<PAGE>
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
STM Wireless, Inc.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(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.
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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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>
STM WIRELESS, INC.
ONE MAUCHLY
IRVINE, CALIFORNIA 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 8, 2000
TO THE STOCKHOLDERS OF STM WIRELESS, INC.:
The 2000 Annual Meeting of Stockholders of STM Wireless, Inc. (the
"Company") will be held at the Laguna Cliffs Marriott Resort, 25135 Park
Lantern, Dana Point, California, on November 8, 2000, at 10:00 A.M., for the
following purposes as more fully described in the accompanying Proxy Statement:
(1) To elect the following six (6) nominees to serve as directors until
the next annual meeting of stockholders or until their successors
are elected and have qualified:
Frank T. Connors Dr. Ernest U. Gambaro Louis B. Horwitz
Emil Youssefzadeh Dr. Mark Shahriary Dr. Samuel A. Culbert
(2) To ratify the appointment of KPMG LLP as independent auditors of the
Company for the fiscal year ending December 31, 2000; and
(3) To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Only stockholders of record at the close of business on September 26,
2000 will be entitled to vote at the meeting or any adjournment or postponement
thereof.
By Order of the Board of Directors
Emil Youssefzadeh
President and Chief Executive Officer
October 8, 2000
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any
stockholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting. Stockholders attending the
meeting whose shares are held in the name of a broker or other nominee who
desire to vote their shares at the meeting should bring with them a proxy or
letter from that firm confirming their ownership of shares.
<PAGE>
STM WIRELESS, INC.
ONE MAUCHLY
IRVINE, CALIFORNIA 92618
---------------
PROXY STATEMENT
---------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of STM Wireless, Inc., a
Delaware corporation (the "Company"), for use at its 2000 Annual Meeting of
Stockholders ("Annual Meeting") to be held on November 8, 2000, at 10:00 A.M.,
at the Laguna Cliffs Marriott Resort, 25135 Park Lantern, Dana Point,
California. This Proxy Statement and the accompanying proxy are being mailed to
stockholders on or about October 8, 2000. The Company has retained the services
of U.S. Stock Transfer Corporation to assist in soliciting proxies from brokers
and nominees for the Annual Meeting. The estimated costs for these services is
$5,000 and will be borne by the Company. It is contemplated that this
solicitation of proxies will be made primarily by mail; however, if it should
appear desirable to do so in order to ensure adequate representation at the
meeting, directors, officers and employees of the Company may communicate with
stockholders, brokerage houses and others by telephone, telegraph or in person
to request that proxies be furnished and may reimburse banks, brokerage houses,
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to the beneficial owners of the shares held by them. All
expenses incurred in connection with this solicitation shall be borne by the
Company.
Holders of shares of Common Stock of the Company ("stockholders") who
execute proxies retain the right to revoke them at any time before they are
voted. Any proxy given by a stockholder may be revoked or superseded by
executing a later dated proxy, by giving notice of revocation to the Secretary,
STM Wireless, Inc., One Mauchly, Irvine, California 92618 in writing prior to or
at the meeting or by attending the meeting and voting in person. A proxy, when
executed and not so revoked, will be voted in accordance with the instructions
given in the proxy. If a choice is not specified in the proxy, the proxy will be
voted "FOR" the nominees for election of directors named in this Proxy Statement
and "FOR" the ratification of KPMG LLP as the Company's independent auditors.
VOTING SECURITIES
The shares of Common Stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. Only the stockholders of
the Company of record as of the close of business on September 26, 2000 (the
"Record Date") will be entitled to vote at the meeting or any adjournment or
postponement thereof. As of the Record Date, there were 7,247,509 shares of
Common Stock outstanding and entitled to vote. No shares of the Company's
preferred stock, $0.001 par value, were outstanding. A majority of shares
entitled to vote represented in person or by proxy will constitute a quorum at
the meeting. Each stockholder is entitled to one vote for each share of Common
Stock held as of the Record Date. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for the
purpose of determining whether a quorum is present. Abstentions will be treated
as shares present and entitled to vote for purposes of any matter requiring the
affirmative vote of a majority or other proportion of the shares present and
entitled to vote. With respect to shares relating to any proxy as to which a
broker non-vote is indicated on a proposal, those shares will not be considered
present and entitled to vote with respect to any such proposal. Abstentions or
broker non-votes or other failures to vote will have no effect in the election
of directors, who will be elected by a plurality of the affirmative votes cast.
With respect to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the outstanding shares, an
abstention or broker non-vote will have the same effect as a vote against the
matter being voted upon.
All stockholders entitled to vote at the Annual Meeting may cumulate the
votes in the election of directors. With cumulative voting, each stockholder is
entitled to a number of votes as shall equal the number of votes which the
stockholder would be entitled to cast for the election of directors multiplied
by the number of directors to be
<PAGE>
elected by the stockholders, and each stockholder may cast all of such votes for
a single director or may distribute them among the number to be voted for, or
for any two or more of them as the stockholder may see fit. In order to cumulate
votes, stockholders must attend the meeting and vote in person or make
arrangements with their own proxies. Otherwise, the proxies solicited by the
Board of Directors confer discretionary authority in the proxy holders to
cumulate votes so as to elect the maximum number of nominees.
