SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or
Section 240.14a-12
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 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------
PRELIMINARY
WESTELL TECHNOLOGIES, INC.
750 NORTH COMMONS DRIVE
AURORA, ILLINOIS 60504
(630) 898-2500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 25, 2001
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Westell Technologies, Inc., a
Delaware corporation (the "Company"), will be held at the Company's Corporate
Headquarters, 750 North Commons Drive, Aurora, Illinois on, Thursday, October
25, 2001 at 10:00 a.m. Central Daylight Time for the following purposes:
1. To elect seven directors;
2. To approve an amendment to the Company's charter to increase the
authorized shares of Class A Common Stock from 85,000,000 to 109,000,000; and
3. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 17,
2001 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting.
By Order of the Board of Directors
Nicholas C. Hindman, Sr.
Vice President and Chief Financial Officer
October 1, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE FOR MAILING IN
THE UNITED STATES. A PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION WILL BE
APPRECIATED.
WESTELL TECHNOLOGIES, INC.
750 NORTH COMMONS DRIVE
AURORA, ILLINOIS 60504
-----------
Proxy Statement
Annual Meeting of Stockholders to be held October 25, 2001
-----------
To the Stockholders of
WESTELL TECHNOLOGIES, INC.:
This Proxy Statement is being mailed to stockholders on or about
October 1, 2001 and is furnished in connection with the solicitation by the
Board of Directors of Westell Technologies, Inc (the "Company") of proxies for
the Annual Meeting of Stockholders to be held on October 25, 2001 for the
purpose of considering and acting upon the matters specified in the Notice of
Annual Meeting of Stockholders accompanying this Proxy Statement. If the form of
Proxy which accompanies this Proxy Statement is executed and returned, it will
be voted. A Proxy may be revoked at any time prior to the voting thereof by
written notice to the Secretary of the Company or by attending the meeting and
voting in person.
A majority of the outstanding shares entitled to vote at this meeting
and represented in person or by proxy will constitute a quorum. A quorum is
needed for any proposal to be adopted.
The affirmative vote of the holders of a plurality of the voting power
entitled to vote and represented in person or by proxy at the meeting is
required for the election of directors. Neither the nonvoting of shares nor
withholding authority will affect the election of directors.
An affirmative vote of the holders of a majority of the voting power
entitled to vote is required to approve the charter amendment. Nonvoting if
shares or withholding authority will both count as a vote against the charter
amendment.
With regard to approving any other proposal submitted to a vote at the
meeting, votes cast in favor of a proposal must exceed the votes cast in
opposition.
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. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter
but will be included for purposes of determining if a quorum is present.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Officers of the Company may make additional solicitations in person or
by telephone.
The Annual Report to Stockholders on Form 10-K for fiscal year ended
March 31, 2001 ("fiscal 2001") accompanies this Proxy Statement. If you did not
receive a copy of the report, you may obtain one by writing to the Secretary of
the Company.
As of September 17, 2001, the Company had outstanding 45,810,963 shares
of Class A Common Stock and 19,014,869 shares of Class B Common Stock
(collectively, the "Common Stock"), and such shares are the only shares entitled
to vote at the Annual Meeting. Each share of Class A Common Stock is entitled to
one vote and each share of Class B Common Stock is entitled to four votes on
each matter to be voted upon at the Annual Meeting.
PRELIMINARY
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
August 15, 2001, of (i) each person (including any "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934) known by the Company to own
beneficially more than 5% of either class of its outstanding Common Stock, (ii)
each director, (iii) each executive officer identified name in the summary
compensation table below, 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 PERCENT OF PERCENT OF
NAMED EXECUTIVE CLASS A CLASS B CLASS A CLASS B TOTAL VOTING
OFFICERS AND DIRECTORS SHARES(1)(2) SHARES(2) COMMON STOCK COMMON STOCK POWER(3)
------------------------------- -------------- ------------- ------------ ------------ -----------
Robert C. Penny III........... -- 18,533,297(4) -- 97.4% 60.8%
Melvin J. Simon............... 120,250(5) 19,014,868(4)(6) * 100.0% 62.4%
State of Wisconsin
Investment Board(7)......... 8,416,459 -- 18.4% -- 6.9%
Wellington Management Company(8) 2,589,000 -- 5.7% -- 2.1%
E. Van Cullens -- -- * -- *
Robert H. Gaynor(9)........... 260,898 -- * -- *
J. William Nelson(9).......... 375,851 -- * -- *
Marc J. Zionts(9)............. 25,000 -- * -- *
Nicholas C. Hindman, Sr....... 39,750 -- * -- *
William J. Noll............... 177,250 -- * -- *
Paul A. Dwyer................. 130,150 -- * -- *
John W. Seazholtz............. 95,750 -- * -- *
Howard L. Kirby............... 330,465 -- * -- *
Bernard F. Sergesketter....... 39,250 -- * -- *
Thomas A. Reynolds III........ 66,250 -- * -- *
All Directors and Executive
Officers as a group (12
Persons).................... 1,660,864 19,014,868 3.6% 100.0% 63.7%
------------------
* Less than 1%
(1) Includes options to purchase shares that are exercisable within 60 days of
July 12, 2001 as follows: Mr. Simon: 108,750 shares; Mr. Nelson: 323,500
shares; Mr. Zionts: 25,000 shares; Mr. Noll: 177,250 shares; Mr. Dwyer:
126,150 shares; Mr. Seazholtz: 88,750 shares; Mr. Kirby 290,050 shares; Mr.
Sergesketter: 35,950 shares; Mr. Reynolds 6,250 shares ; Mr. Riviere 19,200
shares; Mr. Hindman 39,750; and all directors and officers as a group:
1,240,600 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 45,819,063 shares of Class A
Common Stock and 19,014,869 shares of Class B Common Stock outstanding as
of July 12, 2001.
