<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Syntellect 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF SYNTELLECT APPEARS HERE]
1000 Holcomb Woods Parkway, Suite 410A
Roswell, Georgia 30076
-------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
-------------------------------------
To the Stockholders:
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of Syntellect
Inc., a Delaware corporation (the "Company"), will be held on Thursday, May
20, 1999, at 9:30 a.m., Atlanta, Georgia time, at the Crowne Plaza Ravinia,
4355 Ashford-Dunwoody Road, Atlanta, Georgia 30346, for the following
purposes:
1. To elect two directors to the Board of Directors to serve for a three-
year term; and
2. To transact such other business as may properly come before the Annual
Meeting.
Each outstanding share of the Company's common stock entitles the holder of
record at the close of business on March 22, 1999 to vote at the Annual
Meeting or any adjournment thereof. Shares can be voted at the Annual Meeting
only if the holder is present or represented by proxy. A copy of the Company's
1998 Annual Report to Stockholders, which includes certified financial
statements, is enclosed. Management cordially invites you to attend the Annual
Meeting.
By Order of the Board of Directors
/s/ Peter W. Pamplin
Peter W. Pamplin
Secretary
Atlanta, Georgia
April 14, 1999
IMPORTANT
STOCKHOLDERS ARE EARNESTLY REQUESTED TO SIGN, DATE, AND MAIL THE ENCLOSED
PROXY. A POSTAGE-PAID ENVELOPE IS PROVIDED FOR MAILING IN THE UNITED STATES.
<PAGE>
1000 Holcomb Woods Parkway, Suite 410A
Roswell, Georgia 30076
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is furnished to the stockholders of Syntellect Inc., a
Delaware corporation ("Syntellect" or the "Company"), in connection with the
solicitation of proxies on behalf of the Board of Directors of the Company for
use in voting at the Annual Meeting of Stockholders to be held on Thursday,
May 20, 1999, at 9:30 a.m., Atlanta, Georgia time, at the Crowne Plaza
Ravinia, 4355 Ashford-Dunwoody Road, Atlanta, Georgia 30346 (the "Annual
Meeting"), and at any adjournment or adjournments thereof. The proxy materials
were mailed on or about April 14, 1999, to stockholders of record at the close
of business on March 22, 1999 (the "Record Date"). The Company had 13,441,763
shares of common stock outstanding, par value $.01 per share ("Common Stock"),
as of the close of business on the Record Date. Only stockholders of record on
the Record Date will be entitled to vote at the Annual meeting. The holders of
a majority of the voting power of the issued and outstanding Common Stock
entitled to vote, present in person or represented by proxy, shall constitute
a quorum at the Annual Meeting.
Each stockholder is entitled to one vote per share for the election of
directors as well as on all other matters that may be properly considered at
the Annual meeting. If the accompanying proxy is signed and returned, the
shares represented thereby will be voted in accordance with any directions on
the proxy. A person giving the enclosed proxy has the power to revoke it at
any time before it is exercised by: (i) attending the Annual Meeting and
voting in person; (ii) duly executing and delivering a proxy bearing a later
date; or (iii) sending written notice of revocation to the Secretary of the
Company at its principal executive offices located at 1000 Holcomb Woods
Parkway, Suite 410A, Roswell, Georgia 30076.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting and will determine
whether or not a quorum is present. The affirmative vote of a plurality of the
shares present in person or by proxy and entitled to vote is required to elect
directors. With respect to other matters submitted at the Annual Meeting, the
approval of any such matter would require a greater number of votes cast
favoring the matter than the number of votes cast opposing such matter. Shares
held by nominees for beneficial owners will be counted for purposes of
determining whether a quorum is present if the nominee has the discretion to
vote on at least one of the matters presented, even if the nominee may not
exercise discretionary voting power with respect to other matters and voting
instructions have not been received from the beneficial owner (a "broker non-
vote"). Abstentions with respect to a proposal are counted for purposes of
establishing a quorum. Abstentions will not be counted as votes for or against
the election of directors, but will have the effect of a vote against any
other matter. Broker non-votes will not be counted as votes for or against any
matter submitted to a vote of shareholders.
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of the outstanding Common Stock of the Company.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone, or facsimile. The Company has retained Corporate
Investor Communications, Inc., at an estimated cost of $3,000, plus
reimbursement of expenses, to assist in soliciting proxies from brokers,
nominees, institutions and individuals. Arrangements will also be made with
custodians, nominees, and fiduciaries, and the Company will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection herewith.
As of the date of this Proxy Statement, the Company knows of no matter to be
brought before the meeting other than those referred to in the accompanying
notice of annual meeting. If, however, any other matters properly come before
the meeting, it is intended that proxies in the accompanying form will be
voted thereon in accordance with the judgment of the persons voting such
proxies.
1
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PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of six positions and is
divided into three classes. Each director is elected for three years and the
terms are staggered so that only one class is elected by the stockholders
annually. The present terms of Messrs. J. Lawrence Bradner and William P.