PROPOSAL ONE
ELECTION OF DIRECTORS
On October 6, 2000, the Board of Directors approved an amendment to the
Company's Bylaws increasing the number of authorized directors from five (5) to
six (6). Currently, there are four (4) members of the Board of Directors,
including Emil Youssefzadeh, Frank T. Connors, Dr. Ernest U. Gambaro and Dr.
Mark Shahriary. Claude Burgio resigned from the Board of Directors on October 5,
2000. Directors are elected at each annual stockholders' meeting to hold office
until the next annual meeting or until their successors are elected and have
qualified. Unless otherwise instructed, the proxy holders named in the enclosed
proxy will vote the proxies received by them for the six (6) nominees named
below.
If any nominee becomes unavailable for any reason before the election,
the enclosed proxy will be voted for the election of such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees will be unavailable
to serve.
Under Delaware law, the six (6) nominees receiving the highest number of
votes will be elected as directors at the Annual Meeting. As a result, proxies
voted to "Withhold Authority," which will be counted, and broker non-votes,
which will not be counted, will have no practical effect.
The names and certain information concerning the six (6) nominees for
election as directors are set forth below. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
NAME AGE POSITION WITH THE COMPANY
---- ---- ------------------------
Frank T. Connors 66 Chairman of the Board
Emil Youssefzadeh 48 President and Chief Executive Officer
Dr. Mark Shahriary 56 Director
Dr. Ernest U. Gambaro 62 Director
Louis B. Horwitz 72 Director Nominee
Dr. Samuel A. Culbert 62 Director Nominee
FRANK T. CONNORS, 66, has been a director of the Company since June 1988,
and served as its Chairman of the Board of Directors from September 1999 and
from June 1988 to September 1993, and as its Chief Executive Officer from June
1988 to January 1991. From March 1999 to September 1999, Mr. Connors served as
acting President of the Company. From January 1998 to January 1999, Mr. Connors
served as President of Direc-To-Phone International, Inc. (now SkyOnline, Inc.).
From October of 1994 to January 1998, Mr. Connors was Executive Vice President
of the Company. From December 1982 to January 1988, Mr. Connors was the Chief
Executive Officer of Doelz Networks, a manufacturer of packet switching
equipment. From 1979 to 1981, Mr. Connors was Group Vice President of Northern
Telecom's Computer Systems Group. Mr. Connors is currently a director of DISC,
Inc. (NASDAQ NMS: DCSC; DCSCW), an optical computer storage manufacturing
Company located in Northern California.
EMIL YOUSSEFZADEH, 48, is the founder of the Company. He has been
director of the Company and served as its President from January 1982 to
September 1998, and has served as Chief Executive Officer from January 1982 to
June 1988 and from January 1991. From January 1979 until founding the Company,
Mr. Youssefzadeh was a satellite research engineer with Hughes Aircraft Company
where his projects included design of satellite communications systems and
satellite earth stations. He also was a member of the team responsible for
communications system engineering for the Intelsat-VI spacecraft.
2
<PAGE>
DR. MARK SHAHRIARY, 56, has been a director of the Company since March
2000. From January 1999 to September 1999, Dr. Shahriary served as President of
Teledesic LLC, which is building a global, satellite-based network to offer
telecommunications services. From September 1983 to January 1999, Dr. Shahriary
held various management positions at Hughes Space and Communications, most
recently as Executive Vice President in charge of operations. Dr. Shahriary is
the winner of the 1989 L.A. Hyland Patent Award, the highest award given at
Hughes, and holds seven U.S. patents related to various communication designs.
He earned his BSEE and MSEE from California State University and his Ph.D. in
solid state engineering from the University of California at Los Angeles. Dr.
Shahriary is also on the Board of Directors of Peregrine Semiconductor
Corporation.
DR. ERNEST U. GAMBARO, 62, has been a director of the Company since March
1997. In 1988, Dr. Gambaro directed the formation of Infonet Services Corp.
(NYSE: IN), a provider of cross-border managed data communication services to
multinational corporations worldwide, and has since served as its Senior Vice
President, General Counsel and Secretary. Prior to 1988, Dr. Gambaro was
Assistant General Counsel for Computer Sciences Corporation focusing on the
company's international, acquisition and divestiture activities. Between 1962
and 1975, Dr. Gambaro directed programs at The Aerospace Corporation relating to
the conceptual, definition and implementation of advanced technology systems for
space.
LOUIS B. HORWITZ, 72, was Chairman of the Board of Directors of Datum,
Inc. (NASDAQ NM: DATM) from 1976 through 1999, and was its President and Chief
Executive Officer from 1976 through April 1998. Datum, Inc. designs,
manufactures and markets a wide variety of high performance time and frequency
products used in telecommunications networks. Prior to joining Datum, Mr.
