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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
HighwayMaster Communications, Inc.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies: ______
______________________________________________________________________
2. Aggregate number of securities to which transaction applies: _________
______________________________________________________________________
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): ___________
______________________________________________________________________
4. Proposed maximum aggregate value of transaction: _____________________
5. Total Fee Paid: ______________________________________________________
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid: ______________________________________________
2. Form, Schedule or Registration Statement No.: _______________________
3. Filing Party: ________________________________________________________
4. Date Filed: __________________________________________________________
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[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
TO THE STOCKHOLDERS OF HIGHWAYMASTER COMMUNICATIONS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
HighwayMaster Communications, Inc. will be held at our headquarters at 1155 Kas
Drive, Richardson, Texas 75081 on Tuesday, May 25, 1999, at 1:30 p.m., to
consider and vote on the following proposals:
1. Election of six directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors
shall have been duly elected and qualified.
2. Ratification of PricewaterhouseCoopers LLP as our independent
accountants for 1999.
3. Transaction of such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the
attached proxy statement.
Stockholders as of March 26, 1999, will be entitled to vote at this
Annual Meeting. A holder of shares of HighwayMaster Communication, Inc.'s common
stock is entitled to one vote, in person or by proxy, for each share of common
stock owned by such holder on all matters properly brought before the Annual
Meeting.
All stockholders of HighwayMaster Communications, Inc. are invited to
attend the annual meeting. Whether or not you expect to attend the annual
meeting, we urge you to sign, date and promptly return the enclosed proxy card
to assure your representation at the meeting. You can revoke your proxy at any
time before it is voted.
This Proxy Statement, voting instruction card and 1998 Annual Report
are being distributed on or about April 27, 1999.
By Order of the Board of Directors
/s/ J. RAYMOND BILBAO
J. Raymond Bilbao
Secretary
Richardson, Texas
April 27, 1999
1155 Kas Drive, Richardson, Texas 75081 o 972-301-2000, 800-493-3022
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[LOGO]
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
GENERAL QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: Re-election of six directors (Jana A. Bell, Stephen L. Greaves, William
C. Kennedy, Jr., Terry S. Parker, Gerry C. Quinn and John T. Stupka)
and ratification of PricewaterhouseCoopers LLP as HighwayMaster
Communication, Inc.'s independent accountants.
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on March 26, 1999 (the Record
Date). Each share of common stock is entitled to one vote.
Q: HOW DO I VOTE?
A: You can vote by completing, signing and returning your proxy card or by
coming to the meeting and voting in person.
Q: HOW DOES DISCRETIONARY AUTHORITY APPLY?
A: If you sign your proxy card, but do not make any selections, your
shares will be voted in favor of the nominees for election as directors
and for the ratification of PricewaterhouseCoopers LLP.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Only the inspector, ChaseMellon Shareholders Services, LLC, and
certain employees will have access to your proxy card. All comments
will remain confidential, unless you ask that your name be disclosed.
Q: WHO WILL COUNT THE VOTES?
A: ChaseMellon will tabulate the votes and act as inspector of election.
Q: WHAT CONSTITUTES A QUORUM?
A: As of March 26, 1999, 24,967,960 shares of common stock were issued and
outstanding. A majority of the outstanding shares, present or
represented by proxy, constitutes a quorum. If you vote by proxy card,
you will be considered part of the meeting. ChaseMellon will count
abstentions and broker non-votes in determining whether we have a
quorum at the meeting. If you are present or represented by a proxy at
the Annual Meeting and you abstain, your abstention will have no effect
on the election of directors, but will have the same effect as a vote
against the ratification of PricewaterhouseCoopers LLP.
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Q: WHAT PERCENTAGES OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Approximately 10.9% of our common stock as of December 31, 1998. (See
page 21 for more details.)
Q: WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS?
A: Erin Mills Stockholders, which includes shares owned of record by Erin
Mills International Investment Corporation and The Erin Mills
Investment Corporation, owned 9,088,326 shares, or 36.4%, collectively,
as of December 31, 1998.
Southwestern Bell Wireless Holdings, Inc owned preferred stock and
warrants that are convertible into 6,600,000 shares of common stock, or
21.0%, as of December 31, 1998.
Carlyle Stockholders (which includes Carlyle-HighwayMaster Investors,
L.P., Carlyle-HighwayMaster Investors II, L.P. and TC Group, L.L.C.)
owned 2,723,468 shares, or 10.9%, collectively, as of December 31,
1998.
Q: WHEN ARE THE STOCKHOLDER PROPOSALS DUE FOR THE MEETING IN 2000?
A: Stockholder proposals must be in writing and must be received by
HighwayMaster Communications, Inc., 1155 Kas Drive, Richardson, TX
75081, no later than December 13, 1999.
Q: WHO WILL PAY THE SOLICITATION EXPENSES?
A: We will pay the cost of preparing and distributing this proxy statement
and the cost of soliciting votes. We will reimburse stockbrokers and
other custodians, nominees and fiduciaries for forwarding proxy and
solicitation material to the owners of common stock.
Q: WHAT IF I SIGN AND RETURN MY PROXY, BUT LATER CHANGE MY MIND?
A: You may revoke your proxy at any time before it is voted at the meeting
by doing one of the following:
o Sending a notice revoking your proxy to our Secretary at 1155
Kas Drive, Richardson, Texas 75081;
o Signing and mailing to us a proxy bearing a later date; or
o Coming to our meeting and voting in person.
PROPOSALS
1. RE-ELECTION OF DIRECTORS
Nominees for re-election this year are:
o Jana A. Bell (director since 1998);
o Stephen L. Greaves (director since 1994);
o William C. Kennedy, Jr. (director since 1992);
o Terry S. Parker (director since 1995);
o Gerry C. Quinn (director since 1992); and
o John T. Stupka (director since 1998).
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The nominees named above have indicated they are able and willing to
serve as directors. If any nominee is unable to serve, the nominee approved by
the proxy card will vote the shares covered by that proxy card for such
substitute nominee as the Board of Directors may select. Stockholders can
withhold authority to vote for any nominee by entering the name of that nominee
in the space provided for such purpose on the proxy card.
Each director will be elected if the number of shares of common stock
present at the Annual Meeting voted in favor of his or her election is greater
than shares voted against his or her election.
The Board of Directors recommends that you vote in favor of each
nominee.
2. RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as
HighwayMaster Communication, Inc.'s independent accountants for 1999.
PricewaterhouseCoopers LLP has audited our financial statements since our
inception in 1992. Representatives of PriceWaterhouseCoopers LLP will attend the
Annual Meeting to answer questions and may make a statement if they so desire.
The selection of PricewaterhouseCoopers LLP as our independent
accountants does not need to be ratified by the stockholders. If the choice of
PricewaterhouseCoopers LLP is not ratified, the Board of Directors and the Audit
Committee will reconsider the retention of PricewaterhouseCoopers. If the
selection of PricewaterhouseCoopers LLP is ratified by the stockholders, the
Board of Directors and the Audit Committee may direct the appointment of a
different independent accounting firm at any time during 1999.
The affirmative vote of a majority of the shares present is needed to
ratify PricewaterhouseCoopers LLP as independent accountants for 1999.
The Board of Directors recommends that you vote in favor of ratifying
PricewaterhouseCoopers LLP as the independent accountants for 1999.
DIRECTORS & EXECUTIVE OFFICERS
DIRECTORS
The following individuals are directors of both HighwayMaster
Communications, Inc. and its wholly-owned subsidiary, HighwayMaster Corporation.
We are soliciting your vote only with respect to the election of the
HighwayMaster Communications, Inc. Board of Directors.
JANA A. BELL - PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR SINCE
SEPTEMBER 1998
Ms. Bell, age 35, was initially employed by HighwayMaster
Communications, Inc. and HighwayMaster Corporation in June 1998 as Executive
Vice President and Chief Financial Officer. In September 1998, Ms. Bell was
promoted to President and Chief Executive Officer of both entities, and she
continued to act in the Chief Financial Officer capacity until November 1998.
From March 1992 to June 1998, Ms. Bell was employed in a variety of capacities
by AT&T Wireless Services and by its predecessors, LIN Broadcasting and McCaw
Cellular Communications, Inc. She was initially employed as Director of
Financial Planning and Control in March 1992 for LIN Broadcasting. In May 1994,
she became Director of Finance for McCaw Properties. From January 1996 to June
1998 she served in various executive positions over the Southwest region of AT&T
Wireless including Vice President and Chief Financial Officer since 1997. She
last served as AT&T Wireless' Central United States Vice President of Operations
from March 1998 until she left to join HighwayMaster. Prior to her employment at
AT&T Wireless, Ms. Bell practiced public accounting for Ernst & Young LLP, last
serving as an audit manager.
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STEPHEN L. GREAVES - DIRECTOR SINCE JUNE 1994
Mr. Greaves, age 40, has served as President of Erin Mills
International Investment Corporation, a private venture capital fund and
stockholder of HighwayMaster Communications, Inc., since February 1997 and also
served as General Manager from April 1993 to February 1997. From January 1992
until March 1993, Mr. Greaves worked as a private marketing consultant, and from
January 1989 to December 1991, he served as Marketing Planner for Esso Standard
Petroleum Oil. Mr. Greaves also serves as a director of Erin Mills International
Investment Corporation, MotorVac Technologies, Inc., NewMed Corporation and
several other privately held companies.
