<PAGE> 1
SCHEDULE 14 A 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 ss.240.14a-11(c) or
ss.240.14a-12
HEARTLAND WIRELESS COMMUNICATIONS, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies: ______________________________
(2) Aggregate number of securities to which transaction
applies: __________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
--------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------
(5) Total fee paid:
--------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------
(3) Filing Party:
------------------------------------------
(4) Date Filed:
------------------------------------------
<PAGE> 2
HEARTLAND WIRELESS COMMUNICATIONS, INC.
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
___________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
___________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Heartland Wireless Communications, Inc., a Delaware corporation
(the "Company"), will be held at the Omni Richardson Hotel, Rooms E, F and G,
First Floor, 701 E. Campbell, Richardson, Texas 75081, on August 6, 1997, at
10:00 a.m. (local time) for the following purposes:
1. To elect six directors of the Company to serve until the next
Annual Meeting of Stockholders of the Company and until their successors are
duly elected and qualified;
2. To ratify the selection of KPMG Peat Marwick LLP as auditors for
the Company for the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on July 3, 1997,
are entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
J. Curtis Henderson
Secretary
Plano, Texas
July 7, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE READ THE
ENCLOSED PROXY STATEMENT AND SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED FROM WITHIN THE UNITED
STATES.
<PAGE> 3
HEARTLAND WIRELESS COMMUNICATIONS, INC.
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
============================
PROXY STATEMENT
============================
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 6, 1997
This Proxy Statement is being mailed to you in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders (the "Meeting") of Heartland Wireless
Communications, Inc., a Delaware corporation (the "Company"), to be held on
August 6, 1997, at 10:00 a.m. (local time), at the Omni Richardson Hotel, Rooms
E, F and G, First Floor, 701 E. Campbell, Richardson, Texas 75081, and any
adjournment(s) thereof.
SOLICITATION OF PROXIES
All shares represented by duly executed proxies in the form enclosed
herewith received by the Company prior to the Meeting will be voted as
instructed at the Meeting. There are boxes on the proxy card to vote for or to
withhold authority to vote for the director nominees and there are also boxes
to vote for or against or to abstain from voting on the other matters presented
to the stockholders. IF NO INSTRUCTIONS ARE GIVEN, THE PERSONS NAMED IN THE
ACCOMPANYING PROXY INTEND TO VOTE FOR THE SIX NOMINEES NAMED HEREIN AS
DIRECTORS OF THE COMPANY AND FOR RATIFICATION OF THE SELECTION OF THE AUDITORS
NAMED HEREIN. The Board of Directors does not know of any matter other than as
set forth herein that is expected to be presented for consideration at the
Meeting. However, if other matters properly come before the Meeting, the
persons named in the accompanying proxy (each of whom is an officer and
employee of the Company) intend to vote thereon in accordance with their
judgment. The Company's Annual Report and Form 10-K/A covering the fiscal year
ended December 31, 1996 (the "Annual Report"), including audited financial
statements, is enclosed herewith. The Annual Report does not form any part of
the material for the solicitation of proxies.
Any stockholder may revoke a previously executed proxy at any time
prior to its exercise by (i) delivering a later-dated proxy, (ii) giving
written notice of revocation to the Secretary of the Company at the address set
forth above at any time before such proxy is voted or (iii) voting in person at
the Meeting. No proxy will be voted if the stockholder attends the Meeting and
elects to vote in person. If a stockholder does not intend to attend the
Meeting, any proxy or notice should be returned to the Company for receipt by
the Company not later than the close of business on Tuesday, August 5, 1997.
Revocation will not affect a vote on any matters taken prior to the receipt of
such revocations. Mere attendance at the Meeting will not of itself revoke the
proxy.
This Proxy Statement, the accompanying form of proxy and the Company's
Annual Report containing financial statements for the fiscal year ended
December 31, 1996 were first mailed to stockholders on or about July 7, 1997.
The mailing address of the Company's principal executive offices is 200
Chisholm Place, Suite 200, Plano, Texas 75075.
<PAGE> 4
RECORD DATE, OUTSTANDING VOTING SECURITIES
AND VOTES REQUIRED
The Company's Common Stock is the only outstanding class of voting
securities of the Company. The record date for determining the holders of
Common Stock entitled to vote on the actions to be taken at the Meeting is the
close of business on July 3, 1997 (the "Record Date"). As of the Record Date,
19,670,134 shares of Common Stock were outstanding. Each holder of Common
Stock on the Record Date is entitled to cast one vote per share at the Meeting.
The Common Stock does not have cumulative voting rights.
Holders of a majority of the shares entitled to vote must be present
at the Meeting, in person or by proxy, so that a quorum may be present for the
transaction of business. Assuming the presence of a quorum, the affirmative
vote of the holders on the Record Date of a plurality of the shares of Common
Stock outstanding, represented in person or by proxy at the Meeting, is
necessary for the election of directors of the Company. The affirmative vote
of the holders on the Record Date of a majority of the shares of Common Stock
outstanding, represented in person or by proxy at the Meeting, is required for
ratification of the selection of KPMG Peat Marwick LLP as auditors for the
Company.
