AMENDMENT NO. 1 TO SCHEDULE 14A PROXY STATEMENT ON
SCHEDULE 14C INFORMATION STATEMENT
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Information Statement
WESTELL TECHNOLOGIES, 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 14c-5(g) 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:
WESTELL TECHNOLOGIES, INC.
750 North Common Drive
Aurora, Illinois 60504
(800) 323-6883
March 24, 1998
TO THE STOCKHOLDERS:
Westell Technologies, Inc. will be taking the following actions:
1. Amending the Company's Amended and Restated Certificate of
Incorporation to increase the number of shares of Class A Common Stock,
authorized for issuance from 43,500,000 to 65,500,000.
2. Amending the Westell Technologies, Inc. 1995 Stock Incentive Plan to
increase the number of shares of Class A Common Stock available for grant
thereunder by 5,000,000 shares of Class A Common Stock.
The Company's Board believes that it is in the best interests of the
Company and its stockholders to have additional Class A Common Stock authorized
at this time both generally and under its Stock Plan to avoid the expense and
delay of holding a special meeting of stockholders if and when Westell elects to
issue shares of Class A Common Stock or options in excess of the shares
currently authorized and available.
The enclosed Information Statement is being provided to you in order to
comply with requirements of the Securities and Exchange Commission. I urge you
to read this Information Statement in its entirety, but you need not take any
other action. No vote will take place since all required stockholder approvals
have been obtained, and therefore there is no need to request a proxy.
Sincerely,
Stephen J. Hawrysz
Vice President, Secretary and
Chief Financial Officer
WE ARE NOT ASKING FOR A PROXY. THE ACTIONS HAVE BEEN APPROVED.
WESTELL TECHNOLOGIES, INC.
750 North Common Drive
Aurora, Illinois 60504
(800) 323-6883
___________
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
___________
This Information Statement ("Information Statement") of Westell
Technologies, Inc. (the "Company"), is being furnished by the Board of Directors
of the Company to notify the stockholders of the Company of the written consent
of the holders of a majority of the voting power of the Company, which was
executed and delivered on February 28, 1998 without a meeting of the
stockholders of the Company (the "Written Consent"). Pursuant to the Written
Consent, the holders of a majority of the voting power of the Company have
approved (i) an amendment (the "Charter Amendment") to the Company's Amended and
Restated Certificate of Incorporation increasing the authorized shares of Class
A Common Stock of the Company from 43,500,000 to 65,500,000 (the "Charter
Amendment"), (ii) the filing of the Charter Amendment with the Secretary of
State of the State of Delaware at least 20 calendar days after the delivery of
this Information Statement to the Company's stockholders, and (iii) an amendment
to the Westell Technologies, Inc. 1995 Stock Incentive Plan (the "Stock Plan")
to increase the number of shares of Class A Common Stock available for issuance
thereunder by 5,000,000, to a total of 7,688,050. The Company intends to
execute and file the Charter Amendment with the Secretary of State of the State
of Delaware on April 14, 1998, which is 20 calendar days after the date of
mailing this Information Statement to its stockholders. The Company anticipates
that the amendment to the Stock Plan will be effective on April 14, 1998.
This Information Statement is being mailed on or about March 24, 1998 to
holders of the Company's Class A Common Stock and Class B Common Stock on March
6, 1998 entitled to notice of the corporate actions described above. Pursuant
to the Company's Amended and Restated Certificate of Incorporation, holders of a
majority of all outstanding shares of Class A Common Stock and Class B Common
Stock, voting as a single class, may authorize any corporate action. Under the
Company's Amended and Restated Certificate of Incorporation, any corporate
action requiring stockholder approval may be taken without a meeting, without
prior notice and without a vote of stockholders, if stockholders holding the
necessary amount of voting power needed to approve such action at a meeting
consent to such corporate action in writing and notice is given to those
stockholders who are entitled to vote but who have not executed the written
consent.