WILLIAM C. KENNEDY, JR. - INTERIM CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Kennedy, age 59, served as Chairman of the Board of Directors of
HighwayMaster Communications, Inc. and of HighwayMaster Corporation from their
inceptions, in 1992 and 1994 respectively, until September 1998 when Mr. William
C. Saunders became Chairman of both boards. Upon Mr. Saunders' departure in
December 1998, Mr. Kennedy was appointed to serve as Interim Chairman and
continues in this role currently for both HighwayMaster Communications, Inc. and
HighwayMaster Corporation. Additionally, Mr. Kennedy served as Chief Executive
Officer of HighwayMaster Communications, Inc. from its inception in 1992 until
December 1994. Mr. Kennedy founded Instacom, Inc., serving as its Chairman and
President from 1970 until its merger with Comdata Network, Inc. in 1983. From
1983 to 1985, Mr. Kennedy served as the Chairman of Comdata Network, Inc. From
1988 to 1994 he served as Chairman, President and Chief Executive Officer of
By-Word, a company that was engaged in the engineering and development of voice
recognition and communication products. From 1993 until its merger with Nextel
Communications, Inc. in 1997, Mr. Kennedy served as a Director of Pittencrieff
Communications, Inc., a specialized mobile radio provider.
TERRY S. PARKER - DIRECTOR SINCE APRIL 1995
Mr. Parker, age 54, served as President and Chief Operating Officer of
CellStar Corporation, a cellular distributor, from March 1995 to July 1996. From
October 1993 until March 1995, Mr. Parker served as President of GTE Personal
Communications Services and as Senior Vice President of GTE Mobile Comm, a
cellular service provider. From January 1989 until October 1993, Mr. Parker
served as President of GTE-TP&S, a telecommunications company. Mr. Parker also
serves as a Director of Illinois Superconductor, Inc., CellStar Corp. and
Heartland Wireless, Inc.
GERRY C. QUINN - DIRECTOR SINCE 1992
Mr. Quinn, age 50, served as President of The Eighteen Wheeler
Corporation and The F.B.R. Eighteen Corporation, both of which were affiliates
of predecessor entities of HighwayMaster Communications, Inc., from April 1992
until February 1994. Mr. Quinn has served as President of The Erin Mills
Investment Corporation, since July 1989, and as Executive Vice President of The
Erin Mills Development Corporation a real estate development company and
stockholder of HighwayMaster Communications, Inc. since September 1989. Prior to
joining Erin Mills, Mr. Quinn served as a senior officer in Magna International
Inc. and Barrincorp, both publicly traded companies, and he served as a partner
in the public accounting firm of Ernst & Young. Currently Mr. Quinn is also a
Director of MotorVac Technologies, Inc.
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JOHN T. STUPKA - DIRECTOR SINCE JUNE 1998
Mr. Stupka, age 49, has served as President, Chief Executive Officer
and a director of SkyTel Communications, Inc., formerly known as Mobile
Telecommunication Technologies Corp., since August 1996. Prior to joining
SkyTel, Mr. Stupka served as Senior Vice President - Strategic Planning of SBC
Communications, Inc. from August 1995 to August 1996 and as President and Chief
Executive Officer of Southwestern Bell Mobile Systems, Inc. from November 1985
to August 1995. Mr. Stupka is also a director of CellStar Corp.
EXECUTIVE OFFICERS
JANA A. BELL - PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR FOR
HIGHWAY MASTER COMMUNICATIONS, INC. AND HIGHWAYMASTER CORPORATION SINCE
SEPTEMBER 1998
Please refer to page 3 for information regarding Ms. Bell.
J. RAYMOND BILBAO - GENERAL COUNSEL AND SECRETARY FOR HIGHWAYMASTER
COMMUNICATIONS, INC. AND HIGHWAYMASTER CORPORATION SINCE FEBRUARY 1999
Mr. Bilbao, age 32, was initially employed by HighwayMaster Corporation
in June 1997 as Associate General Counsel. He served in that position until
February 1999, when he was promoted to General Counsel and Secretary of
HighwayMaster Communications, Inc. and HighwayMaster Corporation. From September
1996 to June 1997, Mr. Bilbao was a Senior Associate Attorney at Neligan &
Averch, LLP, a Dallas-based law firm, where he represented technology clients in
corporate and litigation matters. From September 1995 to September 1996, Mr.
Bilbao was employed by Value-Added Communications, Inc., a Dallas-based
telecommunications company, last serving as its Vice President and General
Counsel. Mr. Bilbao was an associate attorney at Haney & Tickner, P.C., from
1993 to 1995, and at Renfro, Mack & Hudman, P.C., from 1992 to 1993, both Fort
Worth law firms. In 1992, Mr. Bilbao earned his law degree at St. Mary's
University in San Antonio, Texas serving as a writer for the St. Mary's Law
Journal. Mr. Bilbao is licensed to practice law in Texas.
MARC BRINGMAN - VICE PRESIDENT OF INFORMATION TECHNOLOGY FOR
HIGHWAYMASTER CORPORATION SINCE JUNE 1998
Since joining HighwayMaster Corporation in March 1996, Mr. Bringman,
age 49, has served HighwayMaster Corporation in a number of positions including
Director of Network Operations from July 1997 to March 1998 and Vice President
of Performance Development from February to June of 1998. From 1993 to 1996, Mr.
Bringman was an independent consultant providing training in leadership,
quality, change management, problem solving and career development. During much
of this period Mr. Bringman also held an area management position with Southland
Corporation in the Pacific Northwest. From 1981 through 1991 Mr. Bringman was
employed by Pacific Bell and held a number of key technical leadership
positions, last serving as a Director managing all usage processing. From 1974
to 1981, Mr. Bringman served as an officer in the U.S. Air Force specializing in
electronic warfare and communications.
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TODD A. FELKER - SENIOR VICE PRESIDENT, SALES AND MARKETING FOR
HIGHWAYMASTER CORPORATION SINCE JUNE 1998
From May 1994 to June 1998, Mr. Felker, age 38, was employed in several
marketing management and product planning positions of increasing responsibility
for AT&T Wireless, last serving as its Vice President of Marketing, Central Area
which encompassed 15 states, 1.6 million customers and over $1 billion in annual
revenue. From May 1989 to May 1994, Mr. Felker held Manager of Marketing
Development and Director of Marketing positions at Crown Media, Inc. and a
predecessor, Cencom Cablevision. From June 1982 to May 1989, Mr. Felker worked
with D'Arcy Masius Benton & Bowles, an advertising firm, where he last served as
a Manager of Media Planning and Research developing and implementing media plans
for Southwestern Bell Telephone and Banquet Frozen Foods.
ROBERT W. LAMERE - SENIOR VICE PRESIDENT OF TRANSPORTATION SYSTEMS FOR
HIGHWAYMASTER CORPORATION SINCE MARCH 1997
Mr. LaMere, age 46, has over 14 years of experience in information
systems. From 1993 to March 1997, he served as the General Manager of Spirit
Systems, the division of Burlington Motor Carriers responsible for all of its
data and telecommunications needs and a support and services provider to other
transportation companies. From 1990 to 1993, Mr. LaMere served as the Vice
President of Information Systems at Burlington Motor Carriers.
CAROLYN D. LOCKE - DIRECTOR OF HUMAN RESOURCES FOR HIGHWAYMASTER
CORPORATION SINCE 1992
Ms. Locke, age 51, has over 23 years experience in various positions in
human resources, benefits administration and employee relations. From 1988 to
1992, Ms. Locke served as Employee Relations Manager for Pearle Vision, Inc.,
and from 1975 to 1988, she was employed by McDonald's Corporation in several
positions of increasing responsibility, last serving as a Human Resources
Regional Manager.
WILLIAM H. MCCAUSLAND - SENIOR VICE PRESIDENT, OPERATIONS FOR
HIGHWAYMASTER CORPORATION SINCE SEPTEMBER 1998
Mr. McCausland, age 38, has worked with HighwayMaster Corporation since
January 1996. Prior to becoming Senior Vice President, Operations in September
1998, he served as Senior Vice President and General Manager, AutoLink. From
September 1996 to March 1998, Mr. McCausland served HighwayMaster Corporation as
Senior Vice President, Network Operations and from January 1996 to September
1996 as Vice President, Business Alliances. From May 1993 to January 1996, Mr.
McCausland was employed by GTE-TSI, initially as Director of Industry Relations,
and was an Assistant Vice President and General Manager when he left to join
HighwayMaster Corporation. From May 1987 to May 1993, Mr. McCausland worked for
CommNet Cellular, Inc. (formerly known as Cellular, Inc.), where he was employed
in a variety of positions, most recently, Vice President of Customer Support
Services. From May 1984 to May 1987, Mr. McCausland worked in a variety of
management positions for a cellular reseller that has since been acquired by
Southwestern Bell Mobile Systems.
BRAD E. POPOFF - SENIOR VICE PRESIDENT, CUSTOMER SERVICE OPERATIONS FOR
HIGHWAYMASTER CORPORATION SINCE SEPTEMBER 1996
Mr. Popoff, age 45, served HighwayMaster Corporation as Senior Vice
President, Marketing from November 1993 to September 1996, as Vice President,
Operations and Engineering from December 1992 until November 1993, as Vice
President, Operations, from September 1992 until December 1992, and as Director
of Marketing from April 1992 until September 1992. From 1986 until April 1992,
Mr. Popoff was employed as Vice President of Sales and Marketing of Burlington
Motor Carriers, where he was responsible for 22 western states in the United
States and Mexico. Mr. Popoff held various operations, sales and sales
management positions with Schneider National, Inc., a
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trucking company, from 1980 until 1986, and served as Manager of Operations of
Mead Paper Corporation's private fleet, where he was employed from 1974 until
1980.
