SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or
Section 240.14a-12
WESTELL TECHNOLOGIES, INC.
--------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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4) Date Filed:
WESTELL TECHNOLOGIES, INC.
750 North Commons Drive
Aurora, Illinois 60504
(630) 898-2500
Notice of Annual Meeting of Stockholders
September 23, 2004
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Westell Technologies, Inc. (the
"Company") will be held at the Company's Corporate Headquarters, 750 North
Commons Drive, Aurora, Illinois on Thursday, September 23, 2004 at 10:00 a.m.
Central Daylight Time for the following purposes:
1. To elect eight directors;
2. To vote upon a proposal to adopt the Westell Technologies, Inc. 2004
Stock Incentive Plan;
3. To vote upon a proposal to amend the Westell Technologies, Inc.
Employee Stock Purchase Plan to increase the number of shares
available under the plan by 300,000;
4. To vote on a proposal to ratify the appointment of independent
auditors; and
5. Any other matters that properly come before the meeting.
The Board of Directors has fixed the close of business on July 26, 2004 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.
Senior Vice President and Chief Financial Officer
August 10, 2004
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
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Proxy Statement
Annual Meeting of Stockholders to be held September 23, 2004
-----------
To the Stockholders of
WESTELL TECHNOLOGIES, INC.:
This Proxy Statement is being mailed to stockholders on or about August 10,
2004 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 September 23, 2004 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 voting power of Class A Common Stock and
Class B Common Stock 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 of
the Company entitled to vote and represented in person or by proxy at the
meeting is required for the election of directors. The affirmative vote of
holders of a majority of the voting power of the Class A Common stock and Class
B Common Stock of the Company, voting together as a single class, represented in
person or by proxy at the Annual Meeting is required to approve the 2004 Stock
Incentive Plan and the amendment to the Employee Stock Purchase Plan and to
ratify the appointment of the independent auditors; the approval of the 2004
Stock Incentive Plan or the amendment to the Employee Stock Purchase Plan or the
ratification of the appointment of the independent auditors but will not effect
the election of directors.
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 and will have the same affect as votes against any such
matters. Broker "non-votes" and the shares as to which stockholders abstain are
included for purposes of determining whether a quorum of shares is present at a
meeting. Broker "non-votes" will have no effect on the outcome of the election
of directors, approval of the 2004 Stock Incentive Plan or the amendment to the
Employee Stock Purchase Plan or the ratification of the appointment of
independent auditors. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
With regard to approving any other proposal submitted to a vote at the
meeting, the affirmative vote of holders of a majority of the voting power of
the Company is required.
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, 2004 ("fiscal 2004") 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 at the address indicated above.
Only holders of record of Class A Common Stock or Class B Common Stock at
the close of business on July 26, 2004 are entitled to vote at the meeting. As
of July 26, 2004, the Company had outstanding 53,632,788 shares of Class A
Common Stock and 14,471,822 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.
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 June 15,
2004, of (i) each person known by the Company to own beneficially more than 5%
of either class of its outstanding Common Stock, (ii) each director, (iii) each
Named Executive Officer identified 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. 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........ 170,940(8) 13,714,302(4) * 93.0% 48.9%
Melvin J. Simon............ 415,410(5)(9) 14,741,871(4)(6) * 100.0% 52.7%
Batterymarch Financial
Management, Inc. (7)....... 3,816,809 -- 7.1% -- *
E. Van Cullens............. 1,259,123 -- 2.3% -- *
John W. Seazholtz.......... 170,000 -- * -- *
Nicholas C. Hindman, Sr.... 83,592 -- * -- *
William J. Noll............ 307,476 -- * -- *
John C. Clark............. 21,028 -- * -- *
Paul A. Dwyer.............. 227,900 -- * -- *
Timothy J. Reedy........... 77,500 -- * -- *
Bernard F. Sergesketter.... 64,900 -- * -- *
Eileen A. Kamerick -- -- * -- *
Roger L. Plummer........... 31,000 -- * -- *
All Directors and Executive
Officers as a group (13
Persons)................... 2,666,151 5.3% 2.5%
------------------
* Less than 1%
(1) Includes options to purchase shares that are exercisable within 60 days of June 15, 2004 as follows: Mr. Cullens:
1,195,723 shares; Mr. Simon: 159,000 shares; Mr. Noll: 290,000 shares; Mr. Dwyer: 201,900 shares; Mr. Seazholtz:
153,000 shares; Mr. Sergesketter: 54,900 shares; Mr. Hindman: 69,750 shares; Mr. Clark: 21,028 shares; Mr. Reedy:
67,500 shares; Mr. Plummer: 26,000 shares; and all directors and officers as a group: 2,238,801 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 53,631,638 shares of Class A Common Stock and 14,741,871 shares of
Class B Common Stock outstanding as of June 15, 2004.
(4) Includes 13,714,032 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 2,939,911 shares held for the benefit of Mr. Penny and 137,804 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 616, Lisle, Illinois 60532.
(5) Includes 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 20,965 shares held in trust for the benefit of Sheri A. Simon and 20,965 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 985,639 shares held in trust for the benefit of Mr. Penny's children for which Mr.
Simon is trustee and has sole voting and dispositive power. Mr. Simon disclaims beneficial ownership of these
shares.
(7) The Class A Common stock listed in the table is owned of record by clients of Batterymarch Financial Management,
Inc. In its capacity as an investment advisor, Batterymarch Financial Management, Inc. may be deemed to
beneficially own the shares listed in the table. The address for this stockholder is 200 Clarendon Street, Boston,
MA 02116.
(8) Includes warrants to purchase 170,940 shares that are exercisable within 60 days of June 15, 2004 that are held in
trusts that Mr. Penny is a co-trustee of.
(9) Includes warrants to purchase 256,410 shares that are exercisable within 60 days of June 15, 2004 that are held in
trusts that Mr. Simon is a trustee and has sole voting power.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Annual Meeting, eight directors, are to be elected to hold office
until the next annual meeting of stockholders or until their successors are
elected and qualified. The Bylaws of Westell Technologies, Inc. provide that not
less than six nor more than ten directors shall constitute the Board of
Directors.
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 by the persons named in the
proxies, based upon a recommendation by the Board of Directors. The persons
named in the proxies may alternatively vote to allow the vacancy created thereby
to remain open until filled by the Board of Directors.
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 (67) 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 Iteris, Inc. (formerly 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. He is Chairman of
eWay Group, a private consulting firm. He is on the Board of Overseers
of N.J. Institute of Technology.
E. Van Cullens (58) 2001 E. Van Cullens has served as President, 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. Mr. Cullens was with
Stromberg-Carlson from May 1984 until January 1991 when the
Stromberg-Carlson was acquired by Siemens. From May 1972 to April
1984, Mr. Cullens held various management positions with GTE
Corporation.
Paul A. Dwyer (70) 1996 Paul A. Dwyer has served as a Director of the Company since January
1996 . Mr. Dwyer, now retired, served as Chief Financial Officer of
Henry Crown and Company, a private investment firm from February 1981
to December 1999, and as Vice President - Administration of Longview
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Management Group, LLC, a registered investment advisor, from October
1998 to December 1999. Mr. Dwyer serves as a Director for McHenry
Bancorp Inc., Rush Computer Rental and Valuemetrics Advisors.
Eileen A. Kamerick (45) 2003 Eileen A. Kamerick has served as a Director of the Company since
December, 2003. Ms Kamerick currently serves as the Chief Financial
Officer of Heidrick and Struggles (NASDAQ HSII), an international
provider or senior level executive search and leadership development
services. Previously, Ms. Kamerick was chief financial officer and
executive vice president of Bcom3 Group, Inc., a leading international
holding company specializing in advertising and marketing services.
Ms. Kamerick also has held senior finance and legal positions for BP
Amoco Corporation, GE Capital AFS and Whirlpool Corporation. Ms.
Kamerick is also a director of Stelmar Shipping, Inc. (NYSE SJH) and
serves on the company's Audit Committee. In addition, Ms. Kamerick
serves as a Board member of The Boys and Girls Club of Chicago, The
Senior Businesswomen's Forum and the Mid America Club.
Robert C. Penny III (51) 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.
Roger L. Plummer (62) 2001 Roger L. Plummer has served as a Director of the Company since
September, 2001. Mr. Plummer currently serves as the Managing Director
of the International Engineering Consortium. Mr. Plummer also serves
as a consultant in communication technology and corporate organization
and culture. Mr. Plummer previously served in various executive
capacities at Ameritech and its predecessor, Illinois Bell, including
President of the Ameritech Custom Business Services unit. Mr. Plummer
serves as a Board member of; DePaul University, University of Illinois
Foundation, Chicago public television Channel 11, Association of
Public Television Stations, Accreditation Council of Graduate Medical
Education, Rush Hospital Neurobehavioral Center, Chicago Symphony
Orchestra Governing Members Organization and the University of
Illinois Medical Center.
Bernard F. Sergesketter (68) 2000 Bernard F. Sergesketter has served as a Director of the Company since
March 2000. Mr. Sergesketter is Chairman and Chief Executive Officer
of Sergesketter & Associates, a marketing consulting firm, since 1994.
He served as a Vice President of AT&T from January 1983 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 as a Director of Solar Communications Inc., the
Illinois Institute of Technology and The Sigma Chi Foundation.
Melvin J. Simon (59) 1992 Melvin J. Simon has served as Assistant Secretary of the Company since
July 1995 and as a Director of the Company since August 1992. From
July 1995 to April 2003, Mr. Simon served as Assistant Treasurer of
the Company. From August 1992 to July 1995, Mr. Simon served as
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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 91.5% owned subsidiary
Conference Plus, Inc.
DETERMINATION OF NON-EMPLOYEE DIRECTOR INDEPENDENCE
The Board of Directors has determined that each of Messrs. Seazholtz,
Dwyer, Penny, Plummer, Sergesketter and Simon and Ms. Kamerick, is an
independent director as defined in the corporate governance requirements of the
Nasdaq National Market (referred to herein as the Nasdaq listing standards) and
the rules of the Securities and Exchange Commission.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES:
The Board of Directors held twelve meetings during fiscal 2004. 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 2004.
