SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
I. SCHEDULE 14A INFORMATION
A. Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
American Mobile Satellite Corporation
(Name of Registrant as Specified in Its Charter)
Randy S. Segal
(Name of Person(s) Filing Proxy Statement)
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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
American Mobile Satellite Corporation to be held at 9:00 a.m. on Wednesday, May
26, 1999 at the Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston,
Virginia (703/620-9000).
The formal notice of annual meeting and proxy statement are attached to this
letter. This material contains information concerning the business to be
conducted at the meeting and the nominees for election as directors.
Even if you are unable to attend the meeting in person, it is important that
your shares be represented. Therefore, I urge you to complete, date, sign and
return the enclosed proxy card at your earliest convenience. If you choose to
attend the annual meeting, you may, of course, revoke your proxy and cast your
votes personally at the meeting.
Sincerely,
/s/Gary M. Parsons
Chairman of the Board
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[GRAPHIC OMITTED]
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of American Mobile Satellite Corporation:
The annual meeting of stockholders of American Mobile Satellite Corporation
("American Mobile" or the "Company") will be held at the Sheraton Reston Hotel,
11810 Sunrise Valley Drive, Reston, Virginia, on Wednesday, May 26, 1999, at
9:00 a.m., for the following purposes:
1. To elect nine directors;
2. To consider and act upon a proposal to amend the Company's 1994 Stock
Option Plan for Non-Employee Directors, in order to increase the number of
authorized shares available under such Plan and to increase the size of the
automatic option grants under such plan;
3. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as independent accountants for American Mobile for the year 1999;
and
4. To transact such other business as may be properly brought before the
meeting or any adjournments thereof.
Only holders of record of American Mobile's common stock at the close of
business on March 31, 1999 will be entitled to vote at the meeting. A list of
such stockholders will be available at the Company's headquarters, 10802
Parkridge Boulevard, Reston, Virginia for examination during normal business
hours by any stockholder for any purpose germane to the meeting for a period of
ten days prior to the meeting.
Stockholders who do not expect to attend the meeting in person are asked to
date, sign and complete the enclosed proxy and return it without delay in the
enclosed envelope, which requires no postage if mailed in the United States.
By order of the Board of Directors,
Randy S. Segal
Senior Vice President and Secretary
Reston, Virginia
April 21, 1999
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[GRAPHIC OMITTED]
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
The accompanying proxy is solicited on behalf of the Board of Directors of
American Mobile Satellite Corporation ("American Mobile" or the "Company") for
use at the annual meeting of stockholders to be held on May 26, 1999, and any
adjournments thereof. The annual meeting will be held at the Sheraton Reston
Hotel, 11810 Sunrise Valley Drive, Reston, Virginia, and will commence at 9:00
a.m. The stockholder giving the proxy may revoke it at any time before it is
exercised at the meeting by delivering to the Secretary of American Mobile a
written instrument of revocation or a duly executed proxy bearing a later date.
This proxy statement and the accompanying form of proxy are being first sent to
stockholders on or about April 21, 1999.
The only class of securities of American Mobile entitled to vote at the 1999
annual meeting is its common stock, of which 32,303,098 shares were outstanding
on March 31, 1999. Only stockholders of record at the close of business on March
31, 1999 will be entitled to vote at the annual meeting. The presence of the
holders of a majority of the issued and outstanding shares of common stock
entitled to vote at the annual meeting, either in person or represented by
properly executed proxies, is necessary to constitute a quorum for the
transaction of business at the meeting. If there are not sufficient shares
represented in person or by proxy at the meeting to constitute a quorum, the
meeting may be postponed or adjourned in order to permit further solicitation of
proxies by the Company. Proxies given pursuant to this solicitation and not
revoked will be voted at any postponement or adjournment of the annual meeting
in the manner described elsewhere in this proxy statement.
Each stockholder has one vote for each share of common stock held, and in the
election of directors is entitled to cumulate his or her votes. Under cumulative
voting, each stockholder is allowed that number of votes equal to the number of
director positions to be filled (nine) multiplied by the number of shares of
common stock owned. The stockholder may distribute those votes among one or
more, or all, of the nominees as the stockholder desires. However, as described
below, the accompanying proxy reserves to the persons named therein the right to
distribute the votes represented by such proxy in their discretion in order to
maximize the likelihood of electing the full slate of directors. Under
cumulative voting, directors are elected by a plurality of votes cast. A
withheld vote on any nominee will not affect the voting results.
With respect to Proposal 2, approval of amendments to the 1994 Stock Option Plan
for Non- Employee Directors, and with respect to Proposal 3, ratification of the
appointment of Arthur Andersen LLP as independent accountants for American
Mobile for the year 1999, the affirmative vote of the holders of a majority of
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the shares present in person or represented by proxy at the annual meeting and
entitled to vote will be required. Abstentions will be treated as votes present
and entitled to vote and thus will have the effect of a vote against these
proposals.
Brokers who hold shares in street name for beneficial owners have the authority
to vote on the matters scheduled for the meeting if the brokers do not receive
instructions from beneficial owners. Broker non-votes (arising from the lack of
instructions from beneficial owners) will not affect the outcome of the vote on
Proposal 2 or Proposal 3. Broker non-votes will be counted in determining the
existence of a quorum.
The cost of soliciting proxies in the form enclosed herewith will be borne by
the Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers and regular employees, may also solicit proxies
personally or by telephone. The Company also will request persons, firms and
corporations holding common stock in their names or in the names of their
nominees, which are beneficially owned by others, to send proxy materials to and
obtain proxies from the beneficial owners, and the Company will reimburse the
holders for their reasonable out-of-pocket expenses in so doing.
1. ELECTION OF DIRECTORS
------------------------
It is intended that the persons named in the proxy will, unless otherwise
instructed, vote for the election of the nine nominees listed below to serve as
directors until the next annual meeting of stockholders and until their
respective successors are elected and qualified. If for any reason any nominee
should not be available for election or able to serve as a director, the
accompanying proxy may be voted for the election of a substitute nominee
designated by the Board of Directors and will be voted for the election of the
other nominees named therein. In any event, management reserves the right in its
discretion to distribute the total votes represented by the proxies unevenly or
among less than all of the persons named (or their substitutes), as permitted by
cumulative voting, in order to maximize the likelihood of electing the full
slate of directors.
Nominees
- --------
Information with respect to the business experience and affiliations of the
nominees to the Board of Directors is set forth below. The information set forth
below and elsewhere in this proxy statement concerning the nominees and their
security holdings has been furnished by them to American Mobile.
Gary M. Parsons, 48. American Mobile's Chairman of the Board of Directors
since March 1998, Mr. Parsons has been an American Mobile director, and formerly
Chief Executive Officer and President of American Mobile, since July 1996. Mr.
Parsons joined American Mobile from MCI Communications Corporation ("MCI") where
he served in a variety of executive roles from 1990 to 1996, including most
recently as Executive Vice President of MCI Communications, and as Chief
Executive Officer of MCI's subsidiary MCImetro, Inc. From 1984 to 1990, Mr.
Parsons was one of the principals of Telecom*USA, which was acquired by MCI.
Douglas I. Brandon, 40. An American Mobile director since January 1998, Mr.