GORDON D. QUICK - EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
FOR HIGHWAYMASTER CORPORATION SINCE JANUARY 1995
Prior to joining HighwayMaster Communications, Inc. and HighwayMaster
Corporation, Mr. Quick, age 51, served for more than 20 years with GTE
Corporation, where, among other things, he held a variety of marketing, planning
and general management positions with the Telephone Operations Group and the
Information Services Group. In 1990, he was named Vice President of Marketing
and Business Development, and in January 1992 he was named Vice President and
General Manager of GTE-Telecommunications Services, Inc., a principal business
unit of GTE. Mr. Quick was involved in developing the initial services provided
to HighwayMaster Corporation under contract with GTE-TSI.
W. MICHAEL SMITH - SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
TREASURER FOR HIGHWAYMASTER COMMUNICATIONS, INC. AND HIGHWAYMASTER CORPORATION
SINCE NOVEMBER 1998
Mr. Smith, age 34, joined HighwayMaster Communications, Inc. and
HighwayMaster Corporation after serving from 1997 to 1998 as Vice President of
Finance and Chief Financial Officer for TPN, Inc., a provider of digital
satellite programming. Mr. Smith was employed by AT&T Wireless Services from
1994 to 1997, where he served as Director of Financial Planning and Control from
1994 to 1996 and as Director of Finance and Controller from 1996 to 1997. Prior
to his employment at AT&T Wireless, Mr. Smith practiced public accounting for
Arthur Anderson & Co., last serving as a financial consultant and audit manager
primarily representing high technology clients. Mr. Smith earned a Masters in
Accounting at the University of North Texas and is a Certified Public
Accountant.
STEPHEN P. TACKE - VICE PRESIDENT AND CONTROLLER FOR HIGHWAYMASTER
CORPORATION SINCE AUGUST 1995
From August 1996 to August 1997, Mr. Tacke, age 52, served as acting
Chief Financial Officer of HighwayMaster Communications, Inc. and HighwayMaster
Corporation. From July 1991 through August 1995, Mr. Tacke was an independent
financial consultant. Prior to July 1991, Mr. Tacke practiced public accounting
for 22 years with PriceWaterhouse, last serving as an audit partner.
KEN VANDAGRIFF - VICE PRESIDENT OF NETWORK OPERATIONS AND PRODUCT
SUPPORT OF HIGHWAYMASTER CORPORATION SINCE JUNE 1998
Since January 1995, Mr. Vandagriff, age 43, has served HighwayMaster
Corporation in several positions of increasing responsibility including Director
of Customer Care, Director of Technical Services, Director of Information
Technology and Director of System Architecture. From 1989 to 1993, Mr.
Vandagriff was employed at Ventura Software, holding management positions in
product support, quality assurance and information technology. From 1978 to
1988, Mr. Vandagriff served Xerox Corporation in various management and
technology positions.
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KENNETH R. WESTERLAGE - SENIOR VICE PRESIDENT, ENGINEERING & TECHNOLOGY
DEVELOPMENT FOR HIGHWAYMASTER CORPORATION SINCE SEPTEMBER 1996
Mr. Westerlage, age 38, served HighwayMaster Corporation as Vice
President of Software Development from November 1995 to September 1996 and as
Director of Software Development from September 1991 to November 1995. Prior to
November 1995, he worked for over eight years in the aerospace industry at
General Dynamics in a variety of systems design and development capacities.
TODD WHISENANT - DIRECTOR OF MATERIALS OPERATIONS AND DISTRIBUTION FOR
HIGHWAYMASTER CORPORATION SINCE NOVEMBER 1998
From February to November 1998, Mr. Whisenant, age 35, served as
HighwayMaster Corporation's Director of Program Management. From 1996 to 1997,
Mr. Whisenant worked for Motorola as a Product Quality Manager for the Advanced
Messaging Group. From 1993 to 1996, Mr. Whisenant was Corporate Director of
Quality for Intellicall, Inc. in the private payphone industry. From 1991 to
1993, Mr. Whisenant was employed as Quality Manager for the Passenger Seat
Division of Weber Aircraft in the aerospace industry. Mr. Whisenant began his
career at Texas Instruments where he worked in a variety of operations and
quality management positions from 1984 to 1991.
There are no family relationships among the directors and executive
officers of HighwayMaster Communications, Inc. or HighwayMaster Corporation.
ORGANIZATION OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors is comprised of six directors. Four directors
are employees or represent certain of the principal beneficial owners of
HighwayMaster Communication, Inc.'s common stock. See "Security Ownership of
Certain Beneficial Owners and Management" and "Certain Relationships and Related
Transactions." All directors serve until the next annual meeting of the
stockholders or until their respective successors are duly elected and
qualified.
During 1998, the Board of Directors held 15 special meetings. The
standing committees of the Board of Directors currently consist of a
Compensation Committee, an Audit Committee and a Nominating Committee.
The Compensation Committee is responsible for the administration of,
and the determination of strategy and policy matters related to, the Amended and
Restated 1994 Stock Option Plan. The Compensation Committee currently is
composed of Gerry C. Quinn, Terry S. Parker and Stephen L. Greaves. The
Compensation Committee met three times during 1998. The Compensation Committee
also reviews the compensation of Jana A. Bell and other company executives, as
necessary. None of the Compensation Committee members is an officer or employee
of HighwayMaster Communications, Inc. or HighwayMaster Corporation, and none
holds options granted under HighwayMaster Communication's, Inc. Stock Option
Plan.
The Audit Committee, with management and HighwayMaster Communication,
Inc.'s independent accountants, determines the adequacy of internal controls and
other financial reporting matters. The Audit Committee, composed of William C.
Kennedy, Jr., Terry S. Parker and Gerry C. Quinn, met three times during 1998.
The Nominating Committee was formed pursuant to the Amended
Stockholders' Agreement between HighwayMaster Communications, Inc. and certain
of its shareholders which requires the Board of Directors to select a
three-member Nominating Committee composed of one "Erin Mills" director, one
"By-Word" director and one "Carlyle" director. The Nominating Committee also
considers and makes nominations for additional outside directors for election to
the Board of Directors. During 1998, the Nominating Committee was composed of
Gerry C. Quinn as the Erin Mills member, William C. Saunders as the By-Word
member and Terry S. Parker in lieu of the Carlyle member, to serve until such
time, if any, as Carlyle selects a board member who is appointed to the
Nominating Committee. In November 1998, John T. Stupka replaced Mr. Parker on
the committee, and in December 1998, Mr. Saunders resigned
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from the committee. As of the date of this proxy statement, the vacancy created
by Mr. Saunders' resignation had not been filled. The Nominating Committee did
not meet during 1998. See "Certain Relationships and Related Party
Transactions." The Nominating Committee will consider nominees recommended by
our stockholders. Any stockholder wishing to make a nomination should send a
letter providing the name, address, phone number and resume of the nominee to
our offices, to the attention of the Nominating Committee.
During 1998, each director attended at least 75% of the meetings of the
Board of Directors and of the meetings of committees on which he or she served.
INDEMNIFICATION
HighwayMaster Communications, Inc. indemnifies each person who is or
was:
o a director, officer, employee or agent of HighwayMaster
Communications, Inc.; or
o serving at HighwayMaster Communications, Inc.'s request as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against expenses, judgments, fines and amounts incurred in that capacity.
HighwayMaster Communications, Inc. will indemnify only for actions taken:
o in good faith in a manner the indemnified person reasonably
believed to be in or not opposed to the best interests of
HighwayMaster Communications, Inc.; or
o with respect to criminal proceedings which were not unlawful.
o HighwayMaster Communications, Inc. will also advance to the
indemnified person payments incurred in defending a proceeding to
which indemnification might apply provided, the recipient agrees
to repay all such advanced amounts if it is ultimately determined
that such person is not entitled to be indemnified. The Bylaws
specifically provide that the indemnification rights granted
thereunder are nonexclusive.
o In accordance with the Bylaws and the Amended Stockholders'
Agreement between HighwayMaster Communications, Inc. and certain
of its stockholders, HighwayMaster Communications, Inc. has
purchased insurance on behalf of its directors and officers in
amounts it believes to be reasonable.
COMPENSATION OF DIRECTORS
The Board of Directors has the authority to fix the compensation of
directors. The Bylaws and the Amended Stockholders' Agreement provide that
directors may be reimbursed for reasonable expenses for their services to
HighwayMaster Communications, Inc., and may be paid either a fixed sum for
attendance at each Board of Directors meeting or a stated salary as director.
HighwayMaster Communications, Inc. currently reimburses its directors for travel
expenses. HighwayMaster Communications, Inc. provides Terry S. Parker, John T.
Stupka and William C. Kennedy, Jr. with annual directors' fees of $25,000 each.
HighwayMaster Communications, Inc. has granted each of Terry Parker and John
Stupka options to purchase 3,798 shares of common stock at exercise prices of
$7.58 and $2.50 per share, respectively. These options were not granted pursuant
to HighwayMaster Communications, Inc.'s Stock Option Plan, and therefore, unlike
options granted under the plan, such options have not been registered under the
Securities Act of 1933, as amended.
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<PAGE> 12
In addition to his services as a director, Mr. Parker performed
consulting services for HighwayMaster Corporation in connection with the
AutoLink venture and related cellular communications matters for part of 1998.
Pursuant to this consulting arrangement, Mr. Parker received approximately
$62,500 in fees during 1998. Mr. Parker's agreement with HighwayMaster
Corporation terminated in March 1998. HighwayMaster Corporation does not
anticipate that it will pay Mr. Parker any consulting fees during 1999.