The Board of Directors currently has six standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee, the Finance
Committee, the Nominating Committee and the Technology Committee.
The Audit Committee (currently comprised of Messrs. Dwyer (Chair),
Sergesketter, and Ms. Kamerick) met six times in fiscal 2004. The Audit
Committee generally has direct responsibility for appointing, compensating,
retaining and overseeing the work of any independent auditors. The Committee
also is responsible for reviewing the plan and scope of the annual audit,
reviewing the Company's audit and control functions, reviewing and pre-approving
audit and permissible non-audit services and reporting to the full Board of
Directors regarding all of the foregoing and carrying out the other
responsibilities set forth in its charter. The Board of Directors has designated
each member of the Audit Committee as an "audit committee financial expert," as
that term is defined in the SEC rules adopted pursuant to the Sarbanes-Oxley
Act. The Board of Directors has determined that each current member of the Audit
Committee is independent as defined in the Nasdaq listing standards and in the
Sarbanes-Oxley Act of 2002. The Audit Committee charter is attached as Exhibit A
and is also available on the Company's website at www.westell.com.
The Compensation Committee (currently comprised of Messrs. Dwyer (Chair),
Penny, Plummer and Seazholtz) met five times in fiscal 2004. The Board of
Directors has determined that each current member of the Compensation Committee
is independent as defined in the Nasdaq listing standards. The functions of the
Compensation Committee consist of determining executive officers' salaries and
bonuses as well as administering and determining awards to be granted under the
Company's 1995 Stock Incentive Plan and Employee Stock Purchase Plan and, if
adopted, the 2004 Stock Incentive Plan.
The Finance Committee (comprised of Messrs. Simon (Chair), Cullens and
Dwyer) met twice in fiscal 2004. 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),
Sergesketter, Plummer and Cullens) met twice in fiscal 2004. The Technology
Committee was established to insure alignment between the Company's technology
initiatives and its overall business strategy.
The Nominating Committee (comprised of Messrs. Seazholtz (Chair), Plummer,
Sergesketter and Ms. Kamerick) was established in July 2004 and therefore did
not meet in fiscal 2004. Prior to the formation of the Nominating Committee, the
entire Board of Directors carried out the duties now completed by the Nominating
Committee. The Nominating Committee is responsible for: developing the criteria
and qualifications for membership on the Board; reviewing and making
recommendations to the Board as to whether existing directors should stand for
re-election; considering, screening and recommending candidates to fill new or
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open positions on the Board; recommending Director nominees for approval by the
Board and the stockholders; recommending Director nominees for each of the
Board's committees; reviewing candidates recommended by shareholders; and
conducting appropriate inquiries into the backgrounds and qualifications of
possible candidates. In general, director qualifications include highest ethical
and moral standards, business experience and expertise, industry and technology
experience and knowledge applicable to the Company's industry and corporate
management experience. The Board of Directors has determined that each of the
members of the Nominating Committee is independent as such term is defined in
the Nasdaq listing standards. The Nominating Committee charter is attached as
Exhibit B and is also available on the Company's website at www.westell.com.
The Executive Committee (comprised of Messrs. Seazholtz (Chair), Cullens,
Penny and Plumber) did not meet in fiscal 2004.
Directors who are not employees of the Company each receive $25,000 per
year for services rendered as directors, except Robert C. Penny III, who
currently receives no compensation. Directors who are members of board
committees receive $2,000 per in person meeting. On October 1, 2003 Eileen
Kamerick was issued options to purchase 50,000 shares of Class A Common Stock
that vest in equal installments over the first five anniversaries of the option
grant date. The exercise price for such options was based on the fair market
value of the options on the day of grant. In addition, all directors may be
reimbursed for certain expenses incurred in connection with attendance at Board
and Committee meetings. 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.
NOMINATING PROCEDURES
As described above, the Company has a Nominating Committee. The Nominating
Committee considers many factors when considering candidates for the Board of
Directors and strives for the Board to be comprised of directors with a variety
of experience and backgrounds who have high-level managerial experience in a
complex organization and who represent the balanced interest of stockholders as
a whole rather than those of special interest groups. Other important factors in
Board composition include strength of character, mature judgment, specialized
expertise, relevant technical skills, diversity, level of education, broad-based
business acumen, experience and understanding of strategy and policy-setting and
the extent to which the candidate would fill a present need on the Board of
Directors. Depending upon the current needs of the Board of Directors, certain
factors may be weighed more or less heavily by the Nominating Committee.
In considering candidates for the Board of Directors, the Nominating
Committee considers the entirety of each candidate's credentials and does not
have any specific minimum qualifications that must be met by a Nominating
Committee recommended nominee. However, the Nominating Committee does believe
that all members of the Board of Directors should have the highest character and
integrity, a reputation for working constructively with others, sufficient time
to devote to Board matters, and no conflict of interest that would interfere
with performance as a director. In the case of current Directors being
considered for renomination, the Nominating Committee will also take into
account the director's history of attendance at meetings of the Board of
Directors or its committees, the Director's tenure as a member of the Board of
Directors, and the Director's preparation for and participation in such
meetings.
The Nominating Committee considers candidates for the Board from any
reasonable source, including stockholder recommendations. The Nominating
Committee does not evaluate candidates differently based on who has made the
proposal. The Nominating Committee has the authority under its charter to hire
and pay a fee to consultants or search firms to assist in the process of
identifying and evaluating candidates. No such consultants or search firms have
been used to date and, accordingly, no fees have been paid to consultants or
search firms in the past fiscal year. Candidates are recommended to the Board of
Directors after consultation with the Chairman of the Board.
Stockholders who wish to suggest qualified candidates should write to the
Secretary, Westell Technologies, Inc., 750 North Commerce Drive, Aurora,
Illinois 60504, specifying the name of the candidates and stating in detail the
qualifications of such persons for consideration by the Nominating Committee. A
written statement from the candidate consenting to be named as a candidate and,
if nominated and elected, to serve as a director should accompany any such
recommendation. Stockholders who wish to nominate a director for election at an
annual meeting of the stockholders of the Company must comply with the Company's
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bylaws regarding stockholder proposals and nominations. See "Proposals of
Stockholders" contained herein.
ATTENDANCE OF ANNUAL SHAREHOLDER MEETINGS
The Company expects all board members to attend the annual meeting of
stockholders, but from time to time, other commitments may prevent all directors
from attending each meeting. All directors attended the most recent annual
meeting of shareholders, which was held on September 25, 2003.
CODE OF BUSINESS CONDUCT
The Company has adopted a Code of Business Conduct within the meaning of
Item 406(b) of Regulation S-K. This Code of Business Conduct applies to all of
our employees, including our executive officers. This Code of Business Conduct
is available on the Company's website at www.westell.com. The Company intends to
post on its website any amendments to, or waivers from its Code of Business
Conduct applicable to senior financial executives.
WHISTLEBLOWER POLICY
As part of the Company's Whistleblower Policy, the Company has made a
"whistleblower" hotline available to all employees for anonymous reporting of
financial concerns. The Audit Committee receives hotline activity reports,
including complaints on accounting, internal controls or auditing matters.
COMMUNICATIONS WITH DIRECTORS
The Board of Directors has established a process for stockholders to
communicate with members of the Board. If a stockholder has any concern,
question or complaint regarding any accounting, auditing or internal controls
matters, as well as any issues arising under Westell's Code of Business Conduct
or other matters that he or she wishes to communicate to Westell's Audit
Committee or Board of Directors, the stockholder can reach the Westell Board of
Directors by mail at Westell Technologies, Inc., Board of Directors, 750 North
Commons Drive, Aurora, IL 60504. From time to time, the Board of Directors may
change the process that stockholders may communicate to the Board of Directors
or its members. Please refer to our website at www.westell.com for any changes
in this process.
The Board of Directors recommends a vote FOR all of the nominees.
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
---- --- --------
E. Van Cullens............. 58 President and Chief Executive Officer
Nicholas C. Hindman, Sr.... 53 Treasurer, Secretary, Senior Vice President and Chief Financial Officer
John C. Clark.............. 56 Senior Vice President of Operations
William J. Noll............ 62 Senior Vice President and Chief Technology Officer
Timothy J. Reedy........... 42 Chief Executive Officer of Conference Plus, Inc.
Nicholas C. Hindman, Sr. has served as Treasurer, Secretary, Senior 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. Mr Hindman acted as a financial consultant to the
Company from 1980 to 1983.
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John C. Clark has served as Senior Vice President of Operations since April
2001. Prior to joining the Company, Mr. Clark was Vice President of
Manufacturing from September 1998 to October 2000 with 3COM. Mr. Clark was
Director of Material Management at US Robotics/3COM from January 1996 to
September 1998. From 1994 to 1996, Mr. Clark served as Area Vice President of
Operations for Caremark. He also served as Director of Materials Management for
Caremark from 1991 to 1996.
William J. Noll has served as Senior Vice President 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.
Timothy J. Reedy has served as Chief Executive Officer of Conference Plus,
Inc since October 2002. Prior to joining the Company, Mr. Reedy was Vice
President, Finance and Marketing with MCI/WorldCom Conferencing. From 1993 to
1995, Mr. Reedy also served as Vice President, Finance and Marketing at Darome
Teleconferencing. From 1984 to 1993, Mr. Reedy held several management positions
with the former Ameritech Mobile Communications, Inc.
