<PAGE>
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 (S) 240.14a-11(c) or (S) 240.14a-12
ALPNET, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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:
<PAGE>
ALPNET, INC.
4460 South Highland Drive, Suite #100
Salt Lake City, Utah 84124-3543
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 20, 1999
To the Shareholders of ALPNET, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders of
ALPNET, Inc. (the "Company"), will be held on Thursday, May 20, 1999, at 1:30
p.m., Mountain Standard Time, DoubleTree Hotel, 255 South West Temple, Salt Lake
City, UT, for the following purposes:
1. To elect directors for the terms specified in the enclosed Proxy Statement;
2. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the year 1999; and
3. To transact any other business which may properly come before the meeting.
Only the shareholders of record at the close of business on March 12, 1999
are entitled to receive notice of and to vote at the meeting and any
adjournments thereof. A list of shareholders as of such date will be available
for examination by any shareholder for any appropriate purpose relating to the
meeting, at the offices of the Company, for ten days prior to May 20, 1999.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company.
By Order of the Board of Directors
John W. Wittwer
Secretary
Salt Lake City, Utah
March 30, 1999
IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE MEETING.
Shareholders who are unable to attend in person SHOULD IMMEDIATELY MARK, SIGN,
DATE and RETURN the accompanying form of proxy in the enclosed self-addressed
envelope. If you attend the meeting, you may, if you wish, revoke your proxy and
vote in person. The proxy may be revoked at any time prior to its exercise in
the manner described in the Proxy Statement.
<PAGE>
ALPNET, INC.
4460 South Highland Drive, Suite #100
Salt Lake City, Utah 84124-3543
March 30, 1999
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of ALPNET, Inc. (the "Company"), of proxies to be voted
at the Annual Meeting of Shareholders of the Company to be held at the
DoubleTree Hotel, 255 South West Temple, Salt Lake City, UT, on Thursday, May
20, 1999, at 1:30 p.m., Mountain Standard Time, and at any and all adjournments
thereof. This proxy statement and the accompanying form of proxy will be first
sent or given to shareholders on or about April 6, 1999.
Your vote is important. Accordingly, you are urged to sign and return the
enclosed proxy whether or not you plan to attend the meeting. If you do attend,
you may vote by ballot at the meeting, thereby canceling any proxy previously
given.
ANY SHAREHOLDER WHO EXECUTES A PROXY MAY REVOKE IT ANY TIME BEFORE IT IS
VOTED BY NOTIFYING THE SECRETARY OF THE COMPANY, IN WRITING, OF THE REVOCATION,
OR BY DULY EXECUTING ANOTHER PROXY BEARING A LATER DATE, OR BY ATTENDING THE
MEETING AND EXPRESSING A DESIRE TO VOTE HIS OR HER SHARES IN PERSON.
The cost of this solicitation will be borne by the Company. The Company
will use its own employees to assist in the solicitation of proxies. Although
there is no formal agreement to do so, the Company may also reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to their principals.
VOTING SECURITIES
-----------------
The Company's authorized capital stock consists of 40 million shares of no
par value Common Stock and 2 million shares of Preferred Stock. As of March 12,
1999 (the "Record Date"), shares which are entitled to vote at the meeting
include: (i) 24,333,172 shares of Common Stock; and (ii) 87,339 shares of
series D Preferred Stock which have voting rights as if the preferred shares had
been converted to common shares at the ratio of nine common shares for each
preferred share, for a total equivalent number of 786,051 common shares. Only
those shareholders of record at the close of business on the Record Date will be
entitled to vote. Each shareholder of Common Stock will be entitled to one vote
for each common share owned. The shareholder of series D Preferred Stock will
be entitled to nine votes for each series D preferred share owned. The
affirmative vote of a majority of shares represented at the meeting will be the
act of the shareholders. Unless contrary instructions are given, all shares
represented by the persons named in the enclosed form of proxy will be voted
"FOR" each of the proposals, and otherwise in the discretion of any of the
persons acting as proxies for such other business as may properly come before
the meeting.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth, as of March 12, 1999, the beneficial
ownership of the Company's Common Stock and Common Stock equivalents by (i) each
person known to the Company to be the beneficial owner of more than five percent
of the outstanding shares of Common Stock, and (ii) all directors and executive
officers as a group. Common Stock equivalents include Preferred Stock which can
be converted to Common Stock at a ratio of nine common shares for each Preferred
Share of series D Preferred Stock and shares of Common Stock issuable under
stock options granted and exercisable within 60 days of March 12, 1999.