Brandon is Vice President -- External Affairs & Law, AT&T Wireless Services,
Inc. ("AT&T Wireless"). Prior to joining AT&T Wireless in 1993, Mr. Brandon was
associated with the law firm of Davis Polk & Wardwell beginning in 1986. Prior
to Davis Polk, Mr. Brandon clerked for the Honorable William H. Timbers of the
United States Court of Appeals for the Second Circuit.
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Pradeep P. Kaul, 49. An American Mobile director since May 1998, Mr. Kaul
is Executive Vice President of Hughes Network Systems ("HNS") and a member of
the Office of the Chairman. In addition to his general corporate duties, Mr.
Kaul is responsible for HNS' efforts in the wireless marketplace, managing the
development and marketing of offerings that include subscriber terminals,
infrastructure networks and digital network services. Prior to 1987, Mr. Kaul
was senior vice president of M/A-Com Telecommunications, Inc. ("M/A-Com"), which
was acquired by Hughes Electronics Corporation ("Hughes") in 1987. Prior to
that, Mr. Kaul was director of engineering with M/A Com.
Billy J. Parrott, 63. An American Mobile director since May 1988, Mr.
Parrott is President and Chief Executive Officer of Antifire, Inc., a
manufacturer of non-toxic fire retardants. Mr. Parrott is also the founder and
co-founder of several telecommunications companies, including Private Networks,
Inc., a builder and operator of telecommunications and broadcast properties, and
Roanoke Valley Cellular Telephone Company, a cellular communications company.
Mr. Parrott is owner of a production company where he functions as a writer,
producer, director and marketing consultant to Fortune 500 companies.
Walter V. Purnell, Jr., 53. An American Mobile director and the Company's
Chief Executive Officer since January 1999, Mr. Purnell also serves as the
President, a position he has held since March 1998. Previously, Mr. Purnell was
President and Chief Executive Officer of ARDIS since September 1995. Before
that, Mr. Purnell had served as the chief financial officer of ARDIS since its
founding in 1990. Before 1990, Mr. Purnell held a broad range of senior
executive positions with IBM over 23 years, with financial responsibility over
significant telecommunications and other business divisions, both domestically
and internationally.
Andrew A. Quartner, 45. An American Mobile director since May 1988, Mr.
Quartner also serves as corporate counsel at Nextlink Communications, Inc. and
Vice Chairman of CellPort Labs, Inc. Prior to 1997, Mr. Quartner was Senior Vice
President, Law, of AT&T Wireless, which he joined in November 1985. Prior to
joining AT&T Wireless, Mr. Quartner was associated with the law firm of
Debevoise & Plimpton in New York.
Jack A. Shaw, 60. An American Mobile director and formerly Chairman of the
Board of Directors of American Mobile since July 1996, Mr. Shaw is Chairman and
Chief Executive Officer of HNS and Executive Vice President of Hughes. Mr. Shaw
is a member of the Hughes Executive Committee. Previously, Mr. Shaw held senior
management positions with companies including ITT Space Communications, Inc.,
Digital Communications Corporation and M/A-Com, which was acquired by Hughes in
1987.
Roderick M. Sherwood, III, 45. An American Mobile director since April
1996, Mr. Sherwood is a Hughes Network Systems Senior Vice President and General
Manager of Spaceway and a Corporate Vice President of Hughes. Previously, Mr.
Sherwood served as Treasurer of Hughes, and Chairman of Hughes Investment
Management Company, Senior Vice President -- Operations and Chief Financial
Officer of Hughes Telecommunications and Space Company, and Executive Vice
President of DIRECTV International. He is a member of the Hughes Chairman's
Forum. Prior to joining Hughes in May 1995, Mr. Sherwood served in a variety of
financial roles during his 14-year career with Chrysler Corporation, where he
served as Assistant Treasurer from 1991 to 1994.
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Michael T. Smith, 55. An American Mobile director since April 1996, Mr.
Smith is Chairman and Chief Executive Officer of Hughes. Mr. Smith is a member
of the Hughes Executive Committee. Mr. Smith also serves as the Chairman of the
Board of Directors of PanAmSat Corporation. Prior to his current position, Mr.
Smith served as Chairman of Hughes Aircraft Company ("Hughes Aircraft") and Vice
Chairman of Hughes. Mr. Smith served as Executive Vice President and Chief
Financial Officer of Hughes from 1989 until 1992. Mr. Smith was the Chairman of
Hughes Missile Systems Co. from 1992 to 1994. Previously, Mr. Smith served in a
variety of financial management positions with Hughes and General Motors
Corporation, beginning his career in 1968.
The Board of Directors recommends that stockholders vote FOR the election
of the nine persons nominated to serve as Directors.
Board Committees, Meetings and Compensation
- -------------------------------------------
The Board of Directors has an Executive Committee which meets as needed and
generally has full authority to act on behalf of the Board of Directors unless
otherwise prohibited by Delaware law. The Executive Committee includes
representatives from Hughes and AT&T Wireless, and its members are designated by
the Board of Directors in accordance with the terms of a stockholders'
agreement. Under certain circumstances, a stockholder holding a Threshold
Percentage of common stock has the right to cause other 5% stockholders which
are parties to the agreement to have such other parties' representatives on the
Board of Directors vote to have the nominee of that stockholder appointed to the
Executive Committee. See "Agreements Among Stockholders." The current members of
the Executive Committee are Messrs. Brandon, Parsons, Shaw and Sherwood. The
Executive Committee met four times during 1998 and took action by unanimous
written consent three times during 1998.
The Board of Directors also has an Audit Committee which currently consists of
Messrs. Parrott, Quartner and Sherwood. The Audit Committee is responsible for
reviewing the Company's internal auditing procedures and accounting controls and
will consider the selection and independence of the Company's outside auditors.
The Audit Committee met three times during 1998.
The Board of Directors has a Nominating Committee which makes nominations for
the Board of Directors and the Committees of the Board. The current members of
the Nominating Committee are Messrs. Kaul, Parrott and Smith. The Nominating
Committee did not meet during 1998. The Nominating Committee will consider
stockholder proposals of persons to be nominated for election to the Board made
in accordance with the Company's Bylaws. See "Proposals for the Company's Annual
Meeting in 2000," below.
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The Board of Directors has a Compensation and Stock Option Committee which is
responsible for administering American Mobile's 1989 Employee Stock Option Plan
(the "1989 Plan"), reviewing certain of American Mobile's compensation programs
and making recommendations to the Board of Directors with respect to
compensation. The current members of the Compensation and Stock Option Committee
are Messrs. Quartner, Shaw and Smith. The Compensation and Stock Option
Committee met twice during 1998 and took action by unanimous written consent
twice during 1998. See "Compensation and Stock Option Committee Report."
The Board of Directors met eight times during 1998. All director nominees other
than Messrs. Kaul, Quartner and Smith attended 75% or more of all Board meetings
and meetings of committees of which they were members during 1998.
