<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
APAC TELESERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(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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Notes:
<PAGE>
LOGO
APAC TELESERVICES, INC.
ONE PARKWAY NORTH CENTER
SUITE 510
DEERFIELD, ILLINOIS 60015
(847) 374-4980
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
MAY 19, 1998
To the Share Owners of
APAC TeleServices, Inc.:
The Annual Meeting of Share Owners of APAC TeleServices, Inc. will be held
at Harris Trust & Savings Bank, 111 West Monroe Street, Chicago, Illinois on
Tuesday, May 19, 1998, at 9:30 A.M. Central Daylight Time for the following
purposes:
1. To elect six directors.
2. To consider and act upon a proposal of the Board of Directors to
approve the reservation of an additional 4,400,000 Common Shares to be
available for issuance pursuant to the APAC TeleServices, Inc. 1995
Incentive Stock Plan.
3. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Share owners of record at the close of business on March 23, 1998, are
entitled to notice of, and to vote at, the Annual Meeting.
Whether or not you plan to attend the meeting, please date, sign and mail
the enclosed proxy in the envelope provided which requires no postage for
mailing in the United States. A prompt response is helpful, and your
cooperation will be appreciated.
By Order of the Board of Directors
/s/ William S. Lipsman
William S. Lipsman
Vice President, General Counsel and
Secretary
April 10, 1998
<PAGE>
LOGO
APAC TELESERVICES, INC.
ONE PARKWAY NORTH CENTER
SUITE 510
DEERFIELD, ILLINOIS 60015
(847) 374-4980
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHARE OWNERS TO BE HELD MAY 19, 1998
----------------
This Proxy Statement is being mailed to share owners of APAC TeleServices,
Inc. (the "Company") on or about April 10, 1998, and is furnished in
connection with the solicitation of proxies by the Board of Directors for the
Annual Meeting of Share Owners to be held on May 19, 1998, for the purpose of
considering and acting upon the matters specified in the Notice of Annual
Meeting of Share Owners accompanying this Proxy Statement.
Each share owner is entitled to one vote for each Common Share held as of
the record date. A majority of the outstanding shares entitled to vote at this
meeting and represented in person or by proxy will constitute a quorum. As of
the close of business on March 23, 1998, the record date for determining share
owners entitled to vote at the Annual Meeting, 48,993,647 Common Shares were
outstanding.
If the form of Proxy which accompanies this Proxy Statement is executed and
returned, it will be voted in accordance with your directions. A Proxy may be
revoked at any time prior to the voting thereof by written notice to the
Secretary of the Company. The affirmative vote of the holders of a majority of
the Common Shares entitled to vote and represented in person or by proxy at
the Annual Meeting is required in the election of directors, for the approval
of the proposal to reserve an additional 4,400,000 Common Shares to be
available for issuance pursuant to the APAC TeleServices, Inc. 1995 Incentive
Stock Plan, and for any other proposal submitted to a vote. Shares represented
by proxies which are marked "abstain" or to deny discretionary authority on
any matter will be treated as shares present and entitled to vote, which will
have the same effect as a vote against any such matters. Broker "non-votes"
will be treated as not represented at the meeting as to matters for which a
non-vote is indicated on the broker's proxy. Broker "non-votes" and the shares
as to which share owners abstain are included for purposes of determining
whether a quorum of shares is present at a meeting. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner. Broker non-votes will have no effect on the election of
directors or the proposal to reserve an additional 4,400,000 Common Shares to
be available for issuance pursuant to the APAC TeleServices, Inc. 1995
Incentive Stock Plan.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Certain officers of the Company may make solicitations in person or
by telephone.
<PAGE>
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL SHARE OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 23, 1998,
regarding the beneficial ownership of Common Shares by (i) each person known
by the Company to own beneficially more than 5% of its outstanding Common
Shares, (ii) each director and nominee, (iii) each Named Executive Officer (as
defined below), and (iv) all executive officers, directors and nominees as a
group. Except as otherwise indicated, the Company believes that the beneficial
owners of the Common Shares listed below, based on information provided by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Unless otherwise
indicated, the address of each of the share owners named below is the
Company's principal executive office.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
---------------------
NAME NUMBER PERCENT(1)
- ---- ---------- ----------
<S> <C> <C>
Theodore G. Schwartz (2)................................. 19,718,000 40.2%
Trust Seven Hundred Thirty U/A/D 4/2/94 (3).............. 2,615,000 5.3
Trust Four Hundred Thirty U/A/D 4/2/94 (4)............... 2,615,000 5.3
M. Christine Schwartz (3)(4)............................. 5,232,680 10.7
FMR Corp., et al (5)..................................... 5,385,600 11.0
The Capital Group Companies, Inc. (6).................... 3,844,200 7.8
Donald B. Berryman (7)................................... 55,648 *
Thomas M. Collins (7).................................... 16,333 *
George D. Dalton (7)..................................... 7,000 *
Morris R. Shechtman (7).................................. 22,145 *
Marc S. Simon (7)(8)..................................... 365,620 *
Paul G. Yovovich (7)..................................... 26,666 *
Allen A. Kalkstein (7)................................... 0 0
All directors and executive officers as a group (14
persons) (7)............................................ 20,280,505 41.0
</TABLE>
- --------
*less than 1%
(1) Percentage of beneficial ownership is based on 48,993,647 Common Shares
outstanding as of March 23, 1998.
(2) Includes 8,000 Common Shares held in trust for the benefit of certain
members of Mr. Schwartz's family for which Mr. Schwartz is trustee and has
voting and investment control.
(3) M. Christine Schwartz, Robert H. Wicklein and John J. Abens serve as
trustees of Trust Seven Hundred Thirty. All decisions regarding the voting
and disposition of shares held by Trust Seven Hundred Thirty must be made
by a majority of all trustees. The address of this share owner is c/o TCS
Group, LLC, 1200 Shermer Road, Suite 212, Northbrook, IL 60062.