Horwitz was an independent management consultant and Executive Vice President of
Xerox Data Systems.
DR. SAMUEL A. CULBERT, 62, has been Professor of Management at UCLA's
Anderson Graduate School of Management for the past 30 years. Dr. Culbert is
recognized as an expert and theoretician in the management field having authored
several books including "The Organization Trap" and "Mind-Set Management: The
Heart of Leadership" among others. In addition, Dr. Culbert has a consulting
practice, specializing in areas of teamwork, organizational effectiveness,
executive communication, trust building, leadership development and corporate
strategizing with clients ranging from small companies to Fortune 500
businesses.
OTHER EXECUTIVE OFFICERS AND KEY EMPLOYEES
JOSEPH J. WALLACE, 40, has been Vice President-Finance and Chief
Financial Officer of the Company since March 1997. From April 1994 to March
1997, Mr. Wallace was Corporate Controller of MAI Systems Corporation, a
publicly held worldwide provider of total information system solutions for the
hospitality and manufacturing industries. From 1990 to 1993, Mr. Wallace was
Controller and Chief Financial Officer of Simmons Magee, PLC, a British based
value added reseller of computer products and services.
BERND STEINEBRUNNER, 36, has been Vice President, Product Management and
Sales Engineering since he joined the Company in September 1999. Prior to
joining the Company, Mr. Steinebrunner spent 11 years at Bosch Telecom GmbH in
Germany, where he held several positions including Supervisor of the Proposal
Management Team. Mr. Steinebrunner received his Diplom Ingenieur at the
University of Ulm, Germany.
RENATO GONCALVES DIAS, 48, joined the Company in 1994 and has been Vice
President for Latin American Sales since July 1999. Prior to joining the
Company, Mr. Dias held positions in several Brazilian firms including SID
Telecon, where he was a Cellular System Engineering Manager, and Avionics
Systems, where he was a Commercial Manager in charge of sales of on-board
avionics for commercial and military aircraft. Mr. Dias received his bachelors
degree in engineering from the Institute of Technology of Aeronautics in Brazil
and an M.A. in International Affairs from George Washington University.
DAVID BREDENDICK, 33, joined the Company in 1996 and has served as its
Vice President, Business Development since February 2000, and Regional Director,
Asia from February 1996 to February 2000. Prior to joining the Company, Mr.
Bredendick worked as a business development manager and systems engineer at
McDonnell Douglas. Mr. Bredendick has a B.S. from University of California, Los
Angeles, and has an M.B.A. from the University of California, Irvine.
GENE MEISTAD, 61, joined the Company in 1986 and has served as Vice
President of Manufacturing since November 1999 and from February 1986 to
November 1998. Prior to joining the Company, Mr. Meistad was the Manager of
Production Control at BASF, where he helped develop their manufacturing resource
planning system.
3
<PAGE>
Prior to joining BASF, Mr. Meistad was a Materials Manager at Siemen's AG. Mr.
Meistad attended Fullerton College and has served in the U.S. Armed Forces.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company continues to contract with Gulf Communications International,
Inc. ("GCI") in the normal course of business to provide installation services.
Until June 1998, Jack Acker, the President of the Company's Network Systems
Division from January 1998 to March 1999 and a member of the Company's Board of
Directors from September 1998 to March 1999, served as the Chairman of the Board
of GCI and was a 50% owner of GCI. Total purchases by the Company from GCI were
approximately $327,000, $921,000 and $720,000 in 1999, 1998 and 1997,
respectively.
In March 1998, the Company completed a $10 million equity offering of
shares of the Company and Direc-To-Phone International, Inc. (subsequently
renamed SkyOnline, Inc.), the Company's former subsidiary, to two funds managed
by Pequot Capital Management, Inc. Through the transaction, Pequot also acquired
571,429 shares in the Company. In June 1999, Pequot purchased additional
SkyOnline shares from the Company for $2.5 million. Lawrence Lenihan, a
principal of Pequot, was a member of the Board of Directors of the Company from
September 1998 to March 2000.
The Company has entered into a product supply agreement with SkyOnline
pursuant to which the Company is required to offer SkyOnline certain products at
reduced prices compared to pricing available to the Company's other third party
customers. Claude Burgio, a member of the Company's Board of Directors from
September 1999 until October 5, 2000, is SkyOnline's Chief Executive Officer and
Chairman of the Board.
In May 2000, the Company entered into an Investment and Consulting
Agreement with Zavareh LLC (a limited partnership controlled by Dr. Mark
Shahriary, a director of the Company) whereby, Zavareh provides advice to the
Company for two years in consideration for the Company issuing 100,000 shares of
stock to Zavareh LLC and reimbursing Zavareh for out-of-pocket expenses of
$3,000 per month.