-8-
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended March
31, 2002, 2003 and 2004, 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 other four most highly compensated executive officers who were
executive officers at March 31, 2004 (together, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG
TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------------------------------------------------- ----------
NAME AND PRINCIPAL POSITION FISCAL SALARY ($) BONUS ($) OTHER ANNUAL SECURITIES
UNDERLYING ALL OTHER
COMPENSATION OPTIONS(1) COMPENSATION
YEAR ($) (SHARES) ($)
------------------------------- ------ ----------- ----------- --------------- ----------- -------------
E.Van Cullens 2004 471,807 50,000 34,395(2) - 621,000(6)
President and Chief 2003 433,187 - - 195,541 -
Executive Officer 2002 344,898 200,000 217,182(3) 1,876,923 -
John C. Clark 2004 246,446 96,465 - 40,000 6,000(4)
Senior Vice President of 2003 239,239 - 31,714(3) 114,572 -
Operations 2002 234,519 2,500 - 122,632 -
Nicholas C. Hindman, Sr. 2004 240,286 96,465 - 40,000 5,715(4)
Treasurer, Secretary, 2003 196,854 - - 100,498 -
Senior Vice President and 2002 200,000 18,000 - 117,833 -
Chief Financial Officer
William J. Noll 2004 229,542 84,407 - 40,000 6,000(4)
Senior Vice President of 2003 183,938 38,333 - 94,581 -
Research & Development and 2002 222,000 143,600 - 135,402 -
Chief Technology Officer
Timothy J. Reedy(5) 2004 231,058 231,250 - - 2,584(4)
Chief Executive Officer of 2003 91,731 50,000 - 100,000 -
Conference Plus, Inc. 2002 - - - - -
-------------------------------
(1) Stock options granted were non-qualified stock options of Class A Common Stock and were issued under the 1995 Stock
Incentive Plan of the Company (the "Plan") except for all options issued to Mr. Cullens in fiscal year 2002 which
were issued outside of the Plan.
(2) Represents reimbursed relocation expense, professional services, life insurance and tax gross up.
(3) Represents reimbursed relocation expense and tax gross up.
(4) Represents matching discretionary contributions under the Company's 401(k) Profit Sharing Plan.
(5) Mr. Reedy joined the Company in October 2003 and was named an executive officer in fiscal 2004.
(6) Includes a $615,000 payment accrued under the Company's deferred compensation agreement with Mr. Cullens for which
amounts will vest on March 31, 2006 if Mr. Cullens is employed by the Company on that date. See the description of
the agreement under "-Employment and Severance Agreements" below. Also represents a $6,000 matching discretionary
contribution under the Company's 401(k) Profit Sharing Plan.
-9-
The following tables set forth the number of stock options granted to each
of the Named Executive Officers during fiscal 2004, the stock options exercised
by each Named Executive Officer in fiscal 2004 and exercisable and unexercisable
stock options held by the Named Executive Officers as of March 31, 2004. For
purposes of table computations the fair market value at March 31, 2004 was equal
to $7.36 per share.
OPTION GRANTS IN THE LAST FISCAL YEAR
Individual Grants Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation
For Option Term (2)
--------------------------------------------------------------------------- -------------------------
Percent of
Total
Options
Number of Granted to Exercise
Securities Employees or
Underlying in Base
Options Fiscal Price Expiration
Name Granted(#) Year(1) ($/Sh) Date 5% 10%
------------- ----------- ------------ ---------- ------------ --------- -----------
Nicholas C.
Hindman 40,000(3) 1.38% 7.370 03/29/11 $185,398 $469,835
John C.
Clark 40,000(3) 1.38% 7.370 03/29/11 $185,398 $469,835
William J.
Noll 40,000(3) 1.38% 7.370 03/29/11 $185,398 $469,835
(1) Based on 2,889,331 total options granted to employees, including the Named Executive Officers, in fiscal 2004.
(2) The potential realizable value is calculated based on the term of the option at its time of grant (ten years). It
is calculated by assuming the stock price on the date of grant appreciates at the indicated annual rate compounded
annually for the entire term of the option and that the option is exercised and sold on the last day of its term
for the appreciated stock price.
(3) These options vest over a five-year period with 20% vesting per year and have a 7-year life subject to earlier
termination upon the occurrence of certain events related to termination of employment.
FISCAL YEAR-END VALUES
----------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED END (#) FISCAL YEAR END ($)
NAME EXERCISE (#) ($)(1) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(2)
----------------------- ------------- ----------- --------------------------- -------------------------------
E. Van Cullens 150,000 1,025,400 929,751/992,713 5,068,555/4,183,169
Nicholas C. Hindman 116,811 503,250 69,750/137,820 23,168/537,131
John C. Clark 119,442 760,813 4,028/153,734 16,836/613,840
William J. Noll 107,354 674,014 278,250/140,129 377,558/544,005
Timothy J. Reedy 20,000 96,398 50,833/29,167 307,031/176,169
(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 $7.36, the average of the high and low price
of the Company's Class A Common Stock on March 31, 2004, and multiplying such amount by the number of shares
subject to the option.
-10-
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has a severance agreement with Mr. Cullens, the Chief Executive
Officer of the Company. The severance agreement provides that in the event that
Mr. Cullens is terminated without Cause (as defined therein) or he resigns for
Good Reason (as defined therein), the Company shall pay to Mr. Cullens severance
payments equal to his salary and bonus for the fiscal year in which the
termination occurs, and the severance agreement also provides for the payment of
certain amounts upon the occurrence of certain events. Mr. Cullens agreed not to
compete with the Company and not to solicit any Company employees for a period
of one year after termination in the event that his termination entitles him to
severance payments. The Company's severance payment obligations and Mr. Cullens'
right to this additional bonus shall terminate upon Mr. Cullens' death,
resignation without Good Reason, retirement or termination for Cause.
The Company also has entered into a deferred compensation program with Mr.
Cullens. The amount of deferred incentive compensation to be awarded to Mr.
Cullens in each year of his service as Chief Executive Officer of the Company is
to be based on the Company's consolidated net income before income taxes as set
forth in the Company's audited financial statements for March 31, 2004 and
subsequent fiscal years plus any gain on the sale of the Company's interest in
Conference Plus, Inc., if any. The amount of the award shall be determined as
follows:
CONSOLIDATED INCOME
BEFORE CUMULATIVE MAXIMUM CUMULATIVE MAXIMUM
INCOME TAXES RATE AWARD AWARD
-------------------------- ------ --------------- -------------------
Up to $2,500,000 5% $125,000 $ 125,000
Next $3,750,000 4% $150,000 $ 275,000
Next $6,250,000 3% $187,500 $ 462,500
Next $6,250,000 2% $125,000 $ 587,500
Next $6,250,000 1% $ 62,500 $ 650,000
All amounts awarded under the deferred compensation program shall vest on
March 31, 2006 as long as Mr. Cullens is employed by the Company on that date.
Any amounts earned by Mr. Cullens in the fiscal years ending after March 31,
2006 will be fully vested at the time the amounts are determined as set forth
above. The amounts earned under the program will also be fully vested in the
event of Mr. Cullens' death or termination of employment by permanent and total
disability prior to March 31, 2006 or upon a change in control of the Company.
Unless otherwise elected, the deferred incentive compensation earned by Mr.
Cullens and vested thereunder will be paid to Mr. Cullens upon his retirement
from the Company or other termination of employment. Mr. Cullens shall also have
the right to withdraw all vested amounts earned under the program at any time,
provided that 5% of the amount withdrawn shall be forfeited to the Company. The
Company shall establish a rabbi trust and pay to the trust from time to time an
amount equal to any amount earned under the deferred incentive compensation
program. The balance in the deferred compensation account will be paid to Mr.
Cullens in a lump sum within 30 days after a change in control of the Company or
within 90 days after his death or termination of employment by permanent and
total disability.
-11-
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for the
Company's executive compensation and employee stock option programs. It
periodically determines the compensation to be paid to the executive officers of
the Company and administers and determines the awards to be granted under the
Company's 1995 Stock Incentive Plan. The Board of Directors has determined that
each current member of the Compensation Committee is independent as defined in
the Nasdaq listing standards.
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 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
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, the Compensation Committee believes 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
2004, 120,000 stock options were granted to executive officers.
DEFERRED COMPENSATION
The Company's Chief Executive Officer has a deferred compensation
arrangement in the form of a Rabbi Trust Agreement
OTHER
Other benefits are generally those available to all other employees in the
Company, or a subsidiary, as appropriate.
-12-
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The Compensation Committee applies 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.
Internal Revenue Code section 162(m), in general, precludes a public
corporation from claiming a tax deduction for compensation in excess of $1
million in any taxable year for any executive officer named in the summary
compensation table in such corporation's proxy statement. Certain
performance-based compensation is exempt from this tax deduction limitation. The
Compensation Committee's policy is to structure executive compensation in order
to maximize the amount of the Company's tax deduction. However, the Compensation
Committee reserves the right to deviate from that policy to the extent it is
deemed necessary to serve the best interests of the Company.
This report is submitted by the Compensation Committee of the Board of
Directors.
Respectfully Submitted By:
The Compensation Committee
Paul A. Dwyer (Chair)
Robert Penny III
Roger Plummer
John W. Seazholtz
-13-
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal control. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles; the reasonableness of significant judgments; and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee by Statement on Auditing Standards No. 61, as amended by
Statement on Auditing Standards No. 90 (Communication With Audit Committees). In
addition, the Committee has discussed with the independent auditors the
auditors' independence from management and the Company, including the matters in
the written disclosures required by Independence Standards Board Standard No. 1,
and considered the compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
control, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors(and the Board has approved) that
the audited financial statements be included in the Annual Report on Form 10-K
for the year ended March 31, 2004 for filing with the Securities and Exchange
Commission. The Audit Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
The Audit Committee is governed by a charter (see Exhibit A). The Company
has determined that the current members of the Audit Committee each qualify as
an "audit committee financial expert" as defined by Item 401(h) of the
Regulation S-K and that each of them is "independent" as the term is used in the
Item 7(d)(3)(iv) of Schedule 14A under the Securities Act of 1934 as amended.
Respectfully Submitted By:
The Audit Committee
Paul A. Dwyer (Chair)
Eileen A. Kamerick
Bernard F. Sergesketter
-14-
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Dwyer (Chair),
Penny, Plummer and Seazholtz. 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.
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. This guarantee is no longer in place.