(4) M. Christine Schwartz, Robert H. Wicklein and John J. Abens serve as
trustees of Trust Four Hundred Thirty. All decisions regarding the voting
and disposition of shares held by Trust Four Hundred Thirty must be made
by a majority of all trustees. The address of this share owner is c/o TCS
Group, LLC, 1200 Shermer Road, Suite 212, Northbrook, IL 60062.
(5) Based upon information provided in Schedule 13G dated February 14, 1998.
FMR Corp.'s address is 82 Devonshire Street, Boston, MA 02109.
(6) Based upon information provided in Schedule 13G dated February 10, 1998.
The Capital Group Companies, Inc. address is 333 South Hope Street, Los
Angeles, CA 90071.
2
<PAGE>
(7) Includes Common Shares which may be acquired pursuant to options which are
exercisable within 60 days as follows: Mr. Simon (359,020 shares); Mr.
Berryman (55,488 shares); Mr. Collins (13,333 shares); Mr. Shechtman
(10,000 shares); Mr.Dalton (5,000 shares); Mr. Yovovich (16,666 shares);
and all directors and executive officers as a group (516,819 shares).
(8) Includes 3,000 Common Shares held in trust for the benefit of Mr. Simon's
children for which Mr. Simon is Co-Trustee and shares voting and
investment control.
ELECTION OF DIRECTORS
At the Annual Meeting of Share Owners, six directors, constituting the
entire Board of Directors of the Company, are to be elected to serve until the
next annual meeting of share owners. It is intended that the proxies (except
proxies marked to the contrary) will be voted for the nominees listed below,
which nominees are members of the present Board of Directors. It is expected
that the nominees will serve, but if any nominee or nominees declines or is
unable to serve for any unforeseen cause, the proxies will be voted to fill
any vacancy so arising in accordance with the discretionary authority of the
persons named in the proxies.
The Board of Directors recommends a vote FOR the election of each of the
following nominees.
NOMINEES FOR ELECTION
The following table sets forth certain information with respect to the
nominees:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Theodore G. Schwartz.... 44 Theodore G. Schwartz has served as the Company's
Chairman and Chief Executive Officer since its
formation in May 1973.
Marc S. Simon........... 49 Marc S. Simon became President and Chief
Operating Officer of the Company in March 1998.
Mr. Simon joined the Company as Chief Financial
Officer in June 1995 and was elected as a
Director of the Company in August 1995. Prior to
joining the Company, Mr. Simon was a partner
practicing corporate and business law at the law
firm of Neal, Gerber & Eisenberg in Chicago,
Illinois for more than 7 years. Mr. Simon is a
certified public accountant.
Thomas M. Collins....... 70 Thomas M. Collins became a director of the
Company in August 1995. He has been Chairman of
Shuttleworth & Ingersoll, P.C., a law firm in
Cedar Rapids, Iowa, for more than five years and
has practiced with the firm for more than 40
years. Mr. Collins was Chairman of the Board of
Life Investors, Inc., a financial services
holding company, from 1980 to 1988. Mr. Collins
serves on the board of directors of McLeod,
Inc., a telecommunications company.
George D. Dalton........ 70 George D. Dalton became a director of the
Company in July 1996. Mr. Dalton has been
Chairman of the Board and Chief Executive
Officer of Fiserv, Inc., a provider of account
processing and integrated information management
systems for financial institutions, since its
founding in 1984. Mr. Dalton also serves on the
board of directors of ARI, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Morris R. Shechtman..... 55 Morris R. Shechtman became a director of the
Company in September 1995. In November 1996, the
Company purchased from Mr. Shechtman and his
wife all of the outstanding interests of The
Shechtman Group, LLC, a management consulting
firm of which Mr. Shechtman had been the Chief
Executive Officer and Managing Director from
January 1996 through November 1996. In
connection with such transaction, in November
1996, Mr. Shechtman became the Chairman of the
Company's Shechtman Institute. From December
1993 through December 1995, Mr. Shechtman was
the Managing Director of the Insite Institute, a
management consulting firm, and prior to joining
the Insite Institute, he was an independent
management consultant through his company,
Morris R. Shechtman & Associates Ltd.
Paul G. Yovovich........ 44 Paul G. Yovovich became a director of the
Company in July 1996. From July 1996 through
January 1997, Mr. Yovovich served as an employee
of the Company, assisting management in the
Company's strategic efforts. From June 1993 to
May 1996, Mr. Yovovich was President of Advance
Ross Corporation, which merged with CUC
International, Inc. in January 1996. Prior to
joining Advance Ross Corporation, Mr. Yovovich
was employed by Centel Corporation and was
President of Centel Corporation's Central
Telephone Company from January 1990 to December
1992. Mr. Yovovich serves on the boards of 3Com
Corporation, Comarco, Inc., May & Speh, Inc. and
Mastering, Inc.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met five times during 1997 and once took action by
unanimous written consent. All directors attended at least 75% of such
meetings and meetings of Board committees on which they served in 1997.
BOARD COMMITTEES
The Board of Directors has established two standing committees: the Audit
Committee and the Compensation Committee.
The Audit Committee, which currently consists of Messrs. Collins, Dalton and
Simon, recommends the appointment of auditors and oversees the accounting and
audit functions of the Company. The Audit Committee met twice in 1997.
The Compensation Committee, which currently consists of Messrs. Dalton and
Yovovich, determines executive officers' salaries and bonuses and administers
the 1995 Incentive Stock Plan and the Employee Stock Purchase Plan. The
Compensation Committee met twice in 1997 and periodically took actions by
unanimous written consent.