Conlin will expire at the Annual Meeting. On February 16, 1999, Jack R. Kelly,
Jr. resigned from the Board of Directors to pursue other interests. Anthony V.
Carollo, Jr. was appointed to the Board in August of 1998 and Michael D.
Kaufman was appointed to the Board in November of 1998. The Board has
determined to maintain its current level of five members, with one Board seat
to remain vacant. The Board of Directors reserves the right to evaluate
candidates to fill these vacancies. Stockholders will not be entitled to
nominate or cast votes at the Annual Meeting for a director to fill the
remaining vacancy. Messrs. Bradner and Conlin have been nominated for re-
election as directors of the Company and, unless otherwise noted thereon, the
shares represented by the enclosed proxy will be voted for the election of
Messrs. Bradner and Conlin as directors of the Company. If either Mr. Bradner
or Mr. Conlin 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 or persons as may be
determined by the holders of such proxy. The nominees receiving the highest
number of votes cast at the Annual Meeting will be elected and will serve as
director for three years or until his successor is duly elected and qualified.
Information Concerning Directors and Nominees
Information concerning the names, ages, terms, positions with the Company,
and business experience of the Company's current directors is set forth below:
<TABLE>
<CAPTION>
Term
Name Age Position Expires
---- --- -------- -------
<C> <C> <S> <C>
J. Lawrence Bradner.............. 48 Chairman of the Board, Chief 1999
Executive Officer, President
and Chief Operating Officer
Michael R. Bruce (2)............. 51 Director 2001
Anthony V. Carollo, Jr.(1)....... 57 Director 2000
William P. Conlin (2)............ 65 Director 1999
Michael D. Kaufman(1)............ 58 Director 2000
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
J. Lawrence Bradner became Chairman and Chief Executive Officer of the
Company upon completion of the merger with Pinnacle Investment Associates Inc.
("Pinnacle") on March 14, 1996. He served as Chairman and Chief Executive
Officer of Pinnacle and its wholly owned subsidiary, Telecorp Systems, Inc.
since their formation in 1991. On March 31, 1998, Mr. Bradner also assumed the
positions of President and Chief Operating Officer. From 1977 to 1990, Mr.
Bradner was employed by Scientific-Atlanta, Inc. ("Scientific-Atlanta"), a
leading provider of satellite and other telecommunications products based in
Atlanta, Georgia. Mr. Bradner served as President of the Broadband
Communications Business Division of Scientific-Atlanta and as Corporate Vice
President from 1987 to 1990. Mr. Bradner holds a Bachelor's Degree, with
honors, in Industrial and Systems Engineering from the Georgia Institute of
Technology and a Master of Business Administration degree from Harvard
Business School.
Michael R. Bruce has served as director of the Company since December 1997.
Mr. Bruce serves as Managing Director and Chief Investment Officer of American
Asset Management in New York. Prior to joining American Asset Management in
1993, Mr. Bruce assisted in the formation of Johnston Bruce Asset Management
where he served as Managing Director and Portfolio Manager for four years. He
was also a general partner of Adler & Shaykin, an investment banking firm,
from 1983 to 1989. Mr. Bruce holds a Bachelor's Degree from
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Hamilton College. In addition, he earned a CFA designation in 1976 and is a
member of the New York Society of Security Analysts and the Financial Analysts
Federation.
Anthony V. Carollo, Jr. has served as director since August 1998. Mr.
Carollo has been the President of Xantel Corporation since April 1998. Prior
to that Mr. Carollo was the President and Chief Operating Officer, of Fujitsu
Business Communication Systems and a former Vice President and General Manager
ROLM Corporation. He has also held numerous financial positions, both at ROLM,
Arcata Communications and Arthur Andersen & Company. Mr. Carollo currently
serves as a director of Marshall & Lisley Trust Company and Spectralink
Corporation. Mr. Carollo holds a Bachelor's of Science from the University of
Santa Clara and a Master of Business Administration degree from UCLA.
William P. Conlin has served as a director of the Company since February
1995. Mr. Conlin serves as a private consultant to several high-tech companies
in the Southern California area, including Odetics, Inc., Airborne Systems,
Inc., and Facilities Management, Inc. Mr. Conlin served as President and Chief
Executive Officer of CalComp, Inc., an Anaheim, California computer graphics
and distribution company, from 1983 to 1993. From 1960 to 1983, Mr. Conlin
served in a variety of management positions at Burroughs Corp. (now Unisys).
Mr. Conlin currently serves as director and is on the Compensation Committee
for SDRC, a leading supplier of mechanical design automation software. Mr.
Conlin is on the advisory boards of the Graduate School of Management and the
School of Engineering at the University of California, Irvine.