In July 2000, the Company entered into a License Agreement with
BroadEdge, Inc., a satellite-based broadband provider offering high quality
streaming media content, pursuant to which the Company granted to BroadEdge an
exclusive license to use certain intellectual property of the Company for a
period of ten years. In exchange for the license, the Company received 1,000,000
shares of the Common Stock of BroadEdge, or approximately 10% of its capital
stock. Mr. Youssefzadeh is the founder, Chairman of the Board of Directors and a
70% stockholder of BroadEdge. In addition, Infonet Services Corporation is a
stockholder in BroadEdge. The License Agreement and the purchase of shares of
BroadEdge was approved by a majority of the disinterested directors of the
Company. It is expected that the Company and BroadEdge will have common
customers in the future, although the Company's main focus will be the supply of
equipment, while BroadEdge will pursue service opportunities. The Company and
BroadEdge are in the process of adopting a policy that BroadEdge shall not
provide any products or services to any existing or prospective customer of the
Company unless the opportunity is waived by the Company. In addition, any
transaction between the Company and BroadEdge would be independently approved.
BOARD MEETINGS AND ATTENDANCE
The Board of Directors of the Company held nine (9) meetings during the
fiscal year ended December 31, 1999. Each incumbent Director attended at least
seventy-five percent (75%) of the aggregate of the number of meetings of the
Board and the number of meetings held by all committees of the Board on which he
served. There are no family relationships among any of the directors or
executive officers of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation and
Stock Option Committee. The Audit Committee is presently comprised of two (2)
directors selected by the Board of Directors of the Company. The members of the
Audit Committee are Dr. Ernest Gambaro and Dr. Mark Shahriary. Dr. Shahriary
will resign from the Audit Committee as he now serves as a consultant to the
Company through Zavareh LLC. The Audit Committee is authorized to handle all
matters which it deems appropriate regarding the Company's independent
accountants and to otherwise communicate and act upon matters relating to the
review and audit of the Company's books and records, including the scope of the
annual audit and the accounting methods and systems to be utilized by
4
<PAGE>
the Company. In addition, the Audit Committee also makes recommendations to the
Board of Directors with respect to the selection of the Company's independent
accountants. The Audit Committee held one (1) meeting during the fiscal year
ended December 31, 1999.
The Compensation and Stock Option Committee is presently comprised of
three (3) directors selected by the Board of Directors of the Company. The
members of the Compensation and Stock Option Committee are Dr. Gambaro, Mr.
Connors and Mr. Burgio (until Mr. Burgio's resignation on October 5, 2000). The
functions of the Compensation and Stock Option Committee include advising the
Board of Directors on officer and employee compensation and administering the
Company's stock option plans. The Board of Directors, based on input from the
Compensation and Stock Option Committee, establishes the annual compensation
rates for the Company's executive officers. The Compensation and Stock Option
Committee held four (4) meetings during the fiscal year ended December 31, 1999.
The Board of Directors does not have a nominating committee. Instead, the
Board of Directors, as a whole, identifies and screens candidates for membership
on the Company's Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the three years
ended December 31, 1999, by the Company's Chief Executive Officer, and the four
other most highly compensated executive officers of the Company serving at
December 31, 1999 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OTHER ($) AWARDS OPTIONS (#)
--------------------------- ------- ------------ ------------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Emil Youssefzadeh...................... 1999 299,905 0 33,020(7) 0
President and Chief Executive 1998 310,547 0 33,020(7) 0
Officer 1997 239,698 0 33,020(7) 10,000(10)
Frank Connors (1)...................... 1999 12,267 0 141,600(8) 20,000
Chairman of the Board 1998 206,092 0 0 0
1997 165,577 0 0 15,000(10)
Joseph Wallace (2)..................... 1999 148,700 0 1,600(9) 40,000
Vice President, Finance, 1998 149,811 30,000(5) 0 0
Chief Financial Officer & Secretary 1997 95,673 0 0 25,000
Jacques Youssefmir (3)................. 1999 120,000 10,000 1,385(9) 20,000
Vice President & General Counsel 1998 84,000 49,860(6) 0 12,500(11)
Renato Goncalves Dias.................. 1999 125,000 0 1,300(9) 23,000
Vice President, Latin American 1998 124,283 8,000 0 0(11)
Sales 1997 114,613 7,000 0 15,000(10)
Bernd Steinebrunner (4)................ 1999 34,102 0 0 20,000
Vice President, Product Management
& Sales Engineering
</TABLE>
--------------
(1) Mr. Connors served as acting President of the Company from March 1999
through September 1999.
(2) Mr. Wallace commenced employment with the Company in March 1997.
(3) Mr. Youssefmir commenced employment with the Company in April 1998, and
terminated his employment with the Company in June 2000.
(4) Mr. Steinebrunner commenced employment with the Company in September
1999.
(5) Represents bonus paid in connection with the sale of substantially all of
the assets of Telecom Multimedia Systems, Inc., the Company's subsidiary,
to Inter-Tel, Incorporated in June 1998.
5
<PAGE>
(6) Comprised of (a) $6,000 sign on bonus and (b) $43,860 bonus paid in
connection with the sale of substantially all of the assets of Telecom
Multimedia Systems, Inc., the Company's subsidiary, to Inter-Tel,
Incorporated in June 1998.
