - - - - - - SELF-DETERMINED PEER GROUP 100.0 36.5 39.3 67.5 176.5 128.7 139.3
COMPANIES IN THE SELF-DETERMAINED PEER GROUP
COMDIAL CORP EXECUTONE INFORMATION SYS INC
MITEL CORP NORSTAN INC
NOTES:
A. THE LINES REPRESENT MONTHLY INDEX LEVELS DERIVED FROM COMPOUNDED DAILY
RETURNS THAT INCLUDE ALL DIVIDENDS.
B. THE INDEXES ARE REWEIGHTED DAILY, USING THE MARKET CAPITALIZATION ON THE
PREVIOUS TRADING DAY.
C. IF THE MONTHLY INTERVAL, BASED ON THE FISCAL YEAR-END, IS NOT A TRADING
DAY, THE PRECEDING TRADING DAY IS USED.
D. THE INDEX LEVEL FOR ALL SERIES WAS SET TO $100.0 ON 12/29/89.
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: March 23, 1995
Inter-Tel, Incorporated By KURT R. KNEIP,
(Chandler, Arizona) Secretary
<PAGE>
This Proxy is Solicited on Behalf of the Board of Directors
INTER-TEL, INCORPORATED
1995 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of INTER-TEL, INCORPORATED, an Arizona corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated March 23, 1995, and hereby appoints Kurt R. Kneip
and N. Thomas Peiffer, Jr., and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 1995 Annual Meeting of
Shareholders of INTER-TEL, INCORPORATED, to be held on April 27, 1995, at 10:00
a.m., local time, at corporate headquarters, 7300 West Boston Street, Chandler,
Arizona 85226, and at any adjournment or adjournements thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote, if then
and there personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for
(except as indicated) all nominees listed below
STEVEN G. MIHAYLO, GARY D. EDENS, MAURICE ESPERSETH, C. ROLAND HADEN,
NORMAN STOUT AND KATHLEEN R. WADE
(INSTRUCTION: To withhold authority to vote for any nominee, print that
nominee's name in the space provided below.)
- -------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND AS SAID PROXIES DEEM ADVISABLE
ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
A majority of such attorneys or substitutes as shall be present and shall act at
said meeting or any adjournment or adjournments thereof (or if only one shall be
present and act, then that one) shall have and may exercise all of the powers of
said attorneys-in-fact hereunder.
----------------------------------
Signature
----------------------------------
Signature
Dated: , 1995
---------------------
(This Proxy should be dated, signed
by the shareholder(s) exactly as
his or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both shareholders should
sign.)
