<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Sections 240.14a-11(c) or Section
240.14a-12
APAC CUSTOMER SERVICES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per Unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
5) Total Fee paid:
*Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[APAC LOGO]
Six Parkway North Center
Deerfield, Illinois 60015
(847) 374-4980
Notice of Annual Meeting of Share Owners
June 9, 2000
To the Share Owners of
APAC Customer Services, Inc.:
The Annual Meeting of Share Owners of APAC Customer Services, Inc. will be
held at the Hilton Northbrook, 2855 North Milwaukee Avenue, Northbrook,
Illinois on Friday, June 9, 2000, at 10:00 a.m. Central Daylight Time for the
following purposes:
1. To elect seven directors.
2. To consider and act upon a proposal of the Board of Directors to
approve an increase in the annual limitation applicable to stock options
granted to a participant pursuant to the Company's Second Amended and
Restated 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 April 19, 2000 are
entitled to notice of, and to vote at, the Annual Meeting.
Even if you plan to attend the meeting in person, please read these proxy
materials and 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
[Signature]
Linda R. Witte
Secretary
May 1, 2000
<PAGE>
Apac Customer Services, Inc.
Six Parkway North Center
Deerfield, Illinois 60015
(847) 374-4980
----------------
Proxy Statement
Annual Meeting of Share Owners to be Held June 9, 2000
----------------
This Proxy Statement is being mailed to share owners of APAC Customer
Services, Inc. (the "Company") on or about May 1, 2000 in connection with the
solicitation of proxies by the Board of Directors for the Annual Meeting of
Share Owners to be held on June 9, 2000. The purpose of the Annual Meeting is
to consider and act 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 April 19, 2000, the record date for determining share
owners entitled to vote at the Annual Meeting, 48,497,889 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 direction. 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 for the election of directors, for the approval of the proposal to
increase the annual limitation applicable to stock options granted to a
participant pursuant to the Company's Second Amended and Restated 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 increase the annual limitation
applicable to stock options granted to a participant pursuant to the Company's
Second Amended and Restated 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 31, 2000,
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 on page 6), 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. 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)(5).............................. 19,798,000 40.8%
Chairman and Director
Trust Seven Hundred Thirty U/A/D 4/2/94 ("Trust 730")
(3)..................................................... 2,615,000 5.4
Trust Four Hundred Thirty U/A/D 4/2/94 ("Trust 430") (3). 2,615,000 5.4
M. Christine Schwartz (3)................................ 5,232,680 10.8
Merrill Lynch & Co., Inc. and Merrill Lynch Special Value
Fund, Inc. (4).......................................... 4,300,100 8.9
Donald B. Berryman (5)................................... 145,718 *
L. Clark Sisson (5)...................................... 80,000 *
Thomas M. Collins (5)(6)................................. 44,666 *
George D. Dalton (5)..................................... 85,666 *
Bradley T. Harslem....................................... 0 *
Peter M. Leger........................................... 5,000 *
Clark E. McLeod.......................................... 905,652 1.9
Mark O. Remissong (5).................................... 80,000 *
Marc S. Simon (5)(7)..................................... 611,634 1.2
Paul G. Yovovich (5)..................................... 114,332 *
All directors and executive officers as a group (16)
persons) (5)............................................ 21,807,428 44.0
</TABLE>
- --------
*less than 1%
(1) Percentage of beneficial ownership is based on 48,467,689 Common Shares
outstanding as of March 31, 2000.
(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) Robert H. Wicklein and John J. Abens serve as general trustees of Trust
730 and Trust 430. All decisions regarding the voting and disposition of
shares held by Trust 730 and Trust 430 must be made by both general
trustees. M. Christine Schwartz, who is married to Mr. Schwartz and serves
as a special trustee of the Trusts, has limited powers to remove the
general trustees but has no responsibilities or powers regarding the
voting or disposition of the shares owned by the Trusts and accordingly
disclaims beneficial ownership of such shares. The address of these share
owners is c/o TCS Group, 650 Dundee Road, Suite 450, Northbrook, Illinois
60062.
(4) Based solely upon information provided in Schedule 13G dated February 1,
2000. Merrill Lynch & Co., Inc. ("ML & Co.") is a parent holding company
whose indirectly-owned asset management subsidiaries Merrill Lynch Asset
Management L.P. and Fund Asset Management, L.P. hold Common Shares. ML &
Co.
2
<PAGE>
and Merrill Lynch Special Value Fund, Inc. ("MLSVF") share investment and
voting power as to the Common Shares beneficially owned by each, and each
disclaims beneficial ownership thereof. The address of ML & Co. is World
Financial Center, North Tower, 250 Vesey Street, New York, New York 10381,
and the address of MLSVF is 800 Scudders Mill Road, Plainsboro, New Jersey
08536.
(5) Includes Common Shares which may be acquired pursuant to options which are
exercisable within 60 days as follows: Mr. Schwartz (80,000 shares); Mr.
Berryman (145,558 shares); Mr. Sisson (60,000 shares); Mr. Collins (38,666
shares); Mr. Dalton (28,666 shares); Mr. Remissong (80,000 shares); Mr.
Simon (605,034 shares); Mr. Yovovich (89,332 shares); and all directors and
executive officers as a group (1,047,256 shares).
(6) Includes 3,000 Common Shares held in trust for the benefit of Mr. Collins'
family for which Mr. Collins is Co-Trustee and shares voting and investment
control.