Detailed information regarding voting securities beneficially owned by directors
and director nominees is disclosed under Election of Directors, below. The
---------------------
information shown below was furnished to the Company by the respective persons
listed.
Shares of
Common Stock
and Equivalents Percent of
Beneficially Common Stock
Name and Address Owned as of and Equivalents
of Beneficial Owner March 12, 1999 /(1) (2)/ Outstanding /(1) (2)/
- --------------------------------------------------------------------------------
H. F. Boeckmann, II 4,401,974 /(3)/ 18.0%
15505 Roscoe Boulevard
North Hills, CA 91343
Michael F. Eichner 1,385,000 /(4)/ 5.5%
69A Parkhall Road
West Dulwich
London SE21 8EX
United Kingdom
All executive officers and 2,838,705 /(5)/ 11.3%
directors as a group
(9 persons)
- ------------------
(1) The persons named in this table have sole voting power with respect to all
shares of Common Stock and Common Stock equivalents beneficially owned by
them, subject to joint tenancy and community property laws, where
applicable, and the information contained in the notes to this table. The
number of shares and the percentages indicated in the table have been
computed assuming that each shareholder has exercised all available options
to acquire Common Stock and has converted all Preferred Stock to Common
Stock and that no other shareholder has made the same exercise or
conversion, thus indicating the maximum number and percentage of share
ownership possible. The Preferred Stock has voting rights as if the
Preferred Stock has been converted to Common Stock, at the ratio of nine
common shares for each preferred share of series D Preferred Stock.
Holders of the Preferred Stock have these voting rights even if the
Preferred Stock is never converted to Common Stock.
(2) These amounts do not include shares reserved for issuance pursuant to
exercise of stock options granted under the Company's Stock Option Plans
which are not exercisable within 60 days of March 12, 1999.
(3) Includes 20,000 shares of Common Stock owned by Mr. Boeckmann's immediate
family, as to which he disclaims beneficial ownership.
(4) Includes 786,051 shares of Common Stock issuable upon the exercise of the
right to convert series D Preferred Stock which right is exercisable within
60 days of March 12, 1999.
(5) Includes: (i) 1,991,654 shares of Common Stock issued and outstanding; and
(ii) 786,051 shares of Common Stock issuable upon the exercise of the right
to convert series D Preferred Stock which right is exercisable within 60
days of March 12, 1999 and (iii) 59,000 options to acquire Common Stock
which right is exercisable within 60 days of March 12, 1999.
2
<PAGE>
ELECTION OF DIRECTORS
---------------------
(Proposal No. 1)
----------------
At the meeting, seven directors are to be elected to hold office for one
year or until their successors shall be elected and qualified or until they
resign. Unless authority is withheld, it is the intention of the persons named
in the enclosed form of proxy to vote "FOR" the election of the persons
identified as nominees for director in the table below. If the candidacy of any
one or more of such nominees should, for any reason, be withdrawn, the proxies
will be voted "FOR" such other person or persons, if any, as may be nominated by
the Board of Directors. The Board of Directors has no reason to believe that
any nominee named herein will be unable or unwilling to serve. The election of
each director requires the affirmative vote of not less than a majority of the
issued and outstanding Common Stock and Preferred Stock represented and entitled
to vote at the meeting. Each share of Common Stock will be entitled to one vote
for each director and each share of series D Preferred Stock will be entitled to
nine votes for each director.
No arrangement or understanding exists between any director or executive
officer and any other person pursuant to which any director or executive officer
was nominated or is to be elected as a director or officer.
The Board of Directors recommends a vote "FOR" each of the nominees for
Director of the Company.
3
<PAGE>
INFORMATION ABOUT DIRECTORS AND NOMINEES FOR DIRECTOR
The following table sets forth the name and age of each nominee, the
position and office with the Company held by each nominee, the year each first
became a director, and the beneficial ownership of stock in the Company of each.
The information below the table sets forth the principal occupation, employment
and business experience of each nominee for the past five years.