Each non-employee member of the Board of Directors is entitled to receive an
annual retainer of $19,000, and each member of the committees of the Board is
entitled to receive additional amounts as follows: Executive Committee, $3,500
per year; Audit Committee, $2,500 per year; Nominating Committee, $2,000 per
year; and Compensation and Stock Option Committee, $2,000 per year. Directors
have the right to elect to retain or forego these amounts, or to have them
donated to a charity of their choice. Messrs. Parrott and Quartner elected to
have such amounts paid to them directly. All other directors elected to forego
receipt of retainer and committee fees. Each non-employee member of the Board of
Directors (an "Eligible Director") is entitled to receive options exercisable
for the Company's common stock as provided in the Company's 1994 Stock Option
Plan for Non-Employee Directors ("Director Plan"). Pursuant to the Director
Plan, each Eligible Director (other than directors electing not to receive such
options) receives an initial option to purchase 1,000 shares of common stock,
and automatically receives annually an option to purchase 500 shares of common
stock at an exercise price equal to the fair market value of the common stock on
the date of grant. Each option expires on the earlier of (i) ten years from the
date of grant or (ii) seven months after a director's termination of service as
a director. Mr. Brandon elected to forego receipt of options under the Director
Plan. Stockholders are being asked to approve certain amendments to the Director
Plan. See "2. Amendments to Stock Option Plan for Non-Employee Directors."
Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------
The following table and the accompanying notes set forth certain information
concerning the beneficial ownership of American Mobile's common stock at March
31, 1999 (except where otherwise indicated), by (i) each person who is known by
American Mobile to own beneficially more than five percent of American Mobile's
common stock, (ii) each director, (iii) each Executive Officer named in the
Summary Compensation Table (see "Executive Compensation," below) and (iv) all
directors and Executive Officers as a group. Except as otherwise indicated, each
person listed in the table has informed American Mobile that such person has (i)
sole voting and investment power with respect to such person's shares of common
stock and (ii) record and beneficial ownership with respect to such person's
shares of common stock.
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<TABLE>
<CAPTION>
Name of Beneficial Owner(1) Number of
Shares % of Class
Beneficial Owners of More than 5%
<S> <C> <C>
AT&T Wireless Services, Inc.(2) 3,001,145 9.30%
1150 Connecticut Avenue, N.W.
Washington, DC 20036
Singapore Telecommunications Limited (3) 4,836,746 14.63%
31 Exeter Road, Comcentre
Singapore 239732
Republic of Singapore
Motorola, Inc. 6,520,532 20.22%
1303 East Algonquin Road
Schaumberg, IL 60196
Baron Capital, Inc.(4) 6,135,100 18.56%
767 Fifth Avenue, 24th Floor
New York, NY 10153
Hughes Communications Satellite Services, Inc.(5) 11,566,622 31.14%
Building S66/D468
Post Office Box 92424
Los Angeles, CA 90009
Directors and Executive Officers
Douglas I. Brandon....................................... 0 *
Robert L. Goldsmith(6)(10)...............................151,357 *
Pradeep P. Kaul(7)....................................... 1,000 *
Billy J. Parrott(7)(8)................................... 12,500 *
Gary M. Parsons(6)(10)...................................450,990 1.38%
Walter V. Purnell, Jr.(6)(10)(11)........................112,387 *
Andrew A. Quartner(7)(9)................................. 6,000 *
Jack A. Shaw(7).......................................... 1,000 *
Roderick M. Sherwood III(7).............................. 1,000 *
Michael T. Smith(7)...................................... 2,000 *
Randy S. Segal(6)(10)....................................156,841 *
W. Bartlett Snell........................................ 40,000 *
All Directors and Executive Officers as a
group (12 persons)(6)(10)................................934,667 2.82%
</TABLE>
* Less than 1%
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(1)Certain holders of common stock, including each of the beneficial owners
of more than 5% of the common stock ("5% Stockholders") listed in the table are
parties to a stockholders' agreement dated December 1, 1993 (the "Stockholders'
Agreement"). The 5% Stockholders who are parties to the Stockholders' Agreement
may be deemed to constitute a group having beneficial ownership of all common
stock held by members of such group. See "Agreements Among Stockholders." Each
such 5% Stockholder disclaims beneficial ownership as to shares of common stock
held by other 5% Stockholders.
(2)Through its subsidiaries, Transit Communications, Inc. (681,818 shares),
Satellite Communications Investments Corporation (1,113,135 shares) and Space
Technologies Investments, Inc. (1,206,192). Transit Communications, Inc. is
indirectly 80%-owned by LIN Broadcasting Corporation, which is an indirect
subsidiary of AT&T Wireless. Satellite Communications Investments Corporation
and Space Technologies Investments, Inc. are direct or indirect subsidiaries of
AT&T Wireless.
(3)Singapore Telecom is approximately 80%-owned by Temasek Holdings
(Private) Ltd., a Singapore holding company that is wholly owned by the
Government of Singapore. Includes 812,500 shares of common stock issuable upon
exercise of warrants issued in connection with the guaranty of the bank
financings.
(4)Includes 812,500 shares of common stock issuable upon exercise of
warrants issued in connection with the guarantees of the bank financings.
(5)Hughes Communications Satellite Services, Inc. ("HCSSI") is an indirect
wholly-owned subsidiary of Hughes, which is a wholly-owned subsidiary of General
Motors Corporation. Includes 25,000 shares of common stock issuable upon
exercise of warrants issued to HCSSI on January 19, 1996, in connection with a
prior interim financing facility guarantee and 4,875,000 shares of common stock
issuable upon exercise warrants issued in connection with the bank financings.
(6)Includes shares owned through the Company's matching 401(k) Plan and/or
Employee Stock Purchase Plan.
(7)Includes shares issuable upon the exercise of options granted under the
Director Plan which options are vested and exercisable within sixty days after
March 31, 1999, subject to compliance with applicable securities laws.
(8)Includes 7,500 shares owned by Private Networks, Inc., a company in
which Mr. Parrott owns a one-third equity interest. Mr. Parrott disclaims
beneficial ownership as to all such shares of common stock.
(9)Includes 1,050 shares owned by trusts for the benefit of each of Mr.
Quartner's three children, of which Mr. Quartner is trustee, and 100 shares
owned by Mr. Quartner's wife. Mr. Quartner disclaims beneficial ownership as to
all such shares of common stock.
(10)Includes shares issuable upon the exercise of options granted under the
1989 Plan which options are vested and exercisable within sixty days after March
31, 1999, subject to compliance with applicable securities laws. Also includes
shares of restricted stock awarded under the 1989 Plan, which are subject to a
number of conditions of forfeiture.
(11)Includes 200 shares owned by Mr. Purnell's wife, as to which Mr.
Purnell disclaims beneficial ownership.
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Agreements Among Stockholders
- -----------------------------
Stockholders' Agreement
- -----------------------
American Mobile and each holder of shares of common stock who acquired such
shares prior to the Company's initial public offering of 8,500,000 shares of
common stock, which was completed December 20, 1993, are parties to a
Stockholders' Agreement, amended and restated as of December 1, 1993 (the
"Stockholders' Agreement"). The remaining parties to the Stockholders' Agreement
(principally Hughes, Singapore Telecom, and AT&T Wireless) hold approximately
50% of the outstanding shares of common stock on a fully diluted basis. The
Stockholders' Agreement sets forth agreements among the parties relating to the
governance of the Company, ownership of shares and the voting and
transferability of common stock and other matters. The Stockholders' Agreement
limits the Company's activities to engaging in the communications business,
providing, marketing and operating a mobile satellite service and engaging in
activities necessary, appropriate or reasonably related to the foregoing. The
Stockholders' Agreement provides that the parties will not vote to remove
members of the Board of Directors except for cause and that they will not elect
or permit the election of a director who is not a United States citizen, if such
action would cause the Company to violate applicable law, regulations or FCC
policy.