DIRECTOR COMPENSATION
Directors who are not employees or officers of the Company receive an annual
retainer of $12,000 and an option to purchase 5,000 Common Shares upon initial
election and annually upon each re-election as a director
4
<PAGE>
at the Company's annual meeting of share owners. These options have an
exercise price equal to the fair market value of a Common Share on the date of
grant. Directors may also be reimbursed for certain expenses in connection
with attendance at Board and committee meetings. Other than with respect to
reimbursement of expenses, directors who are employees or officers of the
Company do not receive additional compensation for service as a director.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company by the Company's chief
executive officer and four of the Company's other executive officers
(together, the "Named Executive Officers") during each of the last three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------
SECURITIES ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS (#) ($)
------------------ ---- -------- ------- ------------ ------------ ------------ ---
<S> <C> <C> <C> <C> <C> <C> <C>
Theodore G. Schwartz 1997 $312,000 0 0 0 $3,054(1)
Chairman and Chief Executive 1996 312,000 0 0 0 1,484
Officer 1995 312,000 0 0 0 2,170
Marc S. Simon(2) 1997 250,000 250,000 0 0 696(3)
President and Chief 1996 250,000 250,000 0 50,000 696
Operating 1995 139,423 140,000 0 565,034 174
Officer
Morris R. Shechtman(4) 1997 334,330 0 0 82,250(5) 2,565(3)
Chairman-- 1996 24,821 13,875 0 57,250(6) 136
Shechtman Institute 1995 0 0 0 0 0
Allen A. Kalkstein(7) 1997 201,923 87,500 0 511,740(8) 438(3)
Senior Vice President-- 1996 0 0 0 0 0
Information Technology 1995 0 0 0 0 0
Solutions
Donald B. Berryman 1997 194,600 50,000 0 34,426 2,974(9)
Senior Vice President-- 1996 175,000 0 100,447 656 1,115
Sales 1995 169,231 38,875 0 182,470 647
& Marketing
</TABLE>
- --------
(1) Represents $534 with respect to group life insurance premiums paid and
$2,520 contributed by the Company on behalf of Mr. Schwartz to the
Company's 401(k) plan in fiscal 1997.
(2) Mr. Simon joined the Company in May 1995.
(3) Represents group life insurance premiums paid.
(4) Mr. Shechtman became Chairman of the Company's Shechtman Institute in
November 1996.
(5) Includes an option to purchase 52,250 Common Shares which was granted to
Mr. Shechtman on May 20, 1997 in replacement of an option for the same
number of Common Shares which was canceled in the Company's May 1997
option repricing. See "Report on Repricing of Options."
(6) Includes an option to purchase 52,250 Common Shares which was canceled in
the Company's May 1997 option repricing. See "Report on Repricing of
Options."
(7) Mr. Kalkstein joined the Company in February 1997 and resigned from the
Company in February 1998.
(8) Includes an option to purchase 11,740 Common Shares which was awarded in
February 1998 pursuant to the Company's 1997 CPR Plan.
(9) Represents $171 with respect to group life insurance premiums paid and
$2,803 contributed by the Company on behalf of Mr. Berryman to the
Company's 401(k) plan in fiscal 1997.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the number of incentive stock options granted
to the Named Executive Officers during 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
------------------------------------------------ ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(2) ($/SH)(3) DATE 5% ($) 10% ($)
---- ---------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Theodore G. Schwartz.... -- -- -- -- -- --
Marc S. Simon........... -- -- -- -- -- --
Morris R. Schechtman.... 52,250(4) 3.23% $16.75 5/20/07 $1,245,589 $2,270,012
30,000(5) 1.86 16.75 5/20/07 818,520 1,303,356
Allen A. Kalkstein(6)... 500,000(7) 30.93 16.28 7/23/07 13,259,200 21,113,050
Donald Berryman......... 30,000(5) 1.86 12.66 10/28/07 618,600 985,200
4,426(8) * 16.75 1/15/07 120,759 192,288
</TABLE>
- --------
* Less than 1%.
(1) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming the
stock price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated
stock price.
(2) Based on 1,616,746 total options granted to employees, including the Named
Executive Officers, in 1997.
(3) The exercise price was equal to the estimated fair market value of the
Common Shares on the date of grant.
(4) Represents an option granted to Mr. Shechtman in replacement of an option
for the same number of Common Shares which was canceled in the Company's
May 1997 option repricing. See "Report on Repricing of Options." One-third
of these options vest on each of the third, fourth and fifth anniversaries
of the grant date. The term of the option is ten years.
(5) Options are not exercisable during the first twelve months from the date
the options are granted. Thereafter, the options become exercisable at the
rate of 20% of the total shares subject to the option on and after the
first day of each anniversary of the date on which option was awarded. The
term of the option is ten years.
(6) Mr. Kalkstein resigned from the Company in February 1998 and, as a result,
forfeited all of his stock options at such time.
(7) Options would have fully vested 9 1/2 years from the date of grant or
earlier if certain operational goals had been achieved. The term of the
option was ten years.
(8) Options vest immediately but are not exercisable during the first three
years from the date they are granted. The term of the option is ten years.
6
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information regarding stock option exercises in
fiscal 1997 and exercisable and unexercisable incentive stock options held by
the Named Executive Officers as of December 28, 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Theodore G. Schwartz.... 0 0 0 0 0 0
Marc S. Simon........... 0 0 236,013 379,021 $2,239,348 $3,359,037
Morris R. Shechtman..... 0 0 8,334 88,916 $ 33,543 $ 16,769
Allen A. Kalkstein (3).. 0 0 0 500,000 0 0
Donald Berryman......... 9,000 $290,795 55,488 144,564 $ 372,699 $ 746,613
</TABLE>
- --------
(1) Value is calculated by subtracting the exercise price per share from the
fair market value at December 26, 1997, the last trading day in fiscal
1997, of $13.03125 per share, and multiplying by the number of shares
subject to the stock option.
(2) Value is calculated by subtracting the exercise price per share from the
fair market value at the time of exercise and multiplying by the number of
shares exercised pursuant to the stock option.
(3) Mr. Kalkstein resigned from the Company in February 1998 and, as a result,
forfeited all of his stock options at such time.
REPORT ON REPRICING OF OPTIONS
During fiscal 1997 the Company's Board of Directors, on the recommendation
of the Compensation Committee, in order to preserve an economic incentive for
continued commitment to the Company's success, twice authorized the repricing
of certain of its outstanding options having an exercise price in excess of
the then current market value. The Board of Directors made the decisions to
reprice its options based on its belief that such repricings were necessary
and in the best interest of the Company and its share owners to retain key
personnel.