Westell has two classes of capital stock: Class A Common Stock and Class B
Common Stock. The Class A Common Stock and the Class B Common Stock vote
together as a single class with Class A Common Stock having one vote per share
and Class B Common Stock having four votes per share, except with respect to
future issuances of Class B Common Stock and as otherwise provided by law. As
of February 27, 1998, 15,344,294 shares of Class A Common Stock were outstanding
(not including 2,620,259 shares issuable upon exercise of stock options or
otherwise currently available under the Stock Plan) and 21,030,857 shares of
Class B Common Stock were outstanding.
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
February 27, 1998 except as otherwise noted, of (i) each person (including any
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act")) known by the Company to own beneficially more than 5% of
its outstanding Common Stock, (ii) directors, (iii) each Named Executive
Officer, and (iv) all directors and executive officers as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Common Stock 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. Under Rule 13d-3 of the Exchange Act,
persons who have the power to vote or dispose of Common Stock of the Company,
either alone or jointly with others, are deemed to be beneficial owners of such
Common Stock.
STOCKHOLDERS, NUMBER OF NUMBER OF PERCENT OF
NAMED EXECUTIVE CLASS A CLASS B TOTAL VOTING
OFFICERS AND DIRECTORS SHARES (1) SHARES(2) POWER(3)
Robert C. Penny III . . . . . . . . . . . . . . . . -- 19,543,568 (4) 78.6%
Melvin J. Simon . . . . . . . . . . . . . . . . . . 3,333 19,755,856 (4)(5) 79.4%
Gary F. Seamans . . . . . . . . . . . . . . . . . . 150,644 (6) 1,275,001 5.3%
Robert H. Gaynor . . . . . . . . . . . . . . . . . 244,941 -- *
Curtis L. Benton . . . . . . . . . . . . . . . . . 666,474 -- *
Richard P. Riviere . . . . . . . . . . . . . . . . 2,400 -- *
J. William Nelson . . . . . . . . . . . . . . . . . 294,361 -- *
Robert D. Faw(7) . . . . . . . . . . . . . . . . . 64,144 -- *
Stefan D. Abrams . . . . . . . . . . . . . . . . . 127,293 -- *
Michael A. Brunner . . . . . . . . . . . . . . . . 58,833 -- *
Paul A. Dwyer . . . . . . . . . . . . . . . . . . . 53,746 -- *
John W. Seazholtz . . . . . . . . . . . . . . . . . 1,333 -- *
Ormand J. Wade . . . . . . . . . . . . . . . . . . 107,618 -- *
All directors and executive
officers as a group (15 persons) . . . . . . . . . 1,974,012 21,030,857 86.6%
* Less than 1%
(1) Includes options to purchase shares that are exercisable within 60 days of
February 27, 1998 as follows: Mr. Simon: 3,333 shares; Mr. Seamans: 45,000;
Mr. Gaynor: 3,333 shares; Mr. Benton: 4,000 shares; Mr. Riviere: 2,400
shares; Mr. Nelson: 18,000 shares; Mr. Abrams: 1,333 shares; Mr. Brunner;
1,333 shares; Mr. Dwyer: 53,746 shares; Mr. Seazholtz: 1,333 shares; Mr.
Wade: 1,333 shares; and all directors and executive officers as a group:
179,902 shares.
(2) Holders of Class B Common Stock have four votes per share and holders of
Class A Common Stock have one vote per share. Class A Common Stock is
freely transferable and Class B Common Stock is transferable only to
certain transferees but is convertible into Class A Common Stock on a
share-for-share basis.
(3) Percentage of beneficial ownership is based on 15,344,294 shares of Class
A Common Stock and 21,030,857 shares of Class B Common Stock outstanding as
of February 27, 1998.
(4) Includes 19,543,568 shares of Class B Common Stock held by Messrs. Penny
and Simon as Trustees pursuant to a Voting Trust Agreement dated
February 23, 1994, as amended (the "Voting Trust"), among Robert C. Penny
III and Melvin J. Simon, as trustees (the "Trustees"), and members of the
Penny family (as defined in the Voting Trust Agreement) and Simon family
(as defined in the Voting Trust Agreement). The Trustees have joint voting
and dispositive power over all shares in the Voting Trust. Messrs. Penny
and Simon each disclaim beneficial ownership with respect to all shares
held in the Voting Trust in which they do not have a pecuniary interest.
The Voting Trust contains 6,154,635 shares held for the benefit of Mr.
