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 the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
VIATEL, INC.
------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
NA
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):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
N/A
|_| Fee paid previously with preliminary materials.
<PAGE>
|_| 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
[VIATEL LOGO]
July 7, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Viatel, Inc., which will be held on Wednesday, August 13, 1997,
in Astor Room I at the Hotel Inter.Continental, 111 East 48th Street, New
York, New York 10017, at 10:00 a.m., local time. Doors to the meeting will open
at 9:30 a.m.
The business to be considered and voted upon at the meeting is explained
in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares of Common Stock be represented and voted at the
Annual Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting
of Stockholders and Proxy Statement, please sign, date and return the enclosed
proxy card in the postage-paid envelope provided.
Thank you for your support of our Company.
Sincerely,
/s/ Martin Varsavsky
Martin Varsavsky
Chairman and Chief Executive Officer
<PAGE>
VIATEL, INC.
800 THIRD AVENUE
NEW YORK, NEW YORK 10022
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 13, 1997
---------------------
To the Stockholders of Viatel, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of the stockholders of
Viatel, Inc., a Delaware corporation (the "Company"), will be held on Wednesday,
August 13, 1997, in Astor Room I at the Hotel Inter.Continental, 111 East
48th Street, New York, New York 10017, at 10:00 a.m., local time, for the
following purposes:
1. To elect two Class A directors to hold office until the 2000 Annual
Meeting of Stockholders;
2. To approve an amendment to the Company's Amended Stock Incentive Plan
to modify certain administrative provisions and to increase the number
of shares of Common Stock available for future grants;
3. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for fiscal year 1997; and
4. To transact such other business as may properly be presented at the
1997 Annual Meeting and at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on June 30, 1997 as
the record date for the purpose of determining stockholders who are entitled to
notice of and to vote at the 1997 Annual Meeting and any adjournments or
postponements thereof. A list of such stockholders will be available during
regular business hours at the Company's office, 800 Third Avenue, New York, New
York 10022 for the ten days before the meeting, for inspection by any
stockholder for any purpose germane to the meeting.
By Order of the Board of Directors,
/s/ Sheldon M. Goldman
Sheldon M. Goldman
ASSISTANT SECRETARY
New York, New York
July 7, 1997
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE 1997 ANNUAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU
WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
- --------------------------------------------------------------------------------
<PAGE>
VIATEL, INC.
800 THIRD AVENUE
NEW YORK, NEW YORK 10022
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement is being furnished to stockholders of Viatel, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors (the "Board") from holders of the
outstanding shares of the Company's common stock, $0.01 par value per share (the
"Common Stock"), for use at the 1997 Annual Meeting of Stockholders of the
Company to be held on Wednesday, August 13, 1997, in Astor Room I at the
Hotel Inter.Continental, 111 East 48th Street, New York, New York 10017, at
10:00 a.m., local time, and at any adjournments or postponements thereof (the
"Annual Meeting"), for the purpose of considering and acting upon the matters
set forth herein.
Only holders of record of Common Stock as of the close of business on June
30, 1997 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting and any adjournments or postponements thereof. At the close of
business on such date, the Company had 22,630,688 shares of Common Stock issued
and outstanding. Holders of Common Stock are entitled to one vote on each matter
considered and voted upon at the Annual Meeting for each share of Common Stock
held of record as of the Record Date. Holders of Common Stock may not cumulate
their votes for the election of directors. Shares of Common Stock represented by
a properly executed proxy, if such proxy is received in time and not revoked,
will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxy. IF NO INSTRUCTIONS ARE INDICATED, SHARES REPRESENTED BY
PROXY WILL BE VOTED "FOR" THE ELECTION, AS DIRECTORS OF THE COMPANY, OF THE TWO
NOMINEES NAMED IN THE PROXY TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS, "FOR" THE AMENDMENT TO THE COMPANY'S AMENDED STOCK INCENTIVE PLAN,
"FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR FISCAL YEAR 1997 AND IN THE DISCRETION
OF THE PROXY HOLDERS AS TO ANY OTHER MATTER WHICH MAY PROPERLY BE PRESENTED AT
THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
The Proxy Statement and the accompanying proxy card are being mailed to
Company stockholders on or about July 7, 1997.
Any holder of Common Stock giving a proxy in the form accompanying this
Proxy Statement has the power to revoke the proxy prior to its use. A proxy can
be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Assistant Secretary of the Company, (ii) by a duly executed proxy
bearing a later date or time than the date or time of the proxy being revoked,
or (iii) at the Annual Meeting if the stockholder is present and elects to vote
in person. Mere attendance at the Annual Meeting will not serve to revoke the
proxy. All written notices of revocation of proxies should be addressed as
follows: Viatel, Inc., 800 Third Avenue, New York, New York 10022, Attention:
Sheldon M. Goldman, Assistant Secretary.
In determining the presence of a quorum at the Annual Meeting, abstentions
and broker non-votes (votes withheld by brokers in the absence of instructions
from street-name holders) will be included. The Company's Bylaws provide that
directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the matter
and all other matters are approved if the votes cast in favor of the action
exceed the votes cast against the action (unless the matter is one for which the
Delaware General Corporation Law, the Company's Amended and Restated Certificate
of Incorporation or the Company's By-laws require a greater vote). Therefore,
with respect to any matter requiring approval of a majority of the votes cast,
abstentions will be excluded when calculating the number of votes required for
stockholder action but, with respect to the election of directors, abstentions
will have the same effect as a vote against the matter. In all instances,
broker-non votes will be excluded from the calculation.
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board, is
currently seven. The Board voted to increase the size of the Board from six to
seven on May 27, 1997 but has not yet filled the additional Class B directorship
created. The Board consists of three classes: Class A, Class B and Class C. One
of the three classes, comprising one-third of the directors, is elected each
year to succeed the directors whose terms are expiring. Directors hold office
until the annual meeting for the year in which their terms expire and until
their successors are elected and qualified unless, prior to that date, they have
resigned, retired or otherwise left office. In accordance with the Company's
Amended and Restated Certificate of Incorporation, Class A directors are to be
elected at the Annual Meeting, Class B directors are to be elected at the 1998
Annual Meeting of Stockholders and Class C directors are to be elected at the
1999 Annual Meeting of Stockholders.
At the Annual Meeting, two Class A directors are to be elected to the
Board, each to serve until the Annual Meeting of Stockholders to be held in
2000. The nominees for election at the Annual Meeting are Allan L. Shaw and
Antonio Carro. Each nominee is presently a director of the Company. If either
nominee is unable or unwilling to serve as a director, proxies may be voted for
a substitute nominee designated by the present Board. The Board has no reason to
believe that either of the nominees will be unable or unwilling to serve as a
director.
The following table sets forth the name and age (as of the date of the
Annual Meeting) of the directors, the class to which each director has been
nominated for election or elected, their principal occupations at present, the
positions and offices, if any, held by each director with the Company in
addition to the position as a director, and the period during which each has
served as a director of the Company.
<TABLE>
<CAPTION>
SERVED AS A
NAME AGE PRINCIPAL OCCUPATION - POSITION HELD DIRECTOR SINCE
<S> <C> <C>
CLASS A - 1997
Allan L. Shaw ........................................ 33 Vice President, Finance; Chief Financial Officer and 1996
Treasurer of the Company
Antonio Carro ........................................ 38 Head of Corporate Projects of Banco Santander 1996
CLASS B - 1998
W. James Peet ........................................ 42 Vice President of The Chatterjee Group 1995
Paul G. Pizzani ...................................... 37 Treasurer of COMSAT Corporation 1996
CLASS C - 1999
Martin Varsavsky ..................................... 37 Chairman of the Board and Chief Executive Officer of 1991
the Company
Michael J. Mahoney ................................... 38 President and Chief Operating Officer of the Company 1995
</TABLE>
2
<PAGE>
CLASS A DIRECTORS
ALLAN L. SHAW. Mr. Shaw has served as Vice President, Finance and Chief
Financial Officer of the Company since January 1996 and Treasurer of the Company
since September 1996. Mr. Shaw has served as a director of the Company since
June 1996. Prior to becoming the Company's Vice President, Finance and Chief
Financial Officer, Mr. Shaw served as Corporate Controller of the Company from
November 1994 to December 1995. From August 1987 to November 1994, Mr. Shaw was
employed by Deloitte & Touche LLP, most recently as a Manager. Mr. Shaw is a
Certified Public Accountant and a member of the American Institute, United
Kingdom Society and New York State Society of Certified Public Accountants.