(4) Includes 18,533,297 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 certain members of the
Penny family and the Simon family. 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 5,730,713 shares held for the benefit of Mr. Penny and
437,804 shares held for the benefit of Mr. Simon. The address for Messrs.
Penny and Simon is Melvin J. Simon & Associates, Ltd., 4343 Commerce Court,
Suite 114, Lisle, Illinois 60532.
-2-
PRELIMINARY
(5) Includes 9,500 shares held for the benefit of Stacy L. Simon, Melvin J.
Simon's daughter for which Natalie Simon, Mr. Simon's wife, is custodian
and has sole voting and dispositive power, and 2,000 shares held in trust
for the benefit of Makayla G. Penny, Mr. Penny's daughter, for which Mr.
Simon is trustee and has sole voting and dispositive power; Mr. Simon
disclaims beneficial ownership of these shares.
(6) Includes 95,980 shares held in trust for the benefit of Sheri A. Simon and
95,980 shares held in trust for Stacy L. Simon, Melvin J. Simon's
daughters, for which Natalie Simon, Mr. Simon's wife, is custodian and has
sole voting and dispositive power. Includes 262,611 shares held in trust
for the benefit of Makayla G. Penny, and 27,000 shares held in trust for
the benefit of EmmaLah Katelyn Penny, Mr. Penny's daughters, for which Mr.
Simon is trustee and has sole voting and dispositive power. Mr. Simon
disclaims beneficial ownership of these shares.
(7) The address for this stockholder is P.O. Box 7842, Madison, Wisconsin 53707.
(8) The class A common stock listed in the table are owned of record by clients
of Wellington Management Company LLP. In its capacity as an investment
advisor, Wellington Management Company LLP may be deemed to beneficially
own the shares listed in the table. The address for this stockholder is 75
State Street, Boston, Massachusetts 02109.
(9) Mr. Gaynor retired in April 2000. Mr. Nelson resigned in July 2001 and Mr.
Zionts resigned in March 2001.
-3-
PRELIMINARY
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Effective as of the Annual Meeting, the Board of Directors of the
Company has set the size of the board at seven. At the Annual Meeting, seven
directors, constituting the entire Board of Directors of the Company, are to be
elected to hold office until the next annual meeting of stockholders or until
their successors are elected and qualified. In fiscal 2001, Robert H. Gaynor,
Marc J. Zionts and J.W. Nelson resigned from their positions as directors of the
Company. The Bylaws of Westell Technologies, Inc. provide that not less than six
nor more than ten directors shall constitute the board of directors.
Except proxies marked to the contrary, the Board of Directors has no
reason to believe that any such nominee will be unable to serve. It is intended
that the proxies will be voted for the nominees listed below. It is expected
that the nominees will serve, but if any nominee 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.
NOMINEES
The following table sets forth certain information with respect to the
nominees, all of whom are current members of the present Board of Directors.
DIRECTOR
NAME AND AGE SINCE PRINCIPAL OCCUPATION AND OTHER INFORMATION
------------ ----- ------------------------------------------
John W. Seazholtz (65) 1997 John W. Seazholtz has served as Director of the Company
since December 1997 and was elected Chairman in April 2000.
Mr. Seazholtz was President and Chief Executive Officer of
Telesoft America, Inc. from May 1998 to May 2000 In April
1998, Mr. Seazholtz retired as Chief Technology Officer -
Bell Atlantic where he served since June 1995. Mr. Seazholtz
previously served as Vice President Technology and
Information Services - Bell Atlantic and in other executive
capacities with Bell Atlantic beginning in 1962. Mr.
Seazholtz currently serves as a Director for; Odetics, Inc.,
a supplier of digital data management products for the
security, broadcast and computer storage markets, and for
ASC-Advanced Switching Communications, an ATM network
equipment developer and for Mariner, Inc a ATM LAN CPE
developer.
Melvin J. Simon (56) 1992 Melvin J. Simon has served as Assistant Secretary and
Assistant Treasurer of the Company since July 1995 and as a
Director of the Company since August 1992. From August 1992
to July 1995, Mr. Simon served as Secretary and Treasurer of
the Company. A Certified Public Accountant, Mr. Simon
founded and has served as President of Melvin J. Simon &
Associates, Ltd., a public accounting firm, since May 1980.
Mr. Simon serves as a Director of the Company's 88% owned
subsidiary Conference Plus, Inc.
Paul A. Dwyer (67) 1996 Paul A. Dwyer has served as a Director of the Company since
January 1996 and as a Director of Westell, Inc., a wholly
owned subsidiary of the Company, since November 1995. Mr.
Dwyer served as Chief Financial Officer of Henry Crown and
-4-
PRELIMINARY
Company, a private investment firm from February 1981 to
December 1999, and currently serves as Vice President --
Administration of Longview Management Group, LLC, a
registered investment advisor, since October 1998.
Robert C. Penny III (48) 1998 Robert C. Penny III has served as a Director of the Company
since September 1998. He has been the managing partner of
P.F. Management Co., a private investment company, since May
1980.
Thomas A. Reynolds, III (50) 2000 Thomas A. Reynolds has served as Director of the Company
since January 2000. He is a partner with Winston & Strawn,
an international law firm headquartered in Chicago and
currently serves as a member of the Board of Directors of
Smurfit Stone Container Corporation and Georgetown
University and serves as a Trustee of the Brain Research
Foundation.
Bernard F. Sergesketter (65) 2000 Bernard F. Sergesketter has served as a Director of the
Company since March 2000. Mr. Sergesketter is President and
Chief Executive Officer of Sergesketter & Associates, a
telecommunications consulting firm, since 1994. He served as
a Vice President of AT&T from January 1993 to August 1994.