(7) Amounts represent automobile allowance and expenses paid by the Company
for the benefit of Mr. Youssefzadeh.
(8) Represents (a) $100,000 paid to Mr. Connors in connection with his
retirement as an officer in January 1999, (b) $25,000 paid to Mr. Connors
while he served as acting President from March 1999 to September 1999,
(c) $15,000 in directors fees and (d) a $1,600 Company match under the
Company's 401k plan.
(9) Figures represent Company matches under the Company's 401k plan.
(10) Includes regrants to Mr. Youssefzadeh, Mr. Connors and Mr. Dias of 10,000
options, 15,000 options and 15,000 options, respectively, on March 20,
1997 in connection with the Company's option cancellation/regrant
program.
(11) During 1998, Mr. Youssefmir and Mr. Dias were granted options to purchase
common stock of Direc-To-Phone International, Inc.(now SkyOnline, Inc.),
the Company's then majority-owned subsidiary.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants
of STM Wireless, Inc. stock options made during the fiscal year ended December
31, 1999, to each of the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
OPTIONS GRANTED TO EXERCISE STOCK PRICE
GRANTED EMPLOYEES PRICE EXPIRATION APPRECIATION FOR
NAME (NO.) IN FISCAL YR.(1) ($/SHARE) DATE (2) OPTION TERM (3)
------- ----------- ---------------- ----------- ----------- -------------------------
5% ($) 10% ($)
----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Frank Connors.............. 20,000 2.50% $ 5.375 1/8/09 $ 67,606 $ 171,327
Joseph Wallace............. 40,000 5.00% 2.750 7/28/09 69,178 175,312
Jacques Youssefmir......... 20,000 2.50% 2.750 7/28/09 34,589 87,656
Renato Goncalves Dias...... 23,000(4) 2.87% 2.696(4) (4) 38,996 98,825
Bernd Steinebrunner........ 20,000 2.50% 3.500 9/16/09 44,000 111,561
</TABLE>
--------------
(1) Options to purchase an aggregate of 800,100 shares of Common Stock were
granted to employees, including the Named Executive Officers, during the
year ended December 31, 1999.
(2) Options granted have a term of ten years, subject to earlier termination
on certain events related to termination of employment or service to the
Company.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years). It is calculated by assuming
that the stock price appreciates at the indicated annual rate compounded
annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. No gain to the option holder is possible unless the stock price
increases over the option term.
(4) Mr. Dias received stock options on two separate grant dates. Mr. Dias
received 5,000 stock options at an exercise price of $2.50 per share on
March 12, 1999. These options expire on March 12, 2009. Mr. Dias also
received 18,000 options at an exercise price of $2.75 per share on July
28, 1999. These options expire on July 28, 1999.
6
<PAGE>
The following table sets forth information concerning exercises of stock
options during the fiscal year ended December 31, 1999, by each of the Named
Executive Officers and the year-end value of unexercised options:
<TABLE>
<CAPTION>
VALUES OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT
YEAR END (NO.) FISCAL END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (NO.) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
------- ------------------- -------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Emil Youssefzadeh...................... 0 0 10,000/0 $0/$0
Frank Connors.......................... 0 0 15,000/20,000 $0/$25,000
Joseph Wallace......................... 0 0 12,500/52,500 $0/$155,000
Jacques Youssefmir..................... 0 0 2,500/30,000 $0/$77,500
Renato Goncalves Dias.................. 0 0 7,500/30,500 $0/$90,375
Bernd Steinebrunner.................... 0 0 0/20,000 $0/$62,500
</TABLE>
--------------
(1) Value is based on fair market value of Common Stock as of December 31,
1999 stock market close minus the exercise price or base price of
"in-the-money" options. The closing sales price for the Company's Common
Stock as of December 31, 1999 on the NASDAQ Stock Market was $6.625.
DIRECTORS' FEES
Each of the outside directors receives an annual retainer at the rate of
$15,000 for services rendered in his or her capacity as a director of the
Company. Accordingly, during 1999, Mr. Connors received $15,000; Mr. Gambaro
received $15,000; and Mr. Burgio received $3,750 (as he joined the Company's
Board in September of 1999) for their services as outside directors of the
Company. The Company's outside directors also receive options to purchase 20,000
shares of the Company's common stock upon joining the Company's board, with an
exercise price equal to the fair market value of the common stock at the time of
grant. The Company's outside directors were also reimbursed for expenses
incurred for meetings of the Board of Directors which they attended.
RETIREMENT OF MR. CONNORS
In 1999, Mr. Connors retired from his position as an executive officer of
the Company, at which time the Company granted Mr. Connors a retirement package
which consists of (a) $100,000 and (b) retention, at the Company's expense, of
medical and health benefits for Mr. Connors and his dependents through 1999. Mr.