10
<PAGE> 13
COMPENSATION OF CERTAIN EXECUTIVE OFFICERS
GENERAL
SUMMARY COMPENSATION TABLE
The following is a table describing compensation awarded, paid to or
earned by the Chief Executive Officer and the other four most highly compensated
executive officers (rounded to the nearest dollar), for each of the last three
fiscal years. Some of the persons named below are employed by HighwayMaster
Corporation pursuant to employment contracts. Those contracts are described on
page 16.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR (DOLLARS) (DOLLARS) SARS (SHARES) (DOLLARS)(1)
------------------ ---- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Jana A. Bell 1998 130,538 80,000 500,000 --
President and Chief Executive Officer for 1997 -- -- -- --
HighwayMaster Communications, Inc. and 1996 -- -- -- --
HighwayMaster Corporation
William C. Kennedy, Jr. 1998 342,231 -- -- 450,000
Interim Chairman of the Board for 1997 439,230 -- -- --
HighwayMaster Communications, Inc. and 1996 399,300 -- -- --
HighwayMaster Corporation
William H. McCausland 1998 147,396 45,000 20,000 --
Senior Vice President, Operations for 1997 127,083 35,000 -- --
HighwayMaster Corporation 1996 104,603 15,000 30,000 65,000
J. Philip McCormick 1998 218,750 -- -- --
Former Executive Vice President and Chief 1997 92,949 -- 51,000 --
Financial Officer for HighwayMaster 1996 -- -- -- --
Communications, Inc. and HighwayMaster
Corporation
Brad E. Popoff 1998 160,290 -- -- --
Senior Vice President, Customer Service 1997 127,167 -- -- --
Operations for HighwayMaster Corporation 1996 118,333 -- 10,000 --
Gordon D. Quick 1998 364,639 -- -- --
Executive Vice President and Chief 1997 331,490 -- -- 34,089
Operating Officer for HighwayMaster 1996 301,354 -- 40,000 --
Corporation
William C. Saunders 1998 425,565 -- 100,000 300,000
Former President and Chief Executive 1997 439,230 -- -- --
Officer for HighwayMaster Communications, Inc. 1996 399,300 -- -- --
and HighwayMaster Corporation
</TABLE>
11
<PAGE> 14
- ----------------------------------
(1) The components of All Other Compensation are:
o William C. Kennedy, Jr. was paid severance upon the termination of
his employment contract with HighwayMaster Corporation.
o Robert W. LaMere, William H. McCausland and Gordon D. Quick were
paid for relocation expenses, including amounts due in taxes on
actual relocation expenses paid by HighwayMaster Corporation.
Mr. Popoff's salary in 1998 included $23,832 in sales commissions. The
officers included in the table did not receive any annual compensation other
than salary or bonus, except for certain perquisites and other personal benefits
which are not shown. Those amounts are not included in the table because the
aggregate amount of such compensation, if any, for each officer during the
fiscal year did not exceed the lesser of $50,000 or 10% of his total reported
salary and bonus.
Stock Options. HighwayMaster Communications, Inc. grants options to
certain of its executive officers and employees under the Stock Option Plan. As
of December 31, 1998, HighwayMaster had granted options to purchase a total of
1,954,186 shares, 1,946,590 of which were outstanding under the Stock Option
Plan, and options to purchase 627,973 shares remained available for grant
thereunder. The additional options representing 7,596 shares were granted to
directors and are not governed by a formal plan.
12
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
The following table describes the number of options granted to the
Chief Executive Officer and HighwayMaster Corporation's other four most highly
compensated executive officers during the year ended December 31, 1998 and
certain other information relating to such options. During 1998, the Board of
Directors repriced certain options that had been granted on various dates
ranging from May 1994 through June 1998, and for Mr. Saunders, extended the term
for exercise of options as described below. For purposes of the following table,
except for Mr. Saunder's options, the options that were repriced in 1998 are not
included as options granted during 1998. For additional information regarding
the option repricing, please see the table on page 15.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------------------ ---------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR EXPIR-
OPTIONS EMPLOYEES BASE PRICE ATION
NAME GRANTED(1) IN FISCAL YEAR ($ PER SHARE) DATE 5% 10%
---- ---------- -------------- ------------- ----- -- ---
<S> <C> <C> <C> <C> <C> <C>
Jana A. Bell 70,000 8% $1.19 5/29/04 $111,630 $147,571
400,000 46% $1.00 8/12/04 $616,380 $708,624
30,000 3.4% $1.19 9/18/04 $47,841 $63,245
William C. Kennedy, Jr. -- -- -- -- -- --
William H. McCausland 20,000 2.3% $1.19 9/18/04 $31,895 $42,163
J. Philip McCormick -- -- -- -- -- --
Brad E. Popoff -- -- -- -- -- --
Gordon Quick -- -- -- -- -- --
William C. Saunders 100,000 11.5% $1.19 1/30/98 -- --
</TABLE>
- ----------------------
(1) Ms. Bell's options vest on each of the first, second and third
anniversaries of the date of the grant. For all other grants, options vest 20%
on the date of the grant and in 20% increments on each of the first, second,
third and fourth anniversaries of the date of the grant. In addition, the grant
to Mr. Saunders represents options that were granted previously, repriced and
for which the exercise period was extended at the time of repricing. Those
options would have fully vested in March 1999 if he had still been an employee
of HighwayMaster Corporation at that time; however, because he resigned as
Chairman of the Board of Directors in December 1998, the options were canceled
and no vesting occurred.
In the event an optionee's position as an employee of HighwayMaster
Communications, Inc. or a subsidiary terminates for any reason, unless otherwise
provided in the applicable stock option agreement or applicable employment
agreement, the optionee may exercise the option during the 60-day period
following such termination, to the extent that the
13
<PAGE> 16
option was exercisable on the date of termination of the optionee's employment.
All options that are not exercisable on the date of termination are forfeited.
AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES
The following table sets forth:
o the number of options exercised by the Chief Executive Officer and
HighwayMaster Corporation's four additional most highly
compensated executive officers;
o the number of options held by them as of December 31, 1998; and
o the value of unexercised and exercised options held by them as of
December 31, 1998, calculated as the closing price per share of
the common stock on the last day of the fiscal year, which was
$1.125, less the option exercise price, multiplied by the number
of shares.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
OPTION EXERCISES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
DURING 1998 AT DECEMBER 31, 1998 AT DECEMBER 31, 1998
-------------------------- -------------------- --------------------
NUMBER OF
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jana A. Bell -- -- -- 500,000 -- $62,500
William C. Kennedy, Jr. -- -- -- -- -- --
William H. McCausland -- -- 22,000 28,000 -- --
J. Philip McCormick (1) -- -- 17,000 34,000 -- --
Brad E. Popoff -- -- 27,974 4,000 -- --
Gordon D. Quick (1) -- -- 165,305 16,000 -- --
William C. Saunders (1) -- -- 393,478 100,000 -- --
</TABLE>
- ----------------------
(1) Mr. McCormick's employment with HighwayMaster Corporation
terminated on November 13, 1998. He had until January 12, 1998 to exercise the
17,000 options that were then exercisable. Mr. McCormick did not exercise such
options, and the options have now terminated. Mr. Quick's employment with
HighwayMaster Corporation will terminate on April 30, 1999, and he will have
until June 29, 1999 to exercise the 165,305 options that currently are
exercisable, at which time, all unexercised options will terminate. Mr. Saunders
employment with HighwayMaster Corporation terminated December 1, 1998. Mr.
Saunders had until January 30, 1999 to exercise the options. Mr. Saunders did
not exercise such options, and the options have now terminated.
The Board of Directors and its Compensation Committee intend to further
the interests of HighwayMaster Communications, Inc.'s stockholders by tying a
substantial portion of executive compensation to the market value of our common
stock. Toward this end, we have designed our Stock Option Plan to support our
ability to attract and retain qualified management and other personnel necessary
for our success and progress. In the second half of 1998, we restructured our
management and operations, and in connection with this restructuring and in
order to further the interests
14
<PAGE> 17
of our stockholders by retaining qualified management and other personnel, the
Board of Directors determined that it was necessary to reprice the option grants
that were outstanding.
Effective September 18, 1998, the Board of Directors repriced all
outstanding stock options for those employees remaining at HighwayMaster
Corporation after the restructuring. On September 18, 1998, the closing price of
HighwayMaster Communications, Inc.'s common stock on NASDAQ was $1.188, and the
Board of Directors repriced options representing 611,390 shares of common stock
at $1.19 per share. The repriced options originally had been issued by
HighwayMaster Communications, Inc. at exercise prices ranging from $3.75 to
$10.25 per share. The Board of Directors amended terms of the options only to
reflect a new exercise price, and did not amend any terms relating to expiration
dates, except that the exercise date for 100,000 options held by Mr. Saunders
was extended. Because Mr. Saunders' employment terminated in December 1998,
however, his options since have terminated.