In the Stockholders' Agreement, certain stockholders who, together with their
affiliates, own in excess of five percent of the common stock ("Specified
Stockholders") have also agreed to cause their representatives on American
Mobile's Board of Directors to appoint to the Executive Committee two directors
(and one alternate) nominated by each of the two Specified Stockholders which
are parties to the Stockholders' Agreement that hold the greatest number of
shares of common stock and one director (and one alternate) nominated by the
Specified Stockholder that holds the third greatest number of shares of common
stock, provided that each Specified Stockholder making such nomination holds at
least 15% (the "Threshold Percentage"), of the outstanding common stock.
Notwithstanding the foregoing, regardless of whether any other Specified
Stockholder which is a party to the Stockholders' Agreement holds the Threshold
Percentage of the outstanding shares of common stock, during the period that any
single Specified Stockholder or group of affiliated stockholders which are
parties to the Stockholders' Agreement are the record holders of more than 50%
of the outstanding common stock, the Specified Stockholders have agreed to cause
their Board representatives to vote for the appointment to the Executive
Committee of nominees of that Specified Stockholder. The Stockholders' Agreement
also provides that no person shall be elected to the Board of Directors if such
election would violate the Communications Act of 1934, as amended (the
"Communications Act") or regulations thereunder. Furthermore, the Stockholders'
Agreement provides that no director shall be elected to the Executive Committee
if such election, in the opinion of counsel for American Mobile, would raise a
reasonable prospect of violating the Communications Act or regulations
thereunder. Moreover, before any Specified Stockholder may elect a director of
American Mobile who is not a United States citizen, it must first allow
Singapore Telecom to elect such a director, provided Singapore Telecom casts
sufficient cumulative votes to elect a director.
The Communications Act provides that certain FCC licenses may not be held by a
corporation of which more than 20% of its capital stock is directly owned of
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record or voted by non-U.S. citizens or entities or their representatives (the
Company's wholly-owned subsidiary, AMSC Subsidiary Corporation ("AMSC
Subsidiary"), as the holder of the FCC license to construct and operate the
Company's mobile satellite services system, is subject to these restrictions).
Further, the Communications Act provides that certain FCC licenses may not be
held by a corporation controlled by another corporation if more than 25% of the
controlling corporation's capital stock is owned of record or voted by non-U.S.
citizens or entities or their representatives ("Alien Ownership"), if the FCC
finds that the public interest is served by the refusal or revocation of such
license (American Mobile controls AMSC Subsidiary and therefore is subject to
these restrictions). The Stockholders' Agreement contains procedures for
reducing the risk that the Company will fail to comply with the FCC's Alien
Ownership restrictions as a result of the ownership of the stockholders party to
that Agreement or their respective holdings in American Mobile.
The Stockholders' Agreement provides that when a Specified Stockholder transfers
common stock not acquired by such Specified Stockholder in the open market, the
transferee shall become a party to the Stockholders' Agreement, and shall assume
all of the transferring Specified Stockholder's rights and obligations under the
Stockholders' Agreement, provided such transferee together with its affiliates
would, giving effect to such transfer, hold in excess of 5% of the issued and
outstanding common stock.
The Stockholders' Agreement continues until terminated by the affirmative vote
of the holders of three-fourths of the issued and outstanding common stock held
by parties to the Stockholders' Agreement. It may be amended by a three-fourths'
vote of the Specified Stockholders, except that amendments to the provisions
providing for registration rights and certain other matters require the
affirmative vote of the holders of three-fourths of the outstanding common stock
held by parties to the Stockholders' Agreement.
Motorola Agreements
- -------------------
In connection with the acquisition of ARDIS from Motorola by the Company on
March 31, 1998 (the "Acquisition"), and pursuant to the Stock Purchase Agreement
dated as of December 31, 1997, as amended March 31, 1998 (the "Purchase
Agreement"), American Mobile, Motorola and certain of American Mobile's
principal stockholders (Hughes, Singapore Telecom and AT&T Wireless) (the
"Participating Stockholders") have agreed to certain participation and
registration rights with respect to American Mobile's common stock.
Pursuant to the terms of the Participation Rights Agreement entered into on
December 31, 1997 (the "Participation Rights Agreement"), in the event that one
of the Participating Stockholders seeks to transfer its shares of American
Mobile's common stock other than in a Rule 144 or public stock exchange or
Nasdaq Stock Market transaction (a "Transfer") at a time at which Motorola
beneficially owns 5% or more of American Mobile's common stock, Motorola would
have a right to receive notice of the intended Transfer by such Participating
Stockholder and a right to participate (proportionate to Motorola's
stockholdings relative to those of such Participating Stockholder) in such
contemplated Transfer. Under the Participation Rights Agreement, the
Participating Stockholders would be entitled to similar notice and participation
rights in the event of an intended transfer by Motorola of its interests in
American Mobile's common stock.
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The Participation Rights Agreement also provides that in connection with the
Acquisition, Motorola would be entitled to certain demand and participation
("piggyback") registration rights with respect to the shares of common stock to
be issued to Motorola (directly or following exercise of its warrants) as part
of the purchase price of ARDIS. Pursuant to the Participation Rights Agreement,
after the first year following the Acquisition, Motorola or its transferees
would be entitled to two demand registrations with respect to its shares of
American Mobile's common stock, subject to certain registration priorities and
postponement rights of American Mobile. In addition, Motorola would be entitled
to piggyback registration in connection with any registration of securities by
American Mobile (whether or not for its own account) on a form which may be used
for registration of the common stock held by Motorola. Under the Participation
Rights Agreement, Motorola's piggyback registration rights would have certain
priorities for sale over those of other parties (including the Participating
Stockholders). Motorola's priority rights, however, would not extend to a
primary registration on behalf of American Mobile or to the registration rights
relating to the 12 1/4% senior notes and related warrants (the "high yield debt
offering") issued by the Company in connection with the Acquisition.
Executive Officers
- ------------------
Executive Officers of American Mobile are elected by, and serve at the
discretion of, the Board of Directors. As part of their responsibilities,
Executive Officers also currently serve as officers of the subsidiaries of
American Mobile, including AMSC Acquisition Company, Inc. ("AMSC Acquisition
Company"), AMSC Subsidiary, AMSC Subsidiary Corporation of Virginia, American
Mobile Satellite Sales Corporation, Personal Communications Satellite
Corporation, AMSC Sales Corporation, Ltd., XM Satellite Radio Inc. (formerly
American Mobile Radio Corporation), XM Satellite Radio Holdings Inc. (formerly
AMRC Holdings Corporation) (together with XM Satellite Radio Inc., "XM Radio"),
AMSC ARDIS, Inc., AMSC ARDIS Acquisition, Radio Data Network Holding
Corporation, ARDIS Company, and ARDIS Holding Company. Executive Officers
receive no additional compensation for these services. Information with respect
to the age, business experience and the affiliations of the Executive Officers
of American Mobile is set forth below.
Gary M. Parsons, Chairman of the Board of Directors, joined the Company in
July 1996. See "Nominees" for information regarding Mr. Parson's age, business
experience and affiliations.
Walter V. Purnell, Jr., Chief Executive Officer and President, joined the
Company in March 1998. See "Nominees" for information regarding Mr. Purnell's
age, business experience and affiliations.