Abstentions and broker nonvotes, if any, are counted for the purposes
of determining the presence or absence of a quorum for the transaction of
business. However, abstentions and broker nonvotes do not have any effect on
the election of directors. With respect to the other matter(s) presented
herein, abstentions are counted essentially as votes "against" in tabulations
of the votes cast on proposals presented to stockholders, whereas broker
nonvotes, if any, are not counted for purposes of determining whether a
proposal has been approved.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of Common Stock with respect to (i) each person known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock,
(ii) each of the Company's directors, (iii) the Named Executive Officers as
such term is defined in "Executive Compensation and Related Information" and
(iv) all directors and executive officers as a group, in each case, as of June
26, 1997. Except as otherwise indicated, each of the stockholders has sole
voting and investment power with respect to the shares beneficially owned.
Unless otherwise indicated, the address for each stockholder is c/o the
Company, 200 Chisholm Place, Suite 200, Plano, Texas 75075.
- 2 -
<PAGE> 5
<TABLE>
<CAPTION>
Beneficial Ownership
----------------------------
Shares of
Common Stock Percent (1)
------------ -----------
<S> <C> <C>
Hunt Capital Group, L.L.C.(2) . . . . . . . . . 4,000,000 20.3%
Jupiter Partners L.P.(3) . . . . . . . . . . . 3,286,145 14.3
L. Allen Wheeler . . . . . . . . . . . . . . . 2,071,228 10.5
David E. Webb . . . . . . . . . . . . . . . . . 1,401,235 7.1
Putnam Investments, Inc.(4) . . . . . . . . . . 1,344,460 6.8
FMR Corp.(5) . . . . . . . . . . . . . . . . . 1,168,067 5.9
Carroll D. McHenry . . . . . . . . . . . . . . 75,000 *
Max E. Bobbitt . . . . . . . . . . . . . . . . -- --
Robert S. Cecil . . . . . . . . . . . . . . . . -- --
J. R. Holland, Jr.(6) . . . . . . . . . . . . . -- --
John A. Sprague(7) . . . . . . . . . . . . . . 500 *
John R. Bailey(8) . . . . . . . . . . . . . . . 111,200 *
Randy R. Hendrix(9) . . . . . . . . . . . . . . 149,200 *
Robert R. Story(10) . . . . . . . . . . . . . . 25,500 *
All officers and directors as a group
(11 persons)(11) 2,172,992 11.0
</TABLE>
- - ----------------
* Less than 1%.
(1) Based on 19,670,134 shares of the Common Stock outstanding on June 26,
1997.
(2) Address is 4000 Thanksgiving Tower, 1601 Elm Street, Dallas, Texas 75201.
(3) Address is 30 Rockefeller Plaza, Suite 4525, New York, New York 10112.
Jupiter Partners L.P. ("Jupiter") is the holder of $40.0 million gross
proceeds of 9% convertible notes (the "Convertible Notes") due 2004. Each
Convertible Note is convertible into the number of shares of Common Stock
computed by dividing (i) the principal amount of the Convertible Note
(after taking into account accretions in value) by (ii) the Conversion
Price then in effect. The current Conversion Price is $15.34 per share.
(4) Putnam Investments, Inc. ("Putnam") has reported on Schedule 13G dated
January 27, 1997 that it was the beneficial owner of such shares and has
stated that (i) it has no voting power, except for 27,700 shares for which
it has shared voting power, and (ii) it has shared dispositive power with
respect to all of such shares. Putnam has indicated that it shares with
Putnam Investment Management, Inc. ("Putnam Management") dispositive power
as to 1,295,960 shares and with Putnam Advisory Company, Inc. ("Putnam
Advisory") voting power as to 27,700 shares and dispositive power as to
48,500 shares. Therefore, Putnam Management and Putnam Advisory have been
reported on such Schedule 13G as beneficially owning 1,295,960 (6.6%) and
48,500 (less than 1%) shares. Putnam Management and Putnam Advisory are
each reported to be registered investment advisors and wholly-owned
subsidiaries of Putnam. Putnam is reported to be an investment company
and a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. ("Marsh
& McLennan"). Marsh & McLennan has disclaimed any beneficial ownership of
such shares. The address of each of Putnam, Putnam Management and Putnam
Advisory is One Post Office Square, Boston, MA 02109.
(5) FMR Corp. ("FMR") has reported on Schedule 13G dated March 7, 1997 that it
was the beneficial owner of such shares and has stated that (i) it has
sole power to vote 108,500 shares and (ii) sole power to dispose of all of
such shares. FMR has indicated that Fidelity Management & Research
Company, a wholly owned subsidiary of FMR, ("Fidelity") is the beneficial
owner of 1,046,867 shares (5.3%) of the outstanding common stock as a
result of acting as investment adviser to various investment companies.
Additionally, FMR has reported that Edward C. Johnson 3d, Chairman of the
Board of FMR, FMR and the funds each has sole power to dispose of the
1,046,867 shares owned by the funds. The 13G also indicates that Edward
C. Johnson 3d and Abigail P. Johnson may be deemed to form a controlling
group with respect to FMR. The address of each of FMR, Fidelity, Edward
C. Johnson 3d and Abigail P. Johnson is 82 Devonshire Street, Boston,
Massachusetts 02109.
(6) Mr. Holland is the sole Manager and President of Hunt Capital Group,
L.L.C. ("Hunt Capital"). Hunt Capital is owned by trusts, of which Mr.
Holland serves as a trustee. Mr. Holland disclaims beneficial ownership
of the shares of Common Stock owned by Hunt Capital.