The following table sets forth information regarding the option
repricing. We have not included any information for individuals who owned
options that were not repriced.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES PRICE OF EXERCISE LENGTH OF ORIGINAL
UNDERLYING STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT
NAME DATE REPRICED REPRICING REPRICING PRICE DATE OF REPRICING
---- ---- -------- --------- --------- ----- -----------------
<S> <C> <C> <C> <C> <C> <C>
Jana A. Bell 09/18/98 70,000 $1.19 $3.75 $1.19 5 years, 8 months
President & Chief Executive
Officer for HighwayMaster
Communications, Inc. and
HighwayMaster Corporation
J. Raymond Bilbao 09/18/98 7,000 $1.19 $8.88 $1.19 5 years
General Counsel & Secretary for
HighwayMaster
Communications, Inc. and
HighwayMaster Corporation
Todd A. Felker 09/18/98 30,000 $1.19 $3.81 $1.19 5 years, 9 months
Senior Vice President, Sales &
Marketing for HighwayMaster
Corporation
Robert W. LaMere 09/18/98 30,000 $1.19 $10.25 $1.19 4 years, 7 months
Senior Vice President,
Transportation Systems for
HighwayMaster Corporation
Carolyn D. Locke 09/18/98 10,000 $1.19 $7.75 $1.19 3 years, 7 months
Director of Human Resources for
HighwayMaster Corporation
William H. McCausland 09/18/98 30,000 $1.19 $7.58 $1.19 3 years, 5 months
Senior Vice President, Operations
for HighwayMaster Corporation
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES PRICE OF EXERCISE LENGTH OF ORIGINAL
UNDERLYING STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT
NAME DATE REPRICED REPRICING REPRICING PRICE DATE OF REPRICING
---- ---- -------- --------- --------- ----- -----------------
<S> <C> <C> <C> <C> <C> <C>
Brad E. Popoff 09/18/98 22,790 $1.19 $7.58 $1.19 1 year, 9 months
Senior Vice President, Customer 09/18/98 9,184 $1.19 $7.75 $1.19 3 years, 7 months
Service Operations for
HighwayMaster Corporation
William C. Saunders 09/18/98 100,000 $1.19 $7.58 $1.19 1 year, 9 months
Former President & Chief
Operating Officer for
HighwayMaster
Communications, Inc. and
HighwayMaster Corporation
Wesley E. Schlenker 09/18/98 11,304 $1.19 $7.58 $1.19 1 year, 9 months
Former Secretary & General 09/18/98 10,000 $1.19 $7.75 $1.19 3 years, 7 month
Counsel for HighwayMaster
Communications, Inc. and
HighwayMaster Corporation
Stephen P. Tacke 09/18/98 10,000 $1.19 $7.75 $1.19 3 years, 7 months
Vice President & Controller for
HighwayMaster Corporation
Ken Vandagriff 09/18/98 5,000 $1.19 $10.25 $1.19 4 years, 7 months
Vice President, Network
Operations & Product Support
for HighwayMaster Corporation
Kenneth R. Westerlage 09/18/98 56,974 $1.19 $7.58 $1.19 1 year, 9 months
Senior Vice President, 09/18/98 10,000 $1.19 $7.75 $1.19 3 years, 7 months
Engineering & Technology
Development for HighwayMaster
Corporation
Jeffrey G. Wisocki 09/18/98 46,974 $1.19 $7.58 $1.19 1 year, 9 months
Former Senior Vice President, 09/18/98 10,000 $1.19 $7.75 $1.19 3 years, 7 months
Customer Development for
HighwayMaster Corporation
</TABLE>
COMPENSATION COMMITTEE
Stephen L. Greaves
Terry S. Parker
Gerry C. Quinn
16
<PAGE> 19
Savings Plan. HighwayMaster Corporation has a 401(k) Retirement
Investment Profit-Sharing Plan that covers all of its employees once they become
eligible to participate. Pursuant to the 401(k) Plan, employees may contribute
up to 20% of their pre-tax earnings. The maximum amount of contributions and
forfeitures by any employee each year is $10,000. HighwayMaster Corporation is
not required to make any contributions to the 401(k) Plan and did not make any
contributions during 1998.
EMPLOYMENT AGREEMENTS
HighwayMaster Corporation has entered into employment agreements with
Ms. Bell and Messrs. McCausland, Felker and Smith. The terms of these employment
agreements generally provide that such officers are eligible to receive stock
options in HighwayMaster Communications, Inc. and to participate in the
incentive bonus plan for executive officers. In addition, the agreements
prohibit the officers from competing with the business of HighwayMaster
Communications, Inc. or HighwayMaster Corporation during the term of their
employment and for two years after their employment is terminated. In the event
of termination without "cause", the employment agreements provide for severance
payments equal to the remaining amount of salary payable under the contract and
for continued vesting of all stock options that were granted during employment
and that had not expired at the time of the termination. The following
paragraphs present the additional details of the employment agreements with each
of Ms. Bell and Messrs. McCausland, Felker and Smith.
Jana A. Bell. The agreement with Ms. Bell, as amended, provides for Ms.
Bell's employment as President and Chief Executive Officer through December 14,
1999. Under the terms of the amended agreement, Ms. Bell is paid an annual
salary of $300,000 and in September 1998 received a bonus of $50,000. In
addition, Ms. Bell is eligible to receive annual bonuses of up to 50% of her
base salary following her first year of employment with HighwayMaster
Corporation.
William H. McCausland. The agreement with Mr. McCausland provides for
Mr. McCausland's employment as Senior Vice President, Network and Customer
Operations of HighwayMaster Corporation through June 3, 2001. Under the terms of
the agreement, Mr. McCausland is paid an annual salary of $150,000 and is
eligible for discretionary bonuses pursuant to the incentive bonus plan for
executive officers. For more information regarding the incentive bonus plan,
please refer to page 25.
Todd A. Felker. The agreement with Mr. Felker provides for Mr. Felker's
employment as Senior Vice President, Director of Marketing of HighwayMaster
Corporation through June 3, 2001. Under the terms of the agreement, Mr. Felker
is paid an annual salary of $150,000 and is eligible for discretionary bonuses
pursuant to the incentive bonus plan for executive officers. For more
information regarding the incentive bonus plan, please refer to page 25.
W. Michael Smith. The agreement with Mr. Smith provides for Mr. Smith's
employment as Chief Financial Officer of HighwayMaster Corporation through
December 14, 1999. Under the terms of the agreement, Mr. Smith is paid an annual
salary of $150,000 and is eligible for discretionary bonuses pursuant to the
incentive bonus plan for executive officers. For more information regarding the
incentive bonus plan, please refer to page 25.
RELEASE AGREEMENTS
HighwayMaster Corporation had previously entered into employment
agreements with Messrs. Kennedy, Saunders and Quick. During 1998, the employment
of Messrs. Kennedy and Saunders terminated, and Mr. Quick's employment will
terminate on April 30, 1999. HighwayMaster Corporation has entered into releases
with each of Messrs. Kennedy, Saunders and Quick whereby Messrs. Kennedy,
Saunders and Quick each provided a release to HighwayMaster Communications, Inc.
and HighwayMaster Corporation from any and all claims which they might have
against HighwayMaster Communications, Inc. and HighwayMaster Corporation arising
out of their employment including the following terms:
17
<PAGE> 20
William C. Kennedy. In September 1998, Mr. Kennedy's employment with
HighwayMaster Corporation terminated, and on September 30, 1998, HighwayMaster
Corporation and Mr. Kennedy entered into an Agreement and General Release.
Pursuant to the terms of the release, HighwayMaster Corporation paid Mr. Kennedy
severance compensation of $450,000, and Mr. Kennedy agreed to serve as a
director of HighwayMaster Communications, Inc. and HighwayMaster Corporation for
annual compensation of $25,000. The Board of Directors has the ability to
request the Mr. Kennedy resign as a director at any time.
William C. Saunders. In September 1998, HighwayMaster Corporation and
Mr. Saunders entered into a second amendment of Mr. Saunders' employment
agreement. The amendment provided that Mr. Saunders would no longer serve as the
President and Chief Executive Officer, but would serve as the Chairman of the
Board for an annual salary of $400,000. The amendment to the agreement provided
for a severance payment of $300,000 to Mr. Saunders in the event of termination
of his employment after December 1, 1998. In December 1998, Mr. Saunders'
employment with HighwayMaster Corporation terminated. Mr. Saunders also signed
an acknowledgment indicating that he had no claims against HighwayMaster
Communications, Inc. and HighwayMaster Corporation, except for the severance
payment and insurance obligations.
Gordon D. Quick. In December 1998, HighwayMaster Corporation and Mr.
Quick entered into a Mutual Separation and Release. Pursuant to the terms of the
release, Mr. Quick would continue to work for HighwayMaster Corporation for
$30,502.10 per month through January 15, 1999 and from January 16, 1999 through
April 30, 1999, Mr. Quick would work for $33,552.30 per month. In addition,
under the release, HighwayMaster Corporation will pay Mr. Quick severance
compensation of at least $434,797 on May 1, 1999, subject to certain
service-based increases that do not exceed $60,000. Subsequent to his
termination, Mr. Quick has agreed to provide HighwayMaster Corporation up to 40
hours of certain consulting services upon reasonable request of HighwayMaster
Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jana A. Bell, the President and Chief Executive Officer of
HighwayMaster Communications, Inc. and HighwayMaster Corporation and member of
the Board of Directors, annually reviews and adjusts the salary structures of
executive officers who are not subject to employment agreements. Such decisions
are subject to review by the Board of Directors. The Board of Directors annually
reviews Ms. Bell's compensation package.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
AMENDED STOCKHOLDERS' AGREEMENT
General. HighwayMaster Communications, Inc. and certain of its
stockholders entered into a Stockholders' Agreement, dated as of February 4,
1994. In connection with transactions with SBC Communications, Inc. consummated
on September 27, 1996 and described below, the parties to the Stockholders'
Agreement amended and restated the agreement in order to add Southwestern Bell
Wireless Holdings, Inc., an affiliate of SBC, as a party thereto and to revise
certain related provisions of the agreement. The Amended Stockholders' Agreement
contains provisions relating to, among other things:
o restrictions on the transfer of shares of common stock by the
stockholders who are parties thereto;
o the grant of registration rights by HighwayMaster Communications,
Inc. to the stockholders who are parties thereto; and
o the election of members of HighwayMaster Communications, Inc.'s
Board of Directors.