<TABLE>
<CAPTION>
Shares of
Common Stock
and Equivalents Percent of
First Beneficially Owned Common Stock
Name, Address Became As of and Equivalents
and Position Age a Director March 12, 1999/(1) (2)/ Outstanding/(1) (2)/
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nominees for Director
Michael F. Eichner 53 1988 1,385,000 /(3)/ 5.5%
69A Parkhall Road
West Dulwich
London SE21 8EX
United Kingdom
Chairman
Jaap van der Meer 44 1996 1,203,246 4.9%
Havengebouw
De Ruyterkade 7
1013 AA Amsterdam
The Netherlands
President and CEO
John W. Wittwer 53 1993 46,834 *
4460 South Highland Drive
Suite #100
Salt Lake City, UT 84124
Vice President Finance
and CFO
James R. Morgan 52 1997
1273 North Nola Drive (Former director
Centerville, UT 84014 1990 - 1995)
Donald N. Reeves 62 1997 9,725 *
3361 N. Calle Tortosa
Tucson, AZ 85750
Jacqueline M. Simkin 56 1998 134,900 *
200 S.E. First Street
Suite 703
Miami FL 33131
Herwig M. Langohr 55 1998 15,000 *
23 Rue Marechal Foche
F-77780 Bourron Marlotte
France
</TABLE>
_____________________
* Less than 1%
4
<PAGE>
(1) The persons named in this table have sole voting power with respect to all
shares of Common Stock and Common Stock equivalents beneficially owned by
them, subject to joint tenancy and community property laws, where
applicable, and the information contained in the notes to this table. The
number of shares and the percentages indicated in the table have been
computed assuming that each director or nominee has exercised all
available options to acquire Common Stock and has converted all Preferred
Stock to Common Stock and that no other shareholder has made the same
exercise or conversion, thus indicating the maximum number and percentage
of share ownership possible.
(2) These amounts do not include shares reserved for issuance pursuant to
exercise of stock options granted under the Company's Stock Option Plans
which are not exercisable within 60 days of March 12, 1999.
(3) Includes 786,051 shares of Common Stock issuable upon the exercise of the
right to convert series D Preferred Stock which right is exercisable within
60 days of March 12, 1999.
MICHAEL F. EICHNER. Mr. Eichner has served as a director of the Company since
May 1988 and is currently the Chairman of the Board of Directors. He served as
Executive Chairman of Interlingua TTI Group Ltd. of London England (then the
largest translation Company in Europe) from 1985 until March 1988 when
Interlingua was acquired by ALPNET, Inc. He joined Interlingua in 1978 and
served as its Managing Director until 1984 when Interlingua merged with TTI
Group and he assumed the position of Executive Chairman. Mr. Eichner is also
Chairman of Eurosis Group P.L.C. of London, England, a company involved in
providing leased equipment and personnel to the international conference and
meetings industry.
JAAP VAN DER MEER. Mr. Van der Meer has served as a director since May 1996 and
as President of ALPNET since August 1997. He was elected CEO in November 1998
and serves as a member of the Company's Corporate Executive Team. Mr. Van der
Meer joined the Company in September 1995 assuming responsibilities for
strategic development and worldwide sales and marketing. Before Mr. Van der
Meer joined ALPNET, he was the CEO of the INK Network, a leading international
translation/localization company. Mr. Van der Meer founded INK in 1980 and he
and his partners sold the company to R.R. Donnelley & Sons Company in 1993. At
the end of 1994, Mr. Van der Meer left Donnelley to pursue his interests in
combining telecommunications with language services and worked on various
consultancy projects before joining ALPNET. Mr. Van der Meer received a degree
in linguistics and literature at the University of Amsterdam.
JOHN W. WITTWER. Mr. Wittwer is one of the founders of the Company and has
served as a director of the Company since May 1993. He is currently serving as
Vice President Finance and Chief Financial Officer and as a member of the
Company's Corporate Executive Team. He has been employed by the Company since
1982 serving in various positions including Executive Vice President, Chief
Executive Officer, Vice President of Finance and Administration, Treasurer and
Director of Administration. Mr. Wittwer is a Certified Public Accountant.
JAMES R. MORGAN. Mr. Morgan is an attorney currently serving as an officer and
director of a closely-held private venture capital firm. Mr. Morgan previously
served as a director of the Company from May 1990 to December 1995 and as
Chairman of the Board from May 1993 to December 1995. He was re-elected to the
Board in May 1997. Mr. Morgan joined the Board of Directors of Beehive
International in 1996. From March 1987 to September 1995, Mr. Morgan was an
officer of NFT Ventures, Inc., a private investment company which was a
principal shareholder of the Company. Mr. Morgan holds a B.S. degree from
Brigham Young University and a J.D. degree from the University of Utah.