ANTONIO CARRO. Mr. Carro has served as a director of the Company since
August 1996. He is the head of Corporate Projects of Banco Santander, where he
has been employed since July 1995. From January 1994 to July 1995, Mr. Carro was
a Managing Director of Airtel, a mobile telephone operator and from January 1985
to December 1993 was employed by McKinsey & Co. where he was co-leader of its
European Telecommunications practice.
CLASS B DIRECTORS
W. JAMES PEET. Mr. Peet has served as a director of the Company since
November 1995. He is Vice President of The Chatterjee Group, an affiliate of S-C
V-Tel Investments, L.P. ("S-C V-Tel"), a stockholder of the Company, and has
been associated with The Chatterjee Group since August 1991. From June 1985 to
July 1991, Mr. Peet was a management consultant employed by McKinsey & Company.
PAUL G. PIZZANI. Mr. Pizzani has served as a director of the Company since
April 1996. He is the Treasurer of COMSAT Corporation and has been associated
with COMSAT Corporation in various capacities since November 1985, most recently
as the Vice President of Finance and Business Planning of COMSAT International
Ventures. COMSAT International, Inc. ("COMSAT"), an affiliate of COMSAT
Corporation, is a stockholder of the Company.
CLASS C DIRECTORS
MARTIN VARSAVSKY. Mr. Varsavsky, a founder of the Company, has served as
Chairman of the Board and Chief Executive Officer of the Company since September
1996 and as Chief Executive Officer and director of the Company since February
1991. Mr. Varsavsky was also President of the Company from February 1991 through
September 1996. In 1985, Mr. Varsavsky founded both Urban Capital Corporation, a
commercial real estate development company, and Medicorp Sciences, a
biotechnology company which conducts AIDS research. Mr. Varsavsky does not
currently hold an officer position with either Urban Capital Corporation or
Medicorp Sciences.
MICHAEL J. MAHONEY. Mr. Mahoney has served as President and Chief Operating
Officer of the Company since September 1996 and as a director of the Company
since 1995. Mr. Mahoney was also Executive Vice President, Operations and
Technology of the Company from July 1994 to September 1996 and Managing
Director, Intercontinental of the Company from January 1996 to September 1996.
From August 1990 to June 1994, Mr. Mahoney was employed by SITEL Corporation, a
teleservices company, most recently as President, Information Services Group.
From August 1987 to August 1990, Mr. Mahoney was employed by URIX Corporation, a
manufacturer of telecommunications hardware and software, in a variety of sales
and marketing positions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALLAN
L. SHAW AND ANTONIO CARRO AS CLASS A DIRECTORS.
3
<PAGE>
GENERAL INFORMATION RELATING TO THE BOARD
THE BOARD
The business and affairs of the Company are managed by the Board. To
assist it in carrying out its duties, the Board has delegated certain authority
to three committees. The Board held two meetings in 1996. Each member of the
Board attended at least 75% of the aggregate meetings of the Board and the
committees thereof of which he was a member during 1996.
COMMITTEES OF THE BOARD
During 1996, the standing committees of the Board consisted of an Audit
Committee, established in July 1996, and a Compensation Committee. During 1996,
the Board did not have a nominating committee or any committee performing
similar functions and all matters which would be considered by such a committee
were acted upon by the full Board. In May 1997, the Company established a
Directors Committee. The Company's By-laws provide, in general, that if a
stockholder intends to propose business or make a nomination for the election of
directors at an annual meeting, the Company must receive notice of such
intention at least 120 days prior to the first anniversary of the preceding
year's annual meeting. If the date of the meeting is changed more than 30 days
from the prior anniversary date, notice must be delivered ten days following the
day on which notice of the annual meeting is first mailed to stockholders. The
notice must include all information relating to the proposed nominee required by
the Securities and Exchange Commission (the "Commission") to be disclosed in
solicitations of proxies for election of directors or, in the case of a
proposal, a brief description of the proposal, and any material interest of the
stockholder in the proposal. The notice must also include (i) the name and
address of the stockholder giving the notice and any other stockholders known by
such stockholder to be supporting the nominees or proposal and (ii) the class
and number of shares of the Company that are owned beneficially by such
stockholder and by any other stockholders known by such stockholder to be
supporting such nominee or proposal. The foregoing is only a summary of the
detailed provisions of the Company's By-laws and is qualified by reference to
the text thereof.
During 1996, the Audit Committee, consisting of Messrs. Peet, Pizzani and
Shaw, held one meeting. The Audit Committee recommends to the Board the firm of
independent public accountants to audit the Company's financial statements,
reviews with management and the independent accountants the Company's interim
and year-end operating results, considers the adequacy of internal controls and
audit procedures of the Company and reviews the nonaudit services to be
performed by the independent accountants.
During 1996, the Compensation Committee, consisting of Messrs. Peet,
Pizzani and Mahoney, held one meeting. The Compensation Committee reviews
general policy matters relating to compensation and benefits of employees and
officers of the Company and administers the Stock Incentive Plan (as hereinafter
defined).
The Directors Committee, established in May 1997, consists of Messrs.
Varsavsky, Mahoney, Peet and Pizzani. The Directors Committee will search for
and interview prospective directors, will make recommendations to the Board
regarding the size of the Board and candidates to fill vacancies on the Board,
including vacancies created by reason of an increase in the size of the Board,
and will nominate candidates for election to the Board. Any recommendations by
stockholders should be submitted in writing to the Assistant Secretary of the
Company in compliance with the notice requirements described above. Such
recommendations should be sent to the Company at 800 Third Avenue, New York, New
York 10022, Attention: Assistant Secretary.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual fee of $12,000, a meeting fee of
$1,000 for every board meeting attended and each committee meeting held
separately and a $500 fee for each board meeting or committee meeting
participated in by telephone. Directors who are also employees of the Company
are not separately compensated for serving on the Board. All directors are
reimbursed for out-of-pocket expenses. Under the Stock Incentive Plan, the
Company may, from time to time and in the discretion of the Compensation
Committee, grant options to directors.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to, the Company's Chief
Executive Officer and the other most highly compensated executive officers of
the Company, whose aggregate cash and cash equivalent compensation exceeded
$100,000 (the "Named Executives"), with respect to the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- -----------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPENSATION STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS ($) OPTIONS(#)
- --------------------------- ---- --------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin Varsavsky,
Chairman and Chief Executive Officer ..... 1996 $350,000 $200,000 $ 76,476 -- --
1995 329,673 100,000 99,813 -- --
1994 309,345 200,000 -- -- --
Michael J. Mahoney,
President and Chief Operating Officer .... 1996 166,458 183,129 102,825 $299,997(2) 253,333
1995 123,000 117,607 52,715 -- 23,333
1994 59,538(3) 50,000 -- -- 23,333
Allan L. Shaw(4),
Vice President, Finance; Chief Financial
Officer; Treasurer ....................... 1996 108,333 115,000 -- -- 43,333
Lawrence G. Malone(5),
Vice President and Managing Director,
Intercontinental.......................... 1996 98,333 88,147 -- -- 33,333
Sheldon M. Goldman(6),
Vice President, Business and Legal
Affairs................................... 1996 86,354 100,000 -- -- 20,000
</TABLE>
- -----------
(1) The amount reflected for Mr. Varsavsky (i) for 1996, includes $67,375 of
housing allowance expense and $8,180 of tuition reimbursement for his
children's schooling and (ii) for 1995, includes $35,880 of housing
allowance expense and $47,500 of relocation expense reimbursement. The
amount reflected for Mr. Mahoney (i) for 1996, represents $32,416 of tax
equalization payments, $28,227 of relocation expense reimbursement
associated with Mr. Mahoney's repatriation from London to New York and
$9,263 of tax gross ups and (ii) for 1995, includes $23,834 of housing
allowance expense.