(7) 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, seven directors, constituting the entire Board of
Directors, 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, each of whom is currently a member
of the 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
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Thomas M. Collins............... 72 Thomas M. Collins became a director of the
Company in August 1995. He is Of Counsel at
Shuttleworth & Ingersoll, P.C., a law firm
in Cedar Rapids, Iowa, for which Mr.
Collins served as Chairman for more than
five years and where he has practiced 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 USA
Incorporated, a telecommunications company.
George D. Dalton................ 72 George D. Dalton became a director of the
Company in July 1996. Mr. Dalton has been
Chairman of the Board of Fiserv, Inc.,
a provider of account processing and
integrated information management systems
for financial institutions, since its
founding in 1984. He was Chief Executive
Officer from 1984 until his retirement in
1999. Mr. Dalton also serves on the boards
of directors of ARI, Inc., Clark/Bardes,
Wisconsin Wireless, Industar and Fiduciary
Management.
Peter M. Leger.................. 49 Peter M. Leger joined the Company in
October 1999 as President and Chief
Operating Officer. In January 2000, Mr.
Leger was appointed the Company's Chief
Executive Officer. From October 1998
through
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
September 1999, Mr. Leger was President and
Chief Executive Officer of Credit
Management Solutions, Inc. Prior to October
1998, Mr. Leger served in various
capacities with Automatic Data Processing,
most recently as President of ADP Dealer
Services Group.
Clark E. McLeod................. 53 Clark E. McLeod has been a director of the
Company since March 28, 2000. Mr. McLeod
founded McLeod USA Incorporated, a
telecommunications company, and has served
as its Chairman of the Board and Chief
Executive Officer since its inception in
1991. Mr. McLeod also serves on the boards
of directors of Orillion Corporation and
Great America Leasing Inc.
Theodore G. Schwartz............ 46 Theodore G. Schwartz has served as the
Company's Chairman since its formation in
May 1973 and was also the Company's Chief
Executive Officer until January 2000.
Marc S. Simon................... 51 Marc S. Simon, who became an Executive Vice
President of the Company in October 1999,
previously served as the Company's
President beginning 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 seven years. Mr. Simon is a certified
public accountant.
Paul G. Yovovich................ 46 Paul G. Yovovich, who became a director of
the Company in July 1996, is a private
investor and a principal of Lake Capital
Management. From July 1996 through January
1997, the Company employed Mr. Yovovich as
a strategic advisor. From June 1993 to May
1996, Mr. Yovovich was President of Advance
Ross Corporation, a provider of value added
tax refund services. Mr. Yovovich serves on
the boards of 3Com Corporation, Lante
Corporation, Focal Communications, Comarco,
Inc. and American Media Operations, Inc.
</TABLE>
Meetings of the Board of Directors
The Board of Directors met twelve times during 1999. All directors attended
at least 75% of such meetings and meetings of Board committees on which they
served in 1999.
4
<PAGE>
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 Yovovich, recommends the appointment of independent auditors, reviews the
proposed scope of the annual audit and the adequacy and effectiveness of
accounting and financial controls, and reviews the annual and quarterly
financial statements with management and the independent auditors. The Audit
Committee is also responsible for reviewing the Company's accounting and
financial human resources and succession planning. The Audit Committee met
four times in 1999.
The Compensation Committee, which currently consists of Messrs. Collins and
Dalton, approves senior management compensation and oversees the Company's
equity compensation plans. The Compensation Committee is also responsible for
annually evaluating the performance of the Chairman and the Chief Executive
Officer. The Compensation Committee met five times in 1999 and periodically
took actions by unanimous written consent.
Director Compensation
In 1999, directors who were not employees or officers of the Company
received (i) options to purchase 20,000 Common Shares upon adjournment of the
Annual Meeting of Share Owners, (ii) options to purchase 1,000 Common Shares
for each regular or special board meeting attended in person (or 500 Common
Shares if such director participated in the meeting via telephone) and (iii)
an annual retainer of $12,000. In addition, Mr. Yovovich received options to
purchase 50,000 Common Shares, effective as of the date of the 1999 Annual
Meeting of Share Owners, related to additional special director services that
he provided to the Company. All options granted have an exercise price equal
to the fair market value of a Common Share on the date of grant. Directors
were also reimbursed for certain expenses in connection with attendance at
Board and Committee meetings. Other than with respect to reimbursement of
expenses, directors who are employees or officers of the Company did not
receive additional compensation for service as a director.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company by its chief executive
officer, four other executive officers who were serving as executive officers
at the end of fiscal 1999, and two additional individuals who served as
executive officers during fiscal 1999 but were not serving in that capacity at
fiscal year end (together, the "Named Executive Officers") during each of the
last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------------- ------------
Other Annual Securities All Other
Name and Principal Salary Bonus Compensation Underlying Compensation
Position Year ($) ($) ($) Options (#) ($)
- ------------------ ---- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Theodore G. Schwartz.... 1999 324,000 0 0 0 5,592(1)
Chairman 1998 324,000 0 0 200,000 4,322(1)
1997 312,000 0 0 0 3,054(1)
Peter M. Leger (2)...... 1999 122,308 300,000 0 1,100,000 161(3)
President and 1998 -- -- -- -- --
Chief Executive Officer 1997 -- -- -- -- --
Marc S. Simon........... 1999 500,000 0 5,000 0 1,152(3)
Executive Vice
President 1998 500,000 0 0 0 1,179(3)
1997 500,000 0 0 0 696(3)
Donald B. Berryman...... 1999 230,000 269,000 6,329 30,000 3,819(6)
Senior Vice President-- 1998 238,846 50,000 0 35,082(4) 3,002(6)
Sales & Marketing 1997 194,600 50,000 0 35,082(5) 2,974(6)
L. Clark Sisson (7)..... 1999 207,419 134,625 2,588 150,000 10,765(8)
Senior Vice President-- 1998 100,899 29,120 11,550 100,000 0
Customer Care Business
Unit 1997 -- -- -- -- --
Bradley T. Harslem (9).. 1999 204,484 8,000 0 220,000 72,751(10)
Senior Vice President 1998 96,371 172,500 3,022 100,000 72,647(10)
and Chief Information
Officer 1997 -- -- -- -- --
Mark O. Remissong (11).. 1999 193,124 0 0 0 100(12)
Senior Vice President 1998 52,884 0 0 0 17(12)
and Chief Financial
Officer 1997 -- -- -- -- --
</TABLE>
- --------
(1) For 1999, 1998 and 1997, represents $912, $932 and $534, respectively,
for group life insurance premiums paid by the Company and $4,680, $3,390
and $2,520, respectively, for contributions by the Company on behalf of
Mr. Schwartz to the Company's 401(k) plan.