Michael D. Kaufman has served as a director of the Company since November
1998. Mr. Kaufman has served as a managing general partner of MK Global
Ventures in California since 1987. Prior to that Mr. Kaufman was a general
partner of Oak Investment Partners where he was involved in the formation of
numerous technology companies. He is currently a director of and serves on the
Compensation Committee of Davox Corporation. He also serves on the Board of
Asante Technologies, Inc., Disc Inc., Human Pheromone Sciences, Inc., and
HyperMedia Communications, Inc. Mr. Kaufman holds a Bachelor's of Science
degree in mechanical engineering and a Master of Science degree in industrial
management and finance from the Polytechnic University New York.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned by (a) each director of the Company,
(b) the Chief Executive Officer and each of the four other most highly
compensated officers of the Company (collectively, the "Named Executive
Officers"), (c) each person known by the Company to beneficially own more than
5% of such stock; and (d) all directors and Named Executive Officers of the
Company as a group.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name and Address of Beneficial Owner Owned (1) Owned
------------------------------------ ------------ -------
<S> <C> <C>
Michael D. Kaufman (2)..................................... 1,260,000 9.4%
Noro-Moseley Partners II., L.P. (3)........................ 1,225,000 9.1%
Cox Communications, Inc.(4)................................ 1,150,000 8.6%
Dimensional Fund Advisors Inc. (5)......................... 956,800 7.1%
J. Lawrence Bradner (6).................................... 894,554 6.5%
Steve G. Nussrallah (7).................................... 789,654 5.7%
T. Rowe Price Associates, Inc (8).......................... 700,000 5.2%
W. Scott Coleman (9)....................................... 204,914 1.5%
Neal L. Miller (10)........................................ 69,700 *
Michael R. Bruce(11)....................................... 57,000 *
Anthony V. Carollo......................................... 20,000 *
William P. Conlin (12)..................................... 15,040 *
Peter W. Pamplin (13)...................................... 6,550 *
All Directors and Named Executive Officers
as a group (9 persons) (14)............................... 3,317,412 23.1%
</TABLE>
- --------
* Represents less than 1% of the outstanding Common Stock.
(1) This information regarding security ownership of the Common Stock is as
of February 1, 1999 except for the security ownership information
regarding Dimensional Fund Advisors Inc., which is derived from a
Schedule 13G filed by Dimensional Fund Advisors Inc., with the Commission
on February 11, 1999, and T. Rowe Price Associates, Inc., which is
derived from a Schedule 13G file by T. Rowe Price Associates, Inc. with
the Commission on February 12, 1999. The percent owned calculations are
based on the number of shares of Common Stock outstanding on February 1,
1999, or within sixty days thereafter.
(2) The total for Mr. Kaufman includes 1,070,000 shares held by MK GVD Fund.
Mr. Kaufman is a general partner of MK GVD Management, the general
partner of MK GVD Fund. Mr. Kaufman disclaims beneficial ownership of
these shares; however, Mr. Kaufman shares the power to vote and control
the disposition of such shares and, therefore, may be deemed to be a
beneficial owner thereof. The total includes 10,000 shares held by Mr.
Kaufman's spouse. Mr. Kaufman's address is c/o MK GVD Fund, 2471 E.
Bayshore Road, Suite 520, Palo Alto, California 94303.
(3) Noro-Moseley Partners II, L.P. is an Atlanta-based venture capital firm.
The address of Noro-Moseley Partners II, L.P. is c/o Noro-Moseley
Partners, 4200 Northside Parkway N.W., Building 9, Atlanta, Georgia
30327.
(4) Cox Communications, Inc. is a diversified media and broadband
communications company. The address of Cox Communications, Inc. is 1400
Lake Hearn Drive, Atlanta, Georgia 30319.
(5) Dimensional Fund Advisors Inc. ("Dimensional") is a California-based
registered investment advisor. Dimensional is deemed to have beneficial
ownership of 956,800 shares of Common Stock, all of which are held in
portfolios which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares
4
<PAGE>
of Common Stock. The address of Dimensional Fund Advisors Inc. is 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(6) The total for Mr. Bradner includes 377,752 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(7) The total for Mr. Nussrallah includes 282,852 shares subject to
unexercised options which were exercisable on February 1, 1999, or within
60 days thereafter. Mr. Nussrallah's address is 605 Buttercup Trace,
Alpahretta, GA 30202.
(8) T. Rowe Price Associates, Inc. is a Maryland-based registered investment
advisor. These shares of Common Stock are owned by various individuals
and institutional investors, of which T. Rowe Price Associates, Inc.
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements
of the Securities Exchange Act of 1934, T. Rowe Price Associates, Inc. is
deemed to be a beneficial owner of such securities; however, T. Rowe
Price Associates, Inc. expressly disclaims the beneficial ownership of
such securities. The address of T. Rowe Price Associates, Inc. is 100 E.
Pratt Street, Baltimore, Maryland 21202.
(9) The total for Mr. Coleman includes 161,200 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(10) The total for Mr. Miller includes 58,900 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(11) The total for Mr. Bruce includes 3,000 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(12) The total for Mr. Conlin includes 15,040 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(13) The total for Mr. Pamplin includes 6,550 shares subject to unexercised
options which were exercisable on February 1, 1999, or within 60 days
thereafter.