(2) Calculated based on a value of $9.00 per share, the fair market value of
the Common Stock on December 31, 1996.
(3) Mr. Mahoney began his employment with the Company in July 1994.
(4) Mr. Shaw was not an executive officer of the Company during 1995 or 1994.
(5) Mr. Malone was not an executive officer of the Company during 1995 or
1994.
(6) Mr. Goldman began his employment with the Company in March 1996.
5
<PAGE>
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock made by the Company during the fiscal year ended December
31, 1996 to each of the Named Executives. No stock appreciation rights ("SARs")
were granted during 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
--------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF PERCENT OF APPRECIATION FOR
SECURITIES TOTAL OPTIONS EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED (#) 1996 (1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ------------- ------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Martin Varsavsky....... - - - - - -
Michael J. Mahoney..... 133,000(4)(5) 16.2% $ 5.85 01/01/06 $489,311 $1,240,011
120,000(5)(6) 14.6 12.00 10/23/01 905,608 2,294,989
Allan L. Shaw.......... 43,333(5)(7) 5.3 5.85 01/01/06 159,424 404,011
Lawrence G. Malone..... 33,333(5)(7) 4.1 5.85 01/01/06 122,633 310,777
Sheldon M. Goldman..... 20,000(5)(8) 2.4 5.85 03/01/06 73,581 186,468
</TABLE>
- -----------
(1) The Company granted options to purchase a total of 822,265 shares of
Common Stock during 1996.
(2) The exercise price was equal to the fair market value of the shares of
Common Stock underlying the options on the grant date.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on
the Common Stock over the term of the options. These assumptions are based
on rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price appreciation. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by
the option holder.
(4) Options to purchase 77,296 shares of Common Stock were exercisable at
December 31, 1996. The remaining 56,037 options will vest as to an
additional 50% in each of 1997 and 1998.
(5) In the event of certain Corporate Transactions (as defined herein), all
unvested stock options become exercisable, unless assumed by the successor
corporation or its parent company.
(6) Options vest and become exercisable as to 25% on October 23, 1997 and as
to an additional 25% on each anniversary thereafter.
(7) Options vested and became exercisable as to 33.34% on January 1, 1997 and
will vest and become exercisable as to an additional 33.33% on each
anniversary thereafter.
(8) Options vested and became exercisable as to 33.34% on March 1, 1997 and
will vest and become exercisable as to an additional 33.33% on each
anniversary thereafter.
6
<PAGE>
YEAR-END OPTION VALUES
The following table sets forth information regarding the number and year
end value of unexercised options held at December 31, 1996 by each of the Named
Executives. No SARs were exercised by the Named Executives during fiscal 1996.
FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY"
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- ---- ------------------------- -----------------------------
<S> <C> <C>
Martin Varsavsky............. 0/0 $0/$0
Michael J. Mahoney........... 113,591/186,408 400,206/216,024
Allan L. Shaw................ 23,704/32,962 74,668/103,830
Lawrence G. Malone........... 18,055/25,278 56,873/79,626
Sheldon M. Goldman........... 0/20,000 0/62,997
</TABLE>
- ------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set
forth represent the difference between $9.00 per share, the fair market
value of the Common Stock issuable upon exercise of options at December
31, 1996 and the exercise price of the option, multiplied by the
applicable number of options.
EMPLOYMENT AGREEMENTS
The Company has executed employment agreements with each of Messrs.
Varsavsky and Mahoney, which became effective on October 23, 1996, pursuant to
which Mr. Varsavsky agreed to continue to serve as Chairman and Chief Executive
Officer and Mr. Mahoney agreed to continue to serve as President and Chief
Operating Officer of the Company until October 23, 1999 and October 30, 1999,
respectively, unless earlier terminated in accordance with the terms of their
respective employment agreement. The annual base salary under such agreements
will be reviewed annually but cannot be less than $350,000 for Mr. Varsavsky and
$200,000 for Mr. Mahoney (in each instance as adjusted for inflation). In
addition, each employment agreement also provides for an annual cash bonus
payment equal to the executive's base salary multiplied by a bonus multiple
ranging from 0.6 to 1.9 determined based upon a comparison of actual versus
projected EBITDA and revenue figures. Each employment agreement also provides
that the respective executive will be eligible to receive annual grants of stock
options or restricted stock in amounts to be determined by the Board in its sole
and absolute discretion.
Mr. Varsavsky's employment agreement also provides that upon certain
terminations of employment (including certain terminations following a Change in
Control, as defined therein), the Company will be obligated to pay Mr. Varsavsky
an amount equal to the Severance Amount (as defined therein). Mr. Mahoney's
employment agreement provides that following a Change in Control, the Company
will be obligated to pay him an amount equal to the Severance Amount (as defined
therein) if he chooses to terminate his employment. Each of Messrs. Varsavsky's
and Mahoney's employment agreement also include a prohibition on the
solicitation of employees and a non-competition covenant.
In each of Messrs. Varsavsky's and Mahoney's employment agreements,
"Change in Control" is defined to mean such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), becomes the ultimate "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act)) of more than 50% of the
total voting power of the then outstanding voting stock of the Company on a
fully diluted basis or (ii) individuals who at the beginning of any period of
two consecutive calendar years constituted the Board (together with any new
directors whose election by the Board or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
members
7
<PAGE>
of the Board then still in office who either were members of the Board at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board then in office.
STOCK INCENTIVE PLAN
The Company has an Amended Stock Incentive Plan (the "Stock Incentive
Plan") under which "nonqualified" stock options ("Nonqualified Stock Options")
to acquire shares of Common Stock may be granted to employees, directors and
consultants of the Company and "incentive" stock options ("Incentive Stock
Options") to acquire shares of Common Stock may be granted to employees,
including employee-directors. The Stock Incentive Plan also provides for the
grant of SARs and shares of restricted Common Stock to the Company's employees,
directors and consultants. The Stock Incentive Plan currently provides for the
issuance of up to a maximum of 1,833,333 shares of Common Stock. The Stock
Incentive Plan is administered by the Compensation Committee which determines
which employees, officers, directors, independent contractors and consultants of
the Company will receive grants, the amount of any grant and the terms and
conditions (including any restrictions) of such grant.
The Stock Incentive Plan provides that outstanding options, restricted
shares of Common Stock or SARs vest in their entirety and become exercisable, or
with respect to shares of restricted Common Stock, are released from
restrictions on transfer and repurchase rights, in the event of a "Corporate
Transaction." For purposes of the Stock Incentive Plan, a Corporate Transaction
includes any of the following stockholder-approved transactions to which the
Company is a party: (i) a merger or consolidation in which the Company is not
the surviving entity, other than a transaction the principal purpose of which is
to change the state of the Company's incorporation, or a transaction in which
the Company's stockholders immediately prior to such merger or consolidation
hold (by virtue of securities received in exchange for their shares in the
Company) securities of the surviving entity representing more than 50.0% of the
total voting power of such entity immediately after such transaction; (ii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company unless the Company's stockholders immediately prior to such sale,
transfer or other disposition hold (by virtue of securities received in exchange
for their shares in the Company) securities of the purchaser or other transferee
representing more than 50.0% of the total voting power of such entity
immediately after such transaction; or (iii) any reverse merger in which the
Company is the surviving entity but in which the Company's stockholders
immediately prior to such merger do not hold (by virtue of their shares in the
Company held immediately prior to such transaction) securities of the Company
representing more than 50.0% of the total voting power of the Company
immediately after such transaction. For a description of the terms of the
proposed amended Stock Incentive Plan, see Proposal No. 2.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board did not have a Compensation Committee prior to the establishment
of one in January 1996. As a result, prior to such time the entire Board,
including Messrs. Varsavsky and Mahoney, made all determinations concerning
compensation of executive officers. The current members of the Compensation
Committee are Messrs. Peet, Pizzani and Mahoney. Mr. Mahoney is the Company's
President and Chief Operating Officer. None of the executive officers of the
Company currently serves on the compensation committee of another entity or any
other committee of the board of directors of another entity performing functions
similar to the Compensation Committee. No interlocking relationships exist
between the Company's Board or its Compensation Committee and the board of
directors or compensation committee of any other company.