Robert L. Goldsmith, 55. American Mobile's Executive Vice President and
Chief Operating Officer since February 1997. Prior to joining American Mobile,
Mr. Goldsmith was the Senior Vice President of Sales and Marketing and General
Manager of the Commercial Services Division for Qwest Communications Company
("Qwest"). Prior to joining Qwest in 1995, Mr. Goldsmith was with MCI for nine
years in various executive sales and marketing positions.
10
<PAGE>
Randy S. Segal, 43. American Mobile's Senior Vice President, General
Counsel and Secretary since October 1992. From October 1983 to October 1992, Ms.
Segal was associated with the law firm of Debevoise & Plimpton in New York, New
York. Prior to joining Debevoise, Ms. Segal clerked for the Honorable Jerre S.
Williams of the United States Court of Appeals for the Fifth Circuit, and for
the Honorable Edmund L. Palmieri for the United States District Court for the
Southern District of New York.
W. Bartlett Snell, 47. American Mobile's Senior Vice President and Chief
Financial Officer as of March 1999. Mr. Snell was formerly the Senior Vice
President and Chief Financial Officer at Orbcomm Global, L.P. ("Orbcomm"), which
he joined in 1996. Prior to joining Orbcomm, Mr. Snell spent 16 years at IBM in
a variety of leadership positions in diverse business areas.
Compensation and Stock Option Committee Report
- ----------------------------------------------
Introduction
- ------------
The Company's compensation policy for 1998 was established by the Compensation
and Stock Option Committee consisting of Messrs. Quartner, Shaw and Smith In
accordance with this policy, which is discussed in greater detail below, the
Compensation and Stock Option Committee set the base salaries of, and awarded
cash bonuses, and stock options to, American Mobile's Executive Officers for
1998. None of the members of the Compensation and Stock Option Committee are
employees of the Company.
American Mobile's Compensation Policy. American Mobile's compensation policy is
- -------------------------------------
designed to (i) attract and retain a talented and highly motivated executive
corps, (ii) reward those executives for attaining personal, departmental and
company-wide goals and (iii) align the interests of those executives with the
interests of the Company's stockholders. Each of these objectives is addressed
to a greater or lesser extent by each of the three components of the executive's
compensation - base salary, annual bonus and equity based awards (restricted
stock awards and stock options).
In determining the base salaries of Executive Officers for 1998, the
Compensation and Stock Option Committee considered its actions in 1997 to forego
merit increases or reduce salaries for Executive Officers. The Committee's
actions for 1997 had been made in view of the economic constraints then facing
the Company, the desirability of placing a greater emphasis on
performance-based, at-risk compensation and the positive message to be derived
throughout the organization by implementation of such a salary reduction or
freeze at the most senior management levels.
The Committee also considered the considerable efforts of senior management in
effecting the successful acquisition of ARDIS and related financing in March of
1998. In light of these considerations and the overall compensation policy, the
Committee determined that merit increases should be paid in 1998 and returned
the reduced salary of Mr. Parsons to its original level.
11
<PAGE>
In 1998, the Committee also began its evaluation of the consistency of base and
bonus compensation for executive and senior management in the combined American
Mobile-ARDIS organization. Compensation for Mr. Purnell, who joined the Company
in March 1998 as its President, was determined consistent with the existing
compensation structure for other Executive Officers of American Mobile.
Compensation for other senior officers of the combined company were considered
and modified towards a goal of comparable treatment.
Annual Bonus. American Mobile's Executive Officers are eligible for
- --------------
discretionary annual bonuses. Performance objectives are set annually for each
executive, with relative values set for attaining each objective. At year end,
the Chief Executive Officer of the Company assesses each executive's success in
obtaining his or her performance objectives, and makes an appropriate
recommendation to the Compensation and Stock Option Committee regarding such
executive's annual bonus. Such recommendations are generally based, in part, on
quantitative factors relating to attainment of corporate objectives and, in
part, on more qualitative factors relating to individual performance.
In 1998, the Committee determined that 92.5% of established corporate objectives
had been met and approved payment of discretionary bonuses as recommended.
Equity Based Awards. The number and type of equity based awards granted to each
executive is determined by the Compensation and Stock Option Committee in its
discretion. In making its determination, the Compensation and Stock Option
Committee considers the executive's position at the Company, his or her
individual performance, the number of options or other awards held by the
executive (if any) and other factors, including an analysis of the estimated
amount potentially realizable from the award.
In January 1999, the Committee approved the grant of stock options to senior
management to continue to align the interests of management with those of the
stockholders, and to incentivize and retain those executives. In addition, the
Board of Directors exercised its discretion to waive certain conditions to the
first year's vesting of previously awarded restricted shares to each of Messrs.
Goldsmith and Ms. Segal to recognize their efforts in 1998 and to provide
continued incentives for and retention of those executives. Upon the
recommendation of Messrs. Parsons and Purnell, the conditions to vesting of
restricted shares previously awarded to Messrs. Parsons and Purnell were not
waived by the Board at such time.
Compensation of the Chief Executive Officer. The foregoing principles and
- ----------------------------------------------
policies were applied in determining the compensation of Mr. Parsons, Chairman
of the Board and Chief Executive Officer of American Mobile through 1998. During
fiscal 1998, Mr. Parsons received a base salary of $350,000. The Compensation
and Stock Option Committee also awarded Mr. Parsons options to purchase a total
of 50,000 shares of the Company's common stock.
Tax Deductibility of Executive Compensation. The Internal Revenue Code of 1986,
- -------------------------------------------
as amended (the "Code"), limits the federal income tax deductibility of
compensation paid to the Company's chief executive officer and to each of the
other four most highly compensated Executive Officers. The Company may deduct
12
<PAGE>
such compensation only to the extent that during any fiscal year the
compensation does not exceed $1 million or meets certain specified conditions
(such as stockholder approval). Based on the Company's current compensation
plans and policies and recently released regulations interpreting the Code, the
Company and the Compensation and Stock Option Committee believe that, for the
near future, there is little risk that the Company will lose any significant tax
deduction for executive compensation. The Compensation and Stock Option
Committee intends to monitor this issue, and will consider modifications of the
Company's compensation policies as conditions warrant and to the extent
necessary to serve the best interests of the Company.
Andrew A. Quartner Jack A. Shaw Michael T. Smith
Compensation and Stock Option Committee Interlocks and Insider Participation
- ----------------------------------------------------------------------------
During the fiscal year ended December 31, 1998, the Compensation and Stock
Option Committee of American Mobile's Board of Directors consisted of Messrs.
Quartner, Shaw and Smith. During 1998, the Company and certain of its
subsidiaries entered into contracts and other transactions with certain
affiliates of Hughes. All of these contracts and transactions were approved by
American Mobile's Board of Directors or Executive Committee, and the Company
believes that the contracts and transactions were made on terms substantially as
favorable to the Company as could have been obtained from unaffiliated third
parties. The following is a description of such contracts and transactions.
In January 1997, the Company reached an agreement with Hughes Aircraft, the
manufacturer of the Company's satellite (the "Satellite"), to reduce by 27.5%
the amount of certain performance payments owed by the Company to Hughes
Aircraft under its Satellite construction contract and to defer all payments
otherwise due until January 1998, based on certain satellite performance
considerations. Thereafter, certain additional contractual payment issues were
raised by the Company. At present, the Company's obligation to make additional
performance payments to Hughes Aircraft remains at issue and ongoing discussions
are underway between the companies.