(14) The total for all directors and Named Executive Officers as a group
includes an aggregate of 905,294 shares subject to unexercised options
which were exercisable on February 1, 1999, or within sixty days
thereafter.
Board of Directors' Meetings, Compensation, and Committees
During the fiscal year ended December 31, 1998, the Board of Directors of
the Company met on six occasions. Each of the Company's directors attended 75%
or more of the meetings of the Board of Directors and of the meetings held by
committees of the Board of Directors on which he served.
Directors who are not officers or employees of the Company are compensated
$1,500 for attendance at regular Board of Directors meetings, $200 for
participation in telephonic Board of Directors meetings, and $200 for
attendance at, or participation by telephone in, meetings of Committees of the
Board of Directors of which they are members. In addition, nonemployee
directors also receive an annual retainer of $5,000 in return for their
service with the Company. Nonemployee directors are reimbursed for reasonable
out-of-pocket expenses incurred in connection with their attendance at each
meeting of the Board of Directors. Pursuant to the Company's Nonemployee
Director Stock Plan, nonemployee directors are eligible to receive (i) a one-
time grant of options to purchase 10,000 shares of Common Stock on the third
business day after the nonemployee director is first elected or appointed to
the Board of Directors and (ii) an annual grant of options to purchase 2,000
shares of Common Stock on each June 1 thereafter. A nonemployee director must
be a member of the Board of Directors on the relevant June 1 in order to
receive the annual grant of options for that year.
The Board of Directors maintains a standing Compensation Committee and a
standing Audit Committee. The Compensation Committee, which met twice during
1998, reviews all aspects of compensation of executive officers of the Company
and approves or makes recommendations on such matters to the full Board of
Directors. The Audit Committee, which met once during 1998, is primarily
concerned with the effectiveness of the audits of the Company by its internal
audit staff and by the independent auditors. Its responsibilities include
5
<PAGE>
recommending the selection of independent auditors, reviewing the organization
and scope of the Company's internal system of audit and controls, and
evaluating the Company's financial reporting activities and the accounting
standards and principles followed. The Company does not maintain a standing
nominating committee or other committee performing similar functions.
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who
own more than 10% of the Company's Common Stock, to file reports of beneficial
ownership and changes in such ownership with the Securities and Exchange
Commission ("SEC"). Based solely upon a review of the copies of such forms
furnished to the Company, or written representations from certain reporting
persons that no Form 5 was required for such person, the Company believes
that, during 1998, all officers, directors, and persons who own more than 10%
of the Company's Common Stock complied with the applicable Section 16(a)
filing requirements.
6
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to the Company during the
fiscal years ended December 31, 1998, 1997, and 1996, by the Named Executive
Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($) (1) (#) (2) ($)
- ------------------ ---- ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Lawrence Bradner (3) 1998 252,090 60,500(4) 0 0 9,655(5)
Chairman of the Board, 1997 252,000 0 0 27,500 6,437(6)
Chief Executive
Officer, 1996 198,853 63,000(7) 0 115,000 3,707(8)
President and Chief
Operating Officer
W. Scott Coleman (9) 1998 185,000 37,000(4) 0 120,000 3,821(10)
President, Call Center
Software 1997 178,192 0 0 25,000 3,714(11)
and Services 1996 152,394 101,719(12) 0 20,000 388(13)
Neal L. Miller (14) 1998 170,000 72,500(15) 0 100,000 3,766(16)
President, Syntellect
Interactive 1997 145,000 0 0 10,000 3,237(17)
Services 1996 129,859 18,750(7) 0 0 343(18)
Steve G. Nussrallah (19) 1998 234,750(20) 0 0 0 0
Former President and 1997 210,000 0 0 25,000 4,756(21)
Chief Operating Officer 1996 166,847 52,500(7) 0 105,000 5,798(22)
Peter W. Pamplin (23) 1998 113,301 14,000(4) 0 5,000 331(24)
Vice President, Chief
Financial 1997 55,417 0 0 12,500 165(25)
Officer, Secretary and
Treasurer 1996 0 0 0 0 0
</TABLE>
- --------
(1) Other annual compensation for the periods presented was less than 10% of
the respective executive officer's total annual salary and bonus.
(2) The amounts shown in this column represent outstanding stock options
granted pursuant to Syntellect's Long-Term Incentive Plan and Restated
Stock Option Plan.
(3) Mr. Bradner joined the Company and became its Chairman and Chief
Executive Officer effective March 14, 1996. Under the terms of his
employment agreement, Mr. Bradner's salary for the fiscal year ending
December 31, 1996 was based upon an annualized salary of $240,000. See
"Employment Agreements."
(4) The 1998 bonus amounts shown for Messrs. Bradner, Coleman, and Pamplin
represent bonuses earned in 1998 that were not paid until 1999.