(2) Mr. Leger joined the Company in October 1999.
(3) Represents group life insurance premiums paid by the Company.
(4) Includes only shares for which options were granted, or deemed granted
due to repricing, in 1997 which were repriced in 1998.
(5) Includes 656 shares for which options granted in 1996 were repriced in
1997. All shares shown were subsequently repriced in 1998 and are
reflected as grants in that year.
(6) For 1999, 1998 and 1997, represents $369, $348 and $171, respectively,
for group life insurance premiums paid by the Company and $3,450, $2,654
and $2,803, respectively, for contributions by the Company on behalf of
Mr. Berryman to the Company's 401(k) plan.
6
<PAGE>
(7) Mr. Sisson joined the Company in May 1998.
(8) Represents $179 with respect to group life insurance premiums and $10,586
in moving expenses paid by the Company.
(9) Mr. Harslem's employment initially commenced in May 1998 and terminated
in September 1998; his employment resumed in April 1999 and terminated in
November 1999.
(10) For 1999 and 1998, represents $447 and $0, respectively, for group life
insurance premiums paid by the Company and $72,751 and $72,647,
respectively, of severance payments.
(11) Mr. Remissong's employment commenced in October 1998 and terminated in
June 1999.
(12) For 1999 and 1998, represents $100 and $17, respectively, for group life
insurance premiums paid by the Company.
Option Grants in Last Fiscal Year
The following table sets forth the number of stock options granted to the
Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates of
Stock
Price Appreciation
for
Individual Grants Option Term (1)
-------------------------------------------------------- -------------------
Number of
Securities % of Total Options
Underlying Granted to Exercise or
Options Employees in Fiscal Base Price Expiration
Name Granted (#) Year (2) ($/Sh) Date 5% ($) 10% ($)
- ---- ----------- ------------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Theodore G. Schwartz.... -- -- -- -- -- --
Option Grants in Last Fiscal Year
Peter M. Leger.......... 1,100,000(3) 25.9% $3.59 9/21/09 2,483,505 6,293,689
Marc S. Simon........... -- -- -- -- -- --
Donald B. Berryman...... 30,000(3) * $2.98 8/3/09 56,223 142,481
L. Clark Sisson......... 150,000(3) 3.5% $3.00 4/7/09 283,003 717,184
Bradley T. Harslem...... 220,000(4) 5.2% $2.98 4/19/09 412,303 1,044,858
Mark O. Remissong....... -- -- -- -- -- --
</TABLE>
- --------
* Less than 1%.
(1) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years). It is calculated by assuming the
stock price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option
is exercised and the shares thereby acquired are sold on the last day of
the option term for the appreciated stock price.
(2) Based on options for a total of 4,241,271 Common Shares granted to
employees, including the Named Executive Officers, in 1999.
(3) Subject to acceleration in the event of certain employment terminations,
options are not exercisable during the first twelve months from the date
the options are granted, but thereafter become exercisable at the rate of
20% of the total shares subject to the option on and after the first day
of each anniversary of the date on which option was awarded, except in the
case of Mr. Leger's options, which become exercisable to the extent of 40%
of the total shares on October 1, 2001 and thereafter at the rate of 20%
of the total shares subject to the option on each October 1 through 2004.
The term of each option is 10 years.
(4) Options for a total of 220,000 shares held by Mr. Harslem were forfeited
in connection with the termination of his employment in November 1999.
7
<PAGE>
Aggregate Fiscal Year-End Option Values
The following table provides information regarding the exercisable and
unexercisable stock options held by the Named Executive Officers as of January
2, 2000, the last day of fiscal 1999. No Named Executive Officer exercised any
options in fiscal 1999.