(7) Mr. Sprague is indirectly a controlling general partner of Jupiter.
Accordingly, Mr. Sprague may be deemed to be a beneficial owner of the
shares issuable to Jupiter on conversion of the Convertible Notes. Mr.
Sprague shares voting and investment power as to shares issuable to
Jupiter on conversion of the Convertible Notes with Terry J. Blumer. Mr.
Sprague disclaims beneficial ownership of such shares. Includes 500
shares that Mr. Sprague has the right to acquire upon the exercise of
stock options exercisable within 60 days.
(8) Includes 108,000 shares that Mr. Bailey has the right to acquire upon the
exercise of stock options exercisable within 60 days.
(9) Includes 149,200 shares that Mr. Hendrix has the right to acquire upon the
exercise of stock options exercisable within 60 days.
(10) Includes 13,000 shares that Mr. Story has the right to acquire upon the
exercise of stock options exercisable within 60 days.
(11) Includes 23,500 shares that four directors and executive officers have
the right to acquire upon the exercise of stock options and other
rights exercisable within 60 days.
- 3 -
<PAGE> 6
ITEM 1 ON PROXY
ELECTION OF DIRECTORS
At the Meeting, six persons will be elected to serve as directors until
the Company's next Annual Meeting of Stockholders and until their successors
have been duly elected and qualified as provided in the Company's Restated
Certificate of Incorporation and Restated By-laws. The number of directors
comprising the Board of Directors is seven, as determined by the Board of
Directors. As of the date of this Proxy Statement, management had not
completed its search for the final nominee to the Board of Directors.
Accordingly, management will not solicit proxies for a greater number of
persons than the number of nominees set forth below.
The following persons have consented to be nominated and, if elected, to
serve as directors of the Company. All the nominees are presently members of
the Company's Board of Directors. Information about each nominee for director
is set forth below.
Carroll D. McHenry, 54, joined the Company as Chairman of the Board,
President, Chief Executive Officer and Acting Chief Financial Officer in April
1997. For the past five years, Mr. McHenry was a senior executive at Alltel,
Inc., a national communications holding company, most recently serving as
President of Alltel's Communications Services Group, and serving as President
of Alltel Mobile Communications, Inc. from July 1992 to May 1995. From 1991 to
1992, Mr. McHenry was Vice President of Cellular Business Development at
Qualcomm, Inc. From 1989 to 1991, Mr. McHenry was President, Chief Executive
Officer and Chairman of the Board of Celluland, Inc., a franchisor of cellular
telephone stores. From 1980 to 1989, Mr. McHenry served in various capacities
with Mobile Communications Corporation of America ("MCCA") and as President and
Chief Executive Officer of American Cellular Communications, a joint venture
between MCCA and BellSouth. Mr. McHenry is a director of Wireless One, Inc.
("Wireless One") and CS Wireless Systems, Inc. ("CS Wireless").
Max E. Bobbitt, 52, became a director of the Company in June 1997. Mr.
Bobbitt is a member of the Compensation Committee of the Board of Directors.
Since March 1997, Mr Bobbitt has been the President, Chief Executive Officer
and a director of Metromedia Asia Corporation ("MAC"), a majority owned
subsidiary of Metromedia International Group, Inc., an entertainment and
telecommunications company. From 1995 to 1996, Mr. Bobbitt was in the
telecommunications consulting business. Effective January 1996, Mr. Bobbitt
became President, Chief Executive Officer and a director of Asian American
Telecommunications Corporation ("AAT"), a telecommunications company formed to
pursue telecommunications projects in the People's Republic of China. AAT was
acquired by MAC on February 28, 1997. From 1983 to 1995, Mr. Bobbitt held
several executive positions with Alltel Corporation, including President and
Chief Operating Officer, and Executive Vice President and Chief Financial
Officer. Prior to his career with Alltel, Mr. Bobbitt served in several
executive positions with Allied Telephone Company, including Executive Vice
President and Chief Financial Officer. Mr. Bobbitt currently is a director of
WorldCom, Inc.
- 4 -
<PAGE> 7
Robert S. Cecil, 62, became a director of the Company in June 1997. Mr.
Cecil is a member of the Audit Committee of the Board of Directors. Since
March 1992, Mr. Cecil has been the Chairman of the Board and Chief Executive
Officer of Plantronics, Inc., an international electronics manufacturing
company. From 1985 until 1991, Mr. Cecil was the President of the Cellular
Group of LIN Broadcasting Corporation. From 1978 until 1984, Mr. Cecil served
as Vice President, Sector Director of Marketing and Planning and Vice
President, Corporate Director of Marketing of Motorola, Inc. Prior to this,
Mr. Cecil served in various managerial positions for IBM Corporation. Mr.
Cecil currently is a director of Tab Products Company, Xylan Corporation and
Toll Free Cellular, Inc.
J. R. Holland, Jr., 53, began advising the Company as a consultant in
October 1992 and was Chairman of the Board of Directors from October 1993 until
March 1997. Mr. Holland is a member of the Audit Committee of the Board of
Directors. Mr. Holland has been employed as President and Chief Executive
Officer of Unity Hunt, Inc. ("Unity Hunt") since September 1991. Unity Hunt is
a large international, private holding company with interests in entertainment,
retail, investments, real estate, natural resources and energy businesses. Mr.