Mr. Sergesketter was a Director of Teltrend, Inc, a wholly
owned subsidiary of the Company, from January 1996 to March
2000 and currently serves a Director of the Illinois
Institute of Technology, The Mather Foundation and The Sigma
Chi Foundation.
E. Van Cullens (55) 2001 E. Van Cullens has served as Chief Executive Officer and
Director of the Company since July 2001. Prior to joining
the Company, Mr. Cullens operated Cullens Enterprises, LLC,
a management consulting firm focused in telecommunications,
from June 2000 through June 2001. From June 1999 to May
2000, Mr. Cullens served as President and Chief Operating
Officer of Harris Corporation and served as President,
Communications Sector from May 1997 to June 1999. Mr.
Cullens served in various executive capacities with Siemens
A. G. and affiliated companies from January 1991 to April
1997.
-5-
PRELIMINARY
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES:
The Board of Directors held 13 meetings during fiscal 2001. All
directors attended at least 75% of the aggregate number of such meetings and of
meetings of Board committees on which they served in fiscal 2001.
The Board of Directors has six standing committees: the Audit
Committee, the Compensation Committee, the Stock Incentive Committee, the
Executive Committee, the Finance Committee and the Technology Committee.
The Audit Committee (comprised of Messrs. Dwyer (Chair), Simon and
Sergesgetter) met 4 times in fiscal 2001. The functions of the Audit Committee
consist of providing oversight to the Company's financial reporting process
through periodic meetings with the Company's independent auditors, internal
auditors and management to review accounting, auditing, internal controls and
financial reporting matters. All of the members of the audit committee are
independent directors as defined under NASD rules.
The Compensation Committee (comprised of Messrs. Dwyer (Chair), Penny
and Simon) met 2 times in fiscal 2001. The functions of the Compensation
Committee consist of determining executive officers' salaries and bonuses.
The Stock Incentive Committee (comprised of Messrs. Dwyer (Chair),
Penny and Seazholtz) met 10 times in fiscal 2001. The functions of the Stock
Incentive Committee consist of administering and determining awards to be
granted under the Company's 1995 Stock Incentive Plan and Employee Stock
Purchase Plan.
The Executive Committee (comprised of Messrs. Seazholtz (Chair),
Reynolds and Simon) met 10 times in fiscal 2001. The Executive Committee has the
authority to take all actions that the Board of Directors as a whole would be
able to take, except as limited by applicable law.
The Finance Committee (comprised of Messrs. Simon (Chair), Reynolds and
Dwyer) met 10 times in fiscal 2001. The functions of the Finance Committee
consist of making recommendations to the Board of Directors as to financial
matters and as to such matters as shall be referred to it by the Board of
Directors. The Finance Committee also periodically reviews the investment
policies and performance of the Company.
The Technology Committee (comprised of Messrs. Seazholtz (Chair),
Sergesgetter and Kirby) met 2 times in fiscal 200. The Technology Committee was
established to insure alignment between the Company's technology initiatives and
its overall business strategy.
Directors who are not employees of the Company each receive $20,000 per
year for services rendered as directors, except Robert C. Penny III, who
received no compensation. In the fiscal year ended March 31, 2001, outside
directors, except for Robert C. Penny III and John W. Seazholtz were granted
stock options to purchase 25,000 shares that vest annually over four years. John
Seazholtz was granted stock options to purchase 35,000 shares that vest annually
over four years. In addition, all directors may be reimbursed for certain
expenses incurred in connection with attendance at Board and committee meetings.
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. In
addition, Mr. Simon also receives $1,250 each quarter for his services as a
director of Conference Plus, Inc., a subsidiary of the Company. Other than as
described in this paragraph, directors who are employees of the Company do not
receive additional compensation for service as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES.
-6-
PRELIMINARY
PROPOSAL NO. 2: APPROVAL OF AMENDMENT TO THE COMPANY'S CHARTER
Our Board of Directors has proposed an amendment to our charter to
increase the number of authorized shares of Class A Common Stock by 24,000,000
shares. If the proposed amendment is approved by affirmative vote of a majority
of the total votes cast on the proposal, the total number of authorized shares
of Class A Common Stock would be 109,000,000. Under our charter, holders of a
majority of the voting power of Class A Common Stock and Class B Common Stock,
voting as a single class, may authorize any corporate action. Messrs. Penny and
Simon, the trustees of the Voting Trust and members of the Board, who
collectively control over 62.4% of the voting power of the Company, have
indicated that they will vote for this Proposal No. 2.
Under our current charter, we have the authority to issue 85,000,000
shares of Class A Common Stock, 25,000,000 shares of Class B Common Stock and
1,000,000 shares of Preferred Stock. At September 17, 2001, 45,810,963 shares of
Class A Common Stock were issued and outstanding, 19,014,869 shares of Class B
Common Stock were outstanding and no shares of Preferred Stock were outstanding.
Accordingly, as of September 17, 2001, after taking into account the shares
reserved for issuance under our stock incentive plan and employee stock purchase
plan, or upon the exercise of outstanding options and warrants or upon
conversion of shares of Class B Common Stock, there remained approximately
5,534,398 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,
we would have approximately 29,534,398 shares of Class A Common Stock available
for issuance.
Our stockholders have no preemptive rights with respect to our capital
stock. Accordingly, the Class A Common Stock authorized pursuant to the charter
amendment may be issued without further stockholder approval.
To meet our working capital needs, we are currently engaged in active
discussions and review of proposals regarding potential financing alternatives
although we have no specific plans, agreements or understandings with respect to
the issuance of any securities. In order to raise additional capital, we filed a
"shelf" registration statement covering debt and equity securities having an
aggregate maximum offering price of $60 million. Under this registration
statement, we may issue and sell:
o debt securities;
o shares of our class A common stock;
o depositary shares;
o preferred stock;
o subscription rights;
o warrants;
o stock purchase contracts;
o stock purchase units; or
o any combination of the foregoing.