5
<PAGE>
DONALD N. REEVES. Mr. Reeves, who has served as a director since August 1997,
retired in 1996 as Senior Vice President of Technology Implementation with R.R.
Donnelley & Sons Company. During his 38-year career with R.R. Donnelley, he was
president of several divisions including Telecommunications, Electronic
Graphics, and Financial Printing. During this time, Mr. Reeves also structured
acquisitions of key translation and localization companies.
JACQUELINE M. SIMKIN. Ms. Simkin, who has served as a director since May 1998,
has been Chairwoman and Chief Executive Officer of Simkin Management, Inc.,
since 1996 and Co-Chairwoman and Co-Chief Executive Officer of The Denver Brick
Company from 1994 to April 1998. She is now Chairwoman and CEO of The Denver
Brick Company. Ms. Simkin was a member of the Board of Directors and member of
the Loan and Executive Committee of Intercontinental Bank, Miami, Florida from
1987 to 1995. She has also been an advisor to the Board of Directors of
Thompson's Nutritional Technology, Inc. (aka Thompson's Pet Pasta Products,
Inc.) since 1994, and has been a board member since November 1998.
HERWIG M. LANGOHR. Mr. Langohr, who has served as a director since May 1998, is
Professor of Finance and Banking at INSEAD (Fountainebleu, France), which he
joined in 1976, specializing in corporate finance and financial services. He
also taught at The Wharton School (1982-83), The Darden School (1991-92) and
the University Konstanz in Germany (1992). Mr. Langohr was Associate Dean, MBA
and member of the Executive Committee at INSEAD from 1992-95. He joined the
Board of Directors of INSEAD Research in 1997 and of INSEAD Foundation in 1998.
Mr. Langohr is also serving as a director of KBC Bank and Insurance Holding NV.
He has been a Visiting Scholar at the Board of Governors of the Federal Reserve
System (1982-83) and advisor to the Services of the Prime Minister of the
Belgian Government (1978-79). He is a regular consultant in corporate finance
and business strategy. Mr. Langohr, who is a Belgian citizen and French
resident, holds MBA and DBA degrees from Indiana University (1978) and a Doctor
of Law degree from the K.U. Leuven (Belgium 1967).
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
The Board of Directors has the responsibility of establishing broad
corporate policies and overseeing the overall performance of the Company.
Regular meetings of the Board of Directors are held each quarter, and special
meetings are scheduled when required. There were four regular meetings of the
Board of Directors during 1998. All directors attended all of the regular
meetings.
The Company has a standing Audit Committee of the Board of Directors which
is currently comprised of Messrs. Eichner, Morgan and Ms. Simkin. The principal
functions of the Audit Committee are to consider and recommend the selection of
independent public accountants to audit the Company's financial statements; to
review the Company's internal accounting policies and controls; to review with
the independent public accountants the scope and content of their audit and
their recommendations and comments with respect to internal controls and
accounting systems; and to reinforce the independence of the independent public
accountants. The Audit Committee held one meeting in 1998.
The Company also has a standing Compensation Committee, currently comprised
of Messrs. Eichner, Reeves and Langohr. The functions of the Compensation
Committee include reviewing and making recommendations concerning the
compensation of executive officers, the granting of stock options to employees,
and the compensation policies of the Company. The Compensation Committee
6
<PAGE>
held one meeting in 1998.
COMPENSATION OF DIRECTORS
During 1998, the chairman was paid $12,500 each quarter and the other non-
employee members of the Board of Directors were paid a quarterly fee of $2,000.
In total, $78,000 of directors' fees were paid in 1998. In 1998, Mr. Langohr
and Ms. Simkin were each granted options to purchase 30,000 shares of Common
Stock under the terms of the 1983 Non-Statutory Stock Option Plan (see
"Compensation Pursuant to Plans" elsewhere in this Proxy Statement). These
options have an exercise price of $4.53 per share with vesting dates ranging
from May 1999 through May 2003. Directors who are also employees of the Company
did not receive any compensation related specifically to their service on the
Board.
EXECUTIVE OFFICERS
In addition to the executive officers who also serve as Directors, the following
also serve as executive officers of the company.
GERALDINE LIM, 45. Vice President Operations and Chief Operating Officer. Ms.