On January 15, 1997, the Board of Directors authorized the amendment of all
options then held by employees (including the named executive officers) having
an exercise price in excess of the then current market value to provide a new
exercise price of $32.25 per share, which was not less than the fair market
value of the Company's Common Shares on such date. Other than such change in
the exercise price, all other terms of the existing options remained the same.
No options granted to directors under the Company's 1995 Nonemployee Director
Stock Option Plan were repriced in the January 15, 1997 repricing.
On May 20, 1997, the Board of Directors authorized the repricing of all
options then held by employees (including the named executive officers, other
than Marc S. Simon) having an exercise price in excess of the then current
market value. With respect to employees holding the title of Vice President
and above (the "Senior Officers"), the repricing was effected as follows:
those options (the "CPR Options") granted pursuant to the Company's
Compensation, Performance, Responsibility Incentive Plan (the "CPR Plan") were
amended to provide a new exercise price of $16.75 per share, which was not
less than the fair market value of the Company's Common Shares on such date,
and to extend the vesting period from two years to three years. Those options
that were awarded to Senior Officers other than pursuant to the CPR Plan (the
"Non-CPR Options") were canceled and replaced with new options having the new
exercise price of $16.75 per share. In connection with this
7
<PAGE>
repricing of the Non-CPR Options awarded to Senior Officers, the Compensation
Committee delayed the vesting provisions of such options to provide that one-
third of the options would vest on each of the third, fourth and fifth
anniversaries of the new options' grant dates; the existing options had vested
at a rate of 20% per year beginning with the first anniversary of their grant
dates. Other than such changes in the exercise price and vesting provisions,
all other terms of the options held by the Senior Officers remained the same.
Options held by employees who were not Senior Officers on May 20, 1997 were
amended to provide a new exercise price of $16.75. Other than such change in
the exercise price, the terms, including the vesting provisions, of the
options held by such employees remained the same. No options granted to
directors under the Company's 1995 Nonemployee Director Stock Option Plan were
repriced in the May 20, 1997 repricing.
The following table contains information about adjustments to the exercise
prices of the outstanding options held by executive officers (including named
executive officers) since the Company's initial public offering of its Common
Shares on October 10, 1995. As described above, adjustments made on January
15, 1997 were made by amending the existing options to provide them with the
new exercise price. Adjustments made on May 20, 1997 to CPR Options held by
executive officers were made by amending the existing options and adjustments
made on May 20, 1997 to the Non-CPR Options held by executive officers were
made by cancelling the existing options and granting a new option with the new
exercise price and delayed vesting provisions described above.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE ORIGINAL
COMMON SHARES OF EXERCISE OPTION TERM
UNDERLYING COMMON SHARES PRICE NEW REMAINING
OPTIONS AT TIME OF AT TIME OF EXERCISE AT DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
---- ------- ------------- ------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Donald B. Berryman...... 1/15/97 656 $32.25 $36.00 $32.25 9 1/2 years
5/20/97 656 $16.75 $32.25 $16.75 9 years
5/20/97 4,426 $16.75 $32.25 $16.75 9 1/2 years
Kenneth G. Culver....... 1/15/97 729 $32.25 $36.00 $32.25 9 1/2 years
1/15/97 276 $32.25 $42.88 $32.25 9 3/4 years
5/20/97 729 $16.75 $32.25 $16.75 9 years
5/20/97 276 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 1,959 $16.75 $32.25 $16.75 9 1/2 years
John C. Dontje.......... 1/15/97 10,000 $32.25 $34.12 $32.25 9 1/4 years
1/15/97 20,000 $32.25 $42.88 $32.25 9 3/4 years
1/15/97 118 $32.25 $42.88 $32.25 9 3/4 years
5/20/97 10,000 $16.75 $32.25 $16.75 9 years
5/20/97 20,000 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 118 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 365 $16.75 $32.25 $16.75 9 1/2 years
Richard H. Kremer....... 5/20/97 46,350 $16.75 $32.25 $16.75 9 1/2 years
William S. Lipsman...... 1/15/97 319 $32.25 $34.81 $32.25 9 1/2 years
1/15/97 113 $32.25 $42.88 $32.25 9 3/4 years
1/15/97 1,000 $32.25 $42.88 $32.25 9 3/4 years
5/20/97 319 $16.75 $32.25 $16.75 9 years
5/20/97 113 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 372 $16.75 $32.25 $16.75 9 1/2 years
5/20/97 5,000 $16.75 $25.00 $16.75 9 3/4 years
5/20/97 1,000 $16.75 $32.25 $16.75 9 1/2 years
5/20/97 7,500 $16.75 $29.94 $16.75 9 3/4 years
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE ORIGINAL
COMMON SHARES OF EXERCISE OPTION TERM
UNDERLYING COMMON SHARES PRICE NEW REMAINING
OPTIONS AT TIME OF AT TIME OF EXERCISE AT DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
---- ------- ------------- ------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
James M. Nikrant........ 1/15/97 20,000 $32.25 $38.38 $32.25 9 1/2 years
1/15/97 594 $32.25 $36.00 $32.25 9 1/2 years
1/15/97 320 $32.25 $42.88 $32.25 9 3/4 years
1/15/97 20,000 $32.25 $42.88 $32.25 9 3/4 years
5/20/97 20,000 $16.75 $32.25 $16.75 9 years
5/20/97 594 $16.75 $32.25 $16.75 9 years
5/20/97 320 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 20,000 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 921 $16.75 $32.25 $16.75 9 1/2 years
Morris R. Shechtman..... 1/15/97 52,250 $32.25 $43.38 $32.25 9 3/4 years
5/20/97 52,250 $16.75 $32.25 $16.75 9 1/4 years
Philip B. Wade.......... 1/15/97 1,000 $32.25 $42.88 $32.25 9 3/4 years
1/15/97 231 $32.25 $34.81 $32.25 9 1/2 years
1/15/97 94 $32.25 $42.88 $32.25 9 3/4 years
5/20/97 1,000 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 4,400 $16.75 $32.25 $16.75 9 1/2 years
5/20/97 231 $16.75 $32.25 $16.75 9 years
5/20/97 94 $16.75 $32.25 $16.75 9 1/4 years
5/20/97 359 $16.75 $32.25 $16.75 9 1/2 years
</TABLE>
COMPENSATION COMMITTEE
George D. Dalton
Paul G. Yovovich
EMPLOYMENT AGREEMENTS
In May 1995, the Company entered into an employment agreement with Mr. Simon
providing for payment of an annual base salary of $250,000. Mr. Simon will be
eligible to receive bonuses from the Company through the Company's
Compensation, Performance, Responsibility Incentive Plan ("CPR Plan"). In
addition, Mr. Simon will receive an additional payment for each calendar year
during the term of the agreement equal to the excess, if any, of $500,000 over
Mr. Simon's salary plus bonus. If Mr. Simon's salary plus bonus in any given
year exceeds $500,000, the additional payment for the following year shall be
reduced by the amount of such excess. Upon his joining the Company in 1995,
the Company granted Mr. Simon an option to purchase 565,034 Common Shares.