Connors also received $25,000 in connection with his services to the Company as
acting President from March 1999 through September 1999. In addition, as long as
Mr. Connors remains on the Company's Board of Directors, he will be entitled to
the same remuneration as the other outside directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon its review of the copies of reporting forms furnished
to the Company, or written representations that no annual Form 5 reports were
required, the Company believes that all filing requirements under Section 16(a)
of the Exchange Act applicable to its directors, executive officers and any
persons holding 10% or more of the Company's common stock with respect to the
Company's year ended December 31, 1999, were satisfied, except as follows:
Claude Burgio filed a late Form 3 with respect to becoming a director of the
Company and the grant to him of options to purchase 20,000 shares of the
Company's common stock on September 16, 1999.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Set forth below is certain information as of the Record Date regarding
the beneficial ownership of the Company's Common Stock by (i) any person who was
known by the Company to own more than five percent (5%) of the voting securities
of the Company, (ii) all directors and nominees, (iii) each of the individuals
identified in the Summary Compensation Table, and (iv) all current directors and
executive officers as a group.
7
<PAGE>
<TABLE>
<CAPTION>
FIVE PERCENT SHAREHOLDERS, DIRECTORS, NAMED
EXECUTIVE OFFICERS AND DIRECTORS AND EXECUTIVE AMOUNT AND NATURE OF
OFFICERS AS A GROUP BENEFICIAL OWNERSHIP PERCENT OF CLASS
--------------------------------------------------- ------------------------- ------------------
<S> <C> <C>
Emil Youssefzadeh (1)............................................ 1,077,255 14.6%
STM Wireless, Inc.
One Mauchly
Irvine, California 92618
Dimensional Fund Advisors, Inc. (2).............................. 430,500 5.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Frank T. Connors (3)............................................ 203,080 2.7%
Dr. Mark Shahriary (4)........................................... 254,700 3.4%
Dr. Ernest U. Gambaro (5)........................................ 15,000 *
Claude Burgio (6)................................................ 5,000 *
Joseph Wallace (7)............................................... 28,750 *
Jacques Youssefmir (8)........................................... 11,250 *
Renato Goncalves Dias (9)........................................ 15,750 *
Bernd Steinebrunner (10)......................................... 5,000 *
All Directors and Executive Officers as a group
(11 persons) (1)(3)(4)(5)(6)(7)(8)(9)(10)........................ 1,576,835 22.4%
</TABLE>
--------------
* Less than 1%
(1) Includes 244,020 shares held by Shafigh Youssefzadeh who is brother of
Emil Youssefzadeh, for which Emil Youssefzadeh has voting rights.
Accordingly, Emil Youssefzadeh may be deemed to share beneficial
ownership of these shares. Further, includes 10,000 shares issuable upon
exercise of stock options exercisable within 60 days of the Record Date.
(2) According to a report filed with the Securities and Exchange Commission,
Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager to certain other commingled group trusts and separate accounts.
These investment companies, trusts and accounts are the "Funds". In its
role as investment adviser or manager, Dimensional possesses voting
and/or investment power over 430,500 shares of common stock of the
Company that are owned the Funds. All such securities are owned by the
Funds and Dimensional disclaims beneficial ownership of such securities.
(3) Inclusive of 45,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(4) Inclusive of 154,700 shares purchased in the open market and 100,000
shares issued in connection with an Investment and Consulting Agreement
between the Company and Zavareh LLC (a limited partnership controlled by
Dr. Shahriary).
(5) Inclusive of 15,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(6) Inclusive of 5,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(7) Inclusive of 28,750 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(8) Inclusive of 11,250 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(9) Inclusive of 15,750 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
(10) Inclusive of 5,000 shares issuable upon exercise of stock options
exercisable within 60 days of the Record Date.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The following report is submitted by the Compensation and Stock Option
Committee of the Board of Directors with respect to the executive compensation
policies established by the Compensation and Stock Option Committee and
recommended to the Board of Directors and compensation paid or awarded to
executive officers for the fiscal year ended December 31, 1999.
8
<PAGE>
The Compensation and Stock Option Committee determines the annual salary,
bonus and other benefits, including incentive compensation awards, of the
Company's senior management and recommends new employee benefit plans and
changes to existing plans to the Company's Board of Directors. The Compensation
and Stock Option Committee of the Company's Board of Directors consists of three
members. During the year ended December 31, 1999, Dr. Gambaro, Lawrence D.
Lenihan, Jr. and Guy W. Numann were members of the Compensation and Stock Option
Committee until the annual meeting of the stockholders of the Company in
September of 1999. Following the annual meeting of the stockholders of the
Company, the Compensation and Stock Option Committee was comprised of Dr.
Gambaro, Mr. Connors and Mr. Burgio.
COMPENSATION POLICIES AND OBJECTIVES
In establishing and evaluating the effectiveness of compensation programs
for executive officers and other employees of the Company, the Compensation and
Stock Option Committee is guided by three basic principles:
o The Company must offer competitive salaries to be able to attract and
retain highly-qualified and experienced executives and other
management personnel.
o Annual executive compensation in excess of base salaries should be
tied to individual and Company performance.
o The financial interests of the Company's executive officers should be
aligned with the financial interest of the stockholders, primarily
through stock option grants which reward executives for improvements
in the market performance of the Company's Common Stock.