Penny's immediate family and 793,981 shares held for the benefit of Mr.
Simon's immediate family. The address for Messrs. Penny and Simon is
Melvin J. Simon & Associates, Ltd., 4343 Commerce Court, Suite 114, Lisle,
Illinois 60532.
(5) Includes 212,288 shares held in trust for the benefit of Shawn F. Seamans,
Gary F. Seaman's son, for which Mr. Simon is trustee and has sole voting
and dispositive power. Mr. Simon disclaims beneficial ownership of these
shares.
(6) Includes 105,644 shares held in trusts for the benefit of J. William
Nelson's children for which Mr. Seamans is trustee and has sole voting and
dispositive power. Mr. Seamans disclaims beneficial ownership of these
shares.
(7) Mr. Faw has resigned from the Company to pursue other business interests
effective December 20, 1997. Includes an option to purchase 8,000 shares
that are exercisable within 60 days of February 27, 1998.
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended
March 31, 1995, 1996 and 1997, with respect to all compensation paid or earned
for services rendered to the Company by the Company's Chief Executive Officer
and the Company's four other most highly compensated executive officers who were
serving as executive officers at March 31, 1997 (together, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND PRINCIPAL OTHER SECURITIES
POSITION ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS(1)(2) COMPENSATION(6)
YEAR ($) ($) ($) SHARES ($)
Gary F. Seamans(3) 1997 275,000 133,000 - 150,000 2,883
Chairman of the Board 1996 275,000 212,800 - - 5,136
and Chief Executive 1995 253,000 231,000 - - 3,205
Officer
Robert D. Faw(4) 1997 125,000 35,000 24,567 (5) 40,000 2,236
Chief Executive 1996 120,000 42,000 - - 1,845
Officer-Westell, Inc. 1995 105,000 67,500 - - 988
J. William Nelson 1997 160,000 49,000 27,116 (5) 40,000 2,284
President-Westell, 1996 152,000 69,600 - - 4,435
Inc. 1995 138,000 124,790 - - 2,707
Curtis L. Benton 1997 153,000 43,500 - 20,000 3,302
Executive Vice 1996 153,000 69,600 - - 6,454
President and Chief 1995 139,000 124,382 - - 3,162
Administration
Officer-Westell, Inc.
Richard P. Riviere 1997 126,000 91,683 - 12,000 1,969
Senior Vice President 1996 120,000 20,712 - - 2,802
of Transaction 1995 115,000 30,000 - - 2,184
Services and Chief
Executive Officer
Conference Plus, Inc.
(1) Stock options granted during fiscal 1997 were non-qualified stock options
of Class A Common Stock and were issued under the 1995 Stock Incentive
Plan.
(2) The Company did not issue restricted stock or SARs to any of the Named
Executive Officers in fiscal 1997. At March 31, 1997, restricted stock,
with a fair market value equal to $13.375 per share, was held by Mr. Faw
(36,250 shares of Class A Common Stock valued at $484,844). Mr. Faw
receives all dividends, if any, paid on such shares.
(3) Mr. Seamans is currently on a medical leave of absence from the Company.
(4) Mr. Faw resigned from the Company to pursue other business interests on
December 20, 1997.
(5) Includes promotional awards valued at $15,215 for both Mr. Faw and
Mr. Nelson and the related reimbursement for the tax gross-up of $9,109 and
$10,355 on the awards for Mr. Faw and Mr. Nelson, respectively.
(6) All Other Compensation for fiscal 1997 consists of matching contributions
under the Company's 401(k) Profit Sharing Plan and life insurance premiums,
as follows: Mr. Seamans: $2,100 and $783, respectively; Mr. Faw: $2,083
and $153, respectively; Mr. Nelson: $2,060 and $224, respectively;
Mr. Benton: $2,375 and $927, respectively; and Mr. Riviere: $1,814 and
$155, respectively.
The following table sets forth the number of stock options granted to the
Named Executive Officers during fiscal 1997 and information regarding stock
option exercises and exercisable and unexercisable stock options held by the
Named Executive Officers as of March 31, 1997. No options were exercised in
fiscal 1997.