The Company has certain severance agreements with Mr. Cullens, the Chief
Executive Officer of the Company. See "Employment and Severance Agreements"
above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than 10 percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
During fiscal 2004, all such persons filed on a timely basis all reports
required by Section 16(a) of the Securities Exchange Act of 1934 with the
exception of Eileen Kamerick, who filed a Form 3 on October 21, 2003 when it was
due on October 3, 2003.
-15-
PERFORMANCE GRAPH
The following performance graph compares the 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 Nasdaq
Telecommunications Index for the period commencing April 1, 1999 and ending
March 31, 2004. The stock price performance shown in the performance graph is
not indicative of future stock price performance.
[GRAPH OMITTED]
TOTAL RETURN - DATA SUMMARY
Cumulative Total Return
-------------------------------------------------------------
4/1/99 3/00 3/01 3/02 3/03 3/04
WESTELL TECHNOLOGIES, INC. $100.00 $ 723.41 $ 76.60 $ 35.18 $ 91.69 $ 165.68
NASDAQ STOCK MARKET (U.S.) 100.00 198.50 76.58 59.96 49.22 76.27
NASDAQ TELECOMMUNICATIONS 100.00 200.59 56.98 39.33 38.02 54.46
-16-
PROPOSAL 2. APPROVAL OF THE WESTELL TECHNOLOGIES, INC. 2004 STOCK INCENTIVE
PLAN
There will be presented to the meeting a proposal to approve the Westell
Technologies, Inc. 2004 Stock Incentive Plan (the "2004 Plan"). On July 20,
2004, the Compensation Committee of the Board approved the 2004 Plan, subject to
stockholder approval. The purpose of the 2004 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.
There are only 974,347 shares available under the Company's 1995 Stock
Incentive Plans ("1995 Plan") as of July 23, 2004. Instead of amending the 1995
to increase the number of shares available under the 1995 Plan, the Company
decided that it would submit the 2004 Plan for Stockholder approval.
A SUMMARY OF THE PRINCIPAL FEATURES OF THE 2004 PLAN IS PROVIDED BELOW, BUT
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE 2004 PLAN THAT
WAS FILED ELECTRONICALLY WITH THIS PROXY STATEMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH TEXT IS NOT INCLUDED IN THE PRINTED VERSION OF THIS
PROXY STATEMENT. A COPY OF THE 2004 PLAN IS AVAILABLE FROM THE CORPORATION'S
SECRETARY AT THE ADDRESS ON THE COVER OF THIS DOCUMENT. A COPY OF THE 2004 WILL
ALSO BE POSTED ON THE COMPANY'S WEBSITE AT WWW.WESTELL.COM.
DESCRIPTION OF 2004 PLAN
PLAN ADMINISTRATION.
The 2004 Plan will generally be administered by the Compensation Committee
of the Board of Directors or another committee consisting of not less than two
directors of the Company appointed by the Board of Directors. To the extent
required by the Nasdaq National Market, the Compensation Committee shall be
composed entirely of independent directors of the Company as such term is
defined by the Nasdaq National Market. The Nasdaq National Market currently does
not require that the Compensation Committee be comprised of all independent
members as long as the compensation awarded to executive officers is approved by
a majority of the independent directors of the Company. The Compensation
Committee is authorized to establish such rules and regulations in accordance
with the 2004 Plan as it deems necessary for the proper administration of the
2004 Plan and to make such determinations and interpretations and to take such
action in connection with the 2004 Plan and any benefits granted hereunder as it
deems necessary or advisable. The Compensation Committee may also authorize one
or more officers of the Company to select employees to participate in the 2004
Plan and to determine the number of option shares and other rights to be granted
to such participants and any reference in the 2004 Plan to the Compensation
Committee shall include such officer or officers.
Failure to satisfy the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to the grant of
benefits under the 2004 Plan will not affect the validity of the action of the
Compensation Committee. But it is the Compensation Committee's intent to
maximize the deductions under the Code as much as possible. Benefits and
transactions in or involving benefits, intended to be exempt under Rule 16b-3
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
must be duly and timely authorized by the Board or a committee consisting solely
of two or more "non-employee directors" of the Company (as this requirement is
applied under Rule 16b-3 promulgated under the Exchange Act). All determinations
and interpretations made by the Compensation Committee shall be binding and
conclusive on all participants and their legal representatives.
ELIGIBILITY
All officers, employees, and non-employee directors of the Company and its
subsidiaries are eligible for benefits under the 2004 Plan as determined by the
Compensation Committee. The Compensation Committee shall consider such factors
as it deems pertinent in selecting participants and in determining the type and
amount of their respective benefits. As of July 23, 2004, there were
approximately 880 individuals eligible to participate in the 2004 Plan.
The maximum number of shares which may be awarded to any participant in any
fiscal year during the term of the 2004 Plan is 500,000 shares of Class A Common
Stock, subject to the adjustment provisions discussed below.
-17-
SHARES AVAILABLE.
The aggregate number of shares of Class A Common Stock that may be issued
or transferred to participants under the 2004 Plan shall not exceed 5,500,000
shares in addition to any shares granted but subsequently forfeited under the
1995 Plan. If there is a lapse, expiration, termination or cancellation of any
stock option issued under the 2004 Plan or the 1995 Plan prior to the issuance
of shares, or if shares of Class A Common Stock are issued under the 2004 Plan
and thereafter are reacquired by the Company, the shares subject to those
options and the reacquired shares shall be added to the shares available for
benefits under the 2004 Plan or the 1995 Plan. Shares covered by a benefit
granted under the 2004 Plan will not be counted as used unless and until they
are actually issued and delivered to a participant. Any shares covered by a
stock appreciation right shall not be counted against the number of reserved
shares unless and until they are actually issued and delivered to a participant.
Any shares exchanged by an optionee in payment of the exercise price of any
stock option, any shares retained by the Company pursuant to a participant's tax
withholding election, and any shares covered by a benefit which is settled in
cash shall be added to the shares available under the 2004 Plan.
The 5,500,000 shares of Class A Common Stock available under the 2004 Plan
represents 8.1% percent of the currently outstanding shares of Class A Common
Stock and Class B Common Stock of the Company as of July 23, 2004. As of July
23, 2004, there were 391,200 shares of Class A Common Stock available under the
1995 Plan that may be used under the 2004 Plan.
On July 22, 2004, the closing price of the Company's Class A Common Stock
on the Nasdaq National Market was $3.75 per share.
GRANTS UNDER THE 2004 PLAN
Under the 2004 Plan, the Company expects to continue its efforts to use
stock options as the Company's most widely-used form of long-term incentive. The
2004 Plan will also permit the Compensation Committee to grant stock
appreciation rights, stock awards, including restricted stock and restricted
stock units, and performance awards, all as described below (collectively,
"benefits").
Stock Option Grants
The Compensation Committee may grant options qualifying as incentive stock
options under the Internal Revenue Code and nonqualified stock options. The term
of an option shall be fixed by the Compensation Committee, but shall not exceed
ten years. The option price shall not be less than the fair market value of
common stock on the date of grant. Generally, the fair market value shall be the
closing price of the common stock on the Nasdaq National Market. Payment for
shares purchased upon exercise of a stock option must be made in full at the
time of purchase. Payment may be made in cash, by the transfer to the Company of
shares owned by the participant (or certification of such ownership), by a
cashless exercise of the option or in such other manner as may be authorized by
the Compensation Committee.
Incentive stock options may be granted only to employees of the Company.
The aggregate fair market (determined as of the time the option is granted) of
the 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
exceed $100,000.
The Compensation Committee may provide that a stock option include the
right to require a replacement stock option upon exercise of the original stock
option prior to termination of service to the Company and through payment of the
exercise price in shares of Class A Common Stock.
Stock Appreciation Rights
A stock appreciation right ("SAR") entitles the grantee to receive upon
exercise of the SAR the appreciation in the market price of a stated number of
shares of common stock during a stated term. SARs entitle the grantee to receive
the same economic value upon exercise that would have been derived from exercise
of a stock option relating to the same number of shares. The term of a SAR shall
be fixed by the Compensation Committee but cannot exceed ten years. Payment of
the appreciation may be made in cash, in shares, or a combination of both at the
discretion of the Compensation Committee. In its discretion, the Compensation
Committee may substitute SARs that can be settled only in stock for outstanding
stock options, at any time when the Company is subject to Fair Value Accounting
in accordance with Financial Accounting Standard Board's Statement of Financial
Accounting Standards No. 123.
-18-
Stock Awards: Restricted Stock and Restricted Stock Unit
Restricted stock consists of shares which are transferred or sold by the
Corporation to a participant, but are subject to substantial risk of forfeiture
and to restrictions on their sale or other transfer by the participant.
Restricted stock units provide a participant the right to receive shares at a
future date in accordance with the terms of such grant upon the attainment of
certain conditions specified by the Compensation Committee which include
substantial risk of forfeiture and restrictions on their sale or other transfer
by the participant. The Compensation Committee determines the eligible
participants to whom, and the time or times at which, grants of restricted stock
or restricted stock units will be made, the number of shares to be granted, the
price to be paid, if any, the time or times within which the shares covered by
such grants will be subject to forfeiture, the time or times at which the
restrictions will terminate, and all other terms and conditions of the grants.
Restrictions could include, but are not limited to, Performance Criteria (as
described below), continuous service with the Company, the passage of time or
other restrictions.
The grantee of restricted stock may not dispose of the shares prior to the
expiration of the restriction period. During this period, the grantee would be
entitled to vote the shares and, at the discretion of the Compensation
Committee, receive dividends. Each certificate would bear a legend giving notice
of the restrictions in the grant.
The grantee of restricted stock units may dispose of the shares subject to
the award after the expiration of the restriction period and the delivery of the
shares to the grantee. The grantee of restricted stock units would be entitled
to receive dividend equivalents, at the discretion of the Compensation
Committee, and to vote the shares after the expiration of the restriction period
and the delivery of the shares.
Performance Share Awards
Each award of performance shares shall entitle the participant to a payment
in the form of shares of Class A Common Stock upon the attainment of performance
goals and other terms and conditions specified by the Compensation Committee.