Holland is also the President and Chief Executive Officer of Hunt Capital
Group, L.L.C. ("Hunt Capital"), the Company's largest single stockholder. See
"Security Ownership of Certain Beneficial Owners and Management." From
November 1988 to September 1991, Mr. Holland was Chairman of the Board and
Chief Executive Officer of Nedinco, Inc., a large diversified, international
holding company. Prior to that, Mr. Holland was President and a director of
KSA Industries, Inc., a private, diversified company involved in entertainment,
retail, transportation and energy businesses, and President and a director of
Western Services International, Inc., a company involved in energy services,
equipment and chemicals. Mr. Holland began his career with Booz-Allen &
Hamilton, Inc., a major management consulting firm. Mr. Holland is currently a
director of Placid Refining Company, Optical Securities Group, Inc. and TNP
Enterprises, Inc.
John A. Sprague, 44, became a director of the Company in January 1995.
Mr. Sprague is a member of the Compensation Committee of the Board of
Directors. Since March 1994, Mr. Sprague has been the managing partner of
Jupiter Partners L.P. ("Jupiter"), an investment firm. See "Security Ownership
of Certain Beneficial Owners, Directors and Management." From January 1993
until February 1994, Mr. Sprague was an independent investor. Prior to that,
Mr. Sprague served as a General Partner of Forstmann Little & Co., an
investment firm.
L. Allen Wheeler, 64, co-founder of the Company, has served as a director
of the Company since its formation in September 1990 and was Vice Chairman of
the Board of Directors from February 1996 until February 1997. From January
1997 until February 1997, Mr. Wheeler served as the acting President and Chief
Executive Officer of the Company. Mr. Wheeler is a member of the Compensation
Committee of the Board of Directors. Mr. Wheeler has owned and managed
diversified investments through Allen Wheeler Management, Inc., a personal
holding company, for over 20 years. Mr. Wheeler's investments have emphasized
the media/communications industries. Mr. Wheeler has been a shareholder,
director and officer of several media/communications companies involved in
network and independent television stations, AM and FM radio stations, paging
and telephony. Mr. Wheeler is currently a director of Wireless One, CS
Wireless and Texoma Medical Center, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE INDIVIDUALS NOMINATED FOR ELECTION AS DIRECTORS.
- 5 -
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF
THE BOARD OF DIRECTORS; COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1996, the Board of Directors met
10 times. The Company's Compensation Committee met four times in 1996. The
Compensation Committee makes recommendations to the Board of Directors on
general compensation and benefit levels, determines the compensation and
benefits for the Company's executive officers and administers the Company's
1994 Employee Stock Option Plan, as amended ("Employee Option Plan"). The
Compensation Committee currently is comprised of Messrs. Bobbitt, Sprague and
Wheeler. The Audit Committee met one time in 1996. The Audit Committee
oversees the activities of the Company's independent auditors and internal
accounting controls. The Audit Committee currently is comprised of Messrs.
Cecil and Holland. The Board of Directors does not have a standing nominating
committee or any committee performing a similar function. Each director
attended at least 75% of the aggregate of all Board meetings and all meetings
of committees of which he was a member held during 1996 while he was in office.
On March 29, 1997, the directors ratified and authorized a Search
Committee comprised of Alvin H. Lane, Jr., Dennis M. O'Rourke and John A.
Sprague to conduct a search for and hire a permanent Chief Executive Officer
without further action from the Board of Directors. In connection therewith,
Jupiter, Hunt Capital and L. Allen Wheeler, principal stockholders of the
Company, stated their intention as security holders of the Company to nominate
(or to request that their respective designees to the Board of Directors of the
Company nominate), upon the selection of a permanent Chief Executive Officer, a
slate of directors comprised of a representative of each of them, together with
the permanent Chief Executive Officer and three (3) independent directors. On
March 29, 1997, John A. Fanning resigned as a director of the Company due to
his "strong disagreement" with the Board's actions on such date. Mr. Fanning
remained as Interim President and Chief Executive Officer of the Company until
April 24, 1997, when he was replaced by Carroll D. McHenry.
Non-employee directors receive an annual fee of $5,000 and a meeting fee
of $500 per meeting attended, plus reimbursement of out-of-pocket expenses, for
their services as directors of the Company. In addition, each non-employee
director of the Company is entitled to receive stock options under the
Company's Stock Option Plan for Non-Employee Directors for his services as a
director. Directors who are also employees do not receive any additional
compensation for their services as directors.
EXECUTIVE OFFICERS
The following table sets forth the executive officers of the Company.
See "Election of Directors" for a description of the business experience of Mr.
McHenry.
<TABLE>
<CAPTION>
Name Age Position
- - -------------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Carroll D. McHenry . . . . . . . . . 54 Chairman of the Board, President, Chief Executive
Officer and Acting Chief Financial Officer
Randall C. May . . . . . . . . . . . 35 Vice President -- Operations
Wayne M. Taylor . . . . . . . . . . . 51 Vice President -- Administration
Christopher P. Dailledouze . . . . . 39 Vice President -- Technical Services
David D. Hagey . . . . . . . . . . . 36 Vice President, Controller and Assistant Secretary
J. Curtis Henderson . . . . . . . . . 34 Vice President, General Counsel and Secretary
</TABLE>
- 6 -
<PAGE> 9
Randall C. May joined the Company in October 1994 as a Regional
Manager. Mr. May was appointed Director of System Development in March 1995 and
Vice President - Operations in February 1996. From December 1988 to October
1994, Mr. May worked for Post-Newsweek Cable, most recently serving as General
Manager of certain cable television and radio properties. From 1983 to 1988,
Mr. May served as Vice President -Area Manager for Sooner Cable Television
Inc., an independent cable television company.