Lim serves as a member of the Company's Corporate Executive Team. She was born
and educated in Singapore. Her career started in the travel industry in the Far
East. Thereafter, she joined the Singapore Foreign Service. Her overseas
diplomatic exposure included assignment to Hong Kong as head of the Consular and
Administrative Department of the Singapore Commission. She was a freelance
writer, translator and journalist for three years before she joined ALPNET in
1984. Ms. Lim rose to become Director of ALPNET Asia responsible for operations
in Singapore, Korea, China, Japan, and Thailand. She is fluent in English and
four major Chinese dialects other than Mandarin. She is also fluent in Japanese
and Malay.
PAULA B. SHANNON, 38. Vice President, International Sales and Marketing. Ms.
Shannon serves as a member of the Company's Corporate Executive Team. She
previously served as International Director of IT Services for ALPNET. She
graduated as a faculty scholar from McGill University, Montreal, Canada with a
B.A. in Russian and German and a minor in Linguistics. Prior to joining ALPNET
in 1996, she served in a series of key positions with Berlitz International in
both the U.S. and in Canada. Ms. Shannon is fluent in English, French and Dutch
and functional in German, Spanish and Russian.
7
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following Summary Compensation Table sets forth the cash compensation
and certain other components of the compensation of persons serving in the
position of President of the Company during 1998, and the other most highly
compensated executive officers (named executives) of the Company, whose total
annual salary and bonus exceeded $100,000 in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
| Long-Term |
| Compensation|
| ---------- |
Annual Compensation | Awards |
-------------------------------------------| ---------- |
Other | |
Annual | Securities |
Compen- | Underlying |
Name and Salary/(1)/ Bonus/(2)/ sation/(3)/| Options |
Principal Position Year ($) ($) ($) | (#) |
- --------------------------------------------------------------------------------------|-------------|
<S> <C> <C> <C> <C> | <C> |
Jaap van der Meer 1998 $149,643 | |
President and Chief Executive Officer 1997 100,669 | |
President (August 1997-October 1998) 1996 115,800 6,000 1,000 | |
Vice President of Sales and Marketing | |
(through August 1997) | |
| |
John W. Wittwer 1998 150,810 1,810 | |
Chief Financial Officer 1997 137,100 300 | 100,000 |
Vice President 1996 125,500 4,700 2,200 | |
Executive Vice President | |
(through October 1998) | |
| |
Paula B. Shannon 1998 147,470 | 50,000 |
Vice President International Sales and | |
Marketing | |
International Director of IT Services | |
(through October 1998) | |
</TABLE>
- ------
(1) Certain of the amounts presented above were paid in foreign currencies and
converted into US dollars at the foreign currency exchange rates prevailing
during the respective periods.
(2) The amounts shown represent what was earned in the respective years.
Certain of these amounts were paid in subsequent years.
(3) Represents directors' fees earned and the Company's contributions to
retirement plans for the respective years.
8
<PAGE>
OPTION GRANTS IN 1998
The following table sets forth certain information concerning options to
purchase Common Stock granted during 1998 to the executives named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------------------------
Number % of Total
of Securities Options
Underlying Granted
Options to Employees Exercise Expiration Grant Date
Name Granted (#)/(1)/ in 1998 Price ($/Sh)/(2)/ Date Value($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paula B. Shannon 50,000 9.8% 1.67 November 19, 2004 83,500
</TABLE>
- ------------------
(1) All options granted and reported in this table have been granted under the
terms of the 1983 Non-Statutory Stock Option Plan as described in the
section "Compensation Pursuant to Plans" elsewhere in this Proxy Statement.
(2) Exercise price was equal to the fair market value on the date of grant,
determined by calculating the average of bid and ask prices of Common Stock
as reported by the Nasdaq Stock Market.
AGGREGATED OPTION EXERCISES IN 1998
AND DECEMBER 31, 1998 OPTION VALUES
The following table sets forth certain information concerning the exercise
in 1998 of options to purchase Common Stock by the Executives named in the
Summary Compensation Table and the unexercised options to purchase Common Stock
held by such individuals at December 31, 1998.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Value Options at Options at
on Exercise Realized/(1)/ 12/31/98 (#) 12/31/98($)/(2)/
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jaap van der Meer 250,000 882,812 0 / 150,000 0 / 135,900
John W. Wittwer 44,334 162,789 39,000 / 266,666 45,084 / 174,433
Paula B. Shannon 0 / 200,000 0 / 32,400
</TABLE>
- ------------------
(1) The value realized equals the aggregate amount of the excess of the fair
market value on the date of exercise (the closing price of Common Stock as
reported by the Nasdaq Stock Market for the exercise date) over the relevant
exercise price.