Aggregate Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($) (1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Theodore G. Schwartz (2).... 40,000 160,000 0 0
Peter M. Leger (2).......... 0 1,100,000 0 $11,103,125
Marc S. Simon............... 482,028 133,006 $4,775,359 $1,193,829
Donald Berryman............. 145,558 84,494 $1,035,866 $683,539
L. Clark Sisson............. 20,000 230,000 $174,350 $2,300,525
Bradley T. Harslem (3)...... 44,000 0 $470,938 0
Mark O. Remissong (4)....... 80,000 0 $790,000 0
</TABLE>
- --------
(1) Value is calculated by subtracting the exercise price per share from the
fair market value at December 31, 1999, the last trading day in fiscal
1999, of $13.6875 per share, and multiplying by the number of shares
subject to the stock option.
(2) Exercise of an option for 100,000 shares in the case of Mr. Schwartz, and
1,000,000 shares in the case of Mr. Leger, is subject to share owner
approval as described elsewhere in this Proxy Statement.
(3) Options for a total of 220,000 shares held by Mr. Harslem were forfeited
in connection with the termination of his employment in November 1999.
(4) Options for a total of 320,000 shares held by Mr. Remissong were forfeited
in connection with the termination of his employment in June 1999.
However, the vesting of options for 80,000 shares was accelerated at his
termination date. These vested options remain exercisable until December
15, 2001.
Employment Agreements
In September 1999, the Company entered into an employment agreement with
Mr. Leger providing for payment of an annual base salary of $500,000 through
January 1, 2001, which will increase to $525,000 from and after January 2,
2001 through December 30, 2001, and to $550,000 from and after December 31,
2001 through December 31, 2002. Thereafter, Mr. Leger's base salary will be
reviewed at least annually by the Compensation Committee and may be increased
as it deems appropriate. Mr. Leger will be entitled to receive a bonus in the
amount of $575,000 for the period from the commencement of employment through
January 1, 2001, and thereafter will be eligible to receive an annual bonus
through the Company's Management Incentive Plan ("Management Incentive Plan").
Mr. Leger is also entitled to receive all employee benefits for which the
Chairman or any direct report to Mr. Leger is eligible under benefit plans
established by the Company for senior executive employees. Pursuant to the
employment agreement, the Company granted Mr. Leger options to purchase an
aggregate of 1,100,000 Common Shares. The options have a term of 10 years and
an exercise price of $3.59375 per share. Options for a total of 40% of the
shares covered thereby vest on October 1, 2001, and at the rate of 20% on each
October 1 thereafter through 2004. Exercise of the option for 1,000,000 of the
shares is subject to share owner approval as described elsewhere in this Proxy
Statement. The options vest to varying degrees on an accelerated basis upon
Mr. Leger's death or disability or if his employment agreement is terminated
without cause, for nonperformance, or for good reason after a change in
control. The agreement will
8
<PAGE>
terminate on any of the following events: (1) death or disability of Mr.
Leger; (2) the Company's election to terminate his employment without cause;
(3) the Company's election to terminate his employment for nonperformance, (4)
Mr. Leger's election to terminate his employment for good reason after a
change in control; and (5) the Company's election to terminate his employment
with cause. If the agreement terminates due to death or disability, the
Company has agreed to pay Mr. Leger his base salary as accrued through the
date of death or the date on which he is eligible to receive long-term
disability benefits under its long-term disability benefits plan, as
applicable, and certain bonus amounts. If Mr. Leger's employment is terminated
by the Company with cause, he will receive his base salary prorated through
the date of termination and accrued benefits; provided that if his employment
is terminated with cause prior to January 2, 2001, he will also be entitled to
receive certain bonus amounts. If Mr. Leger's employment is terminated by the
Company without cause, Mr. Leger will receive his base salary for a period of
one year, provided that if Mr. Leger is terminated without cause on or before
December 31, 2001, then he will receive his base salary due through December
31, 2002, a bonus equal to the prorated annual incentive bonus payable based
on actual performance during the year in which his employment terminated if
termination occurs after January 2, 2001, and accrued benefits. If Mr. Leger's
employment is terminated by the Company for nonperformance, Mr. Leger will
receive an amount equal to his base salary for one-half of the period
applicable to termination without cause, or if greater, for one year, and one-
half of the prorated annual incentive bonus payable based on actual
performance during the year in which his employment terminated, and accrued
benefits. If Mr. Leger terminates his employment for good reason after a
change in control, Mr. Leger will receive a lump sum payment equal to two
years' base salary and certain bonus amounts, and accrued benefits. The
agreement also contains non-competition and confidentiality commitments on the
part of Mr. Leger.
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 through the Management Incentive 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 will be
reduced by the amount of such excess. Pursuant to the employment agreement,
the Company granted Mr. Simon an option to purchase 565,034 Common Shares,
with a term of 10 years and an aggregate 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 the employment agreement for substantial reason. After
May 31, 2000, the agreement is terminable by either party on 30 days' notice.
Until May 31, 2000, the agreement will terminate for 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 Management Incentive 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 of
termination. If Mr. Simon terminates the agreement with substantial reason or
the Company terminates without cause, Mr. Simon will receive his salary, bonus
and additional payments up to the scheduled termination date of the agreement
(but not more than $500,000) and any amounts accrued and vested but not
covered by the bonus under the Management Incentive 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 to serve as an advisor and consultant to the Company for
approximately 10 hours per week. The agreement also contains non-competition
and confidentiality commitments on the part of Mr. Simon.
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,
which has been increased over the years to a base of $230,000 in 1999. Mr.