The terms on which any securities might be issued under the shelf registration
statement are not currently known. Moreover, at the date of this Proxy
Statement, we have not decided whether we will commence any offering of
securities pursuant to the shelf registration statement. Due to the limited
number of shares of Class A Common Stock available for issuance under our
-7-
PRELIMINARY
existing charter, an increase in the number of authorized shares of Class A
Common Stock is necessary to permit us to be able to issue Class A Common Stock
or securities convertible into Class A Common Stock to the extent permitted
under the shelf registration statement.
We may not be able to obtain equity financing on acceptable terms, if
at all, due to a number of factors, including market conditions and our
operating performance. Moreover, in connection with the State of Wisconsin
Investment Board's purchase of 1,657,459 shares of our stock in April 2001, we
agreed to insert provisions in our bylaws that would prevent us from selling
securities having forward pricing provisions or from granting options at less
than the fair market value of our stock without first obtaining majority
stockholder approval. These provisions could impair our ability to obtain equity
financing.
Our Board of Directors believes that adoption of the charter amendment
is advisable because it will provide us 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, and thus
discourage a change in control, we are not aware of anyone seeking to accumulate
Class A Common Stock for such purpose and have 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., our Board of Directors may approve the issuance of
authorized but unissued shares of Class A Common Stock at such time, for such
purposes, and for such consideration as our Board may determine to be
appropriate, without further authorization by the stockholders.
The issuance of the additional authorized Class A Common Stock will
have a substantial dilutive effect on our present stockholders. 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 62.4% of our voting power. Upon the issuance of all additional
authorized Class A Common Stock, Messrs. Penny and Simon would control over
52.1% of our voting power. The issuance of additional shares may also adversely
affect the market price of the Class A Common Stock. Moreover, if we issue
securities convertible into Class A Common Stock or other securities that have
rights, preferences and privileges senior to those of our common stock, the
holders of our common stock may suffer significant dilution.
We have 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 charter 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 us.
Our charter and the bylaws currently provide several mechanisms whereby
our Board could resist a takeover attempt not considered in the best interests
of stockholders. Our 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 we have 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 us. In addition, we are 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 us.
Furthermore, certain provisions of our charter and the bylaws may individually
or collectively have the effect of delaying or preventing changes in control of
us or our management and could have a depressive effect on the market price of
Class A Common Stock. For example, our charter 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.
-8-
PRELIMINARY
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors considers the amendment to be in the best
interests of the Company and all of its stockholders and unanimously recommends
that the stockholders vote "FOR" the amendment to the Company's charter.
-9-
PRELIMINARY
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the
current executive officers of the Company. Please refer to the information
contained above under the heading "Election of Directors" for biographical
information of executive officers who are also directors of the Company.
Name Age Position
------------------------------------ --- ---------------------------------------------------------------
John W. Seazholtz................... 65 Chairman of the Board of Directors
E. Van Cullens ..................... 55 President and Chief Executive Officer
Nicholas C. Hindman, Sr............. 49 Treasurer, Secretary, Vice President and Chief Financial Officer
William J. Noll..................... 59 Senior Vice President of Product Development and Chief Technology Officer
Richard P. Riviere.................. 46 Senior Vice President of Transaction Services and President and Chief
Executive Officer - Conference Plus, Inc.
Melvin J. Simon..................... 56 Assistant Secretary, Assistant Treasurer and Director
Nicholas C. Hindman, Sr. has served as Treasurer, Secretary, Vice
President and Chief Financial Officer since March, 2000 and as acting Treasurer,
Secretary, Vice President and Chief Financial Officer of the Company from May
1999 to February 2000. From October 1997 to April 1999, Mr. Hindman served as
General Manager of MFI Holdings, LLC, a manufacturer of consumer products. From
1992 through September 1997, Mr. Hindman operated an auditing and consulting
firm specializing in initial public offerings, private placement of securities
and business turnarounds.
William J. Noll has served as Senior Vice President of Research and
Development and Chief Technology Officer of Westell, Inc. since May 1997. Prior
to joining the Company, Mr. Noll was Vice President and General Manager of
Residential Broadband at Northern Telecom from October 1995 to May 1997. Mr.
Noll held other various Vice President and Assistant Vice President positions at
Northern Telecom from June 1988 to October 1996, and was Vice President Network
Systems at Bell Northern Research from November 1986 to June 1988.
Richard P. Riviere has served as Vice President of Transaction Services
for the Company since July 1995 and as President, Chief Executive Officer and a
Director of the Company's 88% owned subsidiary Conference Plus, Inc. since
October 1988.
-10-
PRELIMINARY
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended
March 31, 1999, 2000 and 2001, with respect to all compensation paid or earned
for services rendered to the Company by the Company's Chief Executive Officers
and the Company's four other most highly compensated executive officers who were
serving as executive officers at March 31, 2001 (together, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- ----------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (SHARES) ($)
--------------------------- ------- ---------- ---------- ----------------- ---------------- ---------------
Marc J. Zionts(5) 2001 259,519 336,800 - 25,000 2,797
Former Chief Executive Officer 2000 244,038 298,080 - 500,000 3,210
1999 233,654 298,080 - 290,000 3,277
Robert H. Gaynor(4) 2001 25,000 - - 65,000 -
Former Chairman of the Board 2000 100,000 - - 100,000 -
and Chief Executive Officer 1999 100,000 - - -
J. William Nelson(6) 2001 259,519 336,800 - 100,000 4,586
Former Chief Executive Officer 2000 244,038 298,080 - 195,000 5,118
1999 233,654 298,080 - 250,000 7,624
Nicholas C. Hindman, Sr. 2001 200,000 39,200 - - -
Treasurer, Secretary, Vice 2000 176,854 10,000 - 75,000 -
President and Chief Financial 1999 - - - - -
Officer
William J. Noll 2001 184,711 186,500 - 85,750 2,302
Senior Vice President of 2000 216,953 177,225 9,530(2) 25,000 3,127
Research & Development and 1999 228,893 177,225 - 145,000 4,001
Chief Technology Officer
Richard P. Riviere 2001 196,712 120,442 - - -
Vice President of Transaction 2000 172,000 150,831 - - 4,889
Services Chief Executive 1999 150,000 103,894 - 12,000 4,008
Officer of Conference Plus,
Inc.