SALARIES AND EMPLOYEE BENEFIT PROGRAMS. In order to retain executives and
other key employees, and to be able to attract additional well-qualified
executives when the need arises, the Company strives to offer salaries, and
health care and other employee benefit programs, to its executives and other key
employees that are comparable to those offered to persons with similar skills
and responsibilities by competing businesses in the local geographic area.
In recommending salaries for executive officers, the Compensation and
Stock Option Committee (i) reviews the historical performance of the executives
and (ii) informally reviews available information, including information
published in secondary sources, regarding prevailing salaries and compensation
programs offered by competing businesses that are comparable to the Company in
terms of size, revenue, financial performance and industry group. Many, though
not all, of these competing businesses, that have securities which are publicly
traded, are included in the S&P Communication--Equipment Manufacturer Index used
in the Stock Performance Graph below. Another factor which is considered in
recommending salaries of executive officers is the cost of living in Southern
California where the Company is headquartered, as such cost generally is higher
than in other parts of the country.
In order to retain qualified management personnel, the Company has
followed the practice of seeking to promote executives from within the Company
whenever practicable. The Board of Directors believes that this policy enhances
employee morale and provides continuity of management. Typically, modest salary
increases are made in conjunction with such promotions.
PERFORMANCE-BASED COMPENSATION. The Board of Directors believes that the
motivation of executives and key employees increases as the market value of the
Company's Common Stock increases. Nevertheless, the Company provides a merit
bonus in cash or stock options to executives and key employees which is
dependent on the Company's achievements and the direct contributions made by
each executive and other key employees. Accordingly, at the beginning of each
fiscal year, the Company establishes short term and long term plans, and at the
end of the fiscal year, the collective and individual contributions of the
executives to the Company's achievements are evaluated. Cash bonuses are awarded
if the Company achieves or exceeds the earnings goal established for the fiscal
year and are limited, subject to extraordinary exceptions, to amounts ranging
from five percent (5%) to fifty percent (50%) of an executive's base salary.
The earnings goal is established on the basis of the annual operating
plan developed by management and approved by the Board of Directors. The annual
operating plan, which is designed to maximize profitability within the
constraints of economic and competitive conditions, some of which are outside
the control of the Company, is developed on the basis of (i) the Company's
performance for the prior fiscal year; (ii) estimates of sales revenue for the
plan year based upon recent market conditions, trends and competition and other
factors which, based on historical experience, or expected to affect the level
of sales that can be achieved; (iii) historical operating costs and
9
<PAGE>
cost savings that management believes can be realized; (iv) competitive
conditions faced by the Company; and (v) additional expenditures beyond prior
fiscal years in expansion or research and development toward growth of the
Company's business in future fiscal years. By taking all of these factors into
account, including market conditions, the earnings goal in the annual operating
plan is determined.
In certain instances, bonuses are awarded not only on the basis of the
Company's overall profitability, but also on the achievement by an executive of
specific objectives within his or her area of responsibility. For example, a
bonus may be awarded for any executive's efforts in achieving greater than
anticipated cost savings, or completing a new product on target.
As a result of this performance-based merit bonus program, executive
compensation, and the proportion of each executive's total cash compensation
that is represented by incentive or bonus income, may increase in those years in
which the Company's profitability increases.
STOCK OPTIONS AND EQUITY-BASED PROGRAMS. In order to align the financial
interests of executive officers and other key employees with those of the
stockholders, the Company grants stock options to its executive officers and
other key employees on a periodic basis, taking into account the size and terms
of previous grants of equity-based compensation and stock holdings in
determining awards. Stock option grants, in particular, reward executive
officers and other key employees for performance that results in increases in
the market price of the Company's Common Stock, which directly benefit all
stockholders. Moreover, the Compensation and Stock Option Committee generally
has followed the practice of granting options on terms which provide that the
options become exercisable in cumulative annual installments, generally over a
three to five-year period. The Compensation and Stock Option Committee believes
that this feature of the option grants not only provides an incentive for
executive officers to remain in the employ of the Company, but also makes longer
term growth in share prices important for the executives who receive stock
options.
FISCAL YEAR 1999 COMPENSATION
The salaries of the Named Executive Officers increased over the salaries
paid in fiscal 1998, primarily as a result of the greater competitive
environment in which the Company operates. Since the Company did not meet the
earnings goals established for the year, no bonus payments were made to any of
the Named Executive Officers for the year ended December 31, 1999, except for
Mr. Youssefmir, who received a bonus of $10,000.
The Company is required to disclose its policy regarding qualifying
executive compensation deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a public corporation is limited to no more than $1 million per year. It is not
expected that the compensation to be paid to the Company's executive officers
for fiscal 2000 will exceed the $1 million limit per officer. The Company's
Incentive Stock Option, Non-Qualified Stock Option and Restricted Stock Purchase
Plan--1992 is structured so that any compensation deemed paid to an executive
officer when he exercises an outstanding option under the plan, with an exercise
price equal to the fair market value of the option shares on the grant date,
will qualify as performance-based compensation that will not be subject to the
$1 million limitation.