Berryman will be eligible to receive bonuses from the Company through the
Management
9
<PAGE>
Incentive Plan. The employment agreement terminates upon the occurrence 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 Management Incentive Plan. Mr. Berryman's agreement provides that 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 on the part of Mr. Berryman.
In December 1999, the Company entered into an employment and relocation
agreement with Mr. Sisson. This agreement provides for payment of a minimum
annual base salary of $270,000. Under the agreement Mr. Sisson is also
eligible to receive bonuses through the Management Incentive Plan. In
addition, the Company agreed to pay certain relocation costs to Mr. Sisson and
granted to Mr. Sisson options to purchase an additional 30,000 Common Shares.
In the event that Mr. Sisson's employment is terminated by the Company other
than for cause, Mr. Sisson will be entitled to receive severance payments
equal to 18 months base salary. The agreement also contains non-competition
and confidentiality commitments on the part of Mr. Sisson.
Separation Agreements
In November 1999, the Company entered into a separation agreement with Mr.
Harslem providing for the payment to him in installments of an aggregate of
$393,000 in separation payments. Mr. Harslem also agreed to serve as a part-
time consultant to the Company in connection with the transition of his duties
for a period of two months and was paid an aggregate of $21,230 for such
services.
In February 2000, the Company entered into a separation agreement with Mr.
Remissong pursuant to which the Company agreed to pay him in installments an
aggregate of $140,625. Under the terms of this agreement, stock options
previously granted to Mr. Remissong were forfeited, other than options
covering an aggregate of 80,000 shares that became vested at his termination
date in June 1999 and are to remain exercisable until December 15, 2001.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee
is composed of non-employee directors responsible for the oversight, approval
and reporting to the Board of Directors on all elements of compensation for
elected corporate officers. The Compensation Committee has furnished the
following report on executive compensation for fiscal year 1999.
The Compensation Committee recognizes that the industry sector in which the
Company operates is both highly competitive and volatile. To meet and exceed
these challenges, the Company has implemented new strategic initiatives to
restructure its existing operations and develop its e-based customer
relationship management business. In addition, the Compensation Committee
retained independent compensation consultants to provide objective and expert
advice in a review of the Company's executive compensation plans. This process
culminated in an executive compensation program that is intended to ensure the
recruitment, retention and motivation of high quality executives. The new
plans are being implemented for fiscal year 2000.
Compensation Philosophy
The executive compensation program provides a total compensation package
composed of base pay, annual performance-based cash incentives, and long-term
performance-based equity incentives, all of which are designed to provide
incentives to and reward executives for superior performance and the creation
of share owner value. The Compensation Committee believes that a pay-for-
performance culture based on accountability and linkage to business objectives
is critical for future business success.
10
<PAGE>
The practice of the Company is to target total compensation for the
Company's executives at above average levels. Specifically, the Company
targets a range between the 50th percentile and 75th percentile of total
compensation for similar positions at comparable companies.
Executive Compensation Components
The Company's executive compensation program consists of three key
components: base salary, annual incentives and long-term incentives. Each
component is set forth below.
Base Salary
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
Compensation Committee also takes into account individual experience and
performance.
Annual Incentives
Management Bonus Plan. In 1999, the Company utilized the Management Bonus
Plan, which was designed to motivate, recognize and reward outstanding company
and individual performance. Participation was provided to senior management as
well as other key employees. Performance and incentive awards were measured
and paid on a semi-annual basis. Plan funding was contingent on the
achievement of net profit objectives for the first half of the year, and gross
profit objectives tied to overall EPS for the second half of the year.
Individual performance objectives were established in accordance with the key
priorities of people, quality, performance and growth initiatives.
Management Incentive Plan. For fiscal year 2000, the Company has replaced
the Management Bonus Plan with the Management Incentive Plan. Incentive
opportunities are designed around a mix of corporate, business unit and
individual performance. All corporate and business unit targets are directly
linked to the Company's annual business and financial plan. Financial targets
are based on corporate revenue and EPS goals and business unit revenue and
operating profit goals. Individual performance is tied to the Company's annual
evaluation process emphasizing the individual's contribution to:
. Operating plan achievement
. Sales plan achievement
. Quality and client satisfaction
. Operational improvements
. Training and development
Executives are assigned a specific incentive opportunity based on their
position, responsibilities and contribution to the Company. Performance
measures and related goals are determined on an annual basis. This approach
creates a clear link to annual business objectives.
Long-Term Incentives
Incentive Stock Plan. In 1999, executive officers and other key employees
of the Company were eligible to participate in the Second Amended and Restated
1995 Incentive Stock Plan (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 were granted to executive
officers and key employees whom the Compensation Committee determined to be
responsible for the future growth and profitability of the Company. The
Compensation Committee established the number of shares covered by each grant
and the exercise price and vesting period for each grant. The Committee
granted stock options with five year vesting periods for each grant, creating
strong incentives for
11
<PAGE>
recipients of stock option grants to remain with the Company. The stock
options granted by the Compensation Committee 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.
For fiscal year 2000, the Company adopted a stock option program pursuant
to which executives will be eligible for annual grants based on their position
and individual performance and contribution to the Company. In this regard,
the Compensation Committee established discrete opportunities for managers
based on competitive industry practices. The new program reduces the vesting
period from a 5 year to a 4 year graded vesting term. In addition, the option
program now provides for partial stock option vesting upon a change in
control. The Committee believes that these changes and the new granting
approach are consistent with the Company's pay-for-performance culture and
ensure that an adequate opportunity level is provided to retain and motivate
executives and other key employees.