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR AND FISCAL YEAR-END VALUES(1)
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
FOR OPTION TERM
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED(#) YEAR ($/SH)(2) DATE 5%($) 10%($)
Gary F. Seamans 150,000 14.3% 9.6875 10/22/06 869,668 2,179,660
Robert D. Faw 40,000 3.8% 9.6875 7/24/06 224,504 558,741
J. William Nelson 40,000 3.8% 9.6875 7/24/06 224,504 558,741
Curtis L. Benton 20,000 1.9% 9.6875 7/24/06 112,252 279,370
Richard P. Riviere 12,000 1.4% 9.6875 7/24/06 67,351 167,622
(1) At the end of fiscal 1997, none of the options granted had vested and
therefore none were exercisable during fiscal 1997. The value of
unexercised in-the-money stock options at March 31, 1997 that were
unexercisable with a fair market value equal to $13.375 held by Mr. Seamans
(150,000 shares valued at $2,006,250); Mr. Faw (40,000 shares valued at
$535,000); Mr. Nelson (40,000 shares valued at $535,000); Mr. Benton
(20,000 shares valued at $267,500) and Mr. Riviere (12,000 shares valued at
$160,000).
(2) All of the options listed in this table were repriced by the Company on
July 24, 1996 and March 12, 1997 to $21.625 and $9.6875, respectively. The
exercise prices listed in the table reflect the repricing of the options.
EMPLOYMENT AGREEMENTS
Pursuant to an agreement dated September 13, 1988 between the Company and
Richard Riviere, the Vice President of Transaction Services of the Company and
President of Conference Plus, Inc., a subsidiary of the Company ("Conference
Plus"), Mr. Riviere receives an annual base salary of not less than $75,000
during his employment with the Company. This agreement also provides Mr. Riviere
with a right of first refusal with respect to the Company's interest in
Conference Plus in the event the Company decides to sell such interest. In
addition, after his employment with the Company terminates, Mr. Riviere has
agreed not to compete with the Company for a period of two years.
DIRECTOR COMPENSATION
Directors who are not employees of the Company each receive $20,000 per
year for services rendered as directors, except Mr. Gaynor who receives $30,000
per year as Vice Chairman. In addition, all directors may be reimbursed for
certain expenses incurred in connection with attendance at Board and committee
meetings. Other than with respect to reimbursement of expenses, directors who
are employees of the Company do not receive additional compensation for service
as directors. In connection with his election as a director of the Westell,
Inc., a subsidiary of the Company, in November 1995, Mr. Dwyer was granted an
option to purchase 89,900 shares of Class A Common Stock at an exercise price of
$6.50 per share. Mr. Dwyer's options vest at a rate of 1,872 shares per month
commencing January 1, 1996. Mr. Simon also receives $1,250 each quarter for his
services as a director of Conference Plus, Inc., a subsidiary of the Company.
During fiscal 1998, Messrs. Gaynor and Simon were granted options to
purchase 50,000 shares of Class A Common Stock at an exercise price of $15.69
per share for their services as directors of Westell. On the same date, every
other director received an option to purchase 20,000 shares of Class A Common
Stock at an exercise price of $15.69 per share. All of these options vest
monthly in equal installments over a five year period commencing January 1998.
EXECUTIVE OFFICER AND BOARD MEMBER OPTION EXERCISES
There have been no options exercised by the executive officers or board
members for the period April 1, 1997 to February 27, 1998.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Wade (Chair),
Gaynor and Simon, the Assistant Secretary and Assistant Treasurer of the
Company. No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company, nor has any such interlocking relationship
existed in the past.
Since 1984, Melvin J. Simon & Associates, Ltd. has provided accounting and
other financial services to the Company. Mr. Simon, a director and the Assistant
Secretary and Assistant Treasurer of the Company and Co-Trustee of the Voting
Trust, is the sole owner of Melvin J. Simon & Associates, Ltd. The Company paid
Melvin J. Simon & Associates, Ltd. approximately $88,000, $64,000 and $44,000
in fiscal 1995, 1996 and 1997, respectively, for its services. The Company
believes that these services are provided on terms no less favorable to the
Company than could be obtained from unaffiliated parties.