Notwithstanding satisfaction of any performance goals, the number of shares
issued under a performance shares award may be adjusted by the Compensation
Committee on the basis of such further consideration as the Compensation
Committee in its sole discretion shall determine.
PERFORMANCE GOALS
Awards of restricted stock, restricted stock units and performance shares
under the 2004 Plan may be made subject to the attainment of performance goals
relating to one or more business criteria within the meaning of Section 162(m)
of the Code, including, but not limited to, cash flow; cost; ratio of debt to
debt plus equity; profit before tax; economic profit; earnings before interest
and taxes; earnings before interest, taxes, depreciation and amortization;
earnings per share; operating earnings; economic value added; ratio of operating
earnings to capital spending; free cash flow; net profit; net sales; sales
growth; price of the Corporation's common stock; return on net assets, equity or
shareholders' equity; market share; or total return to shareholders
("Performance Criteria"). Any Performance Criteria may be used to measure the
performance of the Corporation as a whole or any business unit of the
Corporation and may be measured relative to a peer group or index. Performance
Criteria shall be calculated in accordance with the Corporation's financial
statements. Performance goals may be based in the future, on total stockholder
return as compared with the Nasdaq Stock Market-U.S. Index and the Nasdaq
Telecommunications Index or such other indices applied by the Compensation
Committee.
ADJUSTMENTS
If the Company changes the number of issued shares of Class A Common Stock
without new consideration to the Company, then the shares reserved for issuance
under the 2004 Plan and the shares covered by each outstanding benefit shall be
adjusted so that the aggregate consideration payable to the Company shall not be
changed. The number and class of shares available under the 2004 Plan and the
terms of outstanding awards may be adjusted by the Compensation Committee to
prevent dilution or enlargement of rights in the event of various changes in the
capitalization of the Corporation. The Compensation Committee shall, as it deems
appropriate and equitable, have the right to (1) proportionately adjust the
number and types of shares of Class A Common Stock (or other securities),
exercise price, or performance standards of any or all benefits and (2) make
provision for a cash payment or for substitution or exchange of any or all
benefits, in connection with any extraordinary dividend or distribution,
reclassification, recapitalization, stock split, reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Stock or securities of the
Company, or similar, unusual or extraordinary corporate transaction or a sale of
substantially all of the assets of the Company.
-19-
AMENDMENT OF THE 2004 PLAN
The Board of Directors has the right and power to amend the 2004 Plan,
provided, however, that the Board of Directors may not amend the 2004 Plan in a
manner which would impair or adversely affect the rights of the holder of a
benefit without the holder's consent. The Company will obtain stockholder
approval if the amendment increases the number of shares reserved under the 2004
Plan, if the amendment increases the maximum amount of shares that may be
subject to awards to a participant in a year or if the Code or any other
applicable statute, rule or regulation, including, but not limited to, those of
any securities exchange on which the stock is listed or traded, requires
stockholder approval with respect to the 2004 Plan or the amendment.
TERMINATION OF THE 2004 PLAN
The 2004 Plan may be terminated at any time by the Board of Directors.
Termination will not in any manner impair or adversely affect any benefit
outstanding at the time of termination.
COMMITTEE'S RIGHT TO MODIFY BENEFITS
Any benefit granted may be converted, modified, forfeited, or canceled, in
whole or in part, by the Compensation Committee if and to the extent permitted
in the 2004 Plan, or applicable agreement entered into in connection with a
benefit grant or with the consent of the participant to whom such benefit was
granted. In no event shall the Compensation Committee cancel any outstanding
stock option for the purpose of reissuing the option to the participant at a
lower exercise price or reduce the option price of an outstanding option.
FEDERAL TAX TREATMENT
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the 2004 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. 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.
A participant who is granted a non-qualified 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 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 stock, restricted
stock units or performance shares awards will generally 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. When the restrictions lapse on restricted
stock or the performance goals on performance shares are met, the participant
will recognize taxable income in an amount equal to the fair market value of the
shares at such time. A participant will realize taxable income upon delivery of
shares pursuant to a restricted stock unit. In general, the Company will be
entitled to a corresponding tax deduction except to the extent that restricted
stock, restricted stock units or performance shares granted to "named executive
officers" (as defined by the SEC) are not subject to restrictions based on
Performance Criteria.
LIMITATION ON THE CORPORATION'S DEDUCTION
Under Section 162(m) of the Code, the Company may not deduct otherwise
deductible compensation paid to "covered employees" (i.e., generally, the Chief
Executive Officer and the four highest compensated officers of the Company) to
the extent that such compensation exceeds $1 million. An exception applies,
however, for performance-based compensation if the terms under which such
compensation is paid are approved by the Company's stockholders and certain
other requirements are satisfied. The Compensation Committee's policy is to
structure executive compensation in order to maximize the amount of the
Company's tax deduction. However, the Compensation Committee reserves the right
-20-
to deviate from that policy to the extent it is deemed necessary to serve the
best interests of the Company.
Although the Company intends that awards under the 2004 Plan (other than
awards not based on Performance Criteria) will satisfy the requirements to be
considered performance-based compensation for purposes of Section 162(m) of the
Code, there is no assurance such awards will satisfy such requirements, and,
accordingly, Section 162(m) of the Code may limit the amount of deductions
otherwise available to the Company (as described above) with respect to awards
to "covered employees" under the 2004 Plan. The inclusion of the limits on
individual awards and the Performance Criteria discussed above satisfy the
requirements of Section 162(m) by establishing a maximum number of shares that
may be represented by awards granted to any employee and by specifying the
factors that may be used by the Compensation Committee with respect to awards
made under the 2004 Plan.
OTHER INFORMATION
As the administration of the 2004 Plan involves discretionary choices by
the Compensation Committee, awards to be granted under the 2004 Plan in fiscal
2005 are not now determinable. Stock awards granted under the 1995 Plan in
fiscal 2004 are disclosed under the heading "Executive Compensation" elsewhere
in this Proxy Statement.
EFFECT OF APPROVAL OF THE 2004 PLAN
Approval by the stockholders of the 2004 Plan will make more shares of
Class A Common Stock available for the award of benefits and provide the
Compensation Committee with more flexibility to award benefits under the 2004
Plan.
APPROVAL OF THE 2004 PLAN BY STOCKHOLDERS
The affirmative vote of holders of a majority of the voting power, voting
as a single class, of the Company that is represented and entitled to vote at
the Annual Meeting is required for approval of the 2004 Plan. Abstentions will
count as a vote against the proposal, but broker non-votes will have no effect.
The Board of Directors recommends a vote FOR approval of the Westell
Technologies, Inc. 2004 Stock Incentive Plan.
-21-
PROPOSAL 3. APPROVAL OF THE AMENDMENT TO THE WESTELL TECHNOLOGIES, INC.
EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER
THE EMPLOYEE STOCK PLAN BY 300,000 SHARES.
The Board of Directors believes it is in the best interests of the Company
to encourage stock ownership by employees of the Company. Accordingly, the
Westell Technologies, Inc. Employee Stock Purchase Plan (the "Employee Purchase
Plan") was initially adopted in 1995 and authorized the sale to employees of up
to an aggregate of 217,950 shares of Class A Common Stock issued under the plan.
The Board of Directors has approved, subject to stockholder approval, amending
the Employee Purchase Plan to increase the aggregate number of shares of Common
Stock available for sale to employees by 300,000 shares.
If our stockholders approve this amendment, an additional 300,000 shares
will be available for purchase by eligible employees under the Employee Purchase
Plan. As of July 22, 2002, the Company had issued and employees had purchased
all of the 217,950 shares authorized under the Employee Purchase Plan.
A summary of the principal features of the Employee Purchase Plan is
provided below, but is qualified in its entirety by reference to the full text
of the Employee Purchase Plan that was filed electronically with this proxy
statement with the Securities and Exchange Commission as Exhibit C. Such text is
not included in the printed version of this proxy statement. A copy of the
Employee Purchase Plan is available from the Company's Secretary at the address
on the cover of this document. A copy of the Employee Purchase Plan is available
from the Company's Secretary at the address on the cover of this document.
ADMINISTRATION AND ELIGIBILITY
The Employee Purchase Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). The Committee has the authority to
make rules and regulations governing the administration of the Employee Purchase
Plan. The Committee may delegate the administration of the Employee Purchase
Plan in accordance with the terms of the plan.
Substantially all full-time employees of the Company and designated
subsidiaries are eligible to participate in the Employee Purchase Plan, except
that the following may be excluded at the discretion of the Committee: (i)
employees whose customary employment is 20 hours or less per week; (ii)
employees whose customary employment is for not more than 5 months per year; and
(iii) employees who have not been employed for at least one year as of any
enrollment date. As of July 22, 2004, approximately 850 employees were eligible
to participate in the Employee Purchase Plan.
PARTICIPATION AND TERMS
An eligible employee may elect to participate in the Employee Purchase Plan
as of any Enrollment Date. "Enrollment Dates" occur on the first day of the
offering period which is currently set at three-month intervals beginning on
approximately January 1, April 1, July 1 and October 1. To participate in the
Employee Purchase Plan an employee must complete an enrollment and payroll
deduction authorization form provided by the Company which indicates the amounts
to be deducted from his or her salary and applied to the purchase of the shares
on the Share Purchase Date (as hereinafter defined). The payroll deduction must
be within limits set by the Committee.
A payroll deduction account is established for each participating employee
by the Company and all payroll deductions made on behalf of each employee are
credited to each such employee's respective payroll deduction account. On the
last trading day of each offering period (the "Share Purchase Date"), the amount
credited to each participating employee's payroll deduction account is applied
to purchase as many shares as may be purchased with such amount at the
applicable purchase price.
The purchase price for the shares purchased from the Company will be 85% of
the average of the high and low reported sales prices of shares of Class A
Common Stock as reported on the Nasdaq National Market for the Share Purchase
Date. If no sales of Class A Common Stock were reported on that date, the
purchase price shall be such average price of the Class A Common Stock reported
for the last preceding date on which sales of Class A Common Stock were so
reported. The Purchase Price Shares purchased on the open market will be the
weighted average price per share of all shares so purchased on the Share
Purchase Date. Employees may purchase shares through the Employee Purchase Plan
only by payroll deductions.