Hughes Network Systems Limited ("HNS"), the manufacturer of the Company's land
earth stations (each an "LES") has provided AMSC Subsidiary software maintenance
services in support of the operation of the LESs at an annual rate of $760,000
for the twelve month period commencing December 1, 1998.
The Company has entered into a reseller agreement with Hughes Space &
Communications Company, through its Hughes Government Services ("HGS") business
unit, whereby American Mobile will sell the Company's services to HGS for resale
by HGS to federal government subscribers at rates to be established by HGS. Like
the Company's other government resellers, HGS will set rates and prices for
services and equipment, respectively and will be responsible for billing and
collecting amounts due from its customers.
In connection with the Acquisition, the Company, AMSC Acquisition Company and
its subsidiaries entered into agreements with Morgan Guaranty Trust Company of
New York,Toronto Dominion Bank, Bank of America National Trust and Savings
13
<PAGE>
Association and certain other lenders (collectively, the "Banks") to provide for
two facilities: (i) the Revolving Credit Facility, a $100 million unsecured
five-year reducing revolving credit facility and (ii) the Term Loan Facility, a
$100 million five-year, term loan facility with up to three additional one-year
extensions subject to the Banks' approval (collectively, the "Bank Financing").
The Term Loan Facility is secured by the assets of the Company, principally its
stockholdings in XM Radio and AMSC Acquisition Company, which was formed in
connection with the Acquisition. The Bank Financing is severally guaranteed by
Hughes, Singapore Telecom and Baron Capital Partners, L.P. (collectively, the
"Bank Facility Guarantors").
In exchange for the additional risks undertaken by the Bank Facility Guarantors
in connection with the Bank Financing, American Mobile agreed, pursuant to a
Guaranty Issuance Agreement dated March 31, 1998 (the "GIA"), to compensate the
Bank Facility Guarantors, principally in the form of 1 million additional
warrants and repricing of 5.5 million warrants previously issued (together, the
"Guarantee Warrants"). As originally issued, the Guarantee Warrants had an
exercise price of $12.51. Further, in connection with the guarantees, American
Mobile agreed to reimburse the Bank Facility Guarantors in the event that the
Guarantors were required to make payment under the Revolving Credit Facility
guarantees and, in connection with this reimbursement commitment, has provided
the Bank Facility Guarantors a junior security interest with respect to the
assets of the Company, principally its stockholdings in XM Radio and AMSC
Acquisition Company.
The Bank Facility Guarantors also obtained certain demand and piggy-back
registration rights with regard to the unregistered shares of the Company's
common stock held by them or issuable upon exercise of the Guarantee Warrants.
Pursuant to the terms of the Amended and Restated Registration Rights Agreement
among the Bank Facility Guarantors and the Company (the "Registration Rights
Agreement"), the Company has agreed to (i) extend the expiration date for demand
registration rights with respect to the Bank Facility Guarantors' existing
warrants, (ii) provide registration rights for the warrants issued pursuant to
the GIA, and (iii) provide registration rights for other restricted securities
held by the Guarantors. Under the Registration Rights Agreement the Guarantors
would be entitled to up to three demand registrations with respect to its shares
of American Mobile's common stock, subject to certain registration priorities
and postponement rights of American Mobile. In addition the Guarantors would be
entitled to piggyback registration in connection with any registration of
securities by American Mobile (whether or not for its own account), subject to
certain Motorola priorities for sale under the Participation Rights Agreement.
On March 29, 1999, the Bank Facility Guarantors agreed to eliminate certain
covenants contained in the GIA relating to the Company's Earnings Before
Interest, Depreciation, Amortization and Taxes ("EBITDA") and service revenue.
In exchange for this waiver, the Company agreed to amend the exercise price of
the Guarantee Warrants from $12.51 per share to $7.50 per share.
14
<PAGE>
Performance Graph
- -----------------
The graph set forth below shows the cumulative total return to holders of
the Company's common stock from December 31, 1993 through December 31, 1998,
computed by dividing (1) the difference between the closing price per share at
the beginning of such period and the last trading day of each month during such
period (the Company did not declare or pay dividends on its common stock during
such period) by (2) the closing share price at the beginning of such period, and
compares such return to the performance during such period of the Center for
Research in Security Prices ("CRSP") Total Return Index for The Nasdaq Stock
Market (U.S. Companies) ("Nasdaq U.S.") and the CRSP Nasdaq Telecommunications
Stock Index ("Nasdaq Telecom"). The Nasdaq U.S. index comprises all domestic
common shares traded on the Nasdaq National Market and the Nasdaq SmallCap
Market, and the Nasdaq Telecom index comprises all such domestic common shares
of companies falling under Standard Industrial Classification Code 48. These
indices are prepared for Nasdaq by the CRSP at the University of Chicago. The
graph assumes $100 invested on December 31, 1993 in the Company's common stock
(at $20.50 per share), the Nasdaq U.S. index and the Nasdaq Telecom index.
COMPARISON OF SIXTY MONTHS CUMULATIVE TOTAL RETURN
--------------------------------------------------
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Dec. '93 Dec. '94 Dec. '95 Dec. '96 Dec. '97 Dec. '98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
American Mobile 100.000 62.195 149.390 59.756 34.146 25.610
Nasdaq US 100.000 97.752 138.256 170.015 208.580 293.209
Nasdaq Telecom 100.000 83.458 109.257 111.719 165.433 270.154
</TABLE>
15
<PAGE>
Executive Compensation
- ----------------------
The following tables set forth (a) the compensation paid or accrued by the
Company to the Company's chief executive officer and its four other most highly
compensated Executive Officers receiving over $100,000 per year (such officers,
the "Named Executive Officers") for services rendered during the fiscal years
ended December 31, 1998, 1997 and 1996 and (b) certain information relating to
options granted to such individuals.
Summary Compensation Table
- --------------------------
<TABLE>
<CAPTION>
Restricted Long-Term
Stock Compensation All Other Compen-
Annual Compensation Awards(4)$ Awards Compensation(6)
---------------------------------------------- ---------- ------------ -----------------
Name and Other Annual Options/
Principal Position Year Salary(2) Bonus Compensation(3) SARs(5)
------------------ ---- --------- -------- --------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary M. Parsons(1) 1998 $349,596 $168,438 $9,600 $985,555 100,000 -
Chairman of the Board 1997 $317,692 $158,000 $9,600 100,000 -
1996 $145,385 $87,500 $4,026 300,000 -
Robert L. Goldsmith(7) 1998 $219,456 $83,435 $9,600 $665,250 - -
Executive Vice Presiden 1997 $189,807 $76,406 $8,800 100,000 -
Chief Operating Officer
Stephen D. Peck(7) 1998 $195,379 $57,285 $9,600 $266,100 - -
Vice President, Chief 1997 $88,154 $31,318 $4,465 50,000
Financial Officer
Walter V. Purnell, Jr.(8) 1998 $172,258 $86,625 $7,200 $709,600 80,000 $81,780
President and Chief
Executive Officer
Randy S. Segal 1998 $204,216 $68,847 $9,600 $532,200 - -
Senior Vice President, 1997 $191,000 $66,850 $9,600 25,000 -
General Counsel and 1996 $191,000 $52,716 $5,619 65,000 -
Secretary
</TABLE>
(1)Mr. Parsons was Chief Executive Officer and Chairman of the Board, and
Mr. Purnell was President, during 1998. The principal positions indicated above
were effective January 1, 1999.