18
<PAGE> 21
As used in the following summary of the Amended Stockholders'
Agreement, the following terms have the following definitions:
o "Erin Mills Stockholders" means Erin Mills International
Investment Corporation and The Erin Mills Investment Corporation;
o "Carlyle Stockholders" means Carlyle-HighwayMaster Investors,
L.P., Carlyle-HighwayMaster Investors II, L.P., TC Group, L.L.C.,
and Mark D. Ein; and
o "By-Word Stockholders" means William C. Kennedy, Jr., Donald M.
Kennedy, William C. Saunders, and Robert T. Hayes.
o "SBC" means SBC Communications, Inc.
Right of First Refusal. Under the terms of the Amended Stockholders'
Agreement, the Erin Mills Stockholders, the Carlyle Stockholders, William C.
Kennedy, Jr. and William C. Saunders (the "First Refusal Stockholders") granted
a right of first refusal to SBC with respect to all shares of common stock owned
by them. Subject to certain exceptions, the right of first refusal requires
that, prior to selling any shares of common stock, a First Refusal Stockholder
must offer such shares for sale to SBC in accordance with the terms of the
Amended Stockholders' Agreement. In addition, any transferee who receives common
stock from a First Refusal Stockholder must execute an agreement making them
subject to the right of first refusal provisions of the Amended Stockholders'
Agreement.
Registration Rights. The Amended Stockholders' Agreement provides the
Erin Mills Stockholders, the Carlyle Stockholders, the By-Word Stockholders and
SBC with certain piggyback registration rights. Accordingly, if at any time
HighwayMaster Communications, Inc. proposes to register any shares of its common
stock (or securities convertible into or exchangeable for, or options, warrants
or other rights to acquire common stock) under the Securities Act of 1933 (other
than registrations on Form S-4 or Form S-8), such stockholders have the right to
include shares of common stock held by them in any such registration. However,
if the inclusion of shares of Common Stock pursuant to the piggyback
registration provisions is reasonably determined by the managing underwriter or
underwriters to materially adversely affect the success of the proposed
offering, HighwayMaster Communications, Inc. may exclude certain shares from the
offering.
The Amended Stockholders' Agreement also provides certain parties with
demand or other registration rights. In particular, the agreement provides that
HighwayMaster Communications, Inc. will register one-half of the 1,818,018
shares of common stock issued to the Erin Mills Stockholders and certain of the
Carlyle Stockholders on or after March 31, 1997 and the remaining shares on or
after September 27, 1997. The Erin Mills Stockholders and the Carlyle
Stockholders waived their rights to cause HighwayMaster Communications, Inc. to
register shares, although they reserved the right to revoke such waiver at any
time. The Carlyle Stockholders registered their shares pursuant to the
registration described below under the heading "Registration Statement on Form
S-3."
In addition, under the Amended Stockholders' Agreement, in certain
instances, some of the stockholders who are parties to the agreement have the
right to demand that HighwayMaster Communications, Inc. register the shares of
common stock held by them on up to two separate occasions. However, if the Board
of Directors of HighwayMaster Communications, Inc. reasonably determines that,
due to a pending or contemplated acquisition or disposition, a demand
registration would have a material adverse effect on HighwayMaster
Communications, Inc., HighwayMaster Communications, Inc. may defer such
registration for a period of no more than 180 days. In addition, HighwayMaster
Communications, Inc. may exclude certain shares from any public offering if a
managing underwriter or underwriters engaged in connection with such demand
registration, or the holders of a majority of the registerable securities that
are subject to the demand registration, determine that the number of shares of
common stock proposed to be sold pursuant to the demand registration provisions
exceeds the amount that can be sold without causing a material adverse effect to
HighwayMaster Communications, Inc.
19
<PAGE> 22
Election of Directors. The Amended Stockholders' Agreement provides
that the parties will take all action necessary to ensure that the Board of
Directors of HighwayMaster Communications, Inc. consists of:
o two directors designated by the Erin Mills Stockholders;
o one director designated by the Carlyle Stockholders;
o two directors designated by the By-Word Stockholders;
o two independent directors; and
o upon the occurrence of certain events discussed below, one
director designated by SBC.
The Erin Mills Stockholders have designated Gerry C. Quinn and Stephen L.
Greaves to serve as directors. The Carlyle Stockholders have declined to
exercise their right to designate a director. The By-Word Stockholders have
designated William C. Kennedy, Jr. to serve as a director. Terry S. Parker and
John T. Stupka serve as independent directors.
Under certain antitrust provisions of the Communications Act of 1934,
as amended by the Telecommunications Act of 1996, as amended, and current
Federal Communications Commission regulations, SBC is currently not permitted to
offer for sale landline, interLATA long distance service. SBC has applied to the
FCC for relief from such regulations. If such regulatory relief is granted, the
Series D Preferred Stock that is owned by SBC will be converted into Class B
Common Stock, the number of directors will be increased by one, and SBC will be
entitled to designate one member of HighwayMaster Communications, Inc.'s Board
of Directors. In addition, if at any time after the conversion of Series D
Preferred Stock into Class B Common Stock, SBC and its affiliates beneficially
own 20% or more of the outstanding common stock on a fully-diluted basis
(including in such calculation securities owned by SBC that are convertible into
common stock), the number of directors again will be increased by one, and SBC
will be entitled to designate a second member of the Board of Directors.
Currently, SBC is permitted to designate a non-voting delegate to the Board of
Directors to attend all meetings and receive all materials distributed to
directors of HighwayMaster Communications, Inc.
In general, no stockholder or group of stockholders will be entitled to
designate any director if the percentage of the outstanding common stock
beneficially owned by such stockholder or group of stockholders falls below 5%.
Each of the Erin Mills Stockholders and the By-Word Stockholders must own at
least 20% of the outstanding common stock for the right to designate two
directors or at least 5% for the right to designate one director. In calculating
share ownership for purposes of this minimum ownership requirement, the
agreement provides that certain shares issuable upon conversion of convertible
securities or upon the exercise of outstanding options, warrants or rights will
be included as owned.
SBC TRANSACTIONS
Sale of Series D Preferred Stock and Warrants. On September 27, 1996,
HighwayMaster Communications, Inc. and SBC entered into a purchase agreement
pursuant to which HighwayMaster Communications, Inc. sold 1,000 shares of a new
series of its preferred stock, designated as Series D Participating Convertible
Preferred Stock, to SBC for $20.0 million. The Series D Stock is convertible
into shares of Class B common stock, a new class of stock created by an
amendment to HighwayMaster Communication, Inc.'s Certificate of Incorporation in
January 1997.
On September 27, 1996, in connection with the sale of Series D Stock to
SBC, HighwayMaster Communications, Inc. issued warrants to SBC, pursuant to
which SBC is entitled to purchase from HighwayMaster Communications, Inc.
3,000,000 shares of common stock at an exercise price of $14.00 per share and
2,000,000 shares of common stock at an exercise price of $18.00 per share, in
each case subject to adjustment to prevent dilution.
Other Agreements. On September 27, 1996, HighwayMaster Corporation,
Inc. entered into a Technical Services Agreement with SBC. Under this agreement,
SBC or one or more of its affiliates will provide HighwayMaster Corporation with
certain technical and advisory services in connection with, among other things,
the operation and
20
<PAGE> 23
improvement of its communications transmission system. In addition, under the
terms of the SBC purchase agreement, if SBC obtains regulatory relief,
HighwayMaster Communications, Inc. promptly thereafter will be required to cause
HighwayMaster Corporation to enter into a Voice and Data Services Agreement with
an affiliate of SBC. The voice and data services agreement, if entered into by
the parties, will provide that HighwayMaster Corporation will purchase long
distance and other voice and data services from an SBC affiliate.
In August 1998, HighwayMaster Corporation entered into an agreement
with member companies of SBC whereby such member companies purchased 11,500
mobile units, customized proprietary software and accompanying services from
HighwayMaster Corporation for an initial term of one year. In the first quarter
of 1999, HighwayMaster Corporation entered into a second agreement with these
SBC companies that extended the initial one-year term to three years.
Subsequently, the SBC companies ordered an additional 3,140 mobile units. In the
aggregate, these agreements represent the largest purchase and service contract
that HighwayMaster Corporation has entered into to date. The agreements require
HighwayMaster Corporation to perform certain product modifications and software
development for SBC in substantial conformance with technical specifications set
forth in the contract. The terms of the agreement provide that SBC may receive
up to a 100% refund of amounts paid to HighwayMaster Corporation if
HighwayMaster Corporation is unable to deliver mobile units and services which
substantially comply with the technical specifications of the agreement.
In March 1999, HighwayMaster Corporation entered into an agreement with
Southwestern Bell Mobile Systems, Inc. Under this agreement, Southwestern Bell
Mobile Systems, Inc. will provide certain administrative and billing services to
HighwayMaster Corporation in connection with HighwayMaster Corporation's
provision of enhanced services to its end users. Currently, these services have
been provided to HighwayMaster Corporation by GTE Wireless, Inc.; however,
HighwayMaster Corporation has begun to transition the services to Southwestern
Bell Mobile Systems, Inc. The agreement provides that HighwayMaster Corporation
will complete the transition period by September 1999, and the initial term of
the agreement is three years.