In 1999, the Compensation Committee granted a total of 4,241,271 options to
approximately 180 employees, some of whom are officers of the Company.
Severance Plan. In March 2000, the Company adopted a "double trigger"
severance plan in which its executive officers are eligible to participate in
the event of a change in control. The plan provides that following a change in
control, severance will be payable upon termination of the executive's
employment within one year after the change in control either by the Company
other than for cause or by the executive for good reason. In the case of
Senior Vice Presidents, severance is equal to eighteen months salary plus
target bonus.
Chief Executive Officer Compensation
The base salary of Mr. Schwartz, the Company's Chief Executive Officer in
1999, remained at $324,000 in 1998 and 1999. In fiscal year 1999, the Company
engaged independent consultants to review the competitiveness of Mr.
Schwartz's total direct compensation level to his peers at comparable
companies. According to the study, Mr. Schwartz's total cash compensation
level was in the lower third of competitive practice. Mr. Schwartz received no
bonus or stock options in 1999.
On October 1, 1999, Mr. Leger assumed the position of President and Chief
Operating Officer, and on January 12, 2000, Mr. Leger succeeded Mr. Schwartz
as the Chief Executive Officer of the Company, with Mr. Schwartz continuing in
the position of Chairman of the Company. All aspects of Mr. Leger's fiscal
year 1999 compensation were governed by his employment agreement, detailed
elsewhere in the proxy.
The Board of Directors approved Mr. Leger's employment agreement after an
extensive search had been conducted by the Board utilizing the resources of a
nationally recognized search firm. In determining the final compensation
amounts, the Board focused on the importance of hiring a Chief Executive
Officer with an outstanding business and leadership record. The Board reviewed
Mr. Leger's compensation package in comparison with the compensation packages
of CEOs at comparable companies.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to the company's Chief Executive Officer or any of the four other
most highly compensated executive officers. Qualifying performance-based
compensation is specifically exempt from the deduction limit. The Compensation
Committee does not believe that Section 162(m) will affect the deductibility
of compensation expected to be paid by the Company in the foreseeable future.
COMPENSATION COMMITTEE
George D. Dalton
Thomas M. Collins (commencing
February 2000)
Paul G. Yovovich (through February
2000)
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
During 1999, no company executive officer 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 a Company employee in 1999 and none
was formerly a Company officer.
CERTAIN TRANSACTIONS
Mr. Collins, a director of the Company, is of counsel at Shuttleworth &
Ingersoll, P.C., a law firm in Cedar Rapids which provided certain legal
services to the Company in fiscal 1999. In addition, the Company owns $250,000
in shares of 2001 Development Corporation, a community-oriented 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 and, as a result, Mr. Collins owns
no interest in 2001 Development Corporation.
The Company made payments for strategic management consulting services
totaling $38,044 in 1999 and $33,817 in 2000 to TCS Group, L.L.C. ("TCS"),
which is wholly owned by Mr. Schwartz and his wife. Steven A. Shlensky, who is
currently an executive officer of the Company, was an employee of TCS and was
paid a salary and incentive compensation by TCS based in part on the services
he provided to the Company. Management believes that the Company's payments to
TCS were reasonable in relation to the services provided by Mr. Shlensky.
13
<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 Common Shares began trading on the Nasdaq National Market,
and ending December 31, 1999, the last trading day in fiscal 1999, as compared
with the cumulative total return of the S&P 500 Index and a Peer Group Index.
The Peer Group consists of: Aegis 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 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.
<TABLE>
<CAPTION>
10/11/95 12/29/95 12/27/96 12/26/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
APAC Customer Services,
Inc.................... $100.00 $167.9 $364.8 $134.6 $ 38.1 $141.5
S&P 500................. $100.00 $106.7 $134.4 $169.5 $226.6 $274.1
Peer Group.............. $100.00 $138.0 $388.0 $241.8 $226.0 $360.4
</TABLE>
14
<PAGE>
PROPOSAL TO APPROVE AN INCREASE IN THE MAXIMUM NUMBER OF SHARES THAT MAY BE
SUBJECT TO OPTIONS GRANTED TO ANY ONE PARTICIPANT IN ANY CALENDAR YEAR UNDER
THE INCENTIVE STOCK PLAN
The Board of Directors has adopted the Incentive Stock Plan, which is the
result of the merger of the Company's Amended and Restated 1995 Non-Employee
Director Stock Option Plan (the "Director Plan") and the Company's Amended and
Restated 1995 Incentive Stock Plan (the "1995 Plan"). The Incentive Stock Plan
was adopted to attract and retain officers, directors and key employees, as
well as independent contractors providing consulting or advisory services, by
providing them opportunities to acquire Common Shares or to receive monetary
payments based on the market value of Common Shares.