(2) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option. The value is
calculated based on the aggregate amount of the excess of the closing price
of Common Stock as reported by the Nasdaq Stock Market for December 31, 1998
($1.66) over the relevant exercise prices.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board of Directors concerning the overall compensation
for the Company's executive officers. The Committee also oversees the granting
of stock options to all executives and employees of the Company.
The Company seeks to compensate executives at competitive levels, considering
the overall size and growth rate of the Company, the complexity of the Company's
operations (especially as it relates to its international operations), the
Company's general financial performance (with a primary focus on levels of
profitability), and each executive's individual contribution to meeting the
Company's goals and objectives. The Company does not set specific, identified
financial benchmarks to use in determining base salaries or other compensation
of its executives. The Company's compensation is designed to attract and
maintain highly qualified executives.
The primary components of executive compensation are base salary, related fringe
benefits such as insurance plan participation (on substantially the same terms
as available to all other employees), and stock option grants. The Company
discontinued its granting of incentive cash bonuses in 1997 and thus bonuses
were not part of the compensation for any executive in 1998.
Base Salary. Each executive receives a base salary, denominated in the local
currency of the country in which the executive resides. The base salaries for
1998 were approved by the Board of Directors in a meeting in November 1997.
Base salary adjustments for the Company's executive officers for the year 1998
consisted of increases in the range of 10% to 58% as compared to 1997. These
increases were determined based on the subjective collective judgements of the
Compensation Committee members, using the factors discussed above as guidelines
and included a significant base salary adjustment for Mr. Van der Meer, the
Company's President, who did not receive an increase in base salary at the time
of his appointment as President in August 1997.
Stock Option Grants. A significant component of each executive's total
compensation consists of the receipt of stock options. One purpose of the
granting of stock options is to provide an incentive for and to reward
individual performance that increases long-term shareholder value. Certain of
the Company's executives were granted options in 1995 which options are
currently covered by the Company's 1996 Executive Stock Option Plan and have
vesting dates ranging from June 1998 through June 2000. During 1998, Ms.
Shannon was granted an option for 50,000 shares of Common Stock covered by the
Company's 1983 Non-Statutory Stock Option Plan with vesting dates ranging from
November 1999 through November 2003.
From January 1998 to May 1998, the Compensation Committee consisted of Michael
F. Eichner, James R. Morgan and Donald N. Reeves. From May 1998 to December
1998 the committee consisted of Michael F. Eichner, Donald N. Reeves and Herwig
M. Langohr. All final decisions of the Compensation Committee were approved
unanimously by the committee and subsequently ratified by the Board of
Directors.
Compensation Committee
Michael F. Eichner
Donald N. Reeves
Herwig M. Langohr
10
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq Stock Market (U.S.) Index and the Quantum MicroCap
Benchmark. This graph assumes that $100 was invested on December 31, 1993 in
the Company's Common Stock, the Nasdaq Stock Market (U.S.) Index, and the
Quantum MicroCap Benchmark.
The Quantum MicroCap Benchmark was chosen because there is no published
industry index for the industry in which the Company operates nor are there any
public companies in the Company's industry from which to make a selection of
peer issuers. The Quantum MicroCap Benchmark is an index of approximately 4,000
companies with an average market capitalization of approximately $170,000,000.
The Company's current average market capitalization is approximately
$56,000,000.
COMPARISON OF STOCK PRICES FOR
ALPNET, INC., THE NASDAQ STOCK MARKET (U.S.),
AND QUANTUM MICROCAP BENCHMARK
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPH
<TABLE>
<CAPTION>
Quantum
MicroCap
ALPNET, Inc. NASDAQ Benchmark
------------ ------ ---------
<S> <C> <C> <C>
1993 100 100 100
1994 37 98 94
1995 242 138 126
1996 213 170 148
1997 275 209 184
1998 221 293 170
</TABLE>
There can be no assurance about the Company's stock performance in future
periods. The Company does not make nor does it endorse any predictions as to
the future stock price performance.
The immediately preceding sections entitled "Compensation Committee Report
on Executive Compensation" and "Stock Price Performance Graph" do not constitute
soliciting material for purposes of Rule 14a-9 of the Securities and Exchange
Commission, may not be deemed to have been filed with the Commission for
purposes of Section 18 of the Securities Exchange Act of 1934, and are not to be
incorporated by reference into any other filing made with the Commission by the
Company.