------------------
(1) Stock options granted during fiscal 2001 were non-qualified stock options
of Class A Common Stock and were issued under the 1995 Stock Incentive Plan
of the Company.
(2) Represents reimbursed relocation expense and tax gross up.
(3) Includes matching contributions under the Company's 401(k) Profit Sharing
Plan for fiscal 2001 as follows: Mr. Zionts $2,797; Mr. Nelson $4,586; and
Mr. Noll $2,302.
(4) Mr. Gaynor retired in April 2000.
(5) Mr. Zionts resigned from the Company effective April 2001 to pursue other
business interests.
-11-
PRELIMINARY
(6) Mr. Nelson resigned from the Company effective July 2001 to pursue other
business interests.
The following tables set forth the number of stock options granted to
each of the Named Executive Officers during fiscal 2001 and the stock option
exercises and exercisable and unexercisable stock options held by the Named
Executive Officers as of March 31, 2001. For purposes of table computations the
fair market value at March 31, 2001 was equal to $3.094 per share.
OPTION GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATE OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
------------------------------------------------------ -------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE 5% 10%
-------------------------------- ---------- -------------- ------------ ---------- ----------- -----------
Marc J. Zionts 25,000(3) 0.65% $ 4.9063 2/28/02 $ 77,139 $ 195,484
J. W. Nelson 100,000(4) 2.59% $ 21.4375 4/04/10 $1,348,193 $3,416,585
William J. Noll 85,000(5) 2.22% $ 21.4375 4/04/10 $1,145,964 $2,904,098
250(6) 0.01% $ 17.1875 8/10/10 $ 2,702 $ 6,848
500(6) 0.01% $ 6.1563 12/18/10 $ 1,936 $ 4,906
Robert H. Gaynor --
Nicholas C. Hindman --
Richard P. Riviere --
------------------
(1) Based on 3,859,650 total options granted to employees, including the Named
Executive Officers, in fiscal 2001.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming the
stock price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated stock
price.
(3) These options vest immediately and have a one year term subject to earlier
termination upon the occurrence of certain events related to termination of
employment.
(4) These options vest over a four-year period with 10%, 20%, 30% and 40%
vesting in years one through four respectively and have a 10-year life
subject to earlier termination upon the occurrence of certain events
related to termination of employment.
(5) These options vest over a two-year period in equal annual installments and
have a 10-year life subject to earlier termination upon the occurrence of
certain events related to termination of employment.
(6) These options are performance-based and vest in full at the earlier of
achievement of certain performance goals or eight years after grant date.
The options have a ten-year life subject to earlier termination upon the
occurrence of certain events related to termination of employment.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED OPTIONS AT FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME EXERCISE (#) ($)(1) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
--------------------------- -------------- -------------- ------------------------------ ---------------------------
Marc J. Zionts 222,500 5,104,377 88,500 / 0 -
Robert H. Gaynor - - - -
J. William Nelson - - 236,750 / 308,250 -
William J. Noll - - 99,500 / 156,250 -
Nicholas C. Hindman 4,000 87,688 6,000 / 60,000 -
Richard P. Riviere - - 16,800 / 7,200 -
------------------
(1) Value is calculated by subtracting the exercise price per share from the
fair market value at the time of exercise and multiplying this amount by
the number of shares exercised pursuant to the stock option.
(2) Value is calculated by subtracting the exercise price per share from
$3,09375, the fair market value at March 31, 2001, and multiplying such
amount by the number of shares subject to the option. The exercise price
for the options exceeded the market value at March 31, 2001 and therefore
no options listed were in-the-money on March 31, 2001.
-12-
PRELIMINARY
EXECUTIVE OFFICER AGREEMENTS
The Company has severance agreements with each Named Executive Officer
and certain other executive officers of the Company. The severance agreements
provide that in the event such officer is terminated without Cause (as defined
therein) or such officer resigns for Good Reason (as defined therein), the
Company shall pay to such officer severance payments equal to such officer's
salary and bonus for the fiscal year in which the termination occurs (2 times
such salary and bonus as to Mr. Zionts), and the severance agreements also
provide for the payment of certain amounts upon the occurrence of certain
events. The executive officers entering into the severance agreements agreed not
to compete with the Company for one year in the event that their termination
entitles them to severance payments and not to solicit any Company employees for
a period of one year after a termination of such officer's employment with the
Company. The Company's severance payment obligations and an officer's right to
this additional bonus shall terminate upon such officer's death, resignation
without Good Reason, retirement or termination for Cause. Payments are being
made pursuant to these agreements for Mr. Zionts and Mr. Nelson.
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, 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.
COMPENSATION AND STOCK INCENTIVE COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
the Company's executive compensation policies. It annually determines the
compensation to be paid to the executive officers of the Company. The
Compensation Committee has two outside directors. The Stock Incentive Committee
administers and determines the awards to be granted under the Company's 1995
Stock Incentive Plan and the Employee Stock Purchase Plan.