Wayne M. Taylor joined the Company in February 1996 as Vice President -
Administration. From May 1989 to February 1996, Mr. Taylor was a Group
Controller at Borden, Inc. From 1972 to 1989 Mr. Taylor was employed by Frito
Lay, most recently as a Group Manager- Finance.
Christopher P. Dailledouze joined the Company in March 1996 as Director
of Engineering and was appointed Vice President-Technical Services in April
1997. From March 1992 to March 1996, Mr. Dailledouze was Director of
Engineering for American Wireless Systems, Inc. From April 1988 to March 1992,
Mr. Dailledouze was Chief Engineer for Galaxy Cablevision, Inc.
David D. Hagey joined the Company in June 1994 as Vice President,
Controller and Assistant Secretary. Prior to joining the Company, Mr. Hagey was
employed by KPMG Peat Marwick LLP for 11 years, most recently as Senior
Manager.
J. Curtis Henderson joined the Company in May 1996 as Vice President,
General Counsel and Secretary. From July 1994 to April 1996, Mr. Henderson was
Senior Vice President, General Counsel and Secretary of ZuZu, Inc., a
restaurant and franchising company in Dallas, Texas. Prior to his employment at
ZuZu, Mr. Henderson was an associate with the Dallas law firm of Locke Purnell
Rain Harrell for five years.
Executive officers of the Company are appointed by the Board of
Directors and serve at the discretion of the Board. Except as described in
"Executive Compensation and Related Information," the Company has no employment
agreements with any executive officers. There are no family relationships
between members of the Board of Directors or any executive officers of the
Company.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following sets forth a summary of (1) the annual compensation of
the Company's current Chief Executive Officer and (2) the compensation of the
Company's former Chief Executive Officer and four most highly compensated
executive officers who were serving in such capacities at the end of the
Company's last completed fiscal year (collectively, the "Named Executive
Officers") for services rendered in all capacities to the Company during the
Company's fiscal years ended December 31, 1996, 1995 and 1994.
Carroll D. McHenry was appointed Chairman of the Board, President,
Chief Executive Officer and Acting Chief Financial Officer of the Company in
April 1997 at an annual salary of $300,000. Mr. McHenry's compensation package
also included a signing bonus of $50,000, a relocation expense payment of
$50,000, a grant of options to purchase 350,000 shares of Common Stock under
the Employee Option Plan at an exercise price of $2.06 (the closing price of
the Common Stock on the Nasdaq Stock Market's National Market on the date of
grant) and 75,000 shares of restricted Common Stock. Mr. McHenry also is
eligible to receive an annual cash bonus of between 25% and 75% of his annual
salary, subject to the achievement by the Company of certain performance goals
to be established by the Compensation Committee.
- 7 -
<PAGE> 10
SUMMARY COMPENSATION TABLE - LAST FISCAL YEAR
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Securities
Other Annual Underlying
Salary Bonus Compensation Options/SARs
Name and Principal Position Year ($) ($) (1) ($) (2) (#)
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David E. Webb(3) . . . . . . 1996 $120,000 $80,000 $11,304 --
President and Chief 1995 120,000 -- 6,088 --
Executive Officer 1994 120,000 -- 7,306 --
L. Allen Wheeler (4) . . . . 1996 120,000 -- 8,400 --
Vice Chairman of the Board 1995 -- -- -- --
1994 -- -- -- --
John R. Bailey(5) . . . . . .
Senior Vice President -- 1996 110,000 45,000 9,899 100,000
Finance, Chief Financial 1995 90,000 45,000 7,800 60,000
Officer, Treasurer and 1994 90,000 -- 4,200 100,000
Secretary
Randy R. Hendrix(5) . . . . .
Senior Vice President -- 1996 100,000 45,000 6,512 46,000
Marketing 1995 90,000 45,000 5,568 24,000
1994 90,000 -- 6,668 130,000
Robert R. Story(5) . . . . .
Senior Vice President -- 1996 100,000 45,000 8,400 85,000
Operations 1995 60,000(6) -- -- 65,000
</TABLE>
- - --------------------
(1) Bonuses paid relate to prior fiscal year.
(2) Other annual compensation is comprised of car allowances.
(3) Mr. Webb resigned as the President and Chief Executive Officer of the
Company in January 1997 and from the Board of Directors of the Company in
March 1997.
(4) Mr. Wheeler became an employee of the Company in March 1996. Mr. Wheeler
did not receive any compensation from the Company, other than certain
rental income paid by the Company to an affiliate for its operating and
marketing offices and warehouse space, during the years ended December 31,
1995 and 1994. See "Certain Transactions and Relationships." Mr. Wheeler
resigned from his position as Vice Chairman of the Board in February 1997,
having received approximately $95,000 in salary to such date.
(5) Messrs. Bailey, Hendrix and Story resigned from their respective positions
with the Company in March 1997.
(6) Includes $37,500 paid by the Company in the form of consulting fees.
The following table sets forth the number of individual grants of stock
options made during the fiscal year ended December 31, 1996 to each of the
Named Executive Officers. All options were granted pursuant to the Company's
Employee Option Plan at an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant.