The Incentive Stock Plan is administered by the Compensation Committee of
the Board of Directors and, with respect to the participation of non-employee
directors, may be administered by a committee consisting of members of the
Board of Directors who are Company employees. Including previously granted and
outstanding options, the Compensation Committee may make awards encompassing a
total of not more than 8,330,895 Common Shares, representing approximately
16.6% of the outstanding Common Shares at March 31, 2000. In addition, any
Common Shares subject to stock options or stock appreciation rights or issued
under such options or rights or as stock awards may be subject to new options,
rights or awards under the Incentive Stock Plan if such options or rights
lapse, expire or terminate prior to issuance of the shares or the payment of
the equivalent thereof or if Common Shares are issued under such options or
rights or such awards and are later reacquired by the Company. However, no
Common Shares attributable to the Director Plan may be subject to Incentive
Stock Options (as defined below). If there is any change in the capitalization
of the Company, such as a stock split or dividend, or a merger, consolidation
or reorganization with another company, or any other relevant change in the
capitalization of the Company, the Compensation Committee may make appropriate
adjustments in the number of Common Shares available for awards and the number
and/or reference price or fair market value of shares subject to outstanding
awards to prevent dilution or enlargement of rights.
The maximum number of Common Shares that may be subject to options granted
to any one participant in any calendar year under the 1995 Plan was 100,000
Common Shares. Under the Incentive Stock Plan, such maximum number of Common
Shares that may be subject to options granted has been increased, subject to
share owner approval, to 1,100,000 Common Shares. The Board of Directors
believes that the increase will allow the Company to compete more effectively
in attracting and retaining the executive talent it requires.
Only Company officers and key company employees, members of the Board of
Directors and independent contractors providing consulting or advisory
services are eligible to participate in the Incentive Stock Plan. There are
currently approximately four hundred officers and key employees and four non-
employee members of the Board of Directors eligible to receive awards under
the Incentive Stock Plan.
The following is a brief summary of the material features of the Incentive
Stock Plan. You are only being asked to approve the increase in the maximum
number of Common Shares that may be subject to options granted to any one
participant in any calendar year.
Awards under the Incentive Stock Plan may be granted in any one or a
combination of stock options, stock appreciation rights, stock awards,
performance shares and performance units. With certain limitations noted
below, the Compensation Committee may determine the participants to whom and
the time at which all of these types of awards are granted, the amount
granted, and the terms and conditions applicable to the awards.
15
<PAGE>
. Stock options awarded under the Incentive Stock Plan may be incentive
stock options within the meaning of the Internal Revenue Code
("Incentive Stock Options") or stock options which do not constitute
Incentive Stock Options ("Nonqualified Stock Options"). Stock options
have an exercise price determined by the Compensation Committee at the
date of grant. The exercise price for Incentive Stock Options must be no
less than the fair market value on the date of grant, and the exercise
price for Nonqualified Stock Options must be no less than 85% of the
fair market value on the date of grant. Stock options become exercisable
at such times and subject to such terms and conditions as may be
determined by the Compensation Committee, provided that certain options
automatically granted to directors each year may not be exercised during
the first year following the date of grant and thereafter may be
exercised only in accordance with the vesting schedule set forth in the
Incentive Stock Plan. Nonqualified Stock Options may expire no later
than 15 years from the date of grant and Incentive Stock Options may
expire no later than 10 years from the date of grant.
. A stock appreciation right entitles the holder to receive the
appreciation in the fair market value of the Common Shares subject
thereto up to the date the right is exercised.
. Stock awards consist of Common Shares transferred to participants, with
or without payment, as additional compensation for services to APAC
Customer Services, Inc.
. Performance shares consist of the right to receive Common Shares or cash
of an equivalent value at the end of a specified performance period.
. Performance units consist of the right to receive a fixed dollar amount,
payable in cash or Common Shares or a combination of both.
The Board of Directors reserves the right to amend or terminate the
Incentive Stock Plan at any time, subject to the rights of participants with
respect to any outstanding awards. Notwithstanding the foregoing, the
Incentive Stock Plan may not be amended without approval of the share owners
if such approval is required by law or regulatory authority.
The federal income tax consequences of the issuance and exercise of options
under the Incentive Stock Plan depend on the nature of the awards. No income
will be recognized by a participant at the time of the grant of Nonqualified
Options or Incentive Stock Options. On the exercise of a Nonqualified Option,
the amount by which the fair market value of the Common Shares on the date of
exercise exceeds the exercise price will be taxable to the participant as
ordinary compensation income. The subsequent disposition of shares acquired
upon exercise of a Nonqualified Option will ordinarily result in capital gain
or loss.
On the exercise of an Incentive Stock Option, the participant will not
recognize any income. However, for purposes of the alternative minimum tax the
exercise of an Incentive Stock Option will be treated as an exercise of a
Nonqualified Option. Accordingly, the exercise of an Incentive Stock Option
may result in an alternative minimum tax liability.
The disposition of shares acquired upon exercise of an Incentive Stock
Option will qualify for capital gains treatment if the shares are held until
two years after the date the option was granted and one year after the date of
exercise of the option. If the shares are disposed of before the completion of
either of these periods (a "disqualifying disposition"), the participant will
recognize ordinary income in the amount of the excess of the fair market value
of the Common Shares on the date the option was exercised over the 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.