OVERVIEW AND PHILOSOPHY
The executive compensation program is intended to provide overall
levels of compensation for the executive officers which are competitive for the
industries and the geographic areas within which they operate, the individual's
experience, and contribution to the long-term success of the Company. A leading
consulting firm provides for the Compensation Committee's consideration
information regarding executive compensation of companies that operate in
similar industries. The Hambrecht & Quist Communications Index (see the
Performance Graph) includes some of the companies which the Compensation
Committee considers. The Compensation Committee believes that its task of
determining fair and competitive compensation is ultimately judgmental.
The executive compensation program is composed of base salary, annual
incentive compensation, equity based incentives, and other benefits generally
available to all employees.
BASE SALARY
The base salary for each executive is intended primarily to be
competitive with companies in the industries and geographic areas in which the
Company competes. Surveys from outside firms and consultants are used to help
determine what is competitive. In making annual adjustments to base salary, the
Compensation Committee also considers the individual's performance over a period
of time as well as any other information which may be available as to the value
of the particular individual's past and prospective future services to the
Company. This information includes comments and performance evaluations by the
-13-
PRELIMINARY
Company's Chief Executive Officer. The Committee considers all such data; it
does not prescribe the relative weight to be given to any particular component.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation is ordinarily determined by a formula
which considers the financial goals and objectives of the Company.
LONG-TERM INCENTIVES
In general, both the Compensation Committee and the Stock Incentive
Committee believe that equity based compensation should form a part of an
executive's total compensation package. Stock options may be granted to
executives in order to directly relate a portion of the executive's earnings to
the stock price appreciation realized by the Company's stockholders over the
option period. Stock options also provide executives with the opportunity to
acquire an ownership interest in the Company. The number of shares covered by
each executive's option will be determined by factors similar to those
considered in establishing base salaries. In fiscal 2001, 210,750 stock options
were granted to executive officers
OTHER
Other benefits are generally those available to all other employees in
the Company, or a subsidiary, as appropriate.
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The Compensation Committee and the Stock Incentive Committee apply the
same standards in establishing the compensation of the Company's Chief Executive
Officer as are used for other executives. However, there are procedural
differences. The Chief Executive Officer does not participate in setting the
amount and nature of his compensation.
The Compensation Committee does not expect that Section 162(m) of the
Internal Revenue Code will limit the deductibility of compensation expected to
be paid by the Company in the foreseeable future.
This report is submitted by the Compensation Committee of the Board of
Directors.
Respectfully Submitted By:
The Compensation Committee The Stock Incentive Committee
Paul A. Dwyer (Chair) Paul A Dwyer (Chair)
Robert Penny III Robert Penny III
Melvin J. Simon John W. Seazholtz
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board of Directors (a copy of which is
attached to this Proxy Statement as Appendix A), include providing oversight to
the Company's financial reporting process through periodic meetings with the
Company's independent auditors, internal auditors and management to review
accounting, auditing, internal controls and financial reporting matters. The
management of the Company is responsible for the preparation and integrity of
the financial reporting information and related systems of internal controls.
The Audit Committee, in carrying out its role, relies on the Company's senior
management, including senior financial management, and its independent auditors.
-14-
PRELIMINARY
We have reviewed and discussed with senior management the Company's
audited financial statements included in the 2001 Annual Report to Stockholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of management
and (ii) have been prepared in conformity with generally accepted accounting
principles.
We have discussed with Ernst & Young LLP, our independent auditors, the
matters required to be discussed by SAS 61 (Communications with Audit
Committee). SAS 61 requires our independent auditors to provide us with
additional information regarding the scope and results of their audit of the
Company's financial statements, including with respect to (i) their
responsibility under generally accepted auditing standards, (ii) significant
accounting policies, (iii) management judgments and estimates, (iv) any
significant audit adjustments, (v) any disagreements with management, and (vi)
any difficulties encountered in performing the audit.
We have received from Ernst & Young LLP a letter providing the
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) with respect to any
relationships between Ernst & Young LLP and the Company that in their
professional judgment may reasonably be thought to bear on independence. Ernst &
Young LLP has discussed its independence with us, and has confirmed in such
letter that, in its professional judgment, it is independent of the Company
within the meaning of the federal securities laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2001 Annual
Report to Stockholders, we have recommended to the Board of Directors that such
financial statements be included in the Company's Annual Report on Form 10-K.
As specified in the Audit Committee Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with generally
accepted accounting principles. That is the responsibility of management and the
Company's independent auditors. In giving our recommendation to the Board of
Directors, we have relied on (i) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principals, and (ii) the report of the
Company's independent auditors with respect to such financial statements.
Respectfully Submitted By:
The Audit Committee
Paul A. Dwyer (Chair)
Melvin J. Simon
Bernard F. Sergesgetter
-15-
PRELIMINARY
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Dwyer
(Chair), Penny 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 $40,000, $15,475
and $66,000 in fiscal 1999, 2000 and 2001, 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 Common Stock held in the Voting Trust.
In June 2001, trusts for the benefit of Robert C. Penny III, a director
of the Company, and other Penny family members, entered into a guaranty of $10
million of the Company's obligations under its revolving credit facility. In
consideration of the guarantee, the Company has granted those trusts warrants to
purchase 512,820 shares of Class A Common Stock for a period of five years at an
exercise price of $1.95 per share (the fair market value on the date of grant)
and agreed to grant registration rights with respect to shares acquired upon
exercise.
The Company has certain severance agreements with each Named Executive
Officer and certain other executive officers of the Company. See "Executive
Compensation --Executive Officer Agreements".
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's officers
and directors, and persons who own more than ten percent of the Company's
outstanding stock, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. During fiscal 2001, to the knowledge of the
Company, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were complied with.