This option has a term of 10 years and an exercise price of $1,764,705. The
option vests 20% on May 31 of each year from 1996 through 2000. If Mr. Simon
is terminated for cause or resigns without substantial reason, the unvested
portion of the option is forfeited. The option fully vests upon Mr. Simon's
death or disability or if his employment agreement is terminated without cause
or Mr. Simon terminates such agreement for substantial reason. In the event of
a sale of substantially all of the Company's assets or stock, Mr. Simon has
the right to sell this option back to the Company for an amount determined
with reference to the amount received in such sale. The agreement terminates
at the earlier of May 31, 2000 or any of the following events: (1) death or
disability of Mr. Simon; (2) mutual agreement, (3) the Company's election to
terminate for cause; (4) Mr. Simon's election to terminate for substantial
reason with 30 days notice; or (5) Mr. Simon's election to terminate without
substantial reason. If the agreement terminates due to death, disability or
mutual agreement, the Company has agreed to pay Mr. Simon his salary as
accrued through the termination date and any amounts accrued and vested with
respect to the CPR Plan. If Mr. Simon's employment is terminated for cause or
Mr. Simon elects to terminate without substantial reason, he will receive only
his salary up to the date
9
<PAGE>
of termination. If Mr. Simon terminates the agreement with substantial reason
or the Company terminates without cause, Mr. Simon shall receive his salary,
bonuses and execution payments up to the termination date and any amounts
accrued and vested, but not covered by the bonus under the CPR Plan. These
amounts will be paid in equal monthly installments, without interest, through
the scheduled termination date of the agreement. During such period, Mr. Simon
has agreed to assist the Company in transitioning his former responsibilities
to other employees and shall serve as an advisor and consultant to the Company
for approximately 10 hours per week. The agreement also contains non-
competition and confidentiality commitments.
In March 1994, the Company entered into an employment agreement with Mr.
Berryman providing for payment of a minimum annual base salary of $125,000.
Mr. Berryman will be eligible to receive bonuses from the Company through the
CPR Plan. The employment agreement terminates at the earlier of December 31,
1998 or any of the following events: (1) death or disability of Mr. Berryman;
(2) mutual agreement, (3) the Company's election to terminate for cause; or
(4) 60 days prior written notice by either party. If the agreement terminates
due to death, disability, mutual agreement or 60 days written notice by Mr.
Berryman, the Company has agreed to pay Mr. Berryman his salary as accrued
through the termination date and any amounts accrued and vested with respect
to the CPR Plan. If Mr. Berryman's employment is terminated with or without
cause, he will receive only his salary up to the date of termination. The
agreement also contains non-competition and confidentiality commitments.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW OF EXECUTIVE COMPENSATION POLICIES
The Compensation Committee administers the Company's executive officer
compensation program. The Compensation Committee has established the following
general principles in setting the compensation levels of the Company's
executive officers and in administering the APAC TeleServices, Inc. 1995
Incentive Stock Plan (the "Incentive Stock Plan"):
. Provide compensation levels and equity ownership opportunities through
the Incentive Stock Plan to attract and retain highly qualified
individuals.
. Set competitive base compensation levels and utilize performance based
incentive compensation to achieve total compensation targets.
. Establish performance goals which are aggressive and are aligned with the
Company's objectives regarding increasing growth in operating results and
share owner value.
. Use an incentive compensation system to recognize outstanding individual
contributions and overall Company performance which exceed annual goals.
. Grant stock options broadly across the organization so that all executive
officers and key employees are firmly aligned with the Company's share
owners' economic value.
The overall compensation of executive officers is made up of the
compensation components set forth below.
Base Salaries. Base salaries of executive officers are targeted to be
competitive relative to companies in the direct marketing, high technology and
high growth industries and other comparable companies. In determining
salaries, the Committee also takes into account individual experience and
performance.
Compensation, Performance, Responsibility Incentive Plan. In 1997 the
Company utilized a compensation, performance and responsibility (CPR) bonus
plan. Under the CPR Plan, the Committee established targets for short-term
objectives of the Company and delegated to management responsibility for
establishing consistent goals for individual executives. CPR incentive
payments may be in the form of either cash or stock options. Funding to
establish the pool of dollars used for CPR payments is based upon pre-tax
profit levels from the overall company, business and divisions. Performance is
assessed on both the individual and team levels, primarily on the basis of
business objectives achieved.
10
<PAGE>
Option Grants. Executive officers and other key employees of the Company are
eligible to participate in the Incentive Stock Plan. The purpose of the plan
is to attract highly qualified individuals and to provide them with incentive
to maximize share owner value by providing them with opportunities to acquire
Common Shares of the Company. Options are granted to executive officers and
key employees who the Compensation Committee, in its sole discretion,
determines to be responsible for the future growth and profitability of the
Company. The Compensation Committee establishes the number of shares covered
by each grant and the exercise price and vesting period for each grant. The
Committee typically grants stock options with five year vesting periods for
each grant, creating strong incentives for recipients of stock option grants
to remain with the Company. The stock options granted by the Compensation
Committee generally have an exercise price equal to the fair market value of
the Company's Common Shares on the date of grant, thus rewarding the recipient
only if the Company's Common Share price appreciates above the price on the
date of grant.