SHAREHOLDERS AGREEMENTS. S-C V-Tel and Mr. Varsavsky are parties to a
shareholders' agreement (the "S-C V-Tel Shareholders Agreement") which provides
that, in certain instances, if Mr. Varsavsky and Mr. Aisemberg propose to sell
20.0% or more of the aggregate number of shares of Common Stock collectively
owned by them, S-C V-Tel has the right to sell its shares of Common Stock in
such a transaction on a pro rata basis with Messrs. Varsavsky and Aisemberg and
certain of the Company's other stockholders, for the same consideration per
share and on the same terms as Mr. Varsavsky.
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On April 5, 1994, Messrs. Varsavsky and Aisemberg and COMSAT entered into
a shareholders' agreement (as subsequently amended, the "COMSAT Shareholders
Agreement"). Pursuant to the terms of the COMSAT Shareholders Agreement, so long
as COMSAT beneficially owns at least 10.0% (subject to certain adjustments) of
the issued and outstanding shares of Common Stock on a fully diluted basis,
COMSAT is entitled to representation on the Board in proportion to its
percentage ownership of Common Stock, subject to a minimum of one seat, and to
designate one member of an Executive Committee of the Board, if any such
committee is established. In addition, in certain instances, if Mr. Varsavsky
proposes to sell 10.0% or more of the shares of Common Stock which he owns,
COMSAT has the right to sell its shares of Common Stock in such a transaction on
a pro rata basis with Mr. Varsavsky and certain of the Company's other
stockholders, for the same consideration per share and on the same terms as Mr.
Varsavsky.
VOTING AGREEMENT. S-C V-Tel and COMSAT are parties to a voting agreement
(the "Voting Agreement"), pursuant to which, at all times that either S-C V-Tel
or COMSAT is entitled to nominate directors to the Board, the other party is
required to vote its respective shares of Common Stock in favor of the first
party's nominees. The Voting Agreement remains in effect until the earlier of
the dissolution of the Company or the date on which either S-C V-Tel or COMSAT
no longer owns any shares of Common Stock. See "Certain Transactions -- S-C
V-Tel Investments, L.P.," and "Certain Transactions -- COMSAT Investments, Inc."
for a description of the registration rights held by each of S-C V-Tel and
COMSAT.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to January 1996, the Board did not have a Compensation Committee. As
a result, prior to such time the entire Board made all determinations concerning
compensation of executive officers.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to attract, motivate,
reward and retain executive personnel capable of making significant
contributions to the long-term success of the Company. During 1996, the
Company's compensation program consisted of base salary, annual incentive
bonuses, stock option grants and grants of restricted Common Stock. Base salary
provides the foundation for the Company's executive pay; its purpose is to
compensate the executive for performing his basic duties. The purpose of annual
incentive bonuses is to provide rewards for favorable performance and
achievement of intermediate-term objectives while the purpose of stock option
grants and grants of restricted Common Stock is to provide incentives and
rewards for long-term performance and to motivate long-term strategic planning.
BASE SALARY. Base salaries for the Company's executive officers are set
annually subject, in certain cases, to certain minimum requirements established
under the executives' employment agreement. See "Executive
Compensation--Employment Agreements." During 1996, the Company did not employ a
formula approach that links cash compensation to corporate performance nor did
it utilize any formal survey or other compilation of empirical data on executive
compensation paid by other companies. Instead, executive compensation was
determined based on a number of subjective factors, including individual
responsibilities, performance, contribution and experience as well as the
Company's performance as compared with the prior year and general economic
factors. The base salary of $350,000 paid to the Company's Chief Executive
Officer in 1996 was contractually based and included an adjustment for increases
in the Consumer Price Index. The base salary paid to the Chief Executive Officer
remained constant from 1995 to 1996.
INCENTIVE BONUSES. The Company's executive officers and certain other
officers are eligible to receive annual incentive bonuses which are linked to
the financial and operating performance of the Company and the individual's
performance. Certain executive officers are assigned an individual incentive
target, which represents the amount that would be payable to the executive if
performance goals were met. The incentive targets range from 20% to 100% of base
salary. The Chief Executive Officer received a $200,000 bonus in 1996. Such
bonus payment was determined based on a number of factors, including the
Company's successful completion of an initial
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public offering, expansion into additional European markets, the launch of
national long-distance service in certain European countries and the expansion
of the Company's customer base.
STOCK OPTIONS AND RESTRICTED STOCK. The Company's compensation program
also utilizes stock option and restricted stock awards, which are intended to
provide additional incentive to increase stockholder value. All stock option
awards are granted with an exercise price equal to 100% of fair market value of
the Common Stock on the date of grant and generally vest in increments of
one-third. Certain executive officers received a grant of stock options which
vest based upon the Company's attainment of specified performance objectives.
Currently, no specific formula is used to determine option awards to employees
but instead awards are based on a subjective evaluation of each individual's
overall past and expected future contribution to the Company. No options were
granted to the Chief Executive Officer during 1996.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
In connection with making decisions with respect to executive
compensation, the Compensation Committee has taken into account, as one of the
factors which it considers, the provisions of Section 162(m) of the Internal
Revenue Code (the "Code"), which limits the deductibility by the Company of
certain categories of compensation in excess of $1 million paid to certain
executive officers.
Respectfully Submitted,
Paul G. Pizzani (from May 1996)
W. James Peet
Michael J. Mahoney (from July 30, 1996)
CERTAIN TRANSACTIONS
S-C V-TEL INVESTMENTS, L.P.
Pursuant to the terms of a stock purchase agreement, dated September 30,
1993 (as subsequently amended, the "S-C V-Tel Stock Purchase Agreement"), S-C
V-Tel purchased 1,695,532 shares of Common Stock on October 1, 1993 and 2,739
shares of Common Stock on December 15, 1993 for an aggregate purchase price of
$5 million (the "S-C V-Tel Shares"). The terms of the S-C V-Tel Stock Purchase
Agreement provide that, among other things, beginning on April 16, 1997, S-C
V-Tel has the right to demand registration under the Securities Act of 1933, as
amended (the "Securities Act") of the S-C V-Tel Shares. Such demand right must
be exercised for at least 30.0%, and no more than 70.0% of the S-C V-Tel Shares
then owned by S-C V-Tel. No earlier than six months after the effective date of
its first demand registration, S-C V-Tel may request a second demand
registration for any remaining S-C V-Tel Shares. The expenses of such demand
registrations, excluding any underwriter's commissions and discounts relating to
the sale of the S-C V-Tel Shares, will be paid by the Company. In addition, if
the Company proposes to register any of its securities under the Securities Act,
S-C V-Tel has the right, on up to four occasions, to include in such
registration a maximum of 331/3% of the S-C V-Tel Shares it then owns. The
expenses of any such "piggy-back" registration, excluding any underwriter's
commissions and discounts relating to the sale of the S-C V-Tel Shares and the
fees and disbursements of S-C V-Tel's legal counsel, will be paid by the
Company. S-C V-Tel is entitled to sell or transfer any of the S-C V-Tel Shares,
without the consent of the Company, provided that the transferee is not in
competition with, or does not otherwise have interests adverse to, the Company.
COMSAT INVESTMENTS, INC.
Pursuant to the terms of a stock purchase agreement, dated April 5, 1994
(as subsequently amended, the "COMSAT Purchase Agreement"), COMSAT purchased
2,140,539 shares of Common Stock for a purchase price of $8.0 million (the
"COMSAT Shares"). Pursuant to the terms of the COMSAT Purchase Agreement, COMSAT
has been granted the same demand and piggyback registration rights as S-C V-Tel.
The COMSAT Purchase Agreement further provides that COMSAT may not transfer any
COMSAT Shares to any transferee without first
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offering such shares to the Company if, following such transfer, such transferee
would own 20.0% or more of the then outstanding shares of Common Stock. In
addition, COMSAT has agreed that it will not acquire more than 30.0% of the
shares of Common Stock outstanding at any time except in certain circumstances
relating to changes in the percentage of the outstanding Common Stock owned by
Mr. Varsavsky. Prior to the sale of all or substantially all of the assets of
the Company or the consolidation or merger of the Company with any person in
which the Company is not the surviving entity, COMSAT has certain rights to
invest in any joint venture proposed by the Company. See "Executive Compensation
- -- Compensation Committee Interlocks and Insider Participation - - Shareholders
Agreements" for a description of certain voting rights held by COMSAT.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of June 30, 1997, by (i) each
person known to the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each of the
Named Executives, and (iv) all executive officers and directors of the Company,
as a group. All information with respect to beneficial ownership has been
furnished to the Company by the respective stockholders of the Company.