(5) The amount shown includes contributions made by the Company during 1998
on behalf of Mr. Bradner to the Syntellect 401(k) Plan of $3,150 and
long-term disability and life insurance premiums paid on Mr. Bradner's
behalf of $6,505.
(6) The amount shown includes contributions made by the Company during 1997
on behalf of Mr. Bradner to the Syntellect 401(k) Plan of $2,886 and
long-term disability and life insurance premiums paid on Mr. Bradner's
behalf of $3,551.
(7) The 1996 bonus amounts shown for Messrs. Bradner, Miller, and Nussrallah
represent bonuses earned in 1996 that were not paid until 1997.
(8) The amount shown includes contributions made by the Company during 1996
on behalf of Mr. Bradner to the Pinnacle 401(k) Plan of $2,852 and life
insurance premiums paid on Mr. Bradner's behalf of $855.
(9) Mr. Coleman joined the Company and became its Vice President of Product
Development in February 1993. Mr. Coleman served in the Office of the
Chief Executive Officer from October 1995 to March 1996, and served as
Senior Vice President and General Manager, Call Center Systems, from
March 1996 to April 1997, and was promoted to President, Call Center
Systems, in May 1997.
7
<PAGE>
(10) The amount shown includes contributions made by the Company during 1998
on behalf of Mr. Coleman to the Syntellect 401(k) Plan of $3,242 and
long-term disability and life insurance premiums paid on Mr. Coleman's
behalf of $579.
(11) The amount shown represents payments made by the Company during 1997 for
life insurance premiums on Mr. Coleman's behalf.
(12) The 1996 bonus amount for Mr. Coleman includes a bonus of $26,719 for
1996 that was not paid until 1997.
(13) The amount shown represents payments made by the Company during 1996 for
life insurance premiums on Mr. Coleman's behalf.
(14) Mr. Miller joined the Company and became its Vice President, Chief
Financial Officer, Secretary and Treasurer in December 1995. As of March
31, 1998, Mr. Miller assumed the additional role of President of
Syntellect Interactive Services, Inc.
(15) The amount shown for Mr. Miller's bonus includes a bonus for $42,500
which was earned in 1998 and not paid until 1999.
(16) The amount shown includes contributions made by the Company during 1998
on behalf of Mr. Miller to the Syntellect 401(k) Plan of $3,305 and long-
term disability and life insurance premiums paid on Mr. Miller's behalf
of $461.
(17) The amount shown includes contributions made by the Company during 1997
on behalf of Mr. Miller to the Syntellect 401(k) Plan of $2,776 and long-
term disability and life insurance premiums paid on Mr. Miller's behalf
of $461.
(18) The amount shown represents payments made by the Company during 1996 for
life insurance premiums on Mr. Miller's behalf.
(19) Mr. Nussrallah joined the Company and became its President and Chief
Operating Officer effective March 14, 1996. Under the terms of his
employment agreement, Mr. Nussrallah's salary for the fiscal year ending
December 31, 1996 was based upon an annualized salary of $200,000.
Effective March 31, 1998, Mr. Nussrallah resigned as an officer of the
Company. See "Employment Agreements."
(20) Mr. Nussrallah's compensation in 1998 included $86,000 in regular
earnings and $148,750 in severance pay.
(21) The amount shown includes contributions made by the Company during 1997
on behalf of Mr. Nussrallah to the Syntellect 401 (k) Plan of $2,020 and
long-term disability and life insurance premiums paid on Mr. Nussrallah's
behalf of $2,736.
(22) The amount shown includes contributions made by the Company during 1996
on behalf of Mr. Nussrallah to the Pinnacle 401(k) Plan of $3,680 and
life insurance premiums paid on Mr. Nussrallah's behalf of $2,118.
(23) Mr. Pamplin joined the Company and became its Vice President and
Controller on June 2, 1997. Mr. Pamplin was promoted to Vice President,
Chief Financial Officer, Secretary and Treasurer on August 13, 1998.
(24) The amount shown includes contributions made by the Company during 1998
on behalf of Mr. Pamplin for long-term disability and life insurance
premiums paid on Mr. Pamplin's behalf of $331.
(25) The amount shown includes contributions made by the Company during 1997
on behalf of Mr. Pamplin for long-term disability and life insurance
premiums paid on Mr. Pamplin's behalf of $165.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grants of stock
options to the Named Executive Officers pursuant to the Company's Long-Term
Incentive Plan during the fiscal year ended December 31, 1998. No SARs were
granted during 1998.
<TABLE>
<CAPTION>
Individual Grants (1)
----------------------------------------------------
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Total Price Appreciation
Name Underlying Options Granted Exercise for Option Term (2)
---- Options to Employees in Price Per Expiration ----------------------
Granted (#) Fiscal Year Share($/Sh) Date 5%($) 10%($)
----------- ---------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. Lawrence Bradner..... 0
W. Scott Coleman........ 120,000(3) 17% 1.75 02/05/08 132,068 334,686
Neal L. Miller.......... 100,000(4) 14% 1.75 02/05/08 110,057 278,905
Steve G. Nussrallah..... 0
Peter W. Pamplin........ 5,000(5) 1% 1.75 02/05/08 5,503 13,945
</TABLE>
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(1) All options were granted at the fair market value (the closing price of
the Common Stock on The Nasdaq Stock Market, as reported in The Wall
Street Journal) on the date of grant. The exercise price and tax
withholding obligations related to exercise may be paid by delivery of
already owned shares or by offset of the underlying shares, subject to
certain conditions.