-22-
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend the Employee Purchase Plan
at any time, provided that if stockholder approval is required for the plan to
continue to comply with the requirements of Securities and Exchange Commission
Regulation Section 240.16b-3 or Section 423 of the Internal Revenue Code (the
"Code"), such amendment shall not be effective unless approved by all of the
Company's stockholders within twelve months after the date of the adoption by
the Board of Directors.
The Employee Purchase Plan may be terminated by the Board of Directors at
any time.
FEDERAL INCOME TAX CONSEQUENCES
The Employee Purchase Plan is intended to be an "employee stock purchase
plan" as defined in Section 423 of the Code. As a result, an employee
participant will pay no federal income tax upon enrolling in the Employee
Purchase Plan or upon purchase of the shares. A participant may recognize income
and/or gain or loss upon the sale or other disposition of shares purchased under
the plan, the amount and character of which will depend on whether the shares
are held for two years from the first day of the offering period.
If the participant sells or otherwise disposes of the shares within that
two-year period, the participant will recognize ordinary income at the time of
disposition in an amount equal to the excess of the market price of the shares
on the date of purchase over the purchase price and the Company will be entitled
to a tax deduction for the same amount.
A participant who exercises an incentive stock option and sells the shares
before having held them for at least one year after exercise and two years after
grant will have taxable income equal to the lesser of the gain realized upon the
sale or the excess of the fair market value of the shares over the exercise
price on the date of exercise and the Company will be entitled to a
corresponding tax deduction. Any additional gain or loss on the sale will be
treated as long-term or short-term capital gain depending on the length of the
holding period.
The exercise of an incentive stock option may in some cases trigger
liability for the alternative minimum tax.
If the participant sells or otherwise disposes of the shares after holding
the shares for the two-year period, the participant will recognize ordinary
income at the time in an amount equal to the lesser of (i) the excess of the
market price of the shares on the first day of the offering period over the
purchase price, or (ii) the excess of the market price of the shares at the time
of disposition over the purchase price. The Company will not be entitled to any
tax deduction with respect to shares purchased under the Employee Purchase Plan
if the shares are held for the requisite two-year period.
The employee may also recognize capital gain or loss at the time of
disposition of the shares, either short-term or long-term, depending on the
holding period for the shares.
OTHER INFORMATION
On July 22, 2004, the closing price of the Class A Common Stock was $3.75
per share.
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN BY STOCKHOLDERS
The affirmative vote of holders of a majority of the voting power, voting
as a single class, of the Company that is represented and entitled to vote at
the Annual Meeting is required for approval of the amendment to the Employee
Stock Purchase Plan. Abstentions will count as a vote against the proposal, but
broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE WESTELL TECHNOLOGIES, INC. EMPLOYEE STOCK PURCHASE PLAN.
-23-
EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATION AS OF MARCH 31, 2004
NUMBER OF SECURITIES TO WEIGHTED AVERAGE EXERCISE NUMBER OF SECURITIES REMAINING
BE ISSUED UPON EXERCISE PRICE OF OUTSTANDING AVAILABLE FOR FUTURE ISSUANCE
OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS REFLECTED IN THE FIRST COLUMN)
---------------------------- -------------------------- --------------------------- --------------------------------
EQUITY COMPENSATION PLANS
APPROVED BY SECURITY 7,759,762 $6.00 818,875
HOLDERS
EQUITY COMPENSATION PLANS
NOT APPROVED BY SECURITY 1,776,923 2.61 --
HOLDERS*
-------------------------- --------------------------- --------------------------------
TOTAL 9,536,685 $5.37 818,875
========================== =========================== ================================
*Reflects non-qualified stock options of Class A Common Stock granted to E. Van Cullens and one other employee in fiscal
2002. 1.1 million of these options vest over a four-year period with 25% vesting per year. The remainder are performance
based and vest at the earlier of achievement of certain performance goals or eight years. The strike price on 0.9
million, 0.4 million and 0.4 million and 0.1 million of the options is $1.95, $2.00, $5.00 and $1.32 per share,
respectively.
-24-
PROPOSAL 4. RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors for fiscal 2004 were Ernst & Young LLP.
Selection of independent auditors is made by the Audit Committee.
Although we are not required to do so, we believe that it is appropriate to
request that stockholders ratify the appointment of Ernst & Young. If
stockholders do not ratify the appointment, the Audit Committee will investigate
the reasons for the stockholders' rejection and reconsider the appointment.
Representatives of Ernst & Young will be at the Annual Meeting, will be given
the opportunity to make a statement and will be available to respond to
appropriate questions.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS FOR FISCAL YEAR
ENDING MARCH 31, 2005.
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 31 2004, and
(ii) the review of Westell's quarterly financial statements set forth in
Westell's Quarterly Report on Form 10-Q for the quarters ended June 30, 2003,
September 30, 2003, and December 31, 2003 were approximately $429,000. The fees
for those services in fiscal 2003 were $392,000.
Set forth below is a summary of certain fees paid to Ernst & Young for
services for the fiscal years 2003 and 2004.
FISCAL FISCAL
2003 2004
----------------- ---------------
Audit Fees $ 392,000 $429,000
Audit-Related Fees 52,000 18,000
Tax Fees 40,000 18,000
----------------- ---------------
Total $ 484,000 $ 465,000
AUDIT RELATED FEES
Audit related services include work performed by the independent auditors
with respect to accounting assistance.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no information technology services rendered by Ernst & Young LLP
during fiscal year 2003 or 2004.
ALL OTHER FEES
All other fees include work performed by the independent auditors with
respect to tax compliance and other tax consulting.
-25-
CONSIDERATION OF NON-AUDIT SERVICES PROVIDED BY INDEPENDENT ACCOUNTANT
The audit committee has considered whether the services provided under
other non-audit services are compatible with maintaining the auditor's
independence and has determined that such services are compatible.
AUDIT COMMITTEE PRE-APPROVAL POLICIES
The Audit Committee has adopted policies and procedures for pre-approving
all non-audit work performed by Ernst & Young. The Committee will annually
pre-approve services in specified accounting areas. The Committee also annually
pre-approves the budget for annual GAAP and statutory audits.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be included in the Company's proxy statement and
presented at the 2005 Annual Meeting must be received at the Company's executive
offices, 750 North Commons Drive Aurora, Illinois 60504 by no later than April
12, 2005 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
2005 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
2004 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 2004 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.,
Senior Vice President and Chief Financial Officer, 750 North Commons Drive,
Aurora, Illinois 60504; telephone number (630) 898-2500.
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.
Senior Vice President and Chief Financial Officer
Date: August 10, 2004
-26-
EXHIBIT A
WESTELL TECHNOLGIES, INC.
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 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 with management and the independent auditors an analysis of the
effect of alternative GAAP methods on the Company's financial
statements and a description of any transactions as to which
management obtained Statement on Auditing Standards No 50 letters.
o Review with management and the independent auditors the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
o Review changes in account 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 problem 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 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 independent accountants. In
connection with its oversight of the external audit coverage, the Audit
Committee will:
-27-
o Recommend to the Board the appointment of the independent accountants.
o Review the experience and qualifications of the senior members of the
independent auditor's team and the quality control procedures of the
independent auditor.
o Approve the retention of the independent auditors for any non-audit
service and the fee for such service.
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
(no 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.
o Review with the independent auditors any disagreements with
management.
(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.
o Reports from management should include "disclosures of insider and
affiliated party transactions".
(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.
-28-
EXHIBIT B
WESTELL TECHNOLGIES, INC.
NOMINATING COMMITTEE CHARTER
1. MEMBERSHIP
o The Nominating Committee (the "Committee") shall consist of at least
three members of the Board of Directors (the "Board") as the Board
shall from time to time determine. Each member shall be "independent"
as that term is defined by the listing standards of Nasdaq at the time
of the member's appointment to the Committee.
o The Chairman of the Board will select the initial members of the
Committee with concurrence of a majority of the Board. Thereafter, the
members of the Committee shall be elected by the Board of Directors at
its first meeting following the Annual Meeting of Shareholders.
2. MEETINGS
o The Committee shall meet at such times as it seems appropriate. A
majority of members shall constitute a quorum. A majority of the
members present shall decide any question brought before the
Committee.
3. POWERS AND DUTIES
The Committee's primary responsibilities shall be:
o Developing the criteria and qualifications for membership on the
Board. The initial qualifications attached as Exhibit I, are subject
to change from time to time at the discretion of the Committee;
o Reviewing and making recommendations to the Board as to whether
existing directors should stand for re-election;
o Considering, screening and recommending candidates to fill new or open
positions on the Board;
o Recommending Director nominees for approval by the Board and the
stockholders;
o Recommending Director nominees for each of the Board's committees;
o Reviewing candidates recommended by shareholders; and
o Conducting appropriate inquiries into the backgrounds and
qualifications of possible candidates.
CRITERIA AND QUALIFICATIONS FOR MEMBERSHIP ON THE WESTELL TECHNOLOGIES, INC
---------------------------------------------------------------------------
BOARD OF DIRECTORS:
-------------------
1. An established public profile, well regarded in the community with a
long-term reputation for highest ethical and moral standards.
2. An independent, objective, candid and constructive approach to business.
3. Operational experience at senior levels with a track record of high
achievement.
4. A strategic perspective with an awareness of the dynamics of change and the
ability to anticipate and capitalize on new business opportunities and to
facilitate important customer/partner relationships.
5. A history of significant business or professional responsibilities leading
to a positive record of accomplishment in present and prior business.
6. Business and/or professional knowledge and experience applicable to the
Company's industry along with a broad and active network of contacts in the
telecommunications/high technology sectors.
-29-
7. Willingness to devote the necessary time to assume the full
responsibilities of being a member of the Board.
8. Familiarity with corporate financial management, reporting, SEC rules and
regulations as well as new corporate governance initiatives such as
Sarbanes-Oxley, etc.