The Compensation Committee of the
Board of Directors
Dr. Ernest U. Gambaro
Frank T. Connors
Claude Burgio
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Company's Board of
Directors consists of three members. During the year ended December 31, 1999,
Dr. Gambaro, Lawrence D. Lenihan, Jr. and Guy W. Numann were members of the
Compensation and Stock Option Committee until the annual meeting of the
stockholders of the Company in September of 1999. Following the annual meeting
of the stockholders of the Company, the Compensation and Stock Option Committee
was comprised of Dr. Gambaro, Mr. Connors and Mr. Burgio. Mr. Connors served as
acting President of the Company from March 1999 to September 1999 and President
of SkyOnline from January 1998 to January 1999.
10
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative stockholder
return on the Company's Common Stock with the cumulative total return of the S&P
Communications-Equipment/Manufacturer Index and the NASDAQ Stock Market -- US
Index for the period commencing December 31, 1994 and ended on December 31,
1999.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG STM WIRELESS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P COMMUNICATIONS EQUIPMENT INDEX
[PERFORMANCE CHART APPEARS HERE]
12/94 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- -----
STM Wireless 100 131 47 58 32 45
Nasdaq Stock Market (U.S.) 100 141 174 213 300 542
S&P Communications Equipment 100 150 175 228 402 883
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
11
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP, independent auditors, to
audit the financial statements of the Company for the fiscal year ending
December 31, 2000, and recommends that stockholders vote for ratification of
such appointment. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection.
KPMG LLP has audited the Company's financial statements annually since
fiscal year 1991. Its representatives are expected to be present at the meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 2001
Annual Meeting of Stockholders and presentation in the Company's Proxy Statement
with respect to such meeting should arrange for such proposal to be delivered to
the Company at its principal place of business no later than June 16, 2000 in
order to be considered for inclusion in the Company's proxy statement relating
to that meeting. Matters pertaining to such proposals, including the number and
length thereof, eligibility of persons entitled to have such proposals included
and other aspects are regulated by the Securities Exchange Act of 1934, Rules
and Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
On May 21, 1998 the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a shareholder proposal
which the shareholder has not sought to include in the Company's proxy
statement. The new amendment provides that if a proponent of a proposal fails to
notify the company at least 45 days prior to the month and day of mailing of the
prior year's proxy statement, then the management proxies will be allowed to use
their discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement.
With respect to the Company's 2001 Annual Meeting of Stockholders, if the
Company is not provided notice of a shareholder proposal, which the shareholder
has not previously sought to include in the Company's proxy statement, by August
24, 2001, the management proxies will be allowed to use their discretionary
authority as outlined above.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting.
If any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
Emil Youssefzadeh
PRESIDENT AND CHIEF EXECUTIVE OFFICER
October 8, 2000
The Annual Report to Stockholders of the Company for the fiscal year
ended December 31, 1999 is being mailed concurrently with this Proxy Statement
to all stockholders of record as of September 16, 2000. The Annual Report is not
to be regarded as proxy soliciting material or as a communication by means of
which any solicitation is to be made.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1999 WILL BE
PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, STM WIRELESS, INC., ONE MAUCHLY, IRVINE, CALIFORNIA 92618.
12
<PAGE>
STM WIRELESS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING - NOVEMBER 8, 2000
The undersigned stockholder of STM Wireless, Inc. (The "Company")
acknowledge receipt of the Notice of the Annual Meeting of Stockholders and
Proxy Statement, each dated October 8, 2000, and the undersigned revokes all
prior proxies and appoints Emil Youssefzadeh, Frank Connors and Joseph Wallace,
and each of them, proxies for the undersigned to vote all shares of Common Stock
of the Company which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders to be held at the Laguna Cliffs Marriott Resort, 25135
Park Lantern, Dana Point, California, at 10:00 a.m. on November 8, 2000, and any
postponement or adjournment thereof, and instructs said proxies to vote as
follows:
1. ELECTION OF SIX DIRECTORS
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees listed
below
Frank T. Connors, Emil Youssefzadeh, Dr. Ernest U. Gambaro, Dr. Mark Shahriary,
Louis B. Horwitz and Dr. Samuel A. Culbert
2. Ratification of appointment of KPMG LLP as independent auditors of the
Company for the fiscal year ending December 31, 2000.
|_| FOR ratification |_| AGAINST
ratification
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON THE REVERSE SIDE)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION MADE. IF NO
SPECIFICATIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE SIX NOMINEES FOR
DIRECTOR.
Dated this ____ day of _____, 2000
--------------------------------------------------
Signature of Stockholder
--------------------------------------------------
Signature of Stockholder
Please sign exactly as your name or names appear
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If shares are held jointly,
each holder should sign.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