-16-
PERFORMANCE GRAPH
The following performance graph compares the quarterly percentage
change in the Company's cumulative total stockholder return on its Class A
Common Stock with the cumulative total return of the Nasdaq Stock Market--U.S.
Index and the J.P. Morgan Hambrecht & Quist Communications Index for the period
commencing April 1, 1996 (the first day of trading of the Class A Common Stock
on the Nasdaq National Market) and ending March 31, 2001. The stock price
performance shown in the performance graph is not indicative of future stock
price performance.
-17-
PRELIMINARY
[PERFORMANCE GRAPH]
-18-
PRELIMINARY
TOTAL RETURN - DATA SUMMARY
Cumulative Total Return
-------------------------------------------------------------
3/96 3/97 3/98 3/99 3/00 3/01
WESTELL TECHNOLOGIES, INC. 100.00 72.30 68.92 23.82 172.30 18.24
NASDAQ STOCK MARKET (U.S.) 100.00 111.15 168.47 227.62 423.37 169.46
JP MORGAN H & Q COMMUNICATIONS 100.00 87.94 126.36 188.81 546.94 183.19
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent auditors for fiscal 2001 were Ernst & Young
LLP. Ernst & Young LLP replaced Arthur Andersen LLP as our auditors on February
19, 2001. Arthur Andersen LLP and the Company mutually agreed to terminate
Arthur Andersen LLP's position as the Company's independent auditors. Selection
of independent auditors is made by the Board of Directors upon consultation with
the Audit Committee. The Board of Directors will vote upon the selection of
auditors for the current fiscal year at a future Board meeting. Representatives
of Ernst & Young LLP will be present at the Annual Meeting with the opportunity
to respond to appropriate questions and to make a statement if they desire to do
so.
AUDIT FEES
The aggregate fees billed by Westell's independent auditors rendered in
connection with (i) the audit of Westell's annual financial statements set forth
in the Westell Annual Report on Form 10-K for the year ended March 30, 2001, and
(ii) the review of Westell's quarterly financial statements set forth in
Westell's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000,
September 30, 2000, and December 30, 2000 were approximately $308,350.
AUDIT RELATED FEES
The aggregate fees for audit related services rendered by the
independent auditors for Westell's most recent fiscal year were approximately
$11,000. These fees include work performed by the independent auditors with
respect to an audit of the Teltrend benefit plan.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no information technology services rendered by Arthur
Andersen LLP or Ernst & Young LLP during the year ended March 31, 2001.
ALL OTHER FEES
The aggregate fees for all other services rendered by its independent auditors
for Westell's most recent fiscal year were approximately $209,780. These fees
include work performed by the independent auditors with respect to tax
compliance, and other tax consulting, including assistance with Westell's
analysis of the Teltrend acquisition transaction costs. The total of audit
related fees and all other fees were approximately $529,130.
-19-
PRELIMINARY
CONSIDERATION OF NON-AUDIT SERVICES PROVIDED BY INDEPENDENT ACCOUNTANT
The audit committee has considered whether the services provided under
financial information systems design and implementation and other non-audit
services are compatible with maintaining the auditor's independence and has
determined that such services are compatible.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be included in the Company's proxy statement
and presented at the 2002 Annual Meeting must be received at the Company's
executive offices, 750 North Commons Drive Aurora, Illinois 60504 by no later
than May 25, 2001 for evaluation as to inclusion in the Proxy Statement in
connection with such meeting.
Stockholders wishing to nominate a director or bring a proposal before
the 2002 Annual Meeting (but not include the proposal in the Company's proxy
statement) must cause written notice of the proposal to be received by the
Secretary of the Company at the principal executive offices of the Company in
Aurora, Illinois, by no later than 60 days prior to the Annual Meeting date, as
well as comply with certain provisions of the Company's bylaws. In order for a
stockholder to nominate a candidate for director, such notice must describe
various matters regarding the nominee and the stockholder giving the notice,
including such information as name, address, occupation and shares held. In
order for a stockholder to bring other business before a stockholders meeting,
the notice for such meeting must include various matters regarding the
stockholder giving the notice and a description of the proposed business. These
requirements are separate from and in addition to the requirements a stockholder
must meet to have a proposal included in the Company's proxy statement.
FINANCIAL INFORMATION
The Company has furnished its financial statements to stockholders in
its 2001 Annual Report, which accompanies this Proxy Statement. In addition, the
Company will promptly provide, without charge to any stockholder, on the request
of such stockholder, an additional copy of the 2001 Annual Report and the
Company's most recent Form 10-K. Written requests for such copies should be
directed to Westell Technologies, Inc., Attention: Nicholas C. Hindman, Sr.,
Vice President and Chief Financial Officer, 750 North Commons Drive, Aurora,
Illinois 60504; telephone number (630) 898-2500.
-20-
PRELIMINARY
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company knows of no other business that
may come before the Annual Meeting. However, if any other matters are properly
presented to the meeting, the persons named in the proxies will vote upon them
in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY
AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
NICHOLAS C. HINDMAN, SR.
Vice President and Chief Financial Officer
Date: October 1, 2001
-21-
PRELIMINARY
ANNEX A
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board of Directors for the
primary purposes of:
o Assisting the Board of Directors in fulfilling its oversight
responsibilities as they relate to the Company's accounting policies and
internal controls, financial reporting practices and legal and regulatory
compliance, and
o Maintaining, through regularly scheduled meetings, a line of communication
between the Board of Directors and the Company's financial management,
internal auditors and independent accountants.