-30-
Exhibit B
WESTELL TECHNOLOGIES, INC.
2004 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the Westell Technologies, Inc. 2004 Stock
Incentive Plan (the "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.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") which shall be the Compensation Committee of the Board of Directors
or another committee consisting of not less than two directors of the Company
appointed by the Board of Directors. To the extent required by any applicable
listing agency, the Committee charged with administering the Plan shall be
composed entirely of independent directors of the Company (within the meaning of
the applicable listing agency). Any action taken by, or inaction of, the
Company, any subsidiary or affiliate, or the Committee relating or pursuant to
the Plan and within its authority hereunder or under applicable law shall be
within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations as it deems
necessary for the proper administration of the Plan and to make such
determinations and interpretations and to take such action in connection with
the Plan and any Benefits granted hereunder as it deems necessary or advisable.
The Committee may authorize one or more officers of the Company to select
employees to participate in the Plan and to determine the number of option
shares and other rights to be granted to such participants and any reference in
the Plan to the Committee shall include such officer or officers.
Failure to satisfy the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to the grant of
Benefits hereunder shall not affect the validity of the action of the Committee
otherwise duly authorized and acting in this matter. Benefits and transactions
in or involving Benefits, intended to be exempt under Rule 16b-3 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), must be
duly and timely authorized by the Board or a committee consisting solely of two
or more "non-employee directors" of the Company (as this requirement is applied
under Rule 16b-3 promulgated under the Exchange Act). All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants and their legal representatives. No member of the Board, no member
of the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, by any other member or employee or by any agent to
whom duties in connection with the administration of this Plan have been
delegated or, except in circumstances involving his or her bad faith, gross
negligence or fraud, for any act or failure to act by the member or employee.
3. ELIGIBILITY. Benefits under the Plan shall be granted to officers,
employees, and non-employee directors of the Company and its subsidiaries
selected initially and from time-to-time thereafter by the Committee on the
basis of the special importance of their services in the management, development
and operations of the Company and its subsidiaries. For these purposes, any
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corporation, partnership or other entity in which the Company has a substantial
financial interest may qualify as a subsidiary. Designation of a participant in
any year shall not require the Committee to designate such person to receive a
Benefit in any other year or, once designated, to receive the same type or
amount of Benefit as granted to the participant in any year. The Committee shall
consider such factors as it deems pertinent in selecting participants and in
determining the type and amount of their respective Benefits.
4. BENEFITS. The Benefits awarded under the Plan shall consist of (a) stock
options, (b) stock appreciation rights, (c) stock awards, including restricted
stock and restricted stock units, and (d) performance awards, all as described
below (collectively, "Benefits").
5. SHARES RESERVED. There is hereby reserved for issuance under the Plan an
aggregate of 5,500,000 shares of Class A Common Stock of the Company which may
be authorized but unissued or treasury shares. All of such shares may, but need
not, be issued pursuant to the exercise of incentive stock options. The maximum
number of shares which may be awarded to any participant in any fiscal year
during the term of the Plan is 500,000 shares. If there is a lapse, expiration,
termination or cancellation of any Stock Option issued under the Plan prior to
the issuance of shares thereunder or if shares of Class A Common Stock are
issued under the Plan and thereafter are reacquired by the Company, the shares
subject to those options and the reacquired shares shall be added to the shares
available for benefits under the Plan. Shares covered by a Benefit granted under
the Plan shall not be counted as used unless and until they are actually issued
and delivered to a participant. Any shares covered by a Stock Appreciation Right
shall be counted as used only to the extent shares are actually issued to the
participant upon exercise of the right. In addition, any shares of Class A
Common Stock exchanged by an optionee as full or partial payment to the Company
of the exercise price under any Stock Option exercised under the Plan, any
shares retained by the Company pursuant to a participant's tax withholding
election, and any shares covered by a Benefit which is settled in cash shall be
added to the shares available for Benefits under the Plan.
The shares authorized hereunder are in addition to shares previously
reserved under the Company's 1995 Stock Incentive Plans (the "Prior Plan"). Any
shares of Class A Common Stock reserved under the Prior Plan in excess of the
number of shares as to which options or other benefits were granted prior to the
date of the adoption of this Plan by the Board of Directors, plus any shares as
to which options or other benefits granted under the Prior Plan may lapse,
expire or terminate after such date, shall be available for issuance in
connection with awards under this Plan.
6. STOCK OPTIONS. Stock options shall consist of options to purchase shares
of Class A Common Stock of the Company and shall be either incentive stock
options (within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or any successor legislation) or non-qualified stock options as
determined by the Committee. The option price shall be not less than 100% of the
fair market value of the shares on the date the option is granted. The option
price upon exercise of any option shall be payable to the Company in full either
(a) in cash or its equivalent; (b) by tendering previously acquired shares
having a fair market value at the time of exercise equal to the option price;
(c) by a certification of ownership of such previously-acquired shares; (d) by
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
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proceeds from the option shares or loan proceeds to pay the exercise price and
withholding taxes due to Company; or (e) such other methods of payment as the
Committee at its discretion deems appropriate. In no event shall the Committee
cancel any outstanding stock option for the purpose of reissuing the option to
the participant at a lower exercise price or reduce the option price of an
outstanding option.
Stock options shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Committee at grant;
provided, however, that no stock option shall be exercisable later than ten
years after the grant date. In the event of termination of service to the
Company, all stock options shall terminate at such times and upon such
conditions as the Committee shall, in its discretion, set forth in such options
at the date of grant.
Incentive stock options shall be granted only to participants who are
employees of the Company or one of its subsidiaries (within the meaning of
Section 424(f) of the Internal Revenue Code) at the date of grant. The aggregate
fair market value (determined as of the time the option is granted) of the
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 (under
all option plans of the Company and its subsidiaries) shall not exceed $100,000.
Options designated as "incentive stock options" that fail to continue to meet
the requirements of Section 422 of the Internal Revenue Code shall be
redesignated as nonqualified options for Federal income tax purposes
automatically without further action by the Committee on the date of such
failure to continue to meet the requirements of Section 422 of the Code.
The Committee may provide, either at the time of grant or subsequently,
that a stock option include the right to acquire a replacement stock option upon
exercise of the original stock option (in whole or in part) prior to termination
of service to the Company of the participant and through payment of the exercise
price in shares of Class A Common Stock. The terms and conditions of a
replacement option shall be determined by the Committee in its sole discretion.
The Committee may also grant stock options in substitution for or in
cancellation of outstanding stock options.
7. STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted to the holder of any stock option granted hereunder. The Committee also
may, in its sole discretion, substitute SARs which can be settled only in stock
for outstanding stock options, at any time when the Company is subject to Fair
Value Accounting in accordance with Financial Accounting Standard Board's
Statement of Financial Accounting Standards No. 123. The grant price of a tandem
or substitute SAR shall be equal to the option price of the related option. In
addition, stock appreciation rights may be granted independently of and without
relation to options. Each stock appreciation right shall be subject to such
terms and conditions consistent with the Plan as the Committee shall impose from
time to time, including the following:
(a) A stock appreciation right may be granted with respect to a stock
option at the time of its grant or at any time thereafter up to six months
prior to its expiration.
(b) Each stock appreciation right will entitle the holder to elect to
receive the appreciation in the fair market value of the shares subject
thereto up to the date the right is exercised. In the case of a right
issued in relation to a stock option, such appreciation shall be measured
from not less than the option price and in the case of a right issued
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independently of any stock option, such appreciation shall be measured from
not less than the fair market value of the Class A Common Stock on the date
the right is granted. Payment of such appreciation shall be made in cash or
in Class A Common Stock, or a combination thereof, as set forth in the
award, but no stock appreciation right shall entitle the bolder to receive,
upon exercise thereof, more than the number of shares of Class A Common
Stock (or cash of equal value) with respect to which the right is granted.
(c) Each stock appreciation right will be exercisable at the times and
to the extent set forth therein, but no stock appreciation right may be
exercisable prior to six months after the grant date nor later than ten
years after the grant date. Exercise of a stock appreciation right shall
reduce the number of shares issuable under the Plan (and the related
option, if any) by the number of shares with respect to which the right is
exercised; provided, however, that the exercise of any stock appreciation
right granted independently of an option for cash only shall not reduce the
number of shares issuable under the Plan.
8. STOCK AWARDS (RESTRICTED STOCK AND RESTRICTED STOCK UNITS).
The Committee may award or sell shares of restricted stock to participants
subject to such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other disposition of
shares, rights of the Company to reacquire such shares upon termination of the
participant's employment within specified periods, and the attainment of
performance goals. Each participant who has been awarded or purchases shares of
restricted stock shall have such rights of a stockholder with respect to such
shares as the Committee may designate at the time of the award, including the
right to vote such shares and the right to receive dividends paid on such
shares. Any dividends or distributions paid in shares of Class A Common Stock
with respect to restricted stock shall be subject to the same restrictions and
terms and conditions as the shares of restricted stock with respect to which
they are paid.
Restricted stock units and stock equivalent units provide the participant
the right to receive shares of Class A Common Stock at a future date subject to
such terms and conditions as the Committee determines appropriate, including,
without limitation, restrictions on the sale or other disposition of the units,
forfeiture of the units upon termination of the participant's employment or
service as a director within specified periods and the attainment of performance
goals. Each participant who has been awarded restricted stock units or stock
equivalent units shall have no rights of a stockholder with respect to the
shares subject to the units until shares are actually issued to the participant
at the end of the deferral period. The Committee may, in its discretion, include
the right to receive dividend equivalents in connection with such restricted
stock units or stock equivalent units.
The Committee may, with the consent of the holder, convert any outstanding
shares of restricted stock into restricted stock units or stock equivalent
units.
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9. PERFORMANCE AWARDS.