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1) CLASS
- ---------------- ----------------- ----------
Martin Varsavsky
Parque Empresarial Edificio 2,
c/o Beatriz De Bobadilla
14,5(degree) Ofic. B
Madrid, Spain................................... 6,068,167 26.8%
COMSAT International, Inc.
6560 Rock Spring Drive
Bethesda, MD 20817(2).......................... 2,140,539 9.5
S-C V-Tel Investments, L.P.
888 Seventh Avenue
New York, NY 10106(2).......................... 1,698,272 7.5
FMR Corp.
82 Devonshire Street
Boston, MA 02109............................... 1,978,900 8.8
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258........................... 1,396,000 6.2
Michael J. Mahoney(3)........................... 170,351 *
Allan L. Shaw(3)................................ 31,666 *
Lawrence G. Malone(3)........................... 20,278 *
Sheldon M. Goldman(3)(4)........................ 14,666 *
Antonio Carro................................... - -
W. James Peet................................... - -
Paul G. Pizzani................................. - -
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AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1) CLASS
- ---------------- ----------------- ----------
All directors and executive
officers as a group (10 persons)(5)........ 6,335,499 27.8%
- -----------
* Represents beneficial ownership of less than 1% of the outstanding shares
of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options and warrants held by that person that are currently
exercisable or exercisable within 60 days of June 30, 1997 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table, the stockholder named in the
table has sole voting and investment power with respect to the shares set
forth opposite such stockholder's name.
(2) Does not include 6,694,240 shares of Common Stock which COMSAT may be
deemed to beneficially own as a result of certain voting arrangements
contained in the COMSAT Shareholders Agreement.
(3) Includes shares of Common Stock which the executive officers have the
right to acquire through the exercise of options within 60 days of June
30, 1997, as follows: Michael J. Mahoney 122,018; Allan L.
Shaw 26,666; Lawrence G. Malone 20,278; and Sheldon M. Goldman 6,666.
(4) Includes 1,000 shares owned by Mr. Goldman's wife.
(5) Includes vested and exercisable options to purchase 205,999 shares of
Common Stock which options were granted pursuant to the Stock Incentive
Plan.
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CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph shows a comparison of cumulative total returns on the
Common Stock against the cumulative total return for The Nasdaq Stock Market -
U.S. Index and The Nasdaq Telecommunications Index. The graph assumes an
investment of $100 on October 18, 1996 (the date the Common Stock began trading
on The Nasdaq National Market) in the Common Stock, The Nasdaq Stock Market -
U.S. Index and The Nasdaq Telecommunications Index. Cumulative total return
assumes reinvestment of dividends. The performance shown is not necessarily
indicative of future performance.
[PERFORMANCE GRAPH]
MONTHLY CUMULATIVE TOTAL VALUES*($)
-----------------------------------------------------------------
1996 THE NASDAQ THE NASDAQ
MONTH-END THE COMPANY STOCK MARKET - U.S. INDEX TELECOMMUNICATIONS INDEX
- --------- ----------- ------------------------- ------------------------
October 100 98 99
November 83 104 101
December 75 104 103
*$100 invested on October 18, 1996 in Common Stock or index, including
reinvestment of dividends, fiscal year ending December 31.
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PROPOSAL 2 - PROPOSED AMENDMENT TO STOCK INCENTIVE PLAN
The Board has amended the Stock Incentive Plan in two respects,
subject to approval of the stockholders. To conform to certain changes in the
rules promulgated under Section 16 of the Exchange Act, the plan administration
provisions have been revised to provide that the plan will now be administered
by a committee consisting of at least two non-employee director members (within
the meaning of the rules promulgated under Section 16). In addition, the Board
has amended the Stock Incentive Plan to provide for an additional 500,000 shares
of Common Stock which may be issued thereunder as restricted stock or upon
exercise of stock options. At its adoption in 1996, the Stock Incentive Plan
provided for the issuance of 1,833,333 shares to participants, of which 315,674
remain available for grants as of July 1, 1997. The Board deems it advisable to
amend the administration provisions so as to conform to current Section 16
requirements and to increase the number of available shares of Common Stock so
as to provide for the continued ability to make grants under the Stock Incentive
Plan after the currently available shares are utilized.
The following summary of the plan, as proposed to be amended, is subject
to the complete terms of the plan, a copy of which is attached to this Proxy
Statement as Exhibit A.
1. ADMINISTRATION. The plan is administered by the Compensation Committee,
which must consist of not less than two non-employee director members. Subject
to the provisions of the plan, the Compensation Committee has sole authority to
select eligible participants, determine (subject to the terms of the plan) the
terms and timing of grants and to generally interpret and administer the plan.
2. PARTICIPANTS. Subject to the terms of the plan, employees, officers,
directors, independent contractors and consultants of the Company or an
affiliate of the Company selected by the Compensation Committee, in its
discretion, are eligible to receive grants under the plan. Currently, there are
approximately 70 participants in the plan.
3. TYPES OF AWARDS. The plan authorizes the granting of stock options
(both Incentive Stock Options and Nonqualified Stock Options), shares of
restricted Common Stock and SARs. The terms and features of these various forms
of awards are set forth below and are described more fully in Exhibit A attached
hereto.
STOCK OPTIONS. Options granted under the plan may be either Incentive
Stock Options or Nonqualified Stock Options. Options may be granted to
participants in such number, at such times, and subject to such terms and
conditions as the Compensation Committee may determine, except that: (i) the
option price of an Incentive Stock Option may not be less than the fair market
value of the Common Stock on the date of grant; (ii) the option price of a
Nonqualified Stock Option may be as determined by the Compensation Committee;
(iii) no Incentive Stock Option may be granted to a "ten percent stockholder"
(as such term is defined in Section 422A of the Code) unless the exercise price
is at least 110% of the fair market value of the Common Stock on the date of
grant and the term of the option may not exceed five years from the date of the
grant; (iv) no Incentive Stock Option may be exercised more than ten years after
the date of grant; and (v) the aggregate fair market value of the stock with
respect to which Incentive Stock Options are exercisable by a participant for
the first time may not exceed $100,000. With respect to each option granted
under the plan, the Compensation Committee may determine and reflect in the
option agreement such other terms, provisions and conditions consistent with the
plan as may be determined by the Compensation Committee.
Payment for the shares of Common Stock purchased under an option must be
made in full upon exercise of the option, by cash (including the following cash
equivalents: certified check, bank draft or postal or express money order
payable to the order of the Company in lawful money of the United States);
provided, however, that the Compensation Committee, in is sole discretion, may
permit a participant to pay the option price, in whole or in part (i) with
shares of Common Stock owned by the participant, (ii) by delivery on a form
prescribed by the Compensation Committee of an irrevocable direction to a
securities broker approved by the Compensation Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for shares of
Common Stock, (iii) by delivery of the participant's promissory note with such
recourse, interest, security and redemption provisions as the Compensation
Committee in its discretion determines appropriate, or (iv) in any
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combination of the foregoing. In addition, the Compensation Committee, in its
sole discretion, may authorize the surrender by a participant of all or part of
an unexercised option and authorize a payment in consideration thereof of an
amount equal to the difference between the aggregate fair market value of the
shares of Common Stock subject to such option and the aggregate option price of
such shares of Common Stock. In the Compensation Committee's discretion, such
payment may be made in cash, shares of Common Stock with a fair value on the
date of surrender equal to the payment amount, or some combination thereof.