COMPOSITION AND QUALIFICATIONS
------------------------------
The Audit Committee shall be appointed by the Board of Directors and
shall be comprised of three or more Directors (as determined from time to time
by the Board), each of whom shall meet the independence requirements of the
Nasdaq Stock Market, Inc. Each member of the Audit Committee shall have the
ability to understand fundamental financial statements. In addition, at least
one member of the Audit Committee shall have past employment experience in
finance or accounting, professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
RESPONSIBILITIES
----------------
The Audit Committee will:
(1) Review the annual audited financial statements with management and the
independent accountants. In connection with such review, the Audit
Committee will:
o Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct
of the audit.
o Review changes in accounting or auditing policies, including resolution of
any significant reporting or operational issues affecting the financial
statements.
o Inquire as to the existence and substance of any significant accounting
accruals, reserves or estimates made by management that had or may have a
material impact on the financial statements.
o Review with the independent accountants any problems encountered in the
course of their audit, including any change in the scope of the planned
audit work and any restrictions placed on the scope of such work, any
management letter provided by the independent accountants, and management's
response to such letter.
o Review with the independent accountants and the senior internal auditing
executive the adequacy of the Company's internal controls, and any
significant findings and recommendations.
(2) Review (by full Committee or Chair) with management and the independent
accountants the Company's quarterly financial statements in advance of
SEC filings.
(3) Oversee the external audit coverage. The Company's independent
accountants are ultimately accountable to the Board of Directors and
the Audit Committee, which have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
-22-
PRELIMINARY
independent accountants. In connection with its oversight of the
external audit coverage, the Audit Committee will:
o Recommend to the Board the appointment of the independent accountants.
o Approve the engagement letter and the fees to be paid to the independent
accountants.
o Obtain confirmation and assurance as to the independent accountants
independence, including ensuring that they submit on a periodic basis (not
less than annually) to the Audit Committee a formal written statement
delineating all relationships between the independent accountants and the
Company. The Audit Committee is responsible for actively engaging in a
dialogue with the independent accountants with respect to any disclosed
relationships or services that may impact the objectivity and independence
of the independent accountants and for recommending that the Board of
Directors take appropriate action in response to the independent
accountants' report to satisfy itself of their independence.
o Meet with the independent accountants prior to the annual audit to discuss
planning and staffing of the audit.
o Review and evaluate the performance of the independent accountants, as the
basis for a recommendation to the Board of Directors with respect to
reappointment or replacement.
(4) Meet periodically with management to review and assess the Company's
major financial risk exposures and the manner in which such risks are
being monitored and controlled.
(5) Meet at least annually in separate executive session with the chief
financial officer and the independent accountants.
(6) Review periodically with the Company's General Counsel (i) legal and
regulatory matters which may have a material affect on the financial
statements, and (ii) corporate compliance policies or codes of conduct.
(7) Report regularly to the Board of Directors with respect to Audit
Committee activities.
(8) Prepare the report of the Audit Committee required by the rules of the
Securities and Exchange Commission to be included in the proxy
statement for each annual meeting.
(9) Review and reassess annually the adequacy of this Audit Committee
Charter and recommend any proposed changes to the Board of Directors.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent accountants. Nor is
it the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent accountants or to
assure compliance with laws and regulations and the Company's corporate
policies.
-23-
PRELIMINARY
PROXY
WESTELL TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF WESTELL
TECHNOLOGIES, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS, ON OCTOBER 25, 2001,
10:00 A.M., LOCAL TIME, AT THE WESTELL CORPORATE HEADQUARTERS, 750 NORTH COMMONS
DRIVE, AURORA, ILLINOIS 60504.
The undersigned hereby appoints John W. Seazholtz and Melvin J. Simon,
and each of them proxies with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all Class A
Common Stock and/or Class B Common Stock held of record by the undersigned in
Westell Technologies, Inc., upon all subjects that may properly come before the
special meeting, and at any adjournments thereof, including the matters
described in the joint proxy statement/prospectus furnished herewith, subject to
any directions indicated on the reverse side of this card.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY HERETOFORE GIVEN AND
ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT FOR THE ANNUAL MEETING.
This proxy when properly executed will be voted in the manner directed
by the undersigned direction is made, this proxy will be voted for proposals 1
and 2.
(THIS PROXY IS CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
(Comments/Change of Address)
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
(If you have written in the above space, please
mark the corresponding box on the reverse side)
PRELIMINARY
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- FOLD AND DETACH HERE -
THE FOLLOWING MATTERS ARE PROPOSED BY THE BOARD OF DIRECTORS
1. ELECTION OF DIRECTORS: For Withhold For All List nominee exceptions:
All All Except ------------------------
Director Nominees: [ ] [ ] [ ]
John W. Seazholtz,
Paul A. Dwyer, Jr.,
E.Van Cullens,
Robert C. Penny III,
Thomas A. Reynolds, III,
Bernard F.Sergesketter,
Melvin J. Simon
2. AMENDMENT TO THE COMPANY'S For Against Abstain
CHARTER to increase the
number of authorized shares
of Class A Common Stock to
109,000,000 shares.
- - - - - - - - - - - - - - - -
INSTRUCTION: To withhold
authority to vote for any
individual nominee, write that
nominee's name in the space
provided
This proxy when properly
executed will be voted
in the manner directed
herein by the
undersigned stockholder.
If no direction is made,
this proxy will be
deemed to constitute
direction to vote "for"
each of the above
proposals.
Please mark, sign, date
and return the proxy
card using the enclosed
------------------------------------------------------- envelope.
Comments/Change
of Address Date __________, 2001
---------------------
Signature(s)
---------------------
Signature(s)
(NOTE: Please sign
exactly as name
appears on this
Proxy. When shares
are held jointly,
both should sign.
When signing as
attorney, executor,
administrator,
trustee, guardian,
corporate officer or
partner, give full
title as such. If a
corporation, please
sign in corporate
name by president or
other authorized
officer. If a
partnership, please
sign in partnership
name by authorized
person.)