REGISTRATION STATEMENT ON FORM S-3
On September 18, 1998, HighwayMaster Communications, Inc. completed a
registration of certain warrants and warrant shares under the Securities Act of
1933, as amended, when the Securities and Exchange Commission declared its
registration statement on Form S-3 to be effective. HighwayMaster
Communications, Inc. was required to register these warrants and warrant shares
under a warrant registration rights agreement it entered into as part of a debt
offering completed in 1997. Under the terms of the warrant registration rights
agreement, HighwayMaster Communications, Inc. is required to use its best
efforts to keep the registration statement continuously effective until either
the warrants expire or they all have been exercised, whichever occurs first.
However, during any consecutive 365-day period, HighwayMaster Communications,
Inc. may temporarily halt the effectiveness of the registration statement on up
to two occasions for no more than 45 consecutive days if certain conditions are
met. The temporary halt must be in connection with a proposed acquisition,
business combination or other development affecting HighwayMaster
Communications, Inc., and the Board of Directors must determine that disclosure
of the proposed development would not be in the best interests of HighwayMaster
Communications, Inc. HighwayMaster Communications, Inc. will not receive any
proceeds from the sale of the warrants by the selling warrant holders. However,
if or when any warrants are exercised, HighwayMaster Communications, Inc. will
receive the exercise price for the warrant shares. During 1998, no warrants were
sold and no warrant shares were exercised.
HighwayMaster Communications, Inc. provided all eligible parties under
the Amended Stockholders' Agreement notice of their opportunity to piggyback the
registration of their HighwayMaster Communications, Inc. common stock in
connection with the Registration Statement on Form S-3. The Carlyle Stockholders
were the only eligible parties who exercised such piggyback rights, and the
Carlyle Shareholders are offering all 2,723,468 shares beneficially owned by
them to the public under the Registration Statement. During 1998, the Carlyle
Stockholders did not sell any common stock pursuant to the offering.
21
<PAGE> 24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31,
1999, regarding beneficial ownership of the common stock and the percentage of
total voting power held by:
o each stockholder who is known by HighwayMaster Communications,
Inc. to own more than five percent of the outstanding common
stock;
o each director;
o each executive officer; and
o all directors and executive officers as a group.
Unless otherwise noted, the persons named below have sole voting and investment
power with respect to such shares. The beneficial ownership information is based
on the most recent Schedule 13D or 13G filed with the Securities and Exchange
Commission by the named stockholders. The numbers in the column titled "Number
of Shares of Common Stock Beneficially Owned" do not include any shares
underlying stock options that are exercisable within 60 days of March 31, 1999,
as such shares are addressed separately under the heading "Options Exercisable
Within 60 Days."
<TABLE>
<CAPTION>
Number of Shares Options Percent of
of Common Stock Exercisable Class
Beneficially Within 60 Beneficially
Name of Holder Owned Days Owned
- -------------- ----- ---- -----
<S> <C> <C> <C>
Erin Mills Stockholders(1)................................ 9,088,326 -- 36.4%
Radley Court, Suite 200
Collymore Rock
St. Michael, Barbados
West Indies
Southwestern Bell Wireless Holdings, Inc. (2)............. 6,600,000 -- 21.0%
17330 Preston Road
Suite 100A
Dallas, Texas 75252
Carlyle Stockholders (3).................................. 2,723,468 -- 10.9%
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004-2505
Jana A. Bell.............................................. -- 23,333 *
William C. Kennedy, Jr.................................... 2,014,318 -- 8.1%
Stephen L. Greaves (4).................................... -- -- --
Terry S. Parker........................................... -- 3,798 *
Gerry C. Quinn (4)........................................ 272,650 -- 1.1%
John T. Stupka............................................ -- 3,798 *
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
Number of Shares Options Percent of
of Common Stock Exercisable Class
Beneficially Within 60 Beneficially
Name of Holder Owned Days Owned
- -------------- ----- ---- -----
<S> <C> <C> <C>
Brad E. Popoff............................................ 5,000 29,974 *
William H. McCausland..................................... 2,500 38,000 *
J. Philip McCormick....................................... 2,000 -- *
Gordon D. Quick........................................... 2,000 173,305 1.0%
All directors and executive officers as a group (19
persons)............................................... 2,302,328 419,182 10.9%
</TABLE>
- -----------
* Less than 1%
(1) This includes 9,061,310 shares of common stock owned of record by Erin
Mills International Investment Corporation and 27,016 shares owned of
record by The Erin Mills Investment Corporation. Pursuant to an
agreement with the Erin Mills Stockholders, Mr. Quinn has a right to
acquire up to 272,650 of the shares of HighwayMaster Communications,
Inc. held by the Erin Mills Stockholders.
(2) This includes 1,600,000 shares of common stock issuable to Southwestern
Bell Wireless Holdings, Inc. upon the conversion of 1000 shares of
convertible Series D Preferred Stock and 5,000,000 shares of common
stock issuable to SBW upon the exercise of warrants.
(3) This includes:
o 2,222,799 shares owned of record by Carlyle-HighwayMaster
Investors, L.P.;
o 209,354 shares owned of record by Carlyle-HighwayMaster Investors
II, L.P.; and
o 291,315 shares of record owned by TC Group, L.L.C.
All of these entities are deemed to have beneficial ownership of
the shares owned of record by each such other entity.
(4) Messrs. Quinn and Greaves are affiliated with the Erin Mills
Stockholders, and they both disclaim beneficial ownership of the shares
owned by the Erin Mills Stockholders. However, pursuant to an agreement
with the Erin Mills Stockholders, Mr. Quinn has a right to acquire up
to 272,650 of the shares of HighwayMaster Communications, Inc. held by
such stockholders. As a result, only 272,650 of the Erin Mills
Stockholders' shares are included in the table for Mr. Quinn, and none
of the Erin Mills Stockholders' shares are included in the table for
Mr. Greaves.
Under the Amended Stockholders' Agreement, certain of HighwayMaster
Communications, Inc.'s stockholders have agreed to vote the shares of common
stock held by them with respect to certain matters as specified therein, and
accordingly, they may be deemed to beneficially own all the shares of common
stock subject to the Amended Stockholders' Agreement. As of March 31, 1999,
17,417,411 shares of common stock, representing 69.8% of the outstanding shares
of common stock at March 31, 1999, were subject to the Amended Stockholders'
Agreement. All of the parties to the Amended Stockholders' Agreement who have
filed Schedule 13Ds or Schedule 13Gs with the Securities and Exchange Commission
have disclaimed beneficial ownership to any shares of common stock held by any
other party to the Amended Stockholders' Agreement as a result of such
agreement. As a result, the share ownership information in the table above does
not include all of the shares subject to the Amended Stockholders' Agreement for
each stockholder party thereto. For additional information regarding the Amended
Stockholders' Agreement, please refer to page 18.
23
<PAGE> 26
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires HighwayMaster
Communications, Inc.'s directors and executive officers, and persons who own
more than ten percent of a registered class of HighwayMaster Communications,
Inc.'s equity securities to file with the Commission initial statements of
beneficial ownership of securities and subsequent changes in beneficial
ownership of HighwayMaster Communications, Inc. Officers, directors and
greater-than-ten-percent stockholders are required by the Commission's
regulations to furnish HighwayMaster Communications, Inc. with copies of all
Section 16(a) forms they file.
To HighwayMaster Communications, Inc.'s knowledge, based solely on a
review of the copies of such reports furnished to HighwayMaster Communications,
Inc. and written representations that no other reports were required, during the
fiscal year ended December 31, 1998, its officers, directors and
greater-than-ten-percent beneficial owners timely complied with all section
16(a) filing requirements applicable to them.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Our Compensation Committee has prepared its report on 1998 executive
compensation as required by rules of the Commission. This report provides
specific information regarding compensation of HighwayMaster Communications,
Inc.'s President and Chief Executive Officer and its executive officers as a
group.
COMPENSATION POLICIES
HighwayMaster Corporation structures compensation of its executives in
a manner that is intended to be competitive in the marketplace and to link
compensation to the long-term business objectives of HighwayMaster Corporation
and the enhancement of stockholder value. HighwayMaster Corporation has retained
certain executives pursuant to long-term employment contracts which govern their
compensation and others are evaluated on an ongoing basis. See "Directors and
Executive Officers -- Employment Agreements." In determining an executive's
total compensation package, the Compensation Committee considers several
factors, including improvements in overall corporate or business unit
performance; increases in installed customer base; development efforts that
result in greater efficiency or competitive advantages to HighwayMaster
Corporation; and the level of responsibility, prior experience, satisfaction of
individual performance goals and comparable industry compensation levels for an
equivalent position.
Decisions concerning compensation of executive officers with employment
contracts have been made by the Compensation Committee with the approval of the
Board of Directors. Those executives whose salaries are not established by
employment contract are set by the Chief Executive Officer, the Chief Operating
Officer or the Chief Financial Officer and are subject to review by the
Compensation Committee and the Board of Directors. The Board of Directors has
delegated to the Compensation Committee, which currently consists of Gerry C.
Quinn, Terry S. Parker and Stephen L. Greaves, the task of discussing strategy
and policy matters related to the Stock Option Plan, although it also reviews
other forms of compensation from time to time. None of the members of the
Compensation Committee is an officer or employee of HighwayMaster
Communications, Inc. or HighwayMaster Corporation or holds options granted under
the Stock Option Plan.
COMPENSATION OBJECTIVES
HighwayMaster Corporation compensates its executives in a manner that
is intended to:
o be competitive in the marketplace;
o link compensation to long-term business objectives; and
24
<PAGE> 27
o link compensation to the enhancement of stockholder value.
Certain executives have been retained pursuant to long-term employment contracts
which govern their compensation and others are evaluated on an ongoing basis.