(2)Effective with the Acquisition, Messrs. Parsons', Purnell's and
Goldsmith's, Ms. Segal's and Mr. Peck's annualized base salaries were
approximately $350,000, $225,000, $219,600, $204,400 and $195,400, respectively.
(3)All dollar amounts reported for fiscal year 1997 and 1996 relate to the
personal use of a company car and/or a car allowance.
(4)As of December 31, 1998, the dollar value of restricted stock held by
each of Messrs. Parsons, Goldsmith, Peck and Purnell and Ms. Segal was $555,555,
$375,000, $150,000, $400,000 and $300,000, respectively. The restricted stock
vests equally over three years and is subject to certain performance conditions
that may be waived by the Board of Directors.
(5)The numbers reflect grants of options to purchase shares of common stock
under the 1989 Plan. The Company has not granted stock appreciation rights
("SARs").
(6)Relates to executive retirement plan pay-out.
(7)Messrs. Goldsmith and Peck joined the Company in February 1997 and July
1997, respectively.
(8)Mr. Purnell joined the Company in April 1998 upon the Acquisition.
16
<PAGE>
Option/SAR Grants Last Fiscal Year
- ----------------------------------
The following table sets forth each grant of stock options made during fiscal
year 1998 to each of the Named Executive Officers.
<TABLE>
OPTION/SAR GRANTS
IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
Annual Rates of
Number of % of Total Stock Price
Securities Options/SARs Appreciation for
Underlying Granted to Exercise or Option Term(3)
Options/SARs Employees/ Base Price
Name Granted(1)(2) Fiscal Year ($/Share) Expiration Date 5% 10%
------------- ----------- --------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Gary M. Parsons .......... 100,000 7.1110% $8.87 Jan. 22, 2008 $557,830 $1,413,650
Walter V. Purnell, Jr..... 80,000 5.6888% $8.87 Jan. 22, 2008 $658,671 $1,469,144
</TABLE>
(1)Does not include options granted on January 28, 1999, with respect to
fiscal year 1998. The numbers reflect the grant of options to purchase shares of
common stock under the 1989 Plan. The Company has not granted SARs.
(2)The options become exercisable in three annual installments, vesting at
the rate of 33 1/3% per year for three years.
(3)Based on actual option term and annual compounding. The actual value a
Named Executive Officer may realize will depend upon the excess of the price of
the common stock over the exercise price on the date the option is exercised.
Accordingly, there is no assurance that the value ultimately realized by a Named
Executive Officer, if any, will be at or near the values indicated.
Option/SAR Exercises and Year-End Option Values
- -----------------------------------------------
The following table sets forth, for each of the Named Executive Officers,
the value of unexercised options at fiscal year-end:
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values (1)
-----------------------------------------
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at Fiscal in-the-Money Options/SARs
Year-End(#) at Fiscal Year-End($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C> <C>
Gary M. Parsons........................ 299,334/250,666 $0/$0
Walter V. Purnell, Jr.................. 26,400/153,600 $0/$0
Robert L. Goldsmith.................... 66,000/94,000 $0/$0
Randy S. Segal ........................ 100,432/73,500 $0/$0
Stephen D. Peck........................ 16,500/33,500 $0/$0
</TABLE>
(1)None of the Named Executive Officers exercised options during the fiscal
year ended December 31, 1998. The Company has not granted SARs.
17
<PAGE>
2. AMENDMENTS TO STOCK OPTION PLAN FOR
--------------------------------------
NON-EMPLOYEE DIRECTORS
----------------------
Proposed Amendments
- -------------------
The Board of Directors has approved and recommends to the stockholders a
proposal to amend the Company's 1994 Stock Option Plan for Non-Employee
Directors to provide for: (i) an increase in the size of the automatic initial
grant of options to new Eligible Directors from 1,000 shares to 5,000 shares,
and an increase in the size of the automatic annual grant of options to
continuing Eligible Directors from 500 shares to 2,500 shares; (ii) an increase
in the number of authorized shares available for issuance under the Director
Plan from 50,000 to 100,000; and (iii) the discretionary granting of additional
options to Eligible Directors.
Subject to stockholder approval of the foregoing amendments, the Board has
approved the grant of options to purchase up to 45,000 shares of common stock in
the aggregate to the Eligible Directors, effective as of March 25, 1999.
The Director Plan is intended to promote ownership by non-employee directors of
a greater proprietary interest in the Company, thereby aligning such directors'
interests more closely with the interests of stockholders of the Company, and to
assist the Company in attracting, and retaining, highly qualified persons to
serve as non-employee directors. The amendments to the Director Plan set forth
above will not be effective unless or until stockholder approval is obtained.
Reasons for the Amendments
- --------------------------
The Board of Directors believes that the proposed amendments are necessary for a
number of reasons. First, the Director Plan was initially adopted in 1994, and
there has been no increase in the size of the automatic grants since that time.
The Board believes that the size of the automatic option grants for non-employee
directors are relatively small, in light of the Company's growth and evolution
since 1994, and also compared with the size of automatic grants made to
non-employee directors under similar plans adopted by peer companies.
Second, the Board believes that the increase in the size of the automatic grants
is necessary to enable the Company to continue to attract, and retain, qualified
and dedicated business people to serve as non-employee directors. The Board
believes that there is significant competition for qualified non-employee
directors, and, accordingly, the Board believes it is important to increase the
financial incentive for such persons to agree to serve, and continue to serve,
on the Company's Board of Directors.
Third, the increase in the size of automatic grants, if approved, will
necessitate an increase in the number of shares authorized to be issued under
the Director Plan. The Board believes that an increase from 50,000 authorized
shares to 100,000 authorized shares is appropriate and prudent.
18
<PAGE>
Finally, the Board believes that the added flexibility to make discretionary
grants of additional options is necessary to recognize extra efforts on special
projects made by individual non-employee directors from time to time, or over
the course of a longer period of time.
Terms of the Director Plan
- --------------------------
Pursuant to the Director Plan, each Eligible Director received an option to
purchase 1,000 shares of common stock upon joining the Board of Directors, and
each Eligible Director continually serving on the Board has received an option
to purchase 500 shares of common stock each year. As of March 31, 1999, a total
of 10,000 options have been granted under the Director Plan (not including the
grants referred to above that were made by the Board subject to stockholder
approval at the 1999 annual stockholders meeting). The options that have been
granted under the Director Plan have exercise prices that range from $9.73 per
share to $25.75 per share. The options granted under the Director Plan are fully
vested and exercisable on the date of grant. Each option expires on the earlier
of (i) ten (10) years from the date of grant or (ii) seven (7) months after a
director's termination of service as a director.
The optionee may not transfer options granted under the Director Plan, except by
will or the applicable laws of descent and distribution or pursuant to the terms
of a qualified domestic relations order. If, during the term of an option, there
is any increase or decrease in the number of issued shares of common stock
resulting from a split-up or consolidation of shares or any similar capital
adjustment, or the payment of any stock dividend, the number and class of shares
covered by an outstanding option and the exercise price per share of the option
will be proportionately adjusted.
Tax Consequences
- ----------------
The material federal income tax consequences to the Company and the non-employee
director of the grant and exercise of options granted under the Director Plan
under the existing applicable provisions of the Internal Revenue Code of 1986,
as amended (the "Code") and regulations thereunder are described in summary
fashion below. This description is a summary only.