(2) Gains are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions, as well as the option holder's continued employment
with the Company throughout the vesting period. The amounts reflected in
this table will not necessarily be achieved.
(3) Mr. Coleman's options granted in 1998 are excercisable 24,000 on or after
February 5, 1999 and 2,000 each month thereafter. In addition, a specified
portion of the option will vest and be exercisable at a date earlier than
described above upon the occurrence of certain "Vesting Events." The
Vesting Events include (i) the achievement of certain closing prices for
the shares of Common Stock, (ii) the achievement of certain levels of
profitability for particular business units, (iii) the offering of certain
core products, (iv) the achievement of certain customer levels, and (v)
the achievement of three consecutive quarters of Company profits. In no
event, will Mr. Coleman be allowed to purchase more than 120,000 shares.
(4) Mr. Miller's options granted in 1998 are exercisable 20,000 on or after
February 5, 1999 and 1,666 each month thereafter. In addition, a specified
portion of the option will vest and be exercisable at a date earlier than
described above upon the occurrence of certain "Vesting Events." The
Vesting Events include (i) the achievement of certain closing prices for
the shares of Common Stock, (ii) the achievement of certain levels of
profitability for particular business units, (iii) the achievement of
certain levels Company profitability, (iv) the successful conversion of
certain products, and (v) the achievement of three consecutive quarters of
Company profits. In no event, will Mr. Miller be allowed to purchase more
than 100,000 shares.
(5) Mr. Pamplin's options granted in 1998 are exercisable commencing one year
from the date of grant, with 24% of the shares of Common Stock subject to
the options vesting at that time and an additional 2% vesting monthly
thereafter until the options are fully vested.
9
<PAGE>
FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning the fiscal year end
value of unexercised options held by the Named Executive Officers. No Named
Executive Officer exercised options in 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End (#) at Fiscal Year End ($) (1)
---------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
J. Lawrence Bradner .... 369,202 56,150 461,049 0
W. Scott Coleman........ 110,100 149,900 0 90,000
Neal L. Miller.......... 21,800 113,200 0 75,000
Steve G. Nussrallah..... 282,852 0 461,049 0
Peter W. Pamplin........ 4,500 13,000 0 3,750
</TABLE>
- --------
(1) Options are considered to be "in-the-money" if the fair market value of
the underlying securities exceeds the exercise price of the options on the
specified date. The amounts shown in these columns represent the
difference between the closing price of the Common Stock on December 31,
1998 ($2.50), and the exercise price of the options. In those instances
where the exercise price of the options exceeds the fair market value, no
value has been reported.
Board Compensation Committee Report on Executive Compensation
The Company's executive compensation program was administered in 1998 by a
three-member Compensation Committee of the Board of Directors (the
"Committee"). The members of the Committee, who are not employees of the
Company, have furnished the following report on executive compensation:
Executive Compensation Policies
Overview. The Company compensates its executives through a combination of
short-term and long-term compensation programs. The principal components of
executive compensation are base salary, an annual bonus program, or, in the
case of marketing and sales personnel, sales commissions, and stock-based
compensation incentives. The Committee believes that this balanced approach to
compensation helps the Company attract and retain senior executives and
rewards executives for their collective and individual contribution to the
leadership and the short-term and long-term growth and profitability of the
Company.
Base Salary. The foundation of the Company's executive compensation package
is base salary. Each executive receives a base salary which, when aggregated
with their maximum bonus amount or potential sales commissions, is intended to
be commensurate with his or her responsibilities and level of performance and
competitive with similarly situated executives in the electronics industry.
Among the elements that the Committee considers in setting an executive's base
salary for the year are: (i) the executive's position relative to other
executives in the Company, (ii) any promotions achieved or changes in
responsibility, (iii) the achievement of performance objectives set by the
Committee, and (iv) compensation information provided by independent surveys
and outside consultants relating to the compensation of similarly situated
executives in the electronics industry.
Annual Bonus Program. The second aspect of the Company's executive
compensation package is the annual bonus. Over the past several years, the
Company has established an annual bonus program for its executive officers at
the beginning of each fiscal year. Under this program, the Committee sets a
target bonus amount for each executive, which is tied to achievement of
certain financial performance objectives that relate directly to the Company's
operating plan for the year. This program is also approved by the Board of
Directors. The amount of the annual bonus varies with the position and the
role of the executive within the Company. In addition, special bonuses may be
awarded to an executive for any reason that the Board of Directors or the
Committee deems appropriate.