- 8 -
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates of
Stock Price Appreciation
Individual Grants for Option Term (1)
------------------------------------------------------- -------------------------
Number of
Securities Percent of
Underlying Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
- - ----------------------- ---------- -------------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David E. Webb(2) . . . -- -- -- -- -- --
L. Allen Wheeler . . . -- -- -- -- -- --
John R. Bailey . . . . 100,000 (3) 19.8% $25.50 2/26/2003 $1,038,102 $2,419,228
Randy R. Hendrix . . . 46,000 (3) 9.1% $25.50 2/26/2003 $ 477,527 $1,112,845
Robert R. Story . . . . 85,000 (3) 16.8% $25.50 2/26/2003 $ 882,387 $2,056,344
</TABLE>
- - -------------
(1) Potential realizable value is based on the assumption that the price of
the Company's Common Stock appreciates at the annual rate shown,
compounded annually, from the date of grant until the end of the
seven-year option term. The values are calculated in accordance with
rules promulgated by the Securities and Exchange Commission ("SEC") and
do not reflect the Company's estimate of future stock price
appreciation.
(2) Pursuant to the terms of the Employee Option Plan, Mr. Webb was not
eligible to receive stock option grants thereunder.
(3) Non-qualified options granted at an exercise price equal to fair market
value on the date of grant vest at a rate of 20% per year, subject to
acceleration upon the death of the optionee or termination of the
optionee following a Change of Control (as defined in the option
agreements), and have a term of seven years.
The following table sets forth information with respect to each
exercise of stock options during the fiscal year ended December 31, 1996 by
each of the Named Executive Officers and the number of options held at fiscal
year end and the aggregate value of in-the-money options held at fiscal year
end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying In-the-Money
Acquired Options/SARs at Options/SARs at
on Value Fiscal Year-End Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- - --------------------- -------- -------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
David E. Webb . . . -- -- -- --
L. Allen Wheeler . -- -- -- --
John R. Bailey . . -- -- 76,000/144,000 $105,000/$52,500
Randy R. Hendrix . -- -- 118,400/81,600 $273,000/$68,250
Robert R. Story . . -- -- 13,000/137,000 $0/$0
</TABLE>
- 9 -
<PAGE> 12
SEVERANCE AGREEMENTS
The Company has entered into a Severance Agreement with
Carroll McHenry, pursuant to which the Company has agreed to pay Mr. McHenry a
severance payment equal to one year's base compensation if Mr. McHenry's
employment is terminated for any reason (other than for cause, as defined in
the Severance Agreement) before December 31, 1999. In addition, in April 1997,
the Company entered into Separation Agreements with former executive officers
John Bailey, Randy Hendrix and Robert Story. As a part of such Separation
Agreements, the Company agreed (i) that certain options previously granted to
such individuals would vest pursuant to the vesting schedules in such
individuals' original option agreements through April 21, 1997, and (ii) to
extend the termination period of such vested options in the event of
termination of employment, death and disability until December 31, 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee makes recommendations to the Board
of Directors with respect to general compensation and benefit levels,
determines the compensation and benefits for the Company's executive officers
and administers the Company's Employee Option Plan.
General Compensation Philosophy
The Company's compensation philosophy is to link executive pay
to Company performance and to provide an incentive to manage the Company with a
principal view of enhancing stockholder value. Generally, the Company's
executive compensation program makes a significant portion of each executive's
compensation contingent upon growth and improvement in the Company's results of
operations, with the potential for exceptional reward for truly exceptional
performance.
Compensation criteria are evaluated annually to ensure that
they are appropriate and consistent with the business objectives which are
important in meeting the Company's operating and strategic goals and in
enhancing stockholder value. The Company's policies and programs are intended
to (i) provide rewards contingent upon Company and individual performance, (ii)
link executive compensation to sustainable increases in and the preservation of
stockholder value, (iii) encourage the retention of a strong management team
and (iv) encourage personal and professional development and growth.
Executive Officer Compensation
Total cash compensation for executive officers is comprised of
base salary and, in the determination of the Compensation Committee, cash
bonuses. Base salaries for executive officers were set at their current levels
to reflect the Company's anticipated growth rate. No cash bonuses were awarded
to the Named Executive Officers for the fiscal year ended December 31, 1996.
Bonuses paid in 1996 relate to fiscal year ended December 31, 1995. The
Company has made, and intends to continue to make, use of stock options as a
significant element of its compensation philosophy.
Chief Executive Officer Compensation
The salary for the Chief Executive Officer for the fiscal year
ended December 31, 1996 was determined by the Compensation Committee. Mr. Webb
received no bonus for the fiscal year ended December 31, 1996. Mr. Webb's base
pay was set at the time of the Company's initial public offering in April 1994,
and remained at the same level in 1995 and 1996. Mr. Webb resigned as
President and Chief Executive Officer
- 10 -
<PAGE> 13
of the Company in January 1997. Mr. McHenry's compensation package was
determined by the Search Committee under authority from the Board of Directors
and in consultation with an independent national executive search and
consulting firm. The Compensation Committee is in the process of formulating
specific performance goals and an executive compensation program that supports
the Company's business objectives.
The Compensation Committee
Max E. Bobbitt
John A. Sprague
L. Allen Wheeler
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1996, the
Compensation Committee of the Board of Directors was comprised of Messrs.
Holland, Sprague, Wheeler and Dennis M. O'Rourke. Mr. Wheeler resigned from
the Compensation Committee when he became Vice Chairman of the Company in
February 1996 and, after his resignation as Vice Chairman in February 1997, was
reappointed to the Compensation Committee in July 1997. Mr. Holland is a
director of the Company and an affiliate of Hunt Capital, a principal
stockholder of the Company. Mr. Sprague is indirectly a controlling general
partner of Jupiter, the holder of $40.0 million gross proceeds of the Company's
Convertible Notes.
Unity Hunt, an affiliate of Hunt Capital of which Mr. Holland
is President, received management fees during 1996 totaling $120,000 for
services provided to the Company by Mr. Holland. The Company leases an
aggregate of approximately 51,345 square feet for its operating and marketing
offices and warehouse space in Durant and Lindsay, Oklahoma from affiliates of
Messrs. Webb and Wheeler. The per annum rent for such space is $139,452. In
addition, the Company leases approximately 12,430 square feet for its
installation and operating offices in Durant, Oklahoma from an affiliate of
Messrs. Story, Webb and Wheeler. The per annum rent for such space is $62,150.
In October 1996 the Company purchased a paging franchise and paging assets from
an affiliate of Messrs. Webb and Wheeler for $123,250 for multiple-site paging
for Company employees. See "Certain Transactions and Relationships."
Mr. Holland, a director of the Company, served on the Board of
Directors and Compensation Committee of Wireless One during 1996 and through
June 1997. Mr. Webb, formerly a director and executive officer of the Company,
served on the Board of Directors of Wireless One during 1996 and continues to
serve on the Board of Directors of CS Wireless.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total
stockholder returns for (1) the Company's Common Stock, (2) the Nasdaq Stock
Market - U.S. Companies Index ("Nasdaq-U.S. Index"), (3) the Nasdaq
Telecommunications Stocks Index ("Nasdaq-Telecom Index") and (4) a
Company-Determined Peer Group Index (the "Peer Index") over the period of April
29, 1994 to December 31, 1996. The Nasdaq-U.S. Index included below is the
same index as the "Nasdaq National Market Index" included in the Company's
Proxy Statement dated April 10, 1996. The Peer Index includes the following
four companies, each of which operates multiple wireless cable television
systems: American Telecasting, Inc., CAI Wireless Systems, Inc., People's
Choice TV Corp. and Wireless One. The returns for each of the members of the
Peer Index have been weighted according to each member's stock market
capitalization. The graph and table assume the investment of $100 in each of
the Company's Common Stock, the Nasdaq-U.S.
- 11 -
<PAGE> 14
Index, the Nasdaq-Telecom Index and the Peer Index on April 29, 1994 (the
Company's Common Stock commenced public trading on April 22, 1994, and April
29, 1994 represents the first month-end date that the Company's Common Stock
was publicly traded) and the reinvestment of all dividends. Total stockholder
returns for prior periods are not an indication of future performance.
[GRAPH]
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
April 29, December 30, December 29, December 31,
1994 1994 1995 1996
---- ---- ---- ----
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Heartland Wireless Communications, Inc. $100.00 $115.91 $270.45 $119.32
- - ------------------------------------------------------------------------------------------------------------
Nasdaq-U.S. Index 100.00 103.38 146.20 179.84
- - ------------------------------------------------------------------------------------------------------------
Nasdaq-Telecom Index 100.00 100.12 131.10 134.01
- - ------------------------------------------------------------------------------------------------------------
Peer Index 100.00 62.48 97.64 33.90
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 26, 1997, the closing sales price for the Company's
Common Stock as reported on the Nasdaq Stock Market's National Market was $2.75
per share. Stockholders are urged to obtain current market price information
concerning the Company's Common Stock.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
During the year ended December 31, 1996, the Company paid
$97,065 to an accounting firm controlled by Mr. Webb for subscriber and payroll
services rendered to the Company.
The Company leases an aggregate of approximately 51,345 square
feet for its operating and marketing offices and warehouse space in Durant and
Lindsay, Oklahoma from affiliates of Messrs. Webb and Wheeler. The per annum
rent for such space is $139,452. The Company leases approximately 12,430
- 12 -
<PAGE> 15
square feet for its installation and operating offices in Durant, Oklahoma from
an affiliate of Messrs. Story, Webb and Wheeler. The per annum rent for such
space is $62,150.
In October 1996 the Company purchased a paging franchise and
paging assets from an affiliate of Messrs. Webb and Wheeler for $123,250 for
multiple-site paging for Company employees.
The terms of the transactions described above were determined
by the parties thereto, and the Company believes that such transactions
involving affiliates were on terms no less favorable to the Company than could
have been obtained from unaffiliated third parties. All future transactions
between the Company and its officers, directors, principal stockholders and
affiliates will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties and will be approved by a majority of
the disinterested members of the Board of Directors.