In addition to stock options granted to executive officers identified in the
table above, in 1997 the Compensation Committee granted a total of 1,616,746
additional options to 976 employees, some of whom are officers of the Company.
Option grants ranged from 250 options to 500,000 options for executive
officers and employees.
Section 162(m) of the Internal Revenue Code limits the deductibility, for
federal income tax purposes, of compensation paid to certain of the Company's
executive officers in excess of $1 million, unless certain conditions are met.
The Compensation Committee does not believe that Section 162(m) will effect
the deductibility of compensation expected to be paid by the Company in the
foreseeable future.
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary of Mr. Schwartz, the Company's Chief Executive Officer,
remained at $312,000 for the years 1995, 1996 and 1997. The Compensation
Committee believes that Mr. Schwartz's total cash compensation was
significantly below that of his peers at comparable companies. Because Mr.
Schwartz has a substantial equity position attributable to his role as founder
of the Company, he did not participate in the Company's CPR
Plan through 1997 and elected not to receive an award of stock options in 1997
in favor of increasing the options awarded to other managers and key
employees. Mr. Schwartz will participate in the 1998 CPR Plan and received an
award of stock options to purchase 200,000 Common Shares in 1998 at an
exercise price of $25.00 per share; the fair market value per share at the
date of grant was $14.77.
COMPENSATION COMMITTEE
George D. Dalton
Paul G. Yovovich
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Yovovich was an employee of the Company from July 1996 through January
1997. During 1997, no executive officer of the Company served on the board of
directors or compensation committee of any other corporation with respect to
which any member of the Compensation Committee was engaged as an executive
officer. No member of the Compensation Committee was formerly an officer of
the Company.
CERTAIN TRANSACTIONS
Mr. Collins, a director of the Company, is the Chairman of Shuttleworth &
Ingersoll, P.C., a law firm in Cedar Rapids which provided certain legal
services to the Company in fiscal 1997. In addition, in fiscal 1997, the
Company invested $250,000 in shares of 2001 Development Corporation, an
economic development company in Cedar Rapids, Iowa, of which Mr. Collins is
the President. Share ownership in 2001 Development Corporation is limited to
corporations doing business in Cedar Rapids, Iowa and, as a result, Mr.
Collins owns no interest in 2001 Development Corporation.
11
<PAGE>
TCS Group, L.L.C. ("TCS Group"), a limited liability company owned by Mr.
Schwartz, the Chairman and Chief Executive Officer of the Company, and his
spouse, has contractual rights to the use of various aircraft. TCS Group has
an agreement with the Company pursuant to which the Company may use such
aircraft for its business activities. The Company pays to TCS Group an amount
permitted under the federal aviation regulations as a reimbursement of amounts
which approximate a competitive bid. The total reimbursements for such
services in 1997 were $117,000. The Company believes that the terms of these
transactions were at least as favorable as those which could have been
obtained from unrelated parties.
The spouse of Morris R. Shechtman, the Chairman of the Company's Shechtman
Institute and a director of the Company, was employed by the Company in 1997
and received an aggregate of $101,315 and options exercisable into 2,500
Common Shares as compensation.
12
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total share
owner return on the Company's Common Shares for the period beginning October
11, 1995, the date the Company's Common Shares began trading on the Nasdaq
National Market, and ending December 31, 1997, as compared with the cumulative
total return of the S&P 500 Index and a Peer Group Index. The Peer Group
consists of: ATC Communications Group, Inc., ICT Group, Inc., National
Techteam, Inc., Precision Response Corp., RMH Teleservices Inc., Sitel Corp.,
Snyder Communications, Sykes Enterprises, Inc., Teletech Holdings, Inc.,
Telespectrum Worldwide, Inc. and West Teleservices Corp. The total share owner
return for each company in the Peer Group has been weighted according to the
company's stock market capitalization. This graph assumes an investment of
$100 on October 11, 1995 in each of the Company's Common Shares, the S&P 500
Index and the Peer Group Index, and assumes reinvestment of dividends, if any.
The stock price performance shown on the graph below is not necessarily
indicative of future stock price performance.
[Performance Graph Omitted]
<TABLE>
<CAPTION>
10/11/95 12/29/95 12/27/96 12/26/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
APAC Teleservices, Inc.................... $100.00 $167.9 $364.8 $134.6
S&P 500................................... $100.00 $106.7 $134.4 $169.5
Peer Group................................ $100.00 $138.0 $388.0 $241.8
</TABLE>
13
<PAGE>
PROPOSAL TO APPROVE THE RESERVATION OF AN
ADDITIONAL 4,400,000 COMMON SHARES
FOR ISSUANCE UNDER THE 1995 INCENTIVE STOCK PLAN
The Incentive Stock Plan was adopted by the Board of Directors in 1995 and
approved by the share owners in the same year. The purpose of the Incentive
Stock Plan is to attract, motivate and retain highly qualified persons as
officers and key employees of the Company. The total number of Common Shares
presently available for grant under the Incentive Stock Plan is 4,600,000. As
of March 23, 1998, options to purchase 3,420,640 Common Shares had been
granted (net of forfeitures and cancellations) under the Incentive Stock Plan.
The total number of outstanding Common Shares on March 23, 1998 was
48,993,647.
The Board of Directors has now amended the Incentive Stock Plan, subject to
share owner approval to increase the number of shares available for grants
under the Incentive Stock Plan to 9,000,000.
The increase in the number of Common Shares available for grants under the
Incentive Stock Plan will allow the Company to remain competitive with those
companies that offer stock incentives to attract and keep management
employees.
SUMMARY OF INCENTIVE STOCK PLAN
The purpose of Incentive Stock Plan is to enable the Company to provide
officers, key employees, consultants and advisors of the Company and its
subsidiaries with performance-based stock and cash incentive awards, thereby
attracting, retaining and rewarding such persons and strengthening the
mutuality of interest between such persons and the Company's share owners.
The Incentive Stock Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). Among the Committee's powers are the
authority to interpret the Incentive Stock Plan, establish rules and
regulations for its operation, select officers, other key employees,
consultants and advisors of the Company and its subsidiaries to receive
awards, and determine the form, amount and other terms and conditions of
awards.