The Company has granted Robert C. Penny III and Melvin J. Simon, as
Trustees of the Voting Trust, certain registration rights with respect to the
shares of Class B Common Stock held in the Voting Trust.
AMENDMENT OF THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED CLASS A COMMON STOCK
The Company's Board of Directors has approved an amendment to the Amended
and Restated Certificate of Incorporation of the Company to increase the number
of authorized shares of Class A Common Stock by 22,000,000 shares. Such
increase was approved by the written consent of the holders of a majority of the
voting power of the Company. Upon the effectiveness of the Charter Amendment,
the total number of authorized shares of Class A Common Stock would be
65,500,000.
Under the Company's current Amended and Restated Certificate of
Incorporation, the Company has the authority to issue 43,500,000 shares of Class
A Common Stock, 25,000,000 shares of Class B Common Stock and 1,000,000 shares
of Preferred Stock. At February 27, 1998, 15,344,294 shares of Class A Common
Stock were issued and outstanding, 21,030,856 shares of Class B Common Stock
were outstanding and no shares of Preferred Stock were outstanding.
Accordingly, as of February 27, 1998, after taking into account the shares
reserved for issuance under the Company's Stock Plans and the Company s Employee
Stock Purchase Plan, or upon the exercise of outstanding options issued by the
Company or upon conversion of shares of Class B Common Stock, there remained
approximately 4,318,000 shares of Class A Common Stock available for issuance.
Once the Charter Amendment is filed with the Secretary of State of the State of
Delaware (and the amendment to the Stock Plan is effective increasing the shares
available for issuance under the Stock Plan by 5,000,000), then Westell would
have approximately 21,318,000 shares of Class A Common Stock available for
issuance.
Westell stockholders have no preemptive rights with respect to Westell
capital stock. Accordingly, the Class A Common Stock authorized pursuant to the
Charter Amendment may be issued without further stockholder approval.
Except for the "shelf" registration statement described below, the Company
has no present plans, agreements or understandings regarding the issuance of any
additional shares of Class A Common Stock. The Board of Directors believes that
adoption of the Charter Amendment is advisable because it will provide the
Company with needed flexibility in connection with possible future financing
transactions, acquisitions of other companies or business properties, stock
splits, employee benefit plans and other corporate purposes. While the issuance
of additional shares of Class A Common Stock may dilute the ownership interest
of a person seeking to obtain control of the Company, and thus discourage a
change in control of the Company by making it more difficult or costly, the
Company is not aware of anyone seeking to accumulate Class A Common Stock for
such purpose and has no present intention of using any additional Class A Common
Stock to deter a change in control. Except as otherwise required by applicable
law or the rules of the National Association of Securities Dealers, Inc.,
authorized but unissued shares of Class A Common Stock may be issued at such
time, for such purposes, and for such consideration as the Board of Directors
may determine to be appropriate, without further authorization by the
stockholders.
In order to raise additional capital, the Company has filed a "shelf"
registration statement covering debt and equity securities having an aggregate
maximum offering price of $300 million. Under this registration statement, the
Company may issue and sell Class A Common Stock or debt or preferred stock that
is convertible into Class A Common Stock (the "Convertible Securities"). The
terms on which Convertible Securities might be issued are not currently known.
Moreover, at the date of this Information Statement, Westell has not decided
whether it will commence any offering of debt or equity. There can be no
assurance that Westell will commence an offering using securities registered
under the shelf registration statement once the Charter Amendment is filed. Due
to the limited number of shares of Class A Common Stock available for issuance
under the existing Amended and Restated Certificate of Incorporation of the
Company, an increase in the number of authorized shares of Class A Common Stock
is necessary to permit the Company to be able to issue equity or Convertible
Securities under the shelf registration statement.
The issuance of the additional authorized Class A Common Stock will have a
substantial dilutive effect on the present stockholders of the Company. The
issuance of the additional Class A Common Stock will reduce the voting power of
Messrs. Penny and Simon, the co-trustees of the Westell Voting Trust, who
currently control over 75% of Westell's voting power. Upon the issuance of all
additional authorized Class A Common Stock, Messrs. Penny and Simon would
control over 65% of Westell's voting power. The issuance of additional shares
may also adversely affect the market price of the Class A Common Stock. In
addition, if Westell issues Convertible Securities, it would create a class of
security holders with rights senior to the rights of the Company's Common
stockholders.