10
<PAGE>
At the end of 1998, the Committee reviewed the performance of the Company's
executives in relation to the bonus program. The Company did not achieve the
financial performance targets established at the beginning of the year.
However, certain discretionary bonuses were awarded based on factors other
than performance. These bonuses will be paid in 1999.
Stock-Based Compensation Incentives. The third aspect of the Company's
executive compensation package is stock-based compensation incentives or stock
options. The Committee believes that executives with an equity stake in the
Company will have interests that are more closely aligned with the interests
of the Company's stockholders and that this will encourage them to remain with
the Company. Toward this end, the Committee grants options to Company
executives from time to time. Historically, all options granted have had
exercise prices set at the fair market value of the Company's Common Stock on
the date of grant, as determined by the closing price of the Common Stock on
The Nasdaq Stock Market.
In selecting recipients and the number of options granted in 1998, the
Committee looked to several criteria, including (i) options granted to
executives at other technology companies, (ii) options granted to other
executives within the Company, (iii) the individual executive's specific role
and performance with the Company, and (iv) the Company's overall performance.
Compensation Committee Interlocks and Insider Participation
The Committee is comprised of outside directors, none of whom have any
interlocking relationships with the Company.
Compliance with Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code, as amended, generally limits to
$1 million the deduction that can be claimed by any publicly-held corporation
for compensation paid to any "covered employee" in any taxable year beginning
after December 31, 1993. The term "covered employee" for this purpose is
defined generally as the Chief Executive Officer and the four highest-paid
employees of the corporation.
Performance-based compensation is outside the scope of the $1 million
limitation and, hence, generally can be deducted by a publicly-held
corporation without regard to amount; provided that, among other requirements,
such compensation is approved by stockholders. The Committee currently does
not anticipate that any executive will exceed the limit. It is the policy of
the Company to comply with Section 162(m), and it will continue to do so to
the extent such compliance is consistent with the best interests of the
Company's stockholders. The Committee will continue to review the impact of
this tax code section and make appropriate recommendations to stockholders in
the future.
Employment Agreements
On November 1, 1998, the Company entered into an employment agreement with
Mr. Bradner, whereby he would serve as the Chairman and Chief Executive
Officer, of the Company. The employment agreement provides Mr. Bradner with an
annual salary of $252,000 beginning on November 1, 1998 and ending on December
31, 1998. The employment agreement also provides that Mr. Bradner will receive
an annual salary of $277,000 beginning on January 1, 1999 and ending December
31, 1999. In addition, Mr. Bradner will be entitled to receive a bonus as the
Board of Directors shall determine in its sole and absolute discretion. In the
event of termination without cause, Mr. Bradner would receive twelve (12)
months salary plus health benefits.
On August 24, 1998, the Company entered into an employment agreement with
Mr. Miller, whereby he would serve as the President, Syntellect Interactive
Services. The employment agreement provides Mr. Miller with an annual salary
of $170,000 beginning on August 24, 1998 and ending on December 31, 1998. The
employment agreement also provides that Mr. Miller will receive an annual
salary of $180,000 beginning on January 1, 1999 and ending December 31, 1999.
In addition, Mr. Miller will be entitled to receive a bonus as
11
<PAGE>
the Board of Directors shall determine in its sole and absolute discretion. In
the event of termination without cause, Mr. Miller would receive six (6)
months salary plus health benefits.
On September 19, 1998, the Company entered into an employment agreement with
Mr. Coleman, whereby he would serve as the President, Call Center Systems. The
employment agreement provides Mr. Coleman with an annual salary of $185,000
beginning on September 19, 1998 and ending December 31, 1998. The employment
agreement also provides that Mr. Coleman will receive an annual salary of
$210,000 beginning on January 1, 1999 and ending on December 31, 1999. In
addition, Mr. Coleman will be entitled to receive a bonus as the Board of
Directors shall determine in its sole and absolute discretion. In the event of
termination without cause, Mr. Coleman would receive six (6) months salary
plus health benefits.
On November 1, 1998, the Company entered into an employment agreement with
Mr. Pamplin, whereby he would serve as the Chief Financial Officer. The
employment agreement provides Mr. Pamplin with an annual salary of $120,000
beginning on November 1, 1998 and ending December 31, 1998. The employment
agreement also provides that Mr. Pamplin will receive an annual salary of
$130,000 beginning on January 1, 1999 and ending on December 31, 1999. In
addition, Mr. Pamplin will be entitled to receive a bonus as the Board of
Directors shall determine in its sole and absolute discretion. In the event of
termination without cause, Mr. Pamplin would receive six (6) months salary
plus health benefits.
The Company has no employment agreements or change-in-control arrangements
with any other executive officers.
Effective March 31, 1998, Mr. Nussrallah resigned as an officer of the
Company and decided not to stand for re-election as a director of the Company.
The Company and Mr. Nussrallah entered into a Separation Agreement dated
February 20, 1998 which provides for the continuation of Mr. Nussrallah's
annual salary of $210,000 through March 31, 1999, the continuation of Mr.