Officers and key employees of, and independent contractors providing
consulting or advisory services to, the Company or its subsidiaries are
eligible to participate in the Incentive Stock Plan. The selection of
participants is within the discretion of the Committee. The estimated number
of employees and independent contractors who are eligible to participate in
the Incentive Stock Plan was approximately 675 at March 23, 1998.
The Incentive Stock Plan provides for the grant of any or all of the
following types of awards: (a) stock options, including nonqualified stock
options and incentive stock options; (b) stock appreciation rights ("SARs");
(c) stock awards; and (d) performance awards. Awards may be granted singly, in
combination, or in tandem as determined by the Committee.
Under the Incentive Stock Plan, the Committee may grant awards in the form
of nonqualified stock options or incentive stock options to purchase Common
Shares. The Committee, with regard to each stock option, determines the number
of shares subject to the option, the manner and time of the option's exercise
and vesting, and the exercise price per share of stock subject to the option;
provided, however, that no stock options shall be exercisable later than ten
years after the date they are granted. The aggregate fair market value at the
time of grant of Common Shares with respect to which incentive stock options
are exercisable for the first time by a participant during any calendar year
cannot be more than $100,000. The exercise price of an incentive stock option
will not be less than 100% of the fair market value of the Common Shares on
the date the option is granted. The option price may be paid by a participant
in cash or, in the discretion of the Committee, in Common Shares then owned by
the participant, or a combination thereof.
The Incentive Stock Plan authorizes the Committee to grant (i) an SAR,
either in tandem with a stock option or independent of a stock option (an SAR
is a right to receive a payment equal to the appreciation in market
14
<PAGE>
value of a stated number of Common Shares from the exercise price); (ii)
awards in the form of restricted or unrestricted Common Shares, subject to
such terms, conditions, restrictions, and/or limitations, if any, as the
Committee deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment; and (iii) awards in
the form of performance awards which consist of the right to receive Common
Shares or cash of equivalent value at the end of a specified period. The
Committee determines the terms and conditions of the performance awards.
The Incentive Stock Plan provides that awards shall not be transferable
otherwise than by law or by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee may permit the transferability of
an award to members of the participant's immediate family or trusts or family
partnerships for the benefit of such family members.
The Board of Directors reserves the right to amend, suspend or terminate the
Incentive Stock Plan at any time, subject to the rights of participants with
respect to any outstanding awards. Notwithstanding the foregoing, no amendment
to the Incentive Stock Plan shall be made without approval of share owners of
the Company if such approval is required by law or regulatory authority.
FEDERAL TAX TREATMENT
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the Incentive Stock Plan.
A participant who is granted a nonqualified stock option will not have
taxable income at the time of grant, but will have taxable income at the time
of exercise equal to the difference between the exercise price of the shares
and the market value of the shares on the date of exercise. The Company is
entitled to a tax deduction for the same amount.
A participant who is granted an incentive stock option does not recognize
any taxable income at the time of the grant or at the time of exercise.
Similarly, the Company is not entitled to any deduction at the time of grant
or at the time of exercise. However, for purposes of the alternative minimum
tax the exercise of an incentive stock option will be treated as an exercise
of a nonqualified stock option. Accordingly, the exercise of an incentive
stock option may result in an alternative minimum tax liability to a
participant. If the participant makes no disposition of the shares acquired
pursuant to an incentive stock option before the later of two years from the
date of grant and one year from the date of exercise, any gain or loss
realized on a subsequent disposition of the shares will be treated as a long-
term capital gain or loss. Under such circumstances, the Company will not be
entitled to any deduction for federal income tax purposes.
However, if the participant disposes of shares acquired upon exercise of an
incentive stock option within two years after the date of grant or one year
after the date of exercise of the option (a "disqualifying disposition"), the
participant will recognize ordinary compensation income in the amount of the
excess of the fair market value of the shares on the date of exercise over the
option exercise price (or, in certain circumstances, the gain on the sale, if
less). Any excess of the amount realized on the disqualifying disposition over
the fair market value of the shares on the date of exercise of the option will
generally be treated as capital gain. In the event of a disqualifying
disposition, the Company will be entitled to a deduction equal to the amount
of ordinary compensation income recognized by the participant.
The grant of an SAR will produce no U.S. federal tax consequences for the
participant or the Company. The exercise of an SAR results in taxable income
to the participant, equal to the difference between the exercise price of the
shares and the market price of the shares on the date of exercise, and a
corresponding tax deduction to the Company.
A participant who has been granted an award of restricted Common Shares will
not realize taxable income at the time of the grant, and the Company will not
be entitled to a tax deduction at the time of the grant, unless the
participant makes an election to be taxed at the time of the award. When the
restrictions lapse, the participant
15
<PAGE>
will recognize taxable income in an amount equal to the excess of the fair
market value of the shares at such time over the amount, if any, paid for such
shares. The Company will be entitled to a corresponding tax deduction.
The grant of an unrestricted stock award will produce immediate tax
consequences for both the participant and the Company. The participant will be
treated as having received taxable compensation in an amount equal to the then
fair market value of the Common Shares awarded. The Company will receive a
corresponding tax deduction.
On March 23, 1998, the Company granted to Mr. Schwartz, the Chairman and
Chief Executive Officer of the Company, an option to purchase an aggregate of
200,000 Common Shares pursuant to the Incentive Stock Plan. Such option has an
exercise price equal to $25.00 per share, expires after ten years and vests at
a rate of 20% per year, beginning on the first anniversary of the grant date.
The fair market value of the Common Shares on March 23, 1998 was $14.77. On
February 27, 1998, the Company granted to Mr. Kalkstein, then an executive
officer of the Company, an option to purchase an aggregate of 11,740 Common
Shares pursuant to the Incentive Stock Plan. Such option has an exercise price
equal to $14.91 per share (the fair market value of the Common Shares on the
date of grant) and expires after ten years; such option is fully vested but
must be held for two years prior to exercise. The Company has also granted to
its employees (other than executive officers) options to purchase an aggregate
of 319,716 Common Shares pursuant to the Incentive Stock Plan since the end of
fiscal 1997. On April 7, 1998 the last reported sales price of the Common
Shares on the Nasdaq National Market was $11.875 per share.