11
<PAGE>
COMPENSATION PURSUANT TO PLANS
1983 Non-Statutory Stock Option Plan
- ------------------------------------
The Company has reserved 2,152,323 shares of Common Stock for issuance
under its 1983 Non-Statutory Stock Option Plan, as amended (the "1983 Plan").
The 1983 Plan is administered by the Board of Directors (with recommendations
from the Compensation Committee), which selects the optionees and determines:
(i) the number of shares subject to each option; (ii) when the option becomes
exercisable; (iii) the exercise price; and (iv) the duration of the option,
which cannot exceed ten years from the date of the grant. The options granted
pursuant to the Company's 1983 Plan are reserved for issuance to key employees,
executive officers, directors and independent contractors of the Company and its
subsidiaries. Generally, the options expire if employment is terminated and are
non-transferable except by will or the laws of descent and distribution as to
accrued or vested portions. In 1988, the initial term of the 1983 Plan expired.
The Board of Directors has extended the term of the 1983 Plan to 2008.
The Board of Directors may also grant stock appreciation rights ("SAR's")
in connection with specific options granted under the 1983 Plan. Each SAR
entitles the holder to either cash (in an amount equal to the excess of the fair
market value of a share of the Company's Common Stock over the option price of
the related option) or Common Stock (with the number of shares issued being
determined by dividing the SAR's cash value by the fair market value of a share
on the SAR exercise date). SAR's may be granted at the same time options under
the 1983 Plan are granted and to holders of previously granted options. No
SAR's have been granted under the 1983 Plan.
At December 31, 1998, 305,331 shares of Common Stock had been issued upon
exercise of options granted under the 1983 Plan, and options to purchase an
aggregate of 1,051,800 shares of the Company's Common Stock (net of exercises
and cancellations) were outstanding under the 1983 Plan. Based on 2,152,323
shares currently reserved for issuance and 1,357,131 shares issued or issuable
upon exercise of options granted under the 1983 Plan, options for an additional
795,192 shares could be granted in the future, under terms of the Plan.
1996 Executive Stock Option Plan
- --------------------------------
The Company has reserved 2,950,000 shares of Common Stock for issuance to
key executives under its 1996 Executive Stock Option Plan (the "1996 Plan").
The 1996 Plan is administered by the Board of Directors (with recommendations
from the Compensation Committee), which selects the optionees and determines;
(i) the number of shares subject to each option; (ii) when the option becomes
exercisable; (iii) the exercise price; and (iv) the duration of the option,
which cannot exceed September 1, 2000. The options covered by this plan expire
September 1, 2000 or when the employee or director terminates employment with
the Company, if sooner, and are non-transferable except by will or the laws of
descent and distribution as to accrued or vested portions. The 1996 Plan
provides for no additional grants of options unless some of the previously
granted options are forfeited or terminated.
At December 31, 1998, 909,000 shares of Common Stock had been issued upon
exercise of options granted under the 1996 Plan, and options to purchase an
aggregate of 1,756,000 shares of the Company's Common Stock (net of exercises
and cancellations) were outstanding. Based on 2,950,000 shares currently
reserved for issuance and 2,665,000 shares issued or issuable upon exercise of
options granted under the 1996 Plan, options for an additional 285,000 shares
could be granted in the future, under terms of the Plan.
12
<PAGE>
Profit Sharing 401(k) Plan
- --------------------------
In January 1986, the Company adopted a contributory profit sharing plan
("Plan") which is designed to meet the requirements for qualification under
Section 401(k) of the Internal Revenue Code. The adoption of the Plan was
approved by the Board of Directors in November 1985. Under the provisions of
the Plan, covered U.S. employees may elect a salary reduction and have amounts
equal to the reduction of salary contributed to the Plan for their benefit,
which contribution is excluded from the employees' taxable income. The Company
has discretionary authority to make additional contributions to the Plan for the
benefit of employees. The total of the Company's deductible annual contribution
may not exceed 20% of the employee's annual compensation, reduced by such
employee's elective deferral of compensation, which may not exceed $10,000 per
annum. Company contributions to the Plan were $50,680, $10,450, and $4,700 in
1998, 1997 and 1996, respectively, of which a total of $1,810 was for the
benefit of Mr. Wittwer in 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the section, "Compensation Pursuant to Plans" under
the heading "1996 Executive Stock Option Plan" for information related to
options granted to certain officers and directors.