(a) Performance Awards may be granted to participants at any time and
from time to time, as shall be determined by the Committee. The Committee
shall have complete discretion in determining the number, amount and timing
of awards granted to each participant. Such Performance Awards may take the
form determined by the Committee, including without limitation, cash,
shares of Class A Common Stock, performance units and performance shares,
or any combination thereof. Performance Awards may be awarded as short-term
or long-term incentives. The Committee shall set performance goals at its
discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Awards that will be paid
out to the participants, and may attach to such Performance Awards one or
more restrictions. Performance goals may be based upon, without limitation,
Companywide, divisional, project, team, and/or individual performance.
(b) The Committee shall have the authority at any time to make
adjustments to performance goals for any outstanding Performance Awards
which the Committee deems necessary or desirable unless at the time of
establishment of goals the Committee shall have precluded its authority to
make such adjustments.
(c) Payment of earned Performance Awards shall be made in accordance
with terms and conditions prescribed or authorized by the Committee.
participants may elect to defer, or the Committee may require the deferral
of, the receipt of Performance Awards upon such terms as the Committee
deems appropriate.
10. PERFORMANCE GOALS. Awards of Restricted Stock, Restricted Stock Units
and Performance Shares under the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Section 162(m) of the Code, including, but not limited to, cash flow; cost;
ratio of debt plus equity; profit before tax; economic profit; earnings before
interest and taxes; earnings before interest, taxes, depreciation and
amortization; earnings per share; operating earnings; economic value added;
ratio of operating earnings to capital spending; free cash flow; net profit; net
sales; sales growth; price of the Class A Common Stock or other capital stock of
the Company; return on net assets, equity or stockholders' equity; market share;
or total return to stockholders ("Performance Criteria"). Any Performance
Criteria may be used to measure the performance of the Company as a whole or any
business unit of the Company and may be measured relative to a peer group or
index. Performance Criteria shall be calculated in accordance with the Company's
financial statements. Performance goals may be based in the future on total
stockholder return as compared with the Nasdaq Stock Market--U.S. Index and the
Nasdaq Telecommunications Index or such other indices applied by the Committee.
11. NONTRANSFERABILITY. Stock options and other Benefits granted under the
Plan shall not be transferable other than by will or the laws of descent and
distribution and each stock option and stock appreciation right shall be
exercisable during the participant's lifetime only by the participant or the
participant's guardian or legal representative. Notwithstanding the foregoing,
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at the discretion of the Committee, an award of a Benefit may permit the
transfer of the Benefit by the participant solely to members of the
participant's immediate family (as defined by the Committee) or trusts or family
partnerships for the benefit of such persons subject to such terms and
conditions as may be established by the Committee.
12. OTHER PROVISIONS. (a) The award of any Benefit under the Plan may also
be subject to other provisions (whether or not applicable to the Benefit awarded
to any other participant) as the Committee determines appropriate. These
provisions may include, without limitation:
(i) provisions for the installment purchase of Class A Common Stock under
stock options;
(ii) provisions for the installment exercise of stock appreciation rights;
(iii) provisions to assist the participant in financing the acquisition of
Class A Common Stock;
(iv) understandings or conditions as to the participant's employment;
(v) requirements or inducements for continued ownership of Class A Common
Stock after exercise or vesting of benefits, forfeiture of awards in the event
of termination of employment shortly after exercise or vesting, or breach of
noncompetition or confidentiality agreements following termination of
employment;
(vi) provisions permitting the deferral of the receipt of a benefit for
such period and upon such terms as the Committee shall determine;
(vii) provisions for restrictions on resale or other disposition of Class A
Common Stock acquired under any form of Benefit;
(viii) provisions for the acceleration of exercisability or vesting of
Benefits in the event of a change of control of the Company or the payment of
the value of Benefits to participants in the event of a change of control of the
Company; or
(ix) provisions as may be required to comply with federal or state
securities laws and stock exchange requirements and understandings or conditions
as to the participant's service to the Company.
(b) In the event any benefit under this Plan is granted to a participant
who is employed or providing services outside the United States and who is not
compensated from a payroll maintained in the United States, the Committee may,
in its sole discretion, modify the provisions of the Plan as they pertain to
such individuals to comply with applicable law, regulation or accounting rules
and to meet the objectives and purpose of the Plan and the Committee may, in its
discretion, establish one or more sub plans to reflect such amended or varied
provisions.
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(c) The Committee, in its sole discretion, may permit or require a
participant to have amounts or shares of Class A Common Stock that otherwise
would be paid or delivered to the participant as a result of the exercise or
settlement of an award under the Plan credited to a deferred compensation or
stock unit account established for the participant by the Committee on the
Company's books of account.
13. FAIR MARKET VALUE. The fair market value of the Company's Class A
Common Stock at any time shall be determined in such manner as the Committee may
deem equitable or as required by applicable law or regulation.
14. ADJUSTMENT PROVISIONS. If the Company shall at any time change the
number of issued shares of Class A Common Stock without new consideration to the
Company (such as by stock dividend or stock split), the total number of shares
reserved for issuance under the Plan and the number of shares covered by each
outstanding Benefit shall be adjusted so that the aggregate consideration
payable to the Company, if any, shall not be changed. Except as provided below
with respect to mergers, consolidations or combination of the Company with or
into another corporation, in the event of any stock dividend, stock split,
recapitalization, share combination, spin off, sale of all or substantially all
of the assets, extraordinary dividend, reorganization, or other change in
corporate structure of the Company affecting the Class A Common Stock, such
equitable adjustment shall be made in the number and class of shares which may
be delivered under the Plan (including the limits on stock options, stock
appreciation rights, restricted stock, restricted stock units and performance
shares), and in the number and class of and/or price of shares subject to
outstanding stock options, stock appreciation rights or other awards so that the
aggregate consideration payable to the Company and the value of each option,
stock appreciation right or other awards shall not be changed. Adjustments may
include the substitution of other property, including other securities, for the
stock covered by outstanding awards and the assumption or replacement with new
awards of awards held by participants terminating employment as a result of a
spin-off or divestiture.
Notwithstanding any other provision of the Plan, and without affecting the
number of shares reserved or available hereunder, the Board of Directors may
authorize the issuance or assumption of Benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.
In the case of any merger, consolidation or combination of the Company with
or into another corporation which results in the outstanding Class A Common
Stock of the Company being converted into or exchanged for different securities,
cash or other property, or any combination thereof, there shall be substituted,
on an equitable basis as determined by the Committee in its discretion, for each
share of Class A Common Stock then subject to an award granted under the Plan,
the number and kind of shares of stock, other securities, cash or other property
to which holders of Class A Common Stock of the Company will be entitled
pursuant to the transaction
15. TAXES. The Company shall be entitled to withhold the amount of any tax
attributable to any shares deliverable under the Plan after giving the person
entitled to receive the shares notice as far in advance as practicable and the
Company may defer making delivery as to any Benefit if any such tax is payable
until indemnified to its satisfaction. The Committee may, in its discretion and
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subject to rules which it may adopt, permit a participant to pay all or a
portion of the taxes arising in connection with any Benefit under the Plan by
electing to have the Company withhold shares of Class A Common Stock from the
shares otherwise deliverable to the participant, having a fair market value
equal to the amount to be withheld.
16. DURATION OF PLAN; AMENDMENT, MODIFICATION OR CANCELLATION OF BENEFITS.
The Plan shall continue in effect until terminated by the Board pursuant to
Section 16; provided, however, that no incentive stock option shall be granted
more than ten years after the date of the adoption of the Plan by the Board. The
terms and conditions applicable to any Benefits granted hereunder may at any
time be amended or cancelled by mutual agreement between the Committee and the
participant or any other persons as may then have an interest therein and may be
unilaterally modified by the Committee whenever such modification is deemed
necessary to protect the Company or its Stockholders.
17. AMENDMENT OR DISCONTINUATION OF PLAN. The Board of Directors may amend
the Plan at any time, provided that no such amendment shall be effective unless
approved within 12 months after the date of the adoption of such amendment by
the affirmative vote of stockholders holding shares of Class A Common Stock
and/or Class B Common Stock entitled to a majority of the votes represented by
all outstanding shares of Class A Common Stock and Class B Common Stock entitled
to vote if such stockholder approval is required for the Plan to continue to
comply with the requirements of Securities and Exchange Commission Regulation
ss. 240.16b-3. The Board of Directors may suspend the Plan or discontinue the
Plan at any time; provided, however, that no such action shall adversely affect
any outstanding Benefit.
18. STOCKHOLDER APPROVAL. The Plan was adopted by the Board of Directors of
the Company on July 20, 2004, subject to stockholder approval.
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PROXY WESTELL TECHNOLOGIES, INC. PROXY
This Proxy is solicited by the Board of Directors of Westell Technologies,
Inc. for the Annual Meeting of Stockholders, on September 23, 2004, 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, 2
and 3.
(THIS PROXY IS CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
(Comments/Change of Address)
------------------------------------
------------------------------------
------------------------------------
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(This proxy is continued and to be (If you have written in the above space,
signed on the reverse side.) please mark the corresponding box on the
reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- FOLD AND DETACH HERE -
THE FOLLOWING MATTERS ARE PROPOSED BY THE BOARD OF DIRECTORS
1. ELECTION OF DIRECTORS: For Withhold List nominee exceptions:
Director Nominees: [] []
John W. Seazholtz, , E. Van Cullens,
Paul A. Dwyer, Eileen A. Kamerick,
Robert C. Penny III, Roger L. Plummer, For All
Bernard F. Sergesketter, Melvin J. Simon All Except
[]
- - - - - - - - - - - - - - - - - - - - -
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"
the above proposal.
Please mark, sign, date
and return the proxy
card using the enclosed
envelope.
2. Adoption of Westell Technologies, Inc. For Against Abstain
2004 Stock Incentive Plan [] [] []
2. Approval of the amendment to the For Against Abstain
Westell Technologies, Inc. Employee Stock [] [] []
Purchase Plan to increase the number of
shares available under the Employee Stock
Plan by 300,000 shares of Class A Common
Stock
4. Ratification of Ernst & Young LLP as For Against Abstain
Auditors [] [] []
Comments/Change of Address / / Date ________________________, 2004
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.)