The affirmative vote of the holders of a majority of the Common Shares
entitled to vote and represented in person or by proxy at the Annual Meeting
is required to approve the proposal to reserve an additional 4,400,000 Common
Shares to be available for issuance pursuant to the APAC TeleServices, Inc.
1995 Incentive Stock Plan.
The Board of Directors recommends a vote FOR approval of the reservation of
an additional 4,400,000 Common Shares for issuance under the Incentive Stock
Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that certain of the Company's officers, its directors, and persons who own
more than ten percent of the Company's outstanding stock, file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. During 1997, to the knowledge of the Company, all Section 16(a)
filing requirements applicable to its officers, directors, and greater than
ten percent beneficial owners were complied with, except that: (i) the reports
filed on behalf of Mr. Shechtman did not report the receipt, in May 1997, by
his spouse (who was then an employee of the Company) of stock options
exercisable into 2,500 Common Shares pursuant to the Incentive Stock Plan,
(ii) the report on Form 4 for September 1997 filed on behalf of Mr. Shechtman
did not report Mr. Shechtman's receipt of an option for 52,250 Common Shares
on May 20, 1997, in replacement of an option for the same number of Common
Shares which was canceled pursuant to the repricing discussed herein, see
"Report on Repricing of Options," (iii) Mr. Shechtman did not report both his
and his spouse's disposition of 2,325 Common Shares each in October 1997, (iv)
Richard H. Kremer, an executive officer of the Company, did not report his
acquisition of 2,325 Common Shares in October 1997, and (v) Mr. Yovovich did
not report his receipt, in May 1997, of stock options exercisable into 10,000
Common Shares pursuant to the Company's 1995 Nonemployee Director Stock Plan.
ANNUAL REPORT; FORM 10-K
A copy of the Company's Annual Report to Share Owners for the fiscal year
ended December 28, 1997 accompanies this proxy statement. Additional copies of
the Annual Report to Share Owners or copies of the Company's Annual Report on
Form 10-K filed with the SEC may be obtained by writing to APAC TeleServices,
Inc., One Parkway North Center, Suite 510, Deerfield, Illinois 60015,
Attention: Secretary.
16
<PAGE>
ACCOUNTANTS
The firm of Arthur Andersen LLP was the Company's independent accountants
for fiscal 1997 and has been selected as independent accountants to audit the
books, records and accounts of the Company for 1998. Representatives of Arthur
Andersen LLP will be present at the Annual Meeting and will be available to
respond to appropriate questions and to make a statement if they desire to do
so.
PROPOSALS OF SECURITY HOLDERS
A share owner proposal to be presented at the 1999 Annual Meeting must be
received at the Company's executive offices, One Parkway North Center, Suite
510, Deerfield, Illinois 60015, by no later than December 11, 1998, for
evaluation as to inclusion in the Proxy Statement in connection with such
Meeting.
In order for a share owner to nominate a candidate for director, under the
Company's Bylaws timely notice of the nomination must be given in writing to
the Secretary of the Company. To be timely, such notice must be delivered or
mailed by first class United States mail, postage prepaid, to the Secretary at
the principal executive offices of the Company not less than sixty (60) days
nor more than ninety (90) days prior to the date of the annual meeting of
share owners or if the Company mails its notice and proxy to the share owners
less than sixty (60) days prior to the annual meeting, within ten (10) days
after the notice and proxy is mailed. Such notice must describe certain
information regarding the nominee and the share owner giving the notice,
including such information as name, address, occupation and shares held.
In order for a share owner to bring other business before a share owners
meeting, timely notice must be given to the Secretary of the Company within
the time limits described above. Such notice must include certain information
regarding the share owner giving the notice and a description of the proposed
business. These requirements are separate from and in addition to the
requirements a share owner must meet to have a proposal included in the
Company's proxy statement. Any share owner desiring a copy of the Company's
Bylaws will be furnished one upon written request to the Secretary.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company knows of no other business which may
come before the Annual Meeting. However, if any other matters are properly
presented to the Meeting, the persons named in the proxies will vote upon them
in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
/s/ William S. Lipsman
WILLIAM S. LIPSMAN
Vice President, General Counsel and
Secretary
Date: April 10, 1998
17
<PAGE>
APAC TELESERVICES, INC.
Proxy is Solicited on Behalf of the Board of Directors
For the Annual Meeting of Share Owners -- May 19, 1998
The undersigned appoints Theodore G. Schwartz and Marc S. Simon, and
each of them, as proxies, each with full power of substitution and revocation,
to represent and to vote, as designated on the reverse side hereof, all of the
Common Shares of APAC TeleServices, Inc. which the undersigned has power to
vote, with all powers which the undersigned would possess if personally present,
at the annual meeting of share owners of APAC TeleServices, Inc. to be held on
May 19, 1998, at Harris Trust & Savings Bank, 111 West Monroe Street, Chicago,
Illinois, or at any adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR approval of the reservation of an additional
4,400,000 Common Shares for issuance under the Incentive Stock Plan.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
Reverse Side:
APAC TeleServices, Inc.
Please Mark Vote in Oval in the Following Manner Using Dark Ink Only
1. Election of Directors -
Nominees: Theodore G. Schwartz, Marc S. Simon,
Thomas M. Collins, George D. Dalton,
Morris R. Shechtman and Paul G. Yovovich
For Withhold For all
all all (Except Nominee(s) written below)
[ ] [ ] [ ]
2. Approval of a proposal of the Board of Directors for the
reservation of an additional 4,400,000 Common Shares
to be available for issuance pursuant to the
APAC TeleServices, Inc. 1995 Stock Incentive Plan.
For Against Abstain
[ ] [ ] [ ]
Dated:
-----------------------------------------
Signature(s)
-----------------------------------------------
-----------------------------------------------------------
Please sign exactly as your name(s) appears hereon. Joint
owners should each sign personally. If signing in fiduciary
or representative capacity, give full title as such. If a
corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