Nussrallah's medical insurance coverage through March 31, 1999, and the
payment of any contractual bonus due to Mr. Nussrallah for 1997 and 1998
pursuant to his employment agreement (which did not result in any additional
payment). In addition, the Separation Agreement provides that Mr. Nussrallah's
option to purchase 282,852 shares of Common Stock at a purchase price of $0.87
per share shall be unaffected by his resignation as an officer of the Company.
This report is made by Jack R. Kelly, Jr., William P. Conlin, and Michael R.
Bruce, the members of the Company's Compensation Committee during fiscal 1998.
COMPENSATION COMMITTEE
Jack R. Kelly, Jr., Chairman
William P. Conlin
Michael R. Bruce
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's Common
Stock with The Nasdaq Stock Market index (U.S. companies) and an index
consisting of Nasdaq Telecommunications Stocks (U.S. and foreign) for the
period from December 31, 1993 to December 31, 1998. The comparison assumes
that $100 was invested on December 31, 1993, in the Company's Common Stock and
in each of the comparison indices, and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Syntellect Inc. $100 $186 $ 92 $112 $ 49 $ 68
NASDAQ Stock Market
(U.S. Companies) $100 $ 98 $138 $170 $209 $293
NASDAQ
Telecommunications
Stocks $100 $116 $152 $156 $231 $377
</TABLE>
13
<PAGE>
RELATIONSHIP WITH
INDEPENDENT ACCOUNTANTS
The principal independent public accounting firm utilized by the Company
during the fiscal year ended December 31, 1998, was KPMG Peat Marwick LLP,
independent certified public accountants (the "Auditors"). It is presently
contemplated that the Auditors will be retained as the principal accounting
firm to be utilized by the Company during the current fiscal year. A
representative of the Auditors will attend the Annual Meeting for the purpose
of responding to appropriate questions and will be afforded an opportunity to
make a statement if the Auditors so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals may be submitted for inclusion in the Company's 2000
proxy material after the 1999 Annual Meeting but no later than 5:00 p.m.,
Atlanta, Georgia time on December 17, 1999. Proposals must be in writing and
sent via registered, certified, or express mail to: Secretary, Syntellect
Inc., 1000 Holcomb Woods Parkway, Suite 410A, Roswell, Georgia 30076.
Facsimile or other forms of electronic submissions will not be accepted.
The Company's bylaws provide that a stockholder proposal with respect to the
election of directors may be acted upon at an annual meeting of stockholders
only if the stockholder gives notice to the Company of such proposal in
conformity with the requirements of the bylaws (not later than 90 days prior
to the annual meeting). The persons named as proxies will have discretionary
voting authority (i) with respect to a stockholder proposal related to the
election of directors if such proposal is not submitted in conformity with the
requirements of the bylaws, and (ii) with respect to any other stockholder
proposal submitted to the Company to be considered at such meeting after
March 1, 2000.
OTHER MATTERS
The Board of Directors does not intend to present at the Annual Meeting any
matters other than those described herein and does not presently know of any
matters that will be presented by other parties. As of the date of this Proxy
Statement, the Company knows of no matters to be brought before the meeting
other than those referred to in the accompanying notice of annual meeting. If,
however, any other matters properly come before the meeting, it is intended
that proxies in the accompanying form will be voted thereon in accordance with
the judgment of the persons voting such proxies.
SYNTELLECT INC.
/s/ Peter W. Pamplin
Peter W. Pamplin
Secretary
April 14, 1999
14
<PAGE>
This Proxy Is Solicited On Behalf Of The Board of Directors
SYNTELLECT INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints J. Lawrence Bradner and Peter W. Pamplin,
or any one of them acting in the absence of the other with full powers of
substitution, the true and lawful attorneys and proxies for the undersigned and
to vote, as designated below, all shares of Common Stock of SYNTELLECT, INC.,
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
(the "Meeting") to be held on Thursday, May 20, 1999, at 9:30 a.m., Atlanta,
Georgia time at the Crowne Plaza Ravinia, 4355 Ashford-Dunwoody Rd., Atlanta,
Georgia 30346 and at any and all adjournments thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote, if then and there
personally present, upon the matter described in the accompanying Notice and
Proxy Statement for the Annual Meeting of Stockholders, receipt of which is
hereby acknowledged and upon any other business that may properly come before
the Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTIONS ARE
INDICATED, WILL BE VOTED FOR PROPOSAL ONE AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
(to be signed on the reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Illegible [X]
copy
1. RE-ELECTION OF DIRECTORS: Nominees J. Lawrence Bradner and William P. Conlin
VOTE FOR WITHHOLD AUTHORITY INSTRUCTION: To withhold authority to vote
nominees to vote for for any individual nominee, write that
listed nominees listed nominee's name in the space below:
[_] [_]
-------------------------------------------
____
|
|
Signature(s) Signature(s) Date
------------------- ----------------- -----------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give a title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