On March 31, 2000, the last reported sales price of the Common Shares on
the Nasdaq National Market was $8.6875 per share. It is not possible to
determine the amount and type of awards that will be made under the Incentive
Stock Plan in the future, or to state the amount and type of awards which
would have been made in 1999 had the Incentive Stock Plan been in effect,
because such determinations are within the discretion of the
16
<PAGE>
Compensation Committee, based on such factors as it deems pertinent in
selecting participants and establishing awards. However, in September 1999,
the Company entered into an employment agreement with Peter M. Leger pursuant
to which it awarded Mr. Leger an option to purchase 1,100,000 Common Shares,
subject to share owner approval in the case of the option to purchase
1,000,000 of the Common Shares. In 1999, the Company awarded options to
purchase an aggregate of 1,412,500 Common Shares, subject to share owner
approval, to its executive officers, including Mr. Leger. A total of
approximately one hundred eighty employees received grants of options to
acquire a total of 4,241,271 Common Shares under the 1995 Plan in 1999 and
three non-employee directors received grants of options to acquire a total of
131,000 Common Shares under the Director Plan in 1999. It is currently
anticipated that approximately four hundred employees and four non-employee
directors will be eligible to receive awards under the Incentive Stock Plan in
2000.
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 increase in the number of Common Shares that may be
subject to options granted to any one participant in any calendar year from
100,000 to 1,100,000. Mr. Schwartz and the general trustees of Trust 730 and
Trust 430 have agreed to vote the Common Shares owned by each of them in favor
of the increase. As a result, the Company anticipates that share owner
approval of the proposed increase will be obtained.
The Board of Directors recommends a vote FOR approval of the proposed
increase in the number of Common Shares that may be subject to options granted
to any one participant in any calendar year under the Incentive Stock Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers, its directors, and persons who own more than ten
percent of the Company's outstanding stock report their beneficial ownership
and changes in their beneficial ownership of the Company's equity securities
by filing reports with the Securities and Exchange Commission. During 1999, to
the Company's knowledge, all Section 16(a) filing requirements applicable to
its officers, directors, and greater than ten percent beneficial owners were
complied with, except that Mr. Dalton and Mr. Holter each made a late filing
of a report required by Section 16(a) relating to a purchase of Common Shares.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's most recent Annual Report on Form 10-K filed with
the Securities and Exchange Commission accompanies this Proxy Statement.
Additional copies may be obtained by writing to APAC Customer Services, Inc.,
Six Parkway North Center, Deerfield, Illinois 60015, Attention: Treasurer.
ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent accountants for
fiscal 1999 and has been selected as the Company's independent accountants for
fiscal 2000. 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.
17
<PAGE>
PROPOSALS OF SHARE OWNERS
A share owner who intends to present a proposal at the 2001 Annual Meeting
and who wishes to have the proposal included in the Company's proxy statement
for that meeting must deliver the proposal to the Secretary. All proposals
must be received by the Secretary at the Company's principal executive office,
Six Parkway North Center, Deerfield, Illinois 60015, no later than January 1,
2001, and must satisfy the rules and regulations of the Securities and
Exchange Commission to be eligible for inclusion in the proxy statement for
that 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. To be timely, such notice must be delivered to the Secretary at
the Company's principal executive offices not less than 90 days or more than
120 days prior to the first anniversary of the date of the 2000 Annual
Meeting. However, if the date of the 2001 Annual Meeting is more than 30 days
before or 60 days after that anniversary date, the notice must be delivered to
the Secretary at the Company's principal executive office not more than 120
days prior to the 2001 Annual Meeting and not less than the later of 90 days
prior to the 2001 Annual Meeting or 10 days following the day on which the
Company first publicly announces the date of the 2001 Annual Meeting. The
notice must describe certain information regarding the nominee and the share
owner giving the notice, including information such as name, address,
occupation and shares held.
In order for a share owner to present a proposal that is a proper subject
for consideration at an Annual Meeting, even if the proposal is not submitted
by the deadline for inclusion in the proxy statement, notice must be given to
the Secretary in the manner and within the time limits described in the
preceding paragraph. The notice must include certain information regarding the
share owner giving the notice and a description of the proposed business.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors knows of no other business that may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual 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
[Signature]
Linda R. Witte
Secretary
Date: May 1, 2000
18
<PAGE>
PROXY PROXY
APAC CUSTOMER SERVICES, INC.
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHARE OWNERS - JUNE 9, 2000
The undersigned hereby appoints Theodore G. Schwartz and Peter M. Leger,
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 Customer Services, Inc. which the undersigned
has the power to vote, with all powers which the undersigned would possess if
personally present, at the annual meeting of share owners of APAC Customer
Services, Inc. to be held on June 9, 2000, or at any adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR the proposal to approve an increase in the annual
limitation applicable to stock options granted to a participant pursuant to the
APAC Customer Services, Inc. Second Amended and Restated 1995 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.)
<PAGE>
APAC CUSTOMER SERVICES, INC.
PLEASE MARK VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<CAPTION>
1. Election of Directors - For All Withhold All For All Except
<S> <C> <C> <C> <C>
Nominees: 01-Thomas M. Collins, 02-George D. Dalton, [_] [_] [_]
03-Peter M. Leger, 04-Clark E. McLeod,
05-Theodore G. Schwartz, 06-Marc S. Simon
and 07-Paul G. Yovovich
____________________________________________________
(Except Nominee(s) written above)
2. Approval of a proposal of the Board of Directors For Against Abstain
to increase the annual limitation applicable to [_] [_] [_]
stock options granted to a participant pursuant
to the APAC Customer Services, Inc. Second Amended
and Restated 1995 Incentive Stock Plan.
Dated:___________________, 2000
____________________________________________________________
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.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