Each option issued to a participant will be exercisable in accordance with
its terms so long as the participant is an employee of the Company or an
affiliate of the Company. In addition, to the extent then exercisable options
will be exercisable by a participant for a period of thirty (30) days after
termination of employment or consulting relationship or such longer period of
time as may be permitted by the Code (but in no event later than the expiration
date of the option). Options will vest in accordance with the schedule
established by the Compensation Committee at the time of grant and will not be
exercisable until vested. In the event of a Corporate Transaction, however,
outstanding options will, to the extent not then vested, vest in their entirety
and become exercisable unless assumed by the successor corporation or its parent
company pursuant to options providing substantially equal value and having
substantially equivalent provisions as the options granted pursuant to the plan.
SARS. SARs may be granted under the plan either separately or in tandem
with options and will be subject to such terms and conditions as the
Compensation Committee may deem appropriate. Each SAR will entitle the holder to
surrender the SAR, and to receive from the Company in exchange therefor, cash
compensation equal to any appreciation in value of the Common Stock underlying
such SAR. In the event of a Corporate Transaction, outstanding SARs will vest in
their entirety and become exercisable unless assumed by the successor
corporation or its parent company pursuant to SARs providing substantially equal
value and having substantially equivalent provisions as the SARs granted
pursuant to the plan.
SHARES OF RESTRICTED COMMON STOCK. Shares of restricted Common Stock may
be sold or granted under the plan in such numbers and at such times during the
term of the plan as the Compensation Committee shall determine. Each participant
who receives a grant of shares of restricted Common Stock or who purchases
shares subject to restrictions will have all the rights of a stockholder with
respect to such shares of restricted Common Stock (subject to certain
restrictions that may be imposed on transferability), including the rights to
vote, receive dividends (including stock dividends), participate in stock splits
or other capitalizations and exchange such shares in a merger, consolidation or
other reorganization.
Each sale or grant of restricted Common Stock pursuant to the plan will be
evidenced by a written restricted stock purchase agreement or restricted stock
bonus agreement, which agreement may contain such other terms, provisions and
conditions consistent with the plan as may be determined by the Compensation
Committee, including restrictions on transfer and forfeiture and vesting
provisions.
In the event of a Corporate Transaction, any shares of restricted Common
Stock will be released from restrictions on transfer and repurchase rights
unless assumed by the successor corporation or its parent company pursuant to
restricted stock agreements providing substantially equal value and having
substantially equivalent provisions as the shares of restricted Common Stock
granted pursuant to the plan.
4. TERMINATION AND AMENDMENTS. The plan terminates with respect to
Incentive Stock Options on September 29, 2003. However, the Board may at any
time amend, suspend or terminate the plan as it deems advisable, provided that
such amendment, suspension or termination complies with all applicable
requirements of state and federal law, including any applicable requirement that
the plan, or any amendment to the plan, be approved by the Company's
stockholders. Notwithstanding the foregoing, the Board may not amend the plan
without the approval of the stockholders of the Company to: (i) increase the
maximum number of shares subject to Incentive Stock Options issued under the
plan; or (ii) change the designation or class of persons eligible to receive
Incentive Stock Options under the plan.
5. TRANSFERABILITY. Neither options granted pursuant to the plan, nor any
right thereunder, will be transferable by the participant by operation of law or
otherwise other than by will or the laws of descent and
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distribution. During the participant's lifetime, options may be exercised only
by the participant. Stock subject to a restricted stock purchase agreement or
restricted stock bonus agreement will be transferable only as provided in such
agreement.
6. CONSIDERATION. The consideration to be received by the Company for the
granting of options or SARs or the granting of shares of restricted Common Stock
is the continued employment of participants. Consideration for the issuance of
shares under the plan will consist of the payment of the option price upon
exercise of an option, surrender of a related option upon exercise of a SAR and
payment of the established purchase price with respect to the purchase of shares
of restricted Common Stock.
7. TAX CONSEQUENCES. The grant of an option or SAR will have no immediate
tax consequences for the participant or the Company. The participant will have
no taxable income upon exercising an Incentive Stock Option (except that an
alternative minimum tax may apply), and the Company will not receive a deduction
when an Incentive Stock Option is exercised. If the participant does not dispose
of the shares of Common Stock acquired on exercise of an Incentive Stock Option
within the two-year period beginning on the day after the grant of the Incentive
Stock Option or within one year after the transfer of such shares to the
participant, the gain or loss on a subsequent sale will be a capital gain or
loss to the participant. The Company would not be entitled to any deduction in
such event. If the participant disposes of the shares within the two-year or
one-year period described above, the participant generally will realize ordinary
income and the Company will be entitled to a corresponding deduction. Upon
exercising a SAR or a Nonqualified Stock Option, the participant must recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise, unless
the shares of Common Stock received are subject to certain restrictions. The
Company is entitled to a deduction for the same amount as of the exercise date
(or the date the restrictions lapse).
Awards granted under the plan that are settled in cash or shares of Common
Stock that are either transferable or not subject to a substantial risk of
forfeiture are taxable as ordinary income in an amount equal to the cash or the
fair market value of the shares received. Awards granted under the plan that are
settled in shares of Common Stock that are subject to restrictions as to
transferability or subject to a substantial risk of forfeiture are taxable as
ordinary income in an amount equal to the fair market value of the shares
received at the first time such shares become transferable or not subject to a
substantial risk of forfeiture, whichever occurs earlier. Awards of restricted
Common Stock granted under the plan are taxable as ordinary income, as of the
earlier of the date that the shares become transferable or are no longer subject
to a substantial risk of forfeiture, in an amount equal to the fair market value
of the shares on such date, unless the participant makes an election under
Section 83(b) of the Code. If a Section 83(b) election is made, the participant
must include in income the value of the shares as of the date of grant.
The Company will receive a deduction for the amount recognized as income
by the participant, subject to the provisions of Section 162(m) of the Code,
which provides for a possible denial of a tax deduction to the Company for
compensation for certain key executive officers in excess of $1 million in any
year.
The tax treatment upon disposition of shares of Common Stock acquired
under the plan will depend on how long the shares have been held. In the case of
shares of Common Stock acquired through exercise of an option, the tax treatment
will also depend on whether or not the shares were acquired by exercising an
Incentive Stock Option. There will be no tax consequences to the Company upon
disposition of shares of Common Stock acquired under the plan, except that the
Company may receive a deduction in the case of disposition of shares acquired
under an Incentive Stock Option before the applicable holding period has been
satisfied.
8. OTHER INFORMATION. The closing price of the Common Stock on June 30,
1997 was $6 3/4.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE STOCK INCENTIVE PLAN.
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PROPOSAL 3 - RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board desires to obtain stockholder ratification of the resolution
appointing KPMG Peat Marwick LLP, New York, New York, as independent auditors
for the Company for fiscal year 1997. KPMG Peat Marwick LLP served as the
Company's auditors for the fiscal year ended December 31, 1996.
If the appointment of KPMG Peat Marwick LLP is not ratified, the adverse
vote will be considered as an indication to the Board that it should select
other independent auditors for the following fiscal year. Given the difficulty
and expense of making any substitution of auditors after the beginning of the
current fiscal year, it is contemplated that the appointment for fiscal year
1997 will be permitted to stand unless the Board finds other good reason for
making a change.
A representative of KPMG Peat Marwick LLP will attend the Annual Meeting,
will have an opportunity to make a statement if he or she desires to do so, and
will be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE
COMPANY FOR FISCAL YEAR 1997.
COSTS OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card, and the cost of solicitation of proxies on behalf of
the Board will be borne by the Company. In addition to the use of the mail,
proxies may be solicited personally or by telephone or regular employees of the
Company without additional compensation. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
materials to the beneficial owners of the Common Stock held of record by such
persons and entities and will be reimbursed for their reasonable expenses
incurred in connection with forwarding such material.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other
matters which will be brought before the Annual Meeting. In the event that any
other business is properly presented at the Annual Meeting, it is intended that
the persons named in the enclosed proxy will have authority to vote such proxy
in accordance with their judgment on such business.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Commission and The Nasdaq National Market. Directors,
certain officers and greater than 10% stockholders are also required by
Commission regulations to furnish the Company with copies of all such reports
that they file. Based on the Company's review of copies of such forms provided
to it, the Company believes that all filing requirements were complied with
during the fiscal year ended December 31, 1996, except for one late filing for
Morten Steen-Jorgensen, a former officer of the Company, and one late filing for
Sheldon M. Goldman.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Proxy Statement to be
issued in connection with the Company's 1998 Annual Meeting of Stockholders must
be mailed to the Assistant Secretary, Viatel, Inc., 800 Third Avenue, New York,
New York 10022, and must be received by the Assistant Secretary on or before
April 15, 1998, except under certain circumstances. See "General Information
Relating to the Board - Committees of the Board."