Westell has no present intention to use the increased authorized Class A
Common Stock for anti-takeover purposes. The Charter Amendment is not intended
to have any anti-takeover effect and is not part of any series of anti-takeover
measures contained in the Amended and Restated Certificate of Incorporation or
the Bylaws as in effect on the date hereof. However, the issuance of the
additional Class A Common Stock would increase the number of shares necessary to
acquire control of the Board or necessary to meet the voting requirements
imposed by Delaware law with respect to a merger or other business combination
involving the Company.
The Amended and Restated Certificate of Incorporation and the Bylaws
currently provide several mechanisms whereby the Company's Board could resist a
takeover attempt not considered in the best interests of stockholders. The
Company's Board has the authority to issue up to 1,000,000 shares of Preferred
Stock and to determine the relative preferences, limitations and relative rights
of those shares with respect to dividends, redemption, payments on liquidation,
sinking fund provisions, conversion privileges and voting rights without any
further vote or action by the stockholders. The rights of the holders of Class
A Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future. While
Westell has no present intention to issue shares of Preferred Stock, any such
issuance could have the effect of making it more difficult for a third party to
acquire control of Westell. In addition, Westell is subject to the anti-
takeover provisions of Section 203 of the Delaware General Corporation Law,
which could have the effect of delaying or preventing a change of control of
Westell. Furthermore, certain provisions of the Amended and Restated
Certificate of Incorporation and the Bylaws may individually or collectively
have the effect of delaying or preventing changes in control or management of
Westell and could have a depressive effect on the market price of Class A Common
Stock. For example, the Amended and Restated Certificate of Incorporation and
the Bylaws contain provisions that limit the right of stockholders to call
special stockholder meetings and require that stockholders follow an advance
notification procedure for certain stockholder nominations of candidates to the
Board and for new business to be conducted at stockholders meetings.
The Charter Amendment increasing the number of authorized shares of Class A
Common Stock will be filed with the Secretary of State of the State of Delaware
on or about April 14, 1998 (twenty calendar days following the date of this
Information Statement).
APPROVAL OF AMENDMENT TO THE WESTELL TECHNOLOGIES, INC.
1995 STOCK INCENTIVE PLAN
GENERAL
The Board of Directors of the Company has approved an amendment to the
Westell Technologies, Inc. Stock Incentive Plan which increases the number of
shares of Class A Common Stock authorized for issuance pursuant to the Stock
Plan. Such amendment was approved by the written consent of the holders of a
majority of the voting power of the Company. The Stock Plan, as originally
adopted and approved by stockholders, provided that options to acquire an
aggregate of 2,688,050 shares of Class A Common Stock may be granted. The Board
of Directors has amended the Stock Plan to provide for the issuance of options
to acquire an additional 5,000,000 shares of Class A Common Stock (for an
aggregate of 7,688,050 shares of Class A Common Stock). As of February 27,
1998, options to purchase 2,730,100 shares of Class A Common Stock have been
granted (net of cancellations) under the Stock Plan.
The Board of Directors believes that the Company's continued success
depends upon its ability to attract and retain highly competent persons as
officers and key employees. The Board of Directors believes that one of the
best ways to attain these objectives is to give officers and key employees an
opportunity to acquire a proprietary interest in the Company by purchasing
shares of Class A Common Stock through the exercise of options granted under the
Stock Plan.
Approval of the amendment required the affirmative vote of a majority of
the shares of Class A and Class B Common Stock outstanding and entitled to vote
at a meeting of stockholders.
SUMMARY OF STOCK PLAN
The purpose of Stock Plan is to enable the Company to provide officers,
employees, and non-employee directors of the Company and its subsidiaries with
performance-based equity and monetary incentives, thereby attracting, retaining
and rewarding such persons and strengthening the mutuality of interest between
such persons and the Company's stockholders.