An optionee will not recognize income on the grant of a nonstatutory stock
option, but generally will recognize ordinary income on the exercise of a
nonstatutory stock option. The amount of income recognized on the exercise of
such stock option generally will be equal to the excess, if any, of the fair
market value of the shares at the time of exercise over the aggregate exercise
price paid for the shares, regardless of whether the exercise price is paid in
cash or shares. The Company generally will be entitled to a deduction in the
amount of ordinary income so recognized, subject to satisfying certain income
tax reporting requirements.
Vote Required
- -------------
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote at the annual meeting is
required to approve the adoption of the amendments to the Director Plan.
19
<PAGE>
The Board of Directors unanimously recommends that stockholders vote
FOR approval of the proposed amendments to the Director Plan.
3. RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
---------------------------------------------
On the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP as independent accountants for the Company for the
year 1999, subject to ratification by the stockholders at the annual meeting.
Arthur Andersen LLP have been the independent accountants for the Company since
1988. A representative of Arthur Andersen LLP will be present at the annual
meeting of stockholders with the opportunity to make a statement if he or she so
desires and to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR ratification
of the appointment of Arthur Andersen LLP as independent accountants
for the Company for the year 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than ten percent of the
Company's common stock are required to report their ownership of the Company's
common stock and any changes in that ownership to the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers, Inc.
Specific due dates for these reports have been established by the Securities and
Exchange Commission and the Company is required to report in this proxy
statement any failure to file by these dates. No person associated with the
Company who was required to file under these rules failed to file any such
required report in 1998. In making this statement, the Company has relied on the
written representations of its directors and officers and copies of the reports
that have been filed with the SEC.
OTHER MATTERS
-------------
The Board of Directors is not aware of any other matters to be presented at the
annual meeting. If any other matter proper for action at the meeting should be
presented, the holders of the accompanying proxy will vote the shares
represented by the proxy on such matter in accordance with their best judgment.
If any matter not proper for action at the meeting should be presented, the
holders of the proxy will vote against consideration thereof or action thereon.
All shares represented by the accompanying proxy, if the proxy is duly executed
and received by the Company at or prior to the meeting, will be voted at the
meeting in accordance with any
21
<PAGE>
instructions specified on such proxy and, where no instruction is specified, as
indicated on such proxy.
PROPOSALS FOR THE COMPANY'S ANNUAL MEETING IN 2000
--------------------------------------------------
The Company will review for inclusion in next year's proxy statement stockholder
proposals received by December 22, 1999. Proposals should be sent to the
Secretary of the Company, 10802 Parkridge Boulevard, Reston, Virginia
20191-5416. In order to be included in the proxy statement for next year's
annual meeting, such proposals must comply with all of the requirements of Rule
14a-8 under the Securities Exchange Act of 1934 (the "Exchange Act").
A stockholder who wishes to submit a proposal for inclusion in next year's proxy
statement, outside the processes of Rule 14a-8 under the Exchange Act, must, in
accordance with Article II, Section 13 of the Company's By-Laws, file a written
notice with the Secretary of the Company which conforms to the requirements of
the By-Laws. If the Board of Directors or a designated committee or officer who
will preside at the stockholders meeting determines that the information
provided in such notice does not satisfy the informational requirements of the
By-Laws or is otherwise not in accordance with law, the stockholder will be
notified promptly of such deficiency and be given an opportunity to cure the
deficiency within the time period prescribed in the ByLaws. Such notice of a
stockholder proposal must be delivered not less than 60 days nor more than 120
days prior to the date of the annual meeting to be held in 2000 (unless such
notice relates to a special meeting or the annual meeting is called to be held
before the date specified in the By-Laws, in which case the stockholder proposal
must be delivered no later than the close of business on the tenth day following
the date on which notice of the meeting is publicly announced). Any stockholder
proposal that is not submitted in accordance with the foregoing procedures will
not be considered to be properly brought before the 2000 annual meeting, and, if
presented at the meeting, the Company will be able to use proxies given to it
for such meeting to vote for or against any such proposal at the Company's sole
discretion.
1998 ANNUAL REPORT
------------------
American Mobile's Annual Report on Form 10-K for the year ended December 31,
1998, including financial statements ("Annual Report"), is being furnished
concurrently with this Proxy Statement to persons who were stockholders of
record as of March 31, 1999, the record date for the Annual Meeting.
By order of the Board of Directors,
Randy S. Segal
Senior Vice President and Secretary
Reston, Virginia
April 21, 1999
22
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This Proxy is Solicited By The Board of Directors of the Company
AMERICAN MOBILE SATELLITE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 26, 1999
The undersigned hereby constitutes and appoints Gary M. Parsons and Walter V.
Purnell, Jr., and each of them, true and lawful agents and proxies ("Proxies"),
with full power of substitution and revocation in each, to attend the Annual
Meeting of Stockholders of American Mobile Satellite Corporation to be held at
9:00 a.m. on Wednesday, May 26, 1999 at the Sheraton Reston Hotel, 11810 Sunrise
Valley Drive, Reston, Virginia, and any adjournments thereof, and thereat to
vote all shares of Common Stock which the undersigned would be entitled to vote
if personally present (i) as designated upon the matters set forth on the
reverse side, and (ii) in their discretion, upon the approval of minutes of
prior meetings of the stockholders and such other business as may properly come
before the meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If directed by the undersigned to vote for the
nominees, or if no direction is made, the votes represented by this proxy will
be voted FOR the nine nominees listed below in such proportions as determined by
the Proxies in their discretion so as to maximize the likelihood of electing all
such nominees; provided, however, that (i) if directed by the undersigned to
withhold votes from one or more nominees, the votes represented by this proxy
will be voted FOR the remaining nominees as set forth above, and (ii) if, prior
to the election, any such nominee shall become unavailable for election or
unable to serve, the Proxies may vote for such other persons as may be
nominated. If no direction is made, this proxy will be voted FOR Proposals 2 and
3 on the reverse side. The undersigned hereby revokes any proxy or proxies
heretofore given to vote such shares at said meeting or any adjournments
thereof.
Election of Directors, Nominees:
Douglas I. Brandon, Pradeep P. Kaul, Billy J. Parrott, Gary M. Parsons,
Walter V. Purnell, Jr., Andrew A. Quartner, Jack A. Shaw, Roderick M.
Sherwood, III, and Michael T. Smith.
(change of address/comments)
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE.
<PAGE>
(REVERSE SIDE)
1. Election of Directors
|_| For All Nominees |_| Withheld From All Nominees
|_| For, except vote withheld from the following nominee(s):
----------------------------------------------------
3. Ratification of the appointment of Arthur Andersen LLP as independent
accountants for the Company for the year 1999.
For |_| Against |_| Abstain |_|
2. Amendments to 1994 Stock Option Plan for Non-Employee Directors.
For |_| Against |_| Abstain |_|
|_| Change of address/comments on reverse side.
INSTRUCTIONS:
1. Please sign exactly as name is printed hereon.
2. If shares are held jointly, each holder should sign.
3. If signing as executor or trustee or in similar fiduciary capacity, please
give full title as such.
4. If a corporation, please sign full corporate name by President or other
authorized officer.
5. If a partnership, please sign partners name by authorized person.
SIGNATURE(S) DATE
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