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ANNUAL REPORT
A copy of the Company's 1996 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders not receiving a copy of such Annual Report may obtain one,
without charge, by writing or calling Sheldon M. Goldman, Assistant Secretary,
Viatel, Inc., 800 Third Avenue, New York, New York 10022, telephone (212)
350-9261.
By Order of the Board of Directors
/s/ Sheldon M. Goldman
Sheldon M. Goldman
ASSISTANT SECRETARY
New York, New York
July 7, 1997
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ANNEX A
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VIATEL, INC.
AMENDED STOCK INCENTIVE PLAN
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1. ESTABLISHMENT, PURPOSE, AND DEFINITIONS.
(a) There is hereby adopted the Amended Stock Incentive Plan (the
"Plan") of VIATEL, INC. (the "Company").
(b) The purpose of the Plan is to provide a means whereby Eligible
Individuals (as defined in paragraph 4, below) can acquire Common Stock, no par
value, of the Company (the "Stock"). The Plan provides employees (including
officers and directors who are employees) of the Company and of its Affiliates
(as defined in subparagraph (c) below) an opportunity to purchase shares of
Stock pursuant to options which may qualify as incentive stock options (referred
to as "Incentive Stock Options") under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and employees, officers, directors,
independent contractors, and consultants of the Company and of its Affiliates an
opportunity to purchase shares of Stock pursuant to options which are not
described in Sections 422 or 423 of the Code (referred to as "Nonqualified Stock
Options"). The Plan also provides for the sale or bonus of Stock to Eligible
Individuals in connection with the performance of services for the Company or
its Affiliates. Finally, the Plan authorizes the grant of stock appreciation
rights ("SARs"), either separately or in tandem with options, entitling holders
to cash compensation measured by appreciation in the value of the Stock.
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall, unless otherwise determined by the Board of
Directors, be administered by the Compensation Committee of the Board (the
"Committee"). The Committee shall consist of not less than two non-employee
director members within the meaning of the rules promulgated under Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Members
of the Committee shall serve at the pleasure of the Board. The Committee shall
select one of its members as chairman, and shall hold meetings at such times and
places as it may determine. A majority of the Committee shall constitute a
quorum and acts of the Committee at which a quorum is present, or acts reduced
to or approved in writing by all the members of the Committee, shall be the
valid acts of the Committee. If the Board does not delegate administration of
the Plan to the Committee, then each reference in this Plan to "the Committee"
shall be construed to refer to the Board.
(b) The Committee shall determine which Eligible Individuals shall
be granted options under the Plan, the timing of such grants, the terms thereof
(including any restrictions on the Stock), and the number of shares subject to
such options.
(c) The Committee may amend the terms of any outstanding option
granted under this Plan, but any amendment which would adversely affect the
optionee's rights under an outstanding option shall not be made without the
optionee's written consent. The Committee may, with the optionee's written
consent, cancel any outstanding option or accept any outstanding option in
exchange for a new option.
(d) The Committee shall also determine which Eligible Individuals
shall be issued Stock or SARs under the Plan, the timing of such grants, the
terms thereof (including any restrictions), and the number of shares of Stock or
SARs to be granted. The Stock shall be issued for such consideration (if any) as
the Committee deems appropriate. Stock issued subject to restrictions shall be
evidenced by a written agreement (the "Restricted Stock Purchase Agreement" or
the "Restricted Stock Bonus Agreement"). The Committee may amend any Restricted
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Stock Purchase Agreement or Restricted Stock Bonus Agreement, but any amendment
which would adversely affect the stockholder's rights to the Stock shall not be
made without his or her written consent.
(e) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable for the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options, SARs or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants.
3. STOCK SUBJECT TO THE PLAN.
(a) An aggregate of not more than 2,333,000 shares of Stock shall be
available for the grant of options or the issuance of Stock under the Plan. If
an option is surrendered (except surrender for shares of Stock) or for any other
reason ceases to be exercisable in whole or in part, the shares which were
subject to such option but as to which the option had not been exercised shall
continue to be available under the Plan. Any Stock which is retained by the
Company upon exercise of an option in order to satisfy the exercise price for
such option or any withholding taxes due with respect to such option exercise
shall be treated as issued to the optionee and will thereafter not be available
under the Plan.
(b) If there is any change in the Stock subject to either the Plan,
an Option Agreement (as defined below), a Restricted Stock Purchase Agreement, a
Restricted Stock Bonus Agreement or a SAR Agreement (as defined in paragraph 8)
through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend, or other change in the capital
structure of the Company, appropriate adjustments shall be made by the Committee
in order to preserve but not to increase the benefits to the individual,
including adjustments to the aggregate number, kind of shares, and price per
share subject to either the Plan, an Option Agreement, a Restricted Stock
Purchase Agreement, a Restricted Stock Bonus Agreement, or a SAR Agreement.
4. ELIGIBLE INDIVIDUALS. Individuals who shall be eligible to have granted
to them the options, Stock or SARs provided for by the Plan shall be such
employees, officers, directors, independent contractors, and consultants of the
Company or an Affiliate as the Committee in its discretion, shall designate from
time to time ("Eligible Individuals"). Notwithstanding the foregoing, only
employees of the Company or an Affiliate (including officers and directors who
are bona fide employees) shall be eligible to receive Incentive Stock Options.
5. THE OPTION PRICE. The exercise price of the Stock covered by each
Incentive Stock Option shall be not less than the per share fair market value of
such Stock on the date the option is granted. The exercise price of the Stock
covered by each Nonqualified Stock Option shall be as determined by the
Committee. Notwithstanding the foregoing, in the case of an Incentive Stock
Option granted to a person possessing more than ten percent of the combined
voting power of the Company or an Affiliate, the exercise price shall be not
less than 110 percent of the fair market value of the Stock on the date the
option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in paragraph 3(b), above.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each option granted pursuant to the Plan will be evidenced by a
written agreement (the "Option Agreement") executed by the Company and the
person to whom such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; PROVIDED, HOWEVER, that the term of an Incentive Stock Option
shall not be for more than 10 years and that, in the case of an Incentive Stock
Option granted to a person possessing more than ten percent of the combined
voting power of the Company or an Affiliate, the term shall be for no more than
five years.
(c) In the case of Incentive Stock Options, the aggregate fair
market value (determined as of the time such option is granted) of the Stock
with respect to which Incentive Stock Options are exercisable for the first time
by an Eligible Individual in any calendar year (under this Plan and any other
plans of the Company or its Affiliates) shall not exceed $100,000.
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(d) The Stock Option Agreement may contain such other terms,
provisions and conditions consistent with this Plan as may be determined by the
Committee. If an option, or any part thereof, is intended to qualify as an
Incentive Stock Option, the Option Agreement shall contain those terms and
conditions which are necessary to so qualify it.
7. TERMS AND CONDITIONS OF STOCK PURCHASES AND BONUSES.
(a) Each sale or grant of Stock pursuant to the Plan will be
evidenced by a written Restricted Stock Purchase Agreement or Restricted Stock
Bonus Agreement executed by the Company and the person to whom such Stock is
sold or granted.
(b) The Restricted Stock Purchase Agreement or Restricted Stock
Bonus Agreement may contain such other terms, provisions and conditions
consistent with this Plan as may be determined by the Committee, including not
by way of limitation, restrictions on transfer, forfeiture provisions,
repurchase provisions and vesting provisions.
8. TERMS AND CONDITIONS OF SARS. The Committee may, under such terms and
conditions as it deems appropriate, authorize the issuance of SARs evidenced by
a written SAR agreement (which, in the case of tandem options, may be part of
the Option Agreement to which the SAR relates) executed by the Company and the
person to whom such SAR is granted (the "SAR Agreement"). The SAR Agreement may
contain such terms, provisions and conditions consistent with this Plan as may
be determined by the Committee.