The Stock Plan currently makes available for awards 2,688,050 shares of
Class A Common Stock. The maximum number of shares which currently may be
awarded to any participant in any year during the term of the Stock Plan is
500,000 shares. If there is a lapse, cancellation, expiration or termination
of any option prior to the issuance of shares, or if shares are issued and
thereafter are reacquired by the Company pursuant to rights reserved upon
issuance thereof, those shares may again be used for new awards under the Stock
Plan.
The 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 Stock Plan, establish rules and regulations for its operation,
select officers and other key employees of the Company and its subsidiaries to
receive awards, and determine the form, amount and other terms and conditions of
awards.
Officers, employees and non-employee directors of the Company or any of its
subsidiaries are eligible to participate in the Stock Plan. The selection of
participants is within the discretion of the Committee. The estimated number of
employees and non-employee directors who are eligible to participate in the
Stock Plan is approximately 820 at February 27, 1998.
The Stock Plan provides for the grant of any or all of the following types
of awards: (a) stock options, including incentive stock options and
nonqualified 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 Stock Plan, the Committee may grant awards in the form of
incentive stock options or nonqualified stock options to purchase shares of the
Class A Common Stock. 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 shares of Class A Common Stock 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 Class A Common Stock on the date the option is granted. The
exercise price of a nonqualified stock option will not be less than 85% of the
fair market value of the Class A Common Stock 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 shares of Class A Common Stock then owned by the participant,
or a combination thereof.
The Stock Plan authorizes the Committee to grant 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 value of a stated number
of shares of Class A Common Stock from the exercise price. If issued in tandem
with a stock option such appreciation is measured from not less than the option
price and in the case of a SAR issued independently of any stock option, such
appreciation is measured from not less than the fair market value of the Class A
Common Stock on the date the right is granted. No SAR may be exercisable
earlier than six months after the date of grant and shall expire at the earlier
of the date the related stock option expires or ten years after the SAR was
granted.
The Stock Plan authorizes the Committee to grant awards in the form of
restricted or unrestricted shares of Class A Common Stock. Such awards are
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.
The Stock Plan authorizes the Committee to grant awards in the form of
performance awards which consist of the right to receive Class A Common Stock or
cash of equivalent value at the end of a specified period. The Committee
determines the terms and conditions of the performance units.
The 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 Stock Plan at any time, subject to the rights of participants with respect
to any outstanding awards. Notwithstanding the foregoing, no amendment to the
Stock Plan shall, without approval of stockholders of the Company, (i)
materially modify the requirement as to eligibility for awards under the Stock
Plan, or (ii) result in the Stock Plan failing to comply with Section 16(b) of
the Exchange Act and the rules and regulations thereunder.
The Stock Plan contains provisions for equitable adjustment of awards in
the event of a merger, consolidation or reorganization, or issuance of shares by
the Company without new consideration or a change of control.
FEDERAL TAX TREATMENT
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the Stock Plan.
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.
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.
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 shares of Class A
Common Stock 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 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 Class A Common Stock awarded. The Company will receive
a corresponding tax deduction.
OPTIONS UNDER THE STOCK PLAN
The following table sets forth options granted in the aggregate, net of
cancellations, under the Stock Plan from March 31, 1997 to February 27, 1998 to
(i) the Named Executive Officers, (ii) all executive officers as a group, (iii)
all non-employee directors and (iv) all employees, including all current
officers who are not executive officers, as a group.
STOCK PLAN(1)
NAME AND POSITION NUMBER OF
SHARES
UNDERLYING
OPTIONS
GRANTED
Gary F. Seamans . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Robert D. Faw . . . . . . . . . . . . . . . . . . . . . . . . . 0
J. William Nelson . . . . . . . . . . . . . . . . . . . . . . . . . 210,000
Curtis L. Benton . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Richard P. Riviere . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
All executive officers as a
group (6 persons) . . . . . . . . . . . . . . . . . . . . . . . . . 867,000
All current directors who are
not executive officers as a
group (7 persons) . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
All employees who are not
Executive officers as a group . . . . . . . . . . . . . . . . . . . 555,450
_________________
(1) All options to purchase Class A Common Stock were issued at 100% of their
fair market value on the date of grant and expire ten years from the date of
grant. See "Executive Compensation."
On March 19, 1998 the last reported sales price of the Class A Common Stock
on the Nasdaq National Market was $13 1/2 per share.