HighwayMaster Corporation considers both objective and subjective criteria in
determining an executive's compensation package. These factors include:
o improvements in overall corporate performance;
o improvements in business unit performance;
o increases in installed customer base;
o development efforts that result in greater efficiency or
competitive advantage;
o level of responsibility;
o prior experience;
o satisfaction of individual performance goals; and
o comparable industry compensation for an equivalent position.
COMPONENTS OF COMPENSATION
HighwayMaster Corporation offers compensation to executive officers
that includes base salary, short-term cash incentive compensation in the form of
a bonus, if appropriate, and long-term incentive compensation in the form of
stock option grants. These elements are addressed separately.
Base Salaries. Those executives whose salary structures are not
established by employment agreements are subject to annual adjustment by the
Chief Executive Officer, the Chief Operating Officer or the Chief Financial
Officer. These adjustments and are subject to review by the Compensation
Committee and the Board of Directors, based on the compensation policies
described above. The Compensation Committee and the Board of Directors may also
consider such other factors in executive salary decisions as market competition,
inflation and other equity considerations. Salary increases reflect job changes,
promotions, market adjustment reviews and ordinary increases. Executive salary
increases in 1998 ranged from 0% to 30%. As per their employment agreements,
Messrs. Kennedy and Saunders received a 10% increase in salary during 1998.
Also, as per his employment agreement and his Mutual Separation and Release
agreement, Mr. Quick received a 10% increase in his salary effective January
1999.
1998 Short-term Incentives - Cash Bonuses and Commissions. In 1998 and
preceding years, HighwayMaster Corporation's policy was to award cash bonuses
based on HighwayMaster Corporation's performance on a company-wide or a
case-by-case basis. Under this policy and under the terms of the then-existing
employment arrangements, the Board of Directors envisioned that bonuses for the
executive officers would be tied to our profitability and would be
discretionary. As reflected in the Summary Compensation Table on page 10 of this
proxy statement, in 1998, Ms. Bell and Mr. McCausland received bonuses. See
"Directors and Executive Officers -- Employment Contracts" and "Compensation of
Certain Executive Officers - Summary Compensation Table."
1999 Short-term Incentives - Cash Bonuses and Commissions.
HighwayMaster Corporation has implemented an incentive bonus plan for the
members of the senior business team who report directly to the chief executive
officer. Under the incentive bonus plan in 1999, HighwayMaster Corporation may
pay each such person a bonus of up to 15% of his or her base salary if he or she
achieves certain defined goals and objectives. Half of the available bonus is
tied directly to the financial performance of HighwayMaster Corporation, and the
remaining half is tied to defined organizational goals by the individual's
functional area of responsibility. HighwayMaster Corporation's chief executive
officer retains the sole
25
<PAGE> 28
discretion to determine whether any executive achieved his or her goals and is
entitled to receive the bonus. While Ms. Bell does not participate in the
incentive bonus plan, she is eligible to receive a bonus under her employment
agreement. For additional information regarding Ms. Bell's prospective bonus,
please refer to page 17.
Long-term Incentives - Stock Option Grants. The Compensation Committee
selects certain executive officers of HighwayMaster Communications, Inc. and
HighwayMaster Corporation to receive stock options to purchase shares of common
stock, which include both incentive stock options and nonqualified stock options
pursuant to the terms of the Stock Option Plan. In the case of the Chief
Executive Officer or the Chief Financial Officer, the Board of Directors makes
this selection. The Compensation Committee administers the Stock Option Plan,
determines those officers or other employees to whom options will be granted and
prescribes the terms and conditions of such options, which need not be identical
even for similarly situated employees.
The Board of Directors and its Compensation Committee intend to further
the interests of HighwayMaster Communications, Inc.'s stockholders by tying a
substantial portion of executive compensation to the market value of our common
stock. Toward this end, we have designed our Stock Option Plan to support our
ability to attract and retain qualified management and other personnel necessary
for our success and progress. Therefore, effective September 18, 1998, the Board
of Directors repriced certain outstanding stock options. For additional
information regarding the repricing, please refer to page 15.
HighwayMaster Communications, Inc. granted new options representing a
total of 797,500 shares to executive officers during 1998.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally limits the U.S. corporate income tax deduction for compensation paid
to each executive officer named in the summary compensation table in the proxy
statement of a public company to $1 million for each year, unless certain
requirements are met. For fiscal 1998, the limitation imposed by Section 162(m)
did not apply to the compensation paid to any executive officers. Therefore, the
Board of Directors has taken no action in response to Section 162(m). The Board
of Directors will consider actions to qualify compensation for deduction should
it appear that the limits of 162(m) will be exceeded, but will retain the
discretion to pay non-deductible compensation if that would be in the best
interests of HighwayMaster Communications, Inc. and HighwayMaster Corporation
and their stockholders under the circumstances.
SUMMARY
The Compensation Committee believes that HighwayMaster Communications,
Inc.'s and HighwayMaster Corporation's executive compensation policies and
actions provide their executive officers with the appropriate incentives to
achieve HighwayMaster Communications, Inc.'s and HighwayMaster Corporation's
short and long-term goals and to enhance stockholder value.
COMPENSATION COMMITTEE
Stephen L. Greaves
Terry S. Parker
Gerry C. Quinn
26
<PAGE> 29
PERFORMANCE GRAPH
The following graph compares total stockholder returns of HighwayMaster
Communications, Inc. since its initial public offering of common stock on June
22, 1995 to two indices:
o the NASDAQ CRSP Total Return Index for the NASDAQ Stock Market,
U.S. companies (the "NASDAQ- US Index"), and
o the NASDAQ CRSP Total Return Index for Telecommunications Stocks
(the "NASDAQ-Industry Index").
The total return for HighwayMaster Communications, Inc.'s stock and for
each index assumes $100 invested on June 22, 1995 in HighwayMaster
Communications, Inc.'s common stock, the NASDAQ-US Index and the NASDAQ-
Industry Index, including the reinvestment of dividends, although cash dividends
have never been declared on HighwayMaster Communications, Inc.'s stock.
HighwayMaster Communications, Inc.'s common stock is traded on the NASDAQ
SmallCap Market and is a component of both the NASDAQ-US Index and the
NASDAQ-Industry Index.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE
HIGHWAYMASTER COMMUNICATIONS, INC.'S INITIAL PUBLIC OFFERING ON JUNE 22, 1995
[CHART]
<TABLE>
<CAPTION>
Nasdaq US Index Nasdaq Telecomm Index HWYM
--------------- --------------------- ----
<S> <C> <C> <C>
6/22/95 100.000 100.000 100.000
12/31/95 112.568 114.864 52.532
12/31/96 138.426 117.453 91.772
12/31/97 169.826 173.924 28.800
12/31/98 238.731 284.020 5.696
</TABLE>
The closing price of the common stock on the last trading day of the
1998 fiscal year was $1.125 per share. Historical stock price performance is not
necessarily indicative of future price performance.
THE MATERIAL IN THE REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION AND THE PERFORMANCE GRAPH IS NOT "SOLICITING MATERIAL," IS NOT
DEEMED FILED WITH THE COMMISSION AND IS NOT TO BE INCORPORATED BY REFERENCE INTO
ANY FILING OF HIGHWAYMASTER COMMUNICATIONS, INC. UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHETHER
MADE BEFORE OR AFTER THE DATE HEREOF AND IRRESPECTIVE OF ANY GENERAL
INCORPORATION LANGUAGE IN ANY FILING.
27
<PAGE> 30
ANNUAL REPORT ON FORM 10-K
We will furnish a copy of our Annual Report on Form 10-K for 1998, as
filed with the Commission, without exhibits, without charge to any person
requesting a copy thereof in writing and stating that such person is a
beneficial holder of shares of our common stock on the Record Date for the
Annual Meeting. If you are a beneficial owner of shares and would like to make a
request for a copy of our Annual Report, please send a written requests to
Investor Relations, 1155 Kas Drive, Richardson, Texas 75081.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ J. RAYMOND BILBAO
J. RAYMOND BILBAO
Secretary
April 27, 1999
28
<PAGE> 31
PROXY
HIGHWAYMASTER COMMUNICATIONS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1999
THIS PROXY IS SOLICITED ON BEHALF OF HIGHWAYMASTER COMMUNICATIONS, INC.'S
BOARD OF DIRECTORS
The undersigned hereby appoints Jana Ahlfinger Bell and J. Raymond Bilbao,
and each of them, proxies for the undersigned with full power of substitution,
to vote all shares of HighwayMaster Communications, Inc.'s Common Stock which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders of
HighwayMaster Communications, Inc., Dallas, Texas, on Tuesday, May 25, 1999 at
1:30 P.M., or at any adjournment thereof, upon the matters set forth on the
reverse side and described in the accompanying Proxy Statement and upon such
other business as may properly come before the meeting or any adjournment
thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE, NO BOXES NEED TO BE CHECKED.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- -------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE> 32
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
PLEASE MARK
YOUR VOTE AS
INDICATED IN
THIS EXAMPLE X
WITHHELD
FOR FOR ALL
Item 1--ELECTION OF DIRECTORS
Jana Ahlfinger Bell,
Stephen L. Greaves
William C. Kennedy, Jr.,
Terry S. Parker,
Gerry C. Quinn,
John Stupka
WITHHELD FOR ONE OR MORE NOMINEES: (Write that nominee's name in the space
provided below).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2--RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR 1999.
I PLAN TO ATTEND MEETING
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change
on the reverse side.
Receipt is hereby acknowledged of the
HighwayMaster Communications, Inc. Notice of
Meeting and Proxy Statement.
Signature(s) Date
----------------------------------------------- ---------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such
*FOLD AND DETACH HERE*