ITEM 2 ON PROXY
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has selected the firm of
KPMG Peat Marwick LLP, independent certified public accountants, to serve as
auditors for the Company for the fiscal year ending December 31, 1997. KPMG
Peat Marwick LLP has served as the Company's auditors since the Company's
inception. The Company expects that a representative of KPMG Peat Marwick LLP
will be present at the Meeting and will be available to make a statement (if he
or she desires to do so) and to respond to appropriate questions at the
Meeting. If the stockholders do not ratify the selection of KPMG Peat Marwick
LLP, the Board of Directors may consider selection of other independent
certified public accountants to serve as independent auditors, but no
assurances can be made that the Board of Directors will do so or that any other
independent certified public accountants would be willing to serve. The vote
of a majority of the shares of Common Stock represented in person or by proxy
at the Meeting is required to ratify the selection of auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THIS SELECTION.
ITEM 3 ON PROXY
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The Board of Directors of the Company knows of no matters
other than those referred to in the accompanying Notice of Annual Meeting of
Stockholders which properly may come before the Meeting. However, if any other
matter should be properly presented for consideration and voting at the Meeting
or any adjournment(s) thereof, the persons named as proxies on the enclosed
form of proxy card intend to vote the proxy cards in accordance with their
judgement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers and directors, and persons who are
beneficial owners of 10% or more of the Company's Common Stock, to file reports
of ownership and changes in ownership of the Company's securities with the SEC.
Officers, directors and greater than 10% beneficial owners are required by
applicable regulations to furnish the Company with copies of all forms they
file pursuant to Section 16(a).
-13-
<PAGE> 16
Based solely upon a review of the copies of the forms
furnished to the Company, and written representations from certain reporting
persons that no Form 5's were required, the Company believes that during the
fiscal year ended December 31, 1996, all filing requirements applicable to its
officers, directors and 10% beneficial owners were complied with except for the
following: the late filing by Mr. Story of a Form 4, Statement of Changes in
Beneficial Ownership of Securities, with respect to his purchase of 2,000
shares of Common Stock occurring in March 1996.
STOCKHOLDER PROPOSALS
The Company presently contemplates that the 1998 Annual
Meeting of Stockholders will be held on or about April 30, 1998. Proposals by
stockholders intended for inclusion in the Proxy Statement to be furnished to
all stockholders entitled to vote at the next Annual Meeting of Stockholders of
the Company must be received at the Company's principal executive offices not
later than February 1, 1998. In order to curtail controversy as to the date on
which a proposal was received by the Company, the Company suggests that
proponents submit their proposals by certified mail, return receipt requested.
Any such proposal must also meet the other requirements of the rules of the
Securities and Exchange Commission relating to stockholder proposals.
EXPENSES AND SOLICITATION
The Company will bear the cost of soliciting proxies,
including expenses in connection with the preparation and mailing of this Proxy
Statement and all papers which now accompany or may hereafter supplement it.
Solicitation of proxies will be primarily by mail. However, proxies may also
be solicited by directors, officers and regular employees of the Company (who
will not be specifically compensated for such services) by telephone or
otherwise. Brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward proxies and proxy material to the beneficial
owners of Common Stock, and the Company will reimburse them for their expenses.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING
SOLICITED BY THIS PROXY STATEMENT, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S 1996 ANNUAL REPORT AND FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER
31, 1996, FILED WITH THE SEC. ALL SUCH REQUESTS SHOULD BE DIRECTED TO
HEARTLAND WIRELESS COMMUNICATIONS, INC., 200 CHISHOLM PLACE, SUITE 200, PLANO,
TEXAS 75075, ATTENTION: INVESTOR RELATIONS.
By Order of the Board of Directors,
J. Curtis Henderson
Secretary
Plano, Texas
July 7, 1997
-14-
<PAGE> 17
HEARTLAND WIRELESS COMMUNICATIONS, INC.
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Carroll D. McHenry and J. Curtis Henderson, or
either of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and vote, as designated below, all
of the shares of the Common Stock, par value $.001 per share, of Heartland
Wireless Communications, Inc. (the "Company") held of record by the undersigned
at the close of business on July 3, 1997, at the Annual Meeting of Stockholders
to be held on August 6, 1997, or any adjournment(s) thereof.
IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. IF
YOU PREFER TO GIVE DIRECTIONS SEPARATELY ON INDIVIDUAL ISSUES, YOU MAY DO SO BY
MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE.
The proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1, "FOR" THE PROPOSAL
TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY UNDER PROPOSAL 2, AND IN THE DISCRETION OF THE
PROXIES WITH RESPECT TO ANY OTHER MATTER THAT IS PROPERLY PRESENTED AT THE
MEETING.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE
<PAGE> 18
HEARTLAND WIRELESS COMMUNICATIONS, INC
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Proposal to elect as directors of FOR each of the nominees listed WITHHOLD INSTRUCTION: To
the Company the following persons, below (except as marked to the AUTHORITY withhold authority
to hold office until the next annual contrary below) to vote for each of to vote for any
meeting of stockholders of the Company nominees listed below individual nominee,
or until their respective successors write that nominee's
have been duly elected and qualified: [ ] [ ] on the line below:
Carroll D. McHenry
Max E. Bobbitt ------------------
Robert S. Cecil
J. R. Holland, Jr.
John A. Sprague
L. Allen Wheeler
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment
of KPMG Peak Marwick LLP as independent [ ] [ ] [ ]
public accountants of the Company for the
fiscal year ending December 31, 1997.
FOR AGAINST ABSTAIN
3. In their discretion, the proxies are
authorized to vote upon such other [ ] [ ] [ ]
business as may properly come before the
meeting.
Please execute this proxy as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
- - ---------------------------------------------------------------------------
Signature Date
</TABLE>