9. USE OF PROCEEDS. Cash proceeds realized from the issuance of Stock
under the Plan shall constitute general funds of the Company.
10. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board may at any time amend, suspend or terminate the Plan
as it deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the Company's stockholders, and provided further that, except as provided in
paragraph 3(b), above, the Board shall in no event amend the Plan in the
following respects without the consent of stockholders then sufficient to
approve the Plan in the first instance:
(i) To increase the maximum number of shares subject to
Incentive Stock Options issued under the Plan; or
(ii) To change the designation or class of persons eligible to
receive Incentive Stock Options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate with respect to the grant of
Incentive Stock Options on September 29, 2003, unless previously terminated by
the Board pursuant to this paragraph 10.
11. ASSIGNABILITY. Each option granted pursuant to this Plan shall, during
the optionee's lifetime, be exercisable only by him, and neither the option nor
any right hereunder shall be transferable by the optionee by operation of law or
otherwise other than by will or the laws of descent and distribution. Stock
subject to a Restricted Stock Purchase Agreement or a Restricted Stock Bonus
Agreement shall be transferable only as provided in such Agreement.
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12. PAYMENT UPON EXERCISE OF OPTIONS.
(a) Payment of the purchase price upon exercise of any option
granted under this Plan shall be made in cash (including for purposes of this
Plan the following cash equivalents: certified check, bank draft, postal or
express money order payable to the order of the Company in lawful money of the
United States); provided, however, that the Committee, in its sole discretion,
may permit an optionee to pay the option price in whole or in part (i) with
shares of Stock owned by the optionee; (ii) by delivery on a form prescribed by
the Committee of an irrevocable direction to a securities broker approved by the
Committee to sell shares and deliver all or a portion of the proceeds to the
Company in payment for the Stock; (iii) by delivery of the optionee's promissory
note with such recourse, interest, security, and redemption provisions as the
Committee in its discretion determines appropriate; or (iv) in any combination
of the foregoing. Any Stock used to exercise options shall be valued at its fair
market value on the date of the exercise of the option. In addition, the
Committee, in its sole discretion, may authorize the surrender by an optionee of
all or part of an unexercised option and authorize a payment in consideration
thereof of an amount equal to the difference between the aggregate fair market
value of the Stock subject to such option and the aggregate option price of such
Stock. In the Committee's discretion, such payment may be made in cash, shares
of Stock with a fair market value on the date of surrender equal to the payment
amount, or some combination thereof.
(b) In the event that the exercise price is satisfied by the
Committee retaining from the shares of Stock otherwise to be issued to the
optionee shares of Stock having a value equal to the exercise price, the
Committee may issue the optionee an additional option, with terms identical to
this option agreement, entitling the optionee to purchase additional Stock in an
amount equal to the number of shares so retained.
13. WITHHOLDING TAXES.
(a) No Stock shall be granted or sold under the Plan to any
participant, and no SAR may be exercised, until the participant has made
arrangements acceptable to the Committee for the satisfaction of federal, state,
and local income and employment tax withholding obligations, including without
limitation obligations incident to the receipt of Stock under the Plan, the
lapsing of restrictions applicable to such Stock, the failure to satisfy the
conditions for treatment as Incentive Stock Options under applicable tax law, or
the receipt of cash payments. Upon exercise of a stock option or lapsing of
restrictions on Stock issued under the Plan, the Company may satisfy its
withholding obligations by withholding from the optionee or requiring the
stockholder to surrender shares of Stock sufficient to satisfy federal, state
and local income and employment tax withholding obligations.
(b) In the event that such withholding is satisfied by the Company
or the optionee's employer retaining from the shares of Stock otherwise to be
issued to the optionee shares of Stock having a value equal to such withholding
tax, the Committee may issue the optionee an additional option, with terms
identical to the Option Agreement under which the option was received, entitling
the optionee to purchase additional Stock in an amount equal to the number of
shares so retained.
14. RESTRICTIONS ON TRANSFER OF SHARES. The Stock acquired pursuant to the
Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances or other transfer as are in effect among the
stockholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
15. CORPORATE TRANSACTION.
(a) For purposes of this paragraph 15, a "Corporate Transaction"
shall include any of the following stockholder-approved transactions to which
the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except (1) for a transaction the principal purpose of which is
to change the state of the Company's incorporation, or (2) a transaction in
which the Company's stockholders immediately prior to such merger or
consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity
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representing more than fifty percent (50%) of the total voting power of such
entity immediately after such transaction;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's stockholders
immediately prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities of
the purchaser or other transferee representing more than fifty (50%) of the
total voting power of such entity immediately after such transaction; or
(iii) any reverse merger in which the Company is the surviving
entity but in which the Company's stockholders immediately prior to such merger
do not hold (by virtue of their shares in the Company held immediately prior to
such transaction) securities of the Company representing more than fifty percent
(50%) of the total voting power of the Company immediately after such
transaction.
(b) In the event of any Corporate Transaction, any option,
restricted Stock or SAR shall vest in its entirety and become exercisable, or
with respect to restricted Stock, be released from restrictions on transfer and
repurchase rights, immediately prior to the specified effective date of the
Corporate Transaction unless assumed by the successor corporation or its parent
company, pursuant to options, restricted stock agreements or stock appreciation
rights providing substantially equal value and having substantially equivalent
provisions as the options, restricted Stock or SARs granted pursuant to this
Plan.
16. STOCKHOLDER APPROVAL. This Plan shall only become effective with
regard to Incentive Stock Options upon its approval by a majority of the
stockholders voting (in person or by proxy) at a stockholders' meeting held
within 12 months of the Board's adoption of the Plan. The Committee may grant
Incentive Stock Options under the Plan prior to the stockholders' meeting, but
until stockholder approval of the Plan is obtained, no Incentive Stock Option
shall be exercisable.
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VIATEL, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1997
Solicited on Behalf of the Board of Directors
The undersigned hereby authorizes Michael J. Mahoney and Sheldon M.
Goldman, and each of them individually, with power of substitution, to vote and
otherwise represent all of the shares of Common Stock of Viatel, Inc. (the
"Company"), held of record by the undersigned, at the Annual Meeting of
Stockholders of the Company to be held in Astor Room No. One at the Hotel
Intercontinental, 111 East 48th Street, New York, New York, on Wednesday, August
13, 1997 at 10:00 a.m., local time, and any adjournments or postponements
thereof, as indicated on the reverse side hereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated in each case, July 7, 1997. All other proxies heretofore
given by the undersigned to vote shares of the Company's Common Stock are
expressly revoked.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DESCRIBED ON THE
REVERSE HEREOF BY THE STOCKHOLDER. IF NOT OTEHRWISE DIRECTED, THIS PROXY WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES NOMINATED IN ITEM 1 AND FOR
THE PROPOSALS REFERRED TO ITEMS 2, 3 AND 4.
(Continued and to be signed and dated on the reverse side.)
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(The Board of Directors recommends a vote "FOR")
1. To elect two (2) Class A directors to the Board of Directors of Viatel, Inc.
to hold office until the 2000 Annual Meeting of Stockholders.
FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS
listed below --- for all nominees listed below ----- ------
Nominees: Allan L. Shaw and Antonio Carro
[INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.]
Exceptions ---------------------------------------------------------------------
2. The ratification of the appointment of KPMG Peat Marwick LLP, New York, New
York, as independent auditors for the Company for fiscal year 1997.
FOR ----- AGAINST ----- ABSTAIN -----
3. To approve an amendment to Viatel, Inc.'s Amended Stock Incentive Plan to
modify certain administrative provisions and to increase the number of shares
of the Company's Common Stock available for future grants.
FOR ----- AGAINST ----- ABSTAIN -----
4. At their discretion, the proxies are authorized to consider and vote upon
such other business as may properly come before the Meeting or any
adjournments or postponements thereof.
Change of Address and
or Comments Mark Here -----
Please sign exactly as your name appears
hereon. When signing in a discretionary
capacity, print your full title.
Dated: --------------------------------, 1997
---------------------------------------------
Signature
---------------------------------------------
Signature
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
Voting must be indicated
(x) in Black or Blue Ink -----
2