LITIGATION INVOLVING EXECUTIVE OFFICERS AND DIRECTORS
During the past five years, no executive officer or director of the Company
has been, nor is presently, involved in any litigation material to such
executive officer's or director's ability to serve as such or as to his
integrity.
RATIFICATION OF SELECTION OF AUDITORS
-------------------------------------
(Proposal No. 2)
----------------
Subject to ratification by the shareholders, the Board of Directors, upon
the recommendation of the Audit Committee, has selected the accounting firm of
Ernst & Young LLP to serve as auditors of the financial records of the Company
and its subsidiaries for the fiscal year ending December 31, 1999. The
accounting firm of Ernst & Young LLP, and its predecessors, has been the
independent auditors of the Company since 1983.
One or more representatives of Ernst & Young LLP are expected to be present
at the annual meeting and will have an opportunity to make a statement and
respond to appropriate questions.
The selection of Ernst & Young LLP will be submitted for ratification by
the shareholders at the annual meeting. The Board of Directors recommends a
vote "FOR" ratification of the selection.
VOTE NECESSARY FOR APPROVAL
---------------------------
A majority of the outstanding shares of Common Stock and Common Stock
equivalents of the Company represented at the annual meeting shall constitute a
quorum of the shareholders. Each matter to be voted upon at the annual meeting
for which this proxy statement is provided will be approved and adopted if at
least a majority of all outstanding shares of Common Stock and Common Stock
equivalents of the Company voted at the meeting are cast in favor of such
approval and adoption.
13
<PAGE>
SHAREHOLDER PROPOSALS
---------------------
Any shareholder proposals intended to be presented at the Annual Meeting of
Shareholders to be held in the year 2000 must be received by the Company by
December 1, 1999 to be considered by the Company for inclusion in the Company's
proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
-------------
Neither the Company nor any of the persons named as proxies know of matters
other than those stated above to be presented and voted on at the annual
meeting. However, if any other matters should properly come before the meeting,
it is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment on such matters.
ANNUAL REPORT
-------------
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1998 includes the Company's Annual Report on Form 10-K and has been
mailed with this proxy statement to shareholders of record as of March 12, 1999,
but it is not deemed a part of the proxy soliciting materials.
14
<PAGE>
FINANCIAL STATEMENTS
--------------------
Financial statements for the Company and its subsidiaries are included in
the Annual Report on Form 10-K for the Year 1998, which is being furnished to
all shareholders along with this Proxy Statement.
EXHIBITS TO THE FORM 10-K WILL BE FURNISHED ONLY UPON SPECIFIC REQUEST AND
UPON PAYMENT OF A FEE REPRESENTING THE EXPENSES OF FURNISHING ANY SUCH EXHIBITS.
By Order of the Board of Directors
John W. Wittwer
Secretary
Salt Lake City, Utah
March 30, 1999
15
<PAGE>
PROXY FOR 1999 ANNUAL MEETING
OF SHAREHOLDERS OF
ALPNET, INC.
4460 South Highland Drive, Suite #100
Salt Lake City, Utah 84124-3543
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
-----------------------------------------------------------
The undersigned hereby appoints James R. Morgan and John W. Wittwer, and each of
them, as proxies of the undersigned, with full power of substitution and
revocation to each of them, for and in the name of the undersigned to vote all
shares of Common Stock of ALPNET, Inc. (the "Company"), which the undersigned
would be entitled to vote if personally present at the Company's Annual Meeting
of Shareholders to be held on May 20, 1999, and at any adjournment or
adjournments thereof, with all the powers the undersigned would possess if
personally present, with authority to vote (i) as specified by the undersigned
below, and (ii) in the discretion of any proxy upon such other business as may
properly come before the meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS
---------------------
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
[INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the
nominee's name in the list below.]
Michael F. Eichner
Jaap van der Meer
John W. Wittwer
James R. Morgan
Donald N. Reeves
Jacqueline M. Simkin
Herwig M. Langohr
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
-----------------------------------------------------------------------
AUDITORS OF THE COMPANY.
-----------------------
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AND OTHERWISE IN THE DISCRETION OF ANY OF THE
PROXIES.
Please sign exactly as your name
appears on the label to the left.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
________________________________
________________________________
________________________________
Shareholder Signature
________________________________
Shareholder Signature (Joint
Signature if Applicable)
PLEASE VOTE, SIGN, DATE, AND
RETURN THIS PROXY USING THE
ENCLOSED ENVELOPE.
DATED this _______ day of ________________ 1999